The American Prospect #332

Maureen Tkacik on health care Ponzi schemes

David Dayen on the new industrial policy

Ramenda Cyrus on predatory lending

IDEAS, POLITICS & POWER

HOW THE FARM BILL DELIVERS FOR CORPORATE AMERICA

BY LUKE GOLDSTEIN

Made in America is a Progressive Value

Over the past two years, progressives have helped build new economic policy centered on American workers, U.S. factories, and a clean energy future. In 2023, it’s time to make it real by:

• Building upon industrial policy like the CHIPS and Science Act and Inflation Reduction Act

• Making good on clean energy investments like domestic solar production and electric vehicles

• Fully implementing infrastructure investment

• Enforcing Buy America laws to ensure our future in Made in America

• Making sure the jobs created are good-paying, familysupporting jobs

Let’s keep the work going.

americanmanufacturing.org

Features

12 How Washington Bargained Away Rural America

Every five years, the farm bill brings together Democrats and Republicans who are normally at each other’s throats. The result is the continued corporatization of agriculture. By Luke

Goldstein

20 Quackonomics

Medical Properties Trust spent billions buying community hospitals in bewildering deals that made private equity rich and working-class towns reel. By Maureen

Tkacik

28 A Liberalism That Builds Power

The goals of domestic supply chains, good jobs, carbon reduction, and public input are inseparable. By David

Dayen

38 An Unemployment System Frozen in Amber

Pandemic-era benefit boosts worked for jobless recipients and the economy. Why did they go away? By Bryce

Covert

46 Getting Across Baltimore

Gov. Wes Moore’s credibility in the largest city in Maryland rides on building a light-rail line long blocked by racist fears.

By Gabrielle Gurley

52 Predatory Lending’s Prey of Color

Black and Latino borrowers are more likely to get trapped in cycles of debt, because they have few other options for dealing with structural poverty. By Ramenda Cyrus

Prospects

04 A China Reset? By Robert Kuttner

Notebook

07 What’s the Refugee Endgame for Latin America? By Jarod Facundo

10 How Big Pharma Rigged the Patent System By Ryan Cooper

Culture

57 Lee Harris on Crack-Up Capitalism

61 Rhoda Feng on Who Cares: The Hidden Crisis of Caregiving, and How We Solve It

64 Parting Shot: Why Gun Jokes No Longer Work

By Francesca Fiorentini

Cover art by Peter and Maria

Hoey

On the Web

Visit prospect.org/ontheweb to read the following stories:

$584,999

Donations by Big Pharma to Republican senators during the 2018, 2020, and 2022 election cycles. But with FDA approvals under attack by a judge Republicans confirmed, David Dayen asks if it was money well spent.

“Americans are taught in high school civics classes that our laws are legitimate because they apply to everyone equally. If we even want to pretend that we believe in this ideal, then Congress must immediately investigate Supreme Court Justice Clarence Thomas.”

“Biden must enter the campaign with two objectives:

to contrast the country over which he hopes to preside with the country where Republicans are busy stripping basic rights from women... and to make his case for freedom so forcefully that he dispels some of the doubts raised by his age—which he can only do by subjecting himself to the media and the public more than he has.”

—From Meyerson On Tap

“While the company was obviously cratering, it still managed to sell a lot of stock. But the dumb money that bought the shares must have taken the serious loss. Shares, which were trading at almost $6 as recently as February, are [in April] trading at 12 cents.”

—From Kuttner On Tap

“GOP lawyer Cleta Mitchell declared that polling places close to dorms, a previously unknown threat to the republic, somehow made it easier for packs of college sloths ‘to roll out of bed, vote, and go back to bed.’ ”

100 PEOPLE ARE KILLED AT WORK EVERY WEEK

in the U.S., according to the Bureau of Labor Statistics. Terri Gerstein examines the dire state of workplace safety.

“Prisoners

—Max Moran on judicial corruption

Gabrielle Gurley looks at the Republican war on youth voting

and their families are an easy mark—a captive audience in the most literal terms—for telecom corporations. But telecoms are a utility. And states—and the federal government—regulate utilities.” Kalena Thomhave writes about how public utility commissions can reduce the cost of prison communications.

EXECUTIVE EDITOR David Dayen

FOUNDING CO-EDITORS Robert Kuttner, Paul Starr

CO-FOUNDER Robert B. Reich

EDITOR AT LARGE Harold Meyerson

SENIOR EDITOR Gabrielle Gurley

MANAGING EDITOR Ryan Cooper

ART DIRECTOR Jandos Rothstein

ASSOCIATE EDITOR Susanna Beiser

STAFF WRITER Lee Harris

JOHN LEWIS WRITING FELLOW Ramenda Cyrus

WRITING FELLOWS Jarod Facundo, Luke Goldstein

INTERNS Hannah Crosby, Luca GoldMansour, Andrea L. Pastor, Imani Sumbi

CONTRIBUTING EDITORS Austin Ahlman, Marcia Angell, Gabriel Arana, David Bacon, Jamelle Bouie, Jonathan Cohn, Ann Crittenden, Garrett Epps, Jeff Faux, Francesca Fiorentini, Michelle Goldberg, Gershom Gorenberg, E.J. Graff, Bob Herbert, Arlie Hochschild, Christopher Jencks, John B. Judis, Randall Kennedy, Bob Moser, Karen Paget, Sarah Posner, Jedediah Purdy, Robert D. Putnam, Richard Rothstein, Adele M. Stan, Deborah A. Stone, Maureen Tkacik, Michael Tomasky, Paul Waldman, Sam Wang, William Julius Wilson, Matthew Yglesias, Julian Zelizer

PUBLISHER Ellen J. Meany

PUBLIC RELATIONS SPECIALIST Tisya Mavuram

ADMINISTRATIVE COORDINATOR Lauren Pfeil

BOARD OF DIRECTORS Daaiyah Bilal-Threats, Chuck Collins, David Dayen, Rebecca Dixon, Shanti Fry, Stanley B. Greenberg, Jacob

S. Hacker, Amy Hanauer, Jonathan Hart, Derrick Jackson, Randall Kennedy, Robert Kuttner, Ellen J. Meany, Javier Morillo, Miles Rapoport, Janet Shenk, Adele Simmons, Ganesh Sitaraman, William Spriggs, Paul Starr, Michael Stern, Valerie Wilson

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Vol. 34, No. 3. The American Prospect (ISSN 1049 -7285) Published bimonthly by American Prospect, Inc., 1225 Eye Street NW, Suite 600, Washington, D.C. 20005. Periodicals postage paid at Washington, D.C., and additional mailing offices. Copyright ©2023 by American Prospect, Inc. All rights reserved. No part of this periodical may be reproduced without consent. The American Prospect ® is a registered trademark of American Prospect, Inc. POSTMASTER: Please send address changes to American Prospect, 1225 Eye St. NW, Ste. 600, Washington, D.C. 20005. PRINTED IN THE U.S.A.

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BY ROBERT KUTTNER

A China Reset?

U.S.-China relations

are sour, with President Xi Jinping escalating military threats against Taiwan, walling off basic economic data on the Chinese economy, and doubling down on predatory development strategies. China views U.S. export controls as a deliberate scheme to maintain U.S. “technological hegemony.”

The Xi-Biden summit in Bali last November was quickly overtaken by the spy balloon fiasco, which led to a cancellation of a longplanned fence-mending visit by Secretary of State Antony Blinken.

Innumerable commentators have called for a reset, to break the cycle of escalation and counter-escalation, reduce military tensions, and achieve an economic truce. As Treasury Secretary Janet Yellen put it in a somewhat wishful speech April 20, “We believe that the world is big enough for both of us.” That, of course, is axiomatic. The difficult question is who defines the terms.

A reset is the plea of the U.S. business and financial elite that profits from trading with China, outsourcing production to China, and investing in China. That sanguine view is shared by free-market economists who are appalled by the Biden administration’s turn to industrial policy, yet think that China’s state-led capitalism is somehow consistent with free trade.

But given the fundamental differences in national interests and strategies, is a symmetrical reset even possible? Under Xi’s increasingly authoritarian regime, China’s determination to displace the U.S. has only intensified. Would gestures to reduce conflict and seek a peaceful economic coexistence be reciprocated—or just treated as a sign of weakness?

While Biden is going full speed ahead with

domestic industrial policy, the U.S. has already pulled back on policies to contain China. In many ways, the get-tough approach to China’s predatory mercantilism peaked last year.

Two emblematic cases are China’s access to U.S. capital markets, and the long-pending revision of strategic export controls. In 2020, Congress passed by voice vote the Holding Foreign Companies Accountable Act. The law required Chinese companies to comply with SEC disclosure and audit requirements, or they would be delisted from U.S. exchanges. The bipartisan lead sponsors included Republican John Kennedy of Louisiana in the Senate and Democrat Brad Sherman of California in the House.

Biden’s SEC , under Gary Gensler, was strongly supportive. In 2021, Gensler went after shell companies of China-based corporations, incorporated in offshore regulatory havens such as the Cayman Islands. Their affiliates are listed on U.S. stock exchanges with little if any accurate financial information.

Gensler directed SEC staff to “take a pause” from listing Chinese shell companies and warned investors about the risks. “I’ve asked the SEC staff to ensure that the companies provide full and fair disclosure that what [shareholders are] investing in is actually a shell company in the Caymans,” Gensler said in a video posted at the SEC YouTube channel.

In August 2022, the Public Company Accounting Oversight Board, a self-governing nonprofit created by Congress to oversee accounting standards, made a deal with Chinese financial authorities that gives PCAOB access to the audits of Chinese companies performed by Chinese accounting

firms. In return, a China-based company can use a Chinese accountant to satisfy the requirements of U.S. law. In December 2022, based on field work in China and Hong Kong reviewing audits by two large accounting firms, the PCAOB retracted its earlier finding that Chinese authorities were blocking audits. This then freed Chinese companies to list on U.S. stock exchanges.

Gensler noted that PCAOB inspectors had found “numerous deficiencies at audit firms in China and Hong Kong,” and warned that if the Chinese do not deliver full access, the SEC would prohibit trading in these companies’ securities. But as Gensler also pointed out, the law gives China three years (recently reduced to two) to comply before sanctions can be imposed.

In February 2023, the Chinese government began a pressure campaign on Chinese companies to drop Western auditors in favor of Chinese accounting firms that are themselves subject to pressure from the Chinese regime. The PCAOB acknowledges that its review of audits has found multiple and serious deficiencies. It does have the power to bring enforcement actions against auditors, including fines, publicizing the deficiencies, and even barring auditors from practice. But no matter how many deficiencies it finds, the ultimate sanction—delisting from U.S. exchanges—cannot take effect for two more years.

A few Chinese companies have preemptively delisted from U.S. stock exchanges and relisted in Hong Kong or Shanghai, where they can still get U.S. capital investment. But according to the U.S.-China Economic and Security Review Commission, as of January 2023 there were 252 Chinese companies listed on U.S. exchanges, with a total market capitalization of $1.03 trillion, up from a market value of $775.6 billion in the third quarter of 2022.

In addition, there is nothing in the law to prevent U.S. investors from putting money into exchange-traded funds or other mutual funds that invest in China. These are huge moneymakers for U.S. financial companies, which in turn lobby for little or no limits on U.S. capital flows to China. So, despite the burst of hawkishness on capital flows late in the Trump administration and early in Biden’s, China’s state-led capitalism can get all the U.S. capital it wants.

The Biden administration also seems to be tempering a more confrontational stance in

its long-awaited revised executive order on strategic export controls. In October 2022, the administration stunned Beijing with a dramatic increase in prohibited exports. These rules ban the export of advanced semiconductors, software for chip design, as well as chip manufacturing equipment. They also apply to any foreign-owned company that relies on U.S. technology.

The White House reportedly plans revisions of the export control order, to further restrict China’s access to advanced technology, AI, and quantum computing. But the order has been delayed for several months.

Advocates of a tougher policy have called for a “reverse CFIUS.” The existing Committee on Foreign Investment in the United States, based in the Treasury Department, screens proposed foreign investments in U.S. companies or technologies, and vetoes investments or corporate takeovers deemed inconsistent with the national security. A reverse CFIUS would screen proposed outgoing investments in China by American individuals and firms, and veto ones that could help either the Chinese military or its acquisition of advanced technology. But my sources tell me that the pending order will stop far short of comprehensive screening.

In the meantime, China keeps finding ways to circumvent existing export controls. The Financial Times reported that Chinese AI surveillance groups targeted by U.S. sanctions have obtained restricted technology by using cloud providers and rental arrangements with third parties, as well as purchasing chips through subsidiary companies in China. iFLYTEK , a U.S.-blacklisted, state-backed voice recognition company, has been renting access to Nvidia’s A100 chips, which are subject to sanctions.

In the view of the China hawks, we need the opposite sort of reset, with much more aggressive limits on U.S. investment in China and more stringent export controls. The hawks include many in Congress, most commissioners of the U.S.-China Commission, scholars such as Clyde Prestowitz and James Mann (who also serves as a commissioner), and critics such as Michael Stumo of the bipartisan Coalition for a Prosperous America. “The only thing that slows China down is concrete leverage and obstacles,” says Prestowitz. “We have all the leverage, access to our export market and financial markets,” adds Stumo. “Their domestic consumption is too weak and their export

surplus keeps rising. We are the biggest absorber of all that surplus.”

On May 3, Senate Majority Leader Chuck Schumer proposed an omnibus China bill that toughens both export and capital controls and creates a U.S.-led rival to the Belt and Road project, whereby China partners on infrastructure projects in emerging markets around the world. The bill, which restores some measures that were dumped from what became the CHIPS and Science Act, has the support of key Democratic committee chairs. This would represent a substantial decoupling of the sort that Secretary Yellen explicitly disavowed.

A broad analogy is the containment policy that defined U.S. strategy toward Soviet Rus-

in early May. “Our view is that we need to play in that market.”

Prestowitz has called this outrageous. “Having just been gifted $50 billion or more by the U.S. government to help them stay technologically ahead of China,” he writes, “are these rich darlings of Silicon Valley truly saying they won’t cooperate with U.S. government China policy?”

In fairness to Biden, he has resisted pressure to cut tariffs on Chinese exports first imposed by Donald Trump. He has appointed several people who understand how China plays the game, most notably U.S. trade representative Katherine Tai and China expert Rush Doshi.

Biden also needs to keep China from giving any more support to Putin’s war on Ukraine. Biden is further hobbled by the lack of support of U.S. allies in Europe. French President Macron and German Chancellor Scholz have sought to increase their countries’ economic ties with China, and Macron has spoken of a China policy independent of the United States.

sia during the Cold War. But China is a much tougher adversary than the USSR ever was. The Soviet Union suffered from deep internal rot. Its system was an economic failure. China’s is mostly an economic success. And while Soviet Russia had an extensive spy network, China has a much more potent Trojan horse: U.S. business. Domestically speaking, the China lobby is corporate America.

The U.S. solar industry, which depends on Chinese components, functions as part of that lobby. Last June, the Solar Energy Industries Association succeeded in getting the White House to block a Commerce Department investigation of illegal transshipments of Chinese solar products.

The U.S. semiconductor industry is lobbying against any restrictions on its ability to do business in or with China. “It’s our biggest market and we’re not the only industry that lays claim to that,” John Neuffer, president and chief executive officer of the Semiconductor Industry Association, said

Even as national-security adviser Jake Sullivan has embraced a salutary economic nationalism, the China hawks are less influential inside the administration. John Kerry, Biden’s special climate ambassador and a leading advocate of rapprochement with China, reports directly to Biden, going around Secretary of State Blinken. Tai is an outlier among senior Biden officials. Doshi, author of the pathbreaking book The Long Game: China’s Grand Strategy to Displace American Order, has the title of Director for China of the National Security Council. But it’s not clear how much influence he has on policymaking.

If his colleagues have read Doshi’s book, they would know that the Chinese Communist Party is unlikely to change its goals or tactics. The Biden administration has been pursuing modest confidence-building measures, such as ending restrictions on flights to and from China. But there is no sign that China is reciprocating.

“I’m skeptical of the possibility of a fundamental reset,” says James Mann. “The strategic differences are too great, unless the reset would be overwhelmingly on China’s terms.” Unless Biden stops splitting the difference, U.S. policy could be just strong enough to annoy the Chinese leadership and lead to more political and military countermoves, but not strong enough to make much difference in China’s geopolitical behavior or its economic grand strategy.

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What’s the Refugee Endgame for Latin America?

The Biden administration is trying to bottle up migrants south of the border.

By Jarod Facundo

“We saw a lot of human desperation and hardship,” Maureen Meyer, vice president for programs of the Washington Office on Latin America, a research and advocacy organization, told me over the phone. Meyer had arrived back in the United States after a trip to Honduras just days before. She described encountering 1,300 migrants at a camp who were awaiting proper documentation from the Honduran government, namely an “exit visa” that would allow them

to legally leave the country and continue their journey northward.

To even reach Honduras, a migrant must first cross the Darién Gap, one of the most dangerous migration routes on the planet. It’s a roadless 60-mile-long jungle that connects South America to Central America— Colombia to Panama. Migrants can either pay syndicate networks that offer a loosely guided passage through the dangerous, bandit-infested jungle, or they can pay to be smuggled via boat, which is somewhat safer, but also much more expensive and

has a higher chance of being detected by law enforcement. After the Darién Gap, they must move through Costa Rica and Nicaragua before entering Honduras.

Across presidencies, despite tweaks in immigration policy, the general thrust of U.S. immigration priorities has been to opt for punitive deterrence measures. President Biden has been no exception in this matter. Looking weak on the border is seen as an electoral liability. In Biden’s case, three decades of incongruous policy have come to roost as migration patterns continue unabated.

It isn’t working.

A smuggler ferries migrants across the Rio Grande.

According to Meyer, Honduras is a relative reprieve from the rest of the journey. “They’ve been through hell. You talk to enough [migrants] and they would say I would never do that again.” And that’s not just in reference to the violence and dangerous conditions of the migration. Meyer added that many migrants described a persistent dehumanization and exploitation. “They feel taken advantage of and mistreated by authorities throughout the region. Everything has a price. Everybody charges. And it’s extra because they’re migrants,” referring to the stream of payments for passage.

“What awaits them in Guatemala and Mexico can be just as bad if not worse,” Meyer said. “Mexico is a lot of abuse at the hands of corrupt Mexican agents and criminal groups that kidnap or rape.”

That’s not including instances like the fire at a migrant center in late March, just across the border from El Paso in Juarez, which left 40 dead. Mexican authorities said that among the dead and injured were migrants from Guatemala, Honduras, Venezuela, El Salvador, Colombia, and Ecuador. VICE reported that, according to survivors of the fire and security guards at the facility, the migrant center operated more as an extortion center where only migrants who could pay at least $200 were released.

Presumably, many of the migrants at the Juarez facility intended to eventually enter the U.S., further emphasizing how the Juarez center is a micro-example of the kinds of black markets entirely sustained by human desperation and suffering—a downstream effect of the Biden administration’s preference for deterrence as a strategy over easing restriction.

The Biden administration’s posture toward the border and enforcement activities has been based upon an “addressing the root causes of migration in Central America” approach, to quote a July 2021 report whose foreword was written by Vice President Harris just after the White House announced that Harris was in charge of spearheading a private economic development effort throughout the Northern Triangle. The idea is that because so many migrants move because of terrible problems in their home countries, American policy should try to fix those problems.

The idea isn’t wrong. When migrant justice advocates talk about root causes, Khury Petersen-Smith, a researcher from the Institute for Policy Studies, told me, “we’re talking

about economic policies that have devastated economies such that people can’t make a living in [their native countries].” But concrete effects have been scarce. Other advocates who spoke to the Prospect characterized administration language and policy as sounding nice, but in practice amounting to very little.

Perhaps the most glaring embarrassment for the U.S. has been that Central America’s “success story” is El Salvador’s immensely popular president Nayib Bukele. Under Bukele, his autocratic government has exterminated gang life from the former homicide capital of the world. Outside Western groups have criticized Bukele’s action against gangs as coming at the cost of unlawful killings, disappearances, arbitrary arrests, detention, and more. Even as that may be true, Bukele still touts an approval rating between 60 and 90 percent, depending on the polling you look at.

Meanwhile, by allowing El Salvador to accept Bitcoin as legal tender, Bukele has hitched his economy to the volatile cryptocurrency, and the results have been tumultuous. Bitcoin is trading at less than half the value it had in 2021 when Bukele made it a legal currency, and Salvadorans who rely on it for payments could end up losing a fortune. Bukele has earned positive notices for authoritarian crackdowns, but with economics often being the biggest driver of Central American migration, he has not addressed the root causes and maybe even exacerbated them.

The story is somewhat different in Mexico. When it and the U.S. signed free-trade deals in the 1990s, economists promised rapid growth would follow. One mining magnate even promised it would save Mexican politics, in a New York Times op-ed from 2000: “Because of NAFTA , Mexico can now afford the luxury of democracy.”

For a period, those new jobs in Mexico offered new opportunities, Princeton University professor Filiz Garip told me. But since these new jobs were concentrated along border towns, it meant that people had to move from rural areas to cities where these jobs were located. “This was a lot of assembly work,” Garip said. “After one year, [the new workers] would be totally exhausted and replaced by a new group of people … then they would be in the border region where they couldn’t find any other work and then they had to migrate.”

A 2003 Times article on NAFTA’s impact in Mexico alludes to these economic distortions

and worker burnout: “Real wages in Mexico are lower now than they were when the agreement was adopted despite higher productivity, income inequality is greater there and immigration has continued to soar.” As a result, thousands of Mexicans continued to cross the border into the U.S. during these years.

Garip noted that the degradation of economic opportunities came as the United States militarized its border. Taken together, those factors created a dynamic that undermined efforts to tighten the border, becoming a flashpoint for the sorts of immigration policy battles seen today. “Employers still needed the same workers, their [labor] demands did not diminish, and they knew they could hire [migrants],” she said. Without a legal framework for managing labor mobility between countries, Garip said, the result was unpredictability.

“You know that you can go back [to your native country],” Garip said, referring to migrants on temporary visas. But when those avenues are restricted, and migrants thus cross illegally, the calculation changes. With steep penalties for attempting to cross back to one’s home country, it makes more sense from a migrant’s perspective to stay in the U.S., even if it’s unlawful.

Today, economic conditions in Mexico itself have improved somewhat, despite an ongoing crime crisis. This generation of migrants from Latin America are coming from Honduras, Guatemala, or even Venezuela. And they are not fleeing their countries for the exact reasons as the wave of Mexican migrants from the immediate post-NAFTA years, though the broad strokes are similar. However, they are hitting the same administrative hurdles in the U.S. immigration system that were set up in the early 21st century.

On May 11, the administration phased out its use of Title 42. Technically, Title 42 comes from the 1944 Public Health Service Act. In theory, the law is intended to allow

Advocates characterized administration language and policy in the Northern Triangle as sounding nice, but in practice amounting to very little.

federal agencies to control the spread of disease. It was the basis for the Centers for Disease Control’s authority throughout the worst bouts of the pandemic. Applied to immigration, Title 42 became an easy tool for border control, allowing federal officials to expel migrants from the United States without a formal asylum process.

Anticipating chaos after the end of Title 42, the Biden administration announced that it would be sending 1,500 active-duty troops from the Army and Marine Corps to the U.S.-Mexico border. According to an internal Department of Homeland Security memo obtained by the Washington Free Beacon, authorities anticipate that up to 15,000 migrants a day will try illegally entering the United States. In a follow-up report from the Free Beacon, internal communications said that those troops would be assisting with “data entry” and not border enforcement.

In a post–Title 42 world, immigration

officials will revert to using Title 8, the immigration laws in place before the pandemic—but this is cold comfort. Under Title 8, for example, being caught for unauthorized immigration results in removal for 5 to 20 years, depending on how many times a migrant has attempted to enter the country. The idea is that steep penalties will incentivize migrants to apply for asylum before arriving at the border.

But it hasn’t worked. The United States’ refusal to process asylum claims has backlogged the Mexican government’s asylum system, a result of the continued “Remain in Mexico” policy first put forward under former President Trump. Though Biden has tried to end the program, a U.S. judge paused Biden’s move, and so the system remains clogged. As I reported earlier this year, the U.S. had 1.6 million pending asylum hearings.

The end of Title 42 is expected to create

additional dysfunction. In early May, in El Paso, Texas, the city’s mayor announced it would be entering a state of emergency ahead of the end of Title 42, in addition to opening up two temporary shelters.

Any plan for dealing with immigration policy is likely to stoke outrage from all sides. On the one hand, Republican attorneys general across the country have asked Biden and Secretary of State Antony Blinken to designate Mexican drug cartels as “foreign terrorist organizations” (FTOs). That pressure increased as Rep. Chip Roy (R-TX) reintroduced legislation with the same effect.

Rebekah Wolf from the American Immigration Council said in an interview that this was merely a symbolic gesture, but it seems to have had an effect. When Sen. Lindsey Graham (R-SC) recently asked U.S. Attorney General Merrick Garland if he would object to Congress designating cartels as FTO s, Garland responded: “I wouldn’t be opposed.” If cartels were designated as FTOs, Wolf said, it would further complicate the ability for migrants to claim asylum, because it’s nearly impossible for a migrant to make it to the southern border without paying cartels and other crime syndicates for passage.

On the other hand, harsh Trump-style immigration policy infuriates immigrant rights activists who feel betrayed by Biden’s moves.

Meyer summarized the Biden administration’s predicament like this: On the one hand, it is increasing access to legal pathways for migrants from Venezuela, Cuba, Honduras, and Nicaragua, so long as they can provide valid passports and they have sponsors in the U.S. That’s a legal pathway for entry into the U.S. for up to 360,000 people a year. In addition, the administration plans to boost resources for migrant processing centers, thereby setting migrants on a path to filing family-based petitions for refugee status.

On paper, those changes should increase legal pathways. But in practice, Meyer said that based upon migrants she and her colleagues encountered in Honduras, they don’t have the documents or meet eligibility requirements, yet still plan on making the journey northward. Desperate people are like that. She recalled frequently being asked by migrants questions such as “What should I do?” or “What are my options?” The most likely scenario is migrants stuck in Mexican border towns hoping for a change in U.S. policy that may never even come. n

The Border Patrol apprehended more than 2.2 million migrants in fiscal year 2022, the most in U.S. history. Nearly half resulted in immediate expulsions under Title 42.

El Salvador President Nayib Bukele is seen as a regional hero, despite his autocratic rule.

How Big Pharma Rigged the Patent System

By Ryan Cooper

Back in March, the Patent Office of India denied an application from Janssen Pharmaceuticals (a subsidiary of Johnson & Johnson) to extend to 2027 its patent on its drug bedaquiline, which is the best lastditch treatment for drug-resistant tuberculosis. The decision came thanks to the work of two activists, Nandita Venkatesan from India and Phumeza Tisle from South Africa, who filed a petition with the office with the backing of Médecins Sans Frontières and other nonprofits.

From the perspective of the Indian government, this decision was a no-brainer. Not only was the patent extension an obvious attempt by J&J to secure a few more years of monopoly profits due to tiny, inconsequential changes they’d made to the drug, but India has the worst tuberculosis burden in the world. Some 40 percent of its population is TB-positive, and it has the largest population of drug-resistant TB cases of any country—a problem that got much worse during the COVID -19 pandemic, which badly disrupted efforts to test and treat new infections. Refusing the patent extension is estimated to cut the cost of bedaquiline treatment in India from $46 per month to $8—a huge benefit for a country that is still quite poor.

The United States doesn’t have anything like such a problem with tuberculosis. But we have a much worse infestation of patent abuse from pharmaceutical companies. Instead of swatting down companies like Johnson & Johnson, the U.S. Patent and Trademark Office (USPTO) has more often than not bent over backwards to enable maximum corporate profit extraction.

One legal strategy Big Pharma uses is filing dozens or even hundreds of patents on the same drug. An Initiative for Medicines, Access, and Knowledge (I-MAK) report from September last year investigated these “patent thickets” on America’s ten best-selling drugs, and the revelations were staggering. The companies have obtained an average of 74 patents apiece on each of those drugs. More tellingly still, of the 140 patent applications on these drugs (on average), twothirds of them happened after the drug was approved by the FDA

The point is to create a huge legal deterrent to any generic or biosimilar competitors who might attempt to enter the market when the original patent expires. Even when a competitor might have a legal right to produce the original formulation of a drug, cutting through the patent thicket would require millions of dollars in litigation and take years.

For example, AbbVie managed to extend patent protection on its arthritis drug Humira for an additional seven years. It filed 312 patents on the drug, 94 percent of which after it had already received FDA approval, and secured 166 of those patents. Its original patent expired in 2016, but the rest of the patents extended its complete control of the medication through the first quarter of 2023. As a result, Humira was the top-selling drug in the U.S. market in 2021, with $17.3 billion in sales—almost twice as much as secondplace Revlimid (a cancer drug). Of all the money AbbVie has made on Humira, about two-thirds (or nearly $100 billion) came after its primary patent expired.

For some, that counts as a smashing success. President Trump’s choice to head the USPTO, Andrei Iancu, was a partner at IP law firm Irell & Manella both before and

after running the agency. In a recent op-ed for Bloomberg Law, he argued that AbbVie’s use of patents “should be celebrated.”

Another strategy is to “make slight modifications to the drug,” Robin Feldman, a professor at UC College of the Law, San Francisco, who studies patent abuses, told the Prospect in an interview. By making small changes to dosages, formulation, method of administration, and so forth, drug companies can then apply for a new patent or a patent extension and extend their monopoly. According to her research, “more than 78 percent of new patents are not new drugs,” she said. One common tactic is to strategically produce an extendedrelease form of the drug right before the original patent is about to expire, because the companies can then receive an additional three-year exclusivity right under “new clinical investigation” rules.

A lot of these patents are probably bunk even by the lax standards of U.S. law. On the rare occasion when generics manufacturers have taken Big Pharma to court to contest patent validity, they have won about three-quarters of the time, Feldman said. But again, that costs time and money—something the major drug companies are counting on.

Yet another strategy is to obtain nonpatent exclusivities. The government grants companies that do certain kinds of research, like treatments for pediatric or tropical diseases, or develop “orphan” drugs to treat rare conditions, additional time-limited rights, like keeping their data private or a monopoly on marketing. (Congress wanted more attention paid to these particular disease areas, but it may have succeeded too well, as companies have piled on resources to develop treatments for relatively uncommon conditions that are often not very effective.)

Finally, there is the “pay for delay” tactic. When patents or other legal protections are about to expire, drug companies commonly take their enormous profits and offer generics manufacturers hefty bribes to stay out of the market, thus preventing competition. The Federal Trade Commission, which has filed some lawsuits against this practice, estimates that this tactic alone costs the country $3.5 billion in higher drug costs every year.

As usual in health care matters, the U.S. is a huge outlier on drug patents compared to peer nations. Returning to Humira, AbbVie obtained 6.4 times more Ameri -

Drug patents are supposed to expire in 20 years. Thanks to legal trickery, though, it usually takes a lot longer than that.

can patents than it did in the European Union, and its patents ran out in October 2018 on the continent. Another more than four years of patent protection in the U.S. market secured an additional $68 billion in monopoly profits.

All this outrageous price-gouging is a major reason why American health care is so expensive. A 2018 study found that drug spending makes up about 15 percent of U.S. health care spending—the highest fraction of any rich country and much higher in absolute terms because our health care is so expensive. In dollar terms, we spend about half again as

much as Switzerland per person, more than twice as much as France, and more than three times as much as the Netherlands. That is largely due to hyper-expensive patented drugs. Just 8 percent of American prescriptions are for brand-name drugs, but thanks to extreme prices—Gilead originally priced its hepatitis C cure at $84,000, though it was later reduced somewhat—they make up 84 percent of total drug spending.

Finally, the broken patent system also provides a toxic incentive for pharmaceutical companies. The ability to extract year after year of hyper-profits from a handful of blockbuster drugs pushes companies to spend heavily on drug modification and lawyers who’ll protect their patent monopoly instead of investing in genuinely new drug research. In 2021, Keytruda alone made up 48 percent of Merck’s profits; Eylea 48 percent of Regeneron/Bayer’s; and Humira 40 percent of AbbVie’s. Feldman’s research found that once a drug company starts down the patent abuse road, it tends to rely on it more and more as time passes.

In the longer term, however, going down

this road might prove to be a risky strategy. Even in the U.S., patents run out eventually, and drug development is expensive, slow, and prone to failure. Relying on one drug for such a huge share of revenue could easily leave such companies twisting in the wind—particularly if Congress were to pass intellectual-property reform.

What should be done about this? Feldman suggests that one simple step would be to clarify the meaning of “non-obviousness” in U.S. patent law. To obtain a patent, one must demonstrate that the invention is something that required skill and effort to produce. There is a lot of legislation in this area, as well as a large body of case law, the details of which are beyond the scope of this article. But clearly it is far too easy to get a drug patent in this country, as shown by how many fewer patents are awarded in the European Union. In the U.S., companies can get patents on stone obvious ideas like “an extended-release formula” that have been well known for decades. The USPTO could also be better funded; its small staff is frequently overwhelmed by drug companies’ blizzard of highly technical filings. The FDA , which has many more medical specialists, might also be assigned to help in this area.

Another more radical idea is a “one and done” patent system. This would outright forbid companies from obtaining more than one patent on the same drug. They would be able to choose between a normal patent, or one of the other exclusivities mentioned above, but not more than one. That would solve the problem at a stroke.

There are at least moderately encouraging signs on the horizon. Both the American Rescue Plan passed back in March 2021 and the Inflation Reduction Act passed last year contain a number of drug price reforms. The former allowed Medicaid to penalize companies that raise their prices above the rate of inflation, prompting Eli Lilly to lower its list price of insulin; the latter allows Medicare to negotiate the price of a limited number of prescription drugs, with new prices starting to take effect in 2026.

Now, these are pretty small-bore and slow reforms. But they are still the biggest defeats Big Pharma has suffered in decades. Drug prices (like the rest of the health care system) are simply so outrageous that even the rickety American government is starting to do something about them. Patent reform is the obvious next step. n

The U.S. Patent and Trademark Office has more often than not bent over backwards to enable maximum corporate profit extraction.

The pharmaceutical industry routinely avoids U.S. taxes by assigning its drug patents to subsidiaries in low-tax jurisdictions.

HOW WASHINGTON BARGAINED AWAY RURAL AMERICA

By Luke Goldstein ILLUSTRATION BY PETER AND MARIA HOEY

A classic premise in American cinema is the buddy comedy, epitomized by films like Tommy Boy or Midnight Run . Two characters who can’t stand each other are thrown together by circumstance, forced to make a screwball pilgrimage across the country to finish a job. Hilarity ensues.

This same storyline infects our politics every five years when the farm bill comes up for reauthorization. Two parties at the brink of civil war are pressured to cooperate in order to deliver for their respective constituents. Congress’s version of this tumultuous road trip runs through both rural and urban America, uniting liberal Democrats and conservative Republicans. But the ultimate winner of this madcap romp is one of the country’s most infamous heels: Big Agriculture.

Despite its title, the farm bill, which is due for reauthorization this September, impacts more than just farmers. Over 80 percent of the allocated funds supports the Supplemental Nutrition Assistance Program

(SNAP), formerly known as food stamps, one of the largest welfare programs and arguably the United States’ closest imitation of a Scandinavian social safety net. The fate of SNAP’s 42 million impoverished recipients is shackled to a baroque patchwork of agriculture subsidies that could rival any late-Soviet central-planning efforts.

The real function of the modern farm bill is to deliver windfalls to industry by subsidizing cheap commodity grains, mostly corn and soybeans used for animal feed, that sell below the cost of production to agribusiness, fast-food chains, and global exports. Oil and gas companies are also major beneficiaries of subsidized corn production, used in ethanol and biofuel. And the structure of the subsidies tilts the playing field in favor of the biggest factory farms and middlemen monopolists.

Low commodity prices drive down incomes for family farmers who actually put in the labor to produce the nation’s food. The government steps in to keep farmers on

just enough life support so that they can continue serving their overlords in agribusiness. Subsidy payments are primarily available for grain commodities like corn, soybeans, and wheat, which drives farmers toward a monocrop culture. Those who raise animals for meat products, though, don’t get covered by the payments, and instead are left to fend for themselves against dominant middlemen.

This economic arrangement, which many of today’s farmers call a new form of serfdom, not only devastates farmers but incentivizes a food system that is causing rising obesity rates, limited access to fresh foods in inner-city areas, and nearly one-third of greenhouse gas emissions globally.

“There’s just no intention or goal anymore … we essentially do ag policy like it’s one large casino run by agribusiness, giving farmers just enough chips so they can play and keep betting but never win,” said Ferd Hoefner, a policy consultant who’s worked and advised lawmakers on farm bills since the 1970s.

Liberal Democrats may be hesitant about

Every five years, the farm bill brings together Democrats and Republicans who are normally at each other’s throats. The result is the continued corporatization of agriculture.

lavishing subsidies on powerful corporations, but their main priority is to make sure poor people can afford food. Conservative Republicans have often fulminated against so-called welfare queens, but they want to keep farm interests happy. And so a corrupt bargain is struck every half-decade, where neither side does much to really challenge the other’s prized possession. The bundling of rural and urban interests ensures the farm bill’s passage, but it comes at a steep cost: a status quo bill full of endless logrolling and backroom deals, which stacks the deck against family farmers.

This leaves only a narrow window for progress. A reform movement, composed of independent farmers and ranchers, environmental advocates, and anti-monopolists from both parties, may be more organized than it’s been since the 1980s farm crisis. But it will square up against the might of Big Ag, which spends more on lobbying in Washington than the defense industry. Ag lobbyists are so enmeshed in congressional dealings that in 2014 one of the largest trade groups, the North American Meat Association, held a barbecue with House Agriculture Committee lawmakers inside the very hearing room where the lobbyists’ clients testified the next day.

“David and Goliath might not fully capture what we’re up against,” said Rhonda Perry, the executive director at the Missouri Rural Crisis Center and a founder of the historic Campaign for Family Farms and the Environment, who has experienced the coercive industry efforts firsthand.

Farm policy in America has become such an empty ritual that members of Congress have yet to fully reckon with the damage the bill is inflicting on what’s left of farm country, not to mention the public health of the citizenry. Step one in undoing the myopic farm bill consensus lies in telling the story of how a radical New Deal program became an appendage of industrial agriculture.

In rural pockets of the country, the ongoing crisis in farming today has echoes of the poverty during the Great Depression, when agriculture markets collapsed and farmers couldn’t find enough demand for the crops they’d harvested the previous year. On the brink of ruin and without government support, farmers held mass protests that were so widespread that government officials worried it would turn into outright rebellion if action wasn’t taken. (That wouldn’t be

an incident without precedent in American history: President Washington had to send in federal troops to put down the Whiskey Rebellion, whipped up by farmers and distillers in opposition to alcohol taxes.)

Agriculture has always required a greater degree of government involvement because of the unconventional nature of the market, prone to periodic booms and busts, weather disasters, price swings, and fluctuations in supply and demand. Unlike a widget factory, production cannot just be quickly ramped up and down to respond to market conditions, which exposes farmers to volatility. As the Depression raged, policymakers finally recognized this core need for government regulation and oversight.

Soon after FDR took office, Congress passed the first radical intervention into agricultural markets. The 1933 farm bill set up the parity system, guaranteeing farmers a base level of income when market prices dropped below the cost of production. It also set up a supply management system to balance supply and demand for most commodity goods, by establishing governmentheld reserves and paying farmers to keep surplus crops off the market, in the hopes of stabilizing prices.

The drastic measures largely succeeded, boosting farmer net income from $2.285 billion in 1932 to $7.723 billion by 1941. However, farming didn’t fully stabilize until World War II, when exports soared as the U.S. became the food provider for allied nations. This geopolitical chip would define the postwar era of food policy and trade.

Roosevelt also signed the first food stamp program, both to feed the hungry and bump demand for surplus crops in the market. Structured as an emergency program, it eventually phased out, but would re-emerge as a political fight during the 1960s.

Agribusiness and corporate leaders abhorred the parity system from the beginning, decrying it as “socialism.” Government production controls, for example, made it harder for would-be monopolists to dislodge farmers who were granted more personal security, and also limited the amount of fertilizers that farmers needed to purchase from agrochemical corporations. But the continual reauthorization of the farm bill every five years gave corporate forces the ability to refashion it as a vehicle for mass industrial production.

The locus for this revolt was the Committee for Economic Development, a research

organization that became the policy engine for turning the political class against New Deal policies. With ties to the Chamber of Commerce and the American Bankers Association, the CED explicitly advocated for liquidating family farmers from the commercial landscape, to make way for industrialized mega-farms that could produce cheaper goods at scale. They christened their plan “the farm problem,” which they went about executing with such methodical precision that it would put a smile on the face of any dekulakization proponent from across the Iron Curtain.

Just as the Chicago school revolution began dismantling antitrust laws, the CED’s influence also came to a head during the 1970s. Nixon’s secretary of agriculture Earl Butz famously declared that farmers would have to “get big or get out,” urging them to plant “fencerow to fencerow,” a monoculture farming model that favors large single-crop operations over diversified family farms. Monoculture farming entails far greater use of nitrogen fertilizer to boost yields and counteract rapid soil erosion—a major cause of greenhouse gas emissions by releasing carbon from the soil.

The “get big or get out” era became the defining doctrine of U.S. ag policy for decades to come. Agribusiness succeeded at using farm bills to chip away at the supply management system. The parity payments were stripped of any requirements for conservation land set-asides, acreage restrictions, or other production controls. Payments to farmers were triggered by target prices when the market price for select commodity crops dropped below a certain level set by Congress.

This set up a vicious boom-and-bust cycle. Overproduction led to lower commodity prices and farm incomes, which in turn required greater taxpayer assistance to make up the difference. Between 1950 and

The bundling of rural and urban interests ensures the farm bill’s passage, but it stacks the deck against family farmers.

1990, over two million farmers were pushed out of the industry. But the changes lowered costs for agribusiness, and allowed them to dominate.

In the 1980s, farm markets crashed under the weight of this burden, a Soviet grain embargo, and the interest rate spike engineered by Federal Reserve chair Paul Volcker to fight inflation. Farm debt exploded, and income dropped from $92.1 billion in 1973 to just $8.2 billion a decade later. Exits, bankruptcies, and foreclosures spiked, which culminated in a greater consolidation of land by corporations and financiers.

Amid relative neglect from President Reagan, a reform effort known as Farm Aid (marked by a concert featuring Willie Nelson, Kris Kristofferson, and Neil Young) sprung up during the 1985 farm bill, not only to raise money for family farms but to try to reverse course on the corporate takeover of farming. It succeeded in pressuring Congress to pass several conservation programs, but was largely unsuccessful in reviving a new supply management system, as it had hoped.

The 1996 farm bill, signed by President Bill Clinton, completed the full deregulation of the agricultural system that farmers face

today. The Freedom to Farm Act (known as “Freedom to Fail” by farmers) entirely dismantled the remaining price parity and supply management controls, promising that the magic of the free market would fix farming. Prices crashed by as much as 32 percent in the next two years as overproduction surged, and the government had to intervene to institute direct payments just to keep farmers afloat.

“The Freedom to Farm Act was a massive giveaway to the rising giants in agriculture we know today,” said Patty Lovera, the policy director for the Organic Farmers Association and a longtime advocate for family farmers.

By revoking supply management, government subsidies to farmers have grown exponentially. A University of Tennessee/National Farmers Union study found that supply management would have saved taxpayers $96 billion between 1998 and 2010, while keeping food prices more stable for consumers.

While farmers struggled, Freedom to Farm delivered the greatest gift the rising meatpacker monopolists could have asked for. It dropped the cost of animal feed below the cost of production, allowing Tyson, for example, to scale up its operations and cap -

ture a dominant position in chicken processing. The company saved nearly $300 million per year on chicken feed in the decade after the 1996 farm bill. These savings were not passed on to consumers as promised, with meat processors—who also owned many of the mega-farms—cross-subsidizing their own operations.

The 1990s saw another transformation. Trade agreements like NAFTA and the WTO required that member nations not directly subsidize their own national producers’ goods to artificially lower prices and prevent global competition. This posed a challenge to congressional farm supports, but their work-around ultimately delivered another boon to Big Ag. The U.S. decoupled farmer payments from production to avoid WTO penalties, and shifted its model to base acreage. It wasn’t about how many bushels of corn a farmer produced, but instead how large the farming operation was. This further incentivized factory farming operations and the buy-up of land to qualify for larger subsidies.

Base acreage still defines farm bill subsidies, even after the 2014 bill ended direct payments and shifted the entire structure to a crop insurance model. Now, the government

The 1996 farm bill dropped the cost of animal feed below the cost of production, allowing big meatpackers to scale up operations and dominate markets.

pays for private insurance premiums on up to 85 percent of a farm’s acreage, costing billions of dollars. Only the major commodity crops—mainly corn, wheat, and soybeans— can access these funds, and not so-called specialty crops like fruits and vegetables.

The shift in farm bill policy set the stage for the monopolization of agriculture. Decades of lax antitrust enforcement led to a merger boom and an industry rollup, which has turned the market from an open to a closed one, dominated by powerful middlemen on both the buyer and supplier side. Farm bill policy also played a role by rewarding larger operations and subsidizing cheap commodity grains, which are as vital to industrial agriculture as semiconductor chips are to the tech economy. As monopolies grew in size, they wielded their market power and lobbying dollars to turn the farm bill into a corporate handout.

At harvest time, most grain farmers today are forced to sell to just four processing firms that make up 90 percent of grain trading. Much of that grain ends up as feed

for livestock. Hog, chicken, and beef farmers are either under contract by just four meatpackers—Cargill, Tyson Foods, JBS SA, and National Beef Packing—or independently forced to sell to them as the only buyers. Recent mergers between Dow and DuPont, as well as Bayer and Monsanto, have narrowed the Big Six seed and agrochemical manufacturers to just four. The top four producers of nitrogen fertilizer rake in two-thirds of all sales.

This cabal of Big Ag monopolies squeezes farmers for all they’re worth, controlling every aspect of production, shortchanging them on the fruits of their labor and ratcheting up costs for necessary inputs like equipment, seeds, and fertilizers. Farmers pay three times higher on inputs today than in the 1990s.

Small- and even medium-sized farming has become a losing enterprise. Incomes continue to plummet, forcing many to supplement annual crop sales with off-farm work just to make ends meet. For most of the past decade, the majority of farm households in the U.S. have lost more money than they made from farming. Debt, bankruptcies,

and even suicide rates are rising, and regional rural economies that depend on agriculture to support grocery stores, schools, and hospitals are verging on collapse.

These financial conditions push farmers to exit the business entirely. More often than not, their land gets flipped into concentrated animal feeding operations (CAFOs), which pack thousands of animals into cramped facilities to produce at the scale demanded by the meatpackers. While CAFOs are convenient for Big Ag, they’re detrimental to animal health and lead to environmental damages from the feces pooling into toxic manure lagoons.

“Both by design and corporate hijacking, government policies have turned our farmlands into a paradise for big business and a wasteland for the rest of us,” said Rebecca Wolf, a policy analyst at Food and Water Watch.

Democrats and Republicans, with rare exceptions, have gone along with the corporate annexation of the farm bill because of an agreement brokered in the 1960s. The deal broadened the stakeholders for the bill

Jaqueline Benitez, who relies on monthly SNAP benefits to pay for food, shops in Bellflower, California.

and increased the degree of difficulty for anyone wanting to break the special-interest obstacles to a more fair and humane farm policy.

While the highest-profile conflicts over the bill today fall along partisan lines, feuds between regional coalitions historically played a greater role. In the 1960s, Midwestern corn, wheat, and soybean interests clashed with the South’s coalition for cotton, a domestic good waning in power due to global competition. Southern Democrats controlled the Agriculture Committee in both the House and Senate, and dutifully doled out subsidies to fit their own agricultural needs.

In 1964, farm bill negotiations reached an impasse, with the cotton coalition unable to find enough partners for passage. Desperate Southern Democrats turned to the urban legislators who caucused with them. Since the expiration of FDR’s emergency food benefits in the 1940s, advocates for low-income communities and their representatives in the inner cities had fought to restore the food stamp program. Southern Democrats, who opposed handouts to the racially coded underclass in the cities, blocked them time and again. It was a familiar dynamic dating back to the original farm bill, when segregationist Democrats ensured that Black sharecroppers wouldn’t be able to receive parity payments, despite bearing the brunt of the acreage restrictions imposed on farmers to slash production.

Food stamp legislation all but certainly had enough support to pass on a floor vote if the Ag Committee would have allowed it; President Johnson was even able to get a pilot “surplus commodities” program instituted administratively in 1962. Finally, to save the farm bill, the Southerners struck an agreement to build on the surplus commodities demonstration and include food stamps in the package. This arrangement

was permanently enshrined in the 1977 farm bill.

“That historical contingency forever changed the politics of the farm and thus the direction of our country’s ag policy,” said Jonathan Coppess, the author of The Fault Lines of Farm Policy and the former administrator of the Farm Service Agency at the Department of Agriculture under President Barack Obama.

Republicans dominate rural America today, and Democrats the urban core. This polarization set up a recurrent political dynamic, which began after Republicans took the House in 1994. Republicans wage war on the poor by threatening cuts to SNAP in order to gain political leverage, even though rural areas are increasingly signing up for SNAP as poverty rises. This allows the GOP to extract as many pounds of flesh as they can for their Big Ag benefactors. In recent years, that’s meant loopholes for a cap on payments that a single farm can receive and also allowing the extended family of farmers to acquire subsidies even if they don’t actually work on the farm.

For their part, Democrats expend their political capital to protect SNAP, and cede most decision-making about agricultural programs to Republicans. To the extent that Democrats push for changes to the agriculture titles, they often broker compromises to expand programs that suit the parochial interests of the states they represent. For example, Michigan Sen. Debbie Stabenow, the current Democratic chair of the Senate Agriculture Committee, championed the Local Agriculture Market Program (LAMP) in the 2018 farm bill, which delivers grants to help farmers markets.

“It’s a lot like a hostage negotiation between both parties to jam their priorities through,” said policy adviser Ferd Hoefner.

By the end of the bipartisan back-scratching, hardly any lawmakers understand the full scope of the bill they’re voting for. Usually checking in at nearly 1,000 pages, the legislative boondoggle is so long and convoluted that you’d have better odds finding lawmakers who’d read the entirety of a Thomas Pynchon novel than the full text.

Most of the programs Republicans fight for in the farm bill would not be able to pass in their current form on a straight floor vote. SNAP, on the other hand, carries much higher popularity among voters in polling. The welfare side of the bill is what makes the package politically possible. But the ag

subsidies are what keeps rural America in a perpetual state of crisis.

The usual buddy comedy that is the farm bill unites liberals and conservatives to protect the basic framework of the program. This year, however, the script may be flipping.

The defining odd couple is shaping up to be Cory Booker, the cheery New Jersey senator prone to impassioned, long-winded speeches about hope and the power of love, and Republican Chuck Grassley, the octogenarian curmudgeon of the Senate better known for his so-bad-they’re-good tweets than his long-held enmity against the meatpackers. Despite their ideological differences, they are working in concert with a chorus of anti-monopoly and conservation advocates in trying to subvert the usual dynamic and redirect the course of U.S. agriculture policy to suit the needs of independent farmers rather than Big Ag.

Though Grassley is a mostly down-theline conservative from Iowa corn country—a major driver of farm bill subsidies—he has been an outspoken adversary to ag consolidation for decades, often diverging from Republican leadership. During his six terms, he consistently championed legislation that would curb the meatpackers’ power to throttle independent cattle ranchers.

This year, he’s pushing for changes alongside Sen. Booker, who is just as quixotically determined to curb concentration in agriculture. Despite being nicknamed the Garden State, New Jersey does not carry a particularly large agricultural economy, representing only 1.3 percent of state GDP. But Booker, as the Senate’s resident vegan, has the perfect credentials to wage a personal crusade against animal cruelty at factory farms.

Dating back to his time as mayor of Newark, Booker has also fought against food deserts, a scourge afflicting urban areas across the country without access to grocery stores carrying fresh foods like fruits and vegetables.

It wasn’t until a meeting Booker took in 2018 with the former Democratic lieutenant governor of Missouri, Joe Maxwell, that he made the connection between limited innercity access to grocery stores and the monopoly crisis that farmers face in the heartland.

“He had a strong foundation of knowledge about concentrated power in retail, so I just had to add some limbs on the tree and get the wind going in another direction to

Democrats expend their political capital to protect SNAP, and cede most decision-making about agricultural programs to Republicans.

show him that the same power is impacting family farmers too,” said Maxwell, a softspoken fourth-generation hog farmer who speaks more with a preacher’s charm than a politician’s salesmanship.

After their meeting, Maxwell invited Booker to visit his home state on a kind of disaster tourism trip through rural America. The two traveled together from the Bootheel and up along the Mississippi River through Southern Illinois. Along the route, they spoke with a broad cross section of independent farmers, from cattle ranchers to medium-sized corn and soybean growers, who bear the scars of decades of failed farm bill policies that greased the skids for corporate concentration.

The trip made a lasting impression on Booker, who returned to Washington and began evangelizing for breaking up Big Ag and other market reforms. Though some suspected that Booker staked out the issue as a 2020 presidential play for the Iowa caucuses, he has continued to champion the cause even after his campaign ended. Many of the competition policy initiatives both Booker and Grassley are aiming to include in this year’s farm bill tie back one way or another to the New Jersey senator’s caravan through Missouri with Maxwell.

Reflecting back on the trip today, Maxwell noted that to any outside observer, it would be a strange sight to behold: a Democratic senator who grew up just outside Newark sitting on hay bales across from farmers who mostly vote Republican, despite feeling that the party’s leadership class sold them out to industry.

At a farm bill conference earlier this year, hosted by Maxwell’s organization Farm Action, Sen. Booker delivered the keynote address, detailing his takeaway from the trip: “I heard wrenching stories from farmers who had deeds on their walls from the Homestead Act but now after generations have to sell the farms … because our food system is broken.”

This year, industry groups are strong-arming legislators to revert back to the direct emergency payment structure phased out in the 2014 farm bill. This would supplement the existing commodity-favored crop insurance model that the government has in place. In addition to crop insurance, commodity farmers also get subsidized coverage, known as Price Loss Coverage, that

pays back for lost revenues in the case of market slumps, which happens frequently. With the help of Republicans, interest groups representing mega-farms are working to get a higher reference point for insurance coverage in order to guarantee larger payouts to farmers.

In addition, the Republican majority in the House will surely push for more strenuous work requirements on the SNAP program, which could leave over 700,000 current recipients ineligible, according to the Food Research and Action Center. The House GOP already included SNAP work requirements in their wish-list bill to extend the debt limit in April.

The cross-partisan pressures that make up the farm bill leave little room for the Grassley-Booker coalition to gain a foothold. For years, the graveyard for amendments has always been the conference committee, after the House and Senate pass their versions and the logrolling takes place behind closed doors to decide what will be included in the final bill. Legislation to curb Big Ag concentration or cap subsidy payments historically gets left on the cutting-room floor.

In 2002, it took near-herculean efforts for Minnesota Sen. Paul Wellstone, one of the last populist Democrats from a rural state at the time, to get a vote on a bill that would have banned meatpackers from owning their own livestock. The bill passed handily on the floor with bipartisan support, but was stripped from the final bill in conference committee.

Another amendment that successfully passed in the 2008 farm bill directed the U.S. Department of Agriculture to update the Packers and Stockyards Act, a major piece of antitrust legislation that grants the USDA authority to prohibit unfair and deceptive practices by meatpackers but has gone unenforced for years. Under massive pressure from Big Ag, USDA Secretary Tom Vilsack dragged his feet on following Congress’s mandate. Then, Republicans passed riders in subsequent bills that neutered the amendment entirely. Vilsack, now agriculture secretary again under President Biden, is still trying to complete Packers and Stockyards rules.

This year’s coalition of family farm advocates and environmentalists aren’t under any illusions about the challenges ahead. But so far, many of their key proposals are picking up traction with

members of both parties, spearheaded by Booker and Grassley.

“Our forces are stronger together when we can get support from across the aisle,” said Adam Zipkin, who serves as counsel to Sen. Booker on food and agriculture policy.

The odd-couple senators are each supporting a collection of complementary competition titles to deconcentrate agriculture and promote an open market for independent farmers to sell into. Both senators are proposing a rule that would force meatpackers to purchase at least 50 percent of their animals in the open spot market instead of through contract, which would give independent ranchers a chance to compete. The measure is also supported by Sen. Jon Tester (D-MT), a self-described “dirt farmer ” and a frequent partner with Booker on the Democratic side. Booker has also called for placing a moratorium on CAFOs

“We [anti-monopolists] used to be greeted on the Hill like we were wearing tinfoil hats for saying we had a consolidation problem, and now everyone is like ‘of course we do,’” said Lovera, who’s worked on farm bills since the early 2000s.

The USDA’s checkoff program is also in the crosshairs of reformers. The program effectively acts as a government-run slush fund, bankrolled by a tax on all farmers, that agribusiness can tap for both industry marketing and lobbying. In essence, small farmers pay for Big Ag to destroy them. Booker introduced a bill earlier this year that would prohibit checkoff dollars going to any lobbying organization. Another primary concern for the farm bill is to reinstate country-of-origin labels, a long-sought priority for independent farmers to distinguish their goods from large meatpackers’ foreign sourcing of products.

In addition to competition policy, there’s a major push this year to make the farm bill resemble something more like a climate bill,

In addition to competition policy, there’s a major push this year to make the farm bill resemble something more like a climate bill.

in order to fulfill President Biden and Secretary Vilsack’s pledges to curb greenhouse gas emissions. Environmental groups and family farm advocates are aligning their priorities to deliver more funding to practices like rotational grazing and crop-covering, rather than using those dollars to retrofit the mega-farms driving the highest emissions.

“In its current form, many conservation programs at the USDA aren’t accessible to small farmers, whose applications get denied at higher rates but could help cover the costs of sustainable farming,” said Antonio Tovar, senior policy associate at the National Family Farm Coalition.

Much of the current funding for climaterelated farm bill policies has turned into a money pit for factory farms. A good example of how this works is the Environmental Quality Incentives Program (EQIP), one of the largest USDA conservation funds.

A provision in the 2002 farm bill, written by lobbyists, required that over a third of the EQIP funds used in Iowa go to livestock operations, which are dominated by factory farm CAFOs. As the Environmental Working Group has documented, over a third of EQIP

funds, totaling around $62 million, finance animal waste cleanups and containment at corporate farms, like manure lagoons and toxic runoffs. Taxpayer dollars help backstop rather than penalize environmental harms by factory farms, when those funds could instead support family farms using sustainable practices that keep carbon in the soil. Booker and Sen. Mike Lee (R-UT) plan to fight for an amendment in the farm bill that would amend the livestock requirement and direct funding to small farmers.

The Inflation Reduction Act also included a pot of almost $20 billion for climate-smart agriculture at the USDA . It didn’t include an EQIP livestock requirement, which was seen as a victory for progressive advocates. They are now pushing to protect that IRA funding, which faces opposition from Republican lawmakers, in the farm bill.

Along with distributing access to conservation funding, Maxwell’s group Farm Action is leading the charge to restructure the bill’s prioritization of payments to fencerow commodity crop production, which promotes monoculture. The core subsidy payments exclude specialty crops like fruits and vegetables, and also dissuade

diversified crop farming, which is primarily used by small family farms. Diversified farming is shown to be far better for soil health and doesn’t require the same amount of nitrogen fertilizers and other agrochemicals to replenish eroded soil.

Several members of the Congressional Progressive Caucus have spoken favorably about incentivizing specialty crop farming, including Rep. Katie Porter (D-CA), who grew up on a family farm in Iowa.

“The fact that only 4 percent of the subsidies go to fruits and vegetables is not because politicians don’t know that fruits and vegetables are good for you … it’s the corporatization of agriculture,” said Rep. Porter in an interview with the Prospect

Another conversation among lawmakers on the Hill is to cut down on wasteful farm payments. Mega-farms collect the largest subsidies because of the base acreage model instituted after the WTO agreements. However, merely revoking subsidies across the board would harm medium-sized and small farms, which rely on government payments more than ever because agriculture markets are fundamentally broken. A bipartisan bill introduced by Sen. Grassley would shift to a subsidy model that caps payments for wealthy mega-farms, to ensure the bulk of the program goes to farmers who actually need government assistance.

These reform efforts are ambitious. It will likely take more than one farm bill in order to turn around years of failed policies. Joe Maxwell’s Farm Action has laid out a decade-long strategy to accomplish reform goals. It begins with getting lawmakers to understand what exactly the stakes are in the legislation, how it works, and how to fix it. In other words, it begins with breaking the bargain at the heart of the farm bill, which has led to a corporatized, consolidated agriculture policy.

“It’s not just about one farm bill, our coalition’s goal is to shift the entire conversation in Congress for years to come to make the family farm the center of our government’s policies, not industry,” said Maxwell. n

Sens. Cory Booker (D-NJ) and Chuck Grassley (R-IA) have formed an unlikely partnership as they attempt to reform this year’s farm bill.

QUACK

No one in the coastal farming town of Watsonville, California, was much impressed when the cash-strapped owner of their struggling hospital, Quorum Health, announced in June 2019 that it was selling them out to something called Halsen Healthcare.

Halsen was a limited liability vehicle incorporated by a guy named Dan Brothman literally the day before the press release went out. Brothman’s last hospital job had involved orchestrating a diabolical whistleblower retaliation campaign against a doctor who’d written an email to other doctors about the hospital’s precarious finances; it had later emerged in court that the hospital had paid a strip club bouncer to plant a gun in the

doctor’s car and get him arrested in a phony “road rage” incident as a means of “humbling” him. It was hard to believe Brothman was allowed to work in a hospital in California, much less own one.

What worried the nurses most was the financing mechanism by which Brothman was proposing to “buy” the Watsonville Community Hospital. First, Halsen would purchase the hospital for $39 million, or $46 million, or $30 million; the figure fluctuated depending on who was reporting it. Then , Brothman would immediately sell the hospital’s underlying real estate to an Alabama real estate investment trust named Medical Properties Trust (MPT), for $55 million, and lease it back for millions of dollars a year in rent and interest

QUACKONOMICS

Medical Properties Trust spent billions buying community hospitals in bewildering deals that made private equity rich and working-class towns reel.

BY MAUREEN TKACIK

payments. The hospital had always been profitable, employees say, but not profitable enough to cough up $5 million a year in rent.

A town hall to protest the deal drew a crowd of 450. A couple of nurses gave a presentation on the history of the hospital, and how it would run out of money and be forced to sell off the land to developers to pay its debt. There would be nowhere for the community to build a new one; a million dollars was the going price of an 800-square-foot shack in Watsonville. Brothman and his two minions, one of whom he’d just hired away from the small private equity firm that had just bankrupted Philadelphia’s Hahnemann Hospital, sat in the front handicapped seats. Remembers ICU nurse

Quiche Rubalcava: “We told them right to their faces how it was going to play out.”

Yet it happened much faster than anyone anticipated. Halsen immediately stopped paying vendors; they ran out of hospital gowns, printer paper, and surgical supplies almost immediately. “It just seemed like a burnout,” says Rubalcava. “Like they were going to burn through everything they could and then bounce.” By the end of 2019, none of the doctors outside the ER, which was managed separately, were getting paid. Two of the intensive care unit’s three doctors quit in early 2020 after a few months of going without paychecks, so Halsen contracted with a telemedicine service, and for most of the pandemic the six-to-ten-patient ICU was supervised by

one saintly intensivist who was willing to work without pay for at least a year, and a revolving cast of Teladoc contractors, mostly retired physicians in their seventies and eighties who beamed in from out of state via iPad, when the hospital’s lousy Wi-Fi would accommodate it. “If I’d been a little fresher out of school when it happened,” says a nurse who has worked at Watsonville since the 1990s, “I would have left the profession.”

Halsen had stopped paying the nurses’ health insurance premiums, and frozen their employee savings accounts. Brothman made the rounds every day, asking nurses about their families, ribbing them about when they were going to get married, and promising he would never stiff them “He always said, our priority is to pay our nurses and to pay our doctors,” remembers Rubalcava. “Period, like he didn’t pretend it was his intention to pay anyone else.” There were whispers that all the money the hospital brought in was going to an address in Los Angeles, that a guy had been overheard bragging to a country club bartender about making $20 million off a hospital deal in Watsonville.

By the end of 2021, the hospital was in bankruptcy protection, where the nurses learned MPT had served Brothman—by that point long gone—with his first default notice 20 months earlier. By then, the hospital owed $40 million in unpaid rent and loans, on top of the value of its real estate. In its first conference call after the bankruptcy, MPT founder Edward Aldag said the firm would be writing off $31 million on the transaction, a hefty sum for an investment with a 2022 book value of just $34.2 million. It seemed obvious to anyone paying attention that Halsen had fleeced the hospital. But why had MPT, which owned some 20 California hospitals and 444 medical properties across 30 other states and nine countries, signed up to be fleeced?

The short answer is that it was all a massive Ponzi scheme. Of course it was: In the age of zero interest rates and private equity rollups, some entire industries

devolved into pyramid schemes, and health care companies, with their high barriers to entry and Medicare billing privileges, were particularly vulnerable. It wasn’t even particularly illegal.

The longer answer is that MPT ’s Ponzi scheme was not necessarily the legal kind.

The plot thickened less than two weeks after the earnings call, when The Wall Street Journal revealed that MPT had suspiciously overpaid for another Quorum hospital in Big Spring, Texas, right before the original Watsonville sale, coughing up $26 million to a company called Steward Health Care for the underlying real estate of a facility it had purchased for $11.7 million. The deal was part of a larger, more alarming pattern of MPT funneling preposterous quantities of cash—$5.5 billion over six years—into Steward in exchange for increasingly dubious assets.

Steward is a chain of more than three dozen hospitals that once touted itself as “the ultimate business model for the age of Obamacare.” Unlike Dan Brothman, its cardiac surgeon founder Ralph de la Torre was widely regarded as a genius. He’d hosted a million-dollar Democratic fundraiser featuring Barack Obama at his house after ditching his Republican registration; his own father boasted that “we could drop you into a tribe of cannibals [and] you’d become king of the cannibals.”

In 2010, de la Torre had wooed SEIU health care division chairman Dennis Rivera into backing the buyout of Steward by the ruthless private equity firm Cerberus Capital Management. Cerberus had contributed $245.9 million cash to buy the hospitals, which proceeded to hemorrhage cash for four years straight. But when the system swung to a profit in 2015 by reaching a settlement involving its long-underfunded employee pension plan, Cerberus saw in MPT a chance to cash out.

Cerberus Capital Management’s sale-leaseback schemes were behind the bankruptcies of retailers like Shopko and Mervyn’s.

MARCIO JOSE SANCHEZ / AP PHOTO

Initially conceived in 1960 as a way of “democratizing” the financial gains associated with property investment, real estate investment trusts (REITs) are specialized funds that receive tremendous tax advantages in exchange for agreeing to adopt rigid, low-overhead structures and pay out 90 percent of the profits to investors, who in turn are allowed to write off a portion of those dividends as business expenses. Almost by definition, REITs give off Ponzi vibes: Their rich dividends attract investors with very little interest in underlying fundamentals; certain accounting practices can easily obscure the financial impact of delinquencies; and their tax breaks are a magnet for private equity firms, which began during the 2000s to see REITs as a fail-safe method of extracting cash from companies no one wanted to buy.

In 2007, for example, a department store chain named Mervyn’s that Cerberus had acquired from Target in 2004 began to wobble under its lack of resources. So Cerberus raked in $430 million selling the underlying real estate of 43 stores to a California REIT and ended up booking a profit, even after Mervyn’s was forced to liquidate and lay off 18,000 employees a year later. This kind of decriminalized Ponzi scheme wasn’t 100 percent kosher: It’s ostensibly illegal to extract dividends from an insolvent company. After four years of litigation, a group of Mervyn’s creditors won $166 million from Cerberus and its co-investors. But the penalties were usually laughable if they existed at all, and private equity firms would deploy what became known as sale-leasebacks to profitably bankrupt countless companies, from Shopko to Friendly’s restaurants to the HCR ManorCare nursing home chain. Hospitals were not particularly conducive to plunder via REIT, however. Hospitals are enormous revenue generators, but their low operating profit margins vary wildly depending on the whims of insurance companies, state and federal lawmakers, and regulators. REIT s are supposed to be passive landlords, legally forbidden (with a couple of exceptions) from managing the properties they own and in many cases even investing in their upkeep. It was virtually impossible to find an operator capable of turning around the finances of a bankrupt mall or nursing home while making steep rent payments, much less a hospital. And so no one really bought hospital real estate, except for MPT, a niche outfit out of Birmingham, Alabama, founded in 2003 by a tax credit expert named Edward K. Aldag and a former shopping mall REIT CFO named R. Steven Hamner.

In its first deal, MPT paid Steward $1.2 billion to buy five of Steward’s hospitals outright and lease them back, then extend mortgages on another four. The hospitals’ real estate had been assessed in 2012 at $599 million, so the price tag raised a few eyebrows, especially given that it involved Steward signing up to pay MPT a $121 million rent check in the first year of the deal, and expanding each year thereafter. To sweeten the deal, Cerberus bought $150 million in MPT stock and MPT

bought $50 million in Steward stock. Then Cerberus used the proceeds of the deal to issue itself a $484 million dividend.

Steward was arguably insolvent before this first transaction with MPT, but it was definitely insolvent afterward, say multiple analysts who have spent most of the past year poring over MPT ’s financials. The Steward chain burned more than a billion dollars between 2017 and 2021. Given Cerberus’s track record of sending half its portfolio companies into default, that wasn’t much of a surprise. But between 2015 and 2021, the private equity firms GTCR , TPG Capital, Leonard Green & Partners, Apollo Advisors, and Welsh, Carson, Anderson & Stowe would also tap MPT to extract nine- and ten-figure payouts from their flailing hospital chains. To a degree, every one of those transactions crippled hospitals and the broader communities they served.

But no one did more deals with MPT than Cerberus’s Steward. Just five months after the initial $1.2 billion sale-leaseback, MPT pitched in another $301 million for Steward’s $304 million buyout of eight hospitals from Community Health Systems. Three months later, MPT put $1.4 billion toward Steward’s $1.9 billion acquisition of IASIS, a hospital chain owned by the private equity firm TPG. The following year, MPT disclosed investing another $764.4 million to buy five hospitals, including four in Massachusetts it had already paid Steward $600 million to mortgage and one in Texas it had acquired in the IASIS deal, then sold back to Steward a few months later, then bought back at a $15 million loss a few months after that. One analysis suggests the transactions represented a gratuitous $57 million giveaway to Steward from MPT

The Securities and Exchange Commission was confused enough to write to the company demanding an explanation, zeroing in on a unique feature of its original mortgage agreement with Steward that gave MPT the “right” to buy back the properties it had lent against for “110 percent of fair market value.” These financial gymnastics looked almost like an admission that MPT would promise to keep the scheme going indefinitely. And it did. MPT funneled a steady stream of cash toward Steward in seemingly fanciful quantities over the following years: $26 million for the $11 million Big Spring hospital and a mysterious $44 million promissory note in 2019; $205 million for a 49 percent stake in an international joint venture with a book value of $27 million in 2020; a $200 million “fair value increase” bonus to convert a $700 million mortgage it had supplied on another two IASIS hospitals in Salt Lake City into a sale-leaseback (that deal, which valued the two Utah hospitals at $2.4 million per bed, was a particular head-scratcher); $900 million followed by an extra $200 million for five Florida hospitals acquired from Tenet in 2021; $335 million to de la Torre in 2021 to pay back funds Cerberus had lent him to buy out its majority stake in Steward’s equity; and $169 million in capital

Medical Properties Trust funneled preposterous quantities of cash into Steward in exchange for increasingly dubious assets.

expenses to build a new Steward hospital in Texarkana, Texas.

REIT s like MPT that rented out properties on “triple net” leases are not supposed to spend investor funds on capital expenditures, period. But even if it could, why would Steward, whose venerable teaching hospitals in Houston and San Antonio were rotting from disinvestment, spend $169 million to build a new facility in Texarkana , of all places? Rob Simone, the REIT analyst at the financial research service Hedgeye Risk Management, suspected the deal was fake, and after MPT claimed in a May 2022 SEC filing that Steward had already spent $57 million of the budget, he contracted a photographer to drive to Texarkana to inspect the progress of the construction. At the site of the future hospital, which had “broken ground” nine months earlier, the photographer found a desolate field with no office or construction equipment, just a capsized blue port-a-potty in a vast expanse of weeds.

Like Brothman, Steward had cultivated a reputation of blowing off its bills, with its own twist: It attempted to intimidate those to whom it owed money by preemptively suing them. The hospital chain owed the state of Massachusetts hundreds of thousands of dollars in fines for failing to file basic financial disclosures since 2014, so in 2017 it sued the state’s health information department . By 2021, Steward owed the travel nurse staffing agency Aya Healthcare $40 million, so it sued the staffing agency for price-gouging. It owed Tenet Healthcare $18 million for backend information technology services, so last summer Steward sued Tenet, claiming it was the one who was actually owed money. Then earlier this year, Steward successfully won a temporary restraining order requiring a franchisee of the kidney dialysis firm Fresenius to continue providing services to its Massachusetts hospitals despite not having been paid in months (though the judge ruled with the Fresenius affiliate after a hearing).

The Tenet lawsuit gave Simone and many shortsellers particular pause, because Tenet claimed in a countersuit that Steward was insolvent and had applied in October for an extension on its repayment of certain CARES Act loans on the grounds of “extreme financial hardship.” In itself, that wasn’t surprising: A 2020 Bloomberg story reported that Steward owed millions of dollars to ad agencies, a linens provider, power companies, and other vendors, and that its Brockton hospital had been cut off by a local pizza shop whose co-owner said the hospital would refuse to pay its multithousand-dollar pizza tab until at least six months had passed. But MPT had insisted as recently as August, when it announced it had loaned Steward yet another $150 million, that the hospital chain’s patient volume was up, labor costs were down, and it was on track to achieve positive free cash flow by the fourth quarter of 2022. (It didn’t; MPT ended up lending Steward anoth-

er $28 million in late 2022 and another $50 million secured by insurance claims so far in 2023, it finally disclosed for the first time in late April.)

Theoretically, any money Steward hoarded by refusing to pay all those vendors should have flowed back to MPT, in the form of wildly inflated rent and interest payments that totaled roughly half a billion dollars in 2022. But Simone doubted that de la Torre’s professional austerity crossed over into his personal life, and on a lark one night he found himself googling “ralph de la torre yacht.”

Lo and behold, the hospital boss had spent $40 million in May 2021 on a 190-foot vessel named Amaral. To call Amaral a “yacht” is a bit misleading; four stories high, it looks more like an intimate cruise ship, or a floating boutique hotel. Poring over MPT’s disclosures, Simone soon discovered how de la Torre could afford it. Right after MPT loaned Steward’s founders the $335 million to buy out Cerberus in early 2021, the REIT had booked an $11 million one-time gain “pursuant to our existing 9.9 percent equity interest in Steward.” That meant that Steward’s new ownership—primarily de la Torre—had paid themselves a dividend totaling $100 million, perhaps reasoning that if Cerberus was paying itself another nine-figure dividend on the woebegone hospital chain, they deserved one, too. MPT apparently agreed.

For months, Simone had been exceedingly careful to cast MPT’s predicament as a product of poor risk management, perverse incentives, and the relatable desire to paper over bad decisions—anything but “the F-word.” But the images of de la Torre’s mega-yacht juxtaposed against the overgrown field in Texarkana did not leave much room for alternative interpretations. And soon a small band of professional short-sellers was adding to Simone’s body of work. Most notable was Fraser Perring, a British former social worker famous for his work on the crime-infested German payments company Wirecard, whose Viceroy Research beginning in January produced 15 reports on

Steward had earned a reputation of blowing off its bills, with its own twist: preemptively suing those to whom it owed money.

Left: The $40 million yacht purchased by Steward founder Ralph de la Torre Right: An empty field in Texarkana, Texas, where Steward was supposed to be building a hospital

what he described as the “den of thieves” comprising MPT and its biggest tenants. In March, MPT sued Viceroy for defamation, conspiracy, tortious interference, and unjust enrichment over the dossiers he’d published, many of which explored Steward’s forays in Europe.

Armin Ernst was a Boston-area pulmonologist and an executive of Steward when, shortly before the 2016 sale-leaseback that rendered Steward insolvent, he uprooted his life to take a job in Malta. Ernst had been recruited to lead a dubious shell company that had come under local press scrutiny for having acquired a lucrative contract to manage the archipelago’s three hospitals, despite no apparent expertise or capacity for doing the job. In 2017, Steward bought the shell company—and Ernst returned to Steward—after investigative journalists revealed that the original contractor was a serial fraudster named Ram Tumuluri who had recently fled Canada after bilking some hotel investors.

The hospital deal was one of a handful of privatization contracts fast-tracked by a Maltese official named Keith Schembri amid a frenzy of mysterious payments to dubious shell companies that had been revealed or referenced in the 2016 “Panama Papers” leak of documents from the offshore tax haven services firm Mossack Fonseca. In Malta, the Panama Papers had been most obsessively scrutinized by an investigative journalist named Daphne Galizia, whose son Matthew worked as a web developer for the nonprofit foundation that had archived the leaks, and who blogged on the brazenly corrupt no-bid process by which the hospital contracts had been awarded weekly, and sometimes daily, until she was suddenly murdered in a gruesome car bombing in 2017.

Schembri’s erstwhile close friend Yorgen Fenech, the cocaine-binging casino tycoon, paid Galizia’s assassins and was arrested while trying to escape on his

own (much smaller) yacht. Schembri and others were implicated in Fenech’s testimony. Steward had transferred at least 3.6 million euros into a bribery network that Schembri helped cultivate. A few months after the assassination, Ernst characterized the hospital ordeal in an email to Schembri as “the messiest situation I have seen in my professional lifetime.”

But Steward stuck it out in Malta, perhaps because Tumuluri and a partner had used the contract as a showcase for selling Steward’s hospital operation services to the governments of Montenegro, Albania, Oman, Slovakia, and Georgia. In 2020, MPT bought a 49 percent stake in this thriving international business for $200 million, even as its book value was just $27 million and nurses were complaining that Steward was funneling money into a “black hole,” while hundreds of patients languished in “camping site conditions” without basic equipment or real bathrooms. Ultimately, leaders calculated that Steward had stolen a combined 400 million euros from the government during its five years managing the three hospitals. The gravy train finally came to a halt months ago, when a judge annulled its management contract in a 140-page ruling ordering the hospitals to be renationalized. The Maltese parliament summarily kicked Steward—and MPT, which owns half of Steward’s international business—out of the country. In late 2021, the State Department even banned Keith Schembri from entering the United States due to “involvement in significant corruption.”

Back home, the government has demonstrated little interest in evicting hospital looters. When MPT agrees to overpay for a struggling community hospital, the hospital is the thing that tends to get kicked out of town. It happened to Youngstown’s Northside Regional Medical Center in 2018; the Ohio Valley Medical Center in Wheeling, West Virginia, and East Ohio Regional Hospital of Martins Ferry, Ohio, in 2019; Houston’s First

Texas Hospital Cy-Fair in 2020; Los Angeles’s Olympia Medical Center in 2021; the Philadelphia exurbs’ Delaware County Memorial and Springfield Hospitals in 2022; and most recently, San Antonio’s Texas Vista Medical Center.

During the first weeks of the COVID -19 pandemic, Steward threatened to close the only hospital in Easton, Pennsylvania, if the governor did not agree to cough up $40 million merely to keep it alive; the ploy worked. Countless MPT hospitals have slashed services to pay the rent, with maternity wards typically the first to go. The sole acute-care hospital in Dodge City, Kansas, where the two biggest employers are industrial slaughterhouses, was downgraded to a freestanding ER and regional referral center after its private equity owners sold off its real estate to MPT; now residents of Dodge City, which is home to nearly 30,000, travel to Minneola, population 750, for medical care.

In Watsonville, MPT commandeered control of the hospital’s bankruptcy reorganization in the way of the modern insolvency masters. It volunteered to provide debtor-in-possession financing, which along with its status as the biggest creditor entitled MPT to appoint a chief restructuring officer, a job for which it tapped the same man it had hired a year earlier to oust Halsen, while insisting to the hospital staff that “no negligence or malfeasance” had been found in Halsen’s books. Though the U.S. bankruptcy trustee objected to these measures, the community coalition organized by the nurses union did not have the ability to play hardball: “We were told bankruptcy lawyers billed $1,400 an hour,” explains a local physician.

The newly formed nonprofit hospital authority agreed to pay MPT a reduced monthly rent of $250,000,

all too conscious of the humanitarian crisis that could materialize if a town with thousands of near-destitute farmworkers lost its hospital. Watsonville’s century-old hospital had been threatened before; after a 1989 earthquake, they were ultimately forced to sell the hospital to the for-profit Community Health Systems after sustaining steep losses rebuilding the hospital to code “It’s like the cost of having health care in California,” one local activist told me, “living with these … marauders.”

MPT ’s roots run deep in California, where Aldag bought his first community hospitals shortly after co-founding the REIT in late 2003. The first term of the Bush administration was a time of transition and opportunity for many health care entrepreneurs, as white-collar crime enforcers who’d spent the late 1990s working multibillion-dollar Medicare fraud cases channeled their energies almost exclusively to the war on terror. In California, as the big health care giants of the 1990s shed hospitals to pay their legal bills, two former business partners turned archrivals, Prem Reddy and Kali P. Chaudhuri, both found profitable second acts as professional hospital bosses.

Aldag backed Reddy, a cardiologist with a newly expunged criminal record, in his 2004 buyout of a troubled HCA hospital; Chaudhuri teamed up with a medical payday lender called Medical Capital Holdings to buy four Tenet hospitals in Orange County, including the Western Medical Center of Santa Ana, California, where Dan Brothman was CEO.

Despite Reddy’s reputation for drinking at work and allegedly pressuring employees to illegally “dump” unprofitable patients, his venture, Prime Healthcare, was an overnight success. By 2007, the team controlled eight hospitals in California, and the Los Angeles Times ran a front-page story about the financial success the

Workers at the community hospital in Watsonville, California, which Halsen Healthcare had purchased and summarily bankrupted

company had achieved through surprise-billing patients whose insurer it deemed too stingy. In 2011, the Center for Investigative Reporting ran an investigation on the apparent epidemic of kwashiorkor, a Ghanaian term denoting a rare form of malnutrition almost exclusively observed in famine-starved children, in Prime hospitals, especially one newly acquired Northern California facility that had billed Medicare for kwashiorkor treatment in 16 percent of its elderly patients. The story revealed that Prime hospitals in the state of California had diagnosed fully a quarter of their Medicare patients with malnutrition, more than triple the state average.

A federal whistleblower investigation soon followed, as did a letter to MPT from the SEC asking for more information on its exposure to Prime, which managed 40 hospitals and comprised 20 percent of its revenue in 2014. In 2015, then-California Attorney General Kamala Harris took the unusual move of imposing a ten-year moratorium on closures or service cuts on Prime’s proposed acquisition of six former Catholic hospitals in the state. Reddy dropped the deal, sued Harris, and eased up on Prime’s expansionary aims. The following year, Aldag did his first fateful deal with Cerberus, while his son served as an intern there.

By that point, there were plenty of aggressive new hospital upstarts ready to push the envelope to pay the rent, as Reddy’s longtime competitor Jack Terner had predicted in 2007 to an L.A. Times journalist writing about Prime: “In many ways what he’s doing is obvious, but no one ever thought they could pull it off.” Terner’s own company, Prospect Medical, acquired by Leonard Green & Partners in 2010, would soon give Reddy a run for his hospital profiteering money, with $1.55 billion in backing from MPT

Reddy’s old archrival Chaudhuri pushed the envelope even further. One of Chaudhuri’s previous ventures had collapsed in spectacular fashion in 2000, and a hospital chief of staff at Western Medical Center named Michael Fitzgibbons led a campaign to minimize Chaudhuri’s involvement in facility operations. Chaudhuri dispatched Brothman to solve the problem, and Brothman in turn masterminded a campaign of psychological terror on Fitzgibbons, filing a bogus defamation lawsuit against him, recruiting a rival infectious disease specialist and warning physicians not to refer patients to him, and later spreading rumors among staff that “everyone knew” Fitzgibbons kept a gun in his car.

Concerned those actions had not sufficiently “humbled” Fitzgibbons, another Chaudhuri deputy dialed it up a notch, using hospital funds in 2006 to pay a strip club bouncer $10,000 to plant a gun in his car and call in a report of a “road rage” incident featuring a man in a white coat and black gloves waving a gun around, which quickly resulted in Fitzgibbons’s arrest in the medical center cafeteria. The physician ultimately won $5.7 million in damages, though not before his office was burglarized and flooded, his daughter and two Japanese exchange students she was hosting nearly died

in a horrific car accident after her tires were slashed on the treads, and the once-beloved hospital, unable to afford basic supplies or routine maintenance under the pressure of 20 percent interest rates, was reduced to the kind of medical hellhole where the CT scanner catches fire with a patient inside. Medical Capital, the lender, was naturally exposed as a billion-dollar Ponzi scheme that diverted millions to, inter alia , a pornography business and a “party yacht.”

Somehow, no one involved in the looting of the Santa Ana hospital or the terror campaign on Fitzgibbons was ever charged with anything illegal. (To the contrary, the same year they spent framing the infectious disease physician, Chaudhuri and Brothman invited a camera crew to film a reality show about travel nurses inside the facility.) Nor, needless to say, was the mastermind of Reddy’s kwashiorkor scam, or the cop who all but admitted under oath to having planted a bag of drugs in Fitzgibbons’s car. Medical Properties Trust is still listed on the New York Stock Exchange, and though its stock has lost nearly threequarters of its value since the beginning of 2022, CEO Aldag made $16 million last year, just a 6 percent drop from the year earlier, bringing his post- COVID compensation to a cool $50 million. Steward remains the largest for-profit hospital network in the country, and Cerberus remains a fearsome private equity titan, on the verge of booking an astonishing $16 billion profit if and when regulators approve the acquisition of its portfolio company Albertsons by the supermarket giant Kroger. And last year, Dan Brothman landed a new CEO gig back home in Orange County working for Prem Reddy at Garden Grove Hospital Medical Center, which MPT has owned since 2008.

Sen. Chuck Grassley (R-IA) recently wrote to MPT demanding information about its $57 million saleleaseback of a rural hospital in his state where a nurse practitioner recently died of an overdose while on shift, after which it emerged that he had sexually assaulted numerous psychiatric patients. But outside of that, nobody in a position of power has connected the dots; it’s been left to short-sellers to do the legwork.

“What’s so abhorrent about these schemes to loot hospitals is that they’re basically picking the pockets of people who’ve had cancer and trauma and heart attacks and strokes,” says Fitzgibbons, who drove up to Watsonville to informally counsel the community group back when the Halsen sale was first announced. He’s still in litigation with one of Chaudhuri’s companies, so he did not address the crowd, but he sat in one of the front rows just so Brothman could see him, would understand that they knew. Spotting the doctor, his old boss at first looked startled. “And then he smiled, and came up and tried to shake my hand like we were old pals,” Fitzgibbons remembers with a laugh. “These guys are nothing if not shameless.” n

Nobody in a position of power has connected the dots on the looting of these hospitals; it’s been left to short-sellers to do the legwork.

A Liberalism That Builds Power

The goals of domestic supply chains, good jobs, carbon reduction, and public input are inseparable.

By David Dayen

In December 2021, the U.S. shipped seven million tons of liquefied natural gas (LNG), more than market champions Qatar and Australia. An explosion at the Freeport LNG terminal in June 2022 was the only thing keeping the U.S. from solidifying its position as the world’s largest exporter, and once Freeport came back online in February 2023, exports hit new records for two straight months.

Six years earlier, the country was a net importer, and only one port in Alaska could ship LNG abroad. In February 2016, Sabine Pass in Louisiana became the first active export terminal in the Lower 48 states. LNG export capacity subsequently climbed from next to nothing to a peak of 14.1 billion cubic feet per day. In 2015, the U.S. exported 28.3 billion cubic feet of LNG; just in February of 2023, it exported 326.2 billion.

In short, America built a complex industry virtually from scratch into the global

leader in six years, under today’s permitting rules and approval processes, with the same standards for public participation, through companies that had no guarantee of profitability. Seven different terminals were built or expanded in the past half-decade, with at least 16 more projects in the pipeline.

You may not like the proliferation of LNG, which expends energy to chill and degasify, releases prodigious amounts of carbon pollution, causes health hazards for local communities, and is fueled by private equity. What you cannot say is that this industry is the product of a country that has forgotten how to build. A mix of national policy, willing financing, and economic and political power easily overcame whatever lethargy is judged to be endemic to the U.S. system.

The Biden administration is trying to generate a similar dynamic to expand clean energy and critical technology industries. Three major laws—the Infrastructure

Investment and Jobs Act (IIJA), the CHIPS and Science Act, and the Inflation Reduction Act (IRA)—aim to subsidize domestic manufacturing and the supports underlying it. In the first few months, the public outlays have been matched by a surge of private investment, faster than any analyst expected.

Unlike with other economic interventions, the Biden administration has strived to hit multiple policy goals in implementing these laws. Grants from the Department of Energy to support battery minerals projects require a community benefits plan, with labor and stakeholder engagement, diversity goals, and support for marginalized groups. Department of Commerce subsidies for domestic semiconductor facilities under the CHIPS Act had applicants lay out plans for access to child care. And Biden’s team is wielding other tools, like incentive bonuses, Buy and Build America mandates, prevailingwage requirements, and even profit-sharing

schemes, to make sure this industrial revolution benefits workers and communities, not just executives and financiers.

This has spurred a backlash from corners of the center-left punditocracy. Combining domestic manufacturing, decarbonization, union jobs, and economic justice muddles the picture, say opinion leaders (and Prospect alumni) Ezra Klein and Matthew Yglesias. They believe that initiating “a liberalism that builds” demands precisely the opposite approach: loosening cumbersome bureaucracy, diminishing public input, and tearing down any barrier to the national abundance we need. These traditionally libertarian preoccupations are finding purchase among self-described “supply-side progressives.”

For the past few months, I’ve talked to dozens of people inside and outside of government about this dichotomy. More important, I’ve talked to labor leaders, community organizers, investors, and businesses that are operating under the terms of the administration’s strategy. What emerges is not a picture of an America shackled by the bonds of stifling environmental regulation and domestic content requirements, to say nothing of its allegedly air-tight labor laws.

For decades, America delivered economic development subsidies without strings attached. Wall Street–fueled private corporations were first in line for those gifts, and they hoarded them. Whatever cheap goods or McJobs we got out of that transaction meant little without the shared prosperity and sustainability that America needs.

A better option involves the government actively supporting the very groups that have been left out of past economic transitions, building the necessary coalition for long-term transformation. Success is not guaranteed—democracy is difficult—but the laissez-faire approach guarantees failure. In order to actually remove the barriers that have hollowed out our industrial base, the answer is not a liberalism that builds, but a liberalism that builds power.

A couple of years ago, the United Steelworkers of America heard about an incipient project to build a nickel mine in northeastern Minnesota. Before they could get a chance to organize around it, the project’s leaders called them. “The company actually approached us and said, ‘We’ve had positive working relationships with the Steelworkers at other places,’” said Anna Fendley, director of regulatory and state policy for the union.

The company, Talon Metals, was formed by expatriates of Rio Tinto, a multinational mining conglomerate. Rio had planned to sell a 31,000-acre site near Tamarack, Minnesota, with large deposits of high-grade nickel, as well as copper and cobalt. The exploration team on the project saw the potential, and signed an earn-in agreement to take over the mine, with Rio serving as a minority partner. A separate processing facility would be the first for nickel in the United States. Later, Talon reached agreement with Tesla, which needs nickel for its EV batteries, to supply 75,000 metric tons of nickel concentrate over six years, once operations begin (the current estimate is 2026).

Total Unit Closings of Top 200 Builders, 2007–2017

The project, which will create roughly 450 jobs, was always going to be politically fraught. Hardrock mining is the leading industry for toxic waste in the United States, according to the Environmental Protection Agency, with particular concern over contamination of watersheds by sulfuric acid and heavy metals. The headwaters of the Kettle and Tamarack Rivers happen to be near the mine; the former feeds into the St. Croix River, and the latter into the Mississippi.

Plus, while the town of Tamarack is sparse (less than 100 people, per the 2020 census), the Mille Lacs Band of Ojibwe tribe lives about a mile away. They survive on well water, lake fish, and the wild rice that grows along the lakes. The tribe calls the rice “manoomin,” and it’s an important agricultural, historical, and cultural product.

“The area has beautiful pristine wetlands

that serve as a water recycling hydrological system,” said Kelly Applegate, commissioner of natural resources for the Mille Lacs Band. “If those were to get polluted it would impact us, our way of life.”

As The New York Times reported last year, Talon sits at the crossroads of industry formation, community skepticism, job creation, and environmental stewardship. To attract support, the company has given the impression of leaning into all these issues.

The Natural Gas Export Boom

Liquified U.S. Natural Gas Exports

A better option for economic development involves the government actively supporting the very groups left out of past economic transitions.

U.S. liquefied natural gas exports, in millions of cubic feet

It signed a union neutrality agreement with the Steelworkers, and partnered with them on a joint workforce training and development center to ensure a steady supply of skilled employees. Fendley said it’s easier to recruit to a rural area if both labor and management are promising a good job.

Talon sees it as a way to meet diversity goals, by recruiting among tribes or local refugee communities. Talon also has committed to a draft project labor agreement for both the mine and the processing facility, which will set wage scales, work rules, and employer contributions to training. “This project with Talon is the idea that a union and a company can have the same goals,” Fendley said.

Talon is going through environmental review in Minnesota, which includes an extensive public comment period. The company believes it can use technology to limit harms. It is working with a partner called EnviCore on a technique that limits mine waste, known as tailings, by turning it into cement mix. It has provided financial assurances to help close the mine when it winds down operations. And Talon decided to move the processing facility and waste

removal to Mercer County, North Dakota, where they believe the drier climate will lessen the possibility of environmental spoilage.

“Moving processing and waste storage, that’s directly responsive to what we heard about from the tribes,” said Todd Malan, chief external affairs officer at Talon. “It’s costing us money and changing our economics on the project to rail product 450 miles to North Dakota. But if people feel that we listened to them, they’re more open to the idea of a mine.”

Applegate stressed that the Ojibwe, a sovereign tribal government, has only engaged in information-sharing with Talon, not deeper discussions. A mining plan has not yet been submitted, with the kind of data that could verify the company’s claims about environmental impacts.

Nevertheless, Talon listed all of these actions in their Department of Energy application for the North Dakota processing plant, which won them a $114 million grant through the IIJA . In a tribal engagement and consultation statement, Talon committed to work toward benchmarks for “tribal employment, procurement from tribal owned businesses and other forms of

economic benefit sharing.” Malan said this offer drew upon the experience in Canada, where tribes have taken equity stakes in projects, purchased trucks and leased them to mining companies, or installed renewable energy and sold power to the firm.

“I don’t want to come to the table where they say, ‘We’re concerned about the environment and wild rice,’ and I talk about good jobs,” Malan said. “That’s a non sequitur. We can say, ‘Here’s what we will do on the environment. And also, we want to provide community benefits.’”

The Ojibwe tribe remains concerned. Applegate cited the recent rash of highprofile train derailments to emphasize the risk of locating the processing facility elsewhere. He acknowledged the shared goal of minimizing carbon emissions and climate change, which is also threatening the wetlands. “But we should not be asked to trade one form of pollution over another,” he said. The economic benefits didn’t seem to be a consideration. “We’re more concerned about being able to hand off this land and this water in a good way to our future generations, so they can practice their traditions.”

Wild rice, known locally as manoomin, grows alongside a Minnesota lake, which tribal communities fear a new nickel mine could contaminate.

In March, the tribe launched a website, waterovernickel.com.

Malan acknowledged that Talon’s promises may not sway everyone. But he said the company was trying to build a model for supplying the energy transition, welcoming a unionized workforce, and extracting needed resources sustainably, all at once. Talon sees the strategy as the only path to facilitating the broad-based community support that a long-term project needs. Federal funding and direction has helped to validate the effort, Malan said. “For people in the community, it feels like they’re contributing to something with a purpose.”

Klein has coined the phrase “everythingbagel liberalism” for the kind of multi-varied approaches like Talon is taking, arguing that one too many goals, even praiseworthy ones, “adds obstacles, expenses and delays,” and frequently accomplishes nothing in the name of accomplishing it all. Besides, trying to bring the coalition together can lead to unnecessary delays. Better to pick one objective and work toward it, and excise the other obstacles to progress.

If the buildup of boxes to check were truly a barrier, we would likely see reticence from firms to comply. But instead, there’s been a line out the door.

Between last August, when the CHIPS Act and the IRA were signed, and early May, companies have announced $216 billion in private manufacturing investments, nearly 20 times the number announced before the pandemic in 2019. Manufacturing construction spending jumped from $74 billion in May 2021 to $140 billion this February. Over 100,000 jobs have already been created. Goldman Sachs predicted that IRA clean-energy tax credits will see three times higher usage than expected, and will eventually bring in $3 trillion in private investment. The CHIPS Act grant process, which includes equitable workforce goals, supply chain diversity, climate pledges, community investments, and access to child care, received 200 statements of interest from applicants in the first two months.

This suggests that, for all the explanations about why America cannot build anything or sustain homegrown industries, maybe the only needed kick start was a little public funding with criteria for community benefits. “When we were putting together our modern American industrial strategy, we said policy certainty will help

crowd in private investment,” said Sameera Fazili, who worked at the National Economic Council in the first two years of the Biden administration. “We’re seeing some indications that our theory was right.”

In fact, the more you try to decipher the real obstacles to industrial and infrastructural capacity in recent years, the more you reach the conclusion that they primarily have to do with two factors: money and power.

For example, a classic “supply-side progressive” argument goes that zoning rules make it illegal to build multifamily housing in much of the country, leading to sprawl and undersupply and spiking home prices. In addition, community input offers far too many veto points from loosely organized homeowners, who are incentivized to restrict building to preserve property values.

That is all absolutely true, and some areas seeing the most affliction—my home state of California in particular—are belatedly trying to do something about it, with a series of legislative actions to force upzoning and increase supply. But there can be no doubt as an empirical matter that the greatest source of undersupply in housing in the past 20 years

The real obstacles to industrial and infrastructural capacity have to do with money and power.

Supply-side progressives believe that zoning rules and community groups have restricted homebuilding, leading to spiking prices.

came from not a zoning rule or community outcry, but the impact of the Great Recession. In 2007, the top 200 builders closed over 389,000 units; within two years, that was cut by more than half, and even in 2017, a decade later, only around 327,000 units were built.

Because we have limited public funding for housing in America, we are at the mercy of the free market. With no social-housing sector, whenever private developers pull back, affordability suffers. And when the housing bubble collapsed, for-profit homebuilders resisted risking capital on what was seen as a hazardous business.

A decade of consolidation ensued, with firms either closing or pairing with bigger rivals. “You had pipe farms, suburban developments with just the pipes sticking out of the ground,” said Dan Immergluck, a professor at Georgia State University and author of Red Hot City, about the Atlanta housing market. “That causes the labor to migrate.” Suppliers fled too. So when the pandemic hit, the system was so fragile that doors and windows and lumber became hard to come by, along with the workers to install them.

Just as housing starts were starting to

bounce back in 2022, Federal Reserve interest rate hikes made it more expensive to build, and starts plummeted again. This is starting to crop up in manufacturing as well, as public tax credits that require upfront investment simply stretch less in a high-interest-rate environment. Today, one big obstacle for LNG export terminals is rising interest rates eating away at up-front financing. Cost of capital is what will ultimately tip decisions on whether to build, outside of social housing or nationalized factories. “You need these policy levers rowing in the same direction to be effective,” said Todd Tucker, director of industrial policy and trade at the Roosevelt Institute. “If Jay Powell kneecaps the IRA at every step that’s going to be a problem.”

Another barrier identified by the liberal supply-siders is the extended permitting process, mandated through well-intentioned laws like the National Environmental Policy Act (NEPA). Again, this didn’t seem to stop a powerful industry like natural gas. A further set of research argues that lack of manpower at the agencies that conduct NEPA reviews was a bigger component of delay.

The biggest source of trouble in permitting, everyone seems to agree, is building transmission lines to move renewable energy from where it’s produced to where it’s consumed. (One 732-mile line from Wyoming to Nevada was just approved, and the long-delayed line from Quebec to New England has been resurrected by a state court in Maine.) One of the biggest issues is cost

allocation. When multiple utilities benefit from new transmission, they must decide who pays for what. A power struggle inevitably ensues. The Federal Energy Regulatory Commission has proposed rules for allocating costs, but if anything the problem involves too few rules, particularly on monopoly utilities trying to secure benefits without paying for them.

Power crops up a lot when you look at the barriers. A report from the Transit Costs Project on why constructing rail lines and subways in the U.S. is so expensive gives an important role to overstaffing of white-collar labor, also known as corporate consultants, which adds layers of bureaucracy, overbidding for materials, and variance of design to too many projects. Politically connected firms win these assignments, turn promising projects like California’s high-speed rail program to mush, and leave behind no institutional memory inside government for how to get things done.

Despite $40 billion in spending to connect all Americans to broadband, and another $45 billion on the way, millions still lack quality service, because incumbent telecoms want to get away with spending as little as possible. We could have abundant cures for all manner of diseases, but pharmaceutical firms get rich from sitting on innovation, buying rivals to snuff out potential competition. Research has even shown that housing inflation, that common theme of the supply-siders, could be attributable to concentrated ownership.

Total Unit Closings of Top 200 Builders, 2007–2017

The Great Recession’s Long Impact

Total unit closings of the Top 200 Builders, 2007–2017

Supply-side progressives sometimes recognize power too, like when they talk about how wealthier homeowners have more influence to stop housing in their neighborhoods. But more often, they set their sights on government incompetence and the burdens of labor and environmental rules, rather than corporate power and the familiar stories of cronyism and incumbency bias.

Between the lines of their arguments is the idea that increasing manufacturing capacity should take precedence over making sure somebody has a good job. Clean-air laws that prevent 230,000 needless deaths a year must take a back seat. Safety laws that have reduced workplace injuries nearly fourfold are too onerous. Democracy—the ability for the public to express their views on matters that will affect them and get a hearing—isn’t worth the trouble.

“You’re telling people they’re not going to get anything out of it and their lives will be made worse,” said Marshall Steinbaum, an assistant professor of economics at the University of Utah. “That’s the tell that it’s not designed to build a political movement. That’s something Silicon Valley billionaires believe.”

The Biden administration’s bid to reverse these trends starts from a premise that broadly distributing both money and power is essential to meeting the nominal goal of augmenting industrial capacity. As Tucker told me, “You can’t say that the problem with what we’re doing is that it’s too publicminded, that’s the point. It’s not just about adding widgets.”

You have to go back to what triggered the rebuilding impulse in the first place. The consequences of outsourced supply to concentrated offshore locations were on full display during the pandemic, introducing hidden risk, and eventually supply shocks and inflation. Monopolistic supply chains are simply unstable. More solar and wind projects were announced in the last three months of 2022 than all of 2021, but sourcing components, most of which come from overseas, has been a struggle, and spurred the push for a domestic solar supply chain.

Arguing that domestic manufacturing will raise costs neglects the severe damage we just experienced, which can emerge through climate catastrophe, geopolitical tensions, and many other factors beyond a pandemic. Besides, high-road labor practices, which aren’t even that common in U.S. manufacturing, add negligible costs

to renewable-energy projects, on the order of 1 to 2 percent.

The imperative of the climate crisis was the second emergency, and it fits with the first: Domestic supply is cleaner to produce and less carbon-intensive to ship. But it’s a monumental task: overhauling the structure of the U.S. energy system, the U.S. transportation system, the U.S. commercial and residential building system, not to mention reviving domestic mining and materials production and manufacturing. It touches absolutely everything. And to pull it off, you need maximum buy-in from all corners of the country, sustained buy-in that prevents policy rollback.

Trading $17-an-hour service-sector jobs for $17-an-hour manufacturing jobs is a sure way to destroy that coalition. “A plain-bagel strategy is not a recipe for winning,” said Ben Beachy, vice president of manufacturing and industrial policy at the BlueGreen Alliance, a labor and environmental partnership. “We will win when workers see climate action as essential, not only for the climate but for next month’s paycheck.”

The fossil fuel sector has managed to figure this out. Oil rig jobs in Louisiana and Texas are generally good, and it’s made them stickier, despite concerns about the climate. As oil companies pull back on investment and cut back on staff, workers have drifted to clean energy. Preserving broad-based support for the energy transition will require both well-paid jobs and secure careers that will be around for decades. “We’re working to eliminate a historic disparity in job quality between clean-energy and traditionalenergy jobs,” said Beachy.

Making that happen has to be a simultaneous process. If you instead offer a plainbagel approach, putting one goal ahead of the other, you end up with what Tucker calls the Elon Musk problem.

In 2009, the Obama administration inaugurated a $90 billion loan guarantee program through the Department of Energy as part of the economic stimulus to recover from the Great Recession. This was industrial policy in miniature, an attempt to incubate the industries of the future while creating jobs and economic opportunity.

One of the higher-profile loan recipients was Tesla, which received $465 million to build its Model S sedan.

Federal largesse spurred Tesla to early dominance, making electric vehicles attractive to a mass audience and spurring com-

petitors to join in. But Elon Musk didn’t have to deal with the kind of standards that are being viewed with skepticism today. As a result, the market leader in electric cars, weaned on public money, proceeded to become one of the biggest union-busters in America. The only U.S. auto company using non-union workers at a stateside plant, Tesla has been criticized for years for low pay, poor safety records, and intimidation of employees seeking collective bargaining. Tesla was found guilty in 2021 of firing an employee engaged in protected union activity; other allegations of illegal firings have followed.

Not only did the failure to condition federal loans on high-road labor practices enable Tesla’s practices, it made it harder to reverse those practices with each passing year, as the company grew and entrenched itself. Plus, Tesla’s competitors feel like they can’t create good jobs either if they want to challenge the market leader. Vehicle manufacturers and their suppliers kept their production overseas, or fought unionization. Even the Big Three automakers have attempted to put EV battery production outside of their contract agreements, arguing that it’s a new technology to be bargained separately. The United Auto Workers have taken the extraordinary step of withholding support for Biden’s re-election out

Preserving broad-based support for the energy transition will require both well-paid jobs and secure careers.

of concern for the drift of the EV workforce. Undoing this isn’t hopeless—workers at Ultium Cells in Ohio, who make batteries for General Motors EVs, overwhelmingly voted to join the UAW last December, and the union also just announced a neutrality agreement with Sparkz, another battery manufacturer. But that one decision to hand Tesla public money 14 years ago had longterm implications for an entire sector.

“We saw the rise of unions in the Industrial Revolution because the jobs were so bad,” said Fendley, with the Steelworkers. “Wouldn’t it be nice in this massive industrial transformation that we’re on the cusp of if we didn’t have to go down a road like that, and we made sure that jobs were highroad and union from the start?”

Biden’s first major policy preoccupation was to bring about full employment. The American Rescue Plan went out of its way to not follow the agonizingly slow labor market recovery of prior recessions. America restored all of the jobs lost in the pandemic,

a deeper deficit than the country had seen in a century, in less than three years. Tightened labor markets bring leverage to workers by definition. Companies in high-impact industries must compete for talent.

The administration has supplemented that in several ways. First, they made supply chain resilience and carbon reduction national priorities. Biden set a goal of electric vehicles being 50 percent of all cars sold by 2030. The Environmental Protection Agency’s tailpipe emissions rule in April codified that goal and even strengthened it. This creates a market for battery and EV production. The administration’s historic supply chain reports last year made the case for producing them and other critical goods domestically. National priorities impact even private investment. LNG terminals must prove they can show 30 years of demand that will earn back the significant investment; those longterm demand projections are less possible in a climate-obsessed world.

Nudges were also added inside key laws, if not always firm standards. An executive

order requires project labor agreements for all federal construction projects. CHIPS funding “strongly encourages” PLA s as well, though an earlier provision to require them was cut out of the final bill. The IRA’s controversial EV rebates include domestic content requirements to further guarantee that not just cars but the whole ecosystem of suppliers remains in America. The law also offers large incentive bonuses for companies that offer prevailing wages for construction, as well as qualified apprenticeship programs, which can help solve the workforce problem for companies while offering ladders to the middle class for workers.

The IRA also reserved $6 billion for technology upgrades supporting cleaner manufacturing of aluminum and steel, to reduce industrial pollution. “We can’t just forever depend on huge reliance on cheap imports to achieve climate goals. Overseas corporations tend to be more emissions-intensive,” Beachy said. The Department of Energy program guidelines, released in March, again preference applicants that not only guar-

In 2009, Tesla received $465 million in government loans, with no strings attached. The result is a largely non-union electricvehicle industry.

antee cuts to greenhouse gas emissions but support cleaner air for local communities.

The supply-side progressive critique misses the fact that all of these goals are mutually reinforcing. For example, the typical line from businesses is that unions will slow down operations, by protecting unproductive performers and adding burdensome work rules. The administration’s actions have flipped that on its head.

Now, unions can offer startup manufacturers a stable workforce and lower turnover rates, along with the potential for unlocking political connections and financing. And since the industrial base has been so hollowed out, experienced employees with production know-how are prized commodities who can help young companies navigate their early growth. In this sense, organized workers become brokers for the clean-energy solution, not just replaceable parts. “What we’re hearing from the private sector is, ‘Where can we find some unions?’” said Beachy.

If you get to those infant industries with upside for growth early, companies with no history of even talking to unions, you can change minds. “If we can set in place industrywide practices that show them that investing in their workers can add to the firm, we’ll be able to add these practices earlier as they grow,” said Fazili.

The biggest victory for this strategy came at an electric school bus factory in rural Georgia , where 1,400 workers won a union election in mid-May. Blue Bird, which received

funding through the IIJA’s clean school bus program, had to comply with an Environmental Protection Agency condition that barred recipients from funding outside antiunion campaigns. In a right-to-work state, those restrictions leveled the playing field.

Over 90 percent of private-sector manufacturing jobs are non-union; increasing union activity can restore organizing muscle across sectors. Most unionized steel and aluminum facilities are located in disadvantaged communities; reducing pollution from these factories would improve air quality in neighborhoods that have needed that for years, while protecting the climate and creating good union jobs.

Similarly, the child care crisis and workforce needs fit together to uplift a unique class of Americans.

In Mississippi, Methodist minister Carol Burnett (yes, that’s her real name) directs two nonprofits dedicated to bringing women, primarily single mothers, into the construction industry, where wages are higher than in traditionally female professions. “Single moms are the population in our state where poverty is most concentrated, even though single moms have higher labor force participation rate in the state,” she told me.

The Women in Construction program in Biloxi started after Hurricane Katrina, another time of acute workforce needs. The program trained women to rebuild and renovate homes devastated by the storm. Enhanced with funding from the Depart-

ment of Labor and philanthropic foundations, Women in Construction expanded into advanced manufacturing and commercial construction. Staff members are now training single mothers in four districts, helping with credentialing, job placement, and child care needs along the way. “We haven’t achieved equity or anything but we’ve made a lot of progress,” Burnett said. “The experience has demonstrated that women can work when one earns enough money.”

Major construction industries in Mississippi include Ingalls Shipbuilding, a federal contractor, as well as oil and gas firms and commercial builders. The state is notoriously unfriendly to unions, environmental rules, and decent wages. Yet Burnett has made some headway with large employers by framing the child care issue as about increasing the employee base. She explained how the state’s workforce development agency, Accelerate MS, received a grant through the American Rescue Plan to fund support services for single parents, including child care.

“There are really a larger number of people at all levels who are beginning to understand that child care is a challenge, and trying to address it is a good thing to get more employees in the door,” Burnett said. The CHIPS Act directives on child care, which simply require companies seeking federal money to look around for access near site locations, can be seen in that context. With women only 10.6 percent of the construction workforce,

Gov. Brian Kemp (R-GA) opens a Hanwha Qcells solar component factory in Dalton, Georgia. Qcells recently invested $2.5 billion to expand the plant and open a new one.

they are an untapped option for expanding the employee base. And making workforce decisions that maximize available labor can benefit workers and the company alike.

One of Fazili’s major initiatives at NEC was to increase the trucking workforce, amid pandemic-era labor shortages. Decades of deregulation made the jobs unattractive. “People were so used to thinking of labor and management in opposition to one another,” she said. The administration initiatives, she said, “creates new incentives for folks to work together and for management to realize there’s real value in collaboration.”

These efforts are not fated to succeed, because nothing requiring cooperation ever is. The Defense Department didn’t have a strategy of adding conditions when it helped build the semiconductor industry in the 1970s. Today, the majority of the most advanced chips come from one island and one firm, Taiwan Semiconductor Manufacturing Company (TSMC). Its founder, Morris Chang, referred to American hightech companies in a 2016 interview, stating bluntly: “When you look at why those companies are successful, I think them not having unions is a big part of it.”

Sure enough, as TSMC builds a chip factory in Arizona with public funding support, they have resisted Commerce Department guidance, and labor has been frozen out. “There is zero interest in doing business with us,” the president of Arizona’s building trades told the Prospect in April. Out-of-state, nonunion workers are building the facility. Though chip companies have started to fight one another over subsidies, suggesting that they could be persuaded to distribute benefits broadly, the government has little leverage to dictate to the small handful of players in the industry, which they’re practically begging to set up shop in America. “Some of these chip firms can walk away from the table in a way that cash-hungry firms can’t,” said Tucker. That’s why the administration’s competition agenda is a component of its industrial policy; more semiconductor firms can bring in new ideas and break the industry’s rigid stances.

But also, Congress had no interest in writing labor neutrality requirements into CHIPS, which would have helped immensely. It’s led to the soft-pressure approach that the Commerce Department has laid out, attempting to show firms that it’s in their interest.

Similarly, the reason you see the vast majority of the investment flowing into red states and red districts is that it lines up with states that have right-to-work laws. That’s also not an impossible hurdle—the Steelworkers secured their neutrality agreement with Talon Metals in right-to-work North Dakota—but it’s a heavier lift when the manufacturing hubs of the future are in the Deep South, or areas where wages and benefits are low by design.

On the flip side, that’s a coalition-building opportunity. One of the biggest solar manufacturers in the U.S., Hanwha Qcells, set up shop in the district of Rep. Marjorie Taylor Greene (R-GA) and later expanded the plant and added another one in a neighboring red district, with a $2.5 billion investment praised by Vice President Kamala Harris. That puts Greene in a difficult position when Republicans fight to extinguish clean-energy tax credits. The workers in that factory become citizen lobbyists against Republican anti-renewable sentiment. And building out a hint of acceptance in the GOP for these policies, as has been done with wind power in Texas and Iowa, insulates the policy to an extent.

Finally, there are the impossible yet inescapable conversations with the kinds of

communities traditionally disadvantaged by industrial production, who don’t particularly want to be—and shouldn’t be—human sacrifices on the altar of the energy transition. “So many times, history repeats itself,” said Applegate, of the Mille Lacs Band in Minnesota. “Industry comes in, taking our land, our trees, moving us onto reservations.” Somehow, slow permitting didn’t stop that from happening.

Community benefits agreements that give disadvantaged communities a stake in future industrial projects, from targeted hiring to environmental mitigation, ensure more equity. Mines, transmission lines, utility-scale solar and wind, battery factories, and other pillars of this strategy, if successful, will be in neighborhoods for decades. The short-term need to win acceptance from the people who have to live next to them will pay long-term dividends.

There’s something uniquely un-American about the alternative. “A liberalism that builds boils down to the idea that people can’t be trusted,” said Steinbaum. “Elites must make the sound enlightened decisions because they don’t trust democracy or politics.” Supply-side progressives like Yglesias and Klein are skilled at detecting the structural problems in American government. They’re less concerned with the problem of power as an impediment to progress. And they’re certainly not interested in equalizing that power, aligning the interests of labor and capital, as the clearest path to deal everyone into a next-generation economy.

For all the struggles that Talon Metals has had gaining support in Minnesota, their executives at least sound like they understand this. “Community support has to be built across all these projects,” Todd Malan told me. “They put us through the wringer, and keep us accountable.”

Most communities will gain from better jobs and opportunity, cleaner air, resilient supply chains, and a climate that isn’t spinning out of control. And they have even more to gain from equalizing the power dynamics that have pummeled their communities. So does a political system that has struggled with the disruptions of inequality and deindustrialization for the past halfcentury. Instead of trying to restart the bulldozers that outsourced and deregulated and got us into this mess, we can build a base for a mass politics, the only base that will sustain the generational effort of standing up a new economy. n

With women only 10.6 percent of the construction workforce, they are an untapped option for expanding the employee base.

AN UNEMPLOYMENT SYSTEM Frozen ın Amber

Pandemic-era benefit boosts worked for jobless recipients and the economy. Why did they go away?

By Bryce Covert

ILLUSTRATION BY CORNELIA LI

LaShondra White worked at a Kohl’s in Detroit, Michigan, for a decade before the pandemic hit. As in-person businesses shuttered, the company told its employees that they would all be furloughed. For White and millions of other workers, their recourse was unemployment insurance.

Enrolling wasn’t much of a hassle at first, and White received over $600 a week, thanks to extra benefits passed by Congress in the CARES Act. It was enough not just to cover her bills, but to give her room to dream. “To me that was my chance to get out of this situation,” she said. She had always wanted to own her own business, and now she had an opportunity to make it happen. She figured out how to fix her credit score, and she rented out a space for an eyelash studio, which she still owns.

“Honestly for me it was a blessing, because it allowed me to do things, and now I’m better for it,” she said.

But White also experienced the downsides of unem-

ployment insurance. When she finally went back to work at Kohl’s in July 2020, it was only on reduced hours, given how few customers were coming into the store. She struggled to get her benefits recertified every week, which meant a delay in getting her checks. Getting help from Michigan’s unemployment agency was nearly impossible. “I’ve never seen anything like that from a customer standpoint,” she said, and she would know, having worked in customer service. “If you work and you’re a taxpayer, these are people that should be working for you. It should not be the other way around where it’s driving you crazy.”

To resolve the issue, White contacted her congressional representatives, getting her case fixed and her benefits flowing. It was a common solution: Organizers say that the best way to get an answer about a delayed claim during the peak of the pandemic was to have workers contact their state representatives to put pressure on the agencies. That can be effective, but it’s incredibly inefficient; Michigan has 15 House and Senate members, and at the height of the pandemic, over one million Michiganders were unemployed.

White was grateful for what she received and that she was able to eventually fix the problems. “But I do remember thinking it shouldn’t be this chaotic,” she said.

It wasn’t so long ago that Michigan was a poster child for all the wrong ideas about unemployment insurance. After the Great Recession, as states looked at how to replenish trust funds that had just been depleted, Michigan was the first to make the math work by cutting back on benefits and going after the unemployed. In 2011, it reduced the number of weeks someone can be enrolled from 26 to 20—breaking with a half-century-long norm—and then in 2013, it implemented an automated fraud detection system (causing a huge spike in claims against recipients) and levied quadruple penalties on those accused, the highest in the nation. The war on the jobless took such a toll that the University of Michigan put a suicide hotline number on its unemployment insurance clinic website.

Today, Michigan is “committed to holistically modernizing and overhauling the unemployment insurance program,” said Julia Dale, director of the state’s unemployment insurance agency. That’s in line with Gov. Gretchen Whitmer’s focus, she said, on making Michigan a good place to live and work.

The holistic approach includes upgrading IT systems; in May, the state enlisted a new vendor, Deloitte, to implement an entirely new computer system for both applicants and agency staff. It’s also tackling inequities in who is able to claim benefits. With some of the billions of dollars the federal government has made available to states through the American Rescue Plan, Michigan has translated unemployment materials into multiple languages and created road maps for both claimants and employers to better navigate the process.

Last year, after the Department of Labor told states they could waive overpayments for those who mistakenly got higher benefits thanks to confusing guidance or processes, Michigan issued 76,000 waivers , erasing more than $555 million that residents would have otherwise had to pay back, months or even years after receiving benefits. “That’s money that allows them to pay the rent, to pay the mortgage, to put food on the table, to buy necessary medication,” Dale noted.

Then at the start of this year, Dale’s agency formed a first-of-its-kind modernization work group made up of labor, business, and unemployed worker representatives to come up with policy recommendations to improve the system, including how many weeks are offered, how much money unemployed workers receive, and what taxes are levied on businesses to fund the program.

“The needle has moved,” Dale said. “What the pandemic revealed was the historic disinvestment in unemployment insurance programs across the country.” She wants to turn Michigan’s new approach into a “national model.” But the agency can’t accomplish this transformation on its own. The power to set benefit amounts or extend the duration lies with the legislature. Eventually, she might need Congress to act, too.

If there was ever a time to reinvent unemployment, a core but little-loved thread of the social safety net, it’s now, after the best and worst of the system were on such public display. Enhanced pandemic benefits lifted millions out of poverty, pushed people into better jobs, and led to one of the fastest economic recoveries in history. Yet creaky technology generated unnecessary hardships and invited fraud. A reasonable country witnessing that would work to keep what worked and jettison what didn’t. But it remains to be seen whether there is enough political will—and resources—to craft a better system.

Unemployment insurance started as a radical idea. President Franklin D. Roosevelt included it in the Social Security Act after the carnage of the Great Depression. “We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life,” Roosevelt said upon signing it into law, “but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job.”

The program had two purposes: to catch American workers when they were pushed out of work and to prop up the economy in times of mass joblessness by making sure families could keep buying necessities. But it goes beyond income replacement. If workers know that they will have income if they lose their jobs, they will be emboldened to speak up about and fight abuse. Plus, if someone does end up losing her job, having income while looking for another allows her to hold out for the right match and the right wage. More generous unemployment benefits lead workers to find better, higherpaying jobs.

But if benefits are difficult or impossible to access, then “it becomes really hard to reject poor offers,” said Will Raderman, policy analyst at the Niskanen Center. “You don’t want to give up a solid wage for a fairly low chance of getting UI.”

Its myriad problems also date back to its inception. “The decision that put us in this spot in the first place,” said Michele Evermore, senior fellow at The Century Foundation, “was deciding to make this be a state-run federal-state partnership.”

Congress considered two different versions of unemployment insurance. One,

If there was ever a time to reinvent unemployment, it’s now, after the best and worst of the system were on such public display.

supported by a Minnesota lawmaker and discussed in the “non-southern-dominated House Labor Committee,” writes Ira Katznelson in When Affirmative Action

Was White , would have created a federal trust fund to administer benefits. Instead, Congress went with a model in which benefits are funded by employers paying taxes on their employees’ wages, while states have control over eligibility and benefit levels. Domestic and agricultural workers, who were overwhelmingly Black, were excluded, as were government, nonprofit, and selfemployed workers. Interruptions for pregnancy and childbirth weren’t covered. The

NAACP testified against the bill, calling it “a sieve with holes just big enough for the majority of Negroes to fall through.”

It was the kind of deal fashioned to pass many New Deal reforms: In order to gain support from white Southern lawmakers, it essentially carved out many Black workers and gave states power to keep excluding people of color as they saw fit. But unlike Social Security retirement benefits and the minimum wage, which have been reformed many times since then to reach more Americans, unemployment insurance “operates almost exactly as it was designed in the late 1930s,” said Jenna Gerry, senior staff attor-

ney with the National Employment Law Project. Agricultural and domestic workers have been included, but not those on small farms, and the self-employed, irregular workers and new parents are still left out.

Talk to any unemployment insurance expert and they’ll say that there are really 54 different state and territorial systems. While many government programs exist as a federal-state partnership, here the separation is nearly complete. The federal government funds the administration of the program, and states are then left to set the rules wholly by themselves, with no national floor. States can be found to be out of compliance with the minimal administrative requirements, but the only option available to the Department of Labor is to more or less revoke a state’s federal funding and prevent it from giving out benefits. “It’s basically like the Department of Labor only has a nuclear option, and it’s never used it because it is the nuclear option,” Gerry said.

As a result, state programs vary wildly. Maximum benefit amounts, which are often set as a percentage of an individual’s average wages before unemployment, range from as little as $235 a week in Mississippi to as much as $1,015 in Massachusetts. In some states, benefits are “so low that many workers will choose to not even apply,” Gerry said. On average, Americans get $392 a week; that wouldn’t even keep a family of three out of poverty in more than threequarters of all states.

The way the system is funded also drives inequities and shortfalls. Employer taxes go into state trust funds to pay out benefits. States are supposed to keep those tax rates high enough to ensure an adequate safety net and replenish the coffers after severe downturns. But employers have a vested interest in keeping rates low, and many state lawmakers listen to them. The business community has more expertise lobbying on this issue than unemployed workers. States are only required, at the minimum, to make employers pay taxes on the first $7,000 of employees’ wages, a figure that hasn’t been updated since 1983. Arizona, California (!), Florida, and Tennessee still keep it that low. Many states don’t index the amount of earnings that is subject to the tax, allowing it to erode over time. Social Security’s taxable wage baseline, on the other hand, started out the same as unemployment insurance’s but has been increased and indexed and is now $160,200. “By not

LaShonda White of Detroit used enhanced unemployment insurance to create a business selling eyelashes.

adjusting [taxable wages] to inflation, the program is sowing the seeds of its own demise,” said Peter Ganong, an economist at the University of Chicago.

The low revenue base incentivizes states to cut benefits to keep funds solvent. Since the 1950s, nearly all states ensured at least 26 weeks of benefits. After the 2008 recession, however, rather than increase tax rates, ten states reduced the number of weeks. Florida, Kentucky, and North Carolina now offer less than half.

To be eligible, an applicant must have made a certain level of earnings and certify that they are actively searching for work. But those rules can disqualify irregular, seasonal, or part-time workers, as well as those with hefty caregiving responsibilities. People who quit or are fired for cause can’t enroll, but even the definition of involuntary unemployment varies—some states will reject someone who, for example, is told their job is moving 30 miles away, or someone who had to leave a job because they feared an abusive partner would find them at work and hurt them. Undocumented workers, even if they pay taxes, are excluded entirely.

While Evermore says an ideal goal is for half of unemployed workers to qualify—a peak that was reached in the 1950s, and roughly the share of unemployed people who are out of work involuntarily—only two states today (Minnesota and New Jersey) achieve that. Alabama and North Carolina reach less than 10 percent. The share of unemployed workers who receive benefits has gradually declined; on the eve of the pandemic, less than 30 percent were eligible.

As with most things, low-wage workers experience the brunt of this inequity. A 2007 GAO report found that while they were almost 2.5 times as likely to be out of work, they were half as likely to receive benefits as those earning higher wages.

Low-wage workers are also more likely to have their employers fight claims. Business taxes rise as former employees enroll in the system, so companies have taken to hiring third-party firms to wage aggressive challenges, depriving those who need the assistance the most. This practice deters some workers from even bothering to make claims, if they know they’ll run into such an intense counteroffensive.

The challenges aren’t just around varying access to benefits, though. The fact that

each state operates its own unemployment insurance fiefdom means there is no standardization. When Evermore worked as deputy director of policy in the Office of Unemployment Insurance Modernization at the Department of Labor, she tried to create a glossary of common terms. But even something as basic as defining “fraud” varied too much between states. Improvements or technology upgrades therefore can’t be rolled out quickly or easily across systems, so states have to keep duplicating the same work.

The federal government gives states funding to administer benefits, but even that has significant issues. The amount each state gets is based on how many claims were made in the previous year; by definition, less funding goes out in times of low unemployment. Then when there’s a sudden increase in unemployment, states are ill-prepared. The funding levels generally are inadequate. The money comes from the appropriations for the Department of Health and Human Services, and “you can probably see why UI administrative funding is not the highest priority when it’s up against cancer research and disease control,” Evermore said. Funding was at a 30-year low when the pandemic hit.

That doesn’t leave much room to update technology so it works smoothly. We learned during the pandemic that many UI systems are programmed with COBOL , a dead computing language used on old mainframes that is rarely taught anymore. Even if pro -

grammers could be found, government work pays less than private-sector technology jobs, making it hard for agencies to hire and retain staff. Many end up outsourcing their needs to the few contracted vendors in this space. States are left unable to make changes easily on their own when needed; the governor of New Jersey used a live press conference in 2020 to ask for volunteers who knew COBOL to help fix their system.

This technology deficit does not interact well with the extreme complexities in benefit delivery. Evermore once worked with a state that had 1,500 questions in its decision tree to determine eligibility.

Some of the hurdles the unemployed face are accidents of bad policy, but some are deliberate. In 2011, Florida became the first state to require claimants to answer 45 math and reading questions before they could apply, and then it updated its online portal in 2013, which was so riddled with technological failures that now-Gov. Ron DeSantis has said it had to be done purposefully to keep people out. “I think the goal was for whoever designed, it was, ‘Let’s put as many kind of pointless roadblocks along the way, so people just say, oh, the hell with it, I’m not going to do that,’” he said. States with larger Black and Latino populations have the strictest rules and the lowest rates of recipiency and replacement of workers’ incomes. Overall, Black workers are about a quarter less likely to receive benefits than white ones.

Soaring Pandemic Unemployment

First-time unemployment claims in 2020 peaked at around 6 million per week, and even by December were at five times where they were in January.

If the program was flawed from the beginning, we’ve only allowed it to get worse over time. “We’ve just seen this slow and steady decline in the system,” said Andrew Stettner, deputy director for policy at the Office of Unemployment Insurance Modernization. “We’ve definitely had a policy of neglect.”

When the pandemic hit, a system that was already primed not to respond when workers most needed it buckled and nearly collapsed. New claims for unemployment benefits hit three million the week of March 21, 2020, triple the previous record, and then doubled to reach six million for two weeks. First-time claims stayed above one million for over a year.

In an unlikely turn of events, Congress reacted quickly to the crisis, enacting the largest increase in unemployment benefits and eligibility in history. Lawmakers created a new program to reach nearly everyone who would otherwise be unable to enroll, including self-employed and independent contractors, caregivers, part-time employees, and underpaid workers. Congress also provided 49 additional weeks of benefits to those who exhausted their state benefits, and offered a flat increase in benefits. Until July of 2020, unemployed workers received an extra $600 a week, and then between December 2020 and September 2021, they got a $300 top-up. For about three-quarters of eligible workers, that meant they received more than they had been making at work.

In 2019, unemployment insurance kept a mere 500,000 people out of poverty. In 2020,

that figure was 11.7 million, second only to Social Security as an anti-poverty measure, and even that may well be an undercount The benefits also helped keep the economy from going into free fall. Recipients quickly turned around and spent their benefits, which propped up business activity. That contributed to the economy’s output fully recovering within about a year of the pandemic’s beginning.

That didn’t mean that everything ran smoothly. Claims were taking weeks, sometimes months, to get processed and approved. Florida, predictably, was the slowest state to process claims in the first month of the pandemic, reaching only about 1 percent of its workforce. In July 2020, over 100,000 people had waited 70 days or more for a check. People couldn’t get through on the phone lines to get help.

At the same time, the overwhelmed, antiquated systems invited sophisticated forms of organized crime to take advantage. The Government Accountability Office found in January that $4.3 billion in benefits were definitively paid out fraudulently, and potentially much more. Over 1,000 people have been arrested in association with unemployment fraud.

Perversely, fraud reports led to haphazard measures that harmed actual recipients. The Center for Popular Democracy worked with people who had monthslong gaps waiting for benefits. “A lot of workers would be denied on various technicalities when they were in desperate need of income,” said Francisco Diez, senior policy strategist at CPD. They were “in danger of not being able to pay their rent and potentially being pushed out of their homes.”

Eventually, making the lives of the unemployed a little less anxious sparked controversy, and months of headlines about whether it was causing people to stop working. In response, 26 states ended the extra benefits early, despite a number of studies finding that increased benefits in the pandemic had little to no effect on whether people worked, and cutting people off from benefits didn’t suddenly spur them to get jobs.

What did happen when Americans got better unemployment benefits is that they were freed up to think about what kind of job they really wanted, and to pursue getting it. The labor shortage was more of a reset: People re-evaluated their relationships to work, facilitated by being able to make ends meet in the meantime.

Arindrajit Dube, professor of economics at the University of Massachusetts at Amherst, and two other economists found that the resulting tight labor market led to rapid wage growth for low-wage workers, which erased a quarter of the wage inequality that had been growing for decades. “We started with an economy with so many bad jobs where there is a lot of room for improvement,” said Dube. But when workers received generous unemployment benefits, they made room for “looking around more and finding better opportunities,” he said.

With this kind of track record, you would think that the pandemic experience would trigger a reassessment of how unemployment insurance can stabilize workers and the broader economy. But you would be wrong.

The new set of benefits are all completely gone. Before the pandemic expansions expired, three-quarters of people were accessing benefits through them rather than their state programs. Today, the share of unemployed workers getting benefits is now back to about 25 percent of jobless Americans. Despite the focus on the system and its failures, as well as these brand-new experiments, “it didn’t accomplish any durable change,” said Indivar Dutta-Gupta, executive director of the Center for Law and Social Policy.

That’s despite new coalitions that rose with the unemployment rate. In July 2020, three organizers formed Unemployed Workers United. They started to engage unemployed workers, first by going into Facebook groups where people had already started connecting with each other to share resources, then by tapping voter data and analyzing it to estimate who was most likely to be experiencing unemployment. They contacted over two million people in 2021 and 2022 and now have a base of about 300,000 people. They hosted dozens of “know your rights” workshops with legal aid lawyers who could answer their questions, drawing 50 or more attendees at each. They held cookouts with community organizations to give people in-person support.

“Unemployed workers often feel isolated because an identity of being unemployed is not something a lot of people identify themselves with,” said Lynn Hua, director of digital organizing for Unemployed Workers United. But these spaces gave them a sense of community in the experience.

The Center for Popular Democracy also

The share of unemployed workers has gradually declined; on the eve of the pandemic, less than 30 percent were eligible.

launched an unemployed action project to mobilize unemployed workers “to have a say in what a better unemployment system could look like,” according to Diez. The large universe of unemployed workers—1 in 4 Americans received at least one payment in the pandemic—helped the campaign spread and got workers to see things differently, Diez said. “That reality opened up a realization that ‘I’m not alone in this.’”

But as CPD members go back to work, they’re now organizing around issues like wage theft and poor working conditions. Unemployment has gone back to the sidelines. “A lot of it has, to be frank, lost momentum because it’s not an urgent issue,” Diez said. Hua’s organization is part of a national unemployment reform coalition

and still has a pending lawsuit against the governor of Arizona for ending federal benefits early. But it’s pivoted to “focus on precariously employed, periodically employed, temporarily employed workers,” Hua said, running campaigns such as banning source-of-income discrimination in housing in Arizona or fighting unfair treatment by temporary staffing agencies in Texas.

Workers are most attuned to unemployment insurance when they need it in a crisis. After that, they go back to trying to earn a living, shedding the identity of an unemployed person. Employers, on the other hand, have a deeply vested and ongoing interest in keeping their tax rates low.

Lawmakers, meanwhile, typically turn their attention elsewhere. Unemployment insurance reform didn’t even make it into

the early, expansive versions of Democrats’ Build Back Better reconciliation package. “It’s really hard to get policymakers to care about unemployment insurance in nonrecessionary times,” Gerry said.

One permanent change did come out of the pandemic: The Office of Unemployment Insurance Modernization. The American Rescue Plan that President Biden signed into law in March 2021 gave the Department of Labor $2 billion for UI administration, and the department is focused on “three critical goals,” said Stettner, its policy director: “equity, timeliness, and accuracy of payments.”

The office has created what it’s calling “Tiger Teams,” experts who deploy into a state government for six weeks to identify

The $1.9 trillion American Rescue Plan offered billions to states to modernize their unemployment systems.

problems and offer potential solutions, all coupled with funding to entice states to make changes. The teams look at everything from whether the program uses easyto-understand language to the effectiveness of its fraud prevention tools. It’s a voluntary program, so a state has to request a team. But 30 have gone through the process, and about 40 have committed to it, Stettner said.

Michigan isn’t the only state to use the funding to embark on ambitious changes. Colorado took $600 million in ARP funds to cover undocumented immigrants, make sure the unemployed receive benefits immediately, and ease up on going after recipients for accidental overpayments. Tennessee used $61 million to upgrade its systems to process claims faster. Washington state put $31 million toward upgrading its IT systems and translating materials into ten languages.

But the Labor Department can only do so much within the existing framework. Even states that are eager to make changes are short on cash, still working through pandemic-era issues and paying back loans from the federal government while doling out ongoing claims. “We can’t fix the system alone,” Stettner said. “We need policy reform.”

The Biden administration has given Congress an idea of what it thinks that reform should look like: ensuring an “adequate” duration and level of benefits in every state, making sure the program responds automatically and quickly to downturns, and expanding eligibility so those who were newly covered during the pandemic qualify. “The Administration calls on Congress to act now while unemployment is low to ensure that unemployed individuals,

regardless of where they live, have equitable access to benefits that are adequate to meeting their basic needs while they are unemployed and searching for new work,” the Department of Labor’s FY2024 congressional budget justification states.

Change has happened before, and could happen again. When Congress passed the American Recovery and Reinvestment Act in 2009 to pump stimulus into a depressed economy, it added some strings. If states accepted extra funding for unemployment benefits, they had to permanently expand eligibility for those benefits to low-income and seasonal workers, part-time workers, and those who leave their jobs due to domestic violence or another “compelling family reason.” It was “the largest expansion in unemployment insurance in a recession really since its history,” Dutta-Gupta said. But it was also an “uphill battle.” Then-Louisiana Gov. Bobby Jindal at first refused to accept the $98.4 million in funding because of the expansion requirements.

Not all lawmakers have lost sight of the need for reform. In early 2021, Sens. Ron Wyden and Michael Bennet, two of the leaders of the pandemic-era reforms, put forward a proposal to overhaul the system by requiring states to offer at least 26 weeks of benefits, replace 75 percent of workers’ wages, cover part-time workers and those who quit for a qualifying reason, create a $250 benefit for those who aren’t covered by the system, and increase the taxable wage base from its $7,000 minimum.

Organizers aren’t done, either. In Louisiana, for example, they helped secure an increase in the maximum weekly benefit. In New York, a coalition is pushing for the state to pass the Unemployment Bridge Program modeled after the excluded workers fund the state ran to cover undocumented workers and others left out of federally expanded pandemic benefits.

Plenty of people lose jobs even in good economic times, in what amounts to a personal recession. The pre-pandemic Trump administration, for example, saw decadeslow unemployment rates, but there were still 58.7 million instances of individual unemployment. Yet there was no expanded coverage or benefit generosity to cushion those workers.

Meanwhile, another economic downturn will come, be it from a recession caused by the Federal Reserve, a string of bank runs,

or another pandemic. The system is still unprepared to handle it. “We are absolutely totally not ready for any economic downturn right now,” Evermore said. But there’s little mystery about what it would take to get ready.

Instead of requiring Congress to top the system up every crisis, the program could be put on autopilot—if the right economic triggers were met, more weeks and more dollars of benefits could automatically kick in. “That eliminates state confusion and makes things go smoother when times are hard,” Evermore said. Otherwise, Americans have to rely on Congress to find the will to enact temporary extensions and enhancements. That leaves the possibility that political infighting will get in the way the next time catastrophe strikes.

“In its true form, it should be social insurance, which is available to workers at all times when they’re experiencing unemployment,” Raderman said. The challenge is to institute minimum federal standards all at once. That way, a state can’t comply with, say, a requirement to offer 26 weeks by turning around and cutting the maximum benefit amount. “You either have to be comprehensive in mandates or reforming the system or you would literally have the federal government run the system,” Dutta-Gupta said.

All of this is “stuff you can’t really do on the fly when there’s a catastrophe,” Evermore said. The question is whether there’s enough momentum from the pandemic catastrophe to truly change the way the system works.

LaShondra White started organizing with the Center for Popular Democracy after her experience with unemployment insurance because she didn’t want other people to struggle with the system. But she worries that the exact same problems will emerge in the next economic downturn. “They may try to push it under the rug because we’re not in [the same] moment,” she said. “But when it comes around again you should be prepared. To put a system in place that works.”

“I just hope going forward we’re prepared for the next time. Because there will be one,” White said. “It’s just a matter about when and how prepared are we going to be.” n

Bryce Covert is an independent journalist writing about the economy and a contributing writer at The Nation.

Another economic downturn will come. The unemployment system is still unprepared to handle it.

In Baltimore, a long bus commute remains the city’s only east-west mass transit option.

Getting BaltimoreAcross

Gov. Wes Moore’s credibility in the largest city in Maryland rides on building a light-rail line long blocked by racist fears.

BY GABRIELLE GURLEY

The Baltimore Transit Equity Coalition’s downtown office is in a space of the kind that architects designed for brick buildings a century ago , with large windows that flood a room with natural light even on a cloudy Saturday in April. A small multiracial group of residents met there to refocus their city on a new version of a transit plan long weighed down by inequities older than the room they sat in. A huge map of the Baltimore region hung to one side of the room. One red line snaked across its center along an east-west axis.

It represented the original route of the Red Line, a proposed light-rail connection. Over the course of the day, older battle-energized veterans and young people new to the cause dove into how the line would improve local connection—not just in mobility, but also in civic engagement and civic life. They strategized about what to say to persuade people to sign a new ballot petition to create a regional

transportation authority for the Baltimore area. No one said much about the map itself. They didn’t have to.

The cancellation of the Red Line is a transgression deeply etched in the collective memory of Baltimore. Few places are as haunted as this city is by the egregiousness of its systemic racism in public transit. Generations of African American Baltimoreans have been consigned to lifetimes of substandard travel by the failure of white politicians, and business and civic leaders, to connect up their neighborhoods with the city’s major job hubs situated along that axis.

Many Black residents had been eager to see the link built to help revive the beleaguered neighborhoods shattered by the uprising that erupted in 2015 after Freddie Gray died from the injuries he suffered in the back of a police van. Poised to receive $900 million from the federal government to build the nearly $3 billion light-rail link,

then-Republican Gov. Larry Hogan shook Baltimore again just weeks after the unrest by rejecting the Red Line funding agreement for the 14-mile-long route.

Several years earlier, rejecting federal transit funds had become something of a hobby for Republican governors. Then-Gov. Rick Scott of Florida pulled the plug on a Tampa–Orlando high-speed rail line; Scott Walker of Wisconsin sent back funds for a high-speed train between Madison and Milwaukee; and Chris Christie of New Jersey rejected money for a rail tunnel.

For his part, Hogan termed almost a billion for Baltimore a “wasteful boondoggle,” but he did accept almost $1 billion for the Purple Line, a light-rail line running through two thriving Maryland suburbs bordering Washington, predominantly white Montgomery County and predominantly Black Prince George’s County. The proposed Baltimore rail line, by contrast, had been designed to connect low- and mod-

erate-income Black neighborhoods with Johns Hopkins Bayview Medical Center at its eastern end, and with the headquarters for Social Security and the Centers for Medicare & Medicaid just over the western city line in Woodlawn. The line, however, also edged too close for comfort to adjacent white communities. State funds that would have gone to the Red Line went straight to road projects in rural white areas. The city did, however, get millions for a new youth detention center. Baltimore has seethed about those body blows ever since.

Linking communities along an eastwest axis with faster options than buses is something so basic that many American cities on the East Coast had figured it out by mid-century. Baltimore, the largest city in one of richest states in the country, never did. Nearly 25 years into the 21st century, a viable east-west connection is still just a red line on a map.

Enter the state’s first Black governor, Wes Moore, who took office in January. The charismatic social entrepreneur who made his mark with nonprofit work on poverty and education took down a 2022 primary slate of Democratic politicos, including former DNC chair Tom Perez. He pulverized his far-right Republican opponent in the general election.

After six months in office, Moore has already sketched out his transit equity legacy by pledging to finally build the Red Line—providing access to opportunity to people long denied the tools to improve their lives. At that Saturday meeting of Red Line advocates, Samuel Jordan, the president of the Baltimore Transit Equity Coalition (BTEC), called on Moore to pick up the pace. The day before the meeting, Jordan told the Prospect, “We need a clear demarcation between the Hogan era and the Wes Moore era, particularly with respect to transportation investments.” At the BTEC gathering, Jordan had choice words for the Moore administration’s public-facing work. “This governor hasn’t yet taken any concrete steps to finish the Red Line, and no one has taken any real concrete steps yet to engage with communities along that corridor in planning for development in the future,” he said.

Baltimore, with a population of about 580,000, has uniquely bad transit for a city of its size. Its system, run by the Maryland Transit Administration, a state agency, is a model of inconvenience. Riders endure one

or more long bus commutes (with traffic, 90 minutes or more each way is not unusual), often enough in slow-moving traffic, to get across town. Jason Haeseler, a math teacher at Patterson High School in East Baltimore, has a shorter, one-seat bus ride from his home in the same neighborhood, but he gets an earful from his students, who commute from all over Baltimore to attend one of the most diverse schools in the city—some of them need three bus transfers to get there.

The Northeast Corridor’s other major cities—Washington, Philadelphia, New York, and Boston—all have had extensive networks of bus and rail lines for decades. Since the 1980s, Baltimore has had just two north-south running rail lines: the Baltimore Metro SubwayLink, a single solitary line that seems to be largely unknown to the outside world (one Redditor recently dropped into the Baltimore subreddit to ask about “the mysterious subway”) and the Baltimore Light RailLink, which runs from Baltimore-Washington International Thurgood Marshall Airport through downtown and on to suburban Hunt Valley, and which has a reputation for subpar service. “One big challenge is there is not a defined culture of transit in the city,” said Derek Moore, a Baltimore resident (no relation to the governor) who attended the BTEC meeting.

During the pandemic, bus lines were tar-

geted for cuts, even though the light rail shed more of its mostly white riders than the buses that moved mostly Black essential workers. Today, Baltimore’s bus network has recovered to about 85 percent of its pre-pandemic ridership while the rail links struggle. The transit coalition’s campaign to set up a regional transit authority in tandem with a new Red Line argues that an independent authority would do a better job than the MTA has of aligning the metro region’s various interests.

Blame much of Charm City’s bad transit on the interstate highway mania of the 1950s, which had very different outcomes in two cities than less than 50 miles apart. Both Baltimore and Washington were targets of aggressive highway campaigns, but only one walked away with the crown

Baltimore has uniquely bad transit for a city its size; it’s a model of inconvenience.

jewel of a world-class subway system. In Washington, another multiracial coalition beat back the factions that wanted to spin spiderwebs of highways across the capital. The victory positioned the city by the 1970s to use the more than $1 billion that would have gone to the highways to build Metrorail instead.

Some of Baltimore’s problems can be traced back to the 1940s, when city leaders called in Robert Moses, New York’s legendary builder of highways. Moses brought with him his distinct contribution to urban restructuring: building expressways that pushed low-income people, and especially African Americans, out of certain areas he wanted repurposed. In Stop the Road: Stories From the Trenches of Baltimore’s Road Wars, Evans Paull, a retired Baltimore city planner, documents how a “Franklin Expressway” plan, ultimately shelved, would have forced about 18,000 people out of their homes. “Some of the slum areas through which the Franklin Expressway passes are a disgrace to the community, and the more of them that are wiped out,’” Moses argued, “the healthier Baltimore will be in the long run.” Local business groups of the period, like the Association of Commerce, endorsed the idea.

By the late 1960s, however, Baltimore transit planners had envisioned a six-line

Baltimore Region Rapid Transit System, somewhat similar to Washington’s. But Baltimore politicians, planners, and business leaders had exhausted themselves and their treasury with highway schemes that the city ultimately could not pay for. They had little interest in repurposing highway dollars to subways. They also had let the streets crumble, leaving furious residents demanding repairs—not rail.

William Donald Schaefer, the powerful, pro-highway mayor of Baltimore who later became Maryland’s governor, decided to save face by building a truncated span of a larger interstate highway project that was later abandoned and came to be known as the “highway to nowhere.” It did succeed, however, in ripping out West Baltimore homes and displacing hundreds of families.

Schaefer did support public transit when it came to two of his pet legacy development projects: the Inner Harbor, with a then state-of-the-art aquarium and indoor mall and food courts, which opened in 1983, and Camden Yards, the Baltimore Orioles’ baseball stadium, which opened in 1992. He belatedly had realized that the downtown area couldn’t handle the throngs of funand-games-seeking white suburban drivers drawn to those attractions.

Unlike their counterparts in Washington, there was little support among white Bal-

Left: The “highway to nowhere,” which cut through West Baltimore

Right: Camden Yards, which has light rail and subway access

timoreans for expensive and complex rail projects that they viewed as solely benefiting Black people. While the Johns Hopkins University and the University of Maryland eds and meds centers are on or near those rail lines (and bus lines, of course), the government centers remain bus-dependent destinations.

Baltimore was the birthplace of redlining in the early 1900s, and similar racist perspectives have shaped the city’s and the state’s policies in transportation, education, and policing. Brian O’Malley, president of the Central Maryland Transportation Alliance, explains that “if you look at maps of historic redlining, if you look at a lot of the indicators where people live, by race, by income, and where people don’t have a car for every working adult in the house, the lack of rapid transit matches up with some of those other indicators of historic institutional racism and lack of resources.”

American politicians often succumb to the impulse to come up with a manifesto that ticks all the boxes about Big Issues of the Day. Moore authored five books (four nonfiction and one young-adult novel) before he was elected governor. After the sudden death of his father when he was a toddler, Moore moved with his mother and sisters from Takoma Park, Maryland, to live with his maternal grandparents in New York. Equity and access to opportunity figure in his public comment on transportation, and his published works provide snippets of Moore’s experiences with New York’s intense public-transit culture before he returned to the Maryland area as a teenager.

Moore learned to navigate the ebb and flow of the subways between his home in the South Bronx and the rest of the city. In Discovering Wes Moore (the young-adult version of his autobiographical memoir), he observes, “On the Number 2 train home, we were crushed in a crowd of executives, construction workers, accountants, and maids. Hands of all colors clung to the metal pole in the middle of the subway car. Justin broke down his strategy for securing a seat. ‘Just stand next to the white people. They’ll get off by a Hundred and Tenth Street. I swear you’ll see. Give it six more stops.’ I grinned

at him, then nodded in awe as his prediction came true. All the suits emptied the train by the time we hit 110th Street, the last wealthy stop in Manhattan … A subway car full of blacks and Latinos would continue the ride up to Harlem and the Bronx.”

By the time he had settled in Baltimore, Moore had a more sobering impression of transit’s impact on a city. In 2020, one year before he announced he’d run for governor, he wrote Five Days: The Fiery Reckoning of an American City with The New York Times ’ Erica L. Green, a former Baltimore Sun reporter who’d covered the 2015 uprising. The book profiles eight Baltimoreans’ experiences during the Freddie Gray uprising. One of them, Major Marc Partee, a Baltimore police officer, had to come to grips with the Baltimore Police Department’s decision to shut down the Mondawmin Mall, which Moore describes as “a true transportation hub in a city not known for its transportation assets,” where a number of bus lines and the metro meet. Moore described that decision as one of the period’s “big unanswered questions.” Clearly, however, that one order epitomized the authorities’ lack of consideration for Black Baltimoreans’ basic needs, stranding already angry young people and exacerbating the conditions that fueled more unrest in the week after Freddie Gray’s funeral.

Scuttling an infrastructure project is easy. Resurrecting it takes time and megabucks. Rather than starting from square one, the Moore administration wants to salvage some part of the more than two decades’ worth of the original Red Line work for its new federal application.

Moore has certain advantages. His selection of Paul Wiedefeld, the former general manager of the Washington Metropolitan Area Transit Authority, as Maryland’s transportation secretary raised some questions thanks to Wiedefeld’s sometimes dicey six-year tenure at an agency in the throes of its own midlife crisis. But the Baltimore native also had run Maryland’s transit and aviation agencies. He was the transit administrator who signed the original 2008 Red Line community compact, which included an outline of which experiences from similarly situated cities could be applied to the Red Line. The Wiedefeld pick signaled that the new governor wanted an adviser already well versed in the terrain.

The Red Line proposal, with a new estimated $3.4 billion price tag, has lined up key supporters in its bid for federal dollars. Maryland Sens. Ben Cardin and Chris Van Hollen gave the Red Line a boost by inserting a provision in the Infrastructure Investment and Jobs Act that allows states like Maryland to get back into one of the federal government’s most complex hypercompetitive grant processes by allowing previously approved projects that have been on pause to reapply.

But a number of things have to fall into place for the Red Line to win new capital improvement grant monies from the Department of Transportation. For starters, Maryland has to come up with some coin itself. With Democratic supermajorities in both chambers, Moore had proposed

tapping into the state’s rainy day fund for $500 million to be divvied up between the Red Line and other transportation priorities. But the projected budget surplus fell short of expectations, and state lawmakers prioritized education, cutting Moore’s transit request to $100 million with a possibility for an additional $100 million. That covers just a fraction of what the line requires. In 2015, the state had lined up about $1.7 billion, plus funds from localities, Maryland’s Transportation Trust Fund, and a possible public-private partnership.

State officials also have to figure out what they can salvage on the environmental front. Does the environmental impact statement that must accompany a new application need to be completely redone? Or can an earlier one at least

Wes Moore, Maryland’s first Black governor, has made salvaging the Red Line a priority.

be amended to indicate how the project meshes with new development and other changes along the route?

Not surprisingly, Wiedefeld is upbeat. “Every project I’ve dealt with, either at the airport, [Washington] Metro, or the MTA , there’s never been a clear path,” he told the Prospect . Can Maryland do the project without federal dollars? “My preference obviously would be to get as many federal dollars as I can.”

The hope is that a legislatively mandated east-west corridor study which just happened to appear in the waning months before Hogan left office in 2022 can help backstop the state’s application without requiring a brand-new environmental impact statement. The study examined how to improve transit access for the Central Maryland region—Baltimore City and four adjacent counties. It contained assessments of how the project would impact the environment and a menu of feasible alternatives, which are required by National Environmental Policy Act processes for transit projects.

The corridor study lists seven east-west alternatives, which include light-rail and bus rapid transit options. (One is a subway, which is almost certain to be out of the running due to construction costs and disruptions.) One of the light-rail proposals (known as “Alternative 6”) mirrors the original Red Line route, according to Klaus Philipsen, who worked on the design team for the Red Line from 2002 to 2015. “This is the thing in transportation: Transit doesn’t change all that often and rapidly,” he said. Asked if Alternative 6 was going to be the choice, Wiedefeld wasn’t going there. “I think it’s too early to get that far,” he says. Equity concerns could also figure into the state’s calculus. In 2015, the NAACP Legal Defense Fund filed a civil rights complaint with the Department of Transportation,

alleging that Gov. Hogan had violated Title VI of the Civil Rights Act by canceling the Red Line and diverting the funds to rural white areas. When Donald Trump came into office, the Department of Transportation closed the investigation.

NIMBYs ready and willing to muck things up pose another potential set of challenges—wealthier harborside neighborhoods that were hotbeds of opposition the last time around may still frown on an aboveground line running past their homes. And some suburbanites still fear rail as a gateway to the denser “urban” communities that threaten their “lovely suburbia,” as one local official described another light-rail proposal. The threat of crime by pillaging “elements” (read: African Americans) usually factors in at some point, too. Ludicrous as those fears may be, suburban apprehension about “loot rail” (a claim that hung over the original Red Line, never backed by any data) could deter the project.

Nor is there a uniform guarantee of support from Black Baltimore neighborhoods, especially the ones convulsed by the construction of the highway to nowhere. Not only were residents forced from their homes that were demolished, but others were forced to give up their homes that didn’t fall to the wrecking ball after much of the original project was abandoned and their homes left standing. That left many community members suspicious of “improvements” or “new investments,” which they have often viewed as Trojan horses for new displacements.

Moore will have to dig deep into his inner visionary and then some, given the long haul that’s ahead. “There’s still anger about the cancellation of the Red Line, which may help to mobilize the city more actively than it would be otherwise,” says Matthew Crenson, an emeritus professor of political science at Johns Hopkins University.

The questions keep coming about a nextgeneration Red Line and all its moving parts, from design and engineering to possible procurements and permitting to getting community input and support—and they all need answers before the bulldozers move in. The first time around, two years passed from the Department of Transportation’s final environmental impact statement approval to a federal funding commitment. The initial estimate for construction? Six years.

“It took about 15 years of planning and

lobbying to get to the point where they got plans approved, money in place, so Moore is going to have to go through building that kind of support again,” says Sheryll Cashin, a professor of law, civil rights, and social justice at Georgetown Law. “There was a huge empathy gap between Hogan and the Black citizens of Baltimore,” she adds. “[The Moore administration] should be able to get it done. If they can’t, that’s quite a statement.”

But while not overselling expectations may have its merits, failing to fill that messaging void with concrete information about next steps leaves Red Line supporters anxious. Pushing any backdoor, less expensive options, such as bus rapid transit, won’t fly either. “I want to make sure that we’re sticking with rail, which the original Red Line was, because rail is better at attracting that economic development,” says Delegate Sheila Ruth, who spoke to the BTEC group at their April meeting, and represents a western section of Baltimore County in the state legislature.

Moore has to hack through some brutal terrain. He appears to have supportive partners in Washington, at least as long as the Biden administration runs it. But he needs billions in rock-solid funding, and only a portion of that is going to come from the feds. He’s likely to need two terms in office to make any serious progress. And on the cusp of a presidential election, there’s always the possibility of an increase in the numbers of transit-resistant Republican congressmembers wanting to meddle in other states’ affairs.

Providing estimates of project milestones and dates is not unreasonable. But, above all, Moore has to keep public messaging and communications transparent and accurate to keep Baltimore’s African American communities—long since suspicious of political pledge-making—on board. Otherwise, he runs the risk of defeating his own purpose by letting a “this is never going to happen, so why should I care?” mindset creep in.

For now, the memories of what might have been are enough to power the Red Line forward. “The same people are working the same jobs, waiting for the same buses they were waiting for—what, seven years ago? Eight years ago? That rail line could have been built by now. Those people are still around and remember,” says Haeseler, the high school teacher. “The faster that Wes Moore can move, the better.” n

For now, the memories of what might have been are enough to power the Red Line.

PREDATORY LENDING

Black and Latino borrowers are more likely to get trapped in cycles of debt,

As a Black woman in America who was barely making ends meet, Ms. Lillie, who asked that we withhold her last name, was a target for high-cost lending. So much so that, one day, an offer showed up in her mailbox. A local lender in Greenville, South Carolina, where she lived, was offering her a loan.

In a just country, Lillie would not have needed the financial help. She had a stable job as a hospital staffer and a decent credit score. But her paycheck still left her short for her basic needs, and she was unable to make rent. Credit cards were an option, but as Lillie told the Prospect, a clerical miscommunication put her behind on her payments

By Ramenda Cyrus

with her bank, Wells Fargo. By the time it was corrected, she could no longer afford the payments. She could not drive—she used the bus to get around Greenville—and she was not good with using the internet to research her options. “I’m a baby boomer,” she said. “When I was growing up, we didn’t have computers, or laptops.”

One day, Lillie got on the bus and stopped at the lender who had sent the mailing, and took the $700 offered. It was not her first line of credit, but, as she told the Prospect, it was the first that sent her into a cycle of debt. And so it ensued: She’d take out new loans to pay off recurring expenses, including previous loans, and then take out more. Lillie began to feel overly burdened and

depressed. “It made me feel like the world was on my shoulders,” she said.

A decade later, with more than $15,000 in debt, Lillie filed for bankruptcy at the age of 70. When asked if, knowing what she knows now, she would do it again, Lillie answered quickly: yes. And who really could be justified in blaming her? It was as simple as getting on the bus.

Many poor and working-class people have been involved with a predatory lender, or know someone who was. Often, these are people of color who—like Ms. Lillie—work, and still just cannot make ends meet.

Predatory loans rely on an information advantage. Lenders know how to manipu-

LENDING’S PREY OF COLOR

because they have few other options for dealing with structural poverty.

late the terms of the loan to keep the customer borrowing more and more. They can bury the most important provisions in financial jargon, leaving the borrower unaware of what they are getting into. Often, people are desperate, seemingly out of options, and willing to accept pretty much anything. That enables the remarkably high interest rates, hidden fees, and constant rollovers into new loans accruing more interest that can trap people in a web of financial stress.

Subprime mortgage lending in the 2008 financial crisis crashed the economy, which is why Congress finally decided to do something about it with the 2010 Dodd-Frank Act. The law established specific provisions

relating to minimizing predatory lending practices, and created the Consumer Financial Protection Bureau (CFPB), both to consolidate consumer protection into a single agency and to give a federal entity the power to regulate nondepository financial institutions such as payday lenders. “It meant that the entire industry had to move to a safer product, or bear increased financial risks to their own balance sheets,” said Mitria Spotser of the Center for Responsible Lending (CRL).

The CFPB is generally regarded as an “unmitigated success” in protecting consumers, which is why the GOP and industry lobbyists want to see it dismantled, or at least made severely inefficient. The legisla-

tive and legal battle for the CFPB is critical; without the consumer agency, poor people would be left without the tools and information to adequately defend themselves against predatory lenders, and without an advocate to turn to if they find themselves caught in the trap.

However, even with the CFPB, predatory lending remains pervasive, particularly for people of color. The key components of the industry, from geography to marketing, take aim at Black and Latino borrowers in need. Low wages, generational poverty, and a lack of traditional financial services funnel people to predatory lenders. Only better jobs, reputable loan alternatives, or tangible aid can give poor people the

options they need to walk away from the cycle of debt.

Ms. Lillie should never have been subject to a predatory loan. She worked at a hospital for 14 years, retiring at 65. Her pay was “reasonable.” For the most part, she was supporting herself. Still, she would find herself needing a boost for necessities, like rent or other bills. And one bad loan set her down a path.

That path was one of few offered to Lillie, and the least distressing one that she would consider. This is by design—not a blind spot of the system, but an essential facet. Predatory lenders and other alternative financial service providers (AFSPs) occupy a space left by traditional banking. As commerce and financial services have moved online, brick-and-mortar bank branches across the U.S. have fallen from 36 per 1,000 adults to 30. From 2017 to 2021, 9 percent of bank branches closed. Of those, a third were in majority-minority communities, per the National Community Reinvestment Coalition.

Bank deserts, as they are called, are often located in low-income areas and populated by people of color. And in the typical majority-Black or -Latino community, there are fewer options for financial services, usually translating into higher interest rates and lower savings rates.

Current FDIC statistics show that nearly six million households have no bank account, while another 18.7 million are “underbanked,” meaning that they have used at least one AFSP in the past year. Black and Latino households were much more likely to be unbanked or underbanked, according to the 2021 data.

“The irony is that people who have lower financial means are individuals who are less likely to use online financial services, so they’re looking for storefronts,” Spotser said. And the storefronts they find, Spotser said, are often high-cost lenders: pawn shops, payday lenders, and check cashers.

A Pew Research study from 2012 found that, when adjusted for other factors, Black people had a 105 percent greater chance of receiving a loan compared to other races. Additionally, Pew found that payday loan usage is concentrated in the South and Midwest. A Morning Consult report from 2020 found that Black people were almost twice as likely to live near a small-dollar lender, such as a payday lender.

A 2018 Center for Responsible Lending

study in Michigan found that “while statewide there are 5.6 payday stores per 100,000 people in Michigan … census tracts that are over 25% and 50% African-American and Latino are 7.6 and 6.6 payday stores per 100,000 people, respectively.” In 2018 testimony delivered to the Rhode Island legislature, CRL noted that, when comparing areas within a similar income bracket, areas with a “significant population” of Black and Latino people have a 70 percent higher concentration of payday lenders in the state.

Even the marketing for payday loans features Black and Latino faces more prominently. “Payday lenders engage in a type of reverse redlining, locating primarily in communities that have been historically and systematically deprived of mainstream financial services in order to extract fees on the false promise of access to credit,” Diane Standaert told the Rhode Island legislature for CRL.

South Carolina, where Lillie lives, is rife with high-cost lending. Eighteen states and the District of Columbia have instituted interest rate caps for payday loans no higher than 36 percent, but South Carolina has yet to do so. That’s not without consequence: The average payday loan interest rate in the state in 2021 was almost 400 percent As The Greenville News reported, “of 1.2 million short-term loans made in South Carolina in 2021, 46 percent were ‘flipped’ or ‘renewed.’” In other words, about half of these borrowers were unable to pay off the loan within the term, and they took out a new one, creating that cycle of debt. CFPB research has put that number even higher: Four out of every five loans are reborrowed.

The CFPB has attempted to regulate the subprime and predatory lending industries, but it’s only as good as its personnel. President Trump may have stopped short of attempting to eliminate the CFPB entirely, but he did not have to, as the institution was wildly ineffective for most of his administration. Under Trump, the CFPB recovered $783 million from companies that violated consumer protections in its most active year. Compare this with the nearly $6 billion recaptured under Obama in 2015, as the Los Angeles Times reported. In fiscal year 2020, ten separate CFPB fines collected just one dollar each.

When the Dodd-Frank Act was negotiated, the CFPB’s structure was written so that the director of the agency could not be fired at will, but instead only for cause. This was meant to keep the agency’s priorities from

changing with administrations. Despite ample precedent for this at other agencies, in Seila Law LLC v. CFPB (2020), the Supreme Court ruled that this violated the separation of powers clause of the Constitution.

Ironically, this example of Republicans and the courts chipping away at the CFPB made it more effective under Biden. If the old rule were in place, Trump’s CFPB director Kathy Kraninger would have been able to serve out her five-year term until December of 2023. Instead, Kraninger resigned before being fired on Biden’s Inauguration Day, and now progressive Rohit Chopra serves as the director.

But opponents of the CFPB haven’t stopped. Another way Congress attempted to insulate the agency’s operations is through the so-called “self-funding” mechanism. CFPB gets its budget from the Federal Reserve instead of Congress. This mechanism became the next target.

In 2016, the CFPB issued a regulation known as the “payday lending rule” (officially, the Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule), which severely restricted how payday and other high-cost lenders could grant loans. The rule introduced underwriting provisions that would force lenders to determine a borrower’s ability to repay the loan, as well as other payment protections. This is similar to the ability-to-repay rule CFPB established for higher-risk mortgages.

Since multiple flipped or renewed loans power the profit margins in payday lending, the rule was likely to “severely” impact the industry and potentially slash the number of loans granted, per The New York Times’ reporting.

Initially, the rule would have also introduced a rate cap of 36 percent, but payday lending lobbyists successfully demanded its elimination. Kraninger then rescinded the

Bank deserts are often located in low-income areas and populated by people of color.

underwriting provisions, leaving only the payment protections for borrowers, making the rule a shell of its former self.

But that was not enough for the lending industry. In 2018, CFPB was sued again, this time in CFPB v. Community Financial Services Association of America (CFSA). In this case, CFSA , the payday lending industry’s leading trade association, sought to completely eliminate the rule, because of both the for-cause firing provision (which hadn’t yet been decided) and the self-funding scheme, which CFSA argued violated the Constitution’s appropriations clause. When the for-cause provision was struck down, CFSA amended its complaint to focus on the latter.

Last October, the U.S. Court of Appeals for the Fifth Circuit, one of the most conservative in the country, concurred with CFSA’s argument, rendering the consumer agency’s funding unconstitutional. CFPB has appealed to the Supreme Court, and the case is set to be heard in its next session.

This court uncertainty makes the potentially harmful consequences of dismantling

the CFPB not a hypothetical. New rulemaking has slowed down as the court case looms. And the payday lending rule, which is at the heart of the case, hasn’t been touched by the new regime, even though advocates would like to see the ability-to-repay standard restored. That places an undue financial burden on the people and communities that the CFPB has been unable to cast a wide enough net to protect.

In March of this year, the South Carolina legislature was debating whether an interest rate cap for consumer loans would be right for the state. Lenders argued that such a regulation would put them out of business, leaving a wide swath of people unable to access credit lines.

An opinion piece for South Carolina’s Post and Courier sums up the argument well: “By imposing a rate cap, policymakers would hinder access to crucial credit products, drive out ethical lending companies and perhaps most significantly, harm borrowers with less-than-perfect credit

who will lose what may be the only form of credit for which they qualify,” wrote Dan Walters, CEO of Credit Central, an online installment lender.

While ultimately this argument is just the industry trying to stop regulation, this perspective does get one thing right: High-cost lending is servicing people who have been otherwise shut out of traditional financial markets, through years of systemic discrimination. Previous generations got to benefit from racially exclusive loans, building wealth for their communities. Payday and other high-cost lenders targeted people of color and low-income individuals by walking through an open door.

A rate cap for consumer loans would not fully address the predatory lending that happens in other lending sectors, like auto title lending, student lending, and—even after Dodd-Frank—mortgage lending. “In every market, almost every single study of discrimination has found that discrimination still exists,” Kathleen Engel, professor at Suffolk University in Boston, told the

Black people are almost twice as likely to live near a small-dollar lender, according to a 2020 study.

Prospect. “It may be less pronounced. It may be less extreme. But it’s still out there.”

Engel notes the deceptive practices used in auto title lending: added warranties that hike up the cost, misrepresent the product, and create a false sense of urgency. These practices are the hallmark of predatory lenders. And while Dodd-Frank pushed discriminatory mortgage lending to the shadows and made it hard to study, there is evidence that it is still happening, as well. One way it can be revealed is through experiments that test whether white people can get better deals on loans than Black people with the same financial credentials.

A New York Times article from 2022 on racism in home appraisals notes exactly this. After Nathan Connolly and Shani Mott had their home in the Baltimore area appraised at $472,000, they removed all photos and identifying information from the home and had a white friend meet a second appraiser at the door. That appraiser estimated the home value at $750,000. Often, it’s not about how much money a person has, but simply whether or not they are Black.

This is not always due to outright racism from individuals. It is just as likely to be systemic forces that have historically placed Black people in proximity to financial destitution, and in need of a quick loan.

Industry arguments do not adequately account for the massive amount of predatory lending that is costing the country, and the victims, dearly.

If anything, Ms. Lillie was one of the luckier ones. Her credit score was pretty good, and the nominal interest rate for her loans wasn’t that high. But the continual reborrowing got her in over her head. “My life was in shambles,” she told the Prospect over Zoom. “I was trying to pick up the pieces.”

But Lillie was not necessarily looking for help when she met Jenny Weidenbenner. They met at a casual event through mutual acquaintances, and got to talking about finances. Through that discussion, it came out that Lillie was drowning in debt.

Weidenbenner, a staffer at Homes of Hope, a local nonprofit, immediately offered her assistance—and empathy. Lillie had to accept that she needed help, and Weidenbenner made that possible. Their rapport is clear even over Zoom—“Jenny really is my guardian angel,” Lillie said.

Weidenbenner told the Prospect that she did her best not to push Lillie into anything, but eventually, Lillie began to see how filing for bankruptcy could help her. Lillie attended the necessary counseling sessions and hearings, and successfully got out from under the loans that plagued her.

That was two years ago, and Lillie, now 72, feels a lot better now. “I can sleep at night, I can eat,” she said. She’s also getting her GED

Lillie’s story represents how, through nonprofit organizations, communities are getting second chances at accessing less risky credit. Community development financial institutions, which are partially funded through the U.S. Treasury, partner with community organizations to provide alternatives to high-cost loans.

One of these organizations is the Self-Help Credit Union, which aims to “help our members avoid high-cost lenders and check cashers that too often prey on working people.” Kerri Smith, South Carolina president of SelfHelp, told the Prospect that they also partner with local churches to identify community members who may need a loan, either to avoid high-cost lenders, or to get out of bad loans.

Self-Help loans usually carry about 4 percent interest, are due over a longer period of time, and can be granted for a larger amount. “We’ve seen folks that have come in through this program, and are now looking towards homeownership. They’re taking advantage of checking accounts, credit cards, and things like that,” Smith said. “A lot of them have just been pushed out of traditional financial services and now, they’re able to access credit in a way that they haven’t been able to before.”

Community aid is a particularly salient and effective way of combating the prevalence of predatory lending, precisely because it addresses the systemic issues that have made the industry so rampant. Meanwhile, Lillie thinks there should be more regulations, because she knows there are more people out there who may need help, like she did.

“Sometimes, people my age don’t know what to do to help the situation,” she said.

A rate cap for consumer loans would not fully address the predatory lending.

The marketing for payday loans features Black and Latino faces more prominently.

CULTURE

Is Capitalism Really Cracking Up Nation-States?

By Lee Harris

Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy

By Quinn Slobodian Metropolitan

The micro-monarchy of Liechtenstein, jammed between Switzerland and Austria, might seem an unlikely archetype for 21stcentury political organization. At roughly the size of Brooklyn, the territory that is now Liechtenstein was purchased by a member of the Viennese court in the 1700s, before becoming part of the Hapsburg Empire.

But, as Wellesley historian Quinn Slobodian shows in his highly anticipated new book, Crack-Up Capitalism , Liechtenstein, which technically became a sovereign state in 1806, would not remain a relic of feudal Europe. Over the next two centuries, the territory learned to innovate its way out of crisis. It became “something that did not yet properly have a name: a tax haven.”

Liechtenstein became known as “the capital of capital in flight,” playing host to the corporate offices of IG Farben and Standard Oil and encouraging the super-rich to purchase citizenship. And it did not stop at being a tax shelter. It plowed revenue into intensive factory output, relying on a migrant workforce to become, by the 1980s, one of the most industrialized countries in the world.

Liechtenstein’s innovations in political economy continued in 2009, when Prince Hans-Adam II suggested that citizens be considered “the shareholders of the state.” The modern nation, the prince announced, had been “reduced to a service company, which has to offer its customers a more or less decent service for a certain price.”

Quinn Slobodian’s new book shimmers with libertarian dreams but fails to demonstrate that zones are splintering national governments.

CULTURE

It is one of many arresting images of privatization and wealth-hoarding in Slobodian’s newest work, which is loosely organized around the theme of “zones” devised by capital and lacking democratic oversight. These include special economic zones (SEZs), export processing zones, tax havens, and other territories used to shield assets from taxation or scrutiny.

“Inside the containers of nations are unusual legal spaces, anomalous territories, and peculiar jurisdictions,” Slobodian writes. He offers a dozen case studies of what he calls “crack-up capitalism,” suggesting that zones are not just bizarre features of 21st-century accumulation, but a new prototype for international political economy.

former British colony. In Slobodian’s retelling, Friedman found himself wondering, “What if the era when the nation-state dominated political aspirations, from the end of the First World War to the 1970s, was no more than a blip?”

Slobodian thinks Friedman might have been onto something. Zones like Hong Kong thrived from that decade onward, he writes, due to a kind of natural selection. “As is the case in nature, what looks at first like an aberration is often actually a mutation adapted to the changed environment—a genetic freak ends up becoming dominant down the line. So it was with Hong Kong.”

That mutant would come to compete with nation-states. “The end of empire and

that it is incompatible with the nation-state.

In fact, observing the resurgence of farright nationalism over recent decades, one is rather more struck by the persistence and consolidation of the old-fashioned nation-state, bolstered by new ententes with big business. Take right-wing rulers such as Donald

Slobodian convincingly demonstrates that libertarians rival neoliberals, the subject of his previous book, in their open hostility to democracy. But while Crack-Up Capitalism takes a colorful trip through the reveries of right-wing economists, tech billionaires, and racist secessionists, it never quite shows that their despotic fantasies shade into a new variant of capitalism.

In 1978, Milton Friedman visited Hong Kong to film an episode of his PBS series, Free to Choose . He was smitten. The island was run like a joint stock corporation , as one writer put it, with no labor unions or popular elections to interfere with the growth of its manufacturing and financial centers. It was the beginning of a long romance between the American economist and the

the end of communism birthed a bevy of new sovereign nation-states even as another political form was also coming into being. From the 1990s, and increasingly so through the present day, the nation-state has been joined by the new entity of the zone.”

And the zone threatens its precursor, Slobodian believes, since “capitalism works by punching holes in the territory of the nation-state, creating zones of exception with different laws and often no democratic oversight.” It’s an impressive story, made more enticing by the suggestion that it has been happening offstage.

But capitalism and nation-states grew up together. While there are enduring frictions between the state and business, there is also collusion at grand scale. If capitalism is corrosive to democracy, that hardly implies

Trump, Narendra Modi, or Viktor Orban. Slobodian points out that all three have relied on special economic zones. But in each case, zones don’t seem to seriously threaten the centralized power of the state. Indeed, the single source Slobodian cites on Hungary, a paper on Orban’s “ordonationalism,” argues that the Hungarian prime minister has used zones as a tool “to exact national-level economic and political control.”

Under Orban, the author finds, the state “seeks to reassert its autonomy from the international institutions which had become the policing agents of global neoliberalism and enforces its own role as key arbiter in domestic marketization, class reproduction, and capital accumulation.”

And, of course, democratic institutions

While there are enduring frictions between the state and business, there is also collusion at grand scale.

Left: Liechtenstein

Right: Singapore

in Slobodian’s quintessential zone of Hong Kong are now being gradually throttled by Beijing, hardly lending support to the argument that zones slay nation-states.

Even when he characterizes zones as a leading threat to popular rule, Slobodian may overstate his case. To make the zone the emblematic example of how capitalism rots democracy is to go for the capillary rather than the jugular, to dress up a subordinate trend as the defining feature of our time.

To make his case, Slobodian summons a Boschian swarm of libertarians and anarcho-capitalists scheming to dissolve the territorial boundaries of the modern state.

like metaphors. In his highly figurative style, Slobodian writes that “the modern world is pockmarked, perforated, tattered and jagged, ripped up and pinpricked.”

At the University of Chicago, where as an undergraduate I attended a talk by Slobodian on an early version of this work, anthropology students had a joke: “That’s very spaces and places of you.” It means an academic affectation of awe at the overwhelming complexity of the modern world, its spaces and places, its endless forms most beautiful.

In this spirit, Crack-Up Capitalism takes a free-associational romp through antidemocratic enclaves ranging from exportprocessing zones to walled gardens for the ultra-rich. It skips from the city-state of Singapore to South African Bantustans, to the garish World Islands and other crass developments of Dubai (see Mike Davis); to Silicon Valley tycoons’ “seasteading” concept for floating cities; to the distasteful phenomenon of the gated community (also see Mike Davis); to recent attempts to colonize the digital “metaverse.”

Slobodian even spares a few paragraphs for the “sacrifice zone,” a word that describes geographic areas devastated by climate change, and laments how the rich have built barricades to insulate themselves from sealevel rise. (“This was the zone as lifeboat,” he muses.) The book calls to mind in style as well as substance the work of Anna Lowenhaupt Tsing, author of The Mushroom at the End of the World , who shares Slobodian’s fascination with frontiers.

(Their absolute growth could continue, even as the fad loses steam.)

A cursory Google search showed that data is scarce on the growth of zones since 2019, but one PwC study reveals that the period of steepest growth in SEZ s lasted from 1997 to 2002, the high-water mark of post–Cold War globalization.

In 2019, after Treasury Secretary Steven Mnuchin had released new guidance on SEZ s in the United States, a private equity investor said of zones that they are “like sex in high school”: Everybody’s talking about it, no one’s doing it.

If SEZs originally surged during the period of high globalization, perhaps they could see a counterintuitive resurgence during the present geopolitical fragmentation or plateauing of globalization. But if that’s the case, there is little effort to quantify the trend.

Metaphors matter. In his previous book, Globalists, Slobodian’s key insight was to reframe the conventional way of describing neoliberalism. While neoliberals are often said to have “unleashed” market forces, Slobodian pointed out that neoliberals were actually working to insulate capital from democracy. His favored analogy was “encasement.” The signal metaphors of Crack-Up Capitalism are “perforation” and “shattering.”

Among his theorists are James Dale Davidson and William Rees-Mogg, a businessman and journalist, respectively, who in 1991 envisioned the “subversive invention” of the microchip and its potential to “destroy the nation-state.”

“Every time a nation-state cracks up, it will facilitate further devolution,” they wrote. “We expect to see a multiplication of sovereign entities, as scores of enclaves and jurisdictions more akin to city-states emerge from the rubble of nations.” Davidson and Rees-Mogg, we learn, have a fan following in Silicon Valley, including the venture capitalists Peter Thiel and Marc Andreessen.

Subtitled “Market Radicals and the Dream of a World Without Democracy,”

Crack-Up Capitalism is thick with dream-

Slobodian’s metaphors are evocative. In the 1990s, he writes, “Czechoslovakia underwent mitosis.” Chinese market reforms avoided shock doctrine in favor of “capitalist hydraulics,” “opening up sluices and locks to foreign investors and market-determined prices rather than dynamiting the levee and letting it all flood in.”

But is the zone truly a new iteration of capitalism, or a minor offshoot? It is hard to judge the scale of the phenomenon from Slobodian’s account. His main statistic showing the global growth of special economic zones—there were some 5,400 as of 2019—is drawn from an UNCTAD report that predates the pandemic.

An online map of zones provides a useful overview, but does not show trends over time. The book left me wondering whether, in the past few years, the momentum behind tax-free zones has picked up or flagged.

But, to be satisfying, intellectual histories of the present should also show how ideas gained purchase. Slobodian rarely dwells for long on how anarcho-capitalist dreams of tearing up the state were actually enacted. The reader is more often left contemplating libertarians’ ominous fantasies than understanding the specific institutions through which they succeeded or failed.

Globalists, by contrast, did analyze the emergence of institutions such as the World Trade Organization. But it, too, emphasized ideas at the expense of power. Slobodian finds the origins of the WTO in what he dubs the “Geneva School” of neoliberal economists, largely ignoring that its design was substantially the work of U.S. corporations.

Maybe the market radicals of Crack-Up Capitalism are more aware of their limitations. In a chapter on libertarian attempts to commandeer digital reality, Slobodian quotes the entrepreneur Balaji Srinivasan, who acknowledges hard constraints on the power of Silicon Valley. Governments are resolute opponents, he admits. “They have aircraft carriers, we don’t.” n

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for Elder Care, Too

By Rhoda Feng

Who Cares: The Hidden Crisis of Caregiving, and How We Solve It

By Emily Kenway Hachette

When my grandfather became terminally ill, my parents chose to hire a home health aide for him rather than putting him in a nursing home. A medical bed was installed in his room—by that point, he was living with my parents—and the aide was deputized to wash him, feed him, change his clothes, and help with other activities of daily living. On days when classes ended early, I would spend part of my time sitting in the living room, pretending to read, but really listening for the slightest sound that sig-

naled the care worker needed an extra pair of hands. One time, my grandfather slipped while trying to get out of bed and I found him propped against the legs of a chair. In a semi-lucid state, he had trouble telling me, in either his native Chinese or in English, what he had been trying to do; all that escaped him was a soughing sound that seemed to plead with me not to be too angry with him. After examining him for wounds (luckily, he hadn’t hurt himself too badly), the caretaker and I managed to lift him back onto his bed.

I recount my experience not because it is unique, but because it is common: You probably have a similar story about caring for a family member or seeking surrogates who do. Despite its ubiquity, elder care often gets elided in public debates about care work,

which lately seem to begin and end with the question of how to raise kids. A new book by Emily Kenway, Who Cares: The Hidden Crisis of Caregiving, and How We Solve It, renders starkly visible the often invisible work of caregiving—one of the fastest-growing segments of the American workforce—and the toll such work exacts on its providers. With its impressive synthesis of research, textured analysis of care work in different countries, and its attention to the ethical issues inherent in elder care, it deserves a space on the shelf next to similar books on elder care like Ai-jen Poo’s The Age of Dignity: Preparing for the Elder Boom in a Changing America , which proposed a “Care Grid” (a network comprising family members and professional caregivers reinforced by federal and state policy) to take care of

The toll that caring for aging parents takes on their children can be allayed only by expanding our caring networks.

CULTURE

our nation’s rapidly aging population, and Lynne Tillman’s Mothercare: On Obligation, Love, Death, and Ambivalence, which chronicled the author’s experience of caring for her elderly mother. (That the authors mentioned are all women is no accident: As Kenway notes in her book, caregivers across the world are overwhelmingly women, who have historically been viewed as innately suited to care work and associated forms of emotional labor.)

Kenway’s book opens with a description of caring for her ailing mother. Toward the end of her life, her mother, weakened by cancer, required the assistance of another person to get out of bed, wash herself, make meals, and do other tasks. “Care seems to override physics, unhitching our days from the outside world,” Kenway writes. In this new world, “time moves spasmodically, lurching between hours that drag like slow fog and moments that come fast as lightning splitting a tree.” Each morning is “a game of roulette” and as the years accumulate, they gradually take their toll on Kenway. She goes from working full-time to part-time, until she eventually resigns from her job at a nonprofit. She writes with bracing honesty about her own mental health struggles during this interval; socially isolated for long stretches of time, she became depressed, increasingly anxious, guilt-ridden, and suicidal. “Grief has no interest in being project managed,” she grimly observes in one period of mourning after her mother has died.

If her book had only been about her personal experience as a kin caregiver—anticipating her mother’s every need while putting her own life on hold—it would have made for worthwhile reading. But Kenway also reports on the experience of individuals living in other countries who have undergone similarly challenging experiences as caregivers.

Ayesha in Kathmandu, Nepal, abandoned her degree at university to help care for her sick father. She had intended to return to her studies after her father recovered or died, but when her mother was diagnosed with cancer, all her plans for her future changed. She had a “complete meltdown,” broke up with her partner, became severely depressed, and suffered a brain aneurysm. Seventy-something Ulla, caring for her husband in Kävlinge, Sweden, after he suffered a stroke, preferred to see herself as her husband’s “possibility maker” rather than his caregiver, but her days were just as arduous. A third woman, Katy, went from being a full-time teacher to

part-time work to help care for her terminally ill father, and later resigned from her job when her husband was diagnosed with motor neuron disease. Katy, Ulla, Ayesha, and Kenway all experienced “role engulfment,” the sense of their identities being completely subsumed under their roles as caregivers. Their stories further testify to the fact that the family “as a load-bearing wall … can’t support the weight of care.”

As has been pointed out ad nauseam, the

COVID pandemic accentuated the crisis of care, revealing asymmetries in both who is able to receive high-quality care and who must work to provide that care. In some communities, as Kenway documents, the pandemic also fostered a greater awareness of our interdependence and gave rise to mutual aid groups and gift economies. The promise of such aid networks lies in the fact that members are seen as “both capable and needy,” to borrow an idea from the philosopher Mar-

La Maison des Babayagas, a cohousing arrangement for elderly people in France

tha Nussbaum. In collapsing categories like “dependent” and “independent,” such groups promote a sense of “generalized reciprocity,” which, as Kenway explains, obtains when people give to each other without immediately expecting something in return. In one section, she draws inspiration from a great-aunt, an Ursuline nun who lived her last years in a community of individuals who took care of one another. “She found a happy hybrid of independence and community, embedded in a broad and reliable network of care—a kind of family by choice,” writes Kenway. Elsewhere, she describes co-housing arrangements in countries like France, where a group of older women established La Maison des Babayagas (or “house of witches”). Such arrangements are distinguished from care facilities or retirement villages in that care is ministered by fellow residents rather than by paid caregivers.

These models are all instantiations of what Kenway calls “kinning,” or “the ongoing creation of family beyond conventional bounds.” Given our demographic reality— in the U.S., “the number of people needing care is expected to outstrip Family members available to provide it by 71 percent by 2050”—her proposal to expand the notion of family (a word she capitalizes throughout the book, to signal the way it has been fetishized) seems reasonable. In this respect, her work resonates with that of writers and thinkers like Shulamith Firestone and Sophie Lewis, who have called for family abolition as a way of expanding systems of care beyond the nuclear family. Though Kenway declines to go into greater detail about what a “commons of care” would look like (partly because each commons would be shaped according to the needs of the people comprising it), it would, in essence, involve people “put[ting] energy into stitching our collective care net [so that] we each get to fall into it and be held by it when needed.”

Besides the psychic toll of caregiving, there is the economic impact: Most caregiving continues to be performed by family and friends, and family caregivers report spending, on average, 26 percent of their income

on caregiving activities. According to one recent study from the American Society on Aging, family caregivers in the U.S. devote an average of nearly 36 hours per week to care work. For many, this is in addition to working full-time jobs. Kenway predicts that “eldercare will be the new childcare” and the data bear this out: The U.S. is on track to see more older adults than children by 2034 and, according to U.S. census data , single-person households rose from 13 percent of all households in 1960 to 29 percent of all households in 2022. Similarly, the U.K., where Kenway resides, has seen an 8.3 percent rise in people living alone in just the past decade, according to the Office for National Statistics. “The parent-child relationship was the focus and remains the paradigmatic care relationship today; all others are understood with reference to it,” Kenway writes. Yet, as she makes clear, it’s a mistake to narrow the aperture when we talk about care; both types of care have been devalued, even as they form the bedrock of our society and economy. As Kenway briefly mentions, underpaid care work in the U.S. is also tinged with the legacy of slavery; enslaved African women were some of the nation’s earliest care workers.

The U.S. does not have a sterling record of caring for its care workers and certainly has a long way to go to enacting anything like the vision of commoning and kinning that Kenway calls for. The Family and Medical Leave Act, passed 30 years ago, guarantees workers only the right to unpaid time off and is restrictive in the extreme: It only applies to workers who have worked for their employers for a year and “at a physical workplace where at least fifty employees work within seventy-five miles of that location.” In a recent review, the U.S. Department of Labor found that 41 percent of private-sector workers were ineligible for unpaid family leave since they did not work at companies with a minimum of 50 employees, as required by the FMLA . More recently, as Robert Kuttner has pointed out in the Prospect, when President Biden’s Build Back Better plan was rebranded as the Inflation Reduction Act in 2022, “what remained on the cutting-room floor was over a trillion dollars of outlays to expand support for the entire range of caregiving.” It’s not as if there isn’t any money to shore up caregiving services; money could be reallocated from the increasingly expensive and wasteful Pentagon budget, which reached $858 billion

this year, to programs that cater to human needs and help save millions of lives instead of breeding mass annihilation.

Solving the care crisis will ultimately require more than just paying caregivers a livable wage, innovating our way out by creating “care tech” toys, and making sure that nursing homes are up to code. On a conceptual level, it will require us to “dethron[e] the falsehood of the free individual and replac[e] it with a conception of the self that’s embedded in relationships,” Kenway writes. On a practical level, she calls for a shorter and more flexible workweek for all, which would allow provider-caregivers to spend more time with their loved ones without suffering the stigma that sometimes attaches to people who work fewer hours than their non-caregiver peers. (She marshals evidence of successful trials of four-day workweeks in the U.S., Spain, the U.K., Canada, Australia, and New Zealand.) Moreover, universal paid family medical leave would ensure that workers don’t feel pressured to sacrifice their livelihoods when they are called upon to provide care to a sick or disabled family member. These are all sensible solutions, but not as comprehensive as those articulated by Ai-jen Poo, president of the National Domestic Workers Alliance, in The Age of Dignity. (In that book, published eight years ago, Poo proposed strengthening labor protections for caregivers and offering a path to citizenship for immigrant care workers, among other things.) Yet when one might have wished for more concrete policy solutions than Kenway offers, she shows irrepressible signs of the amplitude of her moral imagination. The questions she asks deserve a full airing. What would it look like if we deprivatized care and made it a public good? What if we treated caregivers’ income as an entitlement rather than an allowance? What if we made buildings and other spaces more navigable for people with disabilities? What if we made it a universal human right to provide care? In this new reality, care work would shift “from being a women’s problem to being a human problem, from being a sector to being a species activity.” n

Rhoda Feng is a freelance writer living in New York whose work has appeared in 4Columns, The Baffler, BOMB, The New Republic, Jacobin, The White Review, Public Books, the Los Angeles Review of Books, The Atlantic, and more.

Family caregivers report spending, on average, 26 percent of their income on caregiving activities.

Why Gun Jokes No Longer Work

Tragedy + Tragedy + Tragedy + Tragedy …

America’s comedians are the real victims of gun violence. Of course after the actual victims, their children, parents, grandparents, cousins, friends, neighbors, pets, and our entire nation mourning our soulless politicians, who continue to sit on their blood-soaked hands instead of passing gun reform. But after that, it’s comedians who are the real victims. Let me explain why.

As a stand-up comic, I can attest to this. America’s obsession with guns and the steady stream of mass shootings is a huge topic on many of our joke-writing minds. And tragedy + time = comedy, right? But what happens when it’s just tragedy + tragedy + tragedy + tragedy + a week and a day + tragedy? The conditions for comedy are a bit different. Nowadays, it seems like there’s never a time to laugh, never a time to step back, never a time to digest because the bodies keep piling up.

I have a bit about how 98 percent of mass shootings are carried out by men, and that if women were shooting up bro landmarks like Dave & Buster’s, we’d have gun control faster than you can say The Joe Rogan Experience. It’s interesting to note when the bit works and when it just makes everyone depressed. It has to be around 72 hours after a mass shooting for the numb despair to wear off and the manic despair to set in. Once, I did the joke and there was a mass shooting later that same night. I had the macabre thought of being glad that I slid it in just in the nick of time! I’ve refrained from doing the joke when, like the other night, I checked my news alerts beforehand and saw that there was yet another mall shooting in Texas. Skipped the bit.

Beyond timing, let’s talk about substance. My gun control joke isn’t unique (though it is true). In fact, nearly every comedic angle on gun control is now hack. There’s Chris Rock’s about making bullets more expensive, or Wanda Sykes’s angle of banning assault weapons because not every citizen can own a tank, or the well-worn territory of comparing abortion rights to gun control. Like, “How about we rename the classrooms ‘wombs’ so we’ll finally protect the life inside of them?” Good stuff.

In the wake of the 2017 Las Vegas shooting, for my former news comedy show Newsbroke , I listed a whole host of measures to stop gun violence that have nothing to do with gun control. They included background checks on people who have windows in their hotel rooms, zigzagged sidewalks to dodge bullets, and a thoughts and prayers SWAT team. How about bulletproof fashion? Is any of this getting funnier? It all depends on what side of the despair you happen to be reading this from.

The entire premise of guns is so hack that even gun manufacturers are mocking our outrage, as evidenced by WEE1 Tactical’s rollout of the JR-15, an automatic weapon meant for CHILDREN! That’s just a couple years after Sacha Baron Cohen recorded a spoof ad for selling guns to kids on his show Who Is America? It’s ALL been done.

Gun control jokes have become what airplane food jokes were in the ’80s. Only, unlike mass shootings, comics actually roasted airplane food out of existence and made it better!

Even though every gun control joke has been done, nothing has been done about the nightmare we live through day in and day out. You need something new to write a good joke. But while everything else changes, gun violence remains constant. Since Sandy Hook, we’ve had two more presidents, 11 new SNL casts, a rover on Mars, even a new King of England, finally. But the conditions that created that massacre remain the same. The killings don’t change, the political inaction doesn’t change, and of course the automatic weapons never change.

It’s become too tiresome to make mass shooting jokes. Even when—and it’s definitely a when—someone shoots up a comedy club, which would do nothing to change our material but might get one of us laid out of sympathy. Give me an O.J. joke, a 9/11 bit, the white male comics who open with “I know, I look like a guy who stormed the Capitol on January 6th.” I mean, that’s a funny tragedy!

Sadly, no comic could come close to being as hilarious on gun control as the clowns we’ve elected. Greg Abbott blaming “anger,” or Marjorie Taylor Greene trying to find an anti-trans angle? Their deadpan humor is unrivaled.

I’m done with the escapism of gun jokes because there is no escaping this sick reality we live in. Not even for that brief 72 hours in between massacres and twodrink minimums. We’ve got to murder the mass murder joke, for all of our sakes. And if we can’t do that, then please send thoughts and prayers for our shows this evening.—Francesca

Fiorentini

Fighting for a Better Life for All

By Randi Weingarten, President AMERICAN FEDERATION OF TEACHERS

The job of the AFT, indeed the labor movement, is to fight for a better life for all: High-quality healthcare and education. Good jobs with decent pay, safe working conditions, and retirement security. An economy and a democracy that enable freedom and fairness. We shouldn’t have to fight for these things, but far-right extremists—privatizers and profiteers— would rather cut corporate taxes, and enrich themselves, than invest in the American people. Their agenda threatens the bedrock of our country: our healthcare system and our public schools. Even before COVID-19, American healthcare was deteriorating under untrammeled corporatization and consolidation. Now, nurses and other healthcare professionals are under siege: burnt out by too many patients, not enough staff, minimal safety precautions, mandatory overtime. By exhaustion, workplace injuries, and skyrocketing rates of violence that make hospitals one of the most dangerous places in America to work. By the moral injury of not being able to properly care for your patients.

As if on parallel tracks, educators in public schools are under siege too. The school privatization movement is trying to methodically starve public schools of funding while stoking fear and division (even claiming that teachers are groomers), aiming to destroy public education as we know it. Culture war operative Christopher Rufo put it bluntly: “To get to universal school choice, you really need to operate from a premise of universal public school distrust.” To this end, he says, his side has “to be ruthless and brutal.”

The AFT is fighting this scorched-earth mentality. Standing up to hospital CEOs who put profits ahead of patients and against the division of communities and defunding of schools. At the same time, we are trying to strengthen both healthcare and public schools with real-life solutions that help patients and children. In my recent national speech* defending public education, I outlined a four-part plan to help kids’ recovery and to reclaim the purpose and promise of public education: 25,000 community schools, experiential learning for all kids (including career and technical education that could feed the healthcare workforce), the revival and restoration

of the teaching profession, and deepened partnerships with parents and the community.

In healthcare, we know safe patient limits are key. That’s why we launched Code Red, our $1 million national, multiyear campaign to support our healthcare workforce and protect patients by ensuring safe staffing, investing in recruitment and training, and addressing student debt and violence in all venues—from the hospital floor to collective bargaining to state and federal legislation. A recent study in New York found that if medical-surgical staffing in hospitals were four patients per nurse (instead of about six to seven per nurse), then at least 4,370 lives and $720 million would be saved over two years (largely because of shorter stays and fewer readmissions). The “savings” for those patients’ families and the nurses healing them are incalculable.

Federal legislation sponsored by Sen. Sherrod Brown and Rep. Jan Schakowsky would specify minimum nurse-to-patient staffing requirements, study best practices for nurse staffing, and ensure whistleblower protections for nurses who advocate for patients’ safety.

And we are fighting state by state. In Connecticut, we are seeking to create staffing requirements

at hospitals, ban mandatory overtime for nurses, and add protections from workplace violence. In Washington state, we are pressing for a bill tasking the state Department of Labor and Industries with setting staffing standards for healthcare workers. In Oregon, passage looks hopeful for a bill codifying hospital nurse-patient ratios into state statute.

Over 100 AFT healthcare locals are involved in this campaign, many seeking to address staffing through collective bargaining. Staffing ratio language has been negotiated at sites including Ohio State University and Kaiser Permanente and in agreements at SUNY Downstate Health Sciences University, NYU Langone Health, and NYU Langone Hospital—Brooklyn in New York City.

Code

We’re also involved in workforce development— helping to create pathway programs and providing mentoring to not just bring people into healthcare professions but also help them stay. This is what the skilled trade unions do with apprenticeships; we need to carve out the same role in healthcare.

This is union work—raising the issues of safety and fairness, and engaging in these campaigns to get these issues addressed. Together, we’ll achieve victories we could never achieve alone.

Weingarten (at podium) in Washington, D.C., on Mar. 30, at a press conference praising the introduction of the Nurse Staffing Standards for Patient Safety and Quality Care Act.

Photo: Alex Palombo

Red is our $1 million campaign to support our healthcare workforce and protect patients.

“I always leave Netroots Nation feeling inspired, determined and proud.”

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