Today, I am introducing the Public Empowerment Act of 1997, a package containing eight pieces of legislation. Together, these provisions, at very modest cost, can help revitalize our democracy and our economy by restoring the ability of ordinary citizens to influence the decisions of Government and the actions of powerful business corporations.
Our Government — the Congress, the President and Executive Branch, and the independent federal agencies — has, again and again, allowed giant corporations and interest groups and their legions of lawyers and lobbyists to dominate the policy agenda. Our Government has, again and again, given away public resources to corporations, some of them multinational giants run from abroad, without asking for reasonable compensation. What we have is a government of the power brokers, by the power brokers, and for the power brokers. And many, many important decisions that affect our health and welfare and the future of our nation are not made by government at all, but are reserved to corporate CEOs with little accountability to the public or even to their own shareholders.
The people have been left out of the deal. Many citizens feel powerless and alienated from government and from our economic power structure.
President Clinton sometimes quotes President Andrew Jackson’s famous remark that the best cure for democracy’s ills is more democracy. The Public Empowerment Act is in that spirit. Our Nation’s problems, I would submit, arise in large measure from the lack of real democracy, from the sense of citizens that they have no control over our destiny, so why bother trying. So often we have revitalized our society by expanding the reaches of democracy — by abolishing slavery and the Jim Crow laws, by granting women the right to vote, by the spread of ballot initiatives in many states.
The situation of today cries out for still more democracy, for a shifting of some of the power in this Nation from the multinational corporations and their lawyers and lobbyists directly to the American people. Control of government, media, industrial capital, trade, technology, the environment, is dominated by a small elite with little feeling for the needs of ordinary people. When, for example, a bipartisan Congress can strongly support the modified GATT agreement
— modified to surrender our environmental standards and our labor rights protections in the name of global commerce — we know that the powers that be have lost touch with the genuine concerns of the Nation.
The Public Empowerment Act of 1997 includes some modest steps in the direction of restoring the balance and giving citizens a more meaningful role in decisions that affect our political system and our economic system.
The eight components of the Public Empowerment Act are, in essence, trimtabs. A trimtab is a small rudder used to turn a big ship. In this context, I use trimtab to mean a modest, low-cost legislative proposal, carefully targeted at a point of leverage in our massive Government. If we find the right points and give them a nudge, major, positive results can follow.
The Public Empowerment Act contains:
The Financial Consumers’ Information and Representation Act, to permit citizens in each state to form a federally-chartered non-profit membership organization to inform consumers and strengthen consumer representation in government proceedings that concern the financial service industry.
The Corporate Decency Act, to provide for federal minimum standards for the internal governance and conduct of the nation’s largest business corporations.
The Citizens Utility Act, to permit citizens in each state to form a federally-chartered non-profit membership organization to inform consumers and strengthen consumer representation in government proceedings with respect to the rates and regulation of public utilities.
The Consumer Protection Act, to establish a federal Consumer Protection Agency charged with educating consumers and representing their interests in regulatory and judicial proceedings.
The Citizens’ Bounty Act, to provide citizens with a $250 cash award for winning lawsuits brought against violators of key federal statutes, thus ensuring that citizens have standing to bring such suits.
The National Advisory Referendum Act, to allow voters, every two years, to express their views on important issues to our political leaders
The Audience Network Act, to create a federally-chartered non-profit membership organization and provide it with a right to broadcast radio and television programming and to represent its membership in government proceedings addressing communications issues.
The Postal Consumers Act, to create a federally-chartered non-profit membership organization to represent the interests of individual residential customers of the United States Postal Service.
I will discuss each of these pieces of legislation in turn.
The Financial Consumers’ Information and Representation Act
The nation’s financial industries–banks, insurance companies and securities firms–have a critically important impact on the daily lives of the nation’s consumers.
As the savings and loan disasters of the 1980s dramatized, there is an overriding need for consumers–taxpayers–to have the means to enhance their influence on financial issues.
But, the web of secrecy and mystery surrounding much of the financial industry and the state and federal regulatory system is designed to keep consumers in the dark while pro-industry legislators and lax regulators advance the interests of the banks and other financial corporations.
Consequently, consumers end up paying excessive fees and higher interest rates. Surprisingly, as fees go up, the quality of service often declines. Invariably, taxpayers as well as consumers are required to pay the bills for regulatory and financial mistakes.
As banks expand across the nation and the world in multi-billion dollar mergers and interstate branches, the concerns of consumers become more and more distant to the wheelers and dealers in the corporate board rooms. Rather than showing concern for consumer and community needs, many of the banking corporations are diverting resources into more volatile and risky financial products.
Consumer financial decisions are also becoming overwhelmingly complex. What type of deposit account is best? Should investments be made in uninsured bank products? How should retirement funds be managed?
Given the powerful influence of the financial industry over the legislative and regulatory processes, it is likely that consumers will continue to be short-changed unless they form organizations to monitor and challenge the decisions of financial corporations.
We need to renew efforts to establish Financial Consumer Associations (FCAs), state-chartered, nonprofit organizations with full-time staffs that can help consumers band together to serve as watchdogs on financial issues.
In several Congresses, legislation has been introduced that would require membership notices of FCAs to be included in the billing envelopes of financial institutions, ensuring that the maximum number of consumers are invited to join and fund these associations.
This is a critical part of making FCAs a working force for consumers. We should renew the effort to pass legislation which would open the way for building effective membership organizations that could provide true grass-roots input on financial issues that affect every citizen.
FCAs would be supported by membership dues and would receive no tax money. The members would elect a board of directors which could hire researchers, organizers, accountants and lawyers.
Here are some of the things that Financial Consumer Associations could do:
1. Represent citizen and local community interests before regulatory agencies, legislative bodies, the courts and in negotiations with financial service providers.
2. Develop data that would provide consumers with the facts needed to deal with financial institutions and provide a means of shopping for the best bargains in the financial marketplace.
3. Assist citizens as a class in the resolution of common consumer complaints regarding financial services.
4. Evaluate the performance of mortgage lenders.
5. Monitor the availability of financial services to less affluent and minority borrowers.
6. Advocate policies that will ensure reasonable access to credit for all consumers.
7. Provide policy makers, workers, shareholders, taxpayers and news media with background information on how financial industry and government initiatives affect them as consumers of financial services.
In other words, the Act would, like other components of the Public Empowerment Act, provide avenues to enhance the influence of individuals and small businesses in the policy-making process. Empowering our citizens by educating them, uniting them, and giving them a voice. Making democracy work.
Under the Financial Consumers’ Information and Representation Act, once an FCA was established in a state, financial institutions in a state would be required to include in their billing and account statement envelopes, at least every two months, an insert informing customers of the existence and functions of the FCA and the procedure for becoming a member. Such a requirement would be consistent with the First Amendment. In 1986 the Supreme Court, in the case of
Pacific Gas & Electric v. Public Utilities Commission of California, 475 U.S. 1 (1986), decided that a state violated the free speech rights of a utility by requiring it to include with its bills a newsletter from a citizens group concerned with utility issues. For better or for worse, the Court said that corporations could not be required to carry “the messages of third parties, where the messages themselves are biased against or are expressly contrary to the corporation’s view.” But the requirement that would be imposed under this financial consumers legislation would do no such thing. It would merely require financial institutions to pass on to their customers basic factual information concerning customer rights, just as regulated industries today are often required to transmit specific information about services and rates. As the late Justice Thurgood Marshall’s concurring opinion in the Pacific Gas & Electric case stated, the Government has a compelling interest, an interest not foreclosed by the Court’s decision, in requiring regulated industries to distribute factual information concerning the rights of consumers.
The Corporate Decency Act
The conditions of our political and economic system ensure that many, many of the key decisions that affect our lives are made not through the democratic process but in the private suites, here and abroad, of major business corporations. Decisions about how our natural resources will be used. About the kind and price of products and services. About how much toxic pollution will be released into the air, water and soil. About whether jobs will be created, taken away,
or moved to other countries. About whether conditions in workplaces will be safe. About compensation levels for top executives as well as entry-level workers. About whether women and minorities will receive truly equal opportunities to succeed in the corporate structure. About which political parties, groups and candidates will have enough money to saturate the airwaves prior to elections and key legislative votes. About what technologies will be developed that fundamentally affect the natural world. About the shape of our urban skylines and the way crops are grown on our soil.
True, many of these types of decisions are constrained by market forces and addressed by state and federal statutes and regulations. But market factors don’t work where, as is often the case, various dimensions of competition are minimized and consumer access to information is weak. Moreover, due to corporate lobbying and the competition among states for corporate business, the laws governing corporate conduct often set low standards; corporate executives have plenty of leeway within the legal strictures.
Take the recent case of Michael Ovitz, the hot shot Hollywood talent agent recruited by his long-time friend Michael Eisner to become the number two executive at the Walt Disney Company, second only to Mr. Eisner, without any prior comparable experience. Mr. Ovitz left the company after 14 months without a single notable achievement — and received a severance package worth more than $90 million. The decision to give Mr. Ovitz a contract allowing for
such an enormous payout without any record of accomplishment did not serve the interests of the owners of the Walt Disney Company — the individual and institutional investors who own the stock. Yet Mr. Eisner made it happen — shareholders could do nothing to stop it — and it appears to have been completely legal.
The influence on corporate decision-making by shareholders — let alone by employees, consumers, affected small businesses and surrounding communities — is pathetically weak because our system of regulating corporate governance is a failure. Rules for corporate control have been left to the individual states, and the result is well-known: A “race to the bottom,” in which states compete to offer the package of rules most attractive to the corporate managers who choose
the state of incorporation. These managers, not surprisingly, like states whose rules favor management over shareholders. Because Delaware law has traditionally been the most pro-management, it gets the most business. About half of the Fortune 500 are incorporated in the tiny state. Delaware corporations, and those incorporated in other would-be Delawares, are often marked by a board of directors that is an unquestioning tool of management, rather than a genuine reflection of the will of the shareholder-owners. Shareholders rarely attend annual meetings, and directors are chosen by written proxy contests dominated by management.
Weak legal provisions and an imbalance of power between corporate management and shareholders are one thing, but what is worse is that even the relatively low standards set by the law — limits on corporate misconduct like fraud, toxic dumping, indifference to hazardous work conditions, and marketing of dangerous products — are often flouted. As bad as street crime is, the evidence is stronger than ever that business wrongdoing inflicts far more violence and damage on society than all street crimes combined.
This so-called white-collar crime is often concealed — known only to the corporate violators and, sometimes, their high-priced legal counselors. Washington attorney Robert Bennett, a top white-collar practitioner, has said that “90 percent of what I work on never sees the light of day — and that should be true of any good white-collar crime defense attorney.”
We don’t know the precise magnitude of corporate crime due to the curious absence of Justice Department data on such lawlessness, but there is reason to believe it is enormous. The FBI reports that in 1995, burglary and robbery cost our nation approximately $4 billion. Meanwhile, according to W. Steve Albrecht, professor of accountancy at Brigham Young University, white-collar fraud — doctor and lawyer overbilling, defense procurement scams and the like — costs us perhaps $200 billion per year.
In the “Ill-Wind” defense procurement scandal during the early part of this decade, thirteen major defense contractors were convicted for fraudulent conduct. Collusion among contractors ensured that the Government was deprived of its right to procure items based on competitive bidding. A 1994 study by the non-profit Project on Government Oversight found that a “three strikes and you’re out” rule applied to corporate fraud would have put out of the government contracting business a who’s-who of defense firms: Boeing, General Electric, Grumman, Honeywell, Hughes Aircraft, Martin Marietta, McDonnell Douglas, Northrop, Raytheon, Rockwell, Teledyne, Texas Instruments and United Technologies.
Street criminals do not have a monopoly on violent crime, either. About 24,000 people in this country are murdered each year, says the FBI. But the Labor Department reports that more than twice that many Americans — 56,000 — die annually from work-related diseases like black lung and asbestosis. Workplace death can also be sudden, as, for example, in the case of Vernon Langholff, an employee of Ladish Malting Company, a Wisconsin subsidiary of Cargill, Inc. He fell 100 feet from a fire escape landing that broke off of a grain elevator. According to state authorities, the company had known of the unsafe condition of the fire escape for at least three years before the accident.
Federal grand juries are reportedly investigating the major tobacco companies for years of systematic concealment and misrepresentation of the health hazards of cigarettes. Civil lawsuits brought by smoking victims and FDA investigations are documenting long time marketing practices aimed at hooking adolescents into lifetime tobacco addiction.
Corporate environmental crimes are also widespread. Exxon, International Paper, United Technologies, Weyerhaeuser, Pillsbury, Ashland Oil, Texaco, Nabisco and Ralston-Purina have all been convicted in recent years.
Against the backdrop of these factors — immense power and influence by the major corporations and weak controls by shareholders, labor and other constituencies, a disastrous race to the bottom in state corporate chartering, and an epidemic of corporate misconduct — we propose the Corporate Decency Act, a new approach to ensuring that our largest corporations act as good citizens in our society.
Where traditional federal regulation has focused on the external relationships of the corporation — don’t pollute, don’t fix prices, don’t air deceptive advertisements — the Corporate Decency Act would seek to reform the internal governance structure of our largest corporations so that — in a manner consistent with our free-market economy — companies will exercise their power and discretion in more democratic and accountable ways.
The internal governance provisions of the Corporate Decency Act would apply only to companies with more than $500 million in total assets or annual sales or more than 5000 employees — i.e., the wealthiest U.S. corporations and U.S. subsidiaries of foreign companies. These are the autocratic “private governments” that affect so many aspects of our daily lives. Small and medium-sized businesses would not be affected. The Act sets federal minimum standards for
corporate responsibility, so that whatever the Act does not require of the affected corporations is left to existing state laws.
The Corporate Decency Act would, for these large corporations, create a federal code of governance.
Except with respect to those large corporations that are closely-held, i.e., whose stock is not publicly-traded, Title I of the Act would set standards for the composition of corporate boards of directors and other rules of internal decision-making.
The Act would require that the majority of the board of directors of each covered public company be comprised of “independent” directors, i.e., individuals who were not current or recent employees of the company; relatives of executives; lawyers or bankers serving the company; or persons associated with major customers or suppliers of the company. Such a provision will enhance the likelihood that a corporate board will be the responsible partner, not a patsy, of corporate management.
At least nine board members would be charged with special responsibilities, in addition to their traditional fiduciary obligations, to oversee and investigate matters affecting specific areas like employee well-being, consumer protection, environmental protection, community relations, shareholder rights, legal compliance, technology assessment, antitrust standards and political relations. Each firm under the Act’s jurisdiction would be required to have: an audit committee, to monitor financial auditing and investigate financial wrongdoing by officers and directors; a nominating committee, to nominate candidates for director; a public policy committee, to guide the company’s positions on key policy issues; and a legal compliance committee, to design mechanisms to ensure corporate adherence to relevant statutes, regulations and standards. The audit and nominating committees would be comprised solely of outside directors,
while the public policy and legal committees would have majorities of independent directors.
The Act would establish, for the affected public corporations, minimum federal requirements setting a director’s duty of care and duty of loyalty to the firm. Such provisions would help ensure that big-firm corporate boards, regardless of the state jurisdiction of incorporation, would act diligently and avoid engaging in self-dealing transactions.
The affected public corporations would be required to instruct all lawyers and auditors on salary to or retained by the firm to inform the board of directors of illegal or probably illegal firm conduct if such conduct: would result in material financial liability to the firm; call into question the quality or integrity of management; was part of a recurring practice; or involved significant harm to consumers. This provision would make clear that corporate lawyers and auditors have a duty to the board — and not just to management — to disclose wrongdoing.
Shareholders would have the right to nominate candidates for the board of directors if such candidates are supported by a reasonable number of shares, a level to be set by Securities and Exchange Commission regulations. In director elections, firms would provide equal funds to all nominees for campaigning. These provisions would increase the prospects for actual shareholder participation in corporate governance by encouraging shareholders to nominate directors and by equalizing campaign resources between incumbent and insurgent board candidates.
The Act would require cumulative voting in elections for directors in order to promote the election of candidates sympathetic to shareholder minority views. This means that if nine directors were to be elected at once, a shareholder could cast all votes for a single candidate or distribute votes among candidates in any other combination. Without cumulative voting, minority shareholders lose the election of every board position to the majority. Cumulative voting is required in some contexts under some state and federal laws and generally permitted elsewhere. But even among the few corporations who are required to or voluntarily institute cumulative voting, many subvert the process by also allowing “classification” or staggered election of the board. This device reduces by one-third or one-half the number of directors elected at a given time and thus diminishes the power of cumulative minority votes. The Act would prohibit this
practice.
In addition, shareholders would have the right to vote on any transaction involving the purchase, sale, lease, merger, consolidation, financing, refinancing, dissolution or liquidation of assets equal to ten percent of the firm’s total assets, or the sale or redemption of ten percent of the company’s outstanding stock, or the authorization of corporate stock or securities. This provision would ensure shareholder involvement in the core decisions affecting a corporation’s existence.
Titles II through V of the Act would apply to all of the covered corporations, whether closely held or publicly traded.
Title II provides for expanded corporate disclosure and reporting on key matters.
The affected firms would be required to describe in their annual reports to shareholders the distribution of the work force, divided by job category (including directors), by sex and race, and to provide to public requesters their annual compliance reports submitted to the Equal Employment Opportunity Commission. These requirements would subject corporation hiring practices to greater scrutiny, thus better informing the public in debates about race, gender and
opportunity in the workplace.
The affected firms would be required to indicate in their annual reports levels of emission of pollutants at their largest facilities and ongoing legal actions concerning environmental compliance at these facilities. The firms would also be required to provide to public requesters the regular discharge monitoring reports that are submitted to the Environmental Protection Agency and the states.
The affected firms would be required to indicate in their annual reports total occupational injuries and illnesses, based on data records submitted to the Occupational Health and Safety Administration. They would also be required to provide shareholders, employees, and the public with more information about the chemical composition of substances used in manufacturing, to enhance protection against toxic substances.
The affected firms would be required to include in their annual reports the 20 owners of the largest voting shares (excluding owners of less than one-tenth of one percent of the shares) and to provide to requesting shareholders information about any long-term debt or revolving credit agreement of the firm in excess of two million dollars. The owner disclosure rule would remove the veils — holding companies, money managers, and the like — which often shroud the true owners of substantial blocks of corporate stock and hinder communication with and between major shareholders that might lead to greater accountability for management. Easy shareholder access to creditor information would allow shareholders to better understand the status of outside creditors, who can assert enormous influence on corporate affairs.
Each affected firm would be required to disclose in its annual report information about board members: where they work, whether their employer does business with the corporation, how often they attend meetings, how much they earn from the corporation, and what other corporate boards they sit on.
Each affected firm would be required to disclose in its annual report detailed information about its overseas operations — information that is often immune from federal reporting requirements — so that the public can better evaluate the policies and practices of the firm as a whole.
Each affected firm would be required to disclose in its annual report the total cost of legal and accounting services, and the law and accounting firms that received the largest fees. Such disclosure would improve public understanding of the large sums corporations spend on such services.
Each affected firm would be required to disclose in its annual report its effective annual tax rate, after all adjustments, exemptions and credits are taken into account, and to disclose the value of all federal government contracts, grants, subsidies, patent grants and tax expenditures. Such information would provide the public with a better understanding of the actual contributions corporations make to — and the benefits corporations receive from — the Treasury. While
America is accustomed to hearing corporations complain about high taxes, we are only now understanding the magnitude of corporate welfare in this country — the massive federal giveaway of assets, subsidies, bailouts and other assistance to corporations. Some of these programs serve important policy interests, but many are entirely unwarranted and are established or maintained only because of clever lobbying, backed by campaign contributions, from the industries benefited.
Title III of the Act provides for the preparation of community impact analyses to deal with the impact of plant closings on abandoned communities.
An affected corporation that intended to transfer or close an operation that would result in the loss of 500 jobs or 20 percent of jobs in a community would be required to provide the Department of Labor and the community with two years notice. This would give the government and the community time to try to avert the shutdown; to find a new owner; to attract new business if the shutdown were unavoidable; or to provide affected workers with government training
assistance. The Secretary of Labor would have the authority to appoint a representative who could hold hearings on a proposed shutdown and produce a “community impact analysis.” Such hearings would give community members an opportunity to participate in discussions on the plant closing. The reports produced would help educate government officials and the public about the best ways to maximize both corporate interests and community needs.
The Labor Secretary would also have the authority to require the firm to provide adjustment assistance to affected employees in the form of income maintenance payments, continuation of health and pension benefits, relocation allowances and emergency rent and food stamps for affected persons below the poverty level. No employee would be entitled to receive benefits in excess of one year’s salary. Finally, the corporation would be liable to the local government for an amount equal to one year of lost tax revenue.
Title IV would amend the National Labor Relations Act to protect workers from improper workplace punishment. The NLRA would be amended to make clear that employers may not base in any respect a decision to terminate an employee on the employee’s exercise of constitutional, civil or other legal rights, or the employee’s refusal to engage in illegal conduct, or the employee’s contacting government authorities regarding potential violations of law by the company.
The purpose of this section is to protect employees from the ever-expanding encroachments on basic freedoms they are forced to suffer as the price of keeping jobs with giant corporations. The mega-corporations that would be subject to the jurisdiction of the Corporate Decency Act have accumulated so much private governance, global power and influence that to allow them to routinely act contrary to basic civil liberties is to deprive people of such liberties in many aspects
of their daily lives. But that is the situation today. Whisteblowers who accurately expose illegal and unethical corporate conduct are fired. Workers have been fired for participating in political demonstrations on the side opposite to the views of corporate management. After 200 years of growing corporate power, provisions requiring corporations to protect basic rights are long overdue.
While collective bargaining agreements and civil service laws protect many union and government workers from arbitrary dismissal or dismissal for assertion of legal rights, the same privileges do not normally apply to over three-quarters of the workforce who do not fall into those categories.
The enhanced job security that would result from the establishment of this standard — comparable to standards that exist in many industrialized nations — would forestall corporate misdeeds, spur productivity among workers, and protect essential rights.
The National Labor Relations Board, which has for 60 years protected workers against discharge for engaging in union activity, would be charged with protecting workers against unfair discipline or discharge for the exercise of protected rights.
Title V of the Act would amend the Clayton antitrust act to guard against the kind of interlocking directorates that mark a society dominated by back scratching corporate oligarchs. Under this title, no person would be permitted to serve as a director or officer of more than two companies large enough to fall under the Act’s jurisdiction. Justice Brandeis’s observation that “the practice of interlocking directorates is at the root of many evils” remains valid today and
justifies such a measure.
While the Clayton Act already bars interlocking directorates among direct, current competitors, that provision is narrow in its application. It forbids only the service on two corporate boards; it allows a person to be a director of one company and an officer of a competitor. And it does not forbid interlocking directorates among potential competitors. Moreover, it does not address a problem that Justice Brandeis noted: Interlocking directorates among companies that do business with each other “tends to disloyalty and violation of the fundamental law that no man can serve two masters.” Nor does it address the more fundamental concern about excessive concentration of power in the hands of a few — power to ward off new business entrants and otherwise restrain competition, power to control raw materials in short supply, power to obtain preferential access to markets, power to obtain governmental preferences, assets and market protections.
Title VI of the Corporate Decency Act, which would apply to all corporations, other organizations, and individuals, would address the massive corporate crime wave I discussed earlier.
The Act enhances deterrence against corporate crime by criminalizing and setting penalties for various corporate activities, such as: concealing from government authorities products or processes that may cause death or serious injury; engaging in conduct which results in death, where the corporation or corporate official knew or should have known death would be the result; knowingly, recklessly or negligently endangering public safety; falsifying or destroying documents; and retaliating against whistleblowers.
The courts have upheld the imposition of criminal liability on corporate managers for corporate crimes committed on their watch, even without direct evidence of knowledge of particular wrongdoing. As the Supreme Court recognized in the case of United States v. Dotterweich, 320 U.S. 277 (1943), a criminal statute may be upheld even if it dispenses with the traditional requirement of knowledge of misconduct, because such a statute “in the interest of the larger good …
puts the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger.” I would also cite United States v. Park, 421 U.S. 658 (1975), where the Court reaffirmed this principle.
The Act provides for enhanced penalties for criminal wrongdoing by corporations and corporate officials. Sentencing judges could order convicted corporations to surrender shares of stock and bar them from contracting with the government for a period. Judges would also be authorized, in their discretion, to place corporations on probation, giving a probation officer the authority to meet with corporate officials, require disclosures, require the appointment within the corporation of compliance officers, and appoint receivers.
The Act would also provide that any firm that regularly failed to demonstrate “good corporate character” by evidencing, through its actions and inaction an absence of moral virtue or a tendency to habitually engage in activities detrimental to public health and safety, would face criminal punishment.
The title would provide that a federal court, in imposing a sentence on a person or organization found guilty of a criminal offense may order that the defendant
give notice and explanation of the conviction, in such form as the court may approve — such as by mail or advertisement — to the class of persons or sector of the public affected by or financially interested in the conduct underlying the offense. Such a provision would have a double benefit — increasing deterrence against misconduct and warning the public about unlawful practices and untrustworthy parties.
Title VII of the Corporate Decency Act permits any citizen to file suit in federal court to ensure compliance with the Act by both private actors and relevant federal agencies. Citizens who win such suits would be entitled to attorney fees where the court found that the suit served an important public purpose. It also provides for mandatory minimum civil penalties of $5000 per day for each violation of any section of the Act. A second violation within a two-year period
would result in a mandatory minimum $10,000 per day fine.
The Corporate Decency Act is tough on crime. The American people want Congress to be tough on crime, and Congress has been — except, for the most part, when the wrongdoers are businesses and the crimes are sophisticated efforts to hike profits. It’s time for corporate crime to be treated like street crime — as a dangerous affront to an organized, law-respecting society.
The Consumer Protection Act
Now, I turn to the final section: The Consumer Protection Act.
In 1969, John Douglas, an attorney with the Washington, D.C. corporate law firm Covington & Burling, wrote, “Our nation must assure legal representation of consumers before the federal agencies — representation they do not now have. Without their own lawyers, the consumers’ interests are not assured adequate attention…. Even where agency members and staff personnel have the best of intentions, the scales are tipped against the public. Those scales now favor the regulated industries.” Covington & Burling, which did then and does now represent these regulated industries, has grown since 1969 from 125 to 300 lawyers. But the public still lacks an official advocate to represent it before federal agencies and departments and the Congress.
More than ever, politics and policy decisions in our Nation’s capital are dominated by big money. Contributions from U.S. and multinational corporations heavily influence the outcome of elections. And lawyers and lobbyists representing wealthy business interests dominate proceedings in Congress, in the courts and before federal agencies. It is time for the Congress to do something to level the playing field — to provide citizens, in their roles as consumers, homeowners and small business owners with better representation in the halls of Washington.
It is time to create a modest-sized agency whose mission would be to protect the interest of citizens in the rough-and-tumble of Washington politics. It is time — in an age where both major parties speak eloquently of curbing the role of special interests and returning Government to the people — to create a Consumer Protection Agency.
Through discussion of seven pieces of legislation, each aimed at transforming the structures of power, you have not once heard me propose a new government office. Because the Public Empowerment Act is about restoring the influence of the citizens, not the Government. It is about facilitating citizen involvement in independent organizations and creating legal rules that citizens, aided by the existing court system, can enforce. But I submit now that one small expansion in Washington — a Consumer Protection Agency — would be a tremendously lucrative investment for our Government to make. The Agency is an internal trimtab — a tiny rudder within the Government but also aimed at the Government. It would more than finance its tiny price tag by creating enormous economic benefits for the public.
The purpose of a federal Consumer Protection Agency would be to improve the way Government decisions are made — to make them more responsive to the needs of the people, to make them fairer, in order to improve the functioning of our market economy. Corporations have the wealth and power to make their views known in Congress, in the courts and in agency proceedings. The ordinary citizen does not. Corporations can deduct their lobbying expenses on their income tax returns as necessary business expenses. Members of the public who get themselves to Washington to express their concerns on vital issues, even issues of direct economic concern to them, must do so at their own expense, with no tax break provided. These imbalances, time and time again, result in decisions that favor the multinational corporation over the individual American consumer and taxpayer.
When the Food and Drug Administration decides whether to approve for sale or to remove from the market a drug or medical device, medical supply corporations weigh in heavily; consumer interests are overwhelmed. When the Securities and Exchange Commission considers regulations regarding the issuance of securities or insider trading, corporations, brokers and investment banks provide detailed suggestions and arguments; small shareholders may never
know the SEC proceedings have occurred. When the Department of Transportation decides whether to order a recall of a potentially dangerous automobile, the manufacturer can launch a heavily-funded offensive, while disagreggated consumers have little influence. When the Federal Aviation Administration considers new air travel and airport safety rules, the major carriers weigh in, but airline passengers have little representation. When banking agencies turn a deaf ear to a virtual crime wave by rogue savings-and-loan operators, taxpayers and savers have no one to speak up for them, although they will eventually pay for a huge bailout designed with the help of power lobbyists. When federal departments and agencies give away vast public resources in one-sided sweetheart deals with corporate contractors, the public is rarely consulted or heard.
A dedicated, generally low-paid group of consumer advocates, working for non-profit groups, have struggled over the years to ensure that consumer interests are heard by Washington. Their impact has demonstrated the potential of consumer advocacy. But their resources have always been dwarfed by that of the corporations. A Consumer Protection Agency — staffed leanly but expertly by economists, accountants, scientists, engineers and lawyers — would give
Congress, the courts and the agencies a better opportunity to fully consider the consumer perspective in making the decisions that affect our daily lives.
The Consumer Protection Agency would not add a new layer of federal regulation. The agency would have no power to regulate business activity. Instead, it would investigate, develop facts, and present consumer interests to legislators, regulators and courts. It would participate in agency proceedings and challenge federal agency non-enforcement of statutes passed by Congress.
The experience of even weak state consumer protection agencies across the country suggests that a determined advocate for consumer interests — such as the office that once functioned at the state level in New Jersey — would, if established at the federal level, create savings for consumers. Such savings — in the form of lower utility rates and lower consumer prices — would far exceed the federal agency’s operating budget. And such an agency would also help enhance the quality of products and services provided by industry and save precious lives by advocating for safer products and conditions.
The concept of a federally-created voice for consumers has been around at least since 1959, when Senator Estes Kefauver of Tennessee sponsored legislation to secure effective representative for the consumer, whom he called the “forgotten man in our Government structure.” In the 1970’s, both Houses of Congress approved legislation to create a Consumer Protection Agency — in some cases by a wide margin. But although President Jimmy Carter promised to sign the legislation, aggressive, well-financed corporate opposition ensured that it was never passed by both Houses in the same session and sent to the President..
At present, there is only the tiny, impotent Office of Consumer Affairs, established under President Kennedy, to protect consumer interests, and only on a handful of issues, at that. The office, which has been directed by, among others, Esther Peterson and Elizabeth Dole and is now headed by former Representative Leslie Byrne, has in recent years faced repeated efforts to eliminate it. But the solution is not to eliminate this vital consumer protection function, but to replace the existing office, whose current annual budget is $1.5 million, and provide for authoritative, comprehensive consumer representation in Washington.
The Consumer Protection Act of 1997 would establish a Consumer Protection Agency, charged with representing the interests of consumers before federal agencies and the courts, with receiving and transmitting consumer complaints, and with developing and disseminating information of vital importance to Americans as consumers.
The Agency would help: promote the safety, quality and availability of consumer products; protect consumer choice and competitive markets; prevent unfair and deceptive trade practices; and advance the legal rights of consumers.
The Act would establish the Consumer Protection Agency as an independent agency of the Government. The Agency would be headed by an Administrator and Deputy Administrator, each appointed by the President and subject to Senate confirmation.
Under the Act, when the Administrator found that the result of any federal agency proceeding or activity would substantially affect the interest of consumers, the Administrator could participate in that proceeding and, if necessary and where appropriate, formally intervene. The Administrator would have standing to file suit where a federal agency’s action substantially affected consumer interests. The Administrator could also intervene in ongoing litigations to protect consumer interests.
The Agency would also be empowered to challenge, on behalf of citizens, chronic non-enforcement of consumer protection laws passed by Congress.
The Consumer Protection Agency would receive consumer complaints about violations of laws, regulations or court orders affecting consumer interests and transmit such complaints to the relevant federal or state enforcement agency, as well as to the private parties whose conduct was at issue in the complaint.
The Consumer Protection Agency would disseminate consumer information to the public, such as reports on products and services and on upcoming federal hearings and rule-making proceedings of interest to consumers.
The Act directs the President to submit promptly to Congress a reorganization plan providing for the transfer to the Consumer Protection Agency of those consumer-related programs and operations of the federal Government which can be performed more appropriately or efficiently by the new Consumer Protection Agency under the authority in the Act.
The Agency would be funded at a level of $25,000,000 for the fiscal year ending September 30, 1998. This amount is modest indeed considering, for example, the budgets provided by corporations to convey their messages to consumers and also considering federal spending in other areas. For example, a single company, Coca-Cola spent $1.3 billion in 1995 on marketing and advertising — more than 50 times the proposed Consumer Protection Agency Budget. And a
single B-2 bomber aircraft costs $2.2 billion — nearly 90 times what the bill would spend annually on consumer protection and health safety and protecting family budgets.
And the Consumer Protection Agency would more than pay for itself. The benefits to the public as consumers — in the form of better, safer products and services, more competitive markets, and lower prices — would far outweigh the modest costs. And the potential for Consumer Protection Agency watchdog actions would make federal departments and agencies utilize taxpayer dollars more productively.
Recent history is full of examples of situations where a federal consumer protection agency could have saved taxpayers millions — and also saved precious lives. Imagine if a full-time consumer agency could have weighed in before bank regulators approved the operations and actions of the sharp operators who ran the savings-and-loan industry into the ground — forcing a massive federal bailout. Or if consumers could have been fairly represented when the Department of
Transporation cancelled its announced plan to recall six million General Motors pickups with vulnerable fuel tanks that have cost hundreds of lives? Or if a consumer agency could have participated in FDA proceedings before that agency granted approval to market fatally defective medical devices, where companies hid key safety information. In those cases and many more, the presence of a robust, independent Consumer Protection Agency could have made a major
difference. And no doubt there are many more such cases on the horizon. The need for the agency is clear.
The Citizens’ Bounty Act
From corporate crime, I move to a related area: civil wrongdoing. Americans have a right to hold companies and the Government accountable when there are violations of the laws of this country — laws protecting the environment, prohibiting racial discrimination or otherwise effecting the purposes of the people, acting through their elected representatives in Congress. Unfortunately, a series of wrong-headed Supreme Court opinions, culminating in the 1992 decision, Lujan v. Defenders of Wildlife, has twisted the law of “standing” — the determination as to whether a particular person or group has the right to bring a lawsuit — in a manner that has undermined the intent of Congress, the provisions of the Constitution and the will of the people.
What has emerged from the Supreme Court is a complex and convoluted body of “standing” law that is too arcane for ordinary citizens to understand — and too demanding to allow legitimate grievances to be heard in court. Using such esoteric terms of art as “injury in fact,” “redressability,” “logical nexus” and “zone of interest,” the law of standing has become an obstacle to ensuring that the public will, as enacted by Congress, is carried out. Much court time is spent on
preliminary skirmishes over this complex, confusing and often contradictory “standing” law instead of proceeding to decide the actual merits of a lawsuit. Moreover, under the strictures of the Lujan case, there are many instances in which no citizen would have standing to complain even if the Executive Branch of the Government or a private party openly and deliberately violated laws passed by Congress. This is no way to promote official compliance with the law or
citizen confidence in the operation of Government.
In the environmental area, Congress has enacted a series of “citizen suit” provisions to improve enforcement. Recognizing that federal enforcement resources would never be a match for the sprawling activities and enormous resources of industry, Congress decided to fill the gap by allowing citizens who detected violations of law — either by regulated industries or by the regulatory agency itself — to bring suit to compel compliance. Nearly every major environmental statute contains a citizen suit provision. The Clean Water Act, the Clean Air Act, the Safe Drinking Water Act, the Community Right-to-Know Act, the Toxic Substances Control Act, and at least nine other environmental statutes have such a provision.
The Lujan opinion, written by Justice Antonin Scalia, concluded that the Constitution did not permit Congress to grant citizens the general right to sue to prevent an agency from acting in violation of its controlling statutes or to prevent private parties from violating federal law. Instead, Justice Scalia suggested, the plaintiff must identify a specific injury to a traditional interest, such as a property right. (Fortunately, Justice Scalia’s opinion on this point spoke only for himself and three other Justices, short of a court majority. In a concurring opinion, Justice Anthony Kennedy, joined by Justice David Souter, took a broader view, arguing that the Court “must be sensitive to the articulation of new rights of action that do not have clear analogs in our common-law tradition” and that “Congress has the power to define injuries and articulate chains of causation that will give rise to [standing] where none existed before.” But these two Justices
voted with Justice Scalia to deny standing in the circumstances of the case to the citizens seeking to enforce environmental laws.)
As a number of persuasive articles by distinguished legal experts have demonstrated, Justice Scalia’s Lujan opinion is not warranted by the text or history of the Constitution or by prior decisions of the Supreme Court itself. I cite, for example, a 1992 article by Professor Cass R. Sunstein of the University of Chicago Law School, published in the Michigan Law Review; a 1993 article by Professor Gene R. Nichol, Jr., of the University of Colorado Law School, published in the Duke Law Journal; and a 1994 article by U.S. Department of Energy attorney Harold Feld, published in the Columbia Journal of Enivronmental Law.
Fortunately, Professor Sunstein, a respected constitutional law scholar, has proposed a legislative solution that should meet even Justice Scalia’s demanding and formalistic approach to the constitutional requirements of standing. This proposal is the basis of the Citizens’ Bounty Act.
The Citizens’ Bounty Act simply provides that anyone who sues either the Government or a private party under the “citizen suit” provision of a statute and prevails in the suit will receive a $250 cash bounty. Such a provision would give any citizen suit plaintiff a direct financial interest in the outcome of the suit, thus providing a concrete basis for standing. Such an approach is similar to that undertaken in qui tam provisions, such as the False Claims Act, under which a citizen who exposes wrongdoing against the Government by a Government contractor and prevails in court is entitled to a share of the recovery. Courts have confirmed that citizen standing in qui tam suits is consistent with the Constitution. See, e.g., Kreindler & Kriendler v. United Technologies Corp., 985 F.2d 1148, 1154-55 (2d Cir.), cert. denied, 508 U.S. 973 (1993).
This simple fix will eliminate the need to waste valuable time arguing about standing and allow cases to proceed efficiently and on their actual merits. It will allow citizens who can prove that private parties or the government are violating federal law to make their case in court and enforce the will of the people, as reflected in the laws enacted by Congress.
The National Advisory Referendum Act
The Public Empowerment Act begins with a simple proposal to improve Government responsiveness to the public: Ask people what they think, through a National Advisory Referendum that would place on the ballot questions for the voters on important issues.
At the federal level, the will of the people on issues of the day is expressed only indirectly, through the election of the President and Members of Congress, and through a process of lobbying that always favors the wealthiest corporations and interest groups. What we lack is a mechanism by which ordinary citizens can communicate directly to their elected officials on key issues. This gap may be one reason why so many citizens are disenchanted with and alienated from our
Government and our democratic processes.
There should be greater opportunities for citizens to participate in the process of governing in order to increase the responsiveness of Government and the quality of governance. A modest, very low cost remedy is the National Advisory Referendum Act.
Under the Act, citizens of the various states could circulate petitions to place a question of national importance — a question that could be answered “yes” or “no” — on the ballot at the time of federal elections. Whenever citizens of a State obtained on their petitions the signatures of two percent or more of the registered voters in that state, they would be entitled to transmit the petitions and supporting documentation to the Governor of the State, who in turn would be required to transmit the petitions to the Speaker of the House.
Whenever, in the period from January 1 in the year of a new Congress through Sept. 1 in the following year, citizens of twenty-five States submitted to the Speaker of the House petitions in support of an identical question, the President of the United States would be required to direct that the question be placed on all ballots in all States and territories in the next federal election as a National Advisory Referendum. There would be no limit on the number of petitions in each
election.
The states and territories would tabulate the results of the National Advisory Referendum or Referenda as soon as practicable and transmit such results to the Speaker of the House no later than 7 days after Election Day. The Speaker would, within 10 days after Election Day, compile, total and publish the results.
States would be required to participate in the National Advisory Referenda as a condition of receiving federal funds.
The referenda would be advisory, or non-binding, in nature — they would make no new law. But they would be a powerful source of authority for proponents of the people’s will.
I won’t pretend that these initiatives will be free of the usual electoral problems, like distorted advertising and efforts by wealthy interests to buy victory. But they would give the public a chance to speak together — officially — about vital issues. They would spur public debate and interest in current affairs among Americans of all ages. And they might lure to the polling booth voters who are discouraged from participation when candidates themselves are afraid to stand
for much of anything.
This simple and inexpensive experiment in direct democracy is definitely worth a try. President Clinton is fond of quoting President Andrew Jackson’s famous remark that the best cure for democracy’s ills is more democracy. The National Advisory Referendum is in that spirit. Allowing citizens to place vital questions on the ballot at the time of federal elections would spur citizen participation in the democratic process and make elected representatives more responsive to the will of the people.
The Audience Network Act
The Audience Network Act would take back just a small portion of the television and radio airwaves — the precious resource our Government gives away, mostly to the benefit of wealthy corporations — and put it in the hands of the American people.
Despite rapid changes in the communications field, television remains the most powerful medium — and television licenses and franchises the most desired properties — in communications today. At the same time, market consolidation, aided by the laissez-faire attitude of federal regulators, has led to increased concentration of possession of scarce broadcast licenses and cable franchises — all of which the Government gives away for free. The limited broadcast spectrum, which is owned by the public, and valued cable monopolies, conferred by public authorities, are increasingly controlled by a handful of powerful media conglomerates.
Television today suffers not merely from a concentration of power but also from a shortage of quality, thought-provoking programming. There are some quality entertainment, educational and public affairs programs. The major broadcast and cable networks sometimes come through with intelligent entertainment and solid news reporting. C-SPAN has substantially expanded access to the raw material of democracy — the proceedings of government, interest groups and elections. Public television stations have offered quality programming, particularly for children. The Independent Television Service (ITVS), created by Congress in 1988 to address the needs of unserved and underserved audiences, has added an important voice.
But the vast bulk of what appears on television today is of low quality — tabloid, sensationalist “news,” both from local stations and national syndicators, ugly talk shows, mindless comedies, endless violence, half-hour toy advertisements disguised as children’s shows, and, everywhere, droning commercials and “infomercials.” The Corporation for Public Broadcasting, the National Endowment for the Humanities, PBS, and ITVS face yearly threats from Congress to eliminate or sharply reduce Government funding for public television efforts. Public broadcasters are thus turning increasingly to corporate sponsors and advertising and to commercial network cast-off programming, and coming more and more to resemble their commercial cousins. C-SPAN’s funding and distribution is at the mercy of cable operators, many of whom have eliminated one or both C-SPAN channels to make room for commercial offerings. Public
access channels, provided by many cable operators as a price of obtaining franchises from local governments, offer a forum but few resources — resulting, for the most part, in no-budget vanity programming that is difficult to watch. Television’s “vast wasteland” — the famous description provided by Federal Communications Commission Chairman Newton Minow in 1961 — has become vaster and no less of a wasteland. As Bruce Springsteen has described it, what
Americans are generally offered today is “57 channels and nothing on.”
The television industry’s lobbyists insist that the struggle for ratings and revenues is free-market democracy in action — people vote with their eyeballs, and the most popular shows and channels are the winners. But that is simply not the case. Commercial programming choices are driven by appeal to the demographic group advertisers seek — young adults. Older Americans and children receive short shrift. Moreover, the drive for ratings leads to lowest-common-denominator
programming, often devoid of subtlety, creativity, or responsibility. The cable revolution, once seen as promising far greater diversity and appeal to a wider range of audience, has failed. There is just more of the same. As a society, we deserve better.
The Communications Act of 1934 and the regulatory framework established under it conferred public trusteeship status on broadcasters. Broadcasters, while succeeding in their effort to enrich themselves, have generally failed to meet the obligations of their trusteeship.
To return to the people just a small slice of the airwaves — not just television but also the powerful medium of radio — in order to improve the quality, diversity and responsiveness of programming, we propose the Audience Network Act. The Act would empower the television and radio audience — the people of this country — by providing the public with limited access to television and radio time and facilities. The Audience Network proposal was the subject of a 1991 hearing before the House Energy and Commerce subcommittee on telecommunications and finance, then chaired by Representative Edward Markey.
The Act would create Audience Network, a federally-chartered national non-profit membership organization. Anyone sixteen years or older who contributed $10 or more annually would be a member of Audience Network. The Act would grant Audience Network one hour of prime time television and one hour of drive time radio on every commercial station every day. Audience Network could then lease some of these desirable time slots to station owners in order to finance varieties of engrossing quality programming to be shown at other times. The control of these time slots would give Audience Network, and hence citizens concerned with diverse, high-quality broadcasting, strong bargaining power vis-à-vis broadcasters.
Audience Network would function as a separate FCC licensee. Its management would be chosen by direct election of the members. Audience Network would air programming shaped by member interests and needs. It would produce and acquire for presentation a range of quality public affairs and entertainment programs. Management would conduct quarterly membership surveys to ascertain the programming priorities of members. Boards comprised of Audience
Network staff, members and contributing creative artists would select programming. Audience Network would provide national programming, while local Audience Network chapters would contribute additional local programs.
Audience Network public affairs and entertainment programming, aired without commercials, would address issues of interest to a broad range of viewers — including, as a core concern, issues related to communications policy. Audience Network would provide a strong outlet for the discussion of social and political issues, elections and referenda at the national and local levels. It would also help turn the passive television medium into a vehicle for action by focusing on
citizen participation, education and organization — ways for people to become involved in social and political causes of concern to them. Audience Network would frequently provide viewers with names of groups to contact, events to attend, publications to read. An Audience Network site on the Internet would provide computer-capable viewers with additional, detailed information on matters addressed on television and radio. It would also provide computer users in
this country and around the world with access to audio and video materials from Audience Network programming.
Non-profit organizations — from community groups to the Girl Scouts to the Sierra Club to the American Cancer Society to the Junior Chamber of Commerce to labor unions — would be offered opportunities to create and broadcast programming. Such groups have a wealth of important information to share with the public, yet rarely have an opportunity to communicate over the airwaves at any length.
Well-known entertainers and civic leaders would be recruited to participate, to lend their talents to the cause of more diverse and intelligent media and to educate audiences on issues of concern to them. Less well-known creative artists and citizen advocates would be given an opportunity to reach broader national and local audiences.
There is a precedent for the Audience Network approach, and it works. In the Netherlands, radio and television air time is apportioned to citizen groups, with the size of membership determining the extent of access to the airwaves.
Audience Network would also maintain a small staff of communications policy experts who would be charged with representing consumer interests before the Federal Communications Commission, Congress and the courts, and communicating with the public on communications issues, including not only traditional television and radio but the whole range of issues affecting our technological future, such as telephone, cellular, high-definition TV, direct-broadcast satellite, the Internet and other computer on-line services. When the FCC considered proposed hikes in cable television rates or rules for awarding scarce broadcast and cable frequencies, and the giant media corporations appeared with scores of lawyer-lobbyists, Audience Network’s presence would help ensure that the consumer viewpoint was not lost in the crowd.
Audience Network, as conceived by the Act, is fully consistent with the First Amendment rights of broadcasters. Under the Communications Act, a broadcast license does not confer ownership, only temporary use of a designated frequency, with the First Amendment rights of viewers and listeners remaining paramount. The scarcity inherent in the broadcast spectrum, the Supreme Court and the FCC have long recognized, justifies government regulation in the public interest. The advent of cable television has not undermined that rationale: 40 percent of households have no cable service, and rising cable subscription prices, resulting from government deregulation, may increase that percentage, especially among lower-income families. The “must-carry” provisions enacted by Congress, and the entry of new cable channels owned by the broadcast networks are just some of the indications of the continued economic and political power of broadcasters. Moreover, even cable has not eliminated scarcity; there are more channels but even more programmers seeking access.
The Supreme Court has clearly left the door open for Congress to expand access to the airwaves. As the Court stated in CBS v. Democratic National Committee, 412 U.S. 94, 131 (1973), “Conceivably, at some future date Congress or the Commission — or the broadcasters — may devise some kind of right of access that is both practicable and desirable.”
The Audience Network Act would not strip from broadcasters editorial control of their own broadcast time or otherwise implicate the free speech rights of broadcasters. Instead, it would in effect redefine the broadcast license to cover 23 hours, instead of 24, with the remaining hour becoming the property of Audience Network. In no respect would the content of the Audience Network’s programming be imputed to the broadcast licensees sharing a particular piece of the spectrum. The Supreme Court, in its landmark decision in Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 390-91 (1969), recognized that “[r]ather than confer frequency monopolies on a relatively small number of licensees, … the Government could surely have decreed that each frequency should be shared among all or some of those who wish to use it, each being assigned a portion of the broadcast day or broadcast week.” The only connection between the television and radio broadcasters and Audience Network would be that the national broadcast networks and local broadcasters would provide Audience Network with reasonable access to their transmission facilities, and Audience Network would reimburse the broadcasters for the actual costs.
The Audience Network Act says that we can free ourselves of the trap we have set: We have given away the people’s airwaves and received very little in return that enhances the public interest. We need not be at the mercy of broadcasters and cable providers and simply hope that these enterprises will offer high-quality, public-spirited programming. We can reserve for the public just a small piece of the airwaves, and thereby enhance our culture and our democracy.
The Postal Consumers Act
In 1971, Congress passed the Postal Reorganization Act and replaced the old Post Office Department with the United States Postal Service. This reorganization eliminated much of the congressional oversight that provided residential postal users with a mechanism for influencing postal policy. Before the 1971 Act, Congress set postal rates and employee pay, appropriated Post Office operating funds, decided where and what new postal facilities to build, and appointed local postmasters. Pursuant to the 1971 Act, Congress abdicated these responsibilities. Postal rates, postal services and postal service construction are now determined by the Postal Service and the Postal Rate Commission, while employee compensation is determined through collective bargaining.
Although this system has reduced democratic control of this important national resource, it might have been justified had it produced a Postal Service that better served consumers — but it did not. The result has, instead, been higher rates and poorer service for individual residential customers.
Since 1971, postal rates have skyrocketed, despite steadily increasing volume, higher productivity, greater automation, and the implementation of supposedly cost-cutting service reductions. First-class letter rates have risen from 6 cents (1971) to 10 cents (1974) to 13 cents (1975) to 15 cents (1978) to 20 cents (1981) to 22 cents (1985) to 25 cents (1988) to 29 cents (1991) and finally to 32 cents (1995).
To the Postal Service, users of first-class mail are second-class citizens. How do we know? Because the repeated first-class rate increases have been accompanied by cuts in key features of residential service. For example:
In 1978, the Postal Service changed its delivery regulations to eliminate front door delivery for new residential areas; instead customers must choose between curbside delivery and delivery at central mailbox clusters. In some areas, the Post Office has aggressively pressed residents of pre-1978 homes to accept curbside delivery.
· New standards adopted in 1990 slowed down delivery requirements. Some of the mail previously delivered overnight now arrives in two days, while some of the two-day mail is now three- day mail.
· Over 3200 post offices have been closed since 1971, many in rural communities.
· Many post offices are now open only half-days on Saturdays — the one day of the week that many working people can get to the post office.
· Many neighborhood collection boxes have been removed, and pick-ups from many remaining boxes have been cut to once per day. Sunday pickups, once a regular service, have been abolished.
While neglecting the needs of residential customers, the Postal Service is forever courting, listening to, and aiming to please business customers. The Postal Service provides free mailing list standardization services to business mailers. It has established Postal Business Centers that help businesses design mail pieces and develop systems for correcting addresses — and that even sends postal employees to private offices to help process mail. The Postal Service has
reimbursed businesses to upgrade their mailing equipment and computers. It provided business customers with free accommodations and meals at the summer Olympics. It sends hundreds of mailings to business customers, with glossy brochures inside.
There is nothing at all wrong with efforts to satisfy business customers. But the imbalance between the attention lavished on business customers and that offered residential customers is mirrored, disturbingly, by the influence business customers have over government proceedings affecting the postal service as compared with the influence of residential customers.
Business representatives dominate proceedings before the Postal Rate Commission, and as a result, those proceedings are consistently skewed against the first-class mailer and in favor of business mailers. The Postal Service, with its well-financed government relations department, the postal unions, with their political action committees, and the large business mailers, with their PACs, lobbyists and lawyers, dominate congressional proceedings affecting postal issues.
The residential postage user, as well as the small business person, have little or no influence.
The Postal Service has established numerous programs to provide easy access for business mailers to postal officials. The Postal Service Sales Conference Management Program facilitates communication between businesses and postal executives. A Mailers’ Technical Advisory Committee, comprised of associations representing the major mailing industries, meets quarterly to exchange views with postal officials on technical aspects of postal issues. There are regional conferences for business mailers, and local Postal Customer Councils.
The Postal Service does not provide equal treatment for residential customers. A Consumer Advocate’s Office inside the Postal Service deals primarily with consumer service complaints and allegations of mail fraud; it does not address the more systemic questions about rates and services, nor does it represent consumers in proceedings affecting those questions. The Post Office has also established Customer Advisory Councils, but they have not been sufficiently
promoted to customers and have not been visible representatives of customers.
Thus, the individual postal users who occupy the more than 100 million residences around the United States are shut out of most postal policy decisions. They have little or no opportunity to challenge, let alone to prevent, delivery cutbacks, post office closings and rate increases. The Postal Service, with its monopoly on regular mail delivery, is, essentially, unaccountable and, as a result, frequently appears to act without concern for the majority of its mail users — residential customers who primarily use first-class mail.
One way to make the Postal Service more responsive to the needs of residential customers is to give these customers a means of participating directly in shaping the Postal Service’s future. The Postal Consumers Act would achieve this goal by chartering a non-profit membership organization, the Post Office Consumer Association (POCA).
Under POCA, interested postal customers could band together to promote better service, fairer rates, and greater citizen participation in postal decision-making. POCA would be funded by voluntary contributions. A minimum $10 dues payment would make any resident eligible for membership. POCA would recruit members by preparing a twice-yearly mailing, to be delivered to every residential address by the postal service. (Delivery of these mailings would cost the postal service little, since individual addressing and sorting would not be necessary.) Members would vote for a policy-making board, which would then hire full-time staff to represent residential postal consumer interests.
Under the Postal Consumers Act, Congress would not be forcing the American people to assert their interests before the Postal Service. If too few people were willing to spend $10 and a bit of energy, POCA would fail. Congress wouldn’t bail it out. But we should respond to the imbalance of influence, give the system a nudge, and give these disagreggated consumers an opportunity to step forward if they wish. That’s what this Public Empowerment Act is about — finding imaginative, low-cost means to giving people tools to participate in government decision-making on matters that affect their daily lives.
There you have it, the Public Empowerment Act of 1997. I will not be surprised if the multinational business interests whose entrenched privilege the bill challenges will rise in opposition. They like their license — license to ignore consumer needs; to stifle shareholder concerns; to unfairly thwart small business competition; to receive, for no fee, vast public resources; to go to the head of the line for government services; to dump toxic chemicals and maintain hazardous factory conditions; to defraud Government agencies; to dominate regulatory proceedings; to dictate laws to state and federal authorities. But these are destructive licenses untempered by public-spirited responsibility and unaccountable to the public. The pendulum needs to swing at least a few degrees toward the public interest. Business executives and retired business executives with a sense of conscience and public responsibility and a commitment to a prosperous future should welcome these reforms.
We can have a thriving, robust economy without neglecting the interests of the citizenry in opportunity, democracy and justice. We can so by creating modest, low-cost avenues for citizen influence on our economy and government.
These are genuine tools for a genuine democracy, provisions to allow meaningful citizen participation in the decisions that shape our present and our future.
I strongly urge all my colleagues to support these measures and work with me to enact them into law.