AlterNet.org

How Companies Plunder and Profit from the Nest Eggs of American Workers

What really happened to the retirement benefits of millions of Americans at thousands of companies.

By Ellen Schultz

September 27, 2011 |

The following is an excerpt from Retirement Heist: How Companies Plunder and Profit From the Nest Eggs of Americans Workers, by Ellen E. Schultz by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright (c) Ellen E. Schultz, 2011.

In December 2010, General Electric held its Annual Outlook Investor Meeting at Rockefeller Center in New York City. At the meeting, chief executive Jeffrey Immelt stood on the Saturday Night Live stage and gave the gathered analysts and shareholders a rundown on the global conglomerate’s health. But in contrast to the iconic comedy show that is filmed at Rock Center each week, Immelt’s tone was solemn. Like many other CEOs at large companies, Immelt pointed out that his firm’s pension plan was an ongoing problem. The “pension has been a drag for a decade,” he said, and it would cause the company to lose 13 cents per share the next year. Regretfully, to rein in costs, GE was going to close the pension plan to new employees.

The audience had every reason to believe him. An escalating chorus of bloggers, pundits, talk show hosts, and media stories bemoan the burgeoning pension-and-retirement crisis in America, and GE was just the latest of hundreds of companies, from IBM to Verizon, that have slashed pensions and medical benefits for millions of American retirees. To justify these cuts, companies complain they’re victims of a “perfect storm” of uncontrollable economic forces—an aging workforce, entitled retirees, a stock market debacle, and an outmoded pension system that cripples their chances of competing against pensionless competitors and companies overseas.

What Immelt didn’t mention was that, far from being a burden, GE’s pension and retiree plans had contributed billions of dollars to the company’s bottom line over the past decade and a half, and were responsible for a chunk of the earnings that the executives had taken credit for. Nor were these retirement programs—even with GE’s 230,000 retirees—bleeding the company of cash. In fact, GE hadn’t contributed a cent to the workers’ pension plans since 1987 but still had enough money to cover all the current and future retirees.

And yet, despite all this, Immelt’s assessment wasn’t entirely inaccurate. The company did indeed have another pension plan that really was a burden: the one for GE executives. And unlike the pension plans for a quarter of a million workers and retirees, the executive pensions, with a $4.4 billion obligation, have always been a drag on earnings and have always drained cash from company coffers: more than $573 million over the past three years alone.

So a question remains: With its fully funded pension plan, why was GE closing its pensions?

That is one of the questions this book seeks to answer. Retirement Heist explains what really happened to GE’s pensions as well as to the retirement benefits of millions of Americans at thousands of companies. No one disputes that there’s a retirement crisis, but the crisis was no demographic accident. It was manufactured by an alliance of two groups: top executives and their facilitators in the retirement industry—benefits consultants, insurance companies, and banks—all of whom played a huge and hidden role in the death spiral of American pensions and benefits.

Yet, unlike the banking industry, which was rightly blamed for the subprime mortgage crisis, the masterminds responsible for the retirement crisis have walked away blame-free. And, unlike the pension raiders of the 1980s, who killed pensions to extract the surplus assets, they face no censure. If anything they are viewed as beleaguered captains valiantly trying to keep their overloaded ships from being sunk in a perfect storm. In reality, they’re the silent pirates who looted the ships and left them to sink, along with the retirees, as they sailed away safely in their lifeboats.

The roots of this crisis took hold two decades ago, when corporate pension plans, by and large, were well funded, thanks in large part to rules enacted in the 1970s that required employers to fund the plans adequately and laws adopted in the 1980s that made it tougher for companies to raid the plans or use the assets for their own benefit. Thanks to these rules, and to the long-running bull market that pumped up assets, by the end of the 1990s pension plans at many large companies had such massive surpluses that the companies could have fully paid their current and future retirees’ pensions, even if all of them lived to be 99 and the companies never contributed another dime.

But despite the rules protecting pension funds, U.S. companies siphoned billions of dollars in assets from their pension plans. Many, like Verizon, used the assets to finance downsizings, offering departing employees additional pension payouts in lieu of cash severance. Others, like GE, sold pension surpluses in restructuring deals, indirectly converting pension assets into cash.

To replenish the surplus assets in their pension piggy banks, companies cut benefits. Initially, employees didn’t question why companies with multi-billion-dollar pension surpluses were cutting pensions that weren’t costing them anything, because no one noticed their pensions were being cut. Employers used actuarial sleight of hand to disguise the cuts, typically by changing the traditional pensions to seemingly simple account-style plans.

Cutting benefits provided a secondary windfall: It boosted earnings, thanks to new accounting rules that required employers to put their pension obligations on their books. Cutting pensions reduced the obligations, which generated gains that are added to income. These accounting rules are the Rosetta Stone that explains why companies with massively overfunded pension plans went on a pension-cutting spree and began slashing retiree health benefits even when their costs were falling. By giving companies an incentive to reduce the liability on their books, the accounting rules turned retiree benefits plans into cookie jars of potential earnings enhancements and provided employers with the means to convert the trillion dollars in pensions and retiree benefits into an immediate, dollar-for-dollar benefit for the company.

With perfectly legal loopholes that enabled companies to tap pension plans like piggy banks, and accounting rules that rewarded employers for cutting benefits, retiree benefits plans soon morphed into profit centers, and populations of retirees essentially became portfolios of assets and debts, which passed from company to company in swirls of mergers, spin-offs and acquisitions. And with each of these restructuring deals, the subsequent owner aimed to squeeze a profit from the portfolio, always at the expense of the retirees.

The flexibility in the accounting rules, which gave employers enormous latitude to raise or lower their obligations by billions of dollars, also turned retiree plans into handy earnings-management tools.

Unfortunately for employees and retirees, these newfound tricks coincided with the trend of tying executive pay to performance. Thus, deliberately or not, the executives who green-lighted massive retiree cuts were indirectly boosting their own pay.

As their pay grew, managers and officers began diverting growing amounts into deferred-compensation plans, which are unfunded and therefore create a liability. Meanwhile, their supplemental executive pensions, which are based on pay, ballooned along with their compensation. Today, it’s common for a large company to owe its executives several billion dollars in pensions and deferred compensation.

These growing “executive legacy liabilities” are included in the pension obligations employers report to shareholders, and account for many of the “growing pension costs” companies are complaining about. Analysts, shareholders, and others don’t understand that executive obligations are no different from pension obligations for rank-and-file workers and retirees—they are governed by the same accounting rules, and they represent IOUs that a company has on its books. In some ways, executive liabilities are like public pensions: large, growing, and underfunded (or, as in the case of the executives, unfunded).

Unlike regular pensions, the growing executive liabilities are largely hidden, buried within the figures for regular pensions. So even as employers bemoaned their pension burdens, the executive pensions and deferred comp were becoming in some companies a bigger drag on profits.

To offset the impact of their growing executive liabilities on profits, many companies take out billions of dollars of life insurance on their employees, using the policies as informal executive pension funds and collecting death benefits when workers, former employees, and retirees die.

With the help of well-connected Washington lobbyists and leading law firms, over the past two decades employers have steadily used legislation and the courts to undermine protections under federal law, making it almost impossible for employees and retirees to challenge their employers’ maneuvers. With no punitive damages under pension law, employers face little risk when they unilaterally slash benefits, even when promised in writing, since they can pay their lawyers with pension assets and drag out the cases until the retirees give up or die.

As employers curtail traditional pensions, employees are increasingly relying on 401(k) plans, which have already proven to be a failure. Employees save too little, too late, spend the money before retiring, and can see their savings erased when the market nosedives.

But 401(k)s have other features that ensure that the plans, as they exist, will never benefit the majority of employees. The plans are supposed to provide a level playing field, the do-it-yourself retirement vehicle so perfect for an “ownership” society. But the game has been rigged from the beginning. Many companies use these plans as part of a strategy to borrow money cheaply, or in schemes to siphon assets from pension funds.

And just as the new accounting rules led to such mischief, so too did new anti-discrimination rules. Implemented in the 1990s, the rules were intended to ensure that employers didn’t use taxpayer-subsidized 401(k) plans for the favored few, but would make them available to a broad swath of workers. But thanks to the creativity of benefits consultants, employers have used the discrimination rules to shut millions of low-paid employees out of their plans and to provide them with less generous benefits, while enacting other restrictions that make the plans more valuable to managers and executives, at the expense of everyone else.

Today, pension plans are collectively underfunded, hundreds are frozen, and retiree health benefits are an endangered species. And as executive pay and executive pensions spiral, these executive liabilities are slowly replacing pension obligations on many corporate balance sheets.

Meanwhile, the same crowd that created this mess—employers, consultants, and financial firms—are now the primary architects of the “reforms” that will supposedly clean it up. Under the guise of improving retirement security, their “solutions” will enable employers to continue to manipulate retirement plans to generate profit and enrich executives at the expense of employees and retirees. Shareholders pay a price, too.

Their tactics haven’t served as case studies at Harvard Business School, and aren’t mentioned in the copious surveys and studies consultants produce for a gullible public. But the masterminds of this heist should take a bow: They managed to take hundreds of billions of dollars in retirement benefits that were intended for millions of workers and divert them to corporate coffers, shareholders, and their own pockets. And they’re still at it. It might not be possible to resuscitate pension plans, but it isn’t too late to expose the machinations of the retirement industry, which has its tentacles into every type of retirement benefit: profit-sharing plans, 401(k)s, employee stock ownership plans (ESOPs), and plans for public employees, nonprofits, small businesses, and even churches.

The retirement industry has exported its tactics, using them to achieve similar outcomes in retirement plans in Canada, Europe, Australia, and elsewhere, and has big plans for Social Security and its overseas equivalents as well. Unless it is reined in, the global retirement industry will continue to capture retirement wealth earned by many to enrich a relative few.

Ellen Schultz, an investigative reporter for the Wall Street Journal, has covered the retirement crisis for over a decade.

Why Privatization Is A Move Backwards

Privatization: A Move Backwards

by Marti Hiken and Luke Hiken / September 26th, 2011

Republicans, neo-conservatives and tea party fanatics are all clamoring for “privatization,” characterizing it as the panacea for America’s economic woes. And, as privatization moves forward rapidly in the United States, there has been no overall collective discussion among the citizens of this country as to whether we want it or not.

The corporate oligarchs, who have stolen the wealth of the entire country (and are hoarding it for their own benefit) love privatization, because, for them, it translates into the demise of governmental control and regulations affecting their businesses. They can act without any need for accountability or adherence to the responsibilities that come from government oversight.

With privatization, the billionaires can ignore the environmental impact of their actions, as well as the social implications of creating non-union, unregulated working conditions. For them, it’s similar to re-instituting slave labor, with the minimal wages and benefits needed to placate an unorganized workforce.

The goal is simple. As Naomi Klein describes this “rapid-fire privatization”:

First, governments must remove all rules and regulations standing in the way of the accumulation of profits. Second, they should sell off any assets they own that corporations could be running at a profit. And third, they should dramatically cut back funding of social programs.¹

In short, for the super rich, privatization means that natural resources and human resources are controlled by the employer, and not by any public or community group. The only recourse individuals have for corporate abuse is to quit working for a particular employer, and seek employment from another tyrant, who most likely shares the same power and control as the first employer.

It is obvious why the oligarchs are fighting tooth and nail for privatization. But why in the world would anybody but the rich support such a system?

There are three possible reasons why the average American might assist the oligarchs in obtaining their goals:

1) The working class has been duped into believing that bureaucratic structures and governmental waste is the source of our crumbling economy. This theory suggests that if it weren’t for Washington insiders, the distribution of wealth in the country would not be so unbalanced and unfair, but would reflect the healthy growth associated with Apple, Exxon and Google.

2) America’s white working class has been persuaded by the oligarchs and their lapdogs in the media that minorities, foreigners, the unemployed and the mentally infirm are the cause of the failing economy; therefore, the theory goes, assistance provided to any of these groups threatens the economic security of working people. The only solution oligarchs put forth is to cut all social services and benefits to anybody but the rich.

3) A third significant factor is that the oligarchs have so devastated our natural resources and economy that the working class is barely surviving. Again, people who are struggling to survive hunt for scapegoats, and it points towards the weak and the dispossessed — not towards the rich and powerful. Working people look in the wrong direction for solutions to their problems.

What is so pathetic about this particular moment in history is that the drive for privatization is the worst possible solution for our problems. In fact, it will result in even more chaos and poverty for the great majority of our people. There are several reasons for this:

1) A healthy economy requires a healthy, educated populace. Because this is so, public education should be free, and a right for all. Instead of making a college education so expensive that it is a form of indentured servitude, it should be the responsibility of the state to make it available to all who can participate.

2) Similarly, a healthy population is a mentally and physically productive one. Health care should be the responsibility of the government, and 100% of the population should be protected by our health care system. An unhealthy population is unable to support itself.

3) Those who want to work and are able to do so should be assured of a job. Their employment should not depend upon the whims of a corporate oligarch, who is seeking to maximize profits; but rather, the representatives of the entire society who benefit from full employment.

4) A just society protects its citizens, and finds the best possible alternatives for those unable to work and live independently. Corporate oligarchs couldn’t care less about people who don’t bring them profit. But the society needs to nurture and assist those who, for any number of reasons, are unable to remain productive members of society. We don’t euthanize the elderly, the sick and the weak, simply because they can’t find employment at the local Walmart. Instead, a strong nation does its best to protect this segment of the population.

The underpinnings of why privatization is so counter-productive is that the resources of the entire nation should be in the hands of the majority, whose motivation for action is the collective need, and not in the hands of oligarchs, whose motives revolve around profit and personal aggrandizement. It is the government, and not corporate oligarchs, who recognize the waste and implications of short-term profit over long-term needs. Decisions about the allocation of resources, full employment, health and educational benefits should lie in the hands of the citizenry, and not as the personal property of a select few.

When one reviews the history of privatization throughout world history, one sees those institutions and periods in which that theory thrived: the feudal ages, private kingdoms, and ruling dynasties. Unfortunately, the direction of the future points to “privatization” as a right of an anointed royalty, and not of the people, who would seek to place the needs of all and the wealth of the nation in the hands of the many, and not the few.

1. Klein, Naomi, The Shock Doctrine, Metropolitan Books, NY, 2007, p. 57 [↩]

Luke Hiken is an attorney who has engaged in the practice of criminal, military, immigration, and appellate law. Marti Hiken is the director of Progressive Avenues. She is the former associate director of the Institute for Public Accuracy and former chair of the National Lawyers Guild Military Law Task Force. Read other articles by Marti Hiken and Luke Hiken, or visit Marti Hiken and Luke Hiken's website.

This article was posted on Monday, September 26th, 2011 at 8:00am and is filed under Education, Environment, Health/Medical, Privatization, Right Wing Jerks, Tea Party movement.

U.S. Awash in Oil and Lies, Report Charges

Published on Friday, September 2, 2011 by Inter Press Service

U.S. Awash in Oil and Lies, Report Charges

by Stephen Leahy

With four times as many oil rigs pumping domestic oil today than eight years ago and declining domestic demand, the United States is awash in oil. In fact, the U.S. exports more oil than it imports, according to the U.S. Energy Information Administration - and has done so for nearly two decades.

The country's oil industry is primarily interested in who will pay the most on the global marketplace. They call that "energy security" when it suits, but in reality it is "oil company security" through maximizing profits, say energy experts like Steve Kretzman of Oil Change International, an NGO that researches the links between oil, gas and coal companies and governments.

A young woman holds a sign in front of the white house urging President Obama to reject the keystone pipeline. She was joined by 46 others who engaged in civil disobedience and were arrested on August 25th, 2011. (photo: Milan Ilnyckyj / Tar Sands Action)

The only reason U.S. citizens may be forced to endure a risky, Canadian-owned oil pipeline called Keystone XL is so oil companies with billion-dollar profits can get the dirty oil from Canada's tar sands down to the Gulf of Mexico to export to Europe, Latin America or Asia, according to a new report by Oil Change International released Wednesday.

"Keystone XL will not lessen U.S. dependence on foreign oil, but rather transport Canadian oil to American refineries for export to overseas markets," concludes the report, titled "Exporting Energy Security".

Little of the 700,000 to 800,000 barrels of tar sands oil pumped through the 2,400-kilometre, seven-billion-dollar Keystone XL will end up in U.S. gas tanks because the refineries on the Gulf Coast are all about expanding export markets. One huge refinery operator called Valero has been touting the potential export revenues of tar sands oil to investors, the report found.

Because Keystone XL crosses national borders, President Barack Obama has to issue a permit declaring the pipeline serves the "national interest" in order to be approved.

"The only way Keystone XL could be considered in the national interest is if you equate that with profits for the oil industry," said Kretzman, who wrote the report.

Canada's huge tar sands deposits, located mainly in the far north of the province of Alberta, are the world's second largest oil reserves, but they are landlocked. It's the industry's biggest worry and also Alberta Energy Minister Ron Lieper's biggest concern.

Lieper recently said that without new pipelines "our greatest risk in Alberta is that by 2020 we will be landlocked in bitumen". Bitumen is thick tarry oil from the tar sands that needs lots of high-energy and chemical processing to be useable - one reason it's widely considered the world's dirtiest oil.

The shortest route to the big Asian markets is through the Rocky Mountains to Canada's west coast via the proposed Northern Gateway pipeline. However, Canadian native people live on some of the land and are staunchly opposed, so the industry thought it would be easier to put an export pipeline right through the U.S. heartland, said Kretzman.

"The oil industry would have done the Northern Gateway first but gambled that resistance to the pipeline would be far weaker in the mid-west," he told IPS.

They were wrong.

Thousands of people, including landowners and religious leaders, have gone to Washington DC in the past two weeks to tell President Obama to reject Keystone. Nearly 850 people have been arrested for standing on the sidewalk in front of the White House in what protesters call the largest civil disobedience in the history of the U.S. climate movement.

"It's remarkable, a very dignified and moving protest much like the civil rights demonstrations in the 1960s," said Maude Barlow, chairperson of the Council of Canadians, a large environmental NGO.

"This is about the rights of the environment and future generations. It is the blossoming of a new movement," Barlow told IPS from Washington.

Other massive pipelines are being planned, including ones bringing tar sands crude to New England and the Great Lakes, she said. "Keystone is just the beginning. Once these are built they will have to put something in them."

Infrastructure dictates policy, she stressed. Once pipelines, refineries or power plants are built, it is nearly impossible for governments to shut them down.

Last year, scientists writing in the journal Science concluded there is already enough fossil fuel burning capacity to raise global temperatures by 1.5 degrees C by 2060. Any additional power plants, vehicles, or other fossil fuel burning equipment built from 2011 onward puts humanity at ever greater risk of catastrophic climate change.

"We conclude that sources of the most threatening emissions have yet to built," the scientists wrote.

The Obama administration knows this but the powerful oil lobby can use its unlimited funds to attack Democratic officials during the next election cycle if they don't approve the pipeline, says Kretzman.

Changes to U.S. law in 2010 allow corporations to spend as much as they want on elections, and there is no sector with more money than the oil industry.

"That scares the hell out of the Obama administration," he said.

It's never been clearer that corporations wield the real power in the United States and Canada, activists say.

"This is the beginning of a very big fight for the future," Barlow told IPS.

Copyright © 2011 IPS-Inter Press Service

	So Much for the Polar Bears - Arctic Drilling to Begin

Written by John Daly

Thursday, 01 September 2011 13:59

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The “good” news for wildlife around the Arctic Circle is that BP, renowned despoiler of the Gulf of Mexico, will not be coming.

BP’s 2010 Deepwater Horizon oil spill (also referred as the Macondo blowout), which surged for three months, has won a place in the Guinness book of records as the largest accidental marine oil spill in the history of the petroleum industry.

The bad news is that U.S. oil international Exxon Mobil has sealed an Arctic oil exploration deal with Russia’s state-owned oil firm Rosneft, following an agreement signed on 29 August in the presence of Russian Prime Minister Vladimir Putin.

Proving that the Cold War is well and truly dead, at least for multinationals, Putin gushed, "New horizons are opening up. One of the world's leading companies, Exxon Mobil, is starting to work on Russia's strategic shelf and deepwater continental shelf. The potential oil fields are some of the largest in circumpolar Arctic offshore area.

The contract stipulates that Exxon Mobil and Rosneft will jointly spend $3.2 billion on deepwater exploration in the Russian federation’s East Prinovozemelskii region of the Kara Sea.

Of course, Exxon Mobil did not walk away empty-handed, as the agreement also allows it to begin oil prospecting in the Black Sea. And Rosneft, pushing away from the casino table, will be permitted to develop fields in the Gulf of Mexico and Texas.

Last but not least, the two companies will also cooperate on the development of oil fields in Western Siberia, where production has been in decline for more than a decade.

But let’s get back to the Kara Sea for a moment.

Sandwiched between Novaiia Zemliia island and the Severnaia Zemliia archipelago, compared to its western neighbor, Compared to the Barents Sea, which receives warm Atlantic currents, the Kara Sea is much colder because of its isolation, remaining frozen for over nine months a year. The ice-locked sea is navigable only during August and September.

Furthermore, as the Kara Sea receives a vast amount of freshwater from the northwards flowing Siberian Ob, Yenisei, Pyasina, and Taimyra rivers, its salinity is variable, introducing yet another hydrological element of uncertainty into the proposed exploration.

Of course, what’s a few oil spills amongst comrades? After all, Russian environmentalist groups have protested for years that Russia’s Arctic regions were used as isolated dumping grounds for nuclear waste, and according to a March 1993 Russian Federation government official White Paper" between 1965-1988 the Soviet Union dumped six nuclear submarine reactors and ten nuclear reactors into the Kara Sea, along with solid high- and low-level wastes unloaded from Northern Fleet nuclear submarines. What are a few errant hydrocarbons gonna do admixed with some becquerels?

In an eerie echo of insistent Republican choruses of “drill, baby drill” for Alaska’s Arctic National Wildlife Refuge (ANWR), the proposed Kara Sea operations will impact the Russian Federation’s Great Arctic State Nature Reserve, the nation’s largest and in fact, the most massive in all of Europe, which was established in May 1993 by Resolution No.431 of the Russian Federation government. The Kara Sea reserve elements included the Sergei Kirov Archipelago, Voronina Island, the Izvestiy TSIK Islands, the Arctic Institute Islands, Svordrup Island, Uedineniya Island and a number of smaller islands.

And how will that precious oil be transported?

By tanker, of course.

In this regard, consider a report by Russian environmental Group Bellona about the 16 March 2009 incident where the nuclear-powered icebreaker Yamal collided with the 16.168 ton tanker Indiga during ice escort duty in the Kara Sea, which was shuttling between the oil terminal in the Gulf of Ob and the floating oil storage vessel Belokamenka in the Kola Bay. The Indiga suffered a 31foot-long crack on its main deck from the impact of the collision, but fortunately the tanker was only carrying ballast at the time.

The Kara Sea oil exploration concept is one of those ideas that look good in boardrooms but bad in reality. The severe climate, combined with the difficulties of oil transport, should give pause to all except those inhaling seven figure salaries and three martini lunches. And never mind the fact that the waters contain some of the world’s richest fishing grounds.

The Exxon Mobil-Rosneft alliance has the tacit blessing of both the U.S. and Russian governments, so it will more than likely go forward.

Offshore drilling comes with attendant risks unlike land-based exploration, which the Macondo blowout proved. If it took BP three months to shut down its well in the relatively shallow and warm waters of the gulf of Mexico, then how do Exxon Mobil and Rossneft propose to deal with a similar incident in waters several hundred miles south of the Arctic Circle that are frozen for all but two months of the year?

Guess we’ll find out.

Good thing that polar bears can’t vote, but then, they’re an endangered species anyway, so even if they could, there are too few to matter.

By. John C.K. Daly of OilPrice.com

AlterNet.org

NEWS & POLITICS

Truthdig / By Chris Hedges

How Corporate and Political Forces Have Almost Neutralized All Avenues of Resistance in US Culture

The only commodity our state offers is fear.

August 29, 2011 |

Early voting in Florida.

We have begun the election march of the trolls. They have crawled out of the sewers of public relations firms, polling organizations, the commercial media, the two corporate political parties and elected office to fill the airwaves with inanities and absurdities until the final inanity—the 2012 presidential election. Journalists, whose role has been reduced to purveyors of court gossip, whether on Fox or MSNBC, descend in swarms to report pseudo-events such as the Ames straw poll, where it costs $30 to cast a ballot. And then, almost immediately, they blithely inform us that the Iowa poll is meaningless now that Rick Perry has entered the race. The liberal trolls, as they do in every election cycle, are beating their little chests about the perfidiousness of the Democratic Party and Barack Obama. It is a gesture performed not to effect change but to burnish their credentials as moralists. They know, as do we, that they will trot obediently into the voting booth in 2012 to do as they are told. And everywhere the pulse of the nation is being assiduously monitored through polls and focus groups, not because our opinions matter, but because our troll candidates understand that by parroting back to us our own viewpoints they can continue to spend their days lapping up corporate money with other trolls in the two houses of Congress, the White House, the Supreme Court and television studios where they chat with troll celebrity journalists.

The only commodity the troll state offers is fear. The corporate trolls, such as the Koch brothers, terrify the birthers, creationists, militia lovers, tea party militants, right-to-life advocates, Christian fascists and God-fearing red-white-and-blue patriots by proclaiming that, unless they vote for Perry or Mitt Romney or Michele Bachmann or some other product of the lunatic fringe of our political establishment, the American family will be destroyed, our children will be corrupted and the country will turn socialist. Barack Obama, who they whisper is a closet Muslim, will take away their guns, raise their taxes and bring homosexual couples into kindergartens.

For those, usually liberals, still rooted in a reality-based world, one that believes in evolutionary science, the corporate trolls offer a more refined, fear-based message of impending doom. If you abandon the Democrats we will be governed by Bible-thumping idiots who will make us chant the Pledge of Allegiance in mass rallies and teach the account of Genesis as historical and biological fact in our nation’s schools.

And underneath it all runs the mantra chanted in unison by all the trolls—terror, terror, terror. The troll establishment spins us like windup dolls and laughs all the way to the bank. What idiots, they think. And every election cycle we prove them right.

“The only people who grasp the distinction between reality and appearance, who grasp the laws of conduct and society, are the ruling groups and those who do their bidding; scientific, technical elites who elucidate the laws of behavior and the functions of society so that people might be more effectively, albeit unconsciously, governed,” wrote James W. Carey in “Communication as Culture.”

The trolls dominate or have neutralized every major institution in the country on behalf of their corporate paymasters. The press, education, Wall Street, labor and our political parties are managed by trolls or have been destroyed by them. Sometimes these trolls speak like liberals. Sometimes they speak like conservatives. Sometimes they are secular. Sometimes they are Christians. But the language they use is a cover for the relentless march toward a totalitarian capitalism and a kingdom where the trolls, if not the rest of us, live happily ever after. Rick Perry and John Boehner overtly make war on Social Security. Barack Obama and Nancy Pelosi say they would like to save Social Security but are sadly powerless before the decisions of a congressional super committee they helped form. The result, of course, is the same. We get to choose the rhetoric and manner in which we are deceived and disempowered. Nothing more.

All cloying appeals to the Obama administration to use stimulus money to build public works such as schools, libraries, roads, clinics, public transit and reclaiming dams, as well as to create jobs, are about as effective as writing heartfelt appeals in the era of the old Soviet Union to Uncle Joe Stalin. The trolls have gamed the system. There is no economic, political or environmental reform, from campaign finance to environmental controls, that can be implemented to impede the march of the corporate state. The rot and corruption at the top levels of our financial and political systems, coupled with the increasing deprivation felt by tens of millions of Americans, are volatile tinder for revolt. And the trolls are prepared for this too. They have put in place draconian state controls, including widespread internal surveillance, to silence our anemic left. They know how to direct the rage of the right wing toward the last pockets of the cultural, social and political establishment that cling to traditional liberal values, as well as toward the most vulnerable among us including Muslims, undocumented workers and homosexuals. They will make sure we consume ourselves.

A society is in serious trouble when its political pariahs have at the core of their demands a return to the rule of law. This inversion, with our political and cultural outcasts demanding a respect for law, highlights the awful fact that the most radical and retrograde forces within the body politic have seized control. These forces demand that we serve the dictates of the marketplace. They are destroying all legal impediments to corporate exploitation and profit, as well as dismantling the regulatory agencies that once protected the citizen. They defend torture, offshore penal colonies, black sites and kidnapping (they call it “extraordinary rendition”) of state enemies. They protect and abet financial fraud. They wage pre-emptive war. They refuse to restore habeas corpus. Without warrants, they monitor, eavesdrop on and wiretap tens of millions of citizens. They order the assassination of U.S. citizens. They deny due process. They give corporations the status of persons. They ignore the suffering of the unemployed and the poor, slashing basic social service programs while doling out hundreds of billions in taxpayer funds to corporations. On these key issues, the only ones that really matter, there is no disagreement among trolls from either the self-identified left or the self-identified right. All their public disputes in the election cycle are a carnival act.

All conventional forms of dissent, from electoral politics to open debates, have been denied us. We cannot rely on the institutions that once made piecemeal and incremental reform possible. The only route left is to disconnect as thoroughly as possible from the consumer society and engage in acts of civil disobedience and obstruction. The more we sever ourselves from the addictions of fossil fuel and the consumer society, the more we begin to create a new paradigm for community. The more we engage in physical acts of defiance—as Bill McKibben and others did recently in front of the White House to protest the building of the Keystone XL pipeline, which would increase the flow of “dirty” tar sands oil from Alberta, Canada, to refineries on the Gulf of Mexico—the more we can keep alive a new, better way of relating to each other and the ecosystem.

Most important, we must stop being afraid. We have to turn our backs for good on the Democrats, no matter what ghoulish candidate the Republicans offer up for president. We have to defy all formal systems of power. We have to listen closely to the moral voices in our society, from McKibben to Noam Chomsky to Wendell Berry to Ralph Nader, and ignore feckless liberals who have been one of the most effective tools of our disempowerment. We have to create monastic enclaves where we can retain and nurture the values being rapidly destroyed by the wider corporate culture and build the mechanisms of self-sufficiency that will allow us to survive. The corporate coup is over. We have lost. The trolls have won. We have to face our banishment.

In William Shakespeare’s play “Coriolanus” the Roman consul is deposed by the mob. Coriolanus, whatever his faults, turns on those who thrust him from power to declare a valediction we should deliver to our class of ruling trolls and all those who remain in their embrace.

Brutus:
There’s no more to be said, but he is banish’d,
As enemy to the people and his country:
It shall be so.

Citizens:
It shall be so, it shall be so.

Coriolanus:
You common cry of curs! whose breath I hate
As reek o’ the rotten fens, whose loves I prize
As the dead carcasses of unburied men
That do corrupt my air, I banish you;
And here remain with your uncertainty!
Let every feeble rumour shake your hearts!
Your enemies, with nodding of their plumes,
Fan you into despair! Have the power still
To banish your defenders; till at length
Your ignorance, which finds not till it feels,
Making not reservation of yourselves,
Still your own foes, deliver you as most
Abated captives to some nation
That won you without blows! Despising,
For you, the city, thus I turn my back:
There is a world elsewhere.

Chris Hedges, a Pulitzer Prize-winning reporter, is a senior fellow at the Nation Institute. He writes a regular column for TruthDig every Monday. His latest book is Empire of Illusion: The End of Literacy and the Triumph of Spectacle.

AlterNet.org

NEWS & POLITICS  

AlterNet / By Bruce E. Levine

3 Things That Must Happen for Us To Rise Up and Defeat the Corporatocracy

Most Americans oppose rule by the corporatocracy but don't have the tools to fight back. Here are three things we need to create a real people's movement. 

August 25, 2011  |  

Transforming the United States into something closer to a democracy requires: 1) knowledge of how we are getting screwed; 2) pragmatic tactics, strategies, and solutions; and 3) the “energy to do battle.”
The majority of Americans oppose the corporatocracy (rule by giant corporations, the extremely wealthy elite, and corporate-collaborator government officials); however, many of us have given up hope that this tyranny can be defeated. Among those of us who continue to be politically engaged, many focus on only one of the requirements—knowledge of how we are getting screwed. And this singular focus can result in helplessness. It is the two other requirements that can empower, energize, and activate Team Democracy— a team that is currently at the bottom of the standings in the American Political League.

1. Knowledge of How We are Getting Screwed

Harriet Tubman conducted multiple missions as an Underground Railroad conductor, and she also participated in the Union Army’s Combahee River raid that freed more than 700 slaves. Looking back on her career as a freedom fighter, Tubman noted, “I freed a thousand slaves. I could have freed a thousand more if only they knew they were slaves.” While awareness of the truth of corporatocracy oppression is by itself not sufficient to win freedom and justice, it is absolutely necessary.

We are ruled by so many “industrial complexes”—military, financial, energy, food, pharmaceutical, prison, and so on—that it is almost impossible to stay on top of every way we are getting screwed. The good news is that—either through independent media or our basic common sense—polls show that the majority of Americans know enough about the Afghanistan and Iraq wars, Wall Street bailouts, and other corporate welfare to oppose these corporatocracy policies. In the case of the military-industrial complex, most Iraq War polls and Afghanistan War polls show that the majority of Americans know enough to oppose these wars. And when Americans were asked in a CBS New /New York Times survey in January 2011 which of three programs—the military, Medicare or Social Security—to cut so as to deal with the deficit, fully 55 percent chose the military, while only 21 percent chose Medicare and 13 percent chose Social Security.
In the words of Leonard Cohen, “Everybody knows that the deal is rotten.” Well, maybe not everybody, but damn near everybody.

But what doesn’t everybody know?

2. Pragmatic Tactics, Strategies and Solutions

In addition to awareness of economic and social injustices created by corporatocracy rule, it is also necessary to have knowledge of strategies and tactics that oppressed people have historically used to overcome tyranny and to gain their fair share of power.

Even before the Democratic-Republican bipartisan educational policies (such as “no child left behind” and “race to the top”) that cut back on civics being taught in schools, few Americans were exposed in their schooling to “street-smart civics”—tactics and strategies that oppressed peoples have historically utilized to gain power.

For a comprehensive guide of tactics and strategies that have been effective transforming regimes more oppressive than the current U.S. one, read political theorist and sociologist Gene Sharp’s From Dictatorship to Democracy, which includes nearly 200 “Methods of Nonviolent Actions.” Among Sharp’s 49 “Methods of Economic Noncooperation,” he lists over 20 different kinds of strikes. And among his 38 “Methods of Political Noncooperation,” he lists 10 tactics of “citizens’ noncooperation with government,” nine “citizens’ alternatives to obedience,” and seven “actions by government personnel.” Yes, nothing was more powerful in ending the Vietnam War and saving American and Vietnamese lives than the brave actions by critically thinking U.S. soldiers who refused to cooperate with the U.S. military establishment. Check out David Zeigler’s documentary Sir! No Sir! for details.

For a quick history lesson on “the nature of disruptive power” in the United States and the use of disruptive tactics in fomenting the American Revolution, the abolitionist movement, the labor movement, and other democratic movements, check out sociologist Frances Fox Piven’s Challenging Authority: How Ordinary People Change America. Piven describes how “ordinary people exercise power in American politics mainly at those extraordinary moments when they rise up in anger and hope, defy the rules that ordinarily govern their daily lives, and, by doing so, disrupt the workings of the institutions in which they are enmeshed.” In the midst of the Great Depression when U.S unemployment was over 25 percent, working people conducted an exceptional number of large labor strikes, including the Flint, Michigan sit-down strike, which began at the end of 1936 when auto workers occupied a General Motors factory so as to earn recognition for the United Auto Workers union as a bargaining agent. That famous victory was preceded and inspired by other less well-known major battles fought and won by working people. Check out the intelligent tactics (and guts and solidarity) in the 1934 Minneapolis Truckers Strike.

For an example of “the nature of creative power” that scared the hell out of—and almost triumphed—over the moneyed elite, read The Populist Moment by historian Lawrence Goodwyn. The Populist movement, the late-19th-century farmers’ insurgency, according to Goodwyn, was the largest democratic movement in American history. These Populists and their major organization, commonly called the “Alliance,” created worker cooperatives that resulted in empowering economic self-sufficiency. They came close to successfully transforming a good part of the United States into something a lot closer to a democracy. As Goodwyn notes, “Their efforts, halting and disjointed at first, gathered form and force until they grew into a coordinated mass movement that stretched across the American continent ... Millions of people came to believe fervently that the wholesale overhauling of their society was going to happen in their lifetimes.”

In Get Up, Stand Up, I include the section “Winning the Battle: Solutions, Strategies, and Tactics.” However, a major point of the book is that, currently in the United States, even more ignored than street-smart strategies and tactics is the issue of morale, which is necessary for implementing these strategies and tactics. So, I also have a section “Energy to Do Battle: Liberation Psychology, Individual Self-Respect, and Collective Self-Confidence.”

3. The Energy to Do Battle

The elite’s money—and the influence it buys—is an extremely powerful weapon. So it is understandable that so many people who are defeated and demoralized focus on their lack of money rather than on their lack of morale. However, we must keep in mind that in war, especially in a class war when one’s side lacks financial resources, morale becomes even more crucial.

Activists routinely become frustrated when truths about lies, victimization and oppression don’t set people free to take action. But having worked with abused people for more than 25 years, it doesn’t surprise me to see that when we as individuals or a society eat crap for too long, we become psychologically too weak to take action. There are a great many Americans who have been so worn down by decades of personal and political defeats, financial struggles, social isolation and daily interaction with impersonal and inhuman institutions that they no longer have the energy for political actions.

Other observers of subjugated societies have recognized this phenomenon of subjugation resulting in demoralization and fatalism. Paulo Freire, the Brazilian educator and author of Pedagogy of the Oppressed, and Ignacio Martin-Baró, the El Salvadoran social psychologist and popularizer of “liberation psychology,” understood this psychological phenomenon. So did Bob Marley, the poet laureate of oppressed people around the world. Many Americans are embarrassed to accept that we, too, after years of domestic corporatocracy subjugation, have developed what Marley called “mental slavery.” Unless we acknowledge that reality, we won’t begin to heal from what I call “battered people’s syndrome” and “corporatocracy abuse” and to, as Marley urges, “emancipate yourself from mental slavery.”

Whether one’s abuser is a spouse or the corporatocracy, there are parallels when it comes to how one can maintain enough strength to be able to free oneself when the opportunity presents itself—and then heal and attain even greater strength. This difficult process requires honesty that one is in an abusive relationship. One should not be ashamed of having previously believed in corporatocracy lies; and it also helps to forgive and have compassion for those who continue to believe them. The liars we face are often quite good at lying. It helps to have a sense of humor about one’s predicament, to nurture respectful relationships, and to take advantage of a lucky opportunity—often created by the abuser’s arrogance— when it presents itself.
For democratic movements to have enough energy to get off the ground, certain psychological and cultural building blocks are required. Goodwyn, from his study of the Populists in the United States, Solidarity in Poland, and other democratic movements, concluded that “individual self-respect” and “collective self-confidence” constitute the cultural building blocks of mass democratic politics. Without individual self-respect, people do not believe that they are worthy of power or capable of utilizing power wisely, and they accept as their role being a subject of power. Without collective self-confidence, people do not believe they can succeed in wresting power away from their rulers. There are “democracy battlefields” —in our schools, workplace and elsewhere—where such respect and confidence can be regained every day.
No democratic movement succeeds without determination, courage, and solidarity, but modern social scientists routinely ignore such nonquantifiable important variables, and so those trained only in universities and not on the streets can, as Martin-Baró pointed out, “become blind to the most important meanings of human existence.” Great scientists recognize just how important nonquantifable variables are in certain areas of life. A sign hanging in Albert Einstein’s office at Princeton stated: not everything that can be counted counts, and not everything that counts can be counted.

The battle against the corporatocracy needs critical thinking, which results in seeing some ugly truths about reality. This critical thinking is absolutely necessary. Without it, one is more likely to engage in tactics that can make matters worse. But critical thinking also means the ability to think critically about one’s pessimism—realizing that pessimism can cripple the will and destroy motivation. A critical thinker recognizes how negativism can cause inaction, which results in maintaining the status quo. Antonio Gramsci (1891–1937), an Italian political theorist and Marxist activist who was imprisoned by Mussolini, talked about “pessimism of the intellect, optimism of the will” —a phrase that has inspired many critical thinkers, including Noam Chomsky.
Can one have hope without being an insipid Pollyanna? Until shortly before it occurred, the collapse of the Soviet empire seemed an impossibility to most Americans, who saw only mass resignation within the Soviet Union and its sphere of control. But the shipyard workers in Gdansk, Poland, did not see their Soviet and Communist Party rulers as the all-powerful forces that Americans did. And so Polish workers’ Solidarity, by simply refusing to go away, provided a strong dose of morale across Eastern Europe at the same time other historical events weakened the Soviet empire.

Today in Iceland, citizens have refused to acquiesce to the demands of global financial institutions, simply refusing to be taxed for the mistakes of the financial elite that caused their nation’s recent financial meltdown. In a March 2010 referendum in Iceland, 93 percent voted against repayment of the debt, and Icelandic citizens have been drafting a new constitution that would free their country from the power of international finance (this constitution will be submitted to parliament for approval after the next elections). Yes, participatory democracy is still possible.

The lesson from the 2011 Arab spring in and other periods of history is that tyrannical and dehumanizing institutions are often more fragile than they appear, and with time, luck, morale, and our ability to seize the moment, damn near anything is possible. We never really know until it happens whether or not we are living in that time when historical variables are creating opportunities for seemingly impossible change. Thus, we must prepare ourselves by battling each day in all our activities to regain individual self-respect, collective self-confidence, determination, courage, and solidarity.

Bruce E. Levine is a clinical psychologist and author of Get Up, Stand Up: Uniting Populists, Energizing the Defeated, and Battling the Corporate Elite  (Chelsea Green, 2011). His Web site is www.brucelevine.net.

The Center for Public Integrity

iWatch News

Investigation. Impact. Integrity.

Finance : Corporate Accountability

Since 9/11, Koch Industries has fought against tougher government rules on chemical plants

Koch plant in Texas AP

Koch argues that tough restrictions on petrochemicals aren’t necessary because there hasn’t been a terrorist attack here since 9/11

By John Aloysius Farrell, Ben Wieder and Evan Bush

Koch Industries, a leader of industry resistance to proposed post-9/11 anti-terrorism safeguards at petrochemical plants, owns 56 facilities using hazardous chemicals that put 4.8 million Americans who live nearby at risk.

Schools, homes, hospitals, office parks, churches, recreation areas, nursing homes and daycare facilities dot the properties that surround the Koch plants.

In the government’s “worst case” scenarios, the millions working or living near the plants could be threatened by explosions, chemical spills or clouds of deadly gas, federal records show. Among the hazardous chemicals stored and used at Koch sites are formaldehyde, chlorine, anhydrous ammonia and hydrogen fluoride.

Koch’s own reports to the U.S. government were reviewed by iWatch News. The records, known as risk management plans, are maintained by the Environmental Protection Agency. Access is strictly controlled: members of the press and public can only examine 10 plans per month, under the watchful eye of EPA officials.

A decade after the worst terrorist attacks on U.S. soil, Koch insists that its neighbors are safe, and are adequately protected by federal and state regulations.

All chemical firms are “vulnerable to human error, acts of nature, theft and sabotage,” Koch acknowledges. “It is impossible to completely eliminate every threat.”

But “chemicals are at the heart of many of our businesses,” the firm says, in a section titled “Chemical Safety” on Koch’s website. “The ones used in our facilities are handled with care and by trained professionals.”

The Kansas-based conglomerate vows that it “places compliance and safety before profit.”

Koch did not respond to repeated inquiries for comment to this story over a week’s time.

Koch lobbies against stricter rules

Charles and David Koch, the owners of the country’s second-largest private corporation, are libertarians of long standing, who contend that government regulations, taxes and subsidies stifle individual initiative and hamper American competitiveness. In recent years, the Kochs have played an increasingly public role as financial angels for conservative causes, politicians and foundations.

In Washington, Koch is a leader in efforts to oppose counter-terrorism proposals that would require that petrochemical firms use less hazardous practices and chemicals.

Lobbying disclosure reports, filed with Congress, show that this year Koch has deployed at least 20 lobbyists, from four lobbying firms, to shape legislation on Capitol Hill and the regulatory work of federal agencies.

Aside from its own in-house team of lobbyists, Koch has hired the firms of Hunton & Williams; Siff & Associates, and Mehlman Vogel Castagnetti to lobby the Senate, House of Representatives, the Treasury Department and the Department of Homeland Security.

The Center for Responsive Politics puts Koch at the top of its list of the 80-odd firms, local governments and other groups lobbying Congress to shape or prevent passage of a wide-ranging chemical security bill. Koch is ranked above organizations like the American Chemistry Council, the U.S. Chamber of Commerce, and corporations like Halliburton or Bayer.

According to the CRP database, the chemical safety legislation has been one of Koch’s most important priorities in the last four years, during which the firm has spent $44 million lobbying in Washington on this and other issues.

The threat of a terrorist attack may have been diminished by the death of Osama bin Laden, but Al Qaeda maintains an interest in attacking American power and utility plants, the U.S. government says.

A July 19 intelligence report sent by the Department of Homeland Security to state and local law enforcement agencies noted that “violent extremists have, in fact, obtained insider positions” and that “disgruntled employees and adversaries seeking to use employees to obtain specific information about facility operations continue to pose a threat to utilities and other critical infrastructure.”

Calls for safer substances

Congressional calls for change, endorsed by the Obama administration, would restructure federal rules and inspection procedures and require the use of “inherently safer technology” (IST) to reduce the potential consequences of a terrorist attack.

If paper plants could manufacture the precise amounts of chlorine that they need on site, or use a different chemical process to bleach pulp, for example, they would reduce the risk that terrorists can find chains of rail cars or yards of storage tanks filled with toxic chemicals to target.

House and Senate bills that would require that firms use safer technologies have been the top priorities of Koch lobbyists working on the issue. On its website, Koch says that IST proposals are “onerous” because they “would require manufacturers to use certain products and processes without regard for practicality, availability or cost.”

“Mandating IST would result in even more job losses and higher consumer prices as American manufacturers struggle to comply with the new regulations and compete with overseas manufacturers,” Koch says.

Under the current regulatory regime, Koch notes, “not one incident of terrorism has occurred.”

According to the iWatch News analysis of EPA records, the Koch facilities with the greatest number of neighbors who would be threatened by a worst case release or terrorist attack are:

• An Invista chemical plant in LaPorte, Texas, where a spill and vaporization of formaldehyde could threaten almost 1.9 million potential victims within 25 miles.
• A Georgia-Pacific plant in Camas, Wash., where a chlorine spill and gas cloud could endanger 840,000 people within 14 miles.
• A Flint Hills refinery in Corpus Christi, Texas, where 350,000 people living within 22 miles would be threatened by a hydrogen fluoride spill and vaporization.
• And a Koch Nitrogen plant in East Alton, Ill., where 290,000 people live within 11 miles, and face the potential danger of a poisonous anhydrous ammonia cloud.

The full list of Koch facilities is here [link to download Excel spreadsheet].

The Koch Industries safety and environmental record at its facilities has improved in the last decade. The firm has won government and industry awards, after several embarrassing incidents in the recent past, including a 2001 guilty plea and $20 million in fines and remediation, for covering up the release of hazardous benzene at the Corpus Christi refinery.

Koch bought Invista from DuPont in 2004, and reported to the EPA that the

company’s own audit of its new acquisition had discovered more than 680 violations of environmental and emergency planning and preparedness law at 12 facilities, including the one in LaPorte. Koch paid a $1.7 million civil penalty in 2009, and agreed to make up to $500 million in improvements.

Koch also paid a $6 million criminal fine in 2000 for illegally discharging between 200,000 and 600,000 gallons of aviation fuel into a waterway near the firm’s Flint Hills refinery in Rosemount, Minn.

A 1996 incident offered a lesson in miniature of the dangers of spills and vaporization of hazardous substances. A Koch pipeline carrying liquid butane through Texas ruptured, releasing a white, almost transparent fog near a residential area. A pickup truck carrying two men through the cloud ignited the butane, and they were burned to death. Forty-five families lived nearby.

Government gets tough after 9/11

Congress first passed legislation in 2006 giving the new Department of Homeland Security the authority to regulate chemical facilities in the face of terrorist threats. In 2007 the department issued an interim rule for anti-terrorism standards, requiring that facilities with a prescribed amount of dangerous chemicals must report to DHS. The law has been extended on a year-to-year basis.

The Justice Department called the threat of a terrorist attack on chemical facilities “real and credible.”

“Experts agree that chemical facilities present an attractive target for terrorists intent on causing massive damage,” said a 2006 Government Accountability Office report . “Terrorist attacks involving the theft or release of certain chemicals could significantly impact the health and safety of millions of Americans.

“The disaster in Bhopal, India, in 1984, when methyl isocyanate — a highly toxic chemical — leaked from a tank, reportedly killing about 3,800 people and injuring anywhere from 150,000 to 600,000 others, illustrates the potential threat to public health from a chemical release,” the GAO said.

The chemical safety rules were filled with exceptions, however. They exempted facilities owned by the departments of Defense and Energy, nuclear power plants, water and wastewater utilities (which often use chlorine) and those regulated by another law, the Maritime Transportation Security Act of 2002.

Under the less stringent MTSA, some of Koch’s biggest facilities, like its refinery in Minnesota, are regulated by the U.S. Coast Guard, though located hundreds of miles from the shores patrolled by the Coast Guard.

More than 38,000 of the nation’s chemical facilities ultimately registered with Homeland Security, and more than 7,000 were initially designated “high risk.” After further inspection, some 4,755 were put in four tiers, with 221 in Risk Tier 1, the most dangerous, and 573 in Risk Tier 2. For security reasons, Homeland Security does not identify which facilities are in each tier.

A central controversy in congressional debate is the call for “inherently safer technology.” The Obama administration has supported proposals to give the government the authority to order a Tier 1 or Tier 2 facility to switch to safer chemicals, and to require that all high-risk facilities at least assess the consequences of such a change.

“These assessments may lead to changes in chemical process when deemed safer, more reliable, and cost-effective,” says the nonpartisan Congressional Research Service, in a 2011 study.

The CRS study, however, acknowledges that the proposed IST rule is controversial.

“A fundamental challenge for inherently safer technologies is how to compare one technology with its potential replacement,” CRS reported. “It is challenging to unequivocally state that one technology is inherently safer than the other.”

A refinery that substitutes sulfuric acid for the more dangerous hydrogen fluoride, the CRS study notes, may have to employ so much acid that it raises “different dangers” for nearby communities.

A 2005 GAO report recognized the danger that terrorists could target readily available chemicals, like chlorine, causing a “catastrophic” event. “Exposures to chlorine could burn eyes and skin, inflame the lungs and could be deadly if inhaled,” the GAO reported.

But that report also noted the cost of switching to safer alternatives. Wastewater treatment plants can replace chlorine with sodium hypochlorite, the GAO said, but for each plant it would “increase annual chemical costs from $600,000 for gaseous chlorine to over $2 million for sodium hypochlorite.”

In some cases, the costs seem justified. On Sept. 11, 2001, a chain of railroad tanker cars filled with toxic chemicals, including chlorine, sat at a municipal wastewater treatment plant across the Potomac River from the Pentagon as it was attacked. At that time, the GAO noted, “the population within the plant’s vulnerable zone was 1.7 million people.”

Within weeks the plant stopped using chlorine and adopted a safer alternative.