Can The Democrats Be As Stubborn As Mitch McConnell?

Mitch McConnell
U.S. Senate Republican Majority Leader Mitch McConnell

By Alec MacGillis, ProPublica

In laying the groundwork recently for President Trump’s first nomination for the Supreme Court, Mitch McConnell, the Senate majority leader, had this to say: “What we hope would be that our Democratic friends will treat President Trump’s nominees in the same way that we treated Clinton and Obama.”

McConnell was referring to his party’s grudging acceptance, without resort to filibusters, of President Obama’s first-term nominees to the court, Sonia Sotomayor and Elena Kagan. What McConnell notably neglected to mention, of course, was the very different approach he himself had taken with the open seat Trump was now on the verge of filling: refusing even to hold a confirmation hearing last year for Obama’s nominee, Merrick B. Garland.

That McConnell could now blithely ask for a routine reception of a Trump nominee for the very seat that he managed to freeze unfilled for nearly a year galls Democrats to no end and demonstrates, more than ever, that it’s impossible to match McConnell for sheer chutzpah. But his comment also underscored the conundrum that the Democrats and their new leader, Chuck Schumer of New York, now confront in the Senate minority.

As McConnell showed in the first six years of President Obama’s tenure, the Senate’s rules and traditions allow a determined minority to block much of a president’s agenda — indeed, the Democrats’ 48 Senate seats are their only real leverage against President Trump. But McConnell’s unprecedented use of the filibuster — which forced Democrats to muster 60 votes to get anything done — and other obstructionist tactics drew loud rebukes from Democrats and traditionalists, who identified his intransigence as eroding longstanding norms and contributing greatly to voters’ anger over a dysfunctional Washington.

Can Democrats, who are more philosophically invested in showing that government can function, really bring themselves to replicate McConnell’s obstructionist methods? Would they really be willing to withhold cooperation even in areas where they and President Trump might find agreement, such as a major infrastructure package?

These questions are especially pressing for Senate Democrats because of the landscape they face next year, when 25 of their seats (including those of the two independents who caucus with them) are up for re-election, as opposed to only eight Republican ones. Those 25 include five states that Trump won handily: West Virginia, Missouri, Indiana, Montana and North Dakota. Doesn’t unified opposition to the president mean risking those seats and further diminishing their minority status?

A closer look at McConnell’s opposition during the Obama years suggests that the choices confronting Schumer and the Democrats may not be as stark as they seem. For one thing, the McConnell approach does not preclude going through the motions of working with the president of the opposite party. Recall that in the summer of 2009 McConnell allowed three Republicans, led by Chuck Grassley of Iowa, to spend months meeting with three Democratic counterparts on health care reform. The negotiations came to naught, allowing McConnell to claim that his party’s eventual monolithic vote against the Affordable Care Act came only after the Democrats’ refusal to move off their “far left” proposal.

The meetings also dragged out debate around the bill, helping sour the public on the legislation. As Robert F. Bennett, then a Utah senator and close McConnell ally, who died last year, told me of McConnell in early 2014: “He said, ‘Our strategy is to delay this sucker as long as we possibly can, and the longer we delay it the worse the president looks: Why can’t he get it done?'” He remembered the party leader’s promise to “delay it, delay it, delay it as long as we can.” The main lesson: “Every time something would come up, he would find a way to delay it.” Another lesson for Schumer and the Democrats might be that they could enter into negotiations over an infrastructure package, but insist on doing it mostly on their terms.

The record of Republican intransigence in the Obama years also suggests that voters pay far less attention to the legislative process than Washington insiders would like to believe. What McConnell recognized was that a president’s party is rewarded in midterm elections if he’s popular and getting things done, and punished if he’s not. Grassley, for instance, might’ve been tempted to help President Obama create a bipartisan health care bill since he hailed from a state, Iowa, that had embraced Obama in 2008. Instead, by withholding support, and even endorsing the “death panel” rhetoric around the bill, Grassley fueled the resistance to the “overreaching” president in 2010 and easily won re-election that year.

Similarly, Senate Democrats’ 2018 prospects in states that Trump won will depend more on whether the president is seen as succeeding — on how energized or demoralized the ends of the polarized electorate are — than on whether a given senator found an issue or two of common ground with him.

All of this still leaves the basic question of whether Democrats really have it in them to slow government to a crawl as much as McConnell did. Their willingness, goaded on by an inflamed Democratic base, to force postponements of committee votes on Trump nominees suggests they just might. The biggest test still awaits: whether, in protest of the treatment of Garland, to filibuster the confirmation of Trump’s Supreme Court nominee, Neil M. Gorsuch, which could lead to Republicans’ eliminating the filibuster for court confirmations once and for all.

The two sides of the debate facing the Democrats have been articulated by a veteran arbiter of Washington mores, Norman Ornstein of the American Enterprise Institute. Shortly after the election, he urged Schumer not to mimic the obstructionist methods of McConnell. He wrote: Democrats “will be tempted to adopt the Republican playbook from 2009, when Democrats controlled Washington: Vote in unison against everything, filibuster everything, even those things you like, to obstruct action and make it look ugly, allow damage to the country in the short term to reap political rewards in the next election.” He thought that would be a mistake, because it would limit the ability of Democrats to do anything positive.

But Ornstein told me that he is changing his thinking on this, after witnessing initial Trump moves such as the ban on travel from seven majority-Muslim countries and witnessing how reluctant Republicans have been to provide a check on him. He now recommends that Democrats stall President Trump’s agenda by repeatedly denying unanimous consent on the Senate floor.

This sounds similar to McConnell’s brand of obstruction, but Ornstein argues it’s not, because the opponent is different. “We don’t have a conventional president,” he said. “We’re seeing behavior that could lead us right down the path to martial law or authoritarian rule. These are dangerous times, and you have to think through your strategy in that context.” For Democrats, using “leverage to pull us back from the brink of something that shatters our fundamental system is now in order.”

Of course, McConnell had framed the context for his own obstructionism in dire terms, too, saying it was necessary to withhold bipartisan cooperation from Obama so that voters would realize just how radical his agenda really was. Now, with Trump in the White House and Republicans in control of Congress, McConnell is calling for a new era of comity. “The first thing we have to do is move beyond this us-and-them mentality that has so often characterized the last eight years,” he said on the Senate floor late last month. “We’re all in this together. We rise and fall as one.”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Drug Distributors Penalized For Turning Blind Eye In Opioid Epidemic

opioid epidemic

By Charles Ornstein, ProPublica

As the toll of the opioid epidemic grows, scores of doctors have lost their licenses and some have gone to prison. Pharmacies are being sued and shuttered. Pharmaceutical manufacturers are under investigation and face new rules from regulators.

But penalties against companies that serve as middlemen between drug companies and pharmacies have been relatively scarce — until recently.

In the past month, two major drug distributors, also known as wholesalers, have formally agreed to pay millions of dollars to settle claims that they failed to report suspicious orders for controlled substances to the Drug Enforcement Administration, as required by law.

McKesson Corp., the largest such company in the U.S., last month agreed to pay a $150 million fine. And in late December, Cardinal Health reached a $44 million settlement with the federal government. That’s on top of another $20 million that Cardinal Health agreed this month to pay the state of West Virginia, which has been among the hardest hit by opioid overdoses. Other distributors have also agreed to pay smaller amounts to West Virginia within the past few months. AmerisourceBergen, for instance, will pay $16 million.

“Have the distributors gotten the message? I would hope so,” said Frank Younker, who worked at the DEA for 30 years and retired as a supervisor in its Cincinnati field office in 2014. “The distributors are important. They’re like the quarterback. They distribute the ball. … There’s plenty of blame to go around.”

The death toll from drug overdoses topped 52,000 in 2015, including 33,000 involving an opioid, according to the Centers for Disease Control and Prevention. Although the epidemic began with prescription pills, it is now being driven largely by heroin and various synthetic opioids.

The fines, some of which had been in the works for years, come as news organizations have raised questions about the significant role distributors have played by failing to stop or report pharmacies that appeared to be dispensing more pills than seemed reasonable.

The Charleston Gazette-Mail reported in December how drug companies shipped nearly 9 million hydrocodone pills over two years to one pharmacy in the town of Kermit, West Virginia, population 392. All told, the newspaper reported, drug wholesalers distributed 780 million pills of oxycodone and hydrocodone in the state over six years. “The unfettered shipments amount to 433 pain pills for every man, woman and child in West Virginia,” the story said.

The Washington Post reported in October how DEA leadership delayed and blocked enforcement actions as the overdose epidemic grew. Civil case filings against distributors, manufacturers, pharmacies and doctors dropped from 131 in fiscal 2011 to 40 in fiscal 2014, the Post reported. Immediate suspension orders (the toughest sanction the DEA has) fell from 65 to 9.

Later, the Post reported why that may have been: The drug industry had hired dozens of officials from the DEA, leading some current and former officials to ask whether the industry sought to hire away those who presented “the biggest headaches for them.”

Reports also have suggested that the DEA’s ability to go after problem distributors has been hobbled by watered down enforcement powers. The Los Angeles Times reported in July how Congress passed a bill supported by industry that allows companies accused of failing to report suspicious orders to delay enforcement proceedings against them if they submit a “corrective action plan.” It also made it harder for the agency to immediately suspend the licenses of those it oversees. President Barack Obama signed it into law in April 2016. Critics say it removed key tools at the DEA’s disposal.

In response to written questions for this story, the DEA said it has always held distributors “accountable for preventing the diversion of controlled and abused prescription drugs, including the opioid painkillers.”

Asked if its recent fines were too little, too late, the agency replied, “We don’t think so. We hope large fines such as this one [against McKesson] will get the attention of the companies’ leaders and stockholders and prompt them to be responsible corporate citizens, because people are dying as a result of the diversion of the opioid drugs they sell, and that can’t continue.”

In statements released when the distributors finalized their settlements, the companies said they have improved their performance in recent years. McKesson noted that the settlement covers reporting practices dating back to 2009. “Since 2013, McKesson has implemented significant changes to its monitoring and reporting processes,” the company said in a statement.

As part of the settlement, the DEA will suspend the registrations of four of McKesson’s distribution centers, on a staggered basis, blunting the effect of the punishment.

“Pharmaceutical distributors play an important role in identifying and combating prescription drug diversion and abuse,” John H. Hammergren, chairman and chief executive officer, said in the statement. “McKesson, as one of the nation’s largest distributors, takes our role seriously.”

The DEA had previously taken action against McKesson in 2008 for failing to report suspicious orders, a factor cited in the latest fine.

Cardinal Health’s fine was the last aspect of a 2012 settlement with the DEA, which included a two-year suspension of its Lakeland, Florida, distribution center. “These agreements allow us to move forward and continue to focus on working with all participants in addressing the epidemic of prescription drug abuse,” Craig Morford, its chief legal and compliance officer, said in a statement last month.

Federal prosecutors who worked on the McKesson case said that distributors play an important role in the overall system in which controlled substances get distributed. “What Congress envisioned is that there would be gatekeepers along the way in this closed system,” said Kurt Didier, an assistant U.S. attorney in Sacramento, in an interview. “It starts with the physician writing the prescription and the pharmacist filling the prescription. In between, you have entities like the distributors.

“In this overall scheme, a distributor is obligated to report to DEA prescriptions or orders that it views are suspicious,” Didier said.

The agencies regulating the industry have had their own problems. The Gazette-Mail reported that the West Virginia pharmacy board didn’t pay much attention to its own rules requiring that wholesalers report such orders. The board also had not examined reports from distributors regarding suspicious orders by pharmacies, nor had it shared those with law enforcement.

For its part, the DEA also has been faulted several times by the Government Accountability Office for, among other things, how it sets annual quotas for the amount of controlled substances that can be produced, the information and guidance it provides to the entities it regulates, and how it uses confidential informants.

The Healthcare Distribution Management Association, the trade group that represents the distributors, asked the DEA in 2010, 2011 and 2013 to clarify the companies’ roles and responsibilities, but it received no response.

Younker said he’s worried that the law Congress passed last year, allowing distributors to sign corrective action plans instead of being sanctioned, could hamstring the DEA. “That’s a very big blow. … Will you again see these large-scale fines? I personally doubt it.”

In its responses to ProPublica, the DEA said that it worked extensively with Sens. Orrin Hatch, R-Utah, and Sheldon Whitehouse, D-R.I., to develop the new law. “That law doesn’t change our role as regulators but it does impact the tools that we have to take action against distributors who aren’t meeting their responsibilities to prevent diversion.”

Chuck Rosenberg, the DEA’s acting administrator, told a Senate panel last year that his agency was working to improve itself and its interactions with those it regulates. “In many ways, I think we’re broken…,” he said. “I think we’ve been slow. I think we’ve been opaque. I think we haven’t responded to them.”

Jim Geldhof, who retired in January 2016 after more than 40 years with the DEA, most recently as a manager in the Detroit field office, said the recent fines are important, but he wonders if they will make any difference. “It’s going to be pretty hard to undo the damage that’s been done,” said Geldhof. “Do they get it? I don’t know. I don’t have a real lot of faith in industry frankly.”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Teens Report Onslaught of Bullying During Divisive Election

A rainbow flag, the gay pride symbol, flapping in the wind. (Photo by Ludovic Bertron)


By A.C. Thompson, ProPublica

A new national survey of more than 50,000 teens charts a surge in abusive and hateful behavior among young people since the beginning of the presidential election campaign.

“Our biggest takeaway was that 70 percent of all respondents had witnessed bullying, hate speech or harassment since the 2016 election,” said Allison Turner, assistant press secretary for the Human Rights Campaign, a prominent LGBT advocacy group that conducted the survey. HRC polled a large, though not demographically representative, sample of the nation’s youth.

Race, sexual orientation, and immigration status were the factors most often linked to bullying and social marginalization, according to the survey, which documented the experiences of adolescents between the ages of 13 and 18, many of them gay, lesbian, or transgender; some 45 percent of the teens who participated identified as heterosexual.

Most of the teens surveyed said hateful incidents have been on the increase since the start of the highly contentious presidential campaign, which culminated with the inauguration of Donald Trump on Jan. 20.

In recent months, phone calls, texts and instant messages have been pouring into the Trevor Project, a crisis center for LGBT young people, said social worker David W. Bond, a vice president with organization. The day after the election, Bond and his colleagues were deluged with young people seeking help.

“The volume has continued to be higher than typical levels for November and December. This is very indicative of a higher level of emotional distress” for LGBT youth throughout the country, he said. “They’re clearly more distressed, so much that they feel the need to reach out for help.”

In the survey, high school students described bus rides bristling with homophobic and racist epithets and attacks on student groups like the Gay-Straight Alliance.

“The election results and the rhetoric going on in the media are enabling what would otherwise have been latent discrimination,” Bond said. His organization, he said, is now counseling youth confronted by a wave of more “obvious and observable discrimination that is seemingly more welcome in the public eye, unfortunately.”

After more than 18 months of political invective aimed at Mexico and Mexican immigrants, Latino young people are, unsurprisingly, rattled. The survey found Latinos were “20 percent more likely than other youth to have been personally bullied.”

An 18-year-old Californian reported a fear of speaking Spanish in public, while a young person in Illinois wrote, “My family and I go shopping and wash clothes at 2 am to avoid seeing and hearing people’s comments.”

To conduct the survey, HRC and allied organizations used social-media platforms, including Facebook, Snapchat, Twitter, and Instagram to engage young people during December and January. The technique, called “convenience sampling” by researchers, in this case was likely to draw in participants who have experienced abuse, or are supportive of LGBT equality.

Michael S. Pollard, a sociologist with the RAND Corporation who evaluated the survey and its methodology for ProPublica, said the study “was not designed to be representative of all US teens,” but its findings should be considered seriously because of the “very large group of adolescents” who took part.

The surveyors acknowledged the limitations of the data, writing that “although the sample’s demographics do not reflect the full racial and ethnic diversity of the nation’s youth, the large number of participants allows us to nonetheless learn first-hand about the experiences” of young people across the nation, particularly those who may feel targeted.

“We saw a lot of hateful speech during the election season,” said Turner of HRC. “We can see through our findings that this is affecting young people in a profound way.”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

For Trump’s Rich Appointees, Death May Be Certain But Taxes Aren’t


By Allan Sloan and Cezary Podkul, ProPublica

There are times when two seemingly unrelated tax policies intersect to create windfalls for fortunate people who are in the right place at the right time.

That is likely to be the case when it comes to calculating the tax benefits that will go to the billionaires and other very rich people joining the Trump administration. Among those who stand to benefit but haven’t been identified until now is Donald Trump’s son-in-law, Jared Kushner, even though he’s not taking a formal government job.

No, this isn’t going to be another screed on the tax code provision that provides a temporary tax break to high-net-worth people who take government positions and have to dispose of some of their holdings to avoid conflicts.

Rather, we want to show you how combining this tax break with repeal of the estate tax — a cherished Republican goal that could be achieved this year – can turn a temporary tax benefit into permanent tax avoidance, enriching the appointees and their heirs.

We’re dealing with substantial money here: at a minimum, tens of millions of deferred capital gains taxes; at a maximum, hundreds of millions. We can’t tell until we analyze filings that appointees haven’t yet made with the Office of Government Ethics. One wild card is their holdings outside of the publicly traded companies with which some of them are associated, because we don’t know what they would have to sell, how much of a gain they would have and how much in capital gains taxes they could defer. Rex Tillerson, for example, owns $28 million to $100 million in land and securities other than ExxonMobil, according to a Dec. 31 report he filed with the ethics office that listed more than 400 holdings.

Other very-well-off Trump appointees whose pending jobs will almost surely make them tax deferral candidates include Wilbur Ross, who made vast sums restructuring bankrupt steel companies; Gary Cohn, former No. 2 executive at Goldman Sachs; Steven Mnuchin, who made a huge profit buying a dead savings institution from the FDIC, reviving it and selling it to CIT, and also has extensive private holdings; Andy Puzder, chief executive of privately held CKE, a big restaurant chain; Linda McMahon, former chief executive of World Wrestling Entertainment; and Betsy DeVos, a scion of a rich family who married into the family of the co-founder of the Amway multilevel marketing firm, now known as Quixtar.

Kushner, who succeeded his father as head of the Kushner Companies, a former New Jersey real estate empire that’s now based in Manhattan, has said he’ll sell assets that pose a conflict with his new role as senior adviser to the president. So we asked his attorney, Jamie Gorelick of WilmerHale, whether Kushner would seek a “certificate of divestiture” from the government to allow him to defer taxes on gains generated by his sales. Her emailed answer: “Mr. Kushner will need a certificate of divestiture for certain divestitures that are required for his compliance with the ethics rules.”

Okay. Now, let’s back up a bit, and get into some of the details.

Under Section 1043 of the tax code, which was enacted in 1989, eligible federal appointees can defer capital gains taxes on securities and other assets that they’re required to sell to meet conflict-of-interest guidelines.

The idea was to avoid imposing large tax costs on people who want to join the government, usually for a lot less money than they’re used to making. As long as the appointees reinvest the sale proceeds in securities approved by the Office of Government Ethics, there’s no tax due on the gains until the replacement securities are sold.

If that happens, the appointees have to pay capital gains tax on the difference between the sale proceeds and the “cost basis”- the cost for tax purposes – of the assets they sold to avoid conflicts. If the replacement securities aren’t sold, the gains tax never comes due.

Now, watch. Under current estate tax law, the cost basis of assets owned by someone who dies is “stepped up” to the assets’ value the day of the person’s death, with no tax due on the gain.

However, people who have gotten substantial Section 1043 tax deferrals are likely to have estates that exceed the current estate tax threshold of about $5.5 million for an individual and $11 million for a married couple. So even if the appointee holds the replacement assets until he or she dies and avoids having to pay capital gains tax, under current rules those assets will be part of the appointee’s estate. The estate will pay up to a 40 percent tax on the assets, leaving less for inheritors.

“Our estate tax is a backstop to our income tax,” says Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center. “It imposes taxes at death on income from property that previously escaped taxation, like capital gains that have never been realized.”

Repeal of the estate tax — which proponents routinely denigrate as a “death tax” even though only about one estate in 500 is big enough to be taxable — is an integral part of House Republicans’ proposed tax reform package.

Signs are that they intend to push hard to get the tax repealed quickly. “Our pro-growth tax reform blueprint includes fully repealing the death tax in order to protect family-owned businesses,” a spokeswoman for the Republican majority on the tax-writing House Ways and Means Committee emailed us.

Its committee chairman, Texas Republican Kevin Brady, also weighed in.

“I look forward to working with President-elect Trump on tax reform that permanently buries the death tax once and for all,” Brady said. “For too long, this double and triple taxation has threatened family-owned businesses — including women- and minority-owned businesses – from being passed down to their children and grandchildren.”

Rep. Richard E. Neal (Mass.) the top Democrat on Ways and Means, emailed us that “the estate tax is important not only because of the revenue it raises, but also for its role in making the tax code more fair. Dynastic wealth transfer and a landed aristocracy were not what our forefathers envisioned as pillars of our society.”

But Republicans are in power today, and the Democrats aren’t.

The last time a Republican Congress and a Republican president united in a repeal effort – in 2001, under George W. Bush – the estate tax was killed. Sort of. Rather than wiping out the tax all at once, for arcane budget reasons the Republicans merely raised the threshold and lowered the tax rate through 2009. The tax disappeared entirely in 2010, for that year only. It was scheduled to spring back to its 2001 form in 2011, which the 2001 Republicans had thought would never be allowed to happen.

But by then, Barack Obama had become president, the political dynamic had changed and the estate tax was resurrected in a compromise of sorts. It had a much higher threshold and a much lower rate than it did in 2001. It’s projected to bring in about $24 billion this fiscal year, according to Congress’ Joint Committee on Taxation.

It’s not clear exactly how estate tax repeal would work now. The Ways and Means Republican spokeswoman said repeal specifics are not available. “As we transform the blueprint into legislation, we are continuing to hear from the incoming administration about their ideas,” she said.

We contacted Democratic and Republican leaders in the House and Senate to see what they think of this, but could not get a response ahead of today’s inauguration. Trump’s spokespeople also did not respond.

Trump campaigned on a vague promise to tax unrealized gains above $10 million as part of estate tax repeal. That would have had the effect of substituting capital gains taxes for estate taxes on a handful of very large estates. But it’s uncertain how Trump’s proposal would work, or whether he will push legislative provisions that could cost his family and appointees serious money.

Hence our conclusion that a combination of Section 1043 and estate tax repeal would shower huge benefits on Trump appointees, including Kushner and his wife, Trump’s daughter Ivanka.

Under current law, the tax basis of assets is marked up, tax-free, to their value on the day the person who bequeathed the assets died. The 2010 estate tax repeal largely eliminated this provision, which meant higher capital gains taxes if heirs sold the assets.

However, even if the tax-free step-up in basis disappears as part of estate tax repeal, there are numerous ways that inheritors would be able to reap the benefits of the 1043 deferral for years or decades.

“A tax deferred is a tax saved,” tax expert Robert Willens says. And that’s the bottom line.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Rick Perry’s Texas Giveaways

Rick Perry
Rick Perry

By Alec MacGillis, ProPublica

Donald Trump’s selection of Rick Perry to lead the Department of Energy has prompted many Democrats to question Perry’s qualifications for the position. While he governed a state rich in fossil fuels and wind energy, Perry has far less experience than President Obama’s two energy secretaries, both physicists, in the department’s primary work, such as tending the nuclear-weapons stockpile, handling nuclear waste and carrying out advanced scientific research. That’s not to mention, of course, that Perry four years ago called for doing away with the entire department.

However, there’s one realm in which Perry will have plenty of preparation: doling out taxpayer money in the form of government grants to the energy industry.

What often gets lost in all the talk of the Texas job boom under Perry is how much economic development strategy was driven by direct subsidies to employers who promised to relocate to the state or create jobs there. Of course, many states have for years engaged in the game of luring companies with tax incentives. But by the count of a 2012 New York Times investigation, Texas under Perry vaulted to the top, giving out $19 billion in incentives per year, more than any other state.

Perry’s economic development largesse came in many forms, but among the most high-profile were two big pots of money that he created while in office. In 2003, he founded the Texas Enterprise Fund, which he pitched as a way to help him close the deal in bidding wars for large employers thinking of moving to the state. Over the course of Perry’s tenure, which ended in early 2015, the fund gave out more than $500 million. In 2005, Perry created the Emerging Technology Fund, which was intended for start-ups. It gave out $400 million before being shuttered last year by his Republican successor, Greg Abbott.

Disbursements from both funds were controlled by Perry, the lieutenant governor and the speaker of the House. The technology fund had a 17-member advisory board, all appointed by Perry. With such scant oversight, it did not take long for political favoritism and cronyism to creep into the programs. In 2010, the Texas Observer reported that 20 of the 55 Enterprise Fund grant recipients up to that point had contributed directly to Perry’s campaign or the Republican Governor’s Association, of which he became chairman in 2010. Also in 2010, the The Dallas Morning News reported that some $16 million from the Emerging Technology Fund had gone to firms backed by major donors to Perry. For instance, after Joe Sanderson received a $500,000 Enterprise Fund grant to build a poultry plant in Waco in 2006, he gave Perry $25,000. And the Emerging Technology Fund gave $4.75 million to two firms backed by James Leininger, a hospital-bed manufacturer and school-voucher proponent who had helped arrange a last-minute $1.1 million loan to Perry in his successful 1998 run for lieutenant governor and contributed $239,000 to his campaigns over the ensuing decade.

In theory, companies receiving Enterprise Fund grants were accountable for their job-creation pledges and had to make refunds when they fell short. In practice, the numbers proved hard to quantify and few companies had to make refunds. The watchdog group Texans for Public Justice determined that by the end of 2010, companies had created barely more than a third of the jobs promised, even with Perry’s administration having lowered the standard for counting jobs. And in 2014, the state auditor found that $222 million had been given out to companies that hadn’t even formally applied for funds or made concrete promises for job creation. “The final word on the funds is that they were first and foremost political, to allow [Perry] to stand in front of a podium and say that he was bringing jobs back to Texas,” said Craig McDonald, the director of Texans for Public Justice. “From the very start those funds lacked transparency and accountability.”

This being Texas, it was not surprising that many of the leading beneficiaries of the taxpayer funds were in the energy industry. Citgo got $5 million from the Enterprise Fund when it moved to the state from Tulsa in 2004, even though it made clear that it had strategic reasons to move there regardless of the incentive. Chevron got $12 million in 2013 after agreeing to build a 50-story office tower in downtown Houston — a building that three years later remained unbuilt.

Most revealing of the problems associated with the Perry model of taxpayer-funded economic development, though, may have been a $30 million grant in 2004 to a lesser-known outfit called the Texas Energy Center. The center was created in 2003 to be a public-private consortium for research and innovation in so-called clean-coal technology, deep-sea drilling, and other areas. Not coincidentally, it was located in the suburban Houston district of Rep. Tom DeLay, the powerful House Republican, who, it was envisioned, would steer billions in federal funding to the center, with the help of Washington lobbyists hired by the Perry administration, including DeLay’s former chief of staff, Drew Maloney.

But the federal windfall didn’t come through, and the Enterprise Fund grant was cut to $3.6 million, which was to be used as incentives for energy firms in the area. Perry made the award official with a 2004 visit to the Sugar Land office of the Greater Fort Bend Economic Development Council, one of the consortium’s members, housed inside the glass tower of the Fluor Corporation. In 2013, when I visited Sugar Land for an article on Perry’s economic development approach, his administration still listed the Texas Energy Center as a going concern that had nearly reached its target of 1,500 jobs and resulted in $20 million in capital investment.

There was just one problem: There was no Texas Energy Center to be found. Here, from the 2013 article in The New Republic, is what I discovered:

The address listed on its tax forms is the address of the Fort Bend Economic Development Council, inside the Fluor tower. I arrived there late one Friday morning and asked for the Texas Energy Center. The secretary said: “Oh, it’s not here. It’s across the street. But there’s nothing there now. Jeff handles it here.” Jeff Wiley, the council’s president, would be out playing golf the rest of the day, she said. I went to the building across the street and asked for directions from an aide in the office of DeLay’s successor, which happened to be in the same building. She had not heard of the Texas Energy Center. But then I found its former haunt, a small vacant office space upstairs with a sign on an interior wall — the only mark of the center’s brief existence.Later, I got Wiley on the phone. There has never been any $20 million investment, he said. The center survives only on paper, sustained by Wiley, who, for a cut of the $3.6 million, has filed the center’s tax forms and kept a tally of the jobs that have been “created” by the state’s money at local energy companies. I asked him how this worked — how, for instance, was the Texas Energy Center responsible for the 600 jobs attributed to EMS Pipeline Services, a company spun off from the rubble of Enron? Wiley said he would have to check the paperwork to see what had been reported to the state. He called back and said that the man who helped launch EMS had been one of the few people originally on staff at the Texas Energy Center, which Wiley said justified claiming the 600 jobs for the barely existing center.In at least one instance, this charade went too far: In 2006, a Sugar Land city official protested to Wiley that, while it was one thing to quietly claim the job totals from a Bechtel venture in town, it was not “appropriate or honest” to assert in a press release that the Texas Energy Center had played a role. “There is a clear difference between qualifying jobs to meet the [Energy Center’s] contractual requirement with the state and actively seeking to create a perception of [it] as an active, successful, going concern,” wrote the official, according to Fort Bend Now, a local news website. In this case, reality prevailed, and Wiley declined to count the Bechtel jobs.

Today, the $20 million in capital investment from the Texas Energy Center has vanished from the state’s official accounting of Enterprise Fund impact, but the 1,500 jobs remain, part of the nearly 70,000 jobs that the state claims the fund has generated.

Drew Maloney, the former DeLay chief of staff who lobbied for federal funds for the Texas Energy Center, is now the vice president of government and external affairs at the energy giant Hess Corporation.

And Perry is on the verge of being put in charge of vastly larger sums of taxpayer dollars to disburse across the energy industry. (Requests for comment from the Trump transition team went unanswered, as did a request to Jeff Miller, an unofficial Perry spokesman who now works for Ryan, a Dallas-based tax consultancy that helps clients, including ExxonMobil, get tax incentives from Texas and other states.) The Department of Energy has a budget of around $30 billion, oversees a $4.5 billion loan guarantee program for energy companies, and distributes more than $5 billion in discretionary funds for clean-energy research and development. (The loan guarantee program was the source of the $535 million loan that solar-panel maker Solyndra defaulted on in 2011, but it has had plenty of successes as well.) Many of the department’s programs have well-established standards for disbursement, but as secretary, Perry would have a say over at least some of the flow of dollars.

Trump himself, in announcing his nomination of Perry, said he hoped Perry would bring his Texas strategies on energy and economic development to Washington. “As the Governor of Texas, Rick Perry created a business climate that produced millions of new jobs and lower energy prices in his state,” Trump said, “and he will bring that same approach to our entire country as secretary of energy.”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Endangered Species Under GOP? Climate Change Information on the Web


By Andrew Revkin, ProPublica

James Rowen, a longtime Wisconsin journalist and environmental blogger, recently discovered a stark remaking of a state Department of Natural Resources web page on climate change and the Great Lakes.

Until December, the page, dating from the Democratic administration of former Gov. James Doyle, had this headline — “Climate Change and Wisconsin’s Great Lakes” — and a clear description of the state of the science, including this line reflecting the latest federal and international research assessments: “Earth’s climate is changing. Human activities that increase heat-trapping (“green house”) gases are the main cause.”

The page described a variety of possible impacts on the lakes and concluded, “The good news is that we can all work to slow climate change and lessen its effects.” Nine hyperlinks led readers to other resources.

While the web address still includes /greatlakes/climatechange, the page, managed under agency appointees of Republican Gov. Scott Walker, now has this headline: “The Great Lakes and a changing world.” It now says this:

As it has done throughout the centuries, the earth is going through a change. The reasons for this change at this particular time in the earth’s long history are being debated and researched by academic entities outside the Wisconsin Department of Natural Resources. The effects of such a change are also being debated but whatever the causes and effects, the DNR’s responsibility is to manage our state’s natural resources through whatever event presents itself.

There are now just two hyperlinks, one of which goes to a University of Wisconsin website about the environment and climate in the Yahara River watershed, which is not even connected to the Great Lakes. The other goes to the main page of the Center for Climatic Research at the University of Wisconsin. One has to poke around a while to get back to the issue at hand — the impact of global warming on the Great Lakes.

James Dick, a spokesman for the Department of Natural Resources, sent a response explaining the changes on the web page, asserting that the page “does not say the cause and effects of the change in climate are debatable.”

“It says they are being debated. There’s a difference,” Dick said. “Many scientists may be in agreement but this topic is still the subject of much debate and discussion among the general public.”

It’s not unusual for elected state or national leaders to filter or shape government sources of information on contentious topics, including climate change, to suit their particular policy goals. Climate scientists decried such efforts through much of the presidency of George W. Bush, particularly when handwritten edits of government climate reports by political appointees were leaked in 2005.

Under President Obama, websites highlight points that supported his carbon-cutting plans, while findings that might point to different policies tended to stay deep in the body of reports.

One example is the treatment of hurricanes in the 2014 National Climate Assessment. The prominent text blurb of the report home page is, “The intensity, frequency, and duration of North Atlantic hurricanes, as well as the frequency of the strongest hurricanes, have all increased since the early 1980s. Hurricane intensity and rainfall are projected to increase as the climate continues to warm.”

Buried in the report, there’s this line, which seems to qualify the actual threats previously highlighted: “[F]ewer storms have been observed to strike land during warmer years even though overall activity is higher than average, which may help to explain the lack of any clear trend in landfall frequency along the U.S. eastern and Gulf coasts.”

And so it’s entirely likely that the recent web revisions in Wisconsin portend what’s to come in Washington, given how Walker’s approach to climate change and industry resonates with that of many people in President-elect Donald Trump’s circle of advisers.

In a phone interview, the Wisconsin blogger Rowen said he certainly suspects that his state’s experience is a troubling template for what could happen now at the federal level. “If you have one-party control over all units of government and that party has a pro-corporate, anti-environment mindset, everything will be coordinated, whether in law, executive action or judicial review,” he said.

Parties on all sides of the climate policy debate are now watching closely to see what happens to a vast array of web pages on climate change created during the Obama administration as Trump’s fossil-fuel friendly Cabinet choices and environmental team get to work.

Early signs, including a 74-question survey sent to Department of Energy employees (which the Trump transition team quickly disavowed as unsanctioned), had environmentalists and scientists deeply worried.

Some scurried to set up independent archives for potentially vulnerable climate data, with a repository established by the Technoscience Research Unit at the University of Toronto.

With Republicans in control in most states, and with the incoming White House and Congress committed to undoing President Obama’s climate policies, the “uncertainty” theme around climate change appears likely to become popular.

To be sure, enduring uncertainty does surround many of the most consequential aspects of global warming, like the speed of sea-level rise and extent of warming in this century. But for decades risk experts and economists with a varied range of political views have agreed that uncertain, but momentous outcomes are the reason to act — not a reason to delay.

And the data continue to accrue, with 2016 now set to be the warmest on Earth since at least 1880, when thorough temperature record keeping began, and a new study finding that, if anything, warming has been underestimated in recent years because of imperfect analysis of ocean data gathered by ships and buoys.

Lately, the wider climate-skeptic chorus has been dominated by Walker-style references to uncertainty or complexity in climate science, crystallized by phrases like “I’m not a scientist” and “the climate has always changed.”

When we wrote to Wisconsin officials seeking an explanation for the changes on the website, Dick, the natural resources department spokesman, sent the following email:

As we do from time to time with other website pages, we updated a web page that had not been updated in several years. The update reflects our position on this topic which we have communicated for years — that our agency regularly must respond to a variety of environmental and human stressors from drought, flooding, and wind events to changing demographics.

Our agency must be ready to respond to each of these challenges using the best science available to us. That is our role in this issue. Adaptation has been our position on this topic for some time. The recent update to one single webpage on our website was intended to reflect this perspective and approach to the topic.

The updated page does not deny climate is changing and it does not challenge the dedicated work of the scientists who are working on this issue. In fact, this updated page links to U.W.-Madison programs that include climate change in their research. It also does not say the cause and effects of the change in climate are debatable. It says they are being debated. There’s a difference. Many scientists may be in agreement but this topic is still the subject of much debate and discussion among the general public.

The last line raises a question about the role of government in helping explain to the public what many scientists agree on.

One thing that seems true is that so much information has accrued around climate change science and what it means for policy in recent years that partisans seeking to purge government websites have their work cut out for them.

If you search the Wisconsin Department of Natural Resources website, for instance, for the phrase “climate change” there are still some hits, including an educational resource for kids titled, “Global Warming is Hot Stuff!

There’s still an article posted from the February 2011, issue of the magazine of the natural resources department, in which Jack Sullivan, then the director of the agency’s Bureau of Science Services, said, “We need to think about what climate change means for our natural resources and get out ahead of this problem, and we’re working hard to do that.”

Sullivan, however, retired in 2015, when the agency’s science budget was deeply cut under Walker and a Republican-dominated Legislature.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Trump’s Treasury Pick Excelled at Kicking Elderly People Out of Their Homes


By Paul Kiel and Jesse Eisinger, ProPublica

In 2015, OneWest Bank moved to foreclose on John Yang, an 80-year-old Korean immigrant living in Orange Park, Florida, a small suburb of Jacksonville. The bank believed he wasn’t living in his home, violating the terms of its loan. It dispatched an agent to give him legal notification of the foreclosure.

Where did the bank find him? At the same single-story home the bank had said in court papers he did not occupy.

Still OneWest pressed on, forcing Yang, a former Christian missionary, to seek help from legal aid attorneys. This year, during a deposition, an employee of OneWest’s servicing division was asked the obvious question: Why would the bank pursue a foreclosure that seemed so clearly unjustified by the facts?

The employee’s response was blunt: “You’re trying to make logic out of an illogical situation.”

Yang was lucky. The bank eventually dropped its efforts against him. But others were not so fortunate. In recent years, OneWest has foreclosed on at least 50,000 people, often in circumstances that consumer advocates say run counter to federal rules and, as in Yang’s case, common sense.

President-elect Donald Trump’s nomination of Steven Mnuchin as Treasury Secretary has prompted new scrutiny of OneWest’s foreclosure practices. Mnuchin was the lead investor and chairman of the company during the years it ramped up its foreclosure efforts. Representatives from the company and the Trump transition team did not respond to requests for comment.

Records show the attempt to push Mr. Yang out of his home was not an unusual one for OneWest’s Financial Freedom unit, which focused on controversial home loans known as reverse mortgages. Regulators and consumer advocates have long worried that these loans, popular during the height of the housing bubble, exploit elderly homeowners.

The loans allow people to benefit from the equity they have built up over many years without selling their houses. The money is paid in a variety of ways, from lump sums to a stream of monthly checks. Borrowers are allowed to stay in their homes for as long as they live.

The loans are guaranteed by the U.S. Department of Housing and Urban Development, meaning the agency pays lenders like Freedom Financial the difference between the ultimate sale price of the home and the size of the reverse mortgage.

But the fees are often high and the interest charges mount up quickly because the homeowner isn’t paying down any of the principal on the loan. Homeowners remain on the hook for property taxes and insurance and can lose their homes if they miss those payments.

A 2012 report to Congress by the Consumer Financial Protection Bureau said that “vigorous enforcement is necessary to ensure that older homeowners are not defrauded of a lifetime of home equity.”

ProPublica found numerous examples where Financial Freedom had foreclosed for legally questionable reasons. The company served several other homeowners at their homes to let them know they were being sued for not occupying their homes. In Florida, a shortfall of only $0.27 led to a foreclosure attempt. In Atlanta, the company sought to foreclose on a widow after her husband’s death, but backed down when a legal aid attorney sued, citing federal law that allowed the surviving spouse to remain in the home.

“It appears their business approach is scorched earth, in a way that doesn’t serve communities, homeowners or the taxpayer,” said Alys Cohen, a staff attorney for the National Consumer Law Center in Washington D.C.

Since the financial crisis, OneWest, through Financial Freedom, has conducted a disproportionate number of the nation’s reverse mortgage foreclosures. It was responsible for 16,200 foreclosures on government-backed reverse mortgages, or 39 percent of all foreclosures nationwide, from 2009 through late 2014, even though it only serviced about 17 percent of the loans, according to government data analyzed by the California Reinvestment Coalition, an advocacy group for low-income consumers. While some foreclosures were justified, legal aid attorneys say Financial Freedom has refused to work with borrowers in foreclosure to establish payment plans, in contrast with other servicers of reverse mortgages.

Experts say the companies are not entirely to blame for the wave of foreclosures. HUD oversees standards on most reverse mortgages. In the years after the housing crash, HUD’s rules evolved, creating a miasma of confusion for mortgage servicers. Companies say the new federal rules required them to foreclose when borrowers fell far behind on property and insurance costs, rather than work out payment plans.

OneWest’s rough treatment of homeowners extended to its behavior toward borrowers with standard mortgages in the aftermath of the housing crash. In 2009, the Obama administration launched a program to encourage mortgage servicers to work out affordable mortgage modifications with borrowers. OneWest, weighed down by several hundred thousand souring mortgages, signed up.

It didn’t go well. About three-quarters of homeowners who sought a modification from OneWest through the program were denied, according to the latest figures from the Treasury Department. OneWest was among the worst performing large servicers in the program by that measure. In 2011, activists protested OneWest’s indifference at Mnuchin’s Bel Air mansion in Los Angeles.

“We’re in a difficult economic environment and very sympathetic to the problems many homeowners face, but under the government’s program there’s not a solution in every case,” Mnuchin told the Wall Street Journal in that year.

Despite the controversy, Mnuchin and the other investors in OneWest made a killing on their purchase. In 2009, Mnuchin’s investment group bought the failed mortgage bank IndyMac, which had been taken over by the Federal Deposit Insurance Corporation after the financial crisis, changing the name to OneWest. They paid about $1.5 billion, with the FDIC sharing the ongoing mortgage losses. George Soros, a Clinton backer at whose hedge fund Mnuchin had worked, and John Paulson, a hedge fund manager who also supported Trump, invested alongside Mnuchin in IndyMac.

In 2015, CIT, a lender to small and medium-sized businesses, bought OneWest for $3.4 billion, more than doubling the Mnuchin group’s initial investment. Mnuchin personally made about $380 million on the sale, according to Bloomberg estimates. He retains around a 1 percent stake in CIT, worth around $100 million, which he may have to divest if confirmed.

CIT has found the reverse mortgage business to be a headache. Recently, CIT took a $230 million pretax charge after it discovered that OneWest had mistakenly charged the government for payments that the company should have shouldered itself. An investigation of Financial Freedom’s practices by HUD’s inspector general is ongoing.

Yang’s lawyers at Jacksonville Area Legal Aid fought his foreclosure for a year. Though Yang had run a dry cleaning business in Florida and roamed the world as a missionary, working in North Korea, China, and Afghanistan, the bank’s torrent of paperwork had overwhelmed him. Yang didn’t speak English well. OneWest claimed it had sent him forms to verify he was living at his home, but that he never sent them back.

Under HUD rules, OneWest was required to verify that each borrower continued to use the property as a principal residence. It is a condition of all the HUD-backed loans in order to help ensure the government subsidy goes to those who need it.

But Yang can be forgiven for thinking that OneWest could not have doubted that he was still in his home. During the same period that OneWest was moving to foreclose on Yang for not living in his home, another arm of the bank regularly spoke and corresponded with him at his home about a delinquent insurance payment, according to court documents.

A Financial Freedom employee testified in the case that the department that handled delinquent insurance payments and the department that handled occupancy did not communicate with each other in those circumstances.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Trump’s Pick for Commerce Secretary May Have the Biggest Conflicts of Them All

Wilbur Ross


By Derek Kravitz, ProPublica

Many of President-elect Donald Trump’s cabinet picks are titans of industry with significant potential business conflicts of interest.

But there is one in a class by himself: Commerce secretary choice Wilbur Ross.

Ross has made a fortune in the steel industry — an industry of which the Commerce Department has significant oversight. Indeed, government transition documents show that the Commerce Department is slated to make no fewer than five decisions about steel trade soon after the inauguration which will directly affect businesses that Ross has a stake in. 

“It’s on a different order of magnitude and complexity than any other cabinet pick,” said Norman Eisen, the White House’s chief ethics lawyer in the Obama administration from 2009 to 2011. “Now it’s up to him to figure if he can do this job and, if so, how he can do it given his entanglements.”

Transition briefing documents, which ProPublica obtained through a Freedom of Information Act request, show how closely the Commerce Department is focused on enforcing and monitoring global steel supplies and demand. They make clear how the department’s decisions could greatly benefit ArcelorMittal, the world’s largest steel producer, where Ross retains a stake and has long sat on the board (he was re-elected to a three-year term in 2015).

Among the impending decisions are rulings on unfair pricing investigations of steel imports from Belgium, France, Germany and Italy. The rulings are due within the first 100 days of the new Trump administration. (See the Commerce Department presidential transition briefing documents here.)

Ross has other potential conflicts. While Ross talks tough on China, he is an equity investor in a shipping company with a Chinese sovereign wealth fund. He has also invested in the China Huaneng Group, a state-owned power generator run by the eldest son of Li Peng, the former prime minister.

Ross sits on the boards of five publicly traded companies. Among them is the Bank of Cyprus, where he is vice chairman, and where he has been an investor along with Russian oligarchs.

“His business contacts are deep and wide,” said Kurt Schulzke, director of the Corporate Governance Center at Kennesaw State University. “Life could be very complicated for Wilbur Ross if he chooses to hang onto those interests.”

Ross did not respond to requests for comment and Trump’s transition team referred questions to the Commerce Department, while noting that the department’s briefing documents were crafted under the outgoing Obama administration.

The most obvious potential conflict, experts say, is between Ross and Commerce’s International Trade Administration, which oversees trade laws and agreements with other countries. The agency is working on how to stop China’s government-supported steel industry from encroaching on U.S. markets and has wide purview over monitoring and enforcement.

“It’s never happened that a Commerce secretary has been so directly involved in the fallout, and rewards, from previous trade deals,” said Gary Hufbauer, a former Treasury Department official who specializes in trade policy as a senior fellow at the Peterson Institute for International Economics.

Despite Ross’ considerable fortune, lawyers and Senate committee officials say there is a path for him to avoid thorny ethics issues. It entails liquidating many of his financial holdings, recusing himself on matters where he might have a personal vested interest, and potentially putting his financial holdings in a blind trust.

Those moves would likely dwarf divestitures made by previous cabinet members. Hank Paulson, the former Treasury secretary under President George W. Bush, sold nearly $600 million worth of stock before entering public office in 2006. Penny Pritzker, the Chicago billionaire and Hyatt Hotels executive, stepped down from her position with the hotel chain when she took the Commerce secretary job in 2013.

The Republican-led Senate Commerce Committee, which is tasked with vetting the president’s appointee for the cabinet position, has repeatedly likened Ross’ case to that of Pritzker, who divested from 221 companies and resigned from her job at Hyatt, as a precedent for navigating slippery business conflicts. 

“As has been the practice with past nominees, the Commerce Committee will carefully scrutinize Mr. Ross’ proposal for avoiding conflicts of interest,” the Senate committee said in a statement to ProPublica. “In the recent past, candidates with large portfolios have addressed concerns about financial conflicts and achieved Senate confirmation through recusals, divestment, and other steps as outlined in an ethics agreement.” (The Senate Commerce Committee has not yet received Ross’ ethics agreement proposal.)

But Ross’ situation may be different. “There are a lot fewer trade conflicts with hotels than the steel industry. That’s a pretty qualitative difference,” Hufbauer said.

What’s clear is that Ross plans to rely on his experience with foreign trade in his new public-sector job. In a policy paper published in September with Peter Navarro, a business professor from the University of California at Irvine, about the Trump economic plan, Ross cited his purchase of Pennsylvania’s Bethlehem Steel as proof of a broken trade-enforcement system:

“As another problem, it takes a long time to adjudicate trade cases. In the interim, American companies go bankrupt, cheaters take over the market, and the court ruling becomes moot. This happened a few years ago to Bethlehem and 30 other steel companies that went bankrupt waiting for relief.”


Bethlehem Steel was one of several U.S. steel companies purchased by Ross and packaged into a $4.5 billion deal with ArcelorMittal in 2005. Ross and his investors net gain on the deal: $260 million.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Will Trump Scrap NASA’s Climate Research Mission?



By Andrew Revkin, ProPublica

The wonders of NASA — Mars rovers, astronaut Instagram feeds, audacious missions probing distant galactic mysteries — have long enthralled the American public. And, it turns out, the accomplishments have won the agency the public’s trust: Polls have consistently shown NASA to be the second-most trusted government institution, behind only the Centers for Disease Control and Prevention.

The public, however, probably has less appreciation for the work NASA has done on its home planet. NASA’s $2-billion-a-year earth-science program has long tracked global-scale environmental conditions on Earth, including climate change.

But with the election of Donald Trump, there was immediate concern — inside NASA and among the fans of its valued work on global warming — about the future of the agency’s earth-science program. Within hours of Trump’s acceptance speech on Nov. 9, an internal email from a senior official in the Earth Sciences division at NASA’s Goddard Space Flight Center circulated within NASA acknowledging worry that “funding may now be exposed to severe reductions.”

The last month is not apt to have eased that alarm.

Trump’s most visible advisor on space policy has been Bob Walker, a former House Science committee chairman who is now a space-policy lobbyist pressing to move “Earth-centric” and “heavily politicized” climate science out of NASA altogether. And Christopher Shank, who was chosen by Trump to lead the transition at NASA, is a seasoned strategist who has expressed strong skepticism about the severity of global warming.

Should Trump come to take a dim view of NASA’s research on climate change, he’s likely to have no shortage of support in Congress. The last few years have seen intensifying moves against the Obama administration’s investments in climate science in hearings led by the Texas Republicans Sen. Ted Cruz and Rep. Lamar S. Smith, whose views on NASA and climate parallel those of Walker — built around the notion that NASA needs to focus on outer space, not back on Earth.

As Smith put it in 2015, “There are 13 other agencies involved in climate-change research, but only one that is responsible for space exploration.”

NASA’s Earth Science Division, if less well known to the public, has regularly seen its budget fluctuate with turnover in the White House. Under Ronald Reagan, there were substantial investments in what was then called the Earth Observing System. George H.W. Bush, building on a 1987 report by astronaut Sally Ride, funded a program that came to be known as the “Mission to Planet Earth.”

George W. Bush reversed course, and reduced resources for the program (his administration was eventually exposed for trying to suppress NASA research on global warming). Most recently, though, the division’s budget was greatly restored by Barack Obama. A core argument of Walker and congressional critics of NASA earth science, that budgets have ballooned and reduced resources for other NASA science programs, has no basis, said Arthur Charo, who has tracked NASA science budgets for the Standing Committee on Earth Science and Applications from Space of the nongovernmental National Academy of Sciences.

He said a careful look at programs, adjusting for inflation, shows no evidence of such a pattern. “There is a mythology that earth science has undergone dramatic growth and that this growth has occurred at the expense of other divisions in the Science Mission Directorate,” he said. “Both assertions are false.”

The Trump transition office declined requests for interviews and Walker did not reply to email messages.

Piers J. Sellers is the director of the Earth Sciences Division at NASA’s Goddard Space Flight Center, and the former astronaut is a climate scientist himself. ProPublica spoke with him recently. Sellers declined to discuss the politics surrounding NASA during a presidential transition, but said the agency has a unique position in the world in clarifying global environmental risks and that part of its mission deserves support.

“We’re doing our best to provide the least dangerous options to getting from here to a safe future,” he said. “That’s our job as U.S. government scientists. NASA has the greatest capability to see what’s going on and has a pretty strong capability to model what’s going on into the future, as well.”

Some of NASA’s most vital earth-science work has been done at a tiny climate research hub, the Goddard Institute for Space Studies. The center occupies the upper floors of a century-old building in upper Manhattan best known for Tom’s Restaurant, the cash-only corner diner famed because its façade was featured in the sitcom “Seinfeld.”

The institute was led for decades by James E. Hansen, the climate scientist who stepped ahead of most peers in the hot summer of 1988, famously telling a Senate panel it was “99 percent certain” that human-generated greenhouse gases were driving global warming. A decade ago, Hansen defied muzzling efforts during the George W. Bush administration and irked defenders of fossil fuels with his warnings of calamitous warming. He retired in 2013 to focus on activism aimed at curbing emissions of greenhouse gases linked to warming.

The institute has produced one of the four most important records of global temperature trends and, under Hansen’s successor as director, the TED-talking, Twitter-savvy climatologist Gavin A. Schmidt, has continued to refine climate simulations and communicate warnings about unabated warming.

Schmidt declined to be interviewed for this story, citing what he described as selective quoting in recent coverage of possible threats to earth science under the Trump administration. But he’s shown no signs of dread in his personal Twitter flow, on Thursday night posting this provocative two-parter:

On Wednesday, in an appearance at a space law conference in Washington, D.C., Walker, Trump’s advisor, stuck with his vision of stripping “Earth-centric” science out of NASA and “transferring the programs, lock, stock and barrel, to another agency,” according to an article by Jeff Foust in Space News.

It could be argued that the core work done at Goddard — particularly its climate modeling — is redundant, for the United States has two other major climate modeling centers, and there are more than 30 worldwide. But Richard Betts, the head of the climate impacts division at Britain’s Met Office, said in an interview that the Goddard Institute’s modeling stands out because of NASA scientists’ longstanding familiarity with the information coming from NASA-built satellites.

Decades ago, John R. Christy, the director of the Earth System Science Center at the University of Alabama, Huntsville, co-developed with NASA a method for tracking the temperature of the lower atmosphere from satellites, cutting out some of the uncertainties that come with surface measurements. He has long held skeptical views on the severity of global warming, and has been a featured witness of Republicans resisting steps to cut greenhouse gases. But in an interview Thursday, Christy expressed concern about plans to move Earth-focused science out of NASA.

“NASA has a very good track record of putting things in space that work, and that provide data,” he said. “NASA does that soup to nuts kind of work.” He added, “Undoing that would be disruptive to the mission we have of trying to characterize the planet with as much accuracy as we can.”

He also noted that, with or without human-caused global warming, from California to sub-Saharan Africa, the forces driving megadroughts and other climate-system threats are still poorly understood. “There’s so much that needs to be known and the perspective from space is just absolutely essential,” he said.

What happens to NASA next?

In his victory speech on Nov. 9, Trump pledged to listen to people with differing views, so perhaps he’ll reach out beyond Walker in weighing next steps for NASA to people like David Titley, a retired Navy rear admiral and former Oceanographer of the Navy, who has written a comprehensive overview of the value NASA earth science provides to society, including to national security.

Or perhaps he could turn to former President George W. Bush. While funding for NASA earth science dropped on his watch, his administration’s 2006 NASA Strategic Plan made clear that NASA was an appropriate venue for such research: “Earth science is science in the national interest. While scientific discovery from space is inherent in the Agency’s mission, NASA’s programs in earth science also are central.”

Sellers, in the email to his Earth Sciences Division team a month ago, managed to summon some confidence, even defiance.

“We have an excellent record of achievements and can make a solid case for stable support,” wrote Sellers (his email was provided to ProPublica by someone else at NASA).

“We will never give up on this.”

Correction, Dec. 12, 2016: An earlier version of this story incorrectly identified Piers Sellers as the director of NASA’s Earth Science division. He is the director of the Earth Sciences Division at NASA’s Goddard Space Flight Center.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Why Trump Would Almost Certainly Be Violating the Constitution If He Continues to Own His Businesses

Donald Trump


By Richard Tofel, ProPublica

Far from ending with President-elect Trump’s announcement that he will separate himself from the management of his business empire, the constitutional debate about the meaning of the Emoluments Clause — and whether Trump will be violating it — is likely just beginning.

That’s because the Emoluments Clause seems to bar Trump’s ownership of his business. It has little to do with his management of it. Trump’s tweets last month said he would be “completely out of business operations.”

But unless Trump sells or gives his business to his children before taking office the Emoluments Clause would almost certainly be violated. Even if he does sell or give it away, any retained residual interest, or any sale payout based on the company’s results, would still give him a stake in its fortunes, again fairly clearly violating the Constitution.

The Emoluments Clause bars U.S. officials, including the president, from receiving payments from foreign governments or foreign government entities unless the payments are specifically approved by Congress. As ProPublica and others have detailed, Trump’s business has ties with foreign government entities ranging from loans and leases with the Bank of China to what appear to be tax-supported hotel deals in India and elsewhere. The full extent of such ties remains unknown, and Trump has refused to disclose them, or to make public his tax returns, through which many such deals, if they exist, would be revealed. Foreign government investments in Trump entities would also be covered by the clause, as would foreign government officials paying to stay in Trump hotels, so long as Trump stands to share in the revenues.

One misconception about the Emoluments Clause in early press coverage of it in the wake of Trump’s election is being clarified as scholars look more closely at the provision’s history. That was the suggestion that it would not be a violation for the Trump Organization to conduct business with foreign government entities if “fair market value” was received by the governments.

This view had been attributed to Professor Richard Painter, a former official of the George W. Bush administration, and privately by some others. But Professor Laurence Tribe, the author of the leading treatise on constitutional law, and others said the Emoluments Clause was more sweeping, and mandated a ban on such dealings without congressional approval. Painter now largely agrees, telling ProPublica that no fair market value test would apply to the sale of services (specifically including hotel rooms), and such a test would apply only to the sale of goods. The Trump Organization mostly sells services, such as hotel stays, golf memberships, branding deals and management services.

The Emoluments Clause appears in Article I, Section 9 of the Constitution. It bars any “person holding any office of profit or trust under” the United States from accepting any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign state” “without the consent of the Congress.” The word “emolument” comes from the Latin emolumentum, meaning profit or gain. The language of the clause was lifted in its entirety from the Articles of Confederation which established the structure of the government of the United States from 1781 until the ratification of the Constitution in 1788-89. The clause was derived from a Dutch rule dating to 1751.

The clause was added to the draft Constitution at the Constitutional Convention on Aug. 23, 1787 on a motion by Charles Pinckney of South Carolina. As Gov. Edmund Randolph of Virginia explained to his state’s ratification convention in 1788, Pinckney’s motion was occasioned by Benjamin Franklin, who had been given a snuffbox, adorned with the royal portrait and encrusted with small diamonds, by Louis XVI while serving as the Continental Congress’s ambassador to France. As Randolph said,

“An accident which actually happened, operated in producing the restriction. A box was presented to our ambassador by the king of our allies. It was thought proper, in order to exclude corruption and foreign influence, to prohibit any one in office from receiving emoluments from foreign states.”

The Continental Congress in 1786 had consented, after a debate, to Franklin keeping the snuffbox, as it had earlier with a similar gift to envoy Arthur Lee. At the same time, consent also was given to diplomat John Jay receiving a horse from the King of Spain.

The clause was part of the basis for Alexander Hamilton’s defense of the Constitution, in Federalist 22, as addressing “one of the weak sides of republics”: “that they afford too easy an inlet to foreign corruption.”

There is no question that the Emoluments Clause applies to the president. President Obama’s counsel sought an opinion in 2009 on whether it barred him from accepting the Nobel Peace Prize. The Justice Department concluded that it did not, in part based on historical precedent (the Prize had also been awarded to Presidents Theodore Roosevelt and Woodrow Wilson, Vice President Charles Dawes and Secretary of State Henry Kissinger), but primarily because the Norwegian group that awards the prize was not deemed a governmental entity.

The clause does not seem ever to have been interpreted by a court, but it has been the subject of a number of opinions, over the years, of the attorney general and the comptroller general.

Nearly all of these opinions have concluded that the clause is definitive. In 1902, an attorney general’s opinion said it is “directed against every kind of influence by foreign governments upon officers of the United States.” In 1970, a comptroller general opinion declared that the clause’s “drafters intended the prohibition to have the broadest possible scope and applicability.” A 1994 Justice Department opinion said “the language of Emoluments Clause is both sweeping and unqualified.” Among the ties deemed to violate the clause was a Nuclear Regulatory Commission employee undertaking consultant work for a firm retained by the government of Mexico.

Congress has passed one law giving blanket approval to a set of payments from foreign government entities. Known as the Foreign Gifts and Decorations Act, it is limited to gifts of “minimal value” (set as of 1981 at $100), educational scholarships and medical treatment, travel entirely outside the country “consistent with the interests of the United States,” or “when it appears that to refuse the gift would likely cause offense or embarrassment or otherwise adversely affect the foreign relations of the United States.” The specificity of these few exceptions reinforces the notion that other dealings with foreign government entities is forbidden without congressional approval.

One attorney-general opinion from the Reagan administration offers the possibility of a more permissive interpretation of the Emoluments Clause, indicating it could be limited to “payments which have a potential of influencing or corrupting the recipient.” But whatever the meaning of this, it was the same Reagan Justice Department that banned the NRC employee from the Mexican-funded consultancy a year later.

Ironically, an “originalist” reading of the clause — usually favored these days by conservatives as exemplified by the late Justice Antonin Scalia and current Justice Clarence Thomas — would seem to bind Trump more stringently, while a “living constitution” approach — exemplified by liberals such as the late Justices Louis Brandeis and Thurgood Marshall — might offer him greater latitude.

Clearly, deciding what the Emoluments Clause means in a specific case is a complicated legal question. (The opinion on Obama’s acceptance of the Nobel Prize runs to 13 printed pages.) But just as clearly, the judges of its meaning with respect to President Trump will be politicians rather than the Supreme Court.

The controversies that swirled around Presidents Richard Nixon and Bill Clinton established a number of key points. Among them are that the sole remedy for a violation of the Constitution by a president in office is impeachment, and that the House of Representatives is the sole judge of what constitutes an impeachable offense, while the Senate is the sole judge of whether such an alleged violation warrants removal from office. (Impeachments are very rare: articles of impeachment have been voted against only two presidents, Andrew Johnson and Clinton, both of whom were acquitted by the Senate, while Nixon resigned ahead of likely impeachment. Fifteen federal judges have also been impeached, and eight removed, while four resigned.)

The arguments of scholars and lawyers on the meaning of the Emoluments Clause may influence the public, and their elected representatives. But if Trump decides not to dispose of his business, it will be up to Congress to decide whether to do anything about his apparent violation of the Constitution.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.