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GM Did the Crime, Drivers Do the Time: Ralph Nader on Failure of U.S. to Prosecute Car Executives

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Under the terms of the Justice Department’s $900 million settlement, no GM executives will be prosecuted for covering up the faulty ignition switch linked to at least 124 deaths. The deal is the latest in a string of deferred prosecution agreements between the Obama administration and corporations accused of criminal activity. We speak to longtime consumer advocate Ralph Nader, “Why Not Jail?” author Rena Steinzor and Laura Christian, the mother of a GM crash victim.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: On Thursday, General Motors CEO Mary Barra held a 15-minute news conference in which she discussed GM’s agreement to pay $900 million to end a U.S. criminal ignition switch probe.

MARY BARRA: We let those customers down in that situation. We didn’t do our job. And as part of our apology to the victims, we promise to take responsibility for our actions. So we accept the penalties being announced today, because that’s what it means to be held accountable. But apologies and accountability won’t count for much if we don’t change our behavior. But we can be proud that we have.

AMY GOODMAN: That’s General Motors’ CEO. And I want to turn to Ralph Nader. Ralph Nader, your response to this settlement?

RALPH NADER: Well, it’s a absurd settlement. It doesn’t deter future behavior by General Motors. Nobody went to jail, nobody is indicted. The company wasn’t indicted. The Justice Department under Attorney General Loretta Lynch and the Obama administration have created a new doctrine. It’s called “crimes without criminals.” They charge GM with a crime, but the company was not indicted, and no officials were indicted. Imagine individuals being able to get away from that. That’s a double standard between the privileges and immunities that are dedicated to corporations by the U.S. government and the way individuals are treated. It went so far, Amy, that there are motorists who were charged with vehicular manslaughter because they were involved in crashes due to GM’s defect. As the Corporate Crime Reporter pointed out, GM did the crime, the drivers do the time. And so I think the focus has got to be on Congress. The pending highway bill has to include criminal penalties for auto companies for violating safety standards for cars and parts, if they do so willfully, knowingly, so, as Rena Steinzor has said, they can be prosecuted and sent to jail.

AMY GOODMAN: Let me ask you about—the Times piece today points out that the U.S. attorney, Preet Bharara, cited an internal investigation conducted for GM as favorable in determining the penalties paid by the automaker. The two law firms hired for that inquiry, King & Spalding and Jenner & Block, had previously done legal work for GM, and court papers show Anton Valukas, the chair of Jenner & Block, who headed the GM investigation, helped represent the automaker in its talks with the Justice Department. Your response?

RALPH NADER: Well, as professor of law Rhode from Stanford said, this is a strange situation, where GM takes on an independent reviewer, Mr. Valukas, he puts out a report—it’s quite condemnatory of GM’s corporate culture over the years—and then he gets hired as the defense counsel against the Justice Department. That does not pass the smell test.

There’s a lot involved here, Amy. The U.S. taxpayer bailed out GM $50 billion after they collapsed in 2009 or so, and the government, in return for the bailout, became a 60 percent-plus shareholder. So the U.S. government owned, in effect, GM. And what did they do for five years under the Obama administration when they owned GM? They did not restructure GM, requiring compliance officers, requiring independent ombudsmen so conscientious engineers in GM could go and tell the ombudsmen about defects in cars without losing their job. They didn’t do anything—except bail out General Motors.

And so, they lost a great opportunity to also investigate this ignition switch. I mean, it was not a secret. GM has covered up this ignition switch problem, which killed at least over 124 people, since 2002. I mean, you have the classic conditions for criminal behavior. You have a known defect by people inside GM. You have deaths and injuries increasing. You have a cover-up. You don’t tell the U.S. government, the auto safety agency, in five days what you’re supposed to tell them—that’s another violation of the law. It was a cop-out by the U.S. attorney for the Southern District of New York, under orders from the Justice Department and probably the White House. It was a cop-out.

It’s easy to go after people for insider trading, as this U.S. attorney does, but when it comes to really going down and enforcing the law against corporate crime, he backed down. And then he gives the excuse, says, “Well, you know, GM has this complex internal structure. We couldn’t find out who was accountable.” Nonsense. As Professor Steinzor has pointed out, they’ve done exactly this in other cases, but it was small fry. They went after some food company that contaminated people with deaths, and now they want to sentence the head executive of this small company to jail. But no, GM, bailed out by the U.S., subjected to all kinds of stagnant technology for 50 years, suppressing known safety defects, losing market share to foreign importers, and lobbying on Capitol Hill for—against criminal penalties against fuel efficiency, while it was being bailed out, and then stonewalling the same auto safety agency under the same U.S. government that’s trying to enforce the auto safety laws.

AMY GOODMAN: On Thursday, U.S. Attorney Preet Bharara praised GM for its cooperation with authorities.

PREET BHARARA: From the moment that top management came forward to disclose the defect in February of 2014, the company’s cooperation and remediation have been fairly extraordinary. It conducted a swift and robust internal investigation. That doesn’t always happen, I can to you. It gave the prosecutors in my office real-time updates about the findings of that internal investigation, often revealing to the office what witnesses had said even before GM management was filled in itself.

AMY GOODMAN: That’s the U.S. attorney, Preet Bharara. As The New York Times points out, prosecutors focused their attention on a relatively short period of time, only 20 months from the spring of 2012 to February 2014, when GM began recalling 2.6 million older cars to fix the switch, but the complaints go back more than a decade, with a number of people inside the company saying that they were being told that they shouldn’t raise this issue, Ralph.

RALPH NADER: That’s right. It’s a classic cover-up over a period of more than a decade, as the Center for Auto Safety has pointed out.

But now, looking forward, what we have to do is focus on Congressman Fred Upton, the chair of the committee in the House handling the highway bill, as we speak, and Senator John Thune from South Dakota, the chair in the Senate, and push what Senator Richard Blumenthal and Senator Ed Markey and others have been saying: Put criminal penalties in that auto safety law, after some 50 years of stonewalling and lobbying by GM. Otherwise, more people are going to die, more people are going to be injured. We’ll have a two-tier legal system maturing, and there will be a double standard against what people can’t do and what corporations get away with.

This is what has to be a major issue in the presidential campaign, if they can ever get around to serious issues, has to be a major issue—the corporate crime wave washing over the country, and homicidal fugitives from justice, like General Motors, getting away with it again and again, in spite of terrific media coverage again and again by The Washington Post, Wall Street Journal, New York Times. Didn’t make any difference to the U.S. attorney or the attorney general—

AMY GOODMAN: Who gets—

RALPH NADER: —or the White House.

AMY GOODMAN: Who gets the money?

RALPH NADER: The government gets the $900 million, which is like a drop in the bucket for GM. By the way, that money really is tax money recycled. GM, from the bailout, still has billions of dollars of taxpayer money in its treasury. There are tort lawsuits being filed and negotiations going on as we speak, at least 1,300 or so cases, next of kin claiming compensation for their loved ones and injuries. That’s not fully disclosed yet as to what’s happened, but it looks like it’s imminent. So, we have the tort civil justice system coming at GM—they’ll all write it off, GM will write it off—and the surrender by the Justice Department, on the other hand.

AMY GOODMAN: Now, the U.S. attorney does say that individual prosecutions could take place. This isn’t over.

RALPH NADER: Well, let’s put him on the hot seat and see if he and other U.S. attorneys will do so. They often dangle that when they know they’ve caved to corporate power. They dangle the prospect of future prosecutions. But Professor Steinzor can explain that that’s largely public relations.

AMY GOODMAN: Well, we’re going to come back to this discussion. Our guests are Ralph Nader, longtime consumer advocate, took on GM a long time ago, and has for 50 years. In fact, GM was forced to settle with him when it came out that they were spying on him as he was taking on the auto giant. Laura Christian also our guest, mother of Amber Rose, who died in a car crash in 2005 as a result of the faulty ignition switch. And we will be speaking with Rena Steinzor, who wrote Why Not Jail?: Industrial Catastrophes, Corporate Malfeasance, and Government Inaction. This is Democracy Now! Back in a moment.


AMY GOODMAN: We are talking about the $900 million settlement that’s been reached between the U.S. Justice Department and GM over the deaths of over 120 people, 124 people, for a faulty ignition switch that they knew about for over a decade. Among our guests today, Laura Christian, mother of Amber Rose—she was 16 years old when she died as a result of this faulty ignition switch in the car, which crashed; Ralph Nader, who has long taken on General Motors; and Rena Steinzor, who wrote the book, Why Not Jail?: Industrial Catastrophes, Corporate Malfeasance, and Government Inaction.

Professor Steinzor, can you respond to this settlement and what you think needs to happen? Do you think the government sold out to General Motors?

RENA STEINZOR: Yes, I think the government sold out to General Motors, and what it did is part of a much larger trend. The name of this kind of agreement is “deferred prosecution agreement.” And what that means is that companies can pay a hefty fine—that to them is just a cost of doing business—and avoid any admission that they committed criminal acts.

The U.S. attorney has filed a statement of facts about what happened here, that in and of itself is pretty shocking. There were efforts to cover up the ignition switch defect going back as far as 2001. At one point, the GM engineer who was in charge of the switch, Ray DeGiorgio, secretly changed the part without telling anybody, and so Cobalts from 2005 and Saturns from 2005 on were safe, but cars were left on the road, hundreds of thousands of them, that still had the faulty switch, that GM acknowledged was faulty by changing the part. GM spent years procrastinating. They had various workforce—work groups, task forces, who sat around palavering about what to do. They still dragged their feet when their outside counsel told them they risked punitive damages in some of the tort cases. And finally, they rushed to the Justice Department and said, “I’m sorry,” and were able to escape without having to plead guilty.

This happened most notoriously in the case of HSBC, the huge worldwide bank, which was laundering money for a Mexican drug cartel, and the Justice Department gave them the same kind of settlement—deferred prosecution agreement—which is a favorite of the Obama administration’s Justice Department and really denies justice to the victims of the bad acts, that are covered in a statement but never brought to court.

AMY GOODMAN: Professor Steinzor, Ralph Nader mentioned that drivers were prosecuted—


AMY GOODMAN: —even though General Motors knew it was their fault, they had a faulty ignition switch. Can you tell us some of the stories of those drivers?

RENA STEINZOR: Yes. The one that is most vivid in my mind is the case of Candice Anderson, who was driving a Saturn, and she ran the car into a tree after she lost control of it. It’s really important to try and focus on how upsetting it is to have a car stall out as you’re driving it. You lose the steering, the brakes. The airbags, you find, once—you find out aren’t working once you crash, but by then you’ve already been through this terrible experience. Unfortunately, her fiancé was killed in that crash, and she was indicted for reckless homicide. Fortunately, they gave her probation, but not until her parents had emptied their retirement account to pay for her defense. And only years later did a judge vacate her plea, when GM admitted that the switch was faulty. So, the double standard for white-collar criminals and the average person is revealed in sharp relief by this very sad case.

AMY GOODMAN: Let’s turn to Samantha Denti of Toms River, New Jersey, describing what happened when she drove a GM car with a faulty ignition switch.

SAMANTHA DENTI: Driving this car was like playing a game of Russian roulette with my safety and that of my friends. I can’t even begin to explain the fear and confusion that runs through you that moment when you have no control over your car. I cannot comprehend the loss that these families behind me are going through. My hope is that the horror stops right now. I don’t want any more drivers to be mourned by family and friends because an automaker hid a deadly problem. The federal government failed to take action, and drivers like me were kept in the dark.

AMY GOODMAN: So there you have Samantha Denti. Professor Steinzor, continue with the point that she is making.

RENA STEINZOR: Well, I also want to make clear that the reason, supposed reason, for not being tough with GM, for letting them walk, in addition to the fact that they apologized so nicely, is that there is a gap in the law. And it’s certainly true that it would be much better to have strong provisions that targeted hiding defects, very specifically. But what GM is guilty—and the U.S. attorney did acknowledge this—of, wire fraud: It sold these cars, pre-owned compacts, as safe, even though it knew that there were ignition switch problems; it didn’t replace the switches on the cars it sold itself; it certified that they were safe to the people that bought them; and it advertised them in the media and pushed these sales.

And that is—multiple felonies could be charged on the basis of that, and have been charged in other cases that involved deadly products, including peanut butter that was contaminated by salmonella. The Justice Department went to trial on that case, and the sentencing is next Monday. They got felony convictions. The company was small—that’s one difference. There’s a compounding pharmacy up in Massachusetts that sold steroid injections contaminated by fungal meningitis, and 64 people died as a result. That company has been charged with conspiracy and second-degree murder.

So the Justice Department knows perfectly well how, under existing law, to make tough cases. We need stronger laws, but it is no excuse for what happened here, which is to turn their back on the victims, basically, and not hold the company accountable. There isn’t a victim who’s spoken out who is satisfied with this settlement.

AMY GOODMAN: So, Laura Christian, are you not consulted in any way, since this settlement money doesn’t go to you, it goes to the government?

LAURA CHRISTIAN: Well, you know, it doesn’t have anything to do with the money, in my opinion. None of the families that I’ve spoke to, and I’ve spoken to quite a few, none of us care about the money. What we care about is seeing real justice. And to us, the only thing that that’s going to mean is someone actually going to jail—the one thing that we are vehemently denied by the federal government. For what purpose, I don’t know. Is GM just too big? I don’t understand.

AMY GOODMAN: You met with Mary Barra, is that right?

LAURA CHRISTIAN: That’s correct.

AMY GOODMAN: Talk about this meeting, the CEO of General Motors.

LAURA CHRISTIAN: I found her to be extraordinarily cold, actually. You have to picture the room. We’re in a very large conference room, 30 family members, Kleenex in front of each and every single one of us, Mary Barra at the head surrounded by her two attorneys. And each family member told their story. There was not a dry eye in that room—with the exception of Mary Barra and her two attorneys. She said the same thing over and over again: “I’m so sorry for your loss.” When I asked her—when I asked her about what they were doing, and would they be willing to park those vehicles, she would not answer me, saying that this was under investigation.

AMY GOODMAN: I want to ask about pending legislation to improve auto safety. This is Democratic Senator Richard Blumenthal of Connecticut, followed by Democratic Senator Ed Markey of Massachusetts, who you’ve worked with, Laura Christian.

SEN. RICHARD BLUMENTHAL: Senator Markey and I are here today to urge you, General Motors, to address the unconscionable acts of your company in failing to disclose serious defects in many of your cars. Innocent lives were lost.

SEN. ED MARKEY: There are Americans, right now, driving defective cars down highways at great speeds, whose lives are at risk. And they are unaware of the risk they are taking. Senator Blumenthal and I have introduced legislation that will improve vehicle safety and increase reporting and transparency, so that the public knows sooner about possible deadly defects.

AMY GOODMAN: So, Ralph Nader, how would that work?

RALPH NADER: Well, it would basically say that any company that knowingly and willfully violates government safety standards, resulting in death and injury, can be criminally prosecuted, and, as well, the officials inside the company. So it’s prosecution of the company, prosecution of officials. Senator John Thune from Nebraska, Congressman Fred Upton from Michigan have been blocking Senator Blumenthal and Senator Markey’s efforts. They deserve to be contacted by people all over the country. If we had criminal penalties when we were pressing for them in 1966, and the GM lobbyists, led by Lloyd Cutler, the corporate lawyer, blocked that, you wouldn’t see this situation today. How many times do corporate executives privately have to tell people the only deterrence is their fear of jail? That’s what it is.

And what we have now is corporations who got chartered many, many decades ago to limit the liability of shareholders, now have limited the liability of the corporation itself. And the mockery is that General Motors and Mary Barra, the CEO, are using shareholder money and taxpayer money to pay this flimsy $900 million settlement fine, and they’re off scot-free. I mean, listeners have got to be very indignant about the way corporate criminals get off. They get very indignant when individual criminals, street criminals, don’t get severe penalties, but they don’t get as angry about corporate criminals. And the toll of death, injury and disease that is traced to corporations, like hospital-induced infections, medical malpractice, air pollution, unsafe products, occupational disease, we’re talking hundreds of thousands of deaths, plus more injuries and disease, every year, that are preventable. But the law doesn’t exist.

AMY GOODMAN: Well, don’t the studies show that when corporate individuals are held accountable, when there is a threat of jail, the crime wave goes down?

RALPH NADER: Of course, and—but the problem is, we haven’t had much experience with what you just described, Amy. The Wall Street crash, nobody responsible for it, in JPMorgan, Citigroup, Merrill Lynch, AIG, they weren’t prosecuted. It’s too bad Eliot Spitzer was no longer attorney general. He would have done it. But they weren’t prosecuted. They caught a few large traders insider trading. That doesn’t affect the crash of Wall Street, unemploying 8 million people, shredding pensions, mutual funds. Then they have the gall, after they jump ship and tank their own companies and Wall Street, to go to Washington, where the former head of Goldman Sachs was the secretary of treasury, Secretary Paulson, and demand and get a bailout. Citigroup got a huge multibillion-dollar bailout on a weekend, secretly talking with the officials in Washington.

This country is being corporatized into the ground. Its democracy is being driven into the ground, the rights of people. That’s why we’re very heartened by Laura Christian and the victims and the families of the victims, because they’re not going to go away. And victims and families of product defects all over the country should organize, network and go after their members of Congress. You know—

AMY GOODMAN: Just to under—

RALPH NADER: Politicians can stare us down when we testify, Amy. They can’t stare people like Laura Christian down.

AMY GOODMAN: Let me go back to some of the reports from the last years. This is Reuters 2014. “A former head of General Motors corporate quality audit warned the company’s board in a letter in 2002”—that’s what? Thirteen years ago—”that it needed to 'stop the continued shipment of unsafe vehicles' and 'recall suspect vehicles that were already in customers' hands.'” This is years before Amber died, Laura's daughter.

“The letter from William McAleer shows that GM’s directors and top management were told about serious safety defects in vehicles that were coming off the company’s production lines more than 11 years before GM recalled millions of vehicles for faulty ignition switches linked to,” at that time, “at least 13 deaths.”

Last year, Businessweek wrote about Courtland Kelley, a third-generation, 30-year GM employee, who who was the former head of a nationwide GM inspection program. He was forced to sue GM in 2003, 12 years ago, after the company repeatedly ignored his reports of flaws. And Businessweek also reported on how GM’s outside lawyer, Peter Kellett, pressed Courtland Kelley “to admit that raising concerns about trucks wasn’t part of his job description, as an inspector of cars.” Kelley said, “My job assignment as a GM employee is to make sure that our customers are safe in anyway I can. That’s my understanding,” Kelly said. GM said, “But was it your specific understanding that you were charged with responsibility for monitoring information relating to vehicles other than the [small cars]?” Those were quotes from a deposition.

When you listen to this, Laura Christian, your feelings?

LAURA CHRISTIAN: Absolute disgust. You know, once again, GM puts profit above safety, as they always have. You know, this is nothing new. This is truly nothing new. And, you know, there’s one thing I do want to point out, is that so many people out there think that this is not something that’s going to happen to them, so they don’t get active, they don’t take part in, they don’t write their senators, they don’t write their representatives. Well, I can tell you firsthand, I was one of those people that thought that this was never going to happen to me, you know, the likes of GM would never affect my life directly. And, you know, I can tell you that it has. The fact that such—such corruption exists is not entirely shocking. The fact that we allow it to continue to exist, that we don’t prosecute when these opportunities rear itself in the glaring light of day, you know, that—

AMY GOODMAN: Who do you think should be prosecuted?

LAURA CHRISTIAN: Well, certainly, Ray DeGiorgio. He’s number one on, I think, everybody’s list.

AMY GOODMAN: And explain, because—for those who aren’t familiar and steeped in this as much as you are.

LAURA CHRISTIAN: Oh, certainly. Ray DeGiorgio is the engineer that was in charge of this particular ignition switch. He was the one that knew that there was not enough pressure or torque in these vehicles, meaning that it was going to be able to go from the on position to the accessory position. He knew this. He gave the order at Delphi to go ahead and manufacture this particular part, even though it did not meet GM’s own specifications. He later on, you know, had the model changed itself, had the switch redesigned, but did not change the actual part number. That’s concealing it, not only to all consumers everywhere, not only to the federal government, but to some at GM, as well. I understand it made it a little bit more difficult to figure out what was going on. Though, nevertheless, it did come to light. Counsel in GM knew. Counsel, you know, basically, in some cases, strong-armed certain victims’ parents, family members, to accept minimal amounts of money, to—in some cases, bullied them against suing GM at all. And these are their own counsel.

AMY GOODMAN: Professor Steinzor, why wasn’t—why aren’t these people prosecuted, when you have specific people that are known? And I know this can go right up to the top, obviously. We’re talking about many years now.

LAURA CHRISTIAN: Well, that’s a really good question. You know, actually, certainly, she’s—you’re going to be able to answer that a little bit more than I. Do you want to go ahead and take that one?

AMY GOODMAN: Professor Steinzor?

RENA STEINZOR: I think it is a lack of will on the part of the prosecutors. They just don’t have the stomach to bring the cases, for reasons that I can’t understand. And it’s worth taking one step back. Laura is talking about all the consumers who have trouble with their cars. Remember the Toyota sudden exhilaration. Now we’re in the middle of a massive recall involving Takata airbags. We have the GM ignition switch. Last year, 64 million vehicles were recalled. Some of them were for non-safety defects, but a vast majority were for safety defects.

So we clearly have a problem throughout the auto industry, and yet we have not seen individual prosecutions. And Toyota got another one of these “I don’t have to admit I’m wrong” settlements—a deferred prosecution agreement. It paid more money because it wasn’t as contrite with the Justice Department itself as GM was. But as Laura has said so eloquently, the money, which is really not a big deal to these companies—it’s a cost of doing business—does not have the same deterrent effect in the future to save other consumers.

AMY GOODMAN: Well, last week—I mean, the Justice Department understands this full well. Last week, the Justice Department unveiled new guidelines intended to increase the prosecution—


AMY GOODMAN: —of executives involved in white-collar crime. Deputy Attorney General Sally Yates said, quote, “Corporations can only commit crimes through flesh-and-blood people. It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.” Again, that’s Deputy Attorney General Sally Yates. That’s not Ralph Nader saying that. But, Ralph Nader, your response?

RALPH NADER: Yeah, words, words, words. We want to see the deeds. In addition to the lack of will by these federal prosecutors that Professor Steinzor pointed out, there’s anticipatory greed. Hardly a month goes by when The New York Times or Wall Street Journal doesn’t report that a top federal prosecutor leaves the job and triples or quadruples his or her salary by going into the very corporate law firms that were defending these corporations, so there’s this merry-go-round that goes on. Now, if you’re a federal prosecutor and you know if you’re too tough, you’re not going to get that half-a-million- or million-dollar-a-year job, there’s an inhibitory factor. And it affects the Securities and Exchange Commission, it affects the Justice Department. So people can just google and see just a few days ago another top prosecutor in New York left to join a firm.

AMY GOODMAN: Ralph Nader—

RALPH NADER: The other thing—the other thing is—last quick point—when was the last time any reporter asked any of these presidential candidates, in the last 50 years, “What is your position on corporate crime enforcement? What is your position on corporate crime abuses and violence, of taxpayers, of contracts, of people’s lives and injuries and their health and safety?” That’s the big taboo, Amy, that’s going on here.

AMY GOODMAN: Well, Ralph, I want to—

RALPH NADER: We’re not just—yeah.

AMY GOODMAN: —ask you to stay on for the next segment to comment on the 2015-'16 presidential campaign, but I want to get Laura Christian's last comment on what you’re doing on Facebook right now as you organize.

LAURA CHRISTIAN: Well, I’m continuing to reach out to speak to the family members and other people that have been affected by these recalls, but also to give information, what recalls are out there. And also, people have questions—you know, “My car’s been recalled, the parts are not in”; you know, “GM or the other auto manufacturers that are out there will not give me a loaner. What do I do?” I try to help people individually, and I try to give advice, as well as comfort, to people that are going through the same thing.

AMY GOODMAN: The Facebook page, GM Recall Survivors. I want to thank you both for being with us. Laura Christian, the mother of Amber Rose, who died after her 2005 Chevrolet Cobalt crashed and the air bag failed to deploy on July 29, 2005. Amber Rose was 16 years old. I also want to thank Professor Rena Steinzor, professor at the University of Maryland School of Law, author of Why Not Jail?: Industrial Catastrophes, Corporate Malfeasance, and Government Inaction. Ralph Nader will stay with us to comment on the elections this year. This is Democracy Now! We’ll be back in a minute.

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