The FCC is up to No Good

Last Thursday, the Wall Street Journal ran an editorial entitled “The FCC Muzzle” which spelled out the shenanigans the FCC intends to pull prior to next year’s presidential elections.  They seek to do an end run around the Citizen’s United decision and accomplish by regulatory fiat what Democrats in congress couldn’t do.  And that is to place requirements that top donors to organizations running ads be identified.  Current law requires only the organizations paying for the commercials to be identified.

In today’s politicized atmosphere, thuggish intimidation of Republican and conservative corporate support by leftists has become endemic.  It has reached absurd levels in Wisconsin where unions have threatened small businesses with boycotts if they don’t display signs supporting them.  The Journal’s editorial starts:

Congress tried and failed last year to limit corporate political speech in the wake of the Supreme Court's Citizens United decision, but the threat hasn't gone away. The new liberal hope is that the Federal Communications Commission will do the deed.

Liberal activists at the Media Access Project filed a petition last week asking the FCC to re-interpret decades of law to require that groups that run political ads disclose the names of their top donors. The 1934 Communications Act already requires any group paying for an ad—whether commercial or political—to disclose its identity as part of the ad. But liberals want President Obama's FCC to stretch this reading to require the on-air disclosure of any donor providing 25% or more of funding.

It continues with what the Journal considers the intent:

The goal here is to use "transparency" to intimidate businesses out of making political donations. Disclosure sounds good, but liberals have begun to wield it as a weapon to vilify business donors. Exhibit A was last year's smearing of Target Corp., after it donated to an independent group that ran ads supporting Minnesota GOP gubernatorial candidate Tom Emmer. MoveOn.org twisted the contribution into a claim that Target was "anti-gay" and organized a boycott of Target stores. The company stopped donations.

When the Citizens United decision was handed down, Senator Schumer went berserk and promised legislation (Disclose Act) to reveal contributors.  It failed.  So now the FCC has been given the task to carry Schumer’s water.

This is not the first time the ruse of “transparency” was attempted to intimidate and pressure political supporters.  It happened before in the Deep South in the 1950s.  There are parallels to what happened then and what is being happening now. Fortunately the Supreme Court then put a halt to it in NAACP v. Alabama which recognized that confidentiality was needed to prevent intimidation.

I used that case to write a Letter to the Editor of the Journal.  It ran Monday (4/4/11):

Sometimes Disclosure Begets Intimidation

The threat of intimidation against contributors that would come from mandatory FCC disclosure rules would have a chilling effect on the political process ("The FCC Muzzle," Review & Outlook, March 31).

Such was the case in the racially charged atmosphere of the mid-1950s, when the state of Alabama refused to allow the NAACP to do business in the state. The central issue was a requirement to force the NAACP to turn over its financial records and a list of its members and agents to the state, which the NAACP refused to do. In a landmark decision, the U.S. Supreme Court ruled (NAACP v. Alabama, 1958) for the NAACP, citing the need for privacy and the ability to freely associate to advance its beliefs and ideals.

Other organizations have modeled themselves after the NAACP to protect their members and contributors, most notably the National Right to Work Committee and its legal arm, the National Right to Work Legal Defense Foundation. This is done to shield its members and contributors from union intimidation.

Crosby Boyd
Sanibel, Fla.

Will this deter the FCC?  Probably not.  Recently they simply ignored the ruling of the 10^th Circuit that Congress had not  granted them authority over the Internet (Comcast v. FCC) and simply went ahead and issued regulations anyway.  Fortunately we have a Supreme Court that recognizes the importance of the First Amendment and its fragility.

Smoot-Hawley II

During the election cycle, Obama gave mixed signals on trade policy. After signaling the terms of NAFTA had to be altered, his representatives contended it was simply “political posturing” according to the Canadian Consul General in his memo to Ottawa. But organized labor wants its payback for its election support. And that means restrictive import policies. Both Senate and House versions of the Stimulus Bill contain a “Buy America” provision for all steel and other products used for infrastructure projects. It hasn’t taken long for the EU to react, as reported in the London Telegraph: The EU trade commissioner vowed to fight back after the bill passed in the House of Representatives late on Wednesday included a ban on most purchases of foreign steel and iron used in infrastructure projects. The Senate's version of the legislation, which will be debated early next week, goes even further, requiring that any projects related to the stimulus use only American-made equipment and goods. The inclusion of protectionist measures has quickly raised hackles in Europe. Catherine Ashton, the EU trade commissioner, said: "We are looking at the situation. The one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore." It seems our Congress has a short memory. In 2002, Bush imposed tariffs on steel and steel products to fulfill a campaign promise. The EU and several Asian nations challenged them with the W.T.O. In a little over a year, in November 2003, the W.T.O ruled the tariffs were illegal and authorized $2 billion in retaliatory tariffs. Now here is where the EU did its homework. They have learned how to game the US political system. Instead of using a shotgun, they targeted each member of the House Ways and Means Committee. In each committee member’s district, they selected an industry for retaliation to create the maximum angst among a small but influential group. For Jerry Kleczka from Milwaukee it was a tariff in Harleys, for Mark Foley from south Florida it was orange juice, for Wally Herger of northern California, wines. It was a unique approach that brought pressure on Congress and the President to reverse the tariffs and he soon backed down. But tactics aside, trying to solve a banking crisis with protectionist measures is a recipe for disaster. It doesn’t help, it makes it worse. When we faced the problem once before, we tried to solve it with the Smoot-Hawley Tariff Act. Our trading partners of course retaliated. International trade dried up and the unemployment rate jumped from 7.8% to 25%. Writing in The NextRight, Allen Peel describes how this led us into the Depression. Despite these pleas and protests, Hoover signed Smoot-Hawley in to law and the goods imported from Europe alone decreased by half of what they were before the act. Also, there was a backlash where a number of other nations increased their tariffs on American goods. The other tax increase was in 1932 with a Democrat-led Congress and Hoover. This time, it raised the top marginal tax rate was raised from 25 percent on those making $100,000 or more to a top rate of 63 percent on those making $1,000,000 or more (by comparison, the rate on $100,000 to $149,999 was raised to 56 percent). On top of that, the corporate tax rate was increased from 12 to 13.75 percent (an increase of almost 15 percent). The end result was a jump in the unemployment rate from 7.8 percent in 1930 to 25.1 percent in 1933. It would not be until 1943 when the unemployment rate dropped below 10 percent. Smoot-Hawley didn’t work before, it won’t work now.

Whither the Big 3

Democrats are going to do what they do best, throw money at a problem. They are proposing $25 billion in loans to the Big 3. No doubt there will be strings attached, big, long strings. What the Democrats priorities are will determine whether the domestic auto industry survives or not. Most likely it will be to save as many UAW jobs as possible. While that sounds great, the last thing the Big 3 needs is more UAW workers. Nor do they need an auto czar to micromanage what cars are produced or mandate or forbid sales of certain models. Despite Democrats desires, the big three as well as Toyota and Nissan made gobs of money off of SUVs. That’s where the market was. And the survival of the industry rests more from what people will buy, than what is politically correct to manufacture. Throwing money around subverts the UAW and industry’s need to face economic realities. Just like a recent auction of a real estate development where the distressed seller opted out of the auction price because he felt he could make more from government largesse, there is no incentive for the UAW to reduce costs. Uncle Sam will prop them up. While many place the blame on Big 3’s management for agreeing to untenable UAW demands, that is simply hogwash. If you have ever experienced the whipsaw tactics of unions, you would understand. With your competitors operating, very few companies can withstand a two or three month strike. Not only will you permanently lose market share, you are bled dry by fixed costs. It becomes a choice of going out of business now or postponing it for 5 years. Most bet on waiting for a miracle. Congress has been pushing for a merger between GM and Chrysler. You might ask why GM needs Chrysler. Surely they don’t need more assembly plants. Surely they don’t need to fund the shortfall in Chrysler’s pension plan. Surely they don’t need to fund their retiree benefits. They have sufficient models. They don’t need Jeep when the have GMC. It is a lose-lose proposition. The best solution is for GM to file for bankruptcy. They need out of some of the more burdensome UAW work rules. Just like the airlines, companies after bankruptcy evolve into a leaner and more flexible operations. As far as the rest, their best bet is to find offshore partners. Ford probably can, but Chrysler most likely is toast no matter what happens.