Naked Capitalism: PBS Scrabbling After Money

PBS Pimps Itself Out to Billionaire Who Campaigns Against Pensions for Gov’t Employees to Produce Scaremongering Series About Government Pensions

Posted on February 13, 2014 by Yves Smith

Now we know how much it takes to buy PBS programming: $3.5 million. It might even be less, but $3.5 million is a proven amount that will induce the soi disant public broadcasting network to fall all over itself and violate multiple written, supposedly sacrosanct policies, to produce shows with a story line consistent with the express aims of a right wing foundation.

And the ugliest part is that it was PBS that sought out and proposed this arrangement.

David Sirota reports in must-read piece at PandoDaily that a two-year (!!!) PBS series called Pension Peril which has as its biggest funder none other than than the Laura and John Arnold Foundation, that of former Enron trader John Arnold. And quelle surprise, the story line of the series just happens to fit exactly with the mission of Arnold’s foundation, that of ending pensions for government workers.

Here’s Sirota’s description of Arnold’s political campaign:

In recent years, Arnold has been using massive contributions to politicians, Super PACs, ballot initiative efforts, think tanks and local front groups to finance a nationwide political campaign aimed at slashing public employees’ retirement benefits. His foundation which backs his efforts employs top Republican political operatives, including the former chief of staff to GOP House Majority Leader Dick Armey (TX). According to its own promotional materials, the Arnold Foundation is pushing lawmakers in states across the country “to stop promising a (retirement) benefit” to public employees.

It’s important to understand that the the idea that there is some sort of crisis in public pension funds is a canard. There are particular pension systems that are in terrible shape, but that’s due to deliberate underfunding compounded by mismanagement. The worst is New Jersey, where Christie Todd Whitman started the shell game in 1995 by paying less that the actuarially required amount. And then after more than a decade of underfunding, Orin Kramer (who also happens to be a big Democratic party bundler) who was then Chairman of the New Jersey State Investment Council, pushed to put a large portion of the state’s $72 billion in pension assets with private money managers, as opposed to state employees. The money was allocated to risky strategies, and a lot wound up in investments in subprime plays, and even worse. $115 million invested in Lehman itself. And New Jersey also has the dubious distinction of being the only state ever sanctioned by the SEC for pension mismanagement.

So the understandable media interest in pension train wrecks obscures the general picture. As Sirota stresses:

Whether or not the foundation has direct editorial control of PBS news content, the series still appears to violate PBS’s rules against “pre-ordained” conclusions.

For example, the series’ title – Pension Peril – is the oft-repeated ideological buzzphrase of anti-pension campaigners. It also inherently pre-ordains the Arnold Foundation’s conclusion that public pension shortfalls are an imminent emergency (“peril”), even though data prove that is not the case. To the contrary, as the Center for Economic and Policy Research notes, the shortfalls are “less than 0.2 percent of projected gross state product over the next 30 years” and “even in the cases of the states with the largest shortfalls, the gap is less than 0.5 percent of projected state product.” That’s far less than the amount state and local governments are spending on corporate subsidies. As McClatchy Newspapers has noted: “There’s simply no evidence that state pensions are the current burden to public finances that their critics claim.”

Similarly, in each episode of the Arnold/PBS series that has aired, the reporting has followed the Arnold Foundation’s rhetorical lead by forwarding the idea that pension benefit cuts should be the primary policy solution to public budget problems. It does this by promoting the need for cuts to guaranteed retirement incomes and/or by refusing to mention that pension shortfalls are dwarfed by the amount state and local governments collectively spend each year on corporate subsidies (many of which do not create jobs).

Moreover, as this section suggests, this deal, which allowed Arnold to lever his spending with taxpayer dollars, violated numerous PBS policies. Here is Sirota on the policy on accepting funding from groups with clear policy agendas:

PBS seems to be defying its own rules and regulations about conflicts of interest….Along with barring editorial control and program financing from funders who want to “pre-ordain” conclusions, PBS’s rules also state that “when there exists a clear and direct connection between the interests… of a proposed funder and the subject matter of the program, the proposed funding will be deemed unacceptable regardless of the funder’s actual compliance with the editorial control provisions.”

As one example, PBS says “a series of documentaries, interviews, and commentary on the subject of drug abuse would not be accepted if funded by a special purpose nonprofit corporation whose principal mission is to foster the understanding of drug-related community programs.” As another example, PBS says “a nonprofit organization whose mission is to eradicate heart disease or to raise money for leukemia research could not fund a program designed to educate the public about these respective illnesses.”

Hhm, looks like a pretty flagrant violation, no?

In addition, PBS’s rules and FCC guidelines stipulate that “All underwriters must be identified in video by their name and/or logo,” and programs on controversial subjects require even more disclosure. But Sirota tells us:

Despite those rules and regulations, though, Pando could find no explicit disclosure in any PBS “Pension Peril” episodes that the series is directly financed by the Laura and John Arnold Foundation, much less that the foundation’s benefactor, John Arnold, is one of the nation’s biggest financiers of the ongoing legislative push to slash public pension benefits.

The only notification that Arnold supports PBS comes “occasionally” in a lengthy list of supporters at the end of PBS News Hour and in another long list of donors of flagship station WNET, which is producing the series.

Finally, remember that PBS conceived of and pitched this deal:

…the Arnold Foundation spokesperson tells Pando that it was PBS officials who first initiated contact with Arnold in the Spring of 2013. She says those officials actively solicited Arnold to finance the broadcaster’s proposal for a new pension-focused series. According to the spokesperson, they solicited Arnold’s support based specifically on their knowledge of his push to slash pension benefits for public employees.

And an indignant statement released by the foundation, which fails to dispute any facts in the article while trying to depict it as inaccurate, and provides further support for how Sirota depicted the relationship. From the foundation’s letter:

The agreement with WNET is in all respects our standard grant agreement, which LJAF has signed with virtually all of our grantees (for a list of such grantees, see http://www.arnoldfoundation.org/grants). As we explained to Mr. Sirota, that standard grant agreement provides LJAF with the ability to stop funding in the event of extraordinary circumstances, such as fraud or the change of leadership of a grantee.

The stated purpose of the grant, as set forth in our grant agreement with WNET, was to “educate millions of Americans on the implications of looming debt and the tough choices ahead as these unfunded liabilities threaten to crowd out funding for education, public safety and other essential public services.” The project sought to “raise awareness of which cities and states are in the direst situations and how further crisis and/or bankruptcy might be averted, with a special focus on leaders confronting the issue head-on, proposed solutions and models of reform.”

The fact that the money was given in the form of a grant means it was expressly to further the objectives of the foundation. And most grants are structured to provide for periodic payments, based on progress of the grantee in fulfilling the statement of work. Thus, while Sirota was originally told that the the foundation had the right to halt funding in the event of extraordinary circumstances such as fraud, it’s almost certain that the grant itself contains provisions that allow funding to be halted for nonperformance. Given that the purpose of the grant was narrow, to “educate…..on the implications of looming debt and the tough choices ahead as these unfunded liabilities threaten to crowd out funding for education, public safety and other essential public services” deviation from this message would count as nonperformance. No wonder PBS and the foundation are continuing to refuse to release the text of the agreement.

PBS is following in the footsteps of other established, once highly revered organizations like Demos in the UK and the Roosevelt Institute here, having conservative parasites gaining control of once-liberal hosts. These organizations are highly prized targets, since loyal audiences accept what their trusted source tells them and finds it hard to believe that their interests are being betrayed. But anyone who is still regularly listening to PBS is either wishful or not paying attention. Its new CEO Gary Knell is a heavyweight conservative propagandist, having been a financial services industry lobbyist, patron of conservative think tanks, and Republican donor.

If you watch or listen to PBS, you need to stop. Now. If you’ve ever given money to them, you need to tell them they are never getting a dime from you again. And send this post to all your family members and colleagues who still might be consuming this toxic-to-ordinary-Americans product.

* * *

Then there’s more here, in an article entitled “The Wolf of Sesame Street: Revealing the secret corruption inside PBS’s news division.” Here’s the art:

Counterpunch: The Military-Industrial-Congressional Complex

  Revolving Door Syndrome in the Military-Industrial-Congressional-Complex

The Best Government Money Can Buy

by FRANKLIN C. SPINNEY

Those of you who think it is incorrect to attach “Congressional” onto the the end of Military – Industrial – Congressional Complex (MICC) would be well advised to read “Lawmaker holds stock in defense contractor he champions” (by Donovan Slack, USA Today, 8 Feb 2014) to see one reason why I always include the reference to Congress.

Slack describes the ethically-challenged influence peddling capers of Congressman Tom Petri (R-Wisconsin), a Harvard educated lawyer and one of longest serving and wealthiest members of Congress.  Petri used his position in Congress to enhance his political career (and power) as well as his personal wealth by promoting a controversial $3 billion dollar armored truck procurement contract to Oshkosh corporation that pushed dollars, jobs, and profits into his home district as well as wealth into his own stock portfolio.  Slack describes how Petri intervened to (1) fend off Oshkosh’s competitors, especially Texas based BAE corp, who had protested the contract award, accusing Oshkosh of low-balling its cost estimates and (2) how he worked to neutralize the rescue efforts by BAE’s friendly congressmen.  The story is complex, and I urge you to read Slack’s report at the link above.

Petri’s hijinks are old as our democracy (see this hilarious example of how the Navy’s Ship of the Line program was funded in the years after the War of 1812), but the intricacies of his maneuvers illustrate the subtle and deep-seated general nature of corruption and influence peddling now pervading our nation’s defense policy making machinery.  The threads of this influence peddling network are now woven deeply, almost invisibly, throughout the entire fabric of the contemporary American political economy.

Some political scientists use the metaphor Iron Triangle as a short hand for describing the structural aspects of this web of influence relationships.  The attached diagram depicts the triangle’s basic features for the MICC.  Note its principle idea: the two mutually-reinforcing circulations: (1) a counter-clockwise circulation of influence peddling fueling (2) a concomitant clockwise circulation of money.

Moreover, as the triangle illustrates, the influence peddling and associated money flows to and from the Congressional wing of the MICC, including Petri’s operations, are but two threads in a highly evolved pattern in America’s contemporary political-economic culture. The triangle is useful in that it draws our attention to an oversight in Donovan Slack’s otherwise excellent report: Slack has no discussion of what role any links between the long-serving Congressman Petri and Oshkosh Corp. might have played in the story.  He only notes a vague reference to Oshkosh by Petri’s spokesman as one of the biggest employers in Petri’s district and “we do work with them a lot.”  But there is no development of what “working” with Oshkosh entails.  Nor does Slack inquire into any political contributions possibly made by Oshkosh to Petri’s election campaign, or PACs, or even a possibility that some kind of quid pro quo passed between Petri and Oshkosh.  At the very least, he could have written that no evidence of any influence of this kind was found.

Bear in mind,  the MICC is by no means unique: the same kind of iron triangle is a useful shorthand for thinking about the political economy of Big Pharma, Big Oil, the Banksters, environmental protection businesses, and other large financial or industrial networks.  Our concern today, however, is the MICC.

Referring back to the diagram, note how inside the triangular circulation/counter-circulation of influence and money is a reference to the revolving door.  This reminds us of (1) the incestuous flow of people moving from job to job throughout the triangle; and (2) that the microscopic incentive structure of individual self-aggrandizement accompanying the revolving door is one of, if not the, major engine(s) powering the larger pattern of influence and money flows.

Thirty-three years experience in the DoD convinced me that the incentive structure of the revolving door is the most poisonous influence operating within the poles of these triangles.   The incentive structure produces a behavioral pattern of cynical bureaucratic gaming strategies accompanied by a mix of situational ethics that have evolved over time to lubricate and rationalize the flow of money throughout the triangle (see my pamphlet Defense Power games for some examples of these behaviors).  The result has been an insensible but profound cultural evolution over time: Today, there exists an ubiquitous incentive structure in a culturally mature form, wherein it is both common knowledge and a normative moral value that people who contribute to the money flow should be rewarded, and people who pose a threat to that flow by, for example, (1) exposing problems like cost overruns, testing failures, or management incompetence, and (2) by recommending lower-cost or more efficient solutions should be punished or otherwise neutralized.

Readers might think my characterization of the revolving door is too harsh.  I would ask them to consider the incentive structure and moral implications implicit in Brian Bender’s blockbuster report on just the military-industrial dimension of the revolving door, “From the Pentagon to the Private Sector”. This report appeared on 26 December 2010 in the Boston Globe.  Bender’s report may be the best of its kind, but it is hardly alone.  Other reports illustrating the ubiquity of the revolving door can be found here and here.

No doubt, President Eisenhower would have recognized most of the preceding points, including the revolving door.  But more subtle aspects of the traditional iron triangle and military-industrial revolving door began to evolve, again almost insensibly, after 1981, when the huge flood of money was unleashed during the Reagan Administration.  Perhaps the most prominent of these subtle changes has been a steady increase in the number of Congressional staffers flowing through the revolving door, moving from jobs in Congress to jobs in industry, often via political appointments in the Pentagon.

Members of the Congressional staff work for individual senators and congressmen. By definition their loyalty is political loyalty to their boss’s wishes. The organizational environment in Congress is more like that of a feudal medieval court where elected officials of the lords and the staffers are the courtiers catering to the lords.  Also, Congress resembles a feudal political organization in the sense that it is composed of multiple political power centers rather than the huge top-down information-processing bureaucracy of the executive branch, which organized along the strict chain-of-command lines of a military or industrial age management system.  While one can argue that political power is being concentrated in leaders’ offices on Capital Hill, there is nothing in the Hill’s bureaucratic structure that remotely resembles the huge, highly centralized, rigid hierarchies of  bureaucracies in the Pentagon.

That is to say, there is nothing in a hill staffer’s work experience that prepares him/her for the Pentagon’s bureaucratic battlefield.  Consequently former Hill staffers are particularly easy targets for the gamesters in the Pentagon and the defense industry to overload with “information” and back-to-back meetings, all the while seducing them with outward trappings of power (e.g., long titles, big offices, apparent deference, power point briefing etc.).  In short, Congressional staffers who become political appointees in the Pentagon are easy meat for the seasoned civilian and military bureaucratic warriors, who are skilled in the control of information flowing into their offices.  See my 2010 essay Inside the Rat’s Nest for a description of how “subordinates” set their bosses up to do their bidding.

Consider, for example, the background of the new Secretary of the Air Force, Deborah Lee James.  Traditionally, her qualifying “executive” experience for going through the revolving door into the Pentagon would have been with an arms manufacturer or perhaps a big commercial industrial firm.  But her experience is that of a long-time Congressional staffer (and not a very prominent one at that), with a short stint in the Clinton Administration as Assist. Sec. of Defense (ASD) for Reserve Affairs.  Although reserve issues should be important in the grand scheme of things, that ASD position is one of the least powerful and least effectual ASD positions in the entire Office of the Secretary of Defense in the Pentagon.  After leaving the Pentagon, Ms. James rotated through the revolving door into SAIC, a well known Beltway “consulting” firm, and a notorious revolving-door way station for apparachiks leaving government, who want to (1) cash in on their connections to do business with the government and (2) pad their resumes for a future job in government.

A biting summary of Ms. James background can be found in Debbie Does USAF. To be sure this is a snotty portrayal by a former Bush II official who seems to have an ax to grind.  But can anyone possibly believe that a person with James’ kind of background has built up the requisite  technical knowledge, management savvy, and decision-making expertise needed, for example, to (1) rein in huge, out of control programs like the F-35, or (2) withstand the bureaucratic and political pressure to start a new high cost stealth bomber program (which, by the way, requires starting a new cold war with China for justification).

And while Ms. James is coping with the types of specific management problems mentioned above, she must also cope with an Air Force budget plan that is more out of whack than at any time since I began studying this plans/reality mismatch problem in the early 1970s.

Nothing in her background has prepared her for the bureaucratic battles over the crises between readiness and modernization, not to mention the need to solve the moral and leadership problems that are now sweeping over the Air Force .  Nothing in her background has prepared her for the even more complex bureaucratic battles with Army and Navy in an increasingly stressful budget war over what service gets hosed by the long-term financial pressures posed by the budget sequester.

Or consider the new nominee for the Deputy Secretary of Defense — the more capable Robert Work.  Work is a well educated, retired Marine Colonel with post-retirement stints as an undersecretary of the Navy during the first Obama Administration and in think tanks.  But those think tanks, especially the Center for Strategic and Budgetary Assessments (CSBA), have a history of advocating certain types of high-cost, high-tech defense technologies, especially robotics and stealth technologies (including particularly a new stealth bomber for the Air Force).  Moreover, at least one of these think tanks — CSBA — has a long history of receiving money from the Pentagon’s Office of Net Assessment to produce studies advocating the need for these stealth and robotic technologies together with the concomitant strategies aimed at “containing” China.

Whereas Ms. James epitomizes the congressional hack rolling through the revolving door, Work’s passage thru the revolving door illustrates the growing influence of more obscure outfits — think tanks with agendas and obscure links between industry and government — that lie outside the traditional poles of the iron triangle.  Advocacy outfits, like CSBA, that pose as dispassionate, independent, quasi-scholarly sources of bipartisan information, may have less visible connections to the players in the Iron Triangles, but their funding patterns and advocacy agendas show they are deeply connected to the larger MICC agendas.

Bear in mind, I have only scratched the surface of the revolving door problem and the big cozy family of courtiers in the Hall of Mirrors that is Versailles on the Potomac.  Anyone who thinks the Obama Administration is going to rein in the MICC now that Afghanistan is winding down, need only compare the interests of the Iron Triangle to its panoply of political appointees to see why the big green spending machine is poised to pass on the costs of the budget sequester onto social programs and perhaps start a new cold war with China to justify the extravagance.

It should come as no surprise, therefore, that the Obama Administration is now signalling that it will cave in to this network’s pressures and exempt the Pentagon budget from the constraints of the budget sequester and begin growing the defense budget in FY 2016 and beyond.

Welcome to the best government money can buy.

Franklin “Chuck” Spinney is a former military analyst for the Pentagon and a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. He be reached at chuck_spinney@mac.com