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Newsletter | Revolving Door Project Newsletter | November 30, 2022

Union Joe’s Disgrace

DefenseEthics in GovernmentFinancial RegulationLabor

Congress has unlimited sick days; rail workers can’t have four?

This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.

First of all—solidarity from our union shop to the rail workers who intend (if they can) to strike next week, whose demand for four days of paid sick leave per year is one that should not have to be begged for, much less go unmet. History will not look kindly on President Biden and Congressional leaders forcing a contract on rail workers that includes no sick leave during the pandemic that Biden irresponsibly declared is over, which continues to kill hundreds of Americans a day, to avoid a shutdown of supply chains before the holidays. Read our statement on why Biden must not override rail workers here.

If rail workers are so important to our economy that a single week of striking could cost the economy $1 billion, and if their demands are so modest that any decent employer would easily exceed them, then meeting their demands seems like the obvious solution. But the American balance of power is such that railroad bosses have the allegedly most pro-labor president in history doing their dirty work for them. 

It is a profound shame that Biden has failed to model respecting the workers who take on grueling shifts and high risks to perform essential services. Rail workers should not have to sacrifice their health for the economy and the corporations that profit from their work. And Congress should not use its formidable power to coerce workers to accept unsafe and unjust terms of work, doubling down on corporate bosses’ profit-seeking and willful neglect. The House will vote Wednesday on two versions of legislation that would enforce a contract on rail workers: one which would add sick days and one which would not.

As one rail union declared Tuesday: “Passing legislation to adopt tentative agreements that exclude paid sick leave for Railroad Workers will not address rail service issues. Rather, it will worsen supply chain issues and further sicken, infuriate, and disenfranchise Railroad Workers as they continue shouldering the burdens of the railroads’ mismanagement. Indeed, the big corporations, the monopolies that control America – the robber baron railroads – have again profiteered from the problem they created and shifted the consequences of it onto the Railroad Workers, the customers, and the general public. This cannot continue. There must be a change.” 

Countdown to Shutdown

A total government shutdown as a result of a budget stalemate seems unlikely, but the deadline to solidify an omnibus spending agreement is fast approaching. Political crosscurrents in the soon-to-be-divided government are injecting uncertainty into the process of passing a spending bill for 2023. Meanwhile, autumn’s temporary extension of government spending expires in sixteen days. 

When it comes to agencies calling on Congress to pass a government spending bill before time runs out, the Pentagon is usually the loudest voice in the room, warning of dire consequences to national security if the Defense Department doesn’t get its full slice of the pie, pronto. Lawmakers often capitalize on the Pentagon’s messaging, as Schumer did Monday in a floor speech warning that another continuing resolution would cause “grave harm to our troops in uniform,” as neither party wants to face allegations of unseriousness about national defense. 

Still, the Defense Department’s budget is so bloated—fast approaching $1 trillion dollars a year—that (if, you know, they used their budget responsibly) they should be far more insulated from the shock of sudden austerity than other federal agencies. Given that they’ve yet to pass an annual audit, it’s a bit rich to hear the Pentagon admonishing Congress about fiscal responsibility. 

(For more on the “fiscal fiascoes” of the Defense Department, check out the latest edition of The Bunker newsletter from the Project On Government Oversight. It outlines the dismal result of the Pentagon’s most recent $3.5 trillion audit, which actually consisted of “27 mini-audits conducted by outside accounting firms,” stitched together into an “uber-audit” that still “failed to account for 61% of the Pentagon’s assets,” and which the Pentagon still failed to pass.) 

While the Pentagon’s claims of pending impoverishment should be taken with about a mountain of salt, other agencies with a lot less money to work with are far closer to the cliff’s edge. The Social Security Administration took an unusual tack last week in appealing to the public directly in a blog post outlining the consequences of their administrative budget shortfall:

“As we lose employees, our service further deteriorates. You feel the effects of our staffing shortage. You are waiting an unacceptable average of over six months for a decision on an initial disability claim and over 30 minutes to speak to a representative on our National 800 Number. Our employees strive to provide you compassionate and timely service but cannot do so without a budget that allows for significant improvement.”

Hopefully congressional appropriators take note. Providing the seniors who rely on Social Security benefits with quality service is a political no-brainer. (And an area where Democrats have much room to improve; earlier this month voters 65 and up voted for GOP candidates 12 points over Democrats.) As Social Security is one of the last linchpins of the US’s hollowed-out social safety net, its successes and failures are all the more keenly felt. Biden has previously acknowledged that improving “customer experience” is a part of restoring trust in government; almost a year ago, he passed an Executive Order seeking to improve seventeen agencies’ interactions with the public, including the Social Security Administration. Congress should not drop the ball on ensuring this important service for elderly Americans. 

Myopic Math

In case you spent Thanksgiving morning in a more salutary fashion than reading the news, you might have missed our piece in The American Prospect musing on the need for economistic and quantitative analysis to (please just) take a back seat sometimes. Our piece looks at carbon offsets and permitting reform as case studies in the systemic blind spots of quant purists, including their apparent inability to attend to issues of racial and economic justice. 

Especially when it comes to policy quagmires like climate change—both global and local, with disparate social and ecological and economic consequences—there are other kinds of knowledge and imperatives that need to be considered. Addressing climactic change is not just an existential imperative; it is also a practice, deliberate or not, of world-remaking. It cannot just be numbers guys in the front seat. Their values are not universal or all-encompassing, and they don’t necessarily have a more just, more equal world as their guiding principle. 

Facing the Music

Last week, my colleagues warned in The New Republic that while Sam Bankman-Fried’s crypto scam may be all washed up, the regulatory agenda he was pushing is still in play. Timi and Dylan pointed out that crypto-aligned legislators from both parties appear to be “capitalizing on FTX’s downfall in order to swiftly ram through the failed company’s preferred regulations: that is to say, virtually none.” 

They outlined a number of reasons why legislation enshrining the Commodity Futures Trading Commission as the industry’s primary regulator is an industry give-away, including that the CFTC does not have an investor protection mandate, has minimal experience developing investor protection rules, has extremely limited capacity, and has a crypto-friendly chair. In contrast, the Securities and Exchange Commission has an investor protection mandate, deep experience developing investor protection rules, comparatively greater capacity ($2.69 billion compared to the CFTC’s $811 million, and seven times the staff), and a crypto-skeptic chair. 

Preventing another crypto crash from eroding retail investors’ savings is a government capacity issue, too. Because while the SEC is more robust than the CFTC, both agencies “urgently need funds to fulfill their mandates,” Timi and Dylan wrote. “Crypto stretches these needs even further, but the need has existed for years. For decades, financial crimes have too often gone unpunished. This wasn’t for a lack of rules, but a lack of will, funds, and people willing to enforce them.”

“Crypto doesn’t need special treatment,” they argued, “it needs to face the music.” 

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week plus:

Biden Must Not Override Rail Workers If He Is A Pro-Worker President

Quants, Carbon, and Climate Change

Don’t Fall for FTX’s Final Con

Infrastructure Coordinator Not Coordinating With Public Transit Agency

Commerce Secretary Raimondo Meets With One Corporate Executive per Day

White House pressured to recuse legislative director from antitrust talks

A Rising Star in the Biden Administration Faces a $100 Billion Test

How SBF Created the New Playbook for Manipulating Washington, D.C.

SEC chair riles Wall Street, Republicans — even some Democrats

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