The Mainstream Media and the State Are Joined at the Hip, Sometimes Literally
Politics / Mainstream Media Aug 07, 2010 - 05:58 AM GMTBy: LewRockwell
S.M. Oliva writes: Jon Leibowitz and Ruth Marcus married in 1994. They were the perfect Washington power couple: He was chief counsel to Sen. Herb Kohl (D-Wisc.) and she was a White House correspondent for the Washington Post. Sure, they were just cogs in the establishment, but they were still part of America's ruling class. And over the next decade-and-a-half, they solidified that standing. Marcus – who has worked at the Post for twenty-six years – rose through the ranks to become a member of the paper's editorial board and a regular op-ed columnist. Leibowitz remained with Sen. Kohl until 2000, when he joined the "private sector" as a lobbyist for the copyright industry (aka the Motion Picture Association of America). But in 2004 he returned to his natural habitat, the government, when he received one of five seats on the Federal Trade Commission.
Leibowitz had no special qualifications to sit on the FTC aside from his long association with Kohl, a senior Democrat on the Judiciary Committee, which oversees the Commission. Although the FTC has jurisdiction over virtually all American business activities, Leibowitz himself had never worked for a private business – his entire professional life was inside Washington as part of the political system. Leibowitz did not even have substantive experience practicing antitrust law, the FTC's primary reason for being.
Indeed, Leibowitz's appointment was a mere afterthought. Then-President George W. Bush had two seats to fill on the FTC. The Commission's authorizing statute says no more than three of the five commissioners may belong to the same political party, ensuring both halves of the nation's political duopoly are represented. Bush had named Deborah Majoras, a Republican antitrust lawyer who previously served as the number-two official at the FTC's sister agency, the Justice Department's Antitrust Division, to the first seat (she would also be designated as chairman). Bush needed a Democrat for the other seat, so Kohl and his Senate Democratic colleagues recommended their former lackey, Leibowitz.
The Senate conducted only a superficial review of the two nominees. The website Tech Law Journal described the Majoras-Leibowitz confirmation hearing in June 2004 thusly:
The hearing did little to establish these nominees' positions on technology related maters within the jurisdiction of the FTC, or their qualifications to be Commissioners. Rather, most of the hearing was taken up by partisan election year posturing on issues largely unrelated to matters that will be decided by the FTC.
Both nominations were held up by Sen. Ron Wyden (D-Ore.), then facing a tough reelection campaign, who delayed a confirmation vote on the grounds that Majoras was too close to the oil industry – which Wyden felt the FTC should regulate more harshly. Bush then gave Majoras and Leibowitz recess appointments, and after the election, the Senate unanimously confirmed both now-commissioners to full terms.
Years later, Ruth Marcus would criticize President Barack Obama for using the same type of recess appointment that put her husband on the FTC. Last month Marcus attacked Obama's recess appointment of Donald Berwick as the regime's new Medicare and Medicaid overlord as an "outrageous" abuse of power. The Huffington Post later contacted Marcus, who explained why she was not a hypocrite: "It boiled down to her husband (a Democrat) being a different case because he had a hearing and wasn't controversial."
It's true that Leibowitz was not controversial. He is an unremarkable man in every sense of the word; someone who proves that it's better to be lucky then talented. He proved as much when Obama became president and needed a new FTC chairman. Leibowitz was the only partisan Democrat then serving – there was a Democrat masquerading as an "independent," but her term was expiring – so he got the promotion. Obama later gave Leibowitz a Democratic majority, appointing Edith Ramirez, an antitrust lawyer who just happened to be an old law school (and law review) classmate of the Chosen One at Harvard; and Julie Brill, a career deputy state attorney general and longtime friend of Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.). Neither nominee faced so much as a disparaging word on the Senate floor.
This all brings us to the events of August 4, 2010. It was a big day for Chairman Leibowitz. He called a press conference to announce the Commission's "consent order" with Intel, the company that helped launch the personal-computer revolution. Over the past decade there have been dramatic increases in microprocessor performance – and a related 70 percent decrease in prices – but that was not good enough for Leibowitz. He demanded even better performance and lower prices. Since he did not trust Intel to do this himself, he ordered his staff to fabricate an antitrust complaint against the company. Intel initially signaled it would fight, but the company's general counsel – another former number-two at the DOJ's Antitrust Division like Deborah Majoras (who is now general counsel at Procter & Gamble) – quickly impressed upon naïve executives the importance of working with federal antitrust regulators rather then against them. The company abandoned litigation before there was even a trial and signed an order giving, as Leibowitz put it, 22 of the 26 demands proposed in the FTC's complaint.
Intel's concessions effectively gave Leibowitz and the FTC unprecedented veto power over the company's future R&D and customer relations. Even some antitrust enthusiasts were appalled. Joshua Wright, a George Mason University law professor who worked at the FTC a few years back as a "scholar-in-residence," said "it is really hard to stomach" a provision that requires FTC approval for any future "engineering or design change" to designated Intel products. Wright also criticized provisions that forbid Intel from offering price discounts that are "unreasonable" – i.e., that Intel's competitors cannot match – and which allow the FTC "to oversee the discussions between Intel and its customers" to see if the Commission's wishes are obeyed.
Mainstream news coverage, including that from Ruth Marcus's Washington Post, was uncritical, if not fawning, of Leibowitz's actions and press conference. The press conference itself was a departure from FTC practice – Professor Wright called it "odd [and] self congratulatory" – and its only purpose was to violate the very consent order that the FTC and Intel had just signed. The whole point of Intel "settling" was to avoid a legal finding of guilt, which would subject the company to additional civil liability from outside law firms "representing" Intel customers and competitors. The FTC also avoided the (strong) possibility that its fabricated antitrust complaint would not withstand eventual outside review by the federal courts. Thus, the order itself clearly stated there was no admission of liability by Intel or finding of guilt by the FTC. Leibowitz ignored this at his press conference, using his bully pulpit to explain to a compliant press corps that Intel really was an evil, greedy company that was guilty of all charges. Fortunately, since the case was "settled," the FTC would never have to produce any evidence to prove those charges, and the public would remain ignorant of what really transpired behind closed doors.
Now, a few hours before Leibowitz took his curtain call, I received an email from Ruth Marcus. The day before I had sent her an email regarding her latest column. She was discussing a recent ethics scandal that had enveloped two Democratic House members, and she was placing much of the blame on the congressional staff: "[T]here is something in the congressional atmosphere of compliant aides and fawning courtiers that enables and encourages their sense of ordinary-rules-don’t-apply-to-me entitlement." Which I thought was hilarious given her husband's own back-story as a congressional-aide-turned-regulator and the FTC's overall culture of lawlessness. And I told Marcus as much. She was not amused:
My husband is a hard-working, dedicated public servant. He has spent all but a few years of his career in the private sector because he cares more about making good public policy than making big bucks. In my public capacity, I do not write about or participate in editorial discussions that touch on FTC-related matters. In my private capacity, I could not be prouder of him and the work he has done.
Is Marcus a hypocrite or does she simply lack self-awareness? I suspect it is the latter. Having spent their entire married lives – and most of their pre-married lives, for that matter – inside the Washington cocoon, it is understandable that Leibowitz and Marcus have no sense of how what goes on inside the Imperial capitol is perceived in the outlying provinces. Marcus's email makes that crystal clear.
Let's start with this notion that Leibowitz is a "hard-working, dedicated public servant" who "cares more about making good public policy than making big bucks." As an FTC commissioner, Leibowitz has an annual salary of about $170,000 plus a lush benefits package. This alone puts him in the top 5 percent of all U.S. wage earners (according to the Census Bureau's calculations). And that's before we account for his wife's salary at the Post and the retirement benefits he earned during his nearly two decades as a congressional aide and lobbyist. Leibowitz and Marcus also own a home in the upscale Washington suburb of Bethesda valued – by state tax collectors – at just under one million dollars. This does not paint a picture of a selfless public servant.
Marcus's counter-argument is that her husband could earn far more in the private sector. That is debatable. For one thing, he's never worked in the private sector – sorry, Ruth, lobbying doesn't count – and the fact that Leibowitz has spent his entire career in the political system suggests he may actually be unable to find more lucrative work outside the Beltway. Of course, that was before he lucked into the FTC seat. Leibowitz's term is set to expire in September 2010, and if he does not seek or receive re-appointment, he will likely follow his predecessors into one or more lucrative positions advising companies on how to deal with the FTC. It is not unreasonable to project Leibowitz will earn at least ten times his government salary in his next job, which makes Marcus's plea that "he's not about the money" seem even more hollow than it does today.
And this leads to Marcus's other claim, that her husband is all about "making good policy." Good for whom? The hallmark of Leibowitz's FTC tenure has been the same "sense of ordinary-rules-don't-apply-to-me entitlement" that Marcus found fault with in congressional Democrats. Leibowitz has been a slave to his own staff, rubber-stamping almost every crazy antitrust scheme hatched by the Orwellian-named "Bureau of Competition." Good policy for Jon Leibowitz means grabbing as much power for the FTC as he can without stopping to consider the impact on the market or individuals.
Consider the fate of Prince William Hospital (PWH), a small nonprofit healthcare facility in Manassas, Virginia. PWH's board and CEO spent a year looking for a larger nonprofit partner who could provide their hospital with badly needed capital investment. Eventually, PWH reached a deal with Inova Health System, a five-hospital chain also based in northern Virginia. Inova pledged over $250 million in new investment in PWH. It would have been a great deal – except that Jon Leibowitz and his colleagues disapproved. They didn't have anything personal against Inova or PWH. But the FTC staff had done a poor job in the past challenging hospital mergers, and they needed to stop one just to prove it could be done. Inova and PWH proved a target of opportunity.
To guarantee the FTC would succeed, Leibowitz rigged the Commission's internal procedures. Normally an FTC complaint is heard by administrative law judge – a bureaucrat who works for the FTC as part of the career civil service – who issues an initial decision that can then be reviewed by the commissioners on appeal. But the judges had recently exhibited an independent streak, rejecting FTC staff complaints in a handful of cases. This was unacceptable. So when the FTC issued its complaint against PWH and Inova, it bypassed its two administrative law judges – neither was hearing a case at the time – and appointed one of its own members, Commissioner J. Thomas Rosch, to sit as trial judge. There was no precedent for this. Leibowitz and his colleagues claimed Rosch was simply the "best available candidate to sit as a trier of fact in this case." It was a straight-up lie. Although Rosch was an experienced litigator, he had no experience as a judge or arbitrator. Rosch himself later compounded the lie by saying he had never discussed the circumstances of his appointment with Leibowitz and the others. But a former FTC official later told me, "I'm sure the idea came out of [Rosch's] office, not at anybody else's request." Indeed, I later obtained FTC documents that showed Rosch actively supervised the investigation and prosecution of the case. There was no chance he would be a fair, impartial trier of fact – which the hospitals acknowledged by abandoning their deal, after a nearly two-year "review" by the FTC, without facing Rosch at trial.
Among those celebrating the Prince William-Inova outcome was Steven Pearlstein, a columnist at the Washington Post and a colleague of Ruth Marcus. Pearlstein had a personal vendetta against the two hospitals, which was reflected in a series of columns and public statements cheering on the FTC's activities. Pearlstein claimed he had access to information proving that there were better merger partners for PWH than Inova, and that PWH's board was simply less competent than the FTC (and Pearlstein) in knowing what was best for the local healthcare market in Manassas. Pearlstein never explained where his information came from, but it's a safe bet it came from the FTC. Which makes you wonder what role Leibowitz or Marcus might have played in facilitating the leak of supposedly confidential FTC documents to an outside reporter. (It's also curious that the Wall Street Journal, normally a critic of the FTC, also ran a glowing editorial about the Inova-PWH case.)
More curiously, Pearlstein's reporting omitted any mention of the irregular (and illegal) appointment of Rosch as the trial judge – an action taken on the direct motion of Leibowitz, according to FTC records. Pearlstein told me in an email he thought it was an irrelevant detail, mere "inside baseball" of no interest to the Post's readers. Except that it was the primary reason the hospitals abandoned their merger and didn't bother going to trial, according to an individual I spoke with who had direct knowledge of the situation. It was also common sense. Nobody would spend time and money pursuing a case where the judge had a known bias against you.
Pearlstein withheld this material information because (1) it would undermine his own editorial position in favor of the FTC and (2) it would implicate the husband of a co-worker in unethical and possibly illegal activity. When I approached the Post's "ombudsman" on all this, I was given a polite kiss-off: Pearlstein is an editorial columnist, not a news reporter, so he's entitled to say what he wants – apparently even if it implicates the Post as a co-conspirator in a campaign to deprive individuals and companies of their constitutional and civil rights.
Inova-PWH is just the tip of an iceberg big enough to sink the Titanic fifty times over. Another signature "accomplishment" of the Leibowitz FTC was launching a China-like campaign to cleanse the Internet of information the Chairman and his minions deemed unworthy of public consumption. This principally involved materials about the use of non-FDA-approved products for the purposes of improving one's health. The FTC – which claims to protect competition – forbids competition with its brethren at the Food and Drug Administration when it comes to the potential healthcare benefits of any product, natural or otherwise. The Leibowitz FTC has gone so far as to ban religious organizations from making statements about the historical and Biblical evidence supporting the medicinal use of herbs and natural products. (Of course, the ban has only been applied to Christian organizations, and Leibowitz and his wife are Jewish.)
More tellingly, the Leibowitz censorship crusade has overwhelmingly targeted small businesses that only incidentally rely on the Internet. Most of these businesses are run by individuals whose net revenues are not even half of Leibowitz's annual FTC salary. In one case, Leibowitz's staff falsely prosecuted a man for making "false and misleading" statements on a website he neither owned nor operated. FTC prosecutors, carrying out their chairman's wishes, deliberately refused to conduct a proper investigation and failed to even call the web hosting service to determine the website's actual authors. While the charges were eventually dropped, the FTC refused to compensate the defendant – an 85-year-old retiree with limited income – for the $130,000 in legal bills he incurred. Leibowitz's staff said it was the man's fault they falsely prosecuted him. No doubt Ruth Marcus is proud of her husband for taking such a defiant stand.
These cases obviously receive no attention from the Washington Post and its dying compatriots in the mainstream press. This largely explains why "traditional" newspapers are dying. Readers and advertisers receive diminishing returns from expensive publications that provide only a treacle of actual news, which is heavily filtered through anonymous sources and the need to maintain good relations with the government. There simply is not much of an audience anymore, at least outside of Washington, for Ruth Marcus-type columnists to recycle state propaganda as conventional wisdom. Which is why Jon Leibowitz personally launched another FTC crusade last year – to determine the "future of journalism." While the FTC has yet to make any formal proposals, Leibowitz's staff has already discussed a massive expansion of the government's role in the press – including special legal treatment for existing newspapers, new government subsidies for journalists, and taxes on competing media platforms like the iPad and the Internet.1 As media critic Jeff Jarvis recently noted, "The FTC defines journalism as what newspapers do and aligns itself with protecting the old power structure of media."
A cynic would say Leibowitz is simply using his political influence to help his wife's employer and industry. But this is about more than Leibowitz scoring points with his significant other. He recognizes the important symbiosis between the state and the traditional press. One cannot exist without the other. The FTC's success in violating individual rights depends heavily on a friendly media running interference with the public that is getting screwed. As long as the FTC controls the message, it does not have to worry about any serious external threat – from Congress, the courts, or the public – to its authority. Leibowitz (and his wife) is counting on that to carry him through either a second term as FTC chairman or, more likely, a lucrative paycheck from frightened private sector interests.
S.M. Oliva [send him mail] is a writer and paralegal living in Charlottesville, Virginia.
© 2010 Copyright S.M. Oliva / LewRockwell.com - All Rights Reserved
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