Crossroads GPS distorts the facts in TV ads that attack two Democratic Senate candidates for their roles in the Wall Street bailout and the federal health care law:
- The well-heeled conservative group says Elizabeth Warren was appointed to oversee how tax dollars were spent for bank bailouts that “helped pay big bonuses to bank executives.” That’s absurd. Warren chaired a bipartisan watchdog panel that held hearings, reviewed data and wrote reports to Congress on the effectiveness of the program, but had no control over how banks spent their bailout funds. Bonuses fell under a special “pay czar” at the Treasury.
- Another ad says Nebraska Sen. Ben Nelson “demanded a payoff” for voting for the new health care law and was “accused of selling his vote, cynical what’s-in-it-for-me-type politics.” That insinuation of personal corruption is false. Nelson demanded nothing for himself. He also denied seeking the provision the ad actually refers to, which would have benefited Nebraska over other states.
Crossroads GPS — the well-heeled conservative group founded with the help of former George W. Bush adviser Karl Rove and former Republican National Committee Chairman Ed Gillespie — already has been very active in key 2012 Senate races. The group released five TV ads last month and, as we wrote at the time, distortions abounded.
On Dec. 8, the group announced it had launched a $1.1 million, two-week TV ad campaign targeting four Democratic Senate candidates. In this article, we’ll look at the ads against Elizabeth Warren of Massachusetts and Sen. Ben Nelson of Nebraska. Again, distortions abound.
Elizabeth Warren’s Bailout Role
Warren, a Harvard Law School professor, is running for the U.S. Senate from Massachusetts, challenging Sen. Scott Brown. Crossroads GPS previously targeted Warren in a misleading TV ad on statements she made about Occupy Wall Street in an attempt to tie her to “extreme left protests.” In a 180-degree turn, Crossroads now seeks to portray Warren as a tool for Wall Street banks, ridiculing her promise to be “a voice” for the middle class.
The new ad, which is titled “Champion,” begins with a clip of Warren saying she will be “a voice in the room on behalf of middle-class families.” It then cuts to an announcer who mocks her promise.
Announcer: "Really? Congress had Warren oversee how your tax dollars were spent bailing out the same banks that helped cause the financial meltdown. Bailouts that helped pay big bonuses to bank executives, while middle-class Americans lost out."
That’s misleading. Yes, Warren served from 2008 to 2010 as chairwoman of the five-member Congressional Oversight Panel, a bipartisan committee set up by the same legislation that created the Troubled Assets Relief Program (TARP). But so what? Committee members, who were appointed by congressional leaders of both parties, also included two Republicans: Rep. Jeb Hensarling, who voted against the bailout, and Sen. John Sununu, who voted for it.
Did Warren give money to the troubled banks? No, that was done by Treasury — as required by a law passed with bipartisan support and signed by then-President George W. Bush, a Republican.
Likewise, Warren and her committee had nothing to do with giving “big bonuses to bank executives.” That was done by the banks. And oversight of bonuses was the responsibility of the Office of Special Master for TARP Executive Compensation within the Treasury Department. Kenneth Feinberg, known informally as the “pay czar,” headed that office. Feinberg had the power, among other things, to approve compensation structures of top executives of certain TARP recipients and retroactively seek reimbursement for excessive bonuses paid by TARP recipients if he deemed them “contrary to the public interest.” As he explained on page 13 of his final report, Feinberg found $1.7 billion in excessive bonuses paid to top executives after the banks received TARP money; however, he did not seek reimbursement because the payments were made by institutions that already had repaid their TARP funds or changed their compensation structure.
For her part, Warren was critical of executive compensation that relies too heavily on bonuses. In an Oct. 22, 2009, interview on CBS, Warren called it a “problem in American industry” because in some cases it puts short-term gain ahead of long-term health of the company. Warren said, “They have taken taxpayer money, unemployment is now running at almost 10 percent, millions of families are facing foreclosure on their homes, and yet the executives want to say, ‘I take your money when I make mistakes and I still want to compensate myself richly because I’m the one who is in charge of this big company.”
So, what was the role of Warren and her oversight committee? The nonpartisan Government Accountability Office explained it this way in a November 2009 report: “The panel is empowered to hold hearings, review official data, and write reports on actions taken by Treasury and financial institutions and their effect on the economy.” A year later, the GAO said the oversight panel’s monthly reports primarily focused on transparency to help taxpayers better understand how the money was spent.
GAO, November 2010: Many of its recommendations have focused on issues of transparency and what COP views as the need to be clearer on goals and metrics so that taxpayers can better understand whether their monies are being effectively utilized.
Suggesting Warren is responsible for the Wall Street bailout is like blaming your tax accountant for how you spent your paycheck.
How did she perform as chairwoman of the watchdog panel? Warren was appointed by Senate Majority Leader Harry Reid and served for 22 months before resigning in September 2010. In a Nov. 5, 2009, article, the Associated Press said Warren “gained prominence as an early voice questioning whether Treasury was providing enough transparency as it doled out the bailout money.” This particular AP article was about a panel report that criticized the Treasury Department for guaranteeing $4.3 trillion in risky bank assets — putting far more taxpayer money at risk than the law allowed the department to spend buying troubled assets. It quoted Warren as describing the loan guarantees as “a very dangerous tool.”
At a July 21, 2010, Senate hearing, Republican Sen. Charles Grassley commended Warren and two other “TARP watchdogs” for their work. “Each of you has brought more transparency and accountability to the activities of Treasury,” Grassley said. “In short, you have kept Treasury honest, a critical service with so much taxpayer money at stake.”
On the ad’s overarching point — that Warren helped big banks at the expense of the middle class — we point you to an April 22, 2009, Wall Street Journal story. In it, Warren is quoted as confronting Treasury Secretary Tim Geithner on the program’s failure to help average families.
Wall Street Journal, April 22, 2009: ‘People are angry because they are paying for programs that haven’t been fully explained and that have no apparent benefit for their families or the economy as a whole,’ Harvard University law professor Elizabeth Warren told Treasury Secretary Timothy Geithner during a hearing on Capitol Hill.
On the flip side, Warren had been criticized for not being transparent with the panel’s own finances — which is ironic given her criticism of the Treasury Department for the same thing.
One last thing: The ad also says that “Warren went on a ‘charm offensive’ with some of the same banks who got bailed out.” That’s a reference to a speech she gave to the Chamber of Commerce’s annual Capital Markets Summit. Crossroads cites a Politico article that described Warren’s speech as a “charm offensive” because it was part of the White House’s “outreach to business.” We’ll leave that up to you to decide whether Warren’s appearance at a Chamber of Commerce event counters her promise to work for middle-class families.
Ben Nelson’s ‘Payoff’
Crossroads’ ad attacking Sen. Ben Nelson of Nebraska goes after him for demanding a “payoff,” a false insinuation that he tried to sell his vote for personal gain. The ad actually refers to what critics called the “Cornhusker Kickback,” a deal that was added to a Senate version of the health care bill, and that would have given special help to Nebraska in the form of added federal Medicaid funds. The provision was later removed, and the final legislation boosted federal funding for all states.
The announcer in the ad says that Nelson faced a choice: “Pass Obama’s health care takeover or fight for Nebraska.” The ad goes on to say: “He demanded a payoff, accused of selling his vote, cynical what’s-in-it-for-me-type politics.”
But Nelson didn’t get special help for himself in the deal, and the ad neglects to explain what the supposed “payoff” was. The ad claims Nelson didn’t “fight for Nebraska,” and yet the very “payoff” it accuses him of seeking was in fact special federal funding just for his state. As we said, in the end, all states ended up with more federal funds, and they may well have Nelson to thank for it. Nelson has said that he didn’t ask for the Nebraska-only deal, and that he wanted all states to get the federal dollars.
The story goes back to December 2009, when Senate Majority Leader Harry Reid was trying to drum up 60 votes to pass that chamber’s health care bill. Nelson was concerned about potential federal funding of abortion, and the pertinent section was rewritten. Plus, Nebraska was given full federal funding beyond 2017 to cover the bill’s expansion of Medicaid, a joint federal-state health insurance program for low-income persons. All states were to receive full funding through 2017, but Nebraska would get funding for years to come. Nelson said on Dec. 19, 2009, that he would vote for the Senate legislation. Politico reported that the deal “might be the most blatant” of a handful of deals to certain senators to secure their votes. The headline on the story called the arrangements “payoffs,” and the Crossroads ad highlights that word.
For the record, Reid said that this was simply business as usual for legislators. “You’ll find a number of states that are treated differently than other states. That’s what legislating is all about. It’s compromise,” he was quoted as saying by Politico.
Republicans expressed outrage, but at least one senator thought that Nelson’s negotiating could open the door for all states to get the additional federal dollars. Democratic Sen. Tom Harkin of Iowa told Politico: “When you look at it, I thought well God, good, it is going to be the impetus for all the states to stay at 100 percent [federal funding]. So he might have done all of us a favor.”
Indeed, that’s nearly what happened. The states didn’t get 100 percent funding, but they came close. In February 2010, President Obama put forth a new proposal that dropped the controversial Nebraska deal, which House leaders didn’t much care for either, and instead offered increased federal funding to all states. The final health care law (see page 180) ended up giving states 100 percent federal funding for those who are newly eligible for Medicaid under the law from 2014 through 2016. In 2017, they get 95 percent. The percentage decreases slowly until it hits 90 percent for 2020 and beyond.
When the “Cornhusker” deal was first made in December 2009, Nelson told CNN that he “didn’t ask for a special favor.” And he suggested that something would need to be done for all states.
Nelson, CNN, Dec. 20, 2009: "I didn’t ask for a special favor here. … What I said is the governor of Nebraska has contacted me, he said publicly he’s having trouble with the budget. This will add to his budget woes. And I said, look, we have to have that fixed. …
"If we’re going to mandate these things on a state, then we have to pay for them. … That was my objective, to get that fixed. … But I think in the future, either the mandate goes away or the federal government provides the money, as it should."
Nelson’s staff released a timeline of events to counter the perception that the senator sold his vote. It shows that in early January 2010, Nelson said in a statement that he was “working with Senate leaders” to “treat all states the same” regarding the Medicaid expansion. About a week later, Nelson asked Reid to remove the Nebraska provision from the bill. He said in a letter to the Senate leader that the provision “was intended to serve as a placeholder that would be removed during the conference negotiations and replaced with a mechanism applying to all state governments.”
It’s true that Nelson faced a torrent of criticism when the deal was made public. A Dec. 21, 2009,editorial in Nebraska’s Lincoln Journal Star — highlighted in the Crossroads ad — asked: “Since when has Nebraska become synonymous for cynical ‘what’s in it for me’-type politics?” But the ad leaves the impression that Nelson benefited personally from some kind of corrupt payoff, and that’s not the case.
– by Eugene Kiely and Lori Robertson
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