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A Year in Congress
Dennis Bogusz, ASA 2011-12 Congressional Fellow
As I reflect on a year as a Congressional Fellow working in the Senate’s Permanent Subcommittee on Investigations (PSI), I wish I could share with my fellow sociologists what I worked on. Unfortunately, most of what I did remains confidential. Still, I can present some of the issues PSI covers and how my time there informed my views about Congress more broadly.
Chaired by Senator Carl Levin of Michigan, PSI is part of the Homeland Security and Governmental Affairs Committee. It investigates corporate compliance with rules, regulations, and laws, as well as organized criminal behavior in commerce. This was a perfect transition from my graduate work, where I analyzed regulations concerning corporate governance and executive compensation.
PSI holds a treasure trove of qualitative data on white-collar crime and deviance. Stacks of hearing reports line the bookshelves of its ground floor location in the Russell Senate Office Building. Organizational charts of mafia crime families—exhibits from past Senate hearings—hang on the walls. Diagrams of complex financial transactions and boxes of legal documents fill every spare inch of office space.
Surrounded by staff attorneys, trained to examine evidence in a particular way, I used my previous experience in banking and a sociological lens to impart a different understanding of the actors and organizations under investigation. I spent the bulk of my time reviewing, and occasionally translating, subpoenaed documents. I researched public records and legal databases, frequently pestering Senate librarians for help. I also attended briefings from officials at U.S. agencies, such as the Internal Revenue Service, as well as from foreign governments, such as the Financial Intelligence Unit of Liechtenstein—a country with a history of hosting dirty money. Members of civil society organizations, like the Financial Accountability and Corporate Transparency Coalition, also weighed in with their policy acumen and devotion to economic justice. The most exciting aspect of my work in PSI, however, was interviewing witnesses. Each one had a story to tell, some more willing to share than others. These juicy bits of information from various sources helped me to prepare hearings, reports, and ultimately, legislation.
Follow the Money
PSI recently concluded an investigation into money laundering, drug trafficking, and terrorist financing at the British bank, HSBC, and the failure of U.S. regulators to abate this behavior. My colleagues put tremendous effort into bringing these issues to public awareness. Even the Daily Show with Jon Stewart mentioned the investigation. HSBC apologized profusely and regulators vowed to improve oversight, but that is hardly a criminal sanction. What fines the bank did pay amounted to mere pennies on its share price. No banker went to jail. Sadly, this is a pattern of kiss-and-make-up between government and other financial firms that I see elsewhere.
JPMorgan Chase, for instance, testified in the Senate and in the House of Representatives on the bank’s losses from derivatives trades totaling $5.8 billion in 2012. Like HSBC, JPMorgan apologized for its mistakes and regulators promised better oversight. Yet the policymaking process compromises that oversight. Two years ago, Senator Levin, along with Senator Jeff Merkley of Oregon, had proposed an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. PSI’s previous investigations into Goldman Sachs and the financial crisis greatly contributed to the draft of the Merkley-Levin amendment. It would prevent exactly the sort of speculative trades at JPMorgan that masquerade as otherwise legitimate hedges against risk. Despite every imaginable obstruction by its opponents, the legislation passed and prompted regulators to develop a final rule to address these so-called proprietary trades. The catch is that JPMorgan booked the trades they apologized for in 2012 while the final rule was pending implementation—a process that involved JPMorgan as well as other big banks. They and their lobbyists continue to have an appalling ability to co-author rules, diluting their strength, or skirt the rules altogether.
Policy success just within one chamber of Congress is mired in all things procedural and political. Consider Senator Levin’s “Cut Unjustified Tax (CUT) Loopholes Act” that PSI helped formulate. The bill would end the use of offshore tax havens and corporate tax deductions for stock options. When Facebook became a public company this year, for example, it used completely legal means to reduce its tax liability against differential values of its executives’ stock options. (One of the company’s founders even renounced his U.S. citizenship to avoid paying tax on his personal wealth from the deal.) Closing this and other tax loopholes would bring the Treasury an estimated $130 billion over 10 years. Despite the importance of the CUT Loopholes Act, the bill joins many others in the Senate Finance Committee where its future remains uncertain. Bills that do not move out of committee to the full Senate before the end of the 112th Congress on January 20, 2013, automatically die. With one-third of the Senate up for election this November and a lame-duck session to follow until January, the prospect for the CUT Loopholes Act, like that of myriad others, is not good.
Sociologists and Congress
Whether this legislation passes, I am grateful that the work PSI and Senator Levin do has helped contribute to current debates about tax fairness. Look to this election cycle for more of that debate. However, there is only so much one senator and an investigative team can do. With inequality at historic levels, Americans deserve better from their lawmakers. Donations from industry lobbyists help make an increasingly polarized Congress dysfunctional and unresponsive to societal needs. Although sociologists cannot cure all of these ills, we must play greater policy roles.
Sociologists should focus on research that addresses public policy, even if indirectly. We should advance open source research, create a digital presence, and actively engage with the media to widen research beyond academic circles. Direct commentary on specific policy and testimony in Congress also help. Of course, continuous support of the ASA Congressional Fellowship keeps at least one sociologist in Congress each year (www.asanet.org/funding/cf.cfm). Careers in all branches and at all levels of government await many more sociologists willing to commit to public service.
Reflecting on the 2012 ASA Annual Meeting theme of Real Utopias, I am reminded of how the framers of the U.S. Constitution similarly envisioned a real utopia in 18th century America. I cannot help but think that today’s Congress is not only further from that ideal since it first convened in 1789, but is also starting to look more like Versailles that fateful year. Despite this gloomy assessment, I see no better time to instill lessons from sociological inquiry into the policymaking process. Our knowledge of inequality, institutions, and organizations can make utopia real.
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