Ken Burns’s New Documentary Reveals the Human Side of the Roosevelts – And Our Deep Connection To Their Legacy

Sep 19, 2014Felicia Wong

The success of The Roosevelts: An Intimate History highlights the people behind the policies that reshaped America.

The success of The Roosevelts: An Intimate History highlights the people behind the policies that reshaped America.

As the CEO of the Roosevelt Institute, I am reminded almost daily about the very personal connection people feel to Franklin and Eleanor Roosevelt. The extraordinary critical acclaim for the new Ken Burns documentary The Roosevelts: An Intimate History makes it clear just how widespread that feeling is.

But it also prompts me to consider why, in an age when politicians are vilified and Congress’s approval rating hovers around 14 percent, political figures from almost a century ago are being rediscovered and embraced as heroes.

Part of the answer, of course, is the film’s unique portrayal of the Roosevelts. Burns and his writing partner, Geoffrey Ward (also a proud Trustee of the FDR Presidential Library, which we support here at the Roosevelt Institute), have crafted a narrative that combines grand actors on the world stage with a very grounded depiction of the Roosevelts as people with hopes, fears, and demons to overcome. Although the film has received some criticism for focusing too much on personality and glossing over policy, the knowledge that such momentous change was not won effortlessly by remote historical figures but achieved by individuals who faced complex external and internal struggles should serve as a powerful inspiration to everyone working in politics today.

Another part of the answer is that the Roosevelts were, in fact, uniquely bold figures in American history. Franklin and Eleanor combined two things that are notoriously tough to bring together: big ideas and action. They had the ability to get things done, to experiment and tinker and move things around until they worked. Franklin set a north star, grounded in progressive values, for massive reforms to America’s corporations and banks; labor law and protections; and the social safety net. Eleanor’s boldness extended to the world stage, where she was a leader in the creation of the U.N.'s Universal Declaration of Human Rights, and to the most difficult intersections of race and class in mid-century America.

Along the way, they made mistakes – sometimes profound ones. (It is deeply meaningful to me, personally, that Eleanor pressured Franklin strongly to oppose the internment of Japanese Americans.) But when they succeeded, as they often did, they did so in ways that permanently reshaped the country and the world for the better.

In today’s politics, broken promises are accepted with weary resignation, and weak compromises are often viewed as the best we can hope for. Just imagine the popularity of a president today who could lead a program like the Civilian Conservation Corps: enacted only 32 days after FDR’s inauguration, the program ultimately employed 2.5 million young men in more than 4,500 rural camps nationwide, planting 3 billion trees that remain integral to our landscape today. And imagine how much more confidence we would have if we saw in our elected officials FDR’s kind of political leadership, which, over the course of his presidency, drove the design and implementation of hundreds of solutions to deep systemic problems, from Social Security and Glass-Steagall to the Federal Music Project. These big ideas not only worked (mostly), but also persuaded the country to believe that talk would lead to action and action would lead to results.

And finally, I think a big part of the answer, also captured in Burns’s film, lies in what Roosevelt Institute Board Chair Anna Eleanor Roosevelt has called her grandfather’s “journey from patrician to American,” which is often forgotten in lionizing portrayals of FDR. The Roosevelts were born into a very wealthy family, but for his own post-presidency, FDR had envisioned a move to his home in Warm Springs, Georgia, the small rural town where, in the 1920s, he first found some improvement from the polio that afflicted him as a young man. The home he designed for himself in Warm Springs was modest, just six rooms – mostly a big porch. The most powerful man in the world dreamed of a life as a farmer that would allow him to spend time with his neighbors – a refreshing thought at a time when the revolving door between Washington and Wall Street has never spun faster.

Some have called Franklin and Eleanor Roosevelt “traitors to their class.” As arresting a phrase as that is, it is more even more compelling to think about them another way: as examples that even the most privileged can learn and grow through their flaws and truly devote themselves to the common good. At the Roosevelt Institute, where we dedicate our time to the kinds of big, transformative economic and social policies that will further FDR and ER’s legacy today, we also need to pause to remind ourselves that it was the Roosevelts as human beings that made their big ideas come to life.

Felicia Wong is President and CEO of the Roosevelt Institute. Follow her on Twitter @FeliciaWongRI.

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Daily Digest - September 19: This Bus Doesn't Stop for Big Money

Sep 19, 2014Rachel Goldfarb

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Catholic Nuns Take On Dark Money In Politics With Nationwide Bus Tour (ThinkProgress)

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Catholic Nuns Take On Dark Money In Politics With Nationwide Bus Tour (ThinkProgress)

Sister Simone Campbell, the 2013 FDR Four Freedoms Awards laureate for Freedom of Worship, is leading a new Nuns on the Bus tour, this time focused on disenfranchised voters, writes Jack Jenkins.

Tenants Facing Eviction in Era of Skyrocketing Rents Need Legal Assistance (TAP)

Martha Bergmark emphasizes the need to support legal aid programs, noting that legal representation doubles tenants' chances of staying in their homes when fighting eviction.

Workers Deserve to Benefit from Their Productivity, Too (WaPo)

Harold Meyerson says newly proposed legislation from Rep. Chris Van Hollen that ties the performance pay tax deduction to workers' wage increases is necessary to ensure a fair deal for workers.

  • Roosevelt Take: Roosevelt Institute Fellow Susan Holmberg and Campus Network alumna Lydia Austin look at the broader problems with the performance pay provision in the tax code.

Does Silicon Valley Have a Contract-Worker Problem? (NY Mag)

Kevin Roose dives deep into the so-called "1099 Economy," in which start-ups have independent contractors galore, many of whom may legally qualify as employees.

Demonizing the Minimum Wage (New Yorker)

William Finnegan looks at the range of statements against raising the minimum wage, which consistently misrepresent minimum wage workers. They aren't just teenagers with after-school jobs.

New Republican Bill Would Paralyze National Labor Relations Board (In These Times)

Bruce Vail explains why and how the Republicans are aiming to gridlock the National Labor Relations Board, a goal that he says is primarily based in anti-union, anti-worker bias.

Tax Cuts Can Do More Harm Than Good (AJAM)

David Cay Johnston looks at a new report on tax cuts, which shows that short-term economic growth aside, badly structured tax cuts just push costs to the future and can incentivize bad investments.

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Daily Digest - September 18: The Hashtag of Democracy

Sep 18, 2014Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

From #Ferguson to #OfficerFriendly (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford explains what the New York Police Department will need to do in order to make its new social media initiatives successful.

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

From #Ferguson to #OfficerFriendly (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford explains what the New York Police Department will need to do in order to make its new social media initiatives successful.

Census Report Shows Rise in Full-Time Work, Undercutting Claims by Health Reform Opponents (Off the Charts)

Paul N. Van de Water says the Census Bureau report proves that the Affordable Care Act isn't leading to a large increase in part-time work. In fact, part-time work has decreased.

Fed Signals No Hurry to Raise Interest Rates (NYT)

Binyamin Appelbaum reports on the Federal Reserve's latest policy statement, which affirms the necessity of continued stimulus in the form of near-zero short-term interest rates.

What Cutting Jobless Benefits Wrought (U.S. News & World Report)

Pat Garofalo points to the cutting of federal extended unemployment benefits as one of the sources of our continually too-high poverty rate.

The Occupy Movement Takes on Student Debt (New Yorker)

Rolling Jubilee, which buys up debt and cancels it, may be among the Occupy movement's biggest successes, writes Vauhini Vara, but its real hope is for debtors to organize.

Meet the Domestic Worker Organizer Who Won the 'Genius' Grant (Bloomberg Businessweek)

Josh Eidelson profiles Ai-jen Poo, director of the National Domestic Workers Alliance, who plans to use her MacArthur "Genius Grant" to endow an organizing fellowship for domestic workers.

Want to Live in a State with No Income Tax? Make Sure You're Super Rich First (The Guardian)

Siri Srinivas looks at a new report on state-level taxes, which shows that most Americans think fair taxes should be progressive by nature, emphasizing income and property taxes over sales tax.

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Wall Street Swindled Local Governments, Too. Here’s How They Can Get Their Money Back.

Sep 17, 2014Saqib Bhatti

Predatory lenders drove municipal governments and taxpayers into debt with risky interest rate swap deals that may have violated federal regulations.

The story of how Wall Street banks steered unsuspecting homebuyers towards complex mortgages with hidden risks and hidden costs has been well-documented. In fact, the typical sales pitch for adjustable-rate mortgages was premised on the false notion that home values never fall and that borrowers could refinance their loans before interest rates jumped.

Predatory lenders drove municipal governments and taxpayers into debt with risky interest rate swap deals that may have violated federal regulations.

The story of how Wall Street banks steered unsuspecting homebuyers towards complex mortgages with hidden risks and hidden costs has been well-documented. In fact, the typical sales pitch for adjustable-rate mortgages was premised on the false notion that home values never fall and that borrowers could refinance their loans before interest rates jumped.

Less widely understood is the fact that a very similar story played out with cities, states, and other municipal borrowers that were also steered into predatory interest rate swap deals riddled with hidden risks and hidden costs. Banks pitched these deals as a way for municipalities to save money on bond issuances: instead of issuing a traditional bond that had a fixed interest rate, they could take out a cheaper variable-rate bond that had an adjustable interest rate, but use a swap to protect against the risk of interest rate spikes.

Under this structure, municipalities made fixed-rate payments to banks on their swap deals, while the banks gave them back a variable-rate payment that was intended to offset the interest rate that the municipality had to pay its bondholders. The idea was that this would allow borrowers to get a “synthetic fixed rate” on their debt that was cheaper than what they would have to pay on a comparable conventional fixed-rate bond.

However, there were numerous risks embedded in these deals. For example:

  • The variable interest rate that the banks paid to the municipality could fall short of the rate that the municipality owed bondholders, creating a shortfall.
  • These deals contained many termination clauses that would allow the banks to cancel the deals and charge municipalities tens or even hundreds of millions in termination penalties.
  • Rather than rising, interest rates could crater, causing the net payments on the swap deals to skyrocket and leaving the municipalities unable to take advantage of the low-interest environment unless they terminated their swaps and paid hefty termination penalties.

Even though banks tried to downplay or dismiss these risks in order to push interest rate swaps, all of them materialized in the aftermath of the 2008 financial crisis:

  • When interest rates on a type of variable-rate bond known as an auction rate security shot up, the bank payments on the corresponding swaps could not cover those payments, and cities and states across the country were stuck paying double-digit interest rates to bondholders.
  • When Lehman Brothers filed for bankruptcy and defaulted on its swap payments with municipalities, it triggered termination clauses on the bank’s swaps. In an ironic twist, cities and states actually had to pay penalties to Lehman because of the way the termination clauses were written.
  • When the Federal Reserve slashed interest rates in response to the financial crash, it also drove down variable rates on swaps, causing the net payments on the swaps for cities and states to soar and preventing taxpayers from enjoying any of the benefits from the low rate environment.

As a result, municipalities across the country have been hit with large bills to Wall Street at the same time that they are trying to close record budget shortfalls amid the biggest economic downturn in 80 years. The Detroit Water and Sewage Department is shutting off water to families who have missed just a couple of payments on their water bill so that it can pay off more than $500 million in termination penalties on its swaps. The City of Chicago is now paying $72 million a year on its swaps as a result of the low interest rates, even as entire neighborhoods on the south and west sides of the city fall into disrepair. The school district in Chicago is paying another $36 million a year on swaps, while the Board of Education is invoking budget problems to justify the largest mass school closing in national history. In Wisconsin, the state is now paying $25 million a year on its swaps and making catastrophic cuts to state healthcare programs. These are just a few examples of a trend cropping up everywhere in the U.S.

It is no accident that the same communities that were disproportionately targeted for predatory mortgages are also bearing the brunt of these predatory municipal finance deals. Across the country, working class communities of color are disproportionately impacted by cuts to public services, and austerity measures serve to exacerbate the crisis in those communities in particular.

Luckily, there is something that public officials can do to stop the bleeding. Under Rule G-17 of the Municipal Securities Rulemaking Board (MSRB), a federal regulator charged with protecting the interests of municipal borrowers, banks that pitch deals to public officials must “deal fairly” with them. According to the MSRB, this means that they “must not misrepresent or omit the facts, risks, potential benefits, or other material information about municipal securities activities undertaken with the municipal issuer.” In other words, they must not downplay the risks associated with deals like interest rate swaps, and they must not mislead public officials about the likelihood of such risks materializing. The banks must ensure that public officials truly understand the risks of the deals they enter into.

This is a burden that was not met in the typical swap transaction. As a rule, bankers highlighted the upside and minimized the potential downside in pitching these deals. This was in violation of MSRB Rule G-17 and municipalities like Chicago and Detroit have legal recourse to potentially win back hundreds of millions from Wall Street. Cities, states, and other municipal borrowers can pursue these legal claims by filing for arbitration with the Financial Industry Regulatory Authority (FINRA).

The Baldwin County Sewer Service, a privatized utility in Alabama, successfully used a similar legal argument earlier this year to win back its swap payments and get out of its deals without any termination penalties. The total value of the award was approximately $10 million. The potential claims could be many magnitudes higher for cities and states that had significantly greater swap exposure.

However, officials in municipalities with swaps need to act fast, because time may be running out. FINRA has a six-year eligibility period on these claims. Because many of the risks associated with swaps materialized in October 2008, when interest rates plummeted as a result of the federal response to the financial crisis, it is possible that the clock could run out on these claims as early as October 2014. Public officials like Mayor Rahm Emanuel in Chicago and Governor Scott Walker in Wisconsin should act now to potentially recover millions for their constituents before it is too late.

Saqib Bhatti is a Fellow at the Roosevelt Institute and Director of the ReFund America Project.

Image via Thinkstock

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Daily Digest - September 17: Who's Taking Part in Our Unequal Democracy?

Sep 17, 2014Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Fighting Inequality in the New Gilded Age (Boston Review)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Fighting Inequality in the New Gilded Age (Boston Review)

Roosevelt Institute Fellow Sabeel Rahman reviews three new books that ask who is engaging in democracy and how they are doing so in light of today's economic inequality.

Home Free? (New Yorker)

James Surowiecki looks at Utah's Housing First and Rapid Rehousing programs as examples of a better approach to solving social problems: investing in prevention.

At the Uber for Home Cleaning, Workers Pay a Price for Convenience (WaPo)

Lydia DePillis compares HomeJoy, an app-based cleaning service, to traditional services that count workers as employees, complete with worker's compensation for a job that involves harsh chemicals.

Do State Retirement Pensions Belong with Wall Street Hedge Funds? (The Guardian)

Suzanne McGee looks to current arguments in Rhode Island to explain why the high risks and high fees associated with hedge funds make some pension managers think twice.

‘A National Admissions Office’ for Low-Income Strivers (NYT)

David Leonhardt says Questbridge, a non-profit connecting low-income students to full-ride scholarships at top universities, has an innovative approach that is shifting the admissions process.

Americans' Stagnant Incomes, in Two Depressing Charts (Vox)

Danielle Kurtzleben looks at new data from the U.S. Census Bureau, which confirms that U.S. household income remains stagnant and income inequality hasn't shifted either.

New on Next New Deal

Wall Street Swindled Local Governments, Too. Here’s How They Can Get Their Money Back.

Roosevelt Institute Fellow Saqib Bhatti explains how Wall Street harmed municipalities with risky interest rate swap deals, and argues that those deals may have been illegal and should be fought in court.

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Daily Digest - September 16: It's Time to Rethink the Purpose of Corporations

Sep 16, 2014Rachel Goldfarb

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The Overpaid CEO (Democracy)

Roosevelt Institute Fellow Susan Holmberg and Mark Schmitt argue that exorbitant executive pay cannot be addressed without reconceptualizing a corporation as more than just an agent of its shareholders.

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

The Overpaid CEO (Democracy)

Roosevelt Institute Fellow Susan Holmberg and Mark Schmitt argue that exorbitant executive pay cannot be addressed without reconceptualizing a corporation as more than just an agent of its shareholders.

Independence Has Costs and Benefits (The Scotsman)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that Scotland should base its decision about independence on values rather than short-run economic gains or losses.

The Myth That Sold the Financial Bailout (AJAM)

Letting the investment banks collapse wouldn't have caused a second Great Depression, says Dean Baker. Between the FDIC and stimulus deals, the economy would still have recovered.

Why Pensions Went Away: A Theory (WSJ)

Lauren Weber looks at a new study on pensions, which suggests that the increase in influential investors who buy large blocks of stocks is tied to dropped pension plans.

Income Inequality is Hurting State Tax Revenue, Report Says (WaPo)

A new study from Standard & Poors shows the impact of inequality on state budgets, writes Josh Boak. S&P says that changing state tax codes won't be enough to solve this problem.

What the Poverty Rate Tells Us About the Overall Economy (NYT)

Jared Bernstein expects that the 2013 data will show that the poverty rate has continued to hold steady around 15 percent, because the recovery hasn't reached low-income households.

Scott Walker Wants To Fight Feds Over Welfare Drug Tests (HuffPo)

Federal law does not allow drug testing for food stamps or unemployment insurance, but Arthur Delaney reports that the Wisconsin governor wants to push back on that rule.

Unseen Toll: Wages of Millions Seized to Pay Past Debts (ProPublica)

Paul Kiel looks at the rise of wage garnishment for consumer debts, a system that has few protections for debtors and causes great financial hardship, since up to 25 percent of a paycheck can be taken.

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Daily Digest - September 15: Violence Against Women is Still a Threat, Abroad and at Home

Sep 15, 2014Rachel Goldfarb

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Hillary Clinton Seeks End to Gender Violence by Terrorist Groups (CBS News)

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Hillary Clinton Seeks End to Gender Violence by Terrorist Groups (CBS News)

Clinton also spoke about issues of violence against women in the U.S., reports Hannah Fraser-Chanpong, reiterating her stance that domestic violence requires criminal, not cultural, responses.

White House Photo Ops, Old School (NYT)

Roosevelt Institute Senior Fellow David Woolner says the new Ken Burns film The Roosevelts: An Intimate History highlights the interconnectedness of the lives of Theodore, Franklin, and Eleanor.

Shareholders Say, ‘Show Me The Money’ (In These Times)

David Sirota explains the fight over corporate political spending disclosures. A proposed Securities and Exchange Commission rule has significant public support – and plenty of corporate pushback.

  • Roosevelt Take: Roosevelt Institute Fellow Susan Holmberg looks at the costs and benefits of mandating corporate political spending disclosure.

Workers Go on Strike at Hammond Automotive Seats Plant (Chicago Tribune)

The workers are "tired of being treated like fast-food industry employees," writes Alexandra Chachkevitch. They are asking for the elimination of a salary cap instituted during the financial crisis.

Workers in Maine Buy Out Their Jobs, Set an Example for the Nation (Truthout)

Rob Brown, Noemi Giszpenc, and Brian Van Slyke explain why the creation of the Island Employee Cooperative in Deer Isle, Maine is a particularly groundbreaking achievement.

New on Next New Deal

How Much are Local Civil Asset Forfeiture Abuses Driven By the Feds? A Reply to Libertarians

Roosevelt Institute Fellow Mike Konczal counters libertarian arguments, showing that the profit motive is bottom-up: asset forfeiture in non-Federal cases is driven by local policy.

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How Much are Local Civil Asset Forfeiture Abuses Driven By the Feds? A Reply to Libertarians

Sep 12, 2014Mike Konczal

(Wonkish, as they say.)

I wrote a piece in the aftermath of the Michael Brown shooting and subsequent protests in Ferguson noting that the police violence, rather than a federalized, militarized affair, should be understood as locally driven from the bottom-up. Others made similar points, including Jonathan Chait (“Why the Worst Governments in America Are Local Governments”) and Franklin Foer (“The Greatest Threat to Our Liberty Is Local Governments Run Amok”). Both are smart pieces.

The Foer piece came into a backlash on a technical point that I want to dig into, in part because I think it is illuminating and helps proves his point. Foer argued that “If there’s a signature policy of this age of unimpeded state and local government, it’s civil-asset forfeiture.” Civil-asset forfeiture is where prosecutors press charges against property for being illicit, a legal tool that is prone to abuse. (I’m going to assume you know the basics. This Sarah Stillman piece is fantastic if you don’t, or even if you do.)

Two libertarian critics jumped at that line. Jonathan Blanks of the Cato Institute wrote “the rise of civil asset forfeiture is a direct result of federal involvement in local policing. In what are known as ‘equitable sharing’ agreements, federal law enforcement split forfeiture proceeds with state and local law authorities.”

Equitable sharing is a system where local prosecutors can choose to send their cases to the federal level and, if successful, up to 80 percent of the forfeited funds go back to local law enforcement. So even in states where the law lets law enforcement keep less than 80 percent of funds to try and prevent corruption (by handing the money to, say, roads or schools), “federal equitable sharing rules mandate those proceeds go directly to the law enforcement agencies, circumventing state laws to prevent “‘policing for profit.’”

Lucy Steigerwald at Vice addresses all three posts, and make a similar point about Foer. “Foer mentions the importance of civil asset forfeiture while skirting around the fact that forfeiture laws incentivize making drug cases into federal ones, so as to get around states with higher burdens of proof for taking property...Include a DEA agent in your drug bust—making it a federal case—and suddenly you get up to 80 percent of the profits from the seized cash or goods. In short, it’s a hell of a lot easier for local police to steal your shit thanks to federal law.”

Equitable sharing, like all law in this realm, needs to be gutted yesterday, and I’m sure there’s major agreement on across-the-board reforms. But I think there’s three serious problems with viewing federal equitable sharing as the main driver of state and local forfeitures.

Legibility, Abuse, Innovation

The first is that we are talking about equitable sharing in part because it’s only part of the law that we are capable of measuring. There’s a reason that virtually every story about civil asset forfeiture highlights equitable sharing [1]. It’s because it’s one of the few places where there are good statistics on how civil asset forfeiture is carried out.

As the Institute for Justice found when they tried to create a summary of the extent of the use of civil asset forfeiture, only 29 states have a requirement to record the use of civil asset forfeiture at all. But most are under no obligation to share that information, much less make it accessible. It took two years of FOIA requests, and even then 8 of those 29 states didn’t bother responding, and two provided unusable data. There's problematic double-counting and other problems with the data that is available. As they concluded, “Thus, in most states, we know very little about the use of asset forfeiture” at the county and state level.

We do know about it at the federal level however. You can look up the annual reports of the federal Department of Justice’s Assets Forfeiture Fund (AFF) and the Treasury Forfeiture Fund (TFF) of the U.S. Department of the Treasury. There you can see the expansion of the program over time.

You simply can’t do this in any way at the county or state levels. You can’t see statistics to see if equitable sharing is a majority of forfeiture cases - though, importantly, equitable sharing was the minority of funds in the few states the Institute for Justice were able to measure, and local forfeitures were growing rapidly - or the relationship between the two. It’s impossible to analyze the number of forfeiture cases (as opposed to amount seized), which is what you’d want to measure to see the increased aggressiveness in its use on small cases.

This goes to Foer’s point that federal abuses at least receive some daylight, compared to the black boxes of county prosecutor’s offices. This does, in turn, point the flashlight towards the Feds, and gives the overall procedure a Federal focus. But this is a function of how well locals have fought off accountability.

The second point is that the states already have laws that are more aggressive than the Fed’s. A simple graph will suffice (source). The Feds return 80 percent of forfeited assets to law enforcement. What do the states return?

Only 15 states have laws that that are below the Fed’s return threshold. Far, far more states already have a more expansive “policing for profit” regime set in at the state level than what is available at the Federal level. It makes sense that for those 15 states equitable sharing changes the incentives [2], of course, and the logic extends to the necessary criterion to make a seizure. But the states, driven no doubt by police, prosecutors and tough-on-crime lawmakers, have written very aggressive laws in this manner. They don't need the Feds to police for profit; if anything they'd get in the way.

The third is that the innovative expansion of civil asset forfeiture is driven at the local level just as much as the federal level. This is the case if only because equitable sharing can only go into effect if there’s a federal crime being committed. So aggressive forfeiture of cars of drunk drivers or those who hire sex workers (even if it your wife’s car) is a local innovation, because there’s no federal law to advance them.

There’s a lot of overlap for reform across the political spectrum here, but seeing the states as merely the pawns of the federal government when it comes to forfeiture abuse is problematic. Ironically, we see this precisely because we can’t see what the states are doing, but the hints we do know point to awful abuses, driven by the profit motive from the bottom-up.

[1]  To take two prominent, excellent recent examples. Stillman at the New Yorker: “through a program called Equitable Sharing…At the Justice Department, proceeds from forfeiture soared from twenty-seven million dollars in 1985 to five hundred and fifty-six million in 1993.”

And Michael Sallah, Robert O’Harrow Jr., Steven Rich of the Washington Post: “There have been 61,998 cash seizures made on highways and elsewhere since 9/11 without search warrants or indictments through the Equitable Sharing Program, totaling more than $2.5 billion.”

If either wanted to get these numbers at the state and local levels it would be impossible.

[2] I understand why one want to put an empirical point on it, and the law needs to be changed no matter what, but the core empirical work relating payouts to equitable sharing isn’t as aggressive as you’d imagine. Most of the critical results aren’t significant at a 5% level, and even then you are talking about a 25% increase in just equitable sharing (as opposed to the overall amount forfeited by locals, which we can’t measure) relative to 100% change in state law payouts.

Which makes sense - no prosecutor is going to be fired for bringing in too much money into the school district, if only because money is fungible on the back end.

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(Wonkish, as they say.)

I wrote a piece in the aftermath of the Michael Brown shooting and subsequent protests in Ferguson noting that the police violence, rather than a federalized, militarized affair, should be understood as locally driven from the bottom-up. Others made similar points, including Jonathan Chait (“Why the Worst Governments in America Are Local Governments”) and Franklin Foer (“The Greatest Threat to Our Liberty Is Local Governments Run Amok”). Both are smart pieces.

The Foer piece came into a backlash on a technical point that I want to dig into, in part because I think it is illuminating and helps proves his point. Foer argued that “If there’s a signature policy of this age of unimpeded state and local government, it’s civil-asset forfeiture.” Civil-asset forfeiture is where prosecutors press charges against property for being illicit, a legal tool that is prone to abuse. (I’m going to assume you know the basics. This Sarah Stillman piece is fantastic if you don’t, or even if you do.)

Two libertarian critics jumped at that line. Jonathan Blanks of the Cato Institute wrote “the rise of civil asset forfeiture is a direct result of federal involvement in local policing. In what are known as ‘equitable sharing’ agreements, federal law enforcement split forfeiture proceeds with state and local law authorities.”

Equitable sharing is a system where local prosecutors can choose to send their cases to the federal level and, if successful, up to 80 percent of the forfeited funds go back to local law enforcement. So even in states where the law lets law enforcement keep less than 80 percent of funds to try and prevent corruption (by handing the money to, say, roads or schools), “federal equitable sharing rules mandate those proceeds go directly to the law enforcement agencies, circumventing state laws to prevent “‘policing for profit.’”

Lucy Steigerwald at Vice addresses all three posts, and make a similar point about Foer. “Foer mentions the importance of civil asset forfeiture while skirting around the fact that forfeiture laws incentivize making drug cases into federal ones, so as to get around states with higher burdens of proof for taking property...Include a DEA agent in your drug bust—making it a federal case—and suddenly you get up to 80 percent of the profits from the seized cash or goods. In short, it’s a hell of a lot easier for local police to steal your shit thanks to federal law.”

Equitable sharing, like all law in this realm, needs to be gutted yesterday, and I’m sure there’s major agreement on across-the-board reforms. But I think there’s three serious problems with viewing federal equitable sharing as the main driver of state and local forfeitures.

Legibility, Abuse, Innovation

The first is that we are talking about equitable sharing in part because it’s only part of the law that we are capable of measuring. There’s a reason that virtually every story about civil asset forfeiture highlights equitable sharing [1]. It’s because it’s one of the few places where there are good statistics on how civil asset forfeiture is carried out.

As the Institute for Justice found when they tried to create a summary of the extent of the use of civil asset forfeiture, only 29 states have a requirement to record the use of civil asset forfeiture at all. But most are under no obligation to share that information, much less make it accessible. It took two years of FOIA requests, and even then 8 of those 29 states didn’t bother responding, and two provided unusable data. There's problematic double-counting and other problems with the data that is available. As they concluded, “Thus, in most states, we know very little about the use of asset forfeiture” at the county and state level.

We do know about it at the federal level however. You can look up the annual reports of the federal Department of Justice’s Assets Forfeiture Fund (AFF) and the Treasury Forfeiture Fund (TFF) of the U.S. Department of the Treasury. There you can see the expansion of the program over time.

You simply can’t do this in any way at the county or state levels. You can’t see statistics to see if equitable sharing is a majority of forfeiture cases - though, importantly, equitable sharing was the minority of funds in the few states the Institute for Justice were able to measure, and local forfeitures were growing rapidly - or the relationship between the two. It’s impossible to analyze the number of forfeiture cases (as opposed to amount seized), which is what you’d want to measure to see the increased aggressiveness in its use on small cases.

This goes to Foer’s point that federal abuses at least receive some daylight, compared to the black boxes of county prosecutor’s offices. This does, in turn, point the flashlight towards the Feds, and gives the overall procedure a Federal focus. But this is a function of how well locals have fought off accountability.

The second point is that the states already have laws that are more aggressive than the Fed’s. A simple graph will suffice (source). The Feds return 80 percent of forfeited assets to law enforcement. What do the states return?

Only 15 states have laws that that are below the Fed’s return threshold. Far, far more states already have a more expansive “policing for profit” regime set in at the state level than what is available at the Federal level. It makes sense that for those 15 states equitable sharing changes the incentives [2], of course, and the logic extends to the necessary criterion to make a seizure. But the states, driven no doubt by police, prosecutors and tough-on-crime lawmakers, have written very aggressive laws in this manner. They don't need the Feds to police for profit; if anything they'd get in the way.

The third is that the innovative expansion of civil asset forfeiture is driven at the local level just as much as the federal level. This is the case if only because equitable sharing can only go into effect if there’s a federal crime being committed. So aggressive forfeiture of cars of drunk drivers or those who hire sex workers (even if it your wife’s car) is a local innovation, because there’s no federal law to advance them.

There’s a lot of overlap for reform across the political spectrum here, but seeing the states as merely the pawns of the federal government when it comes to forfeiture abuse is problematic. Ironically, we see this precisely because we can’t see what the states are doing, but the hints we do know point to awful abuses, driven by the profit motive from the bottom-up.

[1]  To take two prominent, excellent recent examples. Stillman at the New Yorker: “through a program called Equitable Sharing…At the Justice Department, proceeds from forfeiture soared from twenty-seven million dollars in 1985 to five hundred and fifty-six million in 1993.”

And Michael Sallah, Robert O’Harrow Jr., Steven Rich of the Washington Post: “There have been 61,998 cash seizures made on highways and elsewhere since 9/11 without search warrants or indictments through the Equitable Sharing Program, totaling more than $2.5 billion.”

If either wanted to get these numbers at the state and local levels it would be impossible.

[2] I understand why one want to put an empirical point on it, and the law needs to be changed no matter what, but the core empirical work relating payouts to equitable sharing isn’t as aggressive as you’d imagine. Most of the critical results aren’t significant at a 5% level, and even then you are talking about a 25% increase in just equitable sharing (as opposed to the overall amount forfeited by locals, which we can’t measure) relative to 100% change in state law payouts.

Which makes sense - no prosecutor is going to be fired for bringing in too much money into the school district, if only because money is fungible on the back end.

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Daily Digest - September 12: Students Shouldn't Go Hungry on College Campuses

Sep 12, 2014Rachel Goldfarb

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How One Student is Fighting the College Hunger Crisis (MSNBC)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

How One Student is Fighting the College Hunger Crisis (MSNBC)

Ned Resnikoff profiles Yvonne Montoya, President of the Santa Monica College chapter of the Roosevelt Institute | Campus Network, and her work to get food stamps accepted on campus.

A Tour of the Roosevelt Family's New York (WSJ)

Sophia Hollander speaks with Roosevelt Institute Senior Fellow David Woolner about the Roosevelt legacy in New York through fourteen sites across the state, in light of the upcoming Ken Burns documentary The Roosevelts.

Measuring the Impact of States’ Obamacare Decisions (WaPo)

Jason Millman looks at a new study on how costs varied for people buying insurance based on their states' approach to the Affordable Care Act. States with successful exchanges had the lowest costs.

Why Co-ops Are the Future of the American Economy (AJAM)

Worker-owned businesses should appeal to liberals and conservatives alike, writes Matthew Harwood, because conservatives see ownership as building self-sufficiency and liberals appreciate the higher wages.

The Inflation Cult (NYT)

The investors and economists who continue to insist that runaway inflation is coming to destroy the U.S. economy are a sign of just how polarized our society has become, writes Paul Krugman.

Allentown Bets Big to Shed its Former Image (Marketplace)

Tommy Andres looks at how tax incentives structured through a Neighborhood Improvement Zone have begun to revitalize Allentown's downtown.

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Daily Digest - September 11: Funding Universal Preschool Means Taking Banks to Task

Sep 11, 2014Rachel Goldfarb

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Bright Future Chicago Pushes for Universal Preschool (Chicago Tonight)

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Bright Future Chicago Pushes for Universal Preschool (Chicago Tonight)

Roosevelt Institute Fellow Saqib Bhatti explains one way that universal preschool could be funded: Chicago could pursue legal claims against banks for bad interest rate swap deals.

Jerry Brown Signs Bill Requiring Employers to Give Paid Sick Leave (The Sacramento Bee)

California is the second state to enact state-wide paid sick leave, but David Siders reports that labor groups aren't in full support of the new law because it excludes home health care workers.

Asset Limits Are a Barrier to Economic Security and Mobility (CAP)

Rebecca Vallas and Joe Valenti explain how asset limits on social safety net programs prevent low-income families from building necessary economic stability, and lay out a plan for reform.

The Federal Reserve's Too Cozy Relations With Banks (WSJ)

Stephen Haber and Ross Levine suggest ways to limit banks' influence with the Federal Reserve, including requiring ex-Fed officials to agree to a waiting period before taking jobs in financial services.

Student Debt Collections Are Leaving the Elderly in Poverty (Bloomberg Businessweek)

Federal student debt among the elderly has increased sixfold since 2005, and a law meant to keep garnishments from putting retirees in poverty is in dire need of an update, reports Natalie Kitroeff.

Who Needs a Smoke-Filled Room? (NYT)

Thomas Edsall lays out an example of the complicated structures that allow tax-exempt "social welfare" organizations to spend millions of dollars on political campaigns with little accountability.

These Charts Are Good News if Your Employer Pays for Health Insurance (TNR)

Jonathan Cohn says that the slowed premium increases for employer-sponsored insurance this year are another sign that the Affordable Care Act is keeping health care costs down.

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