#TexasVsUS
Ian Millhiser on the death panel determined to strike down Obamacare; David Dayen on private equity’s latest scheme: closing urban hospitals and selling off the real estate — PLUS: the push to make D.C. the 51st state. Subscribe to Off-Kilter on iTunes.
This week on Off-Kilter… the push to make D.C. the 51st state is gaining historic traction. A bill that would establish D.C. statehood now has over 215 House cosponsors — and the first Congressional hearing on the subject in a quarter-century has been scheduled to take place in the House of Representatives in the coming weeks. Rebecca talks with Bo Shuff, Executive Director of DC Vote, about the road ahead.
Later in the show… Philadelphia’s historic Hahnemann hospital has been a major part of the city’s fabric since before the Civil War. Yet just months after purchasing the hospital — which has long served some of the city’s poorest residents — its new owners have declared bankruptcy and announced plans to close the hospital… so they can turn around and sell it to real estate developers to build luxury condos in its place. While Off-Kilter was in Philly for Netroots Nation last week, Rebecca sat down with David Dayen, editor in chief of the American Prospect, one of the outlets that’s been covering the debate over the closure and the national outrage it’s sparked, which included a massive protest and rally down Philly’s Broad Street, led by nurses, hospital employees, and community members, during this year’s Netroots gathering.
But first… A panel of two Republicans and one Democrat on the United States Court of Appeals for the Fifth Circuit heard oral arguments last week in a case called Texas vs. United States. At stake, yet again? On, just the entire Affordable Care Act. Ian Millhiser, ThinkProgress’s resident court watcher, observed every painful moment of the oral arguments so the rest of us didn’t have to. Rebecca sat down with him for a recap and a look at what to watch in the weeks ahead.
This week’s guests:
- Ian Millhiser, ThinkProgress courtwatcher (@imillhiser)
- David Dayen, editor-in-chief, The American Prospect (@ddayen)
- Bo Shuff, executive director, DC Vote (@boshuff)
For more on this week’s topics:
- Check out Ian’s explainer on what’s at stake in the Texas v. US case, plus his recap of last week’s oral arguments.
- For more on the closure of Hahnemann, check out Private Equity’s Latest Scheme: Closing Urban Hospitals and Selling Off the Real Estate over at the American Prospect and this update in the Philly Inquirer
- To read up on the push for D.C. statehood, check out this DCist piece; this CBS News piece and this piece in The Hill — and get involved with the 51 for 51 campaign
This week’s transcript:
♪ I work and get paid like minimum wage
sights to hit the class by the end of the day
hot from downtown into the hood where I stay
the only place I can afford ’cause my block ain’t saved
I spend most of my time working, trying to bring in…. ♪
REBECCA VALLAS (HOST): Welcome to Off-Kilter, powered by the Center for American Progress Action Fund. I’m Rebecca Vallas. This week on Off-Kilter, the push to make D.C. the 51st state is gaining historic traction. A bill that would establish D.C. statehood now has well over 200 House co-sponsors, and the first congressional hearing on the subject in a quarter-century has been scheduled to take place in the House of Representatives later this year. I talked with Bo Shuff of DC Vote about the road ahead for D.C. statehood.
Later in the show, another landmark urban hospital is about to bite the dust. Philadelphia’s Hahnemann Hospital has been a part of that city’s fabric since before the Civil War. Yet less than two years after buying Hahnemann, its owners have now declared bankruptcy and announced plans to close the hospital and sell it to real estate developers to build luxury condos. While I was in Philadelphia for Netroots Nation last week, I sat down with David Dayen, editor-in-chief of The American Prospect, one of the outlets that’s been covering the debate over the closure of Hahnemann Hospital and the local, as well as national, outrage it’s sparked.
But first, a panel of two Republicans and one Democrat on the U.S. Court of Appeals for the 5th Circuit heard oral arguments last week in a case called Texas vs. the United States. At stake yet again? Well, just the entire Affordable Care Act, of course. Ian Millhiser, ThinkProgress’s resident court watcher, observed every painful moment of the oral arguments so the rest of us didn’t have to. So, I sat down with him for a recap. Let’s take a listen.
Ian, thanks so much for taking the time to come back on the show.
IAN MILLHISER: I wish I was drinking right now.
VALLAS: I wish that we’d had the forethought to plan that kind of segment. Sorry, my bad.
MILLHISER: [laughs]
VALLAS: That seems unfair.
MILLHISER: Yeah, it was a very bad oral argument.
VALLAS: And I really appreciate you doing us that service of sparing us some great pain. But before we get into what happened in the courtroom, let’s start with what’s at stake here. I said it’s the entire Affordable Care Act, and it is. But let’s get real about kind of what would actually happen if the Affordable Care Act were repealed, just because it’s been a minute since we’ve had a segment about the entire Affordable Care Act being on the chopping block.
MILLHISER: Right. So, first of all, about 20 million people are currently insured under the Affordable Care Act. And the best research I’ve been able to find shows that for every person, for every, I think it’s 830 people, who gain health insurance, it saves one life. You know, it’s one person who’s able to obtain lifesaving care who otherwise wouldn’t have been able to. So, we’re talking about 24,000 lives a year are at stake in this case every year. And just to put that in perspective for a second: like if an invading army were to march into a nation and slaughter 24,000 people and then do it again the next year and then do it again the next year and then do it again the next year, we would call it an atrocity. I mean this is what the U.N. Security Council exists for. Peacekeepers would be sent in to prevent that from happening. And yet, we have two Republican judges with no basis in the law who are going to, who seem eager to commit exactly that atrocity. And the reason why seems to be that they are so ideologically committed to a certain path forward that they don’t seem to be concerned either with the consequences of their decision or with what the law actually says.
VALLAS: So, you’re laying out in incredibly stark terms here what’s at stake, and you’re also giving a little bit of a spoiler of some of the judges here who have this decision in their hands. And I want to get into that in great detail, but it’s also, I think, helpful to know procedurally, how did this case get here? How are we at a point where this particular court is now hearing arguments about whether the Affordable Care Act is constitutional?
MILLHISER: OK. So, I mean I think it’s actually really useful to get into the weeds of the process here. So, this case was filed in the Fort Worth Division of the Northern District of Texas. And the reason why this geography lesson matters is because there is exactly one active judge in the Fort Worth Division of the Northern District of Texas. His name is Reed O’Connor. He’s a former Senate Judiciary staffer for the Republicans, and he’s a hack. And the reason why they filed it in the Fort Worth Division of the Northern District of Texas is because they knew that Reed O’Connor is a rubber stamp and that if they ask him to give them an order saying that the entire Affordable Care Act must cease to exist, he will do it.
VALLAS: Something that legal scholars often call “judge shopping” or “forum shopping.”
MILLHISER: Right. Exactly. So, they forum shop for this judge. But wait, there’s more! Because not only do they, if they bring it in the Fort Worth Division of the Northern District of Texas do they get crank Judge Reed O’Connor, but they ensure that will appeal to the 5th Circuit. And the 5th Circuit is one of the most conservative courts in the country. The majority on this panel, as I’ve alluded to, is really, really bad. But the two Republicans on that panel, Jennifer Elrod and Kurt Engelhardt, are really the median judges in the 5th circuit. Like they don’t even stand out as particularly awful on this extraordinarily conservative court. So, they knew it would go to the 5th Circuit. And that meant that by the time it came up to the Supreme Court, it was more likely than not that they would have some sort of order that said that they were right, and that if you’re a journalist who hasn’t really paid attention to this and you’re just like dropping in to write a quick article about the case, or if you’re just someone who’s just sort of casually following it, doesn’t really know that law, will lead you to believe that there might be something legitimate here. That’s the goal, is the goal is to find some judges who are more concerned with their partisan identity than they are with what the law is, get those judges to legitimize a nonsense theory, and then hope that this nonsense legal theory creates the political space so that Chief Justice Roberts feels comfortable saying, “Well, yeah. I guess I can strike this down.”
VALLAS: So, now you’ve sort of laid your cards on the table and given a little bit of a preview to what you think about the legal argument in this case and whether it holds water. Spoiler: you don’t think it does at all.
MILLHISER: Right.
VALLAS: I want to talk about that. What is the argument that plaintiffs are putting forth here? It all centers on the individual mandate.
MILLHISER: Yeah. So, this is, I mean [laughing] it’s really stupid, Rebecca, so…. OK. So, here’s the deal.
VALLAS: I love that you actually can’t even answer my question without laughing! I feel like that’s great.
MILLHISER: It’s so dumb.
VALLAS: It’s a really nerdy laugh that you’re emitting, but it’s laughter, nonetheless.
MILLHISER: Yeah. Like if a lawsuit had submitted this as a seminar paper, they would not pass the class. It’s so bad. OK. So, here’s the idea. The original, like as the Affordable Care Act was passed in 2010, the original Affordable Care Act had something called the individual mandate, which said that you either have to have health insurance, or you have to pay higher taxes. That’s what it says. In 2017, the Trump tax law amended the Affordable Care Act, and the only changes it made is it said that it set the tax for not having health insurance to zero dollars. So, the original law said that you had to either have insurance or pay a tax. Now, you have to either have insurance or pay nothing. That’s your choice.
And so, their argument is that now that the mandate is zero that that somehow renders the mandate unconstitutional. The theory is that, as you will recall in 2012, the Supreme Court upheld the mandate as an act of the taxing power. But if it is a zero-dollar tax, then it’s not a real tax, so it must be unconstitutional. And I think that argument is wrong, but I also don’t think it matters. Because we’re talking about whether or not something that literally does nothing is constitutional. And who cares?
But here’s where it gets weird. So, when a specific provision of a law is struck down, there’s an inquiry. It’s known as severability. You have to ask like, OK, if Congress had known that this one thing that they wrote is unconstitutional, would they have wanted any more of the law to fall along with it, or would they have wanted everything else to stay?
VALLAS: Which makes sense, if you pause there. This gets kind of wonky, but it’s actually really important to understand. That concept of severability makes a lot of sense as an inquiry, right? Are we throwing out the whole thing, or actually, are we throwing out a part, and the rest of it can stay?
MILLHISER: Right.
VALLAS: That’s sort of what this is.
MILLHISER: And there are sometimes legitimate reasons, like if you have interlocking parts. There are sometimes legitimate reasons why you would have, you would strike down constitutional provisions along with the unconstitutional provision. But there’s two parts to this inquiry. First of all, it’s a speculative inquiry. It asked what would Congress would’ve wanted to do if they had known that this one provision was going to fall? The second part of the inquiry is that there’s an extraordinarily heavy thumb on the scale in favor of keeping as much as you can. The way that the Supreme Court put it in an opinion by Justice Alito, no liberal, he, was that it must be evident — that is the word they used — evident that Congress would’ve preferred to have more law fall than to have as much as possible stay in place.
VALLAS: And that’s a pretty high bar.
MILLHISER: It’s a very high bar. So, we don’t really have to do that much speculation here because again, what Congress did was, you know — And I was alive in 2017, so I actually remember this.
VALLAS: It’s one of those moments where old enough to remember 2017 when this was happening?
MILLHISER: Exactly. So, for those of you who are not old enough to remember 2017 —
VALLAS: A lot of two-year-old listeners on the show.
MILLHISER: A lot of two-year-old listeners. Unfortunately, some of them may be Jennifer Elrod and Kurt Engelhardt.
VALLAS: The judges that we’re about to talk about, right?
MILLHISER: Yeah. But anyways, for our two-year-old listeners, you will remember that Congress spent most of 2017 trying to, debating whether or not they wanted to repeal the entire law or how much they would repeal. There’s that dramatic moment where John McCain walked in and gave the thumbs down, and you know, these weren’t obscure moments. Most people remember these who were following politics back then. And then after they realized they didn’t have the votes to repeal any more, then they passed a bill which repealed just one provision! It zeroed out the individual mandate. So, it effectively repealed the individual mandate, and it did nothing else.
VALLAS: And that was actually part of the tax law, right?
MILLHISER: Right.
VALLAS: One of those weird kind of parts of the tax debate that maybe didn’t get as much attention at the time, but which intersected directly with the health debate.
MILLHISER: Yeah. Which brings me to another point that I want to get to. Which, so first of all, if in fact, the zeroing out of the mandate is unconstitutional, then it is evident that all that Congress wanted to do here was just zero out that one provision because that’s the law they passed. You know, we know that their intention was to zero out one provision and do nothing else because they zeroed out one provision, and then they did nothing else. Like, this isn’t hard, folks.
Second of all, if in fact, we’re going to conduct a severability analysis — If I could just get wonky here.
VALLAS: I mean you’re already there, Ian.
MILLHISER: Yeah.
VALLAS: But please, double down.
MILLHISER: The unconstitutional provision: if the zeroing out of the individual mandate is unconstitutional, then the unconstitutional provision is not a provision of the ACA. It’s a provision of the Trump tax bill.
VALLAS: Oh, interesting. Oh, I hadn’t thought about that angle.
MILLHISER: So, if we’re going to do a severability analysis, and we’re going to ask whether or not Congress would’ve passed the entire bill, and there’s actually a strong argument they wouldn’t have passed the entire Trump tax bill if they had known that they couldn’t zero out the individual mandate, then the solution should be not to strike down the Affordable Care Act. It should be to strike down the Trump tax law!
VALLAS: I mean I can’t say I’m unhappy with that alternate legal theory here. But that’s not, unfortunately, what we heard getting talked about.
MILLHISER: I should probably write this amicable brief.
VALLAS: I mean yes. I’m a plus one to that, please. In your spare time, of which you have copious amounts. But so, Ian, bringing us back then to the legal merits here: I think, to sort of sum up what I’m hearing you say is that based on the legal merits alone, if the rule of law is to prevail, then the paper that the plaintiffs get is an F, right?
MILLHISER: Right.
VALLAS: And the case gets thrown out.
MILLHISER: Yeah.
VALLAS: And that that should be something of a no-brainer, legally.
MILLHISER: Right.
VALLAS: Unfortunately, as you’ve reported, the question that’s looming here is not what the rule of law tells us based on the facts in this case and the arguments, but rather whether, as you said, two conservative judges are effectively going to set aside the rule of law and instead rule based on their partisan leanings.
MILLHISER: Yeah. And it looked at the oral argument like they were going to. I mean these are two extraordinarily conservative and extraordinarily, we now know, partisan judges. I mean Elrod is a George W. Bush appointee, very conservative. She was on the panel striking down DAPA, Obama’s big immigration program. She has some very bad voting rights decisions. Her abortion decisions are not consistent with the role that lower courts play in our constitutional system. She basically thinks that she can just ignore the Supreme Court’s abortion decisions. So, when I saw Elrod’s name, like you know, I mean she’s pretty bad. Engelhardt, I didn’t know much about because he’s new, but I knew that he was a Trump appointee. And well, he acted pretty Trump-y.
VALLAS: So, what happened? You were there for the arguments.
MILLHISER: Yeah.
VALLAS: You were actually in the courtroom, and you were watching. And it went on for quite some time. I want to be very clear: it’s not like a decision was issued in the courtroom.
MILLHISER: Right.
VALLAS: It’s not like you’re reporting on something that tells us we know for a fact what this court is going to rule. But legal scholars, court watchers like yourself spend a lot of time kind of reading the tea leaves about what gets said in oral argument based on the questions that the judges asked.
MILLHISER: So, the biggest tell is that they spent a ton of time asking questions about what should happen if they issue what’s called a remand. And a remand is when you send the case back down to the district judge so that they could do a little bit more work, often around the margins of the case. And in this case, there’s no reason to remand it to the district judge unless you agree with him that the law has to fall. There was question of whether or not they should remand it so that he could issue an injunction blocking the entire law. There was a lot of talk about what the scope of such an injunction would be. And if you intend to do the right thing, if you tend to say this judge was wrong and the law stands, then there’s no reason to talk about well, what should the injunction look like? Because there won’t be an injunction if the law stands. So, I’m pretty convinced they’re not going to follow the law here. Because why would you spend so much time talking about well, what should the scope of the relief be that the plaintiffs get when they win unless the plaintiffs are going to win.
VALLAS: And you’re not the only person who’s looking in a crystal ball and seeing things you don’t like and that are pretty ominous and scary here. That’s certainly been the read of a lot of people who watched these oral arguments. What are the options that the court has here? Is it all or nothing: they’re going to either decide that the law stands or it falls? Are there middle ground options? It sounds from some of your reporting like there were alternative paths that the court was starting to consider.
MILLHISER: So, one path is potentially on the table. So, the way that the original 2010 law was written — it’s called the three-legged stool — was that you had these three interlocking provisions: insurance companies can’t discriminate against you if you have a preexisting condition. The problem is that if you pass that provision by itself, then you risk having a lot of people who are sick buy insurance when they get sick. You have people who are healthy wait until they’re sick to buy insurance, and then the insurance companies run out of money to pay for the sick people. So, you had to have some sort of mechanism to bring people into the market. That’s what the individual mandate was for. Problem with the individual mandate is that if you’re telling people that they’re going to face a financial control consequence unless they buy a product, you need to make the product affordable. So, then you add subsidies, which make it affordable so that people — So, that’s the three-legged stool.
The 2010 Congress, that was their theory of the case. And actually, since the mandate has been repealed, there’s now some evidence that the subsidies may be enough, and we might actually not need the mandate. But the 2010 Congress, what they believed was that you have to have the mandate if you have the insurance regulations. And so, there’s a possibility that the court could just strike down the insurance regulations. The problem with that theory is that it doesn’t matter what the 2010 Congress thought because Congress could amend laws. And I don’t like the Trump tax law, but it was duly enacted by a majority of the United States Congress in both houses. And it was signed by the guy who, despite taking second place, has got to be president of the United States. So, that makes it a law, and that’s allowed.
And Congress could write dumb laws. Like I mean even if it’s really, really bad to have insurance regulations and not a mandate, doesn’t matter if it’s a bad idea. Congress can write laws that are bad ideas, and it’s not up to the courts to say, “Well, we think this is a bad idea.” So, that’s a possibility. It would be wrong.
There was also a lot of discussion because DOJ has this incoherent position where basically, they were arguing that the injunction should apply in some states and not others: it should only apply in the plaintiff states. And that’s just not viable. Among other things, just to give one example, the Affordable Care Act amends the way that the FDA approves biosimilar drugs. So, that would mean that if you struck it down just in the plaintiff states, that there would be drugs that were approved in California but not in Texas. And that makes no sense. And so, that outcome strikes me as unlikely.
But if I could just put on my tinfoil hat for a second?
VALLAS: Oh! It looks great on you.
MILLHISER: Thank you.
VALLAS: Congratulations on the new hat.
MILLHISER: Yeah, no. I shopped around for it
VALLAS: Was it Rent the Runway?
MILLHISER: What’s that?
VALLAS: Rent the Runway.
MILLHISER: Oh yeah.
VALLAS: Yeah.
MILLHISER: So, why would you buy something like this? [laughs]
VALLAS: [laughing] When you can rent it!
MILLHISER: So, anyway. So, the thing about a remand, if they send it bound to the district judge to spend some time thinking about the scope of an injunction, is that takes time.
And there was also talk about like so, the Trump administration is trying to get the law killed even though the United States is ostensibly the defendant in this case. Or is the defendant in this case. So, it’s been left to the House of Representatives and a group of blue states to bring the appeals and argue in favor of the law. And for complicated reasons, the 5th Circuit seems to want to strip both the House and the blue states of its standing to bring further appeals. The main theory is complicated and would only be temporary. It would only last until an injunction issues. But if that happened, that would also delay, potentially, the resolution of this case.
And so, here’s the tinfoil hat problem. I’m pretty confident that Chief Justice Roberts is not going to strike down the Affordable Care Act. We’ve been to this rodeo twice, and we knew how it ended the first two times.
VALLAS: And you’re taking me exactly where I was going to go with my last question, because of course, that’s the million dollar question here if this goes to the Supreme Court.
MILLHISER: Yeah. So, if it goes to this Supreme Court, I think that the Affordable Care Act is upheld in a 5 to 4 decision. It might even be a 6 to 3 decision because if Roberts has already voted to save the law, I think that Kavanaugh might say, “You know, I’m not going to spend my powder on this. Like I’d rather look reasonable than join a dissent that doesn’t matter.”.
VALLAS: And he’s already done that once.
MILLHISER: Yeah. But if Roberts is no longer the median vote, if someone else should leave and Trump should get to replace them, then I don’t have confidence that Kavanaugh would be the 5th vote. And in that scenario, the 5th Circuit wanting to run out the clock makes some sort of conspiratorial sense. And so, again, I think that Roberts has already saved the law twice. He saved the law. Both of those legal theories were dumb, but I’ve never seen anything as dumb as this. I mean this is one of the dumbest lawsuits. Like the toughest question in this case should be whether the lawyers are sanctioned for bringing it. I’m not really that worried about Roberts, but I do worry what happens if Roberts’s vote no longer matters.
VALLAS: And with those as your tinfoil hat, but also crystal ball speculations, I think we’ll have to leave it there. But Ian, in the last minute or so that I have with you, I would be remiss if I did not acknowledge the passing of former Supreme Court Associate Justice John Paul Stevens, which we learned about this week. Do you have any thoughts that you want to share upon that news? What are your sort of favorite or most salient memories of his time on the court?
VALLAS: I mean Stevens was a great judge. I mean so, here’s the thing about John Paul Stevens. John Paul Stevens, he was remembered as the anchor of the liberal wing on the court. And I mean he voted with Ginsburg and Breyer and the other liberal justices more often than he voted with the conservative judges. But he personally was very conservative. I mean he was a Ford appointee. He was appointed by a Republican president, was widely viewed as a center-right judge when he was appointed. A lot of his opinions, there’s a thread of social conservatism that flows through them. You know, he voted in favor of a Texas law criminalizing flag burning. And if you read his opinion, it’s just steeped with a sort of, not Trumpian nationalism, but like a sort of conservative, patriotic nationalism about how the flag is special, that it’s a very cultural conservative outlook. He gave an interview once where he said, “I believe the free market. I don’t think the minimum wage is a good idea.”
But here’s the thing about John Paul Stevens is that he knew as a judge it wasn’t his job to make those calls. He respected democracy. He respected the fact that even if he didn’t like a law, his role was to make sure that the law was carried out in a way that was faithful to the law that was actually passed and that the Constitution was interpreted in a way that was faithful to the Constitution itself. And I think that made him an excellent judge. I mean the test of a good judge is whether or not you’re willing to do what the law says when it hurts.
VALLAS: Which in light of the conversation we’ve just been, having really does make you wonder what kind of a landscape we could be looking at when it comes to health care if we had more judges like Justice Stevens.
MILLHISER: Yeah. No, I think that if we had more conservatives like John Paul Stevens who understand that the law is something different from politics and it is different from whatever ideological crusade you are on, I think the country would be in a much better place.
VALLAS: I’ve been speaking with Ian Millhiser. He’s ThinkProgress’s resident court watcher, the Justice Editor for ThinkProgress, I think, is your actual title, Ian.
MILLHISER: Columnist now.
VALLAS: Columnist.
MILLHISER: Musicals titles over there.
VALLAS: Who knows what your title is. And also the author of a book that I should plug called Injustices: The Supreme Court’s History — here I go — The Supreme Court’s History Of Comforting the Comfortable and Afflicting the Afflicted.
MILLHISER: Damn, that’s good.
VALLAS: Every time.
MILLHISER: All right.
VALLAS: Ian, thanks so much for coming back on the show and for watching all of the oral arguments so that we didn’t have to.
MILLHISER: Yeehaw.
VALLAS: Don’t go away more. Off-Kilter after the break. I’m Rebecca Vallas.
[Hip Hop music break]
You’re listening to Off-Kilter. I’m Rebecca Vallas. If you’ve ever been to the nation’s capital, you’ve probably noticed the slogan on the license plates: “taxation without representation.” Representation in Congress is the lynchpin of America’s democratic system, but 700,000 people in Washington D.C. don’t have that right. Not only do D.C.’s residents lack voting representation in Congress, but Congress regularly sticks its nose in the district’s business, obstructing the passage of reproductive rights bills, common sense gun measures, and other popular and important legislation all the time. But finally, the push to make D.C. the 51st state is gaining historic traction. A bill that would establish D.C. statehood now has well over 200 House co-sponsors, and the first congressional hearing on the subject in a quarter century has been scheduled to take place in the House of Representatives later this year. With this renewed energy for statehood brewing in the nation’s capital, I’m thrilled to have on Bo Shuff, executive director of DC Vote, a group whose mission is making D.C. the 51st state and bringing some much needed change to those license plates. Bo, thanks so much for taking the time to come on the show.
BO SHUFF: Thanks for having us. You know, I honestly hadn’t thought about the fact that we’re going to have to change the license plates. That’s a whole new wrinkle we have to add into our conversation.
VALLAS: And it’s not the reason to do it, but boy will that be visible when it happens.
SHUFF: Certainly. It would be, right?
VALLAS: So Bo, backing up just to get some basics on the table here, D.C. is not a state. And I think our listeners are probably familiar with that fact.
SHUFF: That’s right.
VALLAS: It is the District of Columbia. But technically speaking, if it’s not a state, what is D.C. exactly?
SHUFF: Yep. A lot of people think that the District of Columbia is a city. A lot of people think, there’s a lot of people that actually think it’s a state or at least functions like a state. And they’re mostly correct. The District of Columbia is a district. It is a federal district. We function, however, as a city, state, county, and school board all in one, all at the same time. We do 98 percent of the functions that every other state does already. We have a state board of education. We have a National Guard, although it’s slightly different than the other states. But we function just like every other state, but we are, in fact, a federal district, completely under the control of the U.S. Congress.
VALLAS: Now, why do people want it to become a state? That may seem like a really basic question, but I feel that a lot of times, the conversation around statehood is around the horse race or around the politics but actually misses a lot of the substantive arguments. So, what is the case for statehood?
SHUFF: The case for statehood really boils down to sort of three fundamental American values. The first one: we fought a relatively large war over it. You referenced it with the license plates about taxation without representation. That war obviously being the revolution, all right?
VALLAS: People might know a little bit about this.
SHUFF: A little bit about that one, right? There was some tea, there was a harbor, some things happened, and we were a country.
VALLAS: [laughs]
SHUFF: CliffsNotes version.
VALLAS: Yeah.
SHUFF: Except for everybody in the district that got left out of that party, and we pay full federal taxes. So, the first is to end taxation without representation. We have no vote in the United States House of Representatives. We have no Senators at all in the United States Senate.
The second piece really goes to the fundamental idea that each of us has the right to a government that we elect and that is responsive to our needs. And in the district, we don’t have that either. We have a district council that does a lot of great work and has passed a lot of really great laws and made the district a thriving economy and a fantastic culture. But at the end of the day, they can be overturned by Congress at any time.
And the third piece is really talking about this notion of representation, that everyone in the country deserves a vote and deserves a voice that is equal to everyone else in the country. And we’ve got some problems in that arena on a number of fronts.
But if you’re talking about representation and equal representation, 702,455 people are left out of that mix on day one without any other implications.
VALLAS: Now, for comparison, people might be hearing those numbers and thinking, OK, maybe the D.C. population’s a little larger than they realized. But that’s more than the population of Wyoming, the entire state of Wyoming, which has two Senators and a member of Congress in the House of Representatives.
SHUFF: That’s right, that’s right. And Vermont as well. And I think most people are relatively familiar at least one of the senators from Vermont. So, we know that size [laughs] size shouldn’t matter in this conversation about representation.
Another point to keep in mind is that 49 of the 50 states were smaller than the district is now when they were admitted as states, all the way down to about 50,000 people when one of the states came in as a state. So, there’s never been a qualifying population, but if you are larger than two of the entities that have full representation, it seems only right that you would have full representation in yourself.
VALLAS: Now, one of the things that maybe gets a lot less attention than the taxation without representation piece is also just sort of a functional lack of sovereignty over its own affairs.
SHUFF: Very much so.
VALLAS: And what is that? I mean maybe it sounds wonky, and that’s part of maybe why it gets less airtime because it isn’t quite as clean and crisp as no taxation without representation.
SHUFF: Sure.
VALLAS: But what does that functionally mean?
SHUFF: I think the best way to talk about this is to lay out a recent example, and that is the effort to legalize or decriminalize marijuana in the District of Columbia. We’ve seen several states across the country go through decriminalization and legalization schemes and put those to voters or passed it legislatively. D.C. did something similar. We decriminalized marijuana at the ballot box. We said that this crime should not be something that is pursued by police. If you have a certain amount on you, it’s not a big deal. You still can’t sell it. We still can’t regulate it. And the Congress has tried over and over and over and over again to stop that from occurring. So, they’ve tried to deny funding. They’ve tried to deny our ability to spend our own funds. It’s not congressional funds. It’s not federal funds. It’s not tax money collected in Arkansas that is sent to the district. It is local funds paid for by local people who want to implement a tax and regulation system for marijuana.
What it has resulted in, it’s sort of the Wild Wild West of marijuana possession and production within the district. Individuals are allowed to produce a certain amount within their home for personal consumption or to gift, to give away. You can’t sell it. You can’t buy it. You can’t give it away as a gift with some sort of obligation. But it’s still unregulated. It’s still untaxed. It’s still not tested. It’s still not completely safe that we’re seeing in other states. And that is 100 percent because of manipulation and interference by the Congress.
There’s a number of other examples: literally every issue that folks care about on the progressive side at least has been impacted by our lack of statehood at some point. In the ’80s and ’90s when we were dealing with the height of the HIV/AIDS epidemic, the interference by Congress literally killed people in Washington. Our inability to put together a needle exchange program literally killed people who were unable to get clean needles that they needed. We have seen them interfere with choice services for low-income women. We’ve seen them interfere with our Occupational Safety and Health Law. Two years ago, we saw them interfere with our Wet Wipes laws. We can’t even figure out how to run our own toilet system. Congress has to get involved with that. So, they have stuck their hands and their heads into any policy that they think they can score political points with back home.
VALLAS: Now, we’re talking about a policy that has significant ramifications not just with respect to the entire District of Columbia and 700,000+ people who live here, but really significant ramifications when it comes to racial and also income consequences of who’s impacted because of the demographics of Washington D.C.. So, this is an issue of representation when it comes to a highly low-income city as well as a disproportionately black city. Talk a little bit about the racial and income implications.
SHUFF: Absolutely. I mean the racism piece has always been there, and we’ve seen it in other entities. We saw it when the conversation was around Hawaii being admitted and when Arizona was being admitted, and any time there are significant communities of color present in the system, the process on statehood slows down. D.C. is a majority minority city. We still have, whites are a minority within the district. Yet we are overseen by a body that is massively white. The Congress of the United States is unbelievably out of proportion with the residents of the district. And so, you have a body of white individuals overseeing a body of black and brown and folks of color who had no choice in the matter. It is fundamentally a racist construct.
One of the biggest challenges is that we do not have the right to set our own agenda, and that makes it harder. It adds a second layer of burden to programs that we would want to put forth to solve some of the problems that we’re seeing with gentrification, that we’re seeing with displacement, that we’re seeing with developing low-income housing. But even if we had full budget autonomy and full legislative autonomy, even if the Congress granted us that ability, our lack of advocacy within the Senate and within the House hinder our ability to implement programs that benefit our residents. An example came up. This doesn’t go directly to income, but an example came up that we have no one to advocate on behalf of students who would like to attend the service academies. Little tiny thing, but that just shows you that while Representative Eleanor Holmes Norton’s office does a fantastic job of constituent services, she’s one instead of three. Which everyone else in the country has three. If you have a problem with the V.A., if you want to figure out how to increase housing vouchers, increase funding for schools, you need advocates within the Senate and a full-throated advocate within the House who has a full vote. And so, we see it as a double whammy. Both, they mess with our stuff, and we don’t have anybody there to advocate on our own behalf.
VALLAS: Now, what is the case that gets made against statehood? With all of those as the very compelling arguments, why this push has been gaining traction over the course particularly of the past several months — and we’ll talk a little bit about where things go from here with the legislation you mentioned and the hearing as well — statehood has its detractors as well. And some of those detractors have been coming out of the woodwork in the past several days, going so far as Senator Mitch McConnell did likening the concept to “full bore socialism.” We’ve heard some softer critiques as well that don’t quite go full socialism on it. But what is the more serious argument against statehood, and do you think that it carries water?
SHUFF: I think the strongest argument against statehood that I’ve heard is 4th graders. 4th graders who are going to have to draw the map of D.C., and the ones that are going to have to answer the quiz about which capital belongs to each state. Those are the most salient arguments that hold water with me because that’s actually going to be destructive and challenging to some individual. The rest of the arguments don’t carry water. We’ve heard an argument that the Constitution requires a federal district. We agree. The federal district remains in the bill. It simply reduces it in size a second time. We’ve done this once before when Virginia took its land back. So, we’ve done this once before. It reduces the size of the federal district to the actual federal core, to the places people think of if they’re not from D.C. that is D.C.: the Capitol, the White House, etc.
We have heard arguments that the district would then have outsized control over the federal government, which is interesting to me 10 days or 13 days after tanks literally rolled through our streets, that we are going to have outsized control over the federal government. That was a concern of the founders because, at the time, there was no standing military, federally. It certainly was not as robust and massively armed as it is now. I have to think that even if all 700,000 Washingtonians laid siege to the Capitol Building, it would still end very quickly and go back to it being part of the federal support system. Those arguments, presently the Capital District is surrounded by two states. Afterwards, it will be surrounded by two states, just two different ones.
So, those are some of the arguments we hear. We hear significant concern about the flag, that we are going to have to add a star to the flag. It’s got a huge 50-year history. So, we absolutely don’t want to mess with our flag. We know. We went from 48 to 50. It seemed to be OK. So, I think we’ll get through that one. The Fifty Nifty United States song is concerning, but they’re really, the arguments that come forth are specious at best and political at worst.
VALLAS: Well, and one of those arguments really was John Kasich, a former presidential hopeful on the Republican side who, he came right out and said the quiet part out loud and admitted that he doesn’t like the concept of D.C. statehood because it would give more votes to the Democratic Party.
SHUFF: I’ve never seen a party concede an election before it was even possible to run for office. It’s the most fascinating thing I’ve ever seen. You know, if you look at states, a, if you look at states over history, we’ve seen trends where states elect significantly the same party all the time. Nobody’s ever said they should no longer be a state. Whether that’s a Democratic state or a Republican state. Everybody believes in self-governance. And if we all decided to choose — And I don’t know for sure that they would. We don’t know. When Alaska and Hawaii came in, Alaska was supposed to be solely Democratic, and Hawaii was going to be completely Republican. And that’s why they were brought in in pairs. And they still match, but they’re just backwards. Now Alaska is pretty solidly red, and Hawaii is pretty solidly blue. So, you never know sort of what the future is going to bring, but nobody’s ever been denied representation because of this concept that we won’t use it right. That’s for us to decide. And again, I’ve never heard a party concede an entire election before the office even existed before.
VALLAS: And one of the other arguments that’s been made at some points is that well, D.C. is reliant on federal funds, so maybe the federal government should be granted some kind of a larger say in D.C.’s affairs. But this, too, is an argument that doesn’t really hold water when you start to think about it the landscape for other states.
SHUFF: No, that’s very much not true. Every single state in the union has federal land within it. That wouldn’t change here in the district. We would have federal land in between parts of our borders. At the moment, in fact, the federal government owes us money for the inauguration and now for the tank rolling thing that we haven’t seen payment for and that the mayor rightly pointed out, I think it was last week, that that fund for security, the additional security that the district police provide for events like that is now dry.
D.C. is a net contributor to the federal economy. We pay more in taxes than we receive back in payments or services. Our payments are the same per capita as everybody else across the country, whether we’re talking about education or housing or any of the other pieces that the federal government contributes to. We are on the same ratios as everybody else. So, there is no federal payment anymore. There used to be a federal block payment. That’s been gone for a very long time, so there’s no reason to believe that there would be any change in the finances.
VALLAS: And I’ll give a nod to Vox’s German Lopez who pointed out in some reporting over at that outlet on this subject, that 21 states rely on more federal funding as a percentage of their state budgets than D.C. does. Those are 2013 numbers. So, it doesn’t even hold water when you start to actually dig into the talking point.
SHUFF: Yeah, no. Eleanor Holmes Norton, Congresswoman, likes to point out that we pay more in federal taxes per capita than any other state. We pay more total in taxes than 22 states. We’re absolutely a net contributor to the pot. And it’s just, it’s a fear tactic that oh my gosh, they’re going to drain the coffers!
VALLAS: So Bo, I mentioned up top that there now is legislation that has well over, I said, 200 co-sponsors. I believe the most recent count I’ve seen is over 211.
SHUFF: 216.
VALLAS: We’re up to 216. The ticker keeps going up. Co-sponsors in the House of Representatives on it. Huge deal to see this bill getting that kind of support.
SHUFF: Huge.
VALLAS: And meanwhile, here we are. We’re about to actually see the first congressional hearing on D.C. statehood in 25 years. It was actually supposed to be next week, which is why you and I started talking about doing this segment. And then because we scheduled the segment, it’s going to be rescheduled! But it’s going to happen in September.
SHUFF: It is.
VALLAS: So, it’s still very soon on the horizon. What should people be watching in the weeks ahead when it comes to the push for statehood?
SHUFF: The hearing is as monumental as you mentioned. It’s the first one in 25 years. And it’s important to remember that the vote on D.C. statehood has come to the floor of the House before, and we lost in a big bad way, almost two to one, including a number of Democrats voted against D.C. statehood. So, the push that we have been going on to educate people across the country, to educate their members of Congress to support this bill has turned the tide completely from where we were when the last vote occurred. 216 total co-sponsors, 213 of those have votes. We go back to the whole notion of unrepresented people. Our goal is to get to 218 voting members as co-sponsors before the hearing or at least before the markup to make sure that we know what’s going to happen when it hits the floor.
But people need to also realize that bills don’t come to the House floor with 200 co-sponsors. They come with 20, 40. They still know that they’re going to win the vote, but the co-sponsorship is just a huge difference for this bill than for other bills, as we have worked really hard to build that support across and to indicate to members of Congress that saying you’re gonna vote for it isn’t enough, that you have to be onboard this bill.
So, we anticipate, our goal, if folks are listening from D.C., is we want people to show up for D.C. We want people to come out on the hearing day, and we want to do what the framers were worried about and overtake Congress on that day with as many people that can take a day off or take an afternoon off and join us for the hearing. If people want more information, ShowUp4DC.com (with the number 4) is the website. It has all kinds of new stuff on it to keep you updated on what’s going on. You can text the word “hearing” to 52886 to get on a similar list. But we need D.C. to show up. If you’re close by in Virginia, if you’re coming from Maryland, if you are visiting the week of it from wherever, come with us to the House, wear red and white, and really show a vibrant support for D.C. statehood.
VALLAS: And we’ll make sure to have all of those different resources on our nerdy syllabus page. And Bo, we’ll reup all of this as the hearing is happening in September.
SHUFF: That’d be great.
VALLAS: I’ve been speaking with Bo Shuff. He’s the executive director of DC Vote, a group that’s been fighting to make D.C. the 51st state for quite some time. Really, really exciting to see this push getting so much traction in Congress and in publicly. Bo, thanks so much for taking the time to come on the show.
SHUFF: Absolutely. Thank you for having us.
VALLAS: Don’t go away. More Off-Kilter after the break. I’m Rebecca Vallas.
[Hip Hop music break]
You’re listening to Off-Kilter. I’m Rebecca Vallas. Closing out this week’s episode, Philadelphia’s historic Hahnemann Hospital has been a major part of the city’s fabric since before the Civil War. Yet just months after purchasing the hospital, which has long-served some of the city’s poorest residents, its current owners have declared bankruptcy and announced plans to close the hospital so that they can turn around and — wait for it — sell it to real estate developers to build luxury condos in its place. You just can’t make this up.
When I was in Philadelphia for Netroots Nation last week, I sat down with David Dayen, editor-in-chief of The American Prospect, one of the outlets that’s been covering the debate over the closure and the national outrage that it sparked, which included a massive protest and rally down Philadelphia’s Broad Street last week, led by nurses, hospital employees, and community members. Let’s take a listen.
David, thanks so much for coming back on the show.
DAVID DAYEN: Absolutely. Thank you for having me.
VALLAS: It’s cool getting to hang out in person a little bit for a change and off Twitter.
DAYEN: [chuckles]
VALLAS: I guess this is a thing that happens at Netroots. But as part of the series of conversations I’m having with interesting progressives who have interesting stories to tell about their work, thrilled to sit down with you and talk a little bit about some of the scene behind the scenes in the work that you do. So, before we get into kind of who you are and how you come to some of this work, one of the stories that actually broke while we were both at Netroots was a really big Philadelphia story, and there actually was a massive response from the Netroots community that it spurred. And that’s the closure of a 171-year-old hospital called Hahnemann Hospital, a Philadelphia landmark for a long time that’s stemming from a private equity deal. What’s going on there?
DAYEN: Yeah, that’s right. I mean you and I both have Philadelphia roots, so I’ve certainly been familiar with Hahnemann University and Hahnemann University Hospital for some time, as you said, a 171-year-old facility. Two years ago, a guy named Joel Freedman, who is a private equity fund manager, created this holding company called Paladin Healthcare. This was the major purchase of Paladin Healthcare. Typically, you do not purchase, for a for-profit concern, a hospital that primarily caters to low-income residents. Over half of the patients at Hahnemann are on Medicaid, another chunk on Medicare. Two thirds of the patients are black or Latino. This is a vital resource for this community. And this guy bought it to try to turn a profit. And you wondered what was the deal? Well, now we know what the deal was. 18 months later, he decides to sell it. Well, what he did was he split the hospital from the real estate, and he put the hospital into bankruptcy. And he took the real estate, and he’s selling it to the highest bidder. And this is what was described as a gateway for gentrification.
This is not that bad an area. It’s up and coming, and it’s something where you got a really high price for the real estate of these buildings, which is extensive. And so, this is a private equity play that’s somewhat common to strip the assets out of a company, or in this case a hospital, and sell it off for parts and make a big profit.
VALLAS: One of the things that the American Prospect has reported is that if Hahnemann closes, which is what we can expect to come from this private equity deal, that low-income people will now end up having to travel really significant distances if they’re in health crisis to get to a hospital.
DAYEN: Well, it’s really whether they can find one at all. I mean the other hospitals that serve low-income people in this area are all oversubscribed to begin with. And you’re talking about Temple. You’re talking about Jefferson, Thomas Jefferson Medical Center. And the question is, are they going to be able to withstand a new influx of low-income patients with more problems? And then the question is, if you’re someone who’s been going to Hahnemann for a while, you’re a recurring patient there, are you going to want to go somewhere else? Is that going to be disruptive to you? Are you going to sort of deny yourself care because you think that you might not get the same kind of special treatment that you got at Hahnemann? And so, that’s a whole other sort of health implication from this terrible disruption.
So, yeah, we were down there yesterday. I’m not sure if you were there, but —
VALLAS: No, I got stuck on Amtrak because the trains weren’t getting out. So, I was literally like following the protest on Twitter from you and other people.
DAYEN: Yeah. Thousands of people out there. They closed down half of Broad Street, and you know, the state lawmakers. And what I was struck by was the number of nurses and doctors and patients who were there. I talked to a woman who was wrapping her chemotherapy treatment, and she was crying to me saying, “I just want to finish my chemo treatment with these people who have taken such good care of me. I don’t know where else to go. I don’t know where I’m going to go.” There’s a maternity ward in Hahnemann: 800 women who don’t know where they’re going to have their babies because they’re looking to close that on a fast track as soon as Friday. So, it’s just a terrible crisis for this city and this community.
VALLAS: Is there a potential path to saving the hospital? There’s been this tremendous outpouring of outrage and also solidarity with the hospital and with the Philadelphia community. It’s gotten national attention and really become a national story thanks in large part to reporting from the American Prospect and others. Is there a path to saving this hospital?
DAYEN: It’s a good question. You know, some of the health professionals that spoke were desiring moving it to a teaching hospital, a nonprofit. But it’s really up to Joel Freedman at this point. He owns the real estate. He has put the hospital into bankruptcy. And as much as the city council and state legislators want to change this, it’s unclear what the path forward would be to actually get that into the hands of someone who wants to keep the hospital open.
VALLAS: And I want to correct something I said before in characterizing the American Prospect’s reporting. It’s not that there are great distances people will be traveling to other hospitals. But as you pointed out, and to put some numbers to this, the hospitals that you are naming — Temple University, Thomas Jefferson University Hospital, other major hospitals in Philadelphia — they already have emergency room visit times above the national average of 332 minutes. So, it’s an every-minute-can-count kind of a situation.
DAYEN: Right. So then, throw hundreds if not thousands more patients onto that, and how much longer is it going to take? And what if it’s a real emergency situation? It’s just a terrible tragedy that was very sad. But you know, there was a lot of anger yesterday, people calling Joel Freedman a disgrace and a coward. There was, it was nobody was holding back yesterday at that rally, and I presume that the fight will continue.
VALLAS: So, switching gears just a little bit. Another major area of reporting for you has been around the foreclosure crisis, and that’s where I’d love to actually hear a little bit of the story behind the story. You’re perhaps best known to a lot of our listeners from your book Chain of Title, which actually uncovered a lot of what was behind the foreclosure crisis. Tell a little bit of the story behind that book and of how you took your reporting in that direction.
DAYEN: Yeah. So, I was kind of following that story in real time. In the end of 2010, there was this mass moratorium on foreclosures initiated by the mortgage servicing firms themselves because they had problems with the legality of what they were doing. And I was invited to a meeting actually at the Center for American Progress with a bunch of people who were working on the issue. And at that meeting — and this was in November and December — and it’s actually in the book. It doesn’t mention that I was there, but it’s in the book. I met the three people who ended up becoming the protagonists of the book.: Lisa Epstein, Michael Redman, and Lynn Szymoniak. I met them at this meeting where they were bringing people together. And these three were three people in South Florida. And the difference between those of us who were journalists or academics or researchers or activists or anything like that is that these were three foreclosure victims. They were the only three, I believe, foreclosure victims who were at this meeting. And they talked of how they found these irregularities with mortgage documentation in their own cases. And then instead of just stopping there, they sort of took on a project bigger than themselves.
They decided that they wanted to find out if there was a pattern here. And they went through the public records in their various counties and discovered that yes, there were these massive irregularities with foreclosure documentation based on the fact that during the runup in the housing bubble, there were these securitizations. All these mortgages were sold and then packaged together into bonds and sold a few more times and then sold off all around the world to a Norwegian pension fund or an Indiana teacher’s fund or wherever. And it turns out there are very precise steps that you need to take if you’re going to do that in terms of maintaining the chain of title. It’s the chain of ownership and transferring the documents from one buyer to one seller and so on and being able to document that and show it to county offices that keep track of this stuff. And the banks weren’t doing it. They weren’t doing any of that. And after the fact, they sort of mocked up the documentation to try to prove ownership over these loans, which they actually didn’t have legal ownership over. And these activists saw that in their own cases, then saw that as a regular pattern and built websites to try to expose it. Spent a year trying to expose it.
And the more I talk to them, the more I realize this is very cinematic, the way in which they went about trying to get this story done. These are people who had no history of, understanding of real estate or finance. They had no training. Formerly, it was a nurse, a car salesman, and a lawyer who was involved in insurance cases. They had no history of activism really. And so, they just sort of learned by doing and built this movement to expose foreclosure fraud. And I just thought it was endlessly fascinating. I wanted to learn more about it. And in 2013, I went down for a couple weeks and talked to everybody involved in the situation and eventually got a book out of it.
VALLAS: You’ve also done a tremendous amount of reporting on Steve Mnuchin.
DAYEN: Yes.
VALLAS: It’s a personal area of fascination, it seems. Talk a little bit about some of that reporting.
DAYEN: Sure. So, Steve Mnuchin was, is right at the heart of the foreclosure crisis. He purchased the failed lender IndyMac, turned it into something called OneWest Bank. And OneWest was one of the major servicers who was involved in some of this stuff, this fake creation of documents, fake signing of documents, you know, the robo-signing scandal where somebody would sign their name attesting to everything within a mortgage file, but they wouldn’t spend any time actually looking at the mortgage file. And so, OneWest is featured sort of in my book. And then of course, in 2016, we learn his name because Donald Trump makes him Treasury Secretary.
VALLAS: He who had been called the Foreclosure King.
DAYEN: The Foreclosure King. And I remember talking and marching with activists who, five years earlier, had camped on his front lawn in Bel Air in Los Angeles. And then the night before his confirmation hearing, went and did the same thing. This was a woman who was about to be evicted from her home at the hands of OneWest. And they said, well, if you’re going to kick us out of our home, we’re going to go to yours. And we’re going to set up shop on your front lawn. And they did it again the second time. So, here’s like kind of a symmetry there.
I broke the story about the California attorney general’s office finding evidence of widespread misconduct in foreclosure cases by OneWest, thousands of different violations of California law: backdating of documents, changes in the bidding process by which foreclosures get sold. And so far, Mnuchin’s been able to get away with this. He didn’t, despite lower-level officials in the attorney general’s office recommending a prosecution of OneWest for this misconduct, he ended up not having to face prosecution. Kamala Harris was the attorney general at the time. She did not choose to prosecute. There are other cases where OneWest just sort of got a slap on the wrist fine or got off in some way.
And it’s not just OneWest. I mean Mnuchin was a board member of Sears. His roommate in college, Eddie Lampert, was the CEO and chairman of Sears, who is the guy who fieldstripped that company. He was simultaneously the CEO, chairman, the top lender to Sears, and was a recipient of assets that were sold by Sears, the separate entities that he controlled. This was just the epitome of private equity asset stripping, much like what we’re talking about the Hahnemann case in Sears. And Mnuchin is at the heart of that. He was at the heart of a shady production company that ended up getting out from under all its debts and going away scot free, or at least he did. So, he’s kind of a fascinating character sort of in this age of predatory capitalism. He exemplifies a lot of what’s wrong with the system.
And so, yes, we wrote a book. Rebecca Burns, who’s an excellent writer out of Chicago wrote, for the most part of the book, a lot of it was based on my earlier reporting. And I did some editing and some additional writing for the book, but we put it out. It’s called Fat Cat: The Steve Mnuchin Story. And it goes through really his whole history. This is a guy whose dad was from Goldman Sachs. He was a partner. He was like a legacy there. He ended up vaulting forward above a lot of other people. He ended up in the mortgage department of Goldman Sachs right before the financial crisis. He’s like the Zelig or the Forrest Gump of predatory capitalism.
VALLAS: [laughs]
DAYEN: He’s just at the heart of all of it.
VALLAS: Yeah. And the Sears connection, right, does take us right back to similarities with the Hahnemann case, as you were saying.
DAYEN: Yeah.
VALLAS: Because Sears features prominently in another instance of private equity firms using really similar tactics to strip real estate out of companies.
DAYEN: That’s correct. Yeah. What Sears did is they took their 150 or so most lucrative locations, and they did what is called a sale leaseback. So, they split the company from the real estate, and then they say to the company, “Now you owe us rent on that real estate that you used to own. But we paid you for the real estate, and now you have to pay us rent back every month. And if you close any of those facilities, we get to do whatever we want with it because our real estate.” And of course, Eddie Lampert was double dealing here. He was the CEO and chairman of Sears making the decisions on what Sears stores to close. And also, he was majority owner of Seritage, the real estate company that benefits when they close the locations.
And these are very lucrative pieces of real estate. We’re talking about Sears like in the downtowns of all of these cities. I know near where I live, one of the ones that was stripped out was right in downtown Santa Monica. Very lucrative real estate. And they closed that store in Santa Monica, and Seritage, the real estate company, got to develop it. And it could be billions of dollars that they’re going to make from the development of this real estate that, in a very self-serving way, Eddie Lampert decided to strip out of the company and put into his personal portfolio.
VALLAS: So, back to Hahnemann, are you worried that this is a new playbook that’s emerging that we could see become a national trend not specific to Philadelphia when it comes to hospitals?
DAYEN: Yes. It’s an old playbook but a new playbook. So, it’s an old playbook in terms of the sale leaseback arrangement and this whole idea of stripping real estate out. It’s new in terms of hospitals. I mean there have been some hospitals: St. Vincent in New York and a couple others. They closed urban hospitals in D.C. But we haven’t seen it quite like this where it was deliberately bought for the real estate possibilities and then sold on those terms.
And you know, there’ve got to be tons of areas across the country, urban areas, that are up and coming where there’s a hospital that could be turned into luxury condos or something and deprive the community of that asset of that community space to actually have a medical center. One of the properties that Paladin is involved with, they’re the manager of, is Howard University Hospital, which is in D.C. in the Shaw area which is very lucrative real estate.
VALLAS: Definitely one of the hottest up and coming neighborhoods in the entire D.C. area.
DAYEN: That’s correct. And so, we could see this happen again there. You know, Paladin doesn’t own that hospital, but they do have a hand in it. And they presumably know the owners and could be persuaded in that direction. And the list just goes on. I mean it’s not just D.C. It’s not just Philadelphia. It’s every major city around the country could see this trend. And what does that mean for health care?
I mean we’re having this discussion, this airy discussion about single payer health care and looking really focused on the insurance system. But the providers and the consolidation of those providers would mean that OK, we go ahead and do single payer. Now everyone has access to these hospitals, but what if those hospitals aren’t around? What if they’re so consolidated that it’s difficult to actually access care? And so, we need a broader conversation around health care, I think around, these concentrations of power. Private equity is going big into the hospital space. Others of these companies look like the Mayo Clinic in Minneapolis or UPMC in Pittsburgh. It’s one company that owns practically all the hospitals in the area. We need to think about breaking up those concentrations. Otherwise, even the best designed single payer system is not going to be as effective as it needs to be.
VALLAS: And along the way, even before we’re at that kind of a point in our health care system if we get there, we’re seeing low-income and communities of color the people who are bearing the brunt of these kinds of hospital closures because those are the areas where that’s not where the money is until you turn it into the luxury condos that aren’t going to help them.
DAYEN: That’s correct. And rural hospitals, of course. We’ve seen rural hospital closures all around the country. And usually the access problem is even bigger out there because if you close a hospital in the middle of rural Nebraska, there probably isn’t another one for another hour up the road. And so, in an emergency situation, to have to get yourself an hour to find any kind of care whatsoever is just a terrible burden and hardship on these rural communities. And so, and those are not hospitals that are traditionally extremely lucrative from a for-profit standpoint and usually are the first to go when there is some sort of disruption, and hospitals need to be closed. So, there is a crisis of rural hospitals, and what the Hahnemann thing signals is that there could soon be a crisis of lack of urban hospitals.
VALLAS: You’re exactly right. And you mentioned the similarities with some of what’s going on in D.C. It’s absolutely happening in urban areas too. We’re watching right now the planned closure of the last remaining hospital in D.C.’s poorest neighborhood. If that hospital closes, there won’t be a single hospital in any quadrant in the entire city that is not the rich and very white Northwest quadrant. That’s what’s on deck if this last hospital and in this incredibly poor neighborhood closes.
DAYEN: So, I mean you talk about health care as a human right, and that’s the slogan that gets used. I know the insurance industry is a very valuable villain sort of for these issues. But if we’re not talking about the provider crisis, and if we’re not talking about — I know providers are the healers. The people have a personal relationship with their doctor. But this is a real problem. For-profit health care in the hospital sector, in the provider sector, in the outpatient sector. Look at dialysis where you have two companies, Fresenius and DaVita, that control all the dialysis outpatient centers in the entire nation, or the vast majority of them anyway. There is a real crisis with providers, and if we don’t do something on the provider side, we’re not going to get quality and affordable health care for everybody.
VALLAS: In the last couple of minutes that I have with you, backing up for a second out of the issues of the day, well, in one way at least, you are the executive editor of The American Prospect, a magazine I love dearly, a lot of our listeners love dearly I’m sure. And that puts you very much as a member of the media in a time where that is not the easiest role to play in Trump’s America. What are you feeling is the zeitgeist right now when it comes to how the media is handling this moment with President Trump and heading into 2020 and the potential for maybe a change? What do you see as the road ahead when it comes to the media’s relationship with politics?
DAYEN: Well, it’s something we talk about a lot. We traditionally have tried to take a policy approach to these issues, and — There’s a bug in the studio.
VALLAS: And it’s driving both of us up the wall! You can’t see it. Sorry, guys. You’re just going to have to imagine it!
DAYEN: [laughs] Live radio, yes. Visual, a very visual radio show. [chuckles]
VALLAS: This is why I often become a human graph when I’m telling stories about the chart about corporate profits and worker wages, right? It’s not helpful on the radio either. [laughs]
DAYEN: So, anyway.
VALLAS: Bring us back, David. Bring us back!
DAYEN: [laughs] We do talk about it, and I like to focus on the policies that are really affecting people’s lives and try to explain that situation and those power setups. And sometimes that’s about the Trump administration and what they’re up to, and sometimes that’s about corporate America and what they’re up to. And I think we can’t lose sight of all of these ways in which the working people are sort of been taken out of power. They’ve been sort of put in a situation where they don’t have agency over their own lives and figure out ways that we can get that agency back.
And of course, a lot of what we cover is the progressive movement and the Democratic side of the ledger. And there are important battles happening not just in the 2020 race, but you see it in Congress. And you see it within the sort of jockeying for power, the battle for the soul of the party, if you will. And I think that stuff is very important to keep in mind. I mean we can all run and focus on the latest Trump tweet or the latest outrage or some fight that he’s having with somebody, the soap opera part of the drama. But there are a, real things that he’s doing that are really affecting people, and we want to look at that. And b, there’s what’s going to be done on the other side to restore this, should they regain power at some point. And we got to focus on that. So, I think that’s what’s important. That’s what I’m interested in.
I never try to chase like, you know, try to figure out what people are going to be interested in five minutes from now. I try to figure out what I’m interested in and hope it translates to other people because I think the best and most passionate writing is only done from a place where it’s important to you. And so, that’s where I try to focus my attention, my energies, and you know, we’ll see if people respond.
VALLAS: I’ve been speaking with David Dayen. He’s the executive editor of The American Prospect. He’s also the author of Chain of Title, and his newest book that he’s edited, Fat Cat. You heard about both. You can find information about all of them on our nerdy syllabus page.
DAYEN: And I should mention that next year, I am going to have a new book out also with The New Press, which also Chain of Title. And that is going to be about the role of monopolies and corporate power in everyday life. So, look for that next year. I’m very excited about it. I just finished the draft very recently, and I’m excited to have people read that as well.
VALLAS: And we’ll have you back on to talk about it, I’m sure. David, thanks so much for taking time.
DAYEN: All right.
VALLAS: It’s good to see you.
DAYEN: Thank you, Rebecca.
VALLAS: And that does it for this week’s episode of Off-Kilter, powered by the Center for American Progress Action Fund. I’m your host Rebecca Vallas. The show is produced by Will Urquhart and David Ballard. Find us on Facebook and Twitter @offkiltershow, and you can find us on the airwaves on the Progressive Voices Network and the We Act Radio Network or anytime as a podcast on iTunes. See you next week.
♪ I want freedom (freedom)
Freedom (freedom)
Now, I don’t know where it’s at
But it’s calling me back
I feel my spirit is revealing,
And now we just trynta get freedom (freedom)
What we talkin’ bout…. ♪
