Thursday, August 30, 2012

Election Primer 2012: 7. It’s Not Just Warm, It’s Hot

    Here in central Illinois, it’s been a hot year. Compared to records since 1895, the first half of 2012 was the hottest ever measured. July was the hottest month ever recorded in the lower 48 states.
    One hot summer does not mean the globe is warming. Temperatures fluctuate widely, from day to day, season to season, year to year. The summer of 1936 was about as hot as this year. Climate change means a shifting long-term pattern.
    The science behind global warming covers three separate ideas. One is concrete and measurable. Temperatures calculated across the globe, in Illinois and in the Arctic, over land and sea and up in the atmosphere, by cheap thermometers and delicate instruments, all show the same thing – the earth has gotten warmer over the last century. Not much, by about one degree since 1980, barely noticeable at any moment. But enough to indicate a new pattern.
    The United States is on track for its hottest year ever in 2012, and 6 of the 10 hottest years since record-keeping began have occurred since 1998. The heating up of our climate is not a theory – it is a measurable fact.
    The effects of slight changes in temperature are enormous. Since 1990 the border between zones 5 and 6 on the plant hardiness map of the Arbor Day Foundation has shifted more than 150 miles northward. Central Illinois was in zone 5 and now is in zone 6. The amount of sea ice in the Arctic has reached its lowest point ever measured, and is shrinking even faster than scientists predicted a few years ago.
    The second element of global warming science cannot be shown by simple measurements: that the cause of warming is the production of greenhouse gases by human activity. Yearly global emissions of carbon dioxide have increased about 50% in the last 20 years. Here scientific experimentation, testing of hypotheses, and synthesis of differing arguments are ways of creating the most plausible explanation. That warming is caused by our behavior in industrialized societies is not a fact, but an idea supported by at least 90% of climate scientists. This theory is as well supported by science and by scientists as the atomic theory that led to the creation of nuclear weapons and nuclear power.
    The third element is the least certain and the scariest: that warming increases the number of extreme weather incidents, such as heat waves, storms, and droughts. This is a matter of uncertainty among scientists who agree on the first two ideas. It will take many years of collecting data before anyone can be sure one way or the other.
    The debate about climate change is mainly political. Republican politicians generally attribute the evidence about warming to a world-wide conspiracy. Senator James Inhofe of Nebraska has often said that global warming is a “hoax”, based on his religious beliefs. In March he said: “The arrogance of people to think that we, human beings, would be able to change what He is doing in the climate is to me outrageous.” Ron Paul called global warming “the greatest hoax I think that has been around for many, many years.” Rick Perry attributed evidence of warming to “scientists who have manipulated data so that they will have dollars rolling into their projects,” and Paul Ryan agreed that “leading climatologists make clear efforts to use statistical tricks to distort their findings and intentionally mislead the public on the issue of climate change.”
    Mitt Romney has shifted his position on global warming. As Governor of Massachusetts, he moved to reduce greenhouse gases until he decided to run for President. In June 2011, he said, “I believe the world is getting warmer, and I believe that humans have contributed to that.” In October, his words shifted: “My view is that we don’t know what’s causing climate change on this planet.”
    The Obama administration has accepted evidence about warming. In 2009, the Environmental Protection Agency moved for the first time to reduce greenhouse gas emissions. Obama’s National Security Strategy of 2010 says that “climate change” is a “severe” national security threat. In April he spoke of his “belief that we're going to have to take further steps to deal with climate change in a serious way.”
    Among voters, according to a poll in 2011, party affiliation also determines scientific belief: 80% of Democrats and 47% of Republicans say that warming has been occurring.
    What happens if you take the politics out of the debate? The nation’s insurance companies, through the National Association of Insurance Commissioners, reported in September 2011 their concerns about the effects of warming on the properties they insure. The report’s author, Sharlene Leurig, said, “Climate change will inflict damage across the U.S. . . . Unfortunately, science is telling us that more years in the future are likely to look like 2011.”
    American businesses do not think that spinning tales about conspiracies and doing nothing now is the best policy. They recognize that means even greater costs for future generations.

Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 30, 2012

Tuesday, August 28, 2012

Election Primer 2012: 6. Religion and Government

    The religious beliefs of Mitt Romney and Barack Obama have persistently been a major talking point in this Presidential campaign. Some Christians do not consider Romney’s Mormon faith to be truly Christian. Although Obama’s beliefs should be popular among American Protestants, a surprising number of them believe that he is secretly a Muslim, as they also believe he was really not born in the US.
    As usual the media obsessively focuses on personal details rather than substantive issues. More important to this election are the parties’ views about the ideal relationship between religion and government.
    Since the European settlement of New England in the 17th century, two opposing ideas about government and religion have existed in America. The Puritans fled religious persecution in England. In Massachusetts Bay Colony, they created one of the earliest protections of individual rights in America, the Body of Liberties, which includes freedom of speech, and the right to bail and a jury trial.
    But they also retained the European belief that citizenship should be based on religion, that the state should enforce religious purity. Only men could vote who had been examined for their religious views. Christian ideas which did not conform to Puritan theology, as enunciated by their political leaders, were not tolerated. So-called “heretics” were fined, whipped, imprisoned, banished, or executed. Four Quakers were condemned and hanged in 1659-61. Slavery existed in Massachusetts and some of the governors owned slaves.
    One of those who was forced to leave was Roger Williams. He argued that the Puritans’ charter from the King was invalid, because they did not pay the Native Americans for the land they took. Escaping imprisonment, he walked 100 miles south to present-day Rhode Island in the winter of 1636, purchased land from the Narragansett tribe, and founded a new settlement called Providence Plantation.
    Williams regarded any promotion by the state of religious ideas or practices as “forced worship”, which “stinks in the nostrils of God”. Williams invented the idea of a “wall of separation” between church and state to describe his vision of religious liberty.
    Williams founded the first Baptist church in America, argued for equality between Indians and settlers, and organized the first attempt to prohibit slavery in the original thirteen colonies. For decades the Massachusetts Puritans tried militarily and politically to destroy the Providence settlement.
    These opposing views of religion’s role in government continue to animate Americans in the 21st century. Conservatives in the Republican Party bring up religious arguments to support public policy positions. The arguments made by those who want to challenge the teaching of evolution in public schools are all based on the Bible, not science, as a federal court in Pennsylvania found in 2005. Illinois Congressman John Shimkus opposed policies to deal with global warming by saying that the Bible did not support such an idea. Demands that state and national government prohibit abortion are made on religious grounds.
    Some go further to demand that government funds and behavior support religious practices, always along Christian lines, for example the maintenance of a cross in the Mojave National Preserve in California or of a monument of the Ten Commandments at the Alabama Judicial Building in Montgomery.
    Liberals in the Democratic Party argue that Biblical support for discrimination against gays or for the teaching of a creationist version of human origins should be irrelevant to government policy.
    These competing views of religion and government lead to diametrically opposed reactions to the provision in the Affordable Care Act which compels employers to offer coverage for contraceptives in their health insurance. Republican politicians complain that the government is enforcing a law which compels some Christian institutions to violate their religious beliefs, but they wish to preserve the right of those institutions to enforce their religious beliefs on their employees.
    Catholics in America do not believe that contraception is wrong. This is a religious dogma pronounced by a foreign religious hierarchy in Rome. In May, a Gallup poll found that 82% of US Catholics say birth control is morally acceptable. In February, the Public Religion Research Institute found that 58% of Catholics say contraception and birth control should be a required, no-cost benefit under their employer’s healthcare plan.
    The argument between Democrats and Republicans, between supporters and opponents of making all institutions offer full health benefits to everyone, demonstrates how conflicting ideas about religion and government fit into struggles about private versus public powers. Conservatives argue that government should not make laws for anyone which contradict the religious beliefs of some. Private entities, like hospitals and companies and schools, should be allowed to enforce the institution’s religious beliefs on everyone connected with it. Liberals have argued, at least since the 1960s, that government’s responsibility to take care of all citizens can override religious beliefs.
    It is ironic that the same people who argue that government health insurance policy, supposed to cover everybody, should make exceptions to accommodate a religious belief, also argue that the government should enforce a health policy, prohibiting abortion, because of their religious beliefs.

Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 28, 2012

Thursday, August 23, 2012

Election Primer 2012: 5. Local Government

    Local government issues may not appear to be on the Presidential ballot this November. But the national elections, for President and Congress, will affect our local governments and our daily lives for years afterward.
    Like all governments, local administrations are funded by tax revenues. A small number of municipalities and counties across the US have their own income taxes, usually under 1%, but sometimes higher. Every county in Indiana, Kentucky and Maryland, 560 cities and villages in Ohio, and big cities like Philadelphia, Baltimore, New York, Birmingham, and St. Louis receive funds from local income taxes. Most municipal and county governments, however, rely on property and sales taxes.
    But a sizable chunk of local government spending comes from federal and state tax revenues that are then given to local governments as grants. Decisions about the federal budget thus have a major direct impact on our home towns.
    Local governments across the country are already starved for funds because of the great recession. Dollars paid to local businesses, such as builders and service providers, have fallen. Since 2008, local government investments in equipment and buildings have dropped every year. That means that snow plows, police cars, fire engines, and especially school buildings are getting older and shabbier. Already in 2010, over one-fifth of cites had reduced spending on public safety. By 2011, over half of US cities had cut spending on construction projects and raised fees for city services.
    The money spent by local governments is mostly for compensation of employees. Cutting spending means cutting jobs. In the wake of the recession since 2008, the number of state and local government employees has fallen about 6%, which means over 660,000 lost jobs, mostly at the local level, mostly in the past two years. These cuts have kept the unemployment rate above 8%, even though private business has added jobs in the past few years.
    The majority of local spending is on education. Although we tend to believe that our schools are supported by local revenues, more than half of local education funding comes from state governments and the federal government. Since 2008, most states have been cutting back on support to local school districts. In my state, Illinois, per student funding has fallen about 5% since 2008.
    Some school districts in states with the biggest budget problems are taking extraordinary steps to maintain themselves. In California, where it is nearly impossible to raise new funds through taxes, some school districts are mortgaging the future to pay for the present. Several districts in the San Diego area have borrowed hundreds of millions of dollars, but will make no payments for 20 years. Thus they do not have to budget now for paying back these loans. Such loans have much higher interest rates than normal loans. So in 20 years, when interest has piled up to many times the value of the loan, those districts will have enormous payments.
    School districts in my own area of central Illinois are cutting back on programs, firing teachers, and closing schools. Across the country, in red states and blue states, school districts are borrowing and cutting. Most of the government employees who have lost their jobs were working in our local schools.
    In a speech he gave in June, Mitt Romney outlined in just a few words the partisan divide over local government spending. Criticizing an Obama speech, Romney said, “He says we need more firemen, more policemen, more teachers. Did he not get the message of Wisconsin? The American people did. It’s time for us to cut back on government and help the American people.”
    The budget plan passed by House Republicans and authored by Paul Ryan, now Romney’s running mate for Vice President, is named The Path to Prosperity. It envisions balancing the federal budget by making enormous cuts in federal spending, outside of the defense budget and entitlements like Social Security. What is left is called “discretionary non-defense spending”. About one-third of this category of federal spending flows through state governments in the form of funding for education, health care, human services, law enforcement, infrastructure, and other services that states and localities administer.
    These cuts are necessary to allow the Republican budget to cut tax rates for wealthy Americans, increase defense spending, and still balance the budget. When Romney and the Republicans talk about cutting back on government, they mean much larger cuts in local government spending than what has happened so far.
    Democratic budget proposals raise taxes on the wealthy, reduce defense spending, and thus do not have to make such cuts in funding for state and local governments.
    Americans like local government. Polls from the Pew Research Center show falling public faith in the federal government and in state governments, but 61% still view local government favorably. What will happen when more teachers are let go, when educational programs are cut further, when police and fire departments have fewer people and older equipment, when local human services and health care budgets are cut in half, when more libraries and parks are closed?
    Many Americans say they want government “off their backs and out of their pockets”. I wonder if they realize what that really means.

Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 23, 2012

Thursday, August 16, 2012

Election Primer 2012: 4. Political Debate is like High School

    My son Sam was an excellent high school debater. He took whatever issue and whatever side he was assigned and constructed the obvious arguments with clarity and persuasive force. He delivered them in a finely tuned vocabulary backed by verbal passion.
    My daughter Mae was even better. She won the state championship as “Scary Girl” because she added to Sam’s abilities, which she admiringly copied, a steely glare of determination that could unnerve her peers.
    The practice they got in these skills has proven invaluable in their later lives. They, and we, are indebted to the teacher who led the debate team, Joan Macri, because she loved to teach. (That’s how you honor a teacher.)
    I went to some of their debate meets. I enjoyed watching my children perform, but I found the arguments on all sides unsatisfying. I didn’t get educated, because that was not the purpose. My children trained in the creation of an arbitrary argument, without any necessary conviction that it was right. Good training to be a courtroom lawyer, where the job is to take the side of whoever hires you, and use a command of language to construct the most one-sided case possible.
    Great training to be a politician. Every idea that politicians come up with, every policy they advocate, is the greatest ever. Every suggestion of the other party would be a disaster. Until they change their minds, and then whatever they used to believe is now impossibly stupid and obviously dangerous. In sports, trash-talking is an art form, but even boxers are much less personally abusive of their opponents than American politicians. The worst aspects of high school debate characterize much of our national political discourse.
    Our discussion of national health is just one flagrant example. You won’t get an education about the health and health care of America by listening to politicians in or outside of Washington, because both sides are more interested in scoring political points than in helping us understand a complex issue.
    Conservatives at the Heritage Foundation came up with a detailed plan for transforming health insurance. The Republican Governor of Massachusetts, in cooperation with a Democratic legislature, managed to transform that plan into law in 2006. He insisted on a key element: that every person in Massachusetts must sign up for the insurance, in order to keep costs reasonable for everybody. There would be a tax penalty for those who refused.
    But when those same principles were used by Democrats to create the Patient Protection and Affordable Care Act in 2010 at the federal level, that Governor, Mitt Romney, said it was all wrong. He won’t talk about why he made it his greatest achievement 6 years ago. High ranking Republicans have been unanimous that it is not merely bad policy, but unconstitutional and un-American. It must be repealed.
    Democratic debaters about health care tirelessly extol Obamacare’s virtues, which are mostly theoretical, because most of the Act has not yet come into existence. They don’t talk about Massachusetts either. In Massachusetts in 2009, only 1% of taxpayers had not purchased affordable insurance and thus had to pay an income tax penalty of a few hundred dollars. Massachusetts has the highest proportion of the population with health insurance, 98% in 2010, compared to 83% nationwide. Years after it began, the most significant experiment with a state-run health insurance system in our history, in which everyone must be enrolled, is outside the party debates, and we are gasping for some real information about how it might work at the national level.
    The speeches and the ads and the PACs that politicians create seek to win our votes, not to educate us. They want us to listen to them, but they won’t listen to us. Americans are right in the middle on health care: in the latest Pew Research Center poll in June, 43% approved of the Affordable Care Act, and 48% disapproved. Even the Supreme Court, mostly appointed by conservative Presidents, split down the middle in determining Obamacare constitutional.
    Half of Americans are not wrong. It’s the politicians who refuse to treat us as participants in the national debate who are wrong.
    The sorry state of political discourse may be why so many Americans don’t know even the basic facts about the candidates. In a Pew Center poll last month, barely half of registered voters knew which candidate is anti-abortion. One third did not know that Obama would raise taxes on the rich and that Romney opposes gay marriage. Less than half of Americans know that Obama is a Christian. The ignorance is greatest among younger voters and those who never went to college.
    The one-sided debating points of Republicans and Democrats whip up emotions without increasing our knowledge. Each side seeks to mangle the other side’s message. In the middle sits the American voter, wishing for enlightenment.

Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 16, 2012

Tuesday, August 14, 2012

Election Primer 2012: 3. The Politics of Marriage

    Our extended family organized my niece’s wedding last month on a remote lake in northern Wisconsin. Nearly 200 people watched Helen and Carl exchange vows they had written in a clearing in the woods, miles from the nearest gas station, store, or motel. The guests ate homemade granola, muffins and jars of jam, and partied until the wee hours under a giant tent.
    Helen and Carl were delighted to have exchanged rings with each other. They were ecstatic that so many of their friends and relatives had made the long journey to tiny Springbrook (pop. 570). Their obvious happiness made their statements that every loving, committed adult couple should enjoy the right to marry seem perfectly in place.
    Helen and Carl were not giving campaign speeches. They were just expressing joy at the way marriage brings a couple, their families and friends together, celebrating the transformation of love into lifelong commitment. It’s not their fault that marriage is now so publically contentious that politicians try to win votes by explaining who should be able to get married and who shouldn’t.
    Marriage inevitably involves government business. Tax rates, health care, inheritance, veterans’ benefits, Social Security survivor payments, and decisions about raising children all depend on the legal relationships of family members.
    The Defense of Marriage Act of 1996 is currently the focus of political attention. It defines marriage as the legal union of one man and one woman, and gives the states the unusual right to ignore other states’ laws, if those states allow a gay couple to marry. President Obama's 2008 political platform endorsed its repeal, while Republicans defend it.
    But there is more to the issue of marriage than whether gay Americans can marry. Americans have changed our minds about marriage. What was wrong to even consider, what was disgraceful to do, and who could be one’s partner are no longer certainties.
    In postwar America, heterosexual marriage was regarded as the norm for everyone. Over 80% of adults 25 to 34 years old were married. Divorce was a sign of failure or moral inadequacy, especially for a woman. Cheating was a sure sign of a gross character flaw. Except that important men could have mistresses, which nearly everyone winked at, but kept quiet about. Polygamy was bad, but inter-racial marriage was also a dangerous social and legal offense that might be met with violence.
    These ideas of proper marriage were founded on unquestioned inequalities, regarded as natural laws – men should rule over women, whites should rule over blacks, homosexuals were sick and dangerous. That cultural understanding of marriage has been buried under the onslaught of cultural change. Polygamy has gone from an underground religious phenomenon to a piece of popular culture portrayed in a Broadway musical comedy (Book of Mormon), a reality show (Sister Wives), and a cable drama (Big Love). The proportion of adults 25 - 34 who are married has dropped to under 50%. More Americans support gay marriage than oppose it.
    Despite this considerable shift, the new still struggles against the old. While it has become easy to vocally defend the previously indefensible, it is still hard to personify it. Megan Rapinoe, age 27, who scored three goals on the US women’s soccer team’s way to a gold medal, only last month announced that she has been dating an Australian female soccer star for 3 years. Newt Gingrich can present himself as the political and moral leader of conservative Americans after his two divorces and public infidelities, but it is hard to imagine a woman with that history as a viable candidate for national office. At least Newt keeps tying the legal knot. What if a person were unmarried, but in a committed relationship and cohabiting, like over 7.5 million other American couples – could they run for office?
    The real issues are not our laws, but our ideas. Traditional beliefs about marriage were not based mainly on law; our laws reflected our beliefs. For example, identifying and preventing husbands’ physical abuse of their wives appeared to be an unwarranted intervention of government into private life until the women’s liberation movement of the 1970s brought wife-battering into the public eye. After another decade, the Family Violence Prevention Services Act of 1984 first gave federal help to victims of domestic violence and their children.
    Some Orthodox Jewish families celebrate the marriage of a child to a non-Jew by holding a funeral service to mourn their familial death. These Jews break no American law, and so are free to continue, modify or abandon this behavior. The rest of us are free to disdain it. But we will continue to legislate against certain forms of marriage, even if their proponents cite Scripture in their defense, such as Warren Jeffs, the former president of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, whose version of polygamy included arranging marriages for underage girls and forcing his father’s many widows to marry him.
    Our marriage debates show that electoral politics is not the only politics, that it reflects the broader and deeper, and much more interesting, politics of the whole American people. Think about your marriage politics when you vote in November.

Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 14, 2012

Thursday, August 9, 2012

Election Primer 2012: 2. Basic Facts about Taxes

    Taxes are perhaps the most significant issue in this campaign. Politicians have talked non-stop about taxes for years. Much of the voting public is so riled up about taxes that they can’t see straight.
    Taxes are too big an issue to deal with in one short essay. Here I want to begin a discussion of taxes in the US by laying out a few facts, some of which appear to be ignored in our public discussions. Before we can evaluate what each party says about taxes and the tax policies they favor, we need to know some basics.
    Basic fact number one is that federal taxes have been falling for decades. From the end of World War II until 1964, the top tax rate was more than 80%; from 1950 through 1963, it was 91% - 92%, on all income over $400,000. This top rate was lowered to 77% in 1964, then again to 70% from 1971 to 1981, but was applied to all income over $200,000. A striking change was made in the 1980s, first lowering the top rate to 50% in 1982, then to 28% in 1988.
    The top rate was raised again in 1991 to 31%, then in 1993 to 39.6%. In 2003, that rate was again lowered to 35% on income above $300,000 to $400,000, depending on the year.
    Rates for the lowest tax bracket have followed a somewhat different path: around 20% until 1964, then 14% until 1982, then 11% until 1988. At that point, as the top tax rate was lowered to 28%, the lowest bracket’s rate was raised to 15%, where it stayed until 2002, when it dropped again to 10%.
    What do all these fluctuations mean? One obvious conclusion is that high, even very high tax rates on the wealthiest taxpayers do not impede economic growth. The US economy, measured by the Gross Domestic Product, grew faster from 1950 to 1970, when the top tax rate was 77% or higher, than since 1970, when it fell to half that level.
    A second conclusion is that lowering tax rates for high earners does not bring a stronger economy. In international comparison, Americans are not over-taxed. Economies which are doing as well or better than ours, like Germany, have higher tax rates: all incomes over $150,000 (married couples) are taxed at 42% or more. Tax rates are just one of many forces affecting the health of the national economy.
    Another basic fact is that 46% of American households paid no federal taxes in 2011. Fact spinners often misstate this by saying that 46% paid no taxes at all, which is untrue. About half of those 46% paid Social Security and Medicare taxes on their income. Many also paid state taxes on income which was not federally taxed. On federal tax returns this year, I and all other married couples could deduct $19,000 from our income without paying any tax. In Illinois, this deduction is only $4000. A full-time worker making the federal minimum wage would pay no federal taxes, but would be taxed on most of their income in Illinois. Of course, everyone pays sales tax. So virtually all Americans are paying taxes.
    If one is committed to lowering our federal tax burden, one obvious place to look is the defense budget. That label is actually a misnomer, since the Defense Department has waged offensive war in Iraq and Afghanistan for a decade. In any case, military appropriations (2012 budget: $683 billion) take about 20% of the total federal budget, about 9 times the budget appropriation for education, 13 times that of housing and urban development, 16 times that of energy, 25 times that for agriculture or transportation. Another useful comparison is that our military spending is greater than the combined defense budgets of the next 17 largest spenders.
    The deficit projected for the 2012 federal budget is about $1 trillion. Eliminating all  federal agencies and cabinet departments, except Defense, would not even come close to eliminating that deficit. Eliminating Medicare and Medicaid completely would come close to balancing the budget.
    Those are not serious ideas. But some people have suggested getting rid of individual cabinet departments, such as the Dept. of Energy. Proposals like that may sound good to some voters, but they mean little. All of our nuclear weapons and the nuclear reactors which power our Navy are controlled by the DOE. As in this case, every agency and department carries out indispensable functions. Eliminating a department might just mean putting its sub-agencies into other departments, with little savings.
    Lowering taxes means reducing spending. Many states, such as Illinois, have even more significant deficit problems than the federal government. If federal spending is reduced, state budgets might go even further into the red.
    Here is the most basic fact about taxes: at this moment, our tax system is not supporting our spending, at the state or federal level. Whatever proposals politicians make about taxes should be clear and detailed about how they will relate to spending. That’s probably too much to hope for.

Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 9, 2012

Tuesday, August 7, 2012

Election Primer 2012: 1. Federal Regulation of Banks

There are 13 weeks until Election Day. Many people say this is one of the most important elections in recent history. The talking heads on television focus on the horse race between the candidates, and tell us little about what they would do if elected. Campaign ads are nasty and misleading. Because voters need clear and objective information to make good decisions, the Journal-Courier has agreed to publish “Election Primer 2012", twice weekly factual articles, in which I lay out some of the issues at stake in these elections.

1. Federal Regulation of Banks

    I got an official notice from my bank the other day, concerning government regulation of banks, a major issue in the November elections. “Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information.”
    “Personal information” includes my Social Security number and credit history, information about my account balances, about payments I make, even about my income. Big US banks can find out what and where we buy, how much we spend every month and how we pay our balances.
    Farmers State Bank and Trust, my local bank with local owners for 100 years, chooses not to share any of this financial information with anyone, except where it is necessary to do my business and serve my banking needs. What I do with my bank stays with my bank.
    CitiBank, the giant bank which handles my credit card and millions of others, sent me the same notice, but with a different message. CitiBank spreads my personal information all around. They use it to market their own products to me. They also give it out to other financial companies and to their “affiliates”. I can’t stop CitiBank from doing that; it is their legal right by law.
    CitiBank also discloses my transactions and account information and credit scores to all kinds of other companies, affiliates and non-affiliates. By law I could limit that sharing, but I have to make a special request.
    As the statement from Farmers Bank says, all of those provisions about my financial privacy come from federal laws about banks, a political issue that clearly divides the two parties.
    When I visited my bank this week, I noticed a sign about another major element of federal regulation of banks: the Federal Deposit Insurance Corporation guarantees my deposits up to $100,000. In the midst of the last great depression, Congress passed and Franklin Roosevelt signed the Glass-Steagall Act of 1933, the first major federal regulation of banks. That law created the FDIC so that customers at banks which went bankrupt would not lose their savings. Millions of Americans have been rescued from financial disaster by the FDIC.
    Glass-Steagall also prohibited commercial banks from simultaneously being investment banks or insurance companies. The Republican Congress in 1999 passed the Gramm–Leach–Bliley Act, which repealed that wall of separation. Most Democrats voted for it, some opposed it, and President Clinton signed it. A special provision that Democrats insisted upon was the basis for the notifications these banks sent me, and thus for my ability to opt out of some sharing, but not all.
    Republicans and Democrats are now arguing about more recent federal legislation, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank provided the first federal regulation of hedge funds, limits risky investments by banks, and requires public corporations to allow shareholders to vote on executive compensation every 3 years, among many other complex provisions.
    Dodd-Frank also created the Consumer Financial Protection Bureau. Since Republicans took over the House later in 2010, they have tried to prevent the CFPB from coming into existence. The NY Times wrote, “In May 2011, 44 Republican senators signed a letter saying they would refuse to vote on any nominee to lead the bureau. They argued that the agency had too much power.”
    During a Congressional recess, President Obama used his executive authority to appoint Richard Cordray as director, so the CFPB could begin work.
    Last month the young agency demonstrated what these federal regulations mean for consumers and voters. In the first enforcement action by the CFPB, Capital One Bank, which has clever commercials (“What’s in your wallet?”), but misleading marketing, will have to refund $210 million to its credit-card holders, because it tricked them into buying costly add-on services. According to USA Today, “The bank’s phone-sales operators told customers that services like payment protection and credit monitoring were free or mandatory or offered more benefits than they did.”
    At the same time, the CFPB began to investigate the home mortgage process, hoping to make it easier for borrowers to understand the kind of loan they are getting and its cost.
    Dodd-Frank was passed by Democrats when they controlled Congress. Nearly every Democrat voted for Dodd-Frank, and nearly every Republican voted against it. In August 2011, Mitt Romney said, “I’d like to repeal Dodd Frank.” In January, he said, “Now, the banks aren’t bad people, they’re just overwhelmed right now.” He called the CFPB the “most powerful and unaccountable bureaucracy in the history of our nation”. While he was in London last week, Romney continued his attack on Dodd-Frank, calling it “unnecessary” and “overly burdensome”.
    President Obama and the Democrats defend these laws, and want the CFPB to continue its work.
    Every banking transaction you perform is regulated by federal laws. Democrats and Republicans strongly disagree about how much regulation should restrict banks’ behavior.
    How do you want your personal information treated by banks who participate in your daily lives? How actively should the government investigate banks who cheat their customers? Your vote matters.

Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 7, 2012