The partisan battles that have paralyzed Washington in recent years took a historic turn on Thursday, when Senate Democrats eliminated filibusters for most presidential nominations, severely curtailing the political leverage of the Republican minority in the Senate and assuring an escalation of partisan warfare.
The rule change means federal judge nominees and executive-office appointments can be confirmed by a simple majority of senators, rather than the 60-vote super majority that has been required for more than two centuries.
The change does not apply to Supreme Court nominations. But the vote, mostly along party lines, reverses nearly 225 years of precedent and dramatically alters the landscape for both Democratic and Republican presidents, especially if their own political party holds a majority of, but fewer than 60, Senate seats.
Senate Minority Leader Mitch McConnell (R-Ky.) accused Democrats of a power grab and suggested that they will regret their decision if Republicans regain control of the chamber.
“We’re not interested in having a gun put to our head any longer,” McConnell said. “Some of us have been around here long enough to know that the shoe is sometimes on the other foot.” McConnell then addressed Democrats directly, saying: “You may regret this a lot sooner than you think,” he said.
Sen. Charles E. Grassley (R-Iowa), the ranking Republican on the Senate Judiciary Committee, warned Democrats against the rule change on Wednesday, saying that if the GOP reclaimed the Senate majority, Republicans would further alter the rules to include Supreme Court nominees, so that Democrats could not filibuster a Republican pick for the nation’s highest court.
The vote to change the rule passed 52-48. Three Democrats – Sens. Carl Levin (D-Mich.), Joe Manchin (D-W.Va.) and Mark Pryor (D-Ark.) – joined with 45 Republicans in opposing the measure. Levin is a longtime senator who remembers well the years when Democratic filibusters blocked nominees of Republican presidents; Manchin and Pryor come from Republican-leaning states.
Infuriated by what he sees as a pattern of obstruction and delay over President Obama’s nominees, Senate Majority Leader Harry M. Reid (D-Nev.) triggered the so-called “nuclear option” by proposing a motion to reconsider the nomination of Patricia Millet, one of the judicial nominees whom Republicans recently blocked by a filibuster, to serve on the U.S. Court of Appeals for the District of Columbia.
The Senate voted 57-40, with three abstentions, to reconsider Millett’s nomination. Several procedural votes followed. The Senate Parliamentarian, speaking through Sen. Patrick J. Leahy (D-Vt.), the chamber’s president pro temp, then ruled that 60 votes are needed to cut off a filibuster and move to a final confirmation vote. Reid appealed that ruling, asking senators to decide whether it should stand.
Senators began voting about 12:15 p.m. The final vote was 52 in favor of changing the rule, 48 against.
The Democratic victory paves the way for the rapid confirmation of Millett and two other nominee to the D.C. appeals court. All have recently been stymied by GOP filibusters, amid Republican assertions that the critical appellate court simply did not need any more judges.
But the impact of the move is be more far-reaching. The means for executing this rules change – a simple-majority vote, rather than the long-standing two-thirds majority required to change the chamber’s standing rules – is more controversial than the actual move itself.
Many Senate majorities have thought about using this technical maneuver to get around centuries of parliamentary precedent, but none has done so in a unilateral move on a major change of rules or precedents. This simple-majority vote has been executed in the past to change relatively minor precedents involving how to handle amendments; for example, one such change short-circuited the number of filibusters that the minority party could deploy on nominations.
Reid has rattled his saber on the filibuster rules at least three other times in the past three years, yielding each time to a bipartisan compromise brokered by the chamber’s elder statesmen.
But no deal emerged by the time debate started Thursday morning. Sen. John McCain (R-Ariz.), the main negotiator who brokered recent deals to avert such a showdown, as well as one in 2005, met with Reid on Wednesday, but neither side reported progress.
The main protagonists for the rules change have been junior Democrats elected in the last six or seven years, who have alleged that Republicans have used the arcane filibuster rules to create a procedural logjam that has left the Senate deadlocked. Upon arriving in 2009, Sen. Tom Udall (D-N.M.) said, he found that “the Senate was a graveyard for good ideas.”
As he recounted in a speech this week, Udall said, “I am sorry to say that little has changed. The digging continues.”
As envisioned earlier this week, Democrats would issue a new rule that would still allow for 60-vote-threshold filibusters on legislation and nominees to the Supreme Court.
Republicans, weary from the third rules fight this year, seemed to have adopted a resigned indifference to this latest threat, as opposed to the heated rhetoric in mid-July when the issue last flared up. Sen. Charles E. Grassley (R-Iowa), the ranking Republican on the Judiciary Committee, mocked the idea that the Democrats would leave in place the filibuster rule for Supreme Court nominations, in the event that a GOP nominee wins the White House in 2016.
He made clear that if that occurred, and the GOP reclaimed the Senate majority, the Republicans would then alter the rules so that Democrats could not filibuster a Republican pick for the Supreme Court. “If [Reid] changes the rules for some judicial nominees, he is effectively changing them for all judicial nominees, including the Supreme Court,” Grassley said Wednesday.
Reid’s move is a reversal of his position in 2005, when he was minority leader and fought the GOP majority’s bid to change rules on a party-line vote. A bipartisan, rump caucus led by McCain defused that effort.
At the time, Sen. Mitch McConnell (R-Ky.) was the No. 2 GOP leader and helped push the effort to eliminate filibusters on the George W. Bush White House’s judicial selections. Eight years later, McConnell, now the minority leader, has grown publicly furious over Reid’s threats to use the same maneuver.
Democrats contend that this GOP minority, with a handful of senators elected as tea party heroes, has overrun McConnell’s institutional inclinations and served as a procedural roadblock on most rudimentary things. According to the Congressional Research Service, from 1967 through 2012, majority leaders had to file motions to try to break a filibuster of a judicial nominee 67 times – and 31 of those, more than 46 percent – occurred in the last five years of an Obama White House and Democratic majority.
Republicans contend that their aggressive posture is merely a natural growth from a decades-long war over the federal judiciary, noting that what prompted the 2005 rules showdown were at least 10 filibusters of GOP judicial nominees. To date, only a handful of Obama’s judicial selections have gone to a vote and been filibustered by the minority.
When President Obama needed a business executive to come to his campaign defense, Jim Sinegal was there. The Costco co-founder, director and former CEO even made a prime-time speech at the Democratic Party convention in Charlotte. So what a surprise this week to see that Mr. Sinegal and the rest of the Costco board voted to give themselves a special dividend to avoid Mr. Obama’s looming tax increase. Is this what the President means by “tax fairness”?
Specifically, the giant retailer announced Wednesday that the company will pay a special dividend of $7 a share this month. That’s a $3 billion Christmas gift for shareholders that will let them be taxed at the current dividend rate of 15%, rather than next year’s rate of up to 43.4%—an increase to 39.6% as the Bush-era rates expire plus another 3.8% from the new ObamaCare surcharge.
More striking is that Costco also announced that it will borrow $3.5 billion to finance the special payout. Dividends are typically paid out of earnings, either current or accumulated. But so eager are the Costco executives to get out ahead of the tax man that they’re taking on debt to do so.
Shareholders were happy as they bid up shares by more than 5% in two days. But the rating agencies were less thrilled, as Fitch downgraded Costco’s credit to A+ from AA-. Standard & Poor’s had been watching the company for a potential upgrade but pulled the watch on the borrowing news.
We think companies can do what they want with their cash, but it’s certainly rare to see a public corporation weaken its balance sheet not for investment in the future but to make a one-time equity payout. It’s a good illustration of the way that Federal Reserve Chairman Ben Bernanke’s near-zero interest rates are combining with federal tax policy to distort business decisions.
One of the biggest dividend winners will be none other than Mr. Sinegal, who owns about two million shares, while his wife owns another 84,669. At $7 a share, the former CEO will take home roughly $14 million. At a 15% tax rate he’ll get to keep nearly $12 million of that windfall, while at next year’s rate of 43.4% he’d take home only about $8 million. That’s a lot of extra cannoli.
This isn’t exactly the tone of, er, shared sacrifice that Mr. Sinegal struck on stage in Charlotte. He described Mr. Obama as “a President making an economy built to last,” adding that “for companies like Costco to invest, grow, hire and flourish, the conditions have to be right. That requires something from all of us.” But apparently $4 million less from Mr. Sinegal.
By the way, the Costco board also includes at least two other prominent tub-thumpers for higher taxes – William Gates Sr. and Charles Munger. Mr. Gates, the father of Microsoft’s Bill Gates, has campaigned against repealing the death tax and led the fight to impose an income tax via referendum in Washington state in 2010. It lost. Mr. Munger is Warren Buffett’s longtime Sancho Panza at Berkshire Hathaway and has spoken approvingly of a value-added tax that would stick it to the middle class.
Costco’s chief financial officer, Richard Galanti, confirms that every member of the board is also a shareholder. Based on the most recent publicly available data, they own more than 4.1 million shares and more than 1.3 million options to purchase additional shares. At $7 a share, the dividend will distribute roughly $29 million to the board, including Mr. Sinegal’s $14 million – at a collective tax saving of about $8 million. Even more cannoli.
We emailed Mr. Sinegal for comment but didn’t hear back. Mr. Galanti explained that while looming tax hikes are a factor in the December borrowing and payout, so are current low interest rates. Mr. Galanti adds that the company will still have a strong balance sheet and is increasing its capital expenditures and store openings this year.
As it happens, one of those new stores opened Thursday in Washington, D.C., and no less a political star than Joe Biden stopped by to join Mr. Sinegal and pose for photos as he did some Christmas shopping. It’s nice to have friends in high places. We don’t know if Mr. Biden is a Costco shareholder, but if he wants to get in on the special dividend there’s still time before his confiscatory tax policy hits. The dividend is payable on December 18 to holders of record on December 10.
To sum up: Here we have people at the very top of the top 1% who preach about tax fairness voting to write themselves a huge dividend check to avoid the Obama tax increase they claim it is a public service to impose on middle-class Americans who work for 30 years and finally make $250,000 for a brief window in time.
If they had any shame, they’d send their entire windfall to the Treasury.
As the President of Common Cause, a non-profit citizens’ lobbying group, Democrat Rep. Chellie Pingree criticized lawmakers who traveled on corporate jets.
But Rep. Pingree is engaging in the same activity she derided four years ago.
An investigation by MaineWatchdog found that Pingree has been traveling on a private plane owned by the firm of her significant other, Donald Sussman, Founder and Chairman of Paloma Partners, a billion dollar hedge fund.
When AOL reported in late July that Pingree’s office was reimbursed for more travel expenses than any other house member in 2009 [editors note: “more” refers to the numerical number of reimbursements, not total monetary value], MaineWatchdog asked whether any of those reimbursements were related to travel on private planes. A spokesman for Pingree said: “To my knowledge, the Congresswoman does not fly on privately chartered jets.”
The investigation, however, produced a video of Representative Pingree and Sussman disembarking at Portland International Jetport after a flight from Bridgeport, Conn., on September 17, 2010.
Pingree and Sussman landed in Portland at 1:26 p.m., at which point a red carpet was rolled out for them on the non-commercial apron.
Prior to her election in 2008, Pingree was an outspoken critic of congressional members who flew on corporate jets.
According to written remarks delivered before the Subcommittee on the Constitution in 2006, Pingree said:
“Most Americans never have and never will fly on a chartered jet, much less a fancy corporate jet complete with wet bar and leather couches. So when members of Congress constantly fly around on corporate jets and pay only the cost of a commercial ticket, it contributes to the corrosive public perception that members of Congress are more like the fat cats of Wall Street than they are like the rest of us.”
In the aftermath of the Abramoff scandal, Pingree lobbied for a tough ethics-reform law that would have, among other things, completely banned privately funded travel. When a weaker bill was introduced, Pingree called the drafted bill “window dressing.”
It is not clear whether Pingree’s use of Sussman’s aircraft was limited to the incident on September 17.
Flight logs of Sussman’s plane obtained by MaineWatchdog indicate that Pingree may have used the aircraft on several other occasions.
In several instances, Pingree’s trips between Maine and Washington, D.C. closely track the movement of Sussman’s plane.
MaineWatchdog uncovered the following facts:
On the morning of September 13, Representative Pingree visited Presumpscot Elementary School in Portland.
According to flight logs, Sussman’s plane took off from Portland International Jetport at 12:31 in the afternoon. Forty-nine minutes later, at 1:20, it landed an hour’s drive north of New York City at Westchester County Airport in White Plains, NY.
At 6:30 p.m., two prominent New York theater producers threw a house party to raise money for Pingree at their home in the Upper East End. The party was scheduled to end at 8:00 p.m.
At 9:22 p.m., Sussman’s plane lifted off again at Westchester County Airport in White Plains. It landed at Dulles International Airport an hour outside of Washington, D.C., at 10:17 p.m.
The next day, Sept. 14, Pingree cast two votes (HR 1571 and HR 1052) in the evening on the House floor in Washington.
There are other similar cases where Pingree’s movement parallels that of Sussman’s plane.
MaineWatchdog compared Pingree’s voting record to the movement of Sussman’s plane.
On July 24, Pingree was in Brunswick with Gov. Baldacci to celebrate Kestrel Aviation’s move to Maine.
On July 26, Sussman’s plane left Knox County Regional Airport in Rockland, the closest airport to Pingree’s home in North Haven, at 12:51 pm. Pingree was on the House floor at around 6:30 to vote on HR 1320. She also appeared on Hardball with Chris Matthews that afternoon.
She was in Washington for votes on July 27, 28, and 29.
On July 30, Pingree was on the House floor. The last vote of the day was at around 6:30 p.m. At 7:39, Sussman’s plane left Washington, D.C. for Rockland, Maine.
On August 6th, Pingree attended the Maine Lobster Fest Parade in Rockland.
On August 9, Sussman’s plane departed Rockland for D.C. at 2:33 pm. The next day, Pingree was present in the Oval Office when President Obama signed the $26 billion aid package for states. Sussman’s plane departed D.C. on August 10 at 7:16 pm and returned to Rockland.
At the time this article was released, MaineWatchdog was waiting for Pingree’s office to provide receipts for all commercial flights that the Congresswoman booked over the last several months.