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Has Obama Brought Chicago-Style Pay to Play to Washington, D.C.?

This diary asks the question: has Barack "Offshore" Obama brought Chicago style pay-to-play to Washington, D.C.?

First off, what’s meant by pay to play? In politics, pay to play refers to:

…a system, akin to payola in the music industry, by which one pays (or must pay) money to become a player.

Typically, the payer (an individual, business, or organization) makes campaign contributions to public officials, party officials, or parties themselves, and receives political or pecuniary benefit such as no-bid government contracts, influence over legislation, political appointments or nominations, special access or other favors. The contributions, less frequently, may be to nonprofit or institutional entities, or may take the form of some benefit to a third party, such as a family member of a governmental official.

The phrase, almost always used in criticism, also refers to the increasing cost of elections and the "price of admission" to even run and the concern "that one candidate can far outspend his opponents, essentially buying the election."

While the direct exchange of campaign contributions for contracts is the most visible form of Pay to Play, the greater concern is the central role of money in politics, and its skewing both the composition and the policies of government.

…Incumbent candidates and their political organizations are typically the greatest beneficiaries of Pay-to-Play. Both the Democratic and Republican parties have been criticized for the practice. Many seeking to ban or restrict the practice characterize pay-to-play as legalized corruption.

The city of Chicago and the State of Illinois have a long history of corrupt politics and pay to play. Former Governor Rod Blagojevich, of course, has been indicted and will soon face trial on what are essentially pay to play charges. But Blago wasn’t the first corrupt politician coming from Chicago nor will he be the last. One of Blago’s predecessor was the Republican George Ryan. Ryan was sentenced to 6 1/2 years in prison on federal corruption charges just a few years before Blago.

Robert Grant, the FBI agent in charge of the agency’s Chicago office, has described the Chicago/Illinois special place in the pantheon of political corruption (source same as above):

"If it isn’t the most corrupt state in the United States, it’s certainly one hell of a competitor," Grant said. And Fitzgerald, whose office also prosecuted Blagojevich’s predecessor, said Blagojevich’s "conduct would make Lincoln roll over in his grave."

It’s been that way a long time for lots of reasons. Mob connections, a rapidly developing urban atmosphere where lots of money can be made quickly, a history of disinterested citizenry–all have combined to create this cesspool of corruption and pay to play.

The face for Chicago politics has long been Richard J. Daley who served as mayor for 21 years until his death in 1976. Columnist and writer Mike Ryoko forever captured the picture of Daley in his wonderful book, Boss: Richard J. Daley of Chicago (1971). Boss shows Daley as corrupt, racist, cruel, mean and brutal. I still remember video footage of Daley shouting "Kike" and "Fuck you, you Jew son of a bitch" to Sen. Abraham Ribicoff at the 1968 Democratic National Convention as Ribicoff called out the brutal treatment of the city’s police toward antiwar demonstrators.

If you imagine Orson Welles, who played brilliantly the corrupt policeman in "Touch of Evil" on a larger scale, that would be Daley. Welles in that movie (one of his best performances) even looks like Daley.

Wikipedia describes how Daley’s system worked:

Daley’s chief means of attaining electoral success was his reliance on local precinct captains, who marshaled and delivered votes on a neighborhood-by-neighborhood basis. Many of these precinct captains held patronage jobs with the city, mostly minor posts at low pay. Each ward had a ward leader in charge of the precinct captains, some of whom were corrupt. The notorious First Ward (encompassing downtown, which had many businesses but few residents) was tied to the local mafia or crime syndicate…

Among other things, Daley has been accused of rigging the vote in Chicago to elect JFK. Illinois Racing Board Chairman William S. Miller testified in 1973 that Daley had "induced" him to bribe Illinois Governor Otto Kerner. These accusations followed Daley to his grave. Kerner is another name high in the corruption pantheon. Wikipedia says it best:

Otto Kerner, Jr. (August 15, 1908 – May 9, 1976) was the 33rd Governor of Illinois from 1961 to 1968. He is best known for chairing the National Advisory Commission on Civil Disorders (the Kerner Commission) and for accepting bribes.

(emphasis added)

Accepting bribes and kickbacks, forcing people and businesses to make "contributions" so that they could get preferential treatment or even needed services like fire and police protection (Royko’s book is great on this and highly recommended), that’s the Chicago pay to play system.

This is the political system that Barack Obama and his wife grew up in or were molded in. Indeed, Michelle’s daddy was a Democratic precinct captain under Boss Daley, and of course, he also had a nice city job as water plant employee. The Boss always took care of his people. Meanwhile, if you Google both Barack Obama, Rahm Emanuel, and Rod Blago, you’ll find pictures of the three of them looking very chummy and patting each other on the back.

Let’s return to the main question that this diary poses: Has Barack Obama brought Chicago pay to play to Washington, D.C.?

In two specific instances, I believe that one can see at least the lineaments of this happening: 1) Obama’s relationship with Goldman Sachs and 2) his administration’s cozy treatment of BP.

Let’s look at Goldman Sachs first. Most people know that Goldman Sachs was the major contributor (aside from the U. of California SYSTEM (meaning a dozen or so campuses) to Obama’s 2008 presidential campaign. But they were also the main contributor to his Senatorial campaign. And as early as 2006, Robert Rubin (former head of Goldman and of Citibank) invited a Senator to the Rubin-Goldman funded Hamilton Project. At the Hamilton Project (remember Hamilton: "The People are a Great Beast") then Senator, Obama, paid lavish tribute to "my friend, Bob [Rubin] and went on to talk about the need to cut entitlements (meaning Social Security) and the need for more NAFTA-like agreements (making his statements in 2008 that he would reform NAFTA to be complete lies). A video clip of Obama’s neoliberal speech is available here. See also another informative diary by Dr. Kirk Murphy, M.D. and an article entitled "Wall St. Democrats Unveil Plan to Undermine Progressives" by David Sirota.

Recall that our definition of pay to play above indicates money given in exchange for political appointments. Certainly that has been borne out in the case of Obama and Goldman Sachs since his administration is riddled with Goldies. See this diary entitled "A list of Goldman Sachs People In the Obama Administration: Names Attached to the Giant Squid’s Tentacles". His two chief economic advisers, Timothy Geithner and Larry Summers have Goldman-Rubin connections and so do Geithner’s top aides like Mark Patterson.

Then there are top policy people whom you may not have heard about but who hold key positions in the Obama Administration. Like: Lael Brainard, Thomas Donilon, Bill Dudley, Douglas Elmendorf, Diana Farrell, Stephen Friedman, Michael Frohman, Jason Furman,
Anne Fudge, Mark Gallogly, Gary Gensler, Michael Greenstone (revolving door), Robert Hormats, Neel Kashkari, Karen Kornblum, Jacob J. Lew, David A. Lipton, Peter Orszag, Robert D. Reischauer, and Alice Rivlin. For a detailed look at the appointments-connections between Goldman Sachs-Rubin-and their affiliated groups like the Hamilton Project, please see this diary. Matt Taibbi was exactly correct with his image of the giant squid and its tentacles sinking into the Obama administration.

Pay to play, as we see above, means appointees and Goldman has not lacked them in the Obama administration. See also the article by Greg Gordon (McClatchy)"Goldman’s White House Connections Raise Eyebrows". This diary is also helpful. See also, "Obama Packs Debt Commission with Social Security Looters".

Pay to pay can also mean influence used to favor contributors. Recall how differently Obama’s Tim Geithner and the Obama administration treated Goldman Sachs and Lehman Brothers, one of Goldman’s main competitors? Goldman Sachs feasted from the Obama-Geithner bailouts; Lehman was left to starve and withered away.

Here’s how the Wall St. Journal described the situation on July 15, 2009:

Wall Street’s meltdown fueled the most profitable quarter ever at Goldman Sachs Group Inc., which snatched business away from weakened rivals and churned out huge trading gains by revving up risk taking.

With competitors such as Lehman Brothers Holdings Inc. and Bear Stearns Cos. gone, and others like Citigroup Inc. flailing, Goldman appears to be pulling off one of the biggest market-share grabs in Wall Street history.

Net income in the second quarter was $3.44 billion, or $4.93 a share — more than Goldman earned in all of 2008, when it was hammered by the financial crisis. Analysts had expected strong earnings, but were surprised by how much the firm exceeded expectations.

The primary earnings driver was wider profit margins on the buying and selling of securities, in part due to fewer competitors.

Goldman’s resurgence, including a 33% jump in money set aside for compensation and benefits in the year’s first half, could invite criticism that it is benefiting too much from the government’s Wall Street rescue.

They also underscore the emergence of a handful of large U.S. financial institutions that are likely to profit mightily from the wreckage left by the financial crisis.

…Goldman’s stock-trading division posted net revenue of $3.2 billion for the quarter, up 59% from the first quarter, and 28% from the quarter ended May 30, 2008.

Goldman also picked up some business from clients that had used competitors in the past. U.S. Bancorp tapped Goldman Sachs as one of its lead underwriters on a stock offering in May, the first time it had used Goldman in that role in more than five years, Dealogic data showed.

The banking firm had used Citigroup and Lehman Brothers, among others, on similar deals.

(emphasis added)

Coincidence? The economic crisis actually helped Goldman Sachs get huge bailouts and squeezed out two of its main competitors? Coincidence that this happened after Goldman Sachs gave so much to Obama and has so many people affiliated with it acting in the Obama administration. Mere coincidence?

A fine interview between Bill Moyers and law Professor William Black over at PBS highlights some of the problems that the Obama administration seems unable and unwilling to come to grips with relating to the financial/economic crisis:

BILL MOYERS: Well, Bill, where are the other investigations? Why have there been no arrests? Why have there been no convictions?

WILLIAM K. BLACK Because we have still Bush’s wrecking crew in charge of the key regulatory agencies. Why are they still in place? They have abysmal records as major causes of this crisis.

BILL MOYERS: You talk about the Bush appointees still being there, but Goldman’s former lobbyist, his treasury secretary, Timothy Geithner’s chief of staff, the head of the Commodity Futures Trading Commission, Gary Gensler, who may soon have new power over derivatives, worked for Goldman.

So did the deputy director of the White House National Economic Council, the under Secretary of State is a former Goldman employee. Goldman’s hired Barack Obama’s recent chief counsel from the White House on his defense team. I mean–

WILLIAM K. BLACK Don’t forget Rubin.

BILL MOYERS: Robert Rubin, whose influence is all over the place, who used to be–

WILLIAM K. BLACK It’s his protégés that are in charge of economic policy, under Obama.

BILL MOYERS: So is this administration, which still has some Bush holdovers in it, and now has a lot of Goldman people in it, is this administration going to be able to pass judgment on Goldman Sachs?

WILLIAM K. BLACK Well, so far, they haven’t been able to do it. They can’t even get themselves to use the word fraud.

There’s a huge part that is economic ideology. And neoclassical economists don’t believe that fraud can exist.

Coincidence that not a single person involved in this economic crisis (aside from garden variety criminals like Bernie Madoff) has been sent to jail? Contrast that with the more than 1,000 people who did jail time in the savings and loan crisis (a far smaller crisis) in the 1980’s. Coincidence that Barack Obama’s selection as Attorney General, Eric Holder, is best known for crafting the pardons to fugitive multimillionaire Marc Rich? Coincidence that the DOJ has been sitting on its hands and has no white collar prosecutions up and running on this? That’s an awful lot of coincidences to believe in.

Now let’s turn to BP. Like Goldman Sachs, BP pumped lots of money into the Obama campaign and administration. Indeed, BP gave more to Obama in 2008 than any other candidate and he heads their list of political contributions for the past 20 years. BP flushed even more money to Obama and his party through the Podesta Group, a lobbying/consulting group whose founders have close ties to the President. BP gave the Podesta Group $320,000 in 2008, $320,000 in 2009, and thusfar this year $80,000 as reported by Opensecrets. See also this. One suspects this is but the tip of the iceberg as there are plenty of other groups/individuals to send money through.

Now some here might believe that this is not really a problem since a) Obama also took in lots of money from small contributors and b) it’s only natural since Obama led all candidates in raising money. But not so. Virtually none of those small time contributors wanted to advance their specific business goals, or sought appointments, or wanted to buy influence. It’s a different story with major corporations and businesses as both Republican Senator McCain and Democratic Senator Russ Feingold know. They attempted to do something about the pervasive and harmful influence of political contributions: for this very reason. As to argument b) it is of note that BP has traditionally given to Republicans but they changed that pattern with Obama and made the Democrat their favorite. William Black, the law professor and former senior regulator for the Federal Home Loan Board who cracked down on banking during the Savings & Loan crisis of the 1980’s, made this wise observation that should be kept in mind:

"The highest return on assets" he told Bill Moyers on PBS, "is always a political contribution."

What is troubling about the news surrounding the BP blow out is how the Obama administration and especially Obama’s hand-picked man to head Interior, Ken Salazar has treated BP with kid gloves. The Washington Post has reported that the Obama administration waived environmental impact requirements for BP for its Gulf coast drilling:

The Interior Department exempted BP’s calamitous Gulf of Mexico drilling operation from a detailed environmental impact analysis last year, according to government documents, after three reviews of the area concluded that a massive oil spill was unlikely.

The decision by the department’s Minerals Management Service (MMS) to give BP’s lease at Deepwater Horizon a "categorical exclusion" from the National Environmental Policy Act (NEPA) on April 6, 2009 — and BP’s lobbying efforts just 11 days before the explosion to expand those exemptions — show that neither federal regulators nor the company anticipated an accident of the scale of the one unfolding in the gulf.

In one assessment, the agency estimated that "a large oil spill" from a platform would not exceed a total of 1,500 barrels and that a "deepwater spill," occurring "offshore of the inner Continental shelf," would not reach the coast. In another assessment, it defined the most likely large spill as totaling 4,600 barrels and forecast that it would largely dissipate within 10 days and would be unlikely to make landfall.

"They never did an analysis that took into account what turns out to be the very real possibility of a serious spill," said Holly Doremus, a law professor at the University of California at Berkeley who has reviewed the documents.

Democracynow reports that the agency within the Obama administrative charged with oversight is little more than a rubber stamp:

Newly-released documents meanwhile show government regulators exempted BP from a comprehensive environmental review of the project that resulted in the spill. The Minerals Management Service granted BP a “categorical exclusion” from a full review before approving the project just over a year ago. In a statement, the Center for Biological Diversity said: “Instead of protecting the public interest by conducting environmental reviews, [the MMS] rubber-stamped BP’s drilling plan, just as it does hundreds of others every year in the Gulf of Mexico.”

Dan Froomkin, in an excellent article over at Huffington Post notes that the Obama administration didn’t listen to warnings from NOAA (the scientific body in charge of overseeing oil drilling) about the dangers of off shore drilling:

National Oceanic & Atmospheric Administration officials last fall warned the Department of Interior, which regulates offshore oil drilling, that it was dramatically underestimating the frequency of offshore oil spills and was dangerously understating the risk and impacts a major spill would have on coastal residents.

NOAA is the nation’s lead ocean resource agency, and the warnings came in its response to a draft of the Obama Administration’s offshore oil drilling plans. The comments were Web-published in October by the whistle-blowing group, Public Employees for Environmental Responsibility (PEER).

But NOAA’s views were largely brushed aside as Obama went ahead and announced on March 31 that he would open vast swaths of American coastal waters to offshore drilling… .

Froomkin further points out that Obama has failed to replace most of the Bushies in Interior who have been soft on regulations of the oil industry:

Jeff Ruch, the head of the public-employee whistleblowing group, said that as in many other regulatory agencies, Obama political appointees in the Interior Department’s notoriously troubled Minerals Management Service (MMS) have not taken enough steps to reverse the anti-environmental and anti-science policies of the Bush years.

"For the most part, the Obama team is still the Bush team," Ruch told HuffPost, noting that beyond a thin layer of political appointees, offices like MMS are run by managers who were "promoted during the Bush years — In many instances, promoted for basically violating the law. And from what we can tell, their conduct hasn’t changed."

Futhermore, Ruch said, Obama "sees environmental issues as a political bargaining chip."

Obama made the boneheaded statement on April 2, 2010 that modern technology made off shore drilling safe. A video clip of him saying that is widespread on the internet and was shown recently on Jon Stewart’s show. The oil spill began just 18 days later.

Obama on April 2nd reversed 27 years of policy on oil drilling, banned by former President Ronald Reagan,and permitted off shore drilling. Essentially, Obama flip flopped on prior promises and adopted Sarah Palin’s silly “Drill, Baby, Drill” position. His oil policy is worse than Reagan’s!

EVEN AFTER the oil spill, Obama has not said unequivocally that off shore drilling will be banned by him. Instead, he’s imposed a moratorium (for 30 days or so) so his administration “can study the problem”.

So we have seen kid glove treatment and a volte face on both campaign promises relating to off shore drilling and a reversal of 27 years of government policy forbidding it. We’ve also seen Obama make some misleading and un-lawyerlike comments (yet again) to the effect that BP will pick up the entire tab for the oil spill when that is far from certain and history proves otherwise (like in the Exxon Valdez case). See also this diary on these questions.


I’m not in favor of witch hunts but I do see developing some troubling problems relating to the Obama administration with respect to its cozy relationship with big banks like Goldman Sachs and big oil companies like BP. Why so many people with Goldman connections in this administration? Why differential treatment? Why go soft on regulations in an inherently dangerous business like drilling oil in ocean waters that are more than a thousand feet deep? For that matter, one could also cite the cozy relationship Obama has with Big Pharma and the insurance industries and how he broke his pledge to hold open, public meetings on health care reform and televise them. The Obama administration even denied the meetings had gone on until the New York Times broke that story open published names and details of the meetings.

So, why the lack of openness and transparency from this administration which promised both? Why the unwillingness to enforce laws and regulations? Why the kid’ s glove approach to huge banks, oil companies and huge corporate interests in general? Why the "let’s look forward but not backward" mantra which is the antithesis, after all, of legal education and doctrine as enshrined in the notion of legal precedent?

We don’t need or want a witch hunt. But we need to ask questions. We as a society need to investigate and if necessary prosecute wrongdoing and pay to play just as has been done against Blago and other crooks. We as Democrats also have to ask the same tough questions and apply the same standards that we applied to Bush and his administration to the Democratic Obama administration. Republicans, Democrats and Independents should be looked at and judged equally.

In short, we need Obama and his administration to start living up to its promises of fairness and openness and we citizens interested in good, clean government have to speak up more and demand more of our leaders.

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