Journalism in the Public Interest

The New Democrats: The Coalition Pharma and Wall Street Love

When the Democrats took control of Congress they promised a new era that would end the excesses of what they labeled a Republican “culture of corruption.” Today, many of the same techniques and tactics are still in use, this time by Democrats.

Members of the New Democrat Coalition hobnob with lobbyists on Maryland's Eastern Shore this past May. (Marcus Stern/ProPublica)

As Congress entered the final weeks of its struggle to overhaul regulation of Wall Street in May, several hundred friends and colleagues slipped out of Washington for a private weekend on Maryland's Eastern Shore. Most were lobbyists for large banks, pharmaceutical firms, insurance companies, and big-ticket trade groups. However, 28 were members of Congress, and 29 were legislative staffers, all part of a coalition of House Democrats with a business-friendly agenda.

The retreat was held in honor of the New Democrat Coalition, a group of 69 lawmakers whose close relationship with several hundred Washington lobbyists has made their organization one of the most successful political money machines since the Republican K Street Project collapsed in 2007. In the past year and a half, New Democrats have pulled in more than $18 million in campaign contributions from their lobbyist fundraising network. The lobbyists, in turn, have mingled with lawmakers and their staffers at least 850 times during fundraising events and informal get-togethers.

When the Democrats took control of Congress in 2007 they promised to usher in a new era that would end the excesses of what they labeled a Republican "culture of corruption." One of their prime targets was the K Street Project, in which the Republican congressional leadership placed political operatives in lobbying jobs so they could direct money from big business to GOP campaigns in exchange for access to lawmakers for their clients. The project collapsed after Democrats assumed power and several Republican congressmen, staffers, and lobbyists were convicted on corruption charges.

Wisconsin Rep. Ron Kind, one of the New Democrats' vice-chairs, was among those who campaigned for ethics reform in 2006. "Pay-to-play politics have no place in Congress," he said at the time.

Today, however, many of the same techniques and tactics that formed the basis of the K Street Project are still in use, this time by Democrats. While Democratic House leaders haven't tried to place operatives in key positions at K Street firms or court business interests as openly as their predecessors, various coalitions within the party have stepped forward to fill the K Street Project vacuum. The Blue Dog Coalition, composed of 54 lawmakers from primarily rural areas, is the best known. But the New Democrat Coalition is larger and arguably as successful in courting the business community. Even if Republicans win big at the polls next month, the group is likely to retain its power, because both GOP leaders and the Obama administration will seek their votes in order to pass or block legislation.

Much has been written about the New Democrats in recent years, but the focus has mostly been on individual members or specific issues or events. Through dozens of interviews with congressional staffers, lobbyists, and political operatives and an extensive review of campaign-finance data and lobbying disclosures, ProPublica has pieced together the story of how the New Democrats rose to power and how, despite numerous attempts at reform, the work of lawmakers and lobbyists remains as intertwined as ever.

At first blush, the New Democrats seem unlikely heirs to the K Street Project. None of them chairs a committee or holds a prominent position in the House leadership. Most aren't known outside their own districts and tend to vote with their party caucus. Their power, instead, comes from their ability to tip the balance of close votes on the House floor, their numerous seats on key committees where major bills are shaped before the big votes are taken, and their business-friendly policies.

Over the past two years, their members have helped biotech companies win lucrative patent extensions during healthcare reform, fought to ensure that banks receiving TARP money didn't have to trim executive bonuses, and helped block a proposal to allow bankruptcy judges to adjust home mortgages—a step many experts believe would have reduced foreclosures. As they gathered for their May retreat, the New Democrats were working on what would become their biggest victory yet: weakening key components of financial-services reform legislation.

At a Saturday session at the retreat, Rep. Kind acknowledged what had brought the lobbyists and lawmakers together. In these busy legislative times, he said, the New Democrats had become a "powerful voice in policy making," and the business interests in the room were playing a crucial role in informing that voice.

"We're working hard with you to get the policy right," Kind told lobbyists for the U.S. Chamber of Commerce, JPMorgan, Goldman Sachs and others.

ProPublica contacted the offices of every New Democrat named in this story, but none would agree to an interview. Specifically, they refused to discuss how they separate their lawmaking from the fundraising activities conducted by the group's political action committee, the NewDemPAC, and also by their individual campaigns. The group's chairman, New York Rep. Joe Crowley, is currently being investigated by the Office of Congressional Ethics for collecting checks from financial-industry lobbyists in December, just hours before voting against several measures that Wall Street opposed.

In a review of data collected by the nonprofit Sunlight Foundation, ProPublica found that at least 16 other New Democrats also held fundraisers in the days leading up to the December vote on Wall Street reform. Several explicitly mentioned their membership in the New Democrat Coalition or their seat on the Financial Services Committee on invitations distributed to lobbyists.

Throughout their rise to power, the New Democrats have maintained that their pro-business positions are based not on the campaign contributions they receive but on their personal convictions, their experiences in the private sector, and on the politics of the affluent suburban districts many of them represent.

Staffers for the New Democrat Coalition refused to answer questions on the record, but the group's spokesperson, Natalie Thorpe, read a one-sentence statement over the phone: "The fundraising activities of the NewDemPAC are completely separate from the New Democrat Coalition and have no effect on the official work of the coalition or the positions taken by our members."

From Names on a List to Power Players

The New Democrat Coalition was formed as a House caucus in 1997, following in the footsteps of the Democratic Leadership Council and President Bill Clinton’s “third way” policies, designed to make Democrats and their platform more business friendly. When launched, the group lacked a fundraising PAC and had no legislative staffers. However, they did have allies at the highest levels of the Democratic Party and access to the party's political and fundraising machine.

The New Democrats were as pro-business then as they are now. Many of the group's members, including Kind and Crowley, supported the 1999 Gramm-Leach-Bliley Act, which repealed marquee financial legislation passed after the Great Depression and paved the way for financial institutions to become "too big to fail." A year later, many also voted for the Commodities Futures Modernization Act, which curtailed regulation of financial derivatives, including the products that played a major role in the collapse of energy firm Enron in 2001 and helped to bring the world economy to the brink of disaster in 2008.

Though the driving force behind both bills was Sen. Phil Gramm, a Texas Republican who left Congress just after their passage to lobby for the Swiss bank UBS, they were pushed hard by Clinton administration officials like Robert Rubin and Larry Summers, signed into law by Clinton, and supported by congressional groups like the New Democrats.

When Republicans took control of Congress and the White House, institutional support for the New Democrats dried up. For a time, membership in the group was like being “just a name on the list,” Ron Kind has said. Only groups like the Blue Dogs, with their own fundraising and policy arms, were able to thrive during the height of the Bush years.

In February 2005, the New Democrats reorganized. They cut their roster in half, made membership dues and meeting attendance mandatory, and launched a political action committee to raise money. Then-Rep. Ellen Tauscher, an investment banker from Northern California, became the group's leader, with Kind and Crowley serving as her deputies.

When their party won back Congress, the New Democrats were handed a huge fundraising opportunity. Before the 2006 election, the group's PAC had raised only $636, 471, but it more than doubled that amount over the next two years, pulling in $1.5 million. At the second annual retreat in 2007, the list of attendees read like a guide to Washington's new lobbying elite. Representatives of AIG, PhRMA, UBS, Wellpoint, and many others headed to a Maryland resort for what was billed as “an opportunity to discuss important and challenging issues facing Congress," with 20 New Democrats, including Tauscher, Kind and Crowley.

In early 2009, Tauscher left Congress for a State Department appointment, and Crowley became chairman. The congressman from Queens is known in Washington both for being a fundraising powerhouse and for never passing up a chance to play his guitar in public. Since 2005, he has chaired the business council of the DCCC, which serves as the key fundraising arm for House Democrats. From this post, Crowley has had an inside track to many of the Democratic Party's biggest K Street donors. By the time he became the DCCC's vice chair last year, he had raised $5 million for the organization.

With Crowley in command, the New Democrats have collected more campaign cash from lobbyists than ever before. By the end of August, the group had already pulled in nearly $1.7 million for the current election cycle. Individuals who donate $2,500 and corporate PACs that give $5,000 get a seat on the NewDemPAC Steering Committee and access to regular coffee breaks and happy hours with members of Congress and their staff, according to fundraising invitations and event notices posted online.

The New Democrats have also used less transparent ways to raise money from their most loyal K Street supporters.

Federal election law prevents corporate PACs from giving more than $10,000 to other PACs and prevents groups like the NewDemPAC from passing along more than $10,000 to an individual member's campaign during an election cycle. To get around these limits, the New Democrats created the Keystone Group, which is run by Rep. Jason Altmire, a former federally registered lobbyist, and Helen Milby, the NewDemPAC's chief fundraiser. Lobbyists who join the Keystone Group pledge to donate at least $500 directly to the campaigns of individual New Democrats at events organized by the coalition's PAC.

Functioning like an invisible PAC, the Keystone Group directs contributions to caucus members without filing papers with the FEC, leaving no record of the New Democrats' role in facilitating the transfer of funds. It’s impossible to say precisely which lobbyists are involved in the group and how much money it has raised. However, at the annual retreat in May, Altmire thanked Keystone members for raising $500,000 in the program's first year and a half. Neither Altmire nor Milby would speak with ProPublica about the project or the group’s fundraising.

Even when taken together, the NewDemPAC and Keystone represent only a small fraction of the coalition's fundraising muscle. The same 243 PACs and 63 individuals who donated to the NewDemPAC gave another $16.8 million directly to the campaigns and leadership PACs of the group’s lawmakers between January 2009 and the end of August, a ProPublica analysis of FEC data shows.

In addition to helping raise funds, lobbyists involved with the New Democrats have offered their services as mentors and advisers, particularly to the group's most junior members and staffers.

One group, Majority Under 40, "whose mission is to help new Democrats in Congress adapt to life in Washington," was founded by two lobbyists who have personally given a combined $26,000 to the New Democrats during the 2010 election cycle. The group has organized more than 50 off-the-record meetings between lobbyists and freshmen lawmakers in the past three years, many of them with members of the New Democrat Coalition.

"We will have gotten to know them as freshmen. That's what we're hoping. It will be nice to get in on the ground floor," founder David Thomas told Roll Call when the project launched in 2007.

A Biotech Carve-out

By the time Barack Obama was elected president, the New Democrats had accomplished most of the goals they set out for themselves when they reorganized. They were pulling in impressive amounts of money, helping handpicked recruits get elected in tight suburban districts, and even starting to influence legislation in the House.

The only thing they hadn’t done was occupy the driver’s seat on major legislation. With a Democrat in the White House and health care and financial reforms on the table, that now seemed possible. The question was what the legislation would include and how far it would reach.

Publicly, many Wall Street, pharmaceutical, and even health-insurance companies and trade groups supported regulatory overhaul of their respective industries. But privately, they maneuvered to minimize the impact on their bottom line. Their strategy was two-fold: They wanted to limit reform to fixing past trouble spots, and they wanted to steer clear of pre-emptive or sweeping regulations. To do this, they needed groups like the New Democrats and Blue Dogs.

The Blue Dogs took the lead in protecting business interests during healthcare reform. Although the Blue Dogs and the New Democrats have much in common, including 21 members and many of the same K Street backers, there are differences as well. Because of their generally Southern and rural constituencies, the Blue Dogs’ top concerns involve the national debt, energy legislation and social issues. The New Democrats represent suburban districts, some of them solidly Democratic, and are more interested in hi-tech industries, trade policy and finance. They also have tended to be a less cohesive voting bloc than the Blue Dogs.

Throughout the debate over healthcare reform, the New Democrats often split on what policy approach to take, with some pushing for a government-paid health insurance option while others opposed almost every proposal for change. When they worked together, however, they had the clout to help deliver significant wins, as they did last year for the biotechnology industry.

At issue was how long companies would be allowed to hold exclusive patents on a relatively new class of medicines called biologics, preventing cheaper generic versions from entering the marketplace.

Biologics, which are grown within living cells, are used to treat several types of cancer, anemia, and arthritis, and their use is expected to expand greatly in coming years. Annual sales of biologics currently range from $40 billion to more than $100 billion, according to industry analysts.

BIO, the industry’s trade group, argued that these medicines are so difficult and costly to produce that they deserve at least a 12-year monopoly, instead of the five-year monopoly most pharmaceuticals get. They also argued that, due to the complex nature of the drugs, generics could pose safety risks. However, with the industry's ever-increasing profits and the rising cost of medicines, that argument was a hard sell. In June 2009, the Federal Trade Commission issued a report saying that the 12-year exclusivity was “too long,” leading the White House to suggest a compromise of seven years.

Among those pushing for the 12-year patent was Matthew Schumaker, a former executive director of the New Democrat Coalition who is now a lobbyist with BIO. Another was John Michael Gonzalez, who had served as chief of staff to one of the New Democrats' rising stars, Illinois Rep. Melissa Bean, and works for the lobbying firm Peck Madigan Jones Stewart, on behalf of BIO and several of its member companies. Neither responded to interview requests for this story.

Rep. Jay Inslee, a New Democrat from Washington state, co-sponsored a measure that set the patent at 12 years. It also included language that consumer groups said would allow near-automatic renewals of exclusivity periods if manufacturers changed dosages or delivery methods.

The New Democrats voted to endorse the proposal, throwing the full weight of the caucus behind it and lobbying party leaders to support it. With consumer groups too busy fighting on multiple fronts over big-ticket items like the public option, the measure became law. BIO won its 12-year patents and named Melissa Bean its "legislator of the year" for 2009-2010. The group’s press release specifically citied her membership in the New Democrat Coalition and praised her leadership on biologics.

Bonuses and Mortgages

In early 2009, the New Democrats worked to win concessions for the financial services industry as well. When Congress took up a bill that would have heavily taxed the bonuses handed out by the bailed-out insurance giant AIG, four of the six Democrats who voted against the measure were New Democrats. The bill passed with overwhelming bipartisan support, 328-93. On other measures to rein in large bonuses, New Democrats, Melissa Bean in particular, sided with Republicans to oppose or weaken restrictions.

The New Democrats also waded into the battle over mortgage legislation. 

Since 2007, consumer advocates had been pressing Congress to revise bankruptcy laws so judges could adjust mortgages on primary residences in the same way they could adjust nearly every other kind of loan during bankruptcy proceedings. Bankruptcy law experts and consumer advocates believed the measure would reduce the number of foreclosures, but banks strongly opposed the practice, which they labeled "cramdown." A vote for cramdown, they told lawmakers, would be a vote for a second bailout, this time for irresponsible homeowners.

New Democrats joined Blue Dogs to delay votes whenever the measure came up. After one such delay in March 2009, the New Democrats’ leader, then-Rep. Tauscher, told reporters, "[I]t shows we have bench strength, it shows we can flex." (Tauscher did not return ProPublica's request for an interview.)

Helping coordinate the cramdown opposition was the new executive director for the New Democrats, Adam Pase. Before coming to Congress in 2005, Pase had worked as a low-level lobbyist for 21st Century Group, representing several biotech companies. He had also represented the now-defunct Coalition for Fair and Affordable Lending, a lobbying group set up by the subprime industry.

The New Democrats were never able to fully kill the measure, but after months of delays, they inserted provisions that made it harder for homeowners to qualify for cramdown adjustments, forcing them to exhaust a series of other measures first.

When the bill finally reached the Senate in April, it arrived in the midst of healthcare reform, and cramdown failed to pass. On the eve of its defeat, Democratic Sen. Dick Durbin of Illinois, a staunch supporter of the measure, said that when it came to influencing Congress, the banks "frankly own the place."

Today, homeowners facing foreclosure can try to get their loans adjusted through the federal Home Affordable Modification Program (HAMP), which has been plagued by troubles since it began in 2009 and has been able to modify only half a million mortgages. Or they can simply walk away from their homes.

While cramdown would not have been an overarching solution to the crisis, “there’s no question that bringing loan balances down to home values would have prevented a lot of the foreclosures that have happened,” Alan White, a professor of bankruptcy law at Valparaiso University, told ProPublica in a recent interview.

Wall Street Reform

When Congress took up Wall Street legislation, the New Democrats saw their first real opening to take the lead on a major legislative effort. Voters across the ideological spectrum had come to view banks as villains, and many politicians feared a populist backlash if they were to take up the cause of the financial-services industry. This included the Blue Dogs, who were reluctant to fight as publicly for the banks as they had fought for health-insurance companies.

In many ways, the New Democrats were uniquely suited to act as emissaries between the finance industry and the Democrat-controlled Congress. Many had backgrounds in the world of finance, and several of their former staffers were lobbying for the banks and insurance conglomerates that were also among the New Democrats' steadiest donors.

The biggest asset, however, was their oversized presence on the House Financial Services Committee, which would draft the legislation. Throughout the reform process, the group held as many as 16 seats, forming the largest nonparty voting bloc on the committee. If enough of them teamed with Republicans, they could strip provisions from the bill or add carve-outs for special constituencies.

More important, they could set the boundaries of the debate behind closed doors by emphasizing the concerns of their allies in the financial-services industry.

Three days after Lehman Brothers collapsed in September 2008, the New Democrats unveiled a financial-reform working group co-chaired by Melissa Bean. The group was piloted by John Michael Gonzalez, Bean's chief of staff, who left four months later to lobby for several banks and financial-services trade groups. Gonzalez would not speak with ProPublica, but a biography posted on his lobbying firm's website says he was a "key player in founding the New Democrat Coalition's task force on regulatory modernization."

The other co-chair of the task force was newly elected Connecticut Rep. Jim Himes, who had strong ties to the financial-services industry, as did his chief of staff, Jason Cole. Himes is a former Goldman Sachs banker. Cole, once an aide to New Democrat Dennis Moore, had spent several years working alongside former Republican Sen. Gramm as a UBS lobbyist. In that position, Cole maintained his ties to the New Democrats and was listed as attending their 2007 retreat in Maryland on behalf of the Swiss bank.

As the reform effort picked up steam in 2009, the New Democrats' task force functioned as a shadow financial-services committee, holding its own hearings and drafting its own legislation, according to several congressional staffers familiar with the process. The group met with consumer advocates as well as industry representatives. But with the exception of their endorsement of the consumer financial protection agency, most of their positions reflected the concerns of the banks.

When the New Democrats released their reform principles in February 2009, the Washington lobbying offices of the law firm Blank Rome publicly touted the New Democrats’ proposals, adding that the group "may be the moderating force behind financial regulatory reform in Congress."

Steve Bartlett, a former Republican congressman from Texas and current head of the Financial Services Roundtable, an industry lobbying group, described the New Democrats as "awesome."

"They are my favorite group in Congress in the sense of doing the right things for the country," Bartlett said in an interview with ProPublica. "It's a group that is focused on the economy and on the business sector and on the for-profit sector, and I've just found them to be extraordinary and extraordinarily effective."

The New Democrats demonstrated their effectiveness in two ways. The first was in skirmishes over provisions that applied to small sets of companies or industries, similar to the BIO carve-out from the healthcare debate.

The group joined California Republican Rep. John Campbell, a former Saab salesman still collecting rent from several car dealerships, to make sure auto loans would be exempt from regulation by the new consumer protection agency. The Center for Responsible Lending and other consumer groups say car loans, which generate tens of billions a year for auto dealers, are often as risky as the home loans that fueled the financial crash and have been associated with fraud and abuse, particularly for military service members and their families.

But it was the New Democrats’ role in shaping the core components of the Wall Street legislation that really earned them the admiration of the industry and its lobbyists.

In June, the group released one of the earliest congressional proposals to deal with over-the-counter derivatives, the largely unregulated financial products at the heart of the crisis. Financial industry groups praised the legislation, but its author, New Democrat Mike McMahon, said their goal was to protect “end-users,” businesses that rely on derivatives to guard against financial instability. McMahon said he didn’t want Congress to “overreact” by placing derivatives on exchanges similar to those where stocks and commodities are traded.

Exchanges, which would set up capital requirements and additional transparency for derivatives transactions, were also heavily opposed by the banks, which made significant sums creating customized derivatives.

“The big issue for the dealers is that they make a lot more money off private contracts, the customized ones, than they do on an exchange,” said Frank Partnoy, a former investment banker and professor of corporate law at the University of California San Diego.

The banks used end users as cover, Partnoy said, because, “you can’t go to Congress and say, ‘oh you’re going to hurt us, and we’re not going to make as much money.’ ”

In early October, Barney Frank, chairman of the Financial Services Committee, released a draft of derivatives-reform legislation. On the official committee press release, New Democrats Bean, Crowley and McMahon praised Frank’s bill and touted their involvement in crafting it. Crowley does not sit on the Financial Services Committee.

“I want to thank Chairman Frank for accepting suggestions from the New Democrat Financial Services Task Force in crafting new rules for derivatives trading,” said Michigan New Democrat Gary Peters.

Gary Gensler, the head of the Commodities Futures Trading Commission, himself a former Goldman Sachs executive, protested immediately, pointing out that the end-users exemption created a loophole that would allow risky and unregulated derivatives trading.

Frank said he would “sharpen” the language, but the version that emerged from the House was similar to McMahon’s original proposal. Some speculated that Frank gave in to McMahon in exchange for the New Democrats’ support for one of his top priorities, creating a consumer protection agency. Frank declined an interview request from ProPublica.

Ten days after the bank-friendly derivatives draft was released, Joe Crowley and several other New Democrats serving on the Financial Services Committee headed north for a two-day fact-finding and fundraising trip to Wall Street. They met with Goldman Sachs and JPMorgan executives and were given a fundraiser at a supporter’s Manhattan home.

When the group returned to the capital, they embarked on their second major priority, a roundabout way to weaken consumer protections. In their proposal, put forward by Melissa Bean, individual states wouldn’t be allowed to enact stronger consumer protections against national banks than those established by the federal government. Normally federal laws act as a baseline upon which state laws can expand, but this proposal sought the opposite result, putting conservative Democrats and Republicans in the unusual position of fighting against the rights of individual states.

Many state attorneys general strongly opposed the provision, including Lisa Madigan from Bean’s home state of Illinois. And as the bill neared a vote on the House floor, it looked like Bean and the New Democrats would lose this battle.

But Bean had one final ace in the hole—an extreme measure but one almost guaranteed to work: She threatened to use the voting power of the New Democrats to sink the entire financial reform bill if it didn’t include her proposal.

During the final four days of the reform effort in the House, at least 17 New Democrats held 20 fundraisers, according to records maintained by the Sunlight Foundation. Among these events was the December 10 Crowley fundraiser that is now the target of an ethics investigation. Also included was an “evening reception” fundraiser for Melissa Bean on December 9; the event’s invitation prominently advertised her membership on the Financial Services Committee.

Negotiations stretched late into the night on December 11, until a compromise was reached that satisfied the New Democrats. Bean led a negotiating effort that resulted in federal regulators getting the power to throw out individual state regulatory laws after reviewing them on a case-by-case basis. It was a big win that capped a string of victories demonstrating the New Democrats’ ability to get things done.

Conference Committee and Beyond

In the months that followed the passage of the House reform bill, the Senate surprised nearly everyone by producing legislation that was much tougher than expected.

This was especially true of the derivatives-reform language Arkansas Democrat Sen. Blanche Lincoln introduced. It moved transactions to central clearinghouses, which were similar to exchanges though weaker, and required banks to “spin off” their derivatives divisions. In the event of a September-2008-style collapse, a derivatives unit wouldn’t be able to sink an entire financial institution, as AIG’s derivatives office in London had nearly sunk the international insurance giant.

Wall Street strongly opposed the new measures, but Lincoln was busy fighting off a populist primary challenger, and party leaders were doing everything they could to help her hold on to her seat, including allowing her “tough on banks” provisions to survive. Still, supporters and opponents alike assumed Lincoln’s proposal would be removed from the bill once her nomination was secure.

But Lincoln’s primary was extended by a run-off vote, and it dragged on so long that the opportunity to kill her provision came too late. As the Senate passed its version of financial reform, the New Democrats knew they would have another chance to adjust the language, when the House and Senate met to merge their versions of the legislation.

Five days after the Senate vote, the New Democrats and their lobbyist allies left Washington for their annual fundraising retreat at the Hyatt Regency Chesapeake Bay Golf Resort, Spa & Marina. As the financial-reform effort took a pause, lawmakers relaxed with drinks at the poolside bar and played late-night poker with lobbyists. Rep. Steve Driehaus, who has said his most "star-struck" moment in Congress was meeting a World Series of Poker champion, pulled in a couple hundred dollars playing opposite lobbyist Pete A. Leon, a New Democrat contributor whose clients have included oil giant Chevron, biotech firm Amgen, and the investment company once headed by confessed Ponzi schemer Bernie Madoff.

Representatives of the financial-services community were hard to miss. Gonzalez was making the rounds with Bean and Crowley, while lobbyists for JPMorgan and UBS circled the conference center hallways, coffee cups in hand, chatting up staffers and members of Congress. Also in attendance were staffers from Majority Leader Steny Hoyer’s office, the House Democratic Caucus and the White House.

Back in Washington a few days later, the House conferees for the financial-reform bill were announced. Three New Democrats—Gregory Meeks of New York, Dennis Moore of Kansas and Gary Peters of Michigan—would sit on the panel while Bean and Crowley worked behind the scenes to make sure the interests of the New Democrats and their allies were represented.

The group helped preserve the carve-out for auto dealers, and Meeks worked with Iowa Democrat Sen. Tom Harkin to exempt equity-indexed annuities, controversial financial products often purchased by senior citizens from SEC oversight.

Then came the final fight over derivatives. On June 16, the opening day of negotiations, 43 New Democrats fired off a letter on coalition stationery that reiterated their concerns about how the legislation would affect end users.

Negotiations over the derivatives provision continued late into the night on June 24. Once again, Melissa Bean was a ubiquitous presence. One moment, she was meeting with Treasury Department officials, the next moment she was in closed-door talks with Lincoln or milling around the hallways, speaking with colleagues in hushed tones.

A flurry of behind-the-scenes offers and counter offers began as the final vote drew near. Around 9 p.m., as she exited the negotiation chambers, Lincoln stopped to tell Bean she would take a look at the New Democrats’ latest proposal.

What Bean didn’t know was that Lincoln was about to make a deal directly with the Obama administration, cutting the New Democrats out of the process. The final version of the derivatives section was tougher than the House version the New Democrats helped craft-- but the group had helped make the overall bill more palatable to the financial industry by forcing concessions on multiple fronts.


When the House adjourned on September 29, the New Democrats headed back to their districts with the rest of their colleagues to campaign for re-election. At least a third of the 69 members face stiff challenges from their Republican opponent.

Although the group helped block or water down measures proposed by the White House and Democratic leaders, many of its members are receiving cash infusions and strong support from party institutions like the DCCC. Party leaders believe that the votes of Democrats who aren’t always reliable is better than having those seats in Republican hands.

The lobbyists and big businesses that catapulted the New Democrats from backbenchers to powerbrokers in just five years are sticking with them, too. Because even if Republicans recapture the House in November, and even if the New Democrats ranks are thinned, they will continue to be a critical ally during the contentious battles to come.

Additional Reporting by Srinivas Rao, Joe Kokenge, Dan Nguyen, Nicholas Kusnetz

Merrill Goozner

Oct. 25, 2010, 3:51 p.m.

The people who accuse President Obama of caving in to Wall Street and health care special interests in the reform bills forget the pro-business, anti-reform bias of the Blue Dog and New Democrat components of his ruling coalition, now about to lose power. It’s amazing he got as much done as he did. Thanks for this great piece on the financial ties of the New Democrats, who have largely escaped public notice.

No big surprise since BOTH parties are OWNED. There was no “CHANGE”.  No “transparency”. We can still “HOPE” but don’t hold your breath.

FYI, while Senator, Obama was himself a member of the New Democrat Caucus. As a New Democrat, Obama was/is pro-business, anti-reform.

Obama made the back room deals with PHRMA’s Billy Tauzin of his own accord. No drug price negotiation for Medicare and no reimportation was the deal Obama did.

We’ve been had.

myron blumenfeld

Oct. 25, 2010, 4:41 p.m.

AN INCREDABLE STORY.  BUT TELL ME WHAT CAN I DO   is there no hope for congress !

This is the main reason why Dems will get crushed in the election: The group helped block or water down measures proposed by the White House and Democratic leaders,

It’s getting to the point where you either vote bizarre Republican, Tea Party whacko, or Repub Dem. Where is the 3rd and 4th party to end this destruction of democracy?

The problem is that the Tea Party started off as a decent alternate party. Unfortunately, the GOP was afraid of it so the infiltrated it and took over the Tea Party Express. Luckily, the Tea Party Patriots do NOT have allegiance to the GOP but they don’t get the publicity.
Check out the Tea Party PATRIOTS if you want an alternative.

Really did any one expect that the Dem’s would be less unethical and corrupt? The only real way to stop this behavior is a massive revolution from we the people and States to secede. Washington is out of control.

Yeah, that idea sounds good but would the “president” “allow” that? Would he declare Martial Law, throw the “perpetrators” into concentration camps?
If Martial Law were called (which I wouldn’t be surprised is already PART of their plan) would they “bring in” the United Nations to “make order” (and just happen to make the UN the most powerful organization (New World Order/one-world-government) in the world?
It’s scary. These Power Elites (PE) are probably like professional chess players, having their next seven moves already planned and with contention plans for this or that not happening “according to plan A”.
Too the people have been CONVINCED that the Tea Party is bad (and I guess they’re right if they are speaking of the Tea Party Express but NOT the Tea Party Patriots) and that there is NO HOPE.

Obama COULD CHANGE it all, but he’d have to buck the PE and maybe end up like Lincoln and Kennedy, which he so wants to be compared to, but we know what happened to them.

Who can blame younger voters, and older, end-of-their-tether voters, for not voting at all. As screw-loose as they are, perhaps the frustration of the teaparty folks is where it’s at: dead-end.

Sadly, I’m persuaded that politicians R us; wanting something for nothing, greedy for the good life, entitled.

Bruce the Bald

Richard McDonough

Oct. 25, 2010, 7:25 p.m.

We are probably going to fall into the abyss in which you will find the personal oligarchies of latin countries, and more and more the old biggest player in the Soviet Union, Russia.  THey will live off of our stupidty and greed and inertia.  We are sheep, they are the wolves.  Abandon hope, etcetera.

Bruce the Bald. You’re correct : politicians R us. Younger people who are truly incensed can enter politics and do something to change the “system” rather than remaining skeptics or cynics for a lifetime.

Obama did it and he’s made changes. As usual with the pols, they aren’t the ones he promised and I don’t agree with them but you can’t argue that he hasn’t been successful.

When are we going to get rid of the lobbyist? It may solve most of our problems.

Ralph Chernoff

Oct. 25, 2010, 8:30 p.m.

Depressing, huh? So what else is new? Anybody heard any cheerful news lately? We wish our kids would get out of here and go to some more enlightened country where they have socialized medicine and no “health” insurance cos.

This article tells us at length* what we already know; that we have two enemies, the Republicans in the Republican Party and the Republicans in the Democratic party.

* It’s really too long. It should be serialized in maybe 3 or 4 installments.

John De Herrera

Oct. 26, 2010, 1:57 a.m.

The Article V Convention is the only thing which will deliver us from this mess. Ring it up on Google. Educated yourself about it, learn how to talk about it, and starting doing it.

Amazing article. Can you imagine if such a journalistic investigative witnessing eye would be enacted in Italy, with the media almost COMPLETELY in the hands of the prime minister, either through his private TVs as well with a grip on the state-owned TV, not to mention mainstream newspapers? As I say, there are many similarities between how the US and Italian lobby groups influence politics one way or the other, though with the difference that in the US there’s at least a modicum of morality: backroom secret deals are in this corrupted-to-the-very-bone country such as Italy so pervasive that basically there’s no secret anymore; everything is now under the sun; and courageous journalists that dare to investigate are forced to look over their shoulders lest losing their job, be ostracized, and finally shut up for long, should they doggedly persist.

Amazing article. Can you imagine if such a journalistic investigative witnessing eye would be enacted in Italy, with the media almost COMPLETELY in the hands of the prime minister, either through his private TVs as well with a grip on the state-owned TV, not to mention mainstream newspapers? As I say, there are many similarities between how the US and Italian lobby groups influence politics one way or the other, though with the difference that in the US there’s at least a modicum of morality: backroom secret deals are in this corrupted-to-the-very-bone country such as Italy are so pervasive that basically there’s no secret anymore; everything is now under the sun; and courageous journalists that dare to investigate are forced to look over their shoulders lest losing their job, be ostracized, and finally shut up for long, should they doggedly persist.

John de Herrera,
Thanks. ANOTHER reason to vote out ALL incumbents!

Here’s a suggestion that I got from an email for all those “youngsters” who think socialism is good:

If they are an A student, ask them if they’d like to give up a grade to C students so they could both have B grades.
If they’re a C student, ask if they’d give up a grade to F students so those students can still get credit for the class and they’ll both be passing with a D grade.
If/when they complain that they WORKED for those grades, then you can welcome to becoming a conservative.

arnold klein md

Oct. 26, 2010, 11:39 a.m.

FDA never seems to change with whoever is in Congress. It was not until September 2004 that the anti-inflammatoy Vioxx was withdrawn from the market.. Why it remained on the market so long is the story of how drug companies control the FDA and Amerian medicine as well as Congress. Vioxx was approved by May 1999 yet cardiovascular events were seen almost immediately.In February 2001 an advisory panel of the FDA suggested Vioxx require a label warning of the linkage of this drug to cardiovascular problems. What did the FDA do?  The FDA warned the drug company not the population. With a myriad of deaths Merck only removed Vioxx after results
from a study showed that patients taking Vioxx were twice as likely to suffer a heart attack or stroke. FDA researcher David Graham and his collaborators linked Vioxx to more than 27,000 heart attacks or sudden cardiac deaths. If the FDA had acted quickly so many peoples lifes could have been saved.
    The FDA’s current mission statement says they are responsible for protecting the public health by assuring safety, efficacy, and security of human and veterinary drugs…. Then it states The FDA is also responsible for advancing the public health by helping to speed innovations. However, the rate at which the FDA approved drugs did not become a priority until the inception of the Prescription Drug User Fee Act (1992)which established the user fee program in which the drug companies would pay a “user fee” when they submitted a drug application While some say the   intention was for the FDA to use the the fees to hire additional staff to reduce drug review times,as drug review times decreased the FDA had increased need for postmarket monitoring of drugs if safety concerns arise . From attending panel review’s one can see he FDA’s premarket review has in fact become less thorough and accurate and it is obvious that the delayed removal of Vioxx ensuring safety of consumers amarket was n a priority. Clearly the FDA’s
authority to regulate drugs after they are approved is very compromised Even when drug companies promised to conduct postmarket studies as a condition of approval, the FDA had no authority to enforce these promises.When a physician reports an adverse drug reaction these reports are often disputed by the manufacturer and never reach the FDA. That is why the statistics of adverse reactions is totally inadequate.
Now a days the problems at the FDA are as bad as ever. Recently they had a review panel on cosmetic injectables. The only individuals allowed to speak were drug company consultants who were plastic surgeons with little knowledge of injectables, The meeting was run by a cancer surgeon who had no knowledge whatsoever about injectables. While I was promised to be able to provide a presentation at this meeting, it was limited to 3 minutes. As one of individuals who pioneered the field of injectables and is considered extremely well read I realized the FDA device panel did not want to hear the truth.  If you think the recent approval of Botox for migraines was objective remember one of the investigtor’s in pivitol study holds the use patent for Botox in migraine and Allergan employs 15 lobbyists firms.  Even in the recent whistleblower suite I was promised inclusion by the Justice Departmenr wherein the data I presented to the INS,Justice Department and FBI shows Allergan forged data about the dilution of Botox data utilizing unlicensed foreign physicians without Green cards. Remember,If Botox is too highly diluted it can reach unintended areas and very serious problems can result These physicians practiced medicine and received up to $20,000.00 per day in consulting fees and worked for virually every pharmaceutical company in the USA.  If it was your maid or an unknown physician they would be in jail ..Once I revealed this to David Pyott CEO of Allergan I was disinvited to teach at a CME meetings and was no longer invited to teach at any Dermatology meetings. Why? Because the foreign doctors Alastair and Jean Carruthers were polically active in Dermatology Societies and with their polically active allies saw to it I was unable to publish in a Dermatology Journals, thrown off my editorial positions and no longer invited to speak at medical meetings. Recently I attempted to correct some drug company propaganda that appeared in “Journal Watch “an arm of"New England of Medicine.” Even with them my criticism fell on deaf ears. I find it very sad that the once lofty field of medicine has become a field of greed with many presenters , members of the FDA and members of Congress controlled by pharmaceutical companies.
Democrat or Republican…is their a difference at the FDA
      Arnold Klein MD
      Professor of Medicine and Dernatology UCLA
      Consultant FDA

Listen to all of you, whining about “no hope.” There never was any hope, the system and it’s managers exist only to enrich themselves and keep the general population under control. Since you all are here bellyaching about GovCorp and it’s varied machinations I can see that they are succeeding. RISE UP.
Those stooges who bitch about “socialism” apparently don’t recognize socialism when it is applied to Wall $treet. Conservatives are collaborators in tyranny. The “tea party” is a bad joke, backed by huge corporate financiers. I’m in for anarchy, direct democracy, decentralization. Stop licking the boots of your corporate masters and resist.
Oh wait, you’re too busy to free yourselves, you might miss American Idol.

Rekz Jones,

The Power Elite would LOVE if everybody agreed with you. If there were anarchy, they’d declare Martial Law and the troops (both USA and United Nations) would take over.
Historically, anarchy is followed by power OVER the people.

All anarchy is is the absence of government, not chaos. If enough Americans refused to comply with the government, then it would have no power. The UN might be the only marginally democratic institution with global reach in existence. The “New World Order” is the continuing collusion between governments and corporations, not the illusory fantasies of the TP’ers. Corporations do not recognize human rights, the UN, for all it’s flaws, does.
Oh, and if the “PE” declared martial law in the US, that would be their biggest and last mistake.
Bring it on.

The Article V Convention does not rewrite the Constitution. Whatever is proposed must still be ratified. If someone or some group did want to rewrite the Constitution, they’d first have to propose an amendment allowing for it, get it ratified, then come back and propose their new constitution (and then get that ratified). The Framers did not leave a self-destruct button in their masterwork. Besides, it’s currently ignored by Congress, dust it off and put it to work? The constitutional process of convoking/convening a federal convention will only return us to the Constitution, wake everyone up as to who exactly has sovereign power, and deliver us from the fatal trends of institutionalized corruption. Delegates to the convention do not need to reinvent the wheel, but simply propose amendments—term limits for members of Congress and SC judges, for instance. Beyond that, whether or not the delegates could reach consensus on an amendment today, again, it’s the process which will save us. It will create a dynamic the same as telling a corrupt accountant an outside audit is to begin—which is really all a convention is, a second opinion. Would you like a second opinion on how Congress operates? There are thousands of smart and sterling individuals across the nation, who, if a convention were called, would make their way there, and then make quick work of runaway corporate interests. By trusting in the Constitution we have nothing to lose and everything to gain.

This link is put up by Harvard Professor Lawrence Lessig:

Friends of the Article V Convention is the leading national group:

This link is the database of state applications for the Article V Convention, all fifty have applied, and thus according to the rule of law, it’s currently mandated, it’s just a matter of getting enough Americans signed on to the idea:

This link is put up by former Michigan State Chief Justice Tom Brennan:

Convention USA is a virtual convention where if you sign up as delegate, it doesn’t mean you have to get into the nuts and bolts of debate, it just means that for $10 a month you support the Constitution and government for the people by the people. If it catches on and goes viral, it will bring about the solution.

These articles by Justices Van Sickle and Brennan provide an overview on the matter. Print them, read them, learn how to talk about a convention with others, and share the idea:

Steve Bloomberg

Oct. 26, 2010, 3:33 p.m.

Scary article! The entire Congress is bought & paid for! The only way to change things is to severely restrict lobbying (unlikely with so many greedy members of Congress). Until then, the best way to curb this garbage is to name & shame, as this article does, and to make sure the electorate is fully informed.

Please continue the naming & shaming at every opportunity, & find the highest profile forum to do so! MSNBC loves this sort of stuff, so that’s a good place to start.

Rose Adele Arlitt

Oct. 26, 2010, 5:07 p.m.

Fight them in the Primaries!  Not the General!

steve thiltgen

Oct. 27, 2010, 7:35 a.m.

I would like to see a complete list of who these “New Democrats” are.

I want a complete list of the new democrats too.  This is sickening.  I’ve always been a Democrat because I thought they took care of the little guy.  I want someone in office who’s trying to make America a better place for all Americans, not just for him/herself.  What was it that Kennedy said?  “Think not what your country can do for you, but what you can do for your country.”

Stephanie and Steve—
we’ve put up a chart with a little info on the group’s members here:

STEPHANIE, New or old Democrats or Republican’s they do not take care of we the people they do however take care of their special interest. The only thing they want to make better is their odds.

I’m telling all it is time for a revolution. At least the Tea Party members across this Nation are trying. It however will take a more harsh approach.

steve thiltgen and Stephanie

This is the list of the “New Democrats”

Sebastian Jones:

I think the Wikipedia link is a lot easier, it lists the States and you can see if your guy/gal is on it.

randy stebbins

Oct. 28, 2010, 1:33 p.m.

The only solution is to get money out of politics.  Immediately.  Permanently.

That means there will be no such thing as a lobbyist, no such thing as a campaign contribution, no such thing as business sponsored junkets, conferences, golf outings, or expensive dinners.  No private money for politics and politicians.  Period.

Professional politicians:  Do your job for the American people, not for your buddies and their money, because guess what?, they are not your buddies and they are not the peoples’ buddies.  These “buddies” are, well, let me just write, they’re not a friend.  Not to you anyway.

The pendulum has shifted to the extreme in this democracy toward representing wealth over citizens.
The supreme court gave the ultimate validation to this idea.
Leaders like this president are only allowed to make changes on the fringes. 
As this money continues to taint the system unrest will grow.

Others outside the USA see this problem because they actually get REAL NEWS. Though I don’t like to say so that “my country” is that way, it sure seems that those countries complaining of the USA (and England) being “imperialist” are RIGHT! The USA (the Power Elite who actually DO things as the USA) seems to be out to STEAL the riches of the rest of the world.
It’s tough to sound anti-USA, but to me it’s like being anti-Zionist, against the Zionists who are part (main part?) of the Power Elite whereas the PEOPLE of the USA are great and the “typical” Israeli (if there still is one not indoctrinated into Zionism) probably is just fine, too!

Arlene Russell

Oct. 29, 2010, 5:14 p.m.

We desperately need to enact a law to prevent candidates for offices from raising money outside their districts. 
This one simple act would take the campaign pay off money these “new” and “blue dog” democrats now enjoy.
If the only money you can raise comes from your constituents you are going to represent what is in
the best interests of those constituents.
Isn’t that the government we are supposed to have in this country?
Arlene Russell

Arlene Russell what a great idea!!!! Now all we need is a person like you who will lead the charge, get the ball rolling, to make it happen.

I have been against any corporate ownership of any member of Congress. There are way too many now just ready to be completely led by greed and led by corporate corruption.  Nancy Pelosi and President Obama fought the good fight. They need to be supported for the next two years of downward republican spiral.

Obama led a fight? You’ve got to be KIDDING! Did he stand up against the banksters and NOT continue Bush’s “bailout” when he had the chance? No, he was happy to oblige them.
Pelosi is total MORON.

You have to get over the PRETEND war of left versus right - Democrat versus GOP. BOTH sides are OWNED by the Power Elite, who OWN the banks!

Read “The Elite Serial Killers of Lincoln, JFK, RFK & MLK” (democrats) to see how folks from BOTH parties were behind those ASSASSINATIONS for the Power Elite!

Lauren M. Lynley

Oct. 31, 2010, 11:54 p.m.

It is clear that our social institutions and our public spirit is crumbling at our feet. We hold on to it at our peril. If we do not find a new way forward there shall be no forward left to go.

Thank you to Sebastian Jones, Marcus Stern and
ProPublica for providing journalism in the true sense amongst the howling of the Tower Of Babel that passes for news in mainstream America.

The Democrats are no different from the GOP other than by degree.  I pray that a coalition of true patriots of both parties to include Independents (not the nut cases of very recent times) can turn our government around or we will go the way of Rome, France, Great Britain, etc. as a great nation.  Though it would be against their self interest (feeding at the trough of the taxpayer, special interests and lobbyists) a coalition should propose, support and fight for a constitutional amendment which does not equate money to free speech.  It would win in a landslide if voted on by the states.  The equating money to free speech is twisted thinking by an exceedingly biased politically motivated Supreme Court.  Until that happens our nation is in great peril.

Let’s be clear the “New Democrats” are members of the DLC. Right?

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