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Cato’s Amazing Hypocrisy as It Battles the Kochtopus

by PAM MARTENS

Public relations experts understand one thing about a messy legal   battle: the side that triumphs in public perception from the outset can leverage the momentum.

Right now, that momentum is clearly with the Cato Institute in its court fight to prevent the oil billionaires, Charles and David Koch, from gaining majority control of the libertarian think tank through a shareholder lawsuit.  Yes, I said “shareholder.” This nonprofit, subsidized by taxpayers, is currently 50 percent owned by the Koch brothers and if they win in court, they will become majority owners as a result of a tricked up contract and the death of a 25 percent owner last October.

The Cato Institute, in a week’s time, has transformed its image from a pro deregulation, pro Social Security privatization, anti Federal school lunch, anti minimum wage, anti collective bargaining think tank taking tens of millions from corporate foundation coffers to that of a cherished  endangered species – a freedom-seeking beached whale struggling for survival in a tightening net cast by a villainous predator.

Cato’s crisis management team has set up a web page titled “Save Cato.”  Its survival plea is for a public outcry against Kochs’ attempted takeover  to prevent Cato from becoming an auxiliary of the Republican party or an “intellectual ammo-shop for Americans for Prosperity” – the Koch money funnel to the Tea Party.

The strategy has worked miracles.  Cato’s craven acts of the past have melted away faster than snow cones in July and media fans are springing up daily to herald its independent voice, its venerable platform for libertarian ideals.  This is the specter of mass hypnosis that derives from the enemy of my enemy is my friend.  If the Kochtopus is out to strangle Cato, by golly, we need to save it.  But what, exactly, are we out to save?

Officials on the Cato side — President Ed Crane and Chairman Robert Levy — are not telling us everything we need to know – by a long shot.  For starters, why was this so-called venerable libertarian institution stacked with Republican Party donors instead of Libertarian Party donors long before the Kochs started their takeover effort?

According to the Cato Institute web site, there were 16 members on its Board of Directors and a Director Emeritus prior to the Koch coup on March 1 when the Koch brothers installed four new Koch operatives to replace four Cato loyalists.  Of the 16 members, according to Federal Election Commission records, only three have given money to the Libertarian National Committee since 1997.  Those three are William A. Dunn, Lewis E. Randall, and Jeffrey Yass.  All together, the funds totaled $42,250 over 15 years.

That small sum is dwarfed by the hundreds of thousands of dollars donated to Republican candidates and Republican Committees by the other Cato Board members from 1997 to the present.  Again, what are we saving Cato from?

Ethelmae Humphreys, a long serving Cato Board member, gave over $30,000 to state Republican committees from 1997 to 2010 and $50,000 in 2010 to the New Prosperity Foundation.  New Prosperity is a PAC that placed attack ads in the Midwest against Democrats and supported the election of Republicans in the 2010 midterms.

Humphreys is the daughter of the founder of TAMKO Building Products, where she currently serves as Chairman.  The company is one of the largest independent manufacturers in the U.S. and has sprawling business interests throughout the Midwest.

John Malone, another long tenured Cato Board member is Chairman of Liberty Media Corporation.  Liberty Media owns interests in a broad range of media, including SiriusXM, Live Nation, and minority investments in Time Warner and Viacom.  In just the past three years, Malone has given over $39,000 to national Republican committees.

David Koch, who has sat for many years without complaint until now on the Board of Cato, has given over $1 million to Republican committees and candidates since 1997 according to the FEC.

The deep-pocketed Republican party spending by members of the Cato Board was enhanced by the Supreme Court’s decision, Citizens United v. Federal Election Commission in 2010.  In 2009, the Cato Institute hired the powerful corporate law and lobbyist firm, Patton Boggs, to file its Amicus brief in the Citizens United case, arguing in favor of loosening restrictions on corporate spending in campaigns.  Paton Boggs has spent $390 million lobbying Congress on behalf of corporations since 2000 according to the Center for Responsive Politics.

Cato has consistently, for more than 30 years, been a serial plotter to kill Social Security and set up private accounts to be managed by the same financial institutions which have brought the country to the brink.

Cato’s cynicism toward “we the people” was on display in this policy plot it unveiled in the Cato Journal in 1983.  Titled “Achieving a Leninist Strategy”, Stuart Butler and Peter Germanis wrote:

“First, we must recognize that there is a firm coalition behind the present Social Security system, and that this coalition has been very effective in winning political concessions for many years. Before Social Security can be reformed, we must begin to divide this coalition and cast doubt on the picture of reality it presents to the general public.

“Second, we must recognize that we need more than a manifesto — even one as cogent and persuasive as that provided by Peter Ferrara. What we must do is construct a coalition around the Ferrara plan, a coalition that will gain directly from its implementation. That coalition should consist of not only those who will reap benefits from the IRA-based private system Ferrara has proposed but also the banks, insurance companies, and other institutions that will gain from providing such plans to the public.”

Cato currently employs José Piñera as a senior fellow and co-chairman of its benignly renamed “Social Security Choice.”  Cato’s web site describes Piñera as “formerly Chile’s Secretary of Labor” and “architect of the country’s successful reform of its pension system.”  In reality, Piñera served in Chile under the murderous military dictatorship of General Augusto Pinochet.  Rather than being a “successful reform” of the pension system, actuarial studies of the plans in Chile describe them as an asset stripping operation that allowed Wall Street firms to grab as much as 20 to 25 per cent of the workers’ wages in fees to “manage” the money.  Piñera’s billionaire brother, Sebastian, is currently President of Chile.

Killing Social Security is just the start.  The freedom-lovers at Cato want to also kill federally subsidized school lunches, the minimum wage, and collective bargaining.

On June 15, 2010, Daniel J. Mitchell, a senior fellow at Cato, posted the following: “In a free society, there should be no minimum wage law. From a philosophical perspective, such requirements interfere with the freedom of contract.”  Mitchell was previously Director of Tax and Budget Policy for Citizens for a Sound Economy, which was founded in 1984 by the Koch brothers, Richard Fink, a current executive of Koch, and Jay Humphreys, deceased husband of Ethelmae Humphreys, a long-tenured member of the Cato board.

Chris Edwards, Director of Tax Policy Studies at Cato, wrote the following in Cato’s “Tax and Budget Bulletin” of March 2010.  “Collective bargaining is a misguided labor policy because it violates civil liberties and gives unions excessive power to block needed reforms. To provide policymakers with greater flexibility and to improve government efficiency, states should follow the lead of Virginia and ban collective bargaining in the public sector.”

Edwards wrote again in May of 2010, in an analysis of how to slash the budget of the Department of Agriculture, that “The department’s food subsidy activities—food stamps, school lunches, and WIC—are properly local and private functions. They should be devolved to the states, with each state determining appropriate policies for its own residents. Such reforms would save federal taxpayers about $98 billion annually. Some states may decide to fund food subsidies on their own, but competition between the states would likely result in smaller, more innovative programs.”  There are currently 16.4 million children, one in every five, living in poverty in Cato’s America.

Both Edwards and Mitchell obtained their graduate degrees in  economics from George Mason University, where Koch foundations have given over $30 million.  In fact, as this search of the Cato web site starkly illustrates, the Cato Institute and George Mason University – both funded by the Kochs – have become their own self reinforcing echo chamber.

Jason Kuznicki, a research fellow at the Cato Institute, offered this take on the stakes involved in the Cato-Koch battle. “What we are witnessing here is a very important moment in the history of conservative-libertarian fusionism.  Possibly its death knell.”

Kuznicki points out that Cato has spoken out for civil rights. That could be lost under a Koch regime.  I would argue that Cato’s advocacy for corporate rights is incompatible with both human rights and civil rights.  I think that the free market, creative destruction so beloved by the faux libertarians has at last found a worthy target in Cato.

Pam Martens worked on Wall Street for 21 years. She spent the last decade of her career advocating against Wall Street’s private justice system, which keeps its crimes shielded from public courtrooms. She maintains, along with Russ Martens, an ongoing archive dedicated to this financial era at www.WallStreetOnParade.com. She has no security position, long or short, in any company mentioned in this article. She is a contributor to Hopeless: Barack Obama and the Politics of Illusion, forthcoming from AK Press. She can be reached at pamk741@aol.com

 

Pam Martens has been a contributing writer at CounterPunch since 2006. Martens writes regularly on finance at www.WallStreetOnParade.com.

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