Epiphanyblog

All about ideas…

Lies, lies and more lies…and more to fear

with 4 comments

An ad campaign being spread across the country, created by Republican PR genius Frank Lutz, received a low truth rating by the independent FactCheck.org.

A third-party group, the Committee for Truth in Politics, is out with an ad blasting the House’s “Wall Street Reform and Consumer Protection Act.” The group, which has no Web site and has made no disclosures to the Federal Election Commission, was created by a North Carolina GOP operative, according to National Public Radio, and is represented by lawyer James Bopp, who sued the FEC on the grounds that the group shouldn’t have to file any kind of spending report to that agency.

The ad has run in 35 markets in Arkansas, Connecticut, Colorado, Illinois, Iowa, Montana, North Dakota, Pennsylvania, Virginia and Wisconsin, according to the Campaign Media Analysis Group, a Kantar Media Solution.

The ad, in minute-long and 30-second versions, claims in on-screen graphics that the “financial reform bill” amounts to “[a] new $4 trillion bailout for banks. If they fail. Again. $4,000,000,000,000.”

Does it? Not exactly. The bill (H.R. 4173), which passed the House with no Republican support, does say that “in unusual and exigent circumstances” the Federal Reserve can, with approval from an oversight council and the secretary of the Treasury, loan money to help prop up financial entities. And such monies are capped at $4 trillion. But the Federal Reserve already had such authority — with no stipulated cap on the amount it could loan. And banks that “fail,” as the ad says, could be dissolved by regulators, according to another provision in the bill. Any money needed for the dissolution would come from a $150 billion fund formed at least partly by fees collected from large financial institutions.

The bill certainly does give the Fed the authority to loan as much as $4 trillion, but the ad obscures the fact that the Fed already had such authority to act in “unusual and exigent circumstances” without any cap. H.R. 4173 modifies Section 13 (3) of the Federal Reserve Act, which says that “[i]n unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank” to lend money to “any individual, partnership, or corporation.” (For more on this interesting paragraph, see the Federal Reserve Bank of Minneapolis’ write-up on its history.)

The Fed tapped this “rarely used legal authority,” in the words of the Wall Street Journal, in 2008 to lend money to AIG and Bear Stearns. The House bill modifies that authority (see Sec. 1701) to say “in unusual and exigent circumstances” the Fed could loan such monies when it has “written determination … of the Financial Stability Oversight Council, that a liquidity event exists that could destabilize the financial system.” That approval would come with a vote of two-thirds of the council members and consent of the Treasury secretary, after the president certifies that an emergency exists. Plus, the bill says the secretary and Fed board should support such action only if they believe “there is at least a 99 percent likelihood that all funds disbursed or put at risk by such action” plus interest “will be repaid to the Federal Reserve System.”

In other words, the Fed already had the power to loan enormous amounts of money to a bank. The new legislation only changes the already existing rules by stating that the newly created Oversight Council and Treasury must approve the transfer of the funds – funds which, by the way, had already been assessed from the big banks to cover such emergencies. (Remember that Fed Reserve monies are not funded by the taxpayers but by banks.)

So, Mr. Lutz’s ad campaign is a lie.

But note the almost throw away small statement early in the story: the Committee for Truth in Politics’ lawyer James Bopp sued the FEC on the grounds that the group should not have to file any kind of spending report to that agency.

This is exactly what I feared when the Supreme Court ruled in favor of Citizen’s United against the FEC. The majority decision appeared to signal its willingness to allow complete opacity in political campaign ads, allowing the advertiser – whether a corporation, trade organization, non-profit, or political group – to hide their [donor] identities and how much they’ve spent. For example, Goldman Sachs could run a multi-million dollar ad campaign opposing any financial regulation under a pseudonym such as “Citizens for Good Economics” and no one would know that Goldman bought and ran the campaign.

Bit by bit, the people’s democracy is being bought…and the voters are left wondering who’s telling the truth.

Thomas Jefferson wrote

“…were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter. But I should mean that every man should receive those papers and be capable of reading them.”

By that one statement, Jefferson confirmed the belief of the Founding Fathers that transparency of information or advocacy was – and still remains – the cornerstone of democracy.

Hiding behind a political PAC and denying transparency in advocacy is the antithesis of democracy.

Hiding behind innocuous sounding front organizations to distort the political landscape and create fear is exactly how dictatorships, throughout history, come into power.

Only transparency and openness – what Jefferson saw as the power of a free press, since organizations like PACs did not exist in his era – defeat the power to distort political commentary. The marketplace of political ideas should be argued in an open and clear setting, such as existed in ancient Greek forums, so people can make an informed decision about what is in their and their community’s best interest rather than being hidden behind front organizations with their potentially fear-mongering, misleading ads.

Editorial Note: I have nothing against Frank Lutz. As someone with over 30 years experience in Marketing, I acknowledge that he is a political PR genius. After all, he alone changed the conversation from “inheritance taxes” to “death taxes” which changed the entire psychological dynamics of wealth being passed on to later generations. Without his research and ad campaigns, the Republican Party would never have made their case to reduce or eliminate taxes on inherited, unearned wealth.

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4 Responses

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  1. my very first stop by here and made a decision that I should tell you that I believe you have a Awesome web site

    Zander

    February 12, 2010 at 10:17 PM

  2. […] Lies, lies as well as some-more lies…and some-more to fright « Epiphanyblog […]

  3. Goldman Sachs told the Fed to raise interest rates today. Henry Paulson and Alan Greenspan both agree on this issue. Unfortunately the massive middle class of our country will pay for the excesses of the rich. After all, the rich people dont need Health Care, Social Security, Medicaid and Medicare because they are rich enough to get by without it.

    united health

    February 15, 2010 at 9:25 AM

  4. Wall Street reform is not going to fail because of obstructionist Republicans.It is not going to fail because of incompetent leadership by Senator Dodd. It will however fail. It will fail because our Legislators are sold out before they ever get to Washington. They owe their existence to the people that paid their way to office, and that ain’t us.


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