Outside the Beltway

Kos – Armstrong Blogola Scandal

James Joyner · Tuesday, June 20, 2006 · 12 comments

Dan Riehl has done some digging and found that myDD’s Jerome Armstrong received rather significant payments from his work as a political consultant on Jon Corzine’s successful campaign for NJ governor. While Tim Worstall has a point when he observes that, “with the amount of cash that swills through American politics, they actually look like very small sums,” they’re pretty hefty for amateur consulting services. (A recent MSNBC story has Armstrong describing his role in the Mark Warner campaign as handling “anything that deals with the Internet or technology, especially with the strategic decisions that are made early on in terms of the vendor relationships, the people we bring on.”)

Peeling back the onion a bit, we see that there seems to be a rather symbiotic relationship between Armstrong’s consulting business and the blogging activities of his Crashing the Gates co-author Markos Moulitas Zuniga. Clients of Armstrong’s consulting business, including rather netroots unfriendly candidates like Mark Warner, strangely seem to capture Kos’ fancy and get ringing endorsements.

Slate’s Chris Suellentrop noted the Kos-Armstrong connection and their propensity for blogging about clients well over a year ago, but thought Armstrong deserved only a “slap on the wrist” for shilling for Dean on his blog without disclosing that Dean’s campaign was paying him as a “consultant.” Kos, on the other hand, earned his wrath for having a large string of undisclosed “clients” at a time when he was urging his minions to pony up large sums of cash for selected Kos endorsed candidates. This Sunday, Suellentrop had (somewhat ironically) a pay-per-view piece in the NYT which notes that the practice has gotten more sophisticated. As quoted by TNR’s Jason Zengerle:

[S]ome people . . . compare the blog boomlet they helped create for Dean to the work of online bulletin-board posters who touted dodgy Internet stocks during the boom market without disclosing that they were being paid for their words.

Which, interestingly, is precisely what the Securities and Exchange Commission, in court documents filed last August, alleges that Jerome Armstrong did in 2000. (The original S.E.C. complaint is here.) In a subsequent filing, the S.E.C. alleges that “there is sufficient evidence to infer that the defendants secretly agreed to pay Armstrong for his touting efforts” on the financial Web site Raging Bull.

Without admitting or denying anything, Armstrong has agreed to a permanent injunction that forbids him from touting stocks in the future. The S.E.C. remains in litigation with him over the subject of potential monetary penalties.

It appears that he has found another way to do essentially the same thing. Red State’s Crank:

It’s hard to say that Armstrong’s conduct in the BluePoint case can be separated from his employment by the Warner campaign – if anything, what he did in 2000 bea rs a striking resemblance to what numerous people have noted in the netroots with candidates: money goes to Armstrong, and hype emerges around his favored candidates, and – if the Howard Dean campaign is any indication – what’s left at the end is a bunch of promoters and consultants who made a bunch of money and an audience of true believers who got left with nothing. In other words, it appears that Warner may be using Armstrong for essentially the same function that ran Armstrong afoul of the law in the first place.

Ace of Spades:

Let’s say, hypothetically, you wanted to work both inside and “outside” the political system. One person couldn’t do both; working for someone, taking money from a politician, makes you obviously biased.

But I wonder… I wonder… would there be some way that, I don’t know, two people, say, could both be paid by politicians and also get lots of advertising income for a supposedly independent media outlet?

I know, it’s crazy. There’s no possible way something like that could work.

Donkey Cons has quite a bit of speculation on this one, too, working in the rather antequated phrase “argle-bargle” several times.

Tom Maguire links more documents in the BluePoint matter.

As a side note, Mickey Kaus asks, not unreasonably,

If the NYT’s Chris Suellentrop had a scooplet about Kos crony/Mark Warner payee Jerome Armstrong and the S.E.C. but nobody read it–because it a) wasn’t in the NYT print edition and b) on the Web it was stuck behind the TimesSelect subscription wall–would it make a sound?

I must admit, it’s most odd that what seems a rather major story like this was not deemed worthy of the NYT print edition or even the public website. After all, the NYT and other mainstream outlets covered the YearlyKos convention, the launch of Crashing the Gates, and various other “netroots” activity with zeal. Especially coming at the tail end of YearlyKos, one would think this newsworthy.

As to the Kos-Armstrong payola charge, we’ll need a lot more evidence before getting too carried away. On the one hand, I disagree with Suellentrop’s essential dismissal of their taking money from the Dean campaign while touting Dean on their blogs and not disclosing the relationship on the ground that bloggers aren’t “journalists.” Even though most of us do mostly opinion journalism on our sites, readers have a reasonable expectation that the opinions we tout are our own. On the other hand, since the Dean mini-scandal broke, Armstrong has essentially retired from blogging and become a full-time consultant, selling his expertise in marketing to the netroots (a term he coined) to candidates. Whether he really believes in said candidates is really irrelevant in the consulting game; pay-per-play is the above board nature of that business.

The real question is the nature of the relationship between Armstrong’s clients and the DailyKos blog. That Corzine was given a DailyKos diary is hardly evidence of anything sinister; there are thousands of diarists, few of whom are multi-millionaires. The seemingly odd touting by Kos at every opportunity of Mark Warner is really the only red flag but there could be a non-financial explanation. Regardless, the Kos angle is the one that bears watching.

UPDATE: Don Surber sees more guilt by association: “DNC Sugar Daddy George Soros was convicted of insider trading in 2005.” Given that Soros was a major funder of MoveOn.org, Dean, and the netroots ad boom, it is an interesting coincidence.

Glenn Reynolds is not particularly impressed with the brouhaha.

Is this a big deal? I’m not sure it ought to be. Blogs are a low-trust environment, and readers should be judging bloggers by what they say and how well they back it up, not by their credentials. [….] Still, for my bottom-line take, a suggestion that political consultants have a history of talking things up for personal gain seems less-than-earthshaking to me. Am I wrong here?

I think so, yes. Whether there’s any actual corruption here, as Bill Ardolino wonders, is still unknown. But while consultants taking money from candidates is not news, flacking said candidates on one’s blog without disclosing said pay is incredibly dishonest.

Reynolds has an interesting exposition of the “low-trust environment” argument here. The key is that, “You have a reputation, and it matters, but the reputation is for playing it straight with the facts you present, not necessarily the conclusions you reach.” While that’s arguably true on a per post basis–and for most of the higher trafficked blogs, most traffic comes to specific posts from links elsewhere, including search engines–it’s not true for a communitarian site like DailyKos. The Kosacks aren’t just coming for analysis, they’re there for marching orders. They’re not giving tons of money to Kos-selected candidates because of careful weighing of facts and clicking through of hyperlinks but rather because they trust Kos’ endorsements.

On the left, TAP’s Garance Franke-Ruta thinks this a “little micro-scandal” while Pandagon’s Jedmunds “can’t even comprehend how Jerome Armstrong’s reputation could survive this.”

Correction: The original version of the story incorrectly referenced Matt Stoler, the other prominent myDD blogger, rather than Jerome Armstrong in the opening sentence. Thanks to the email tipster who pointed out my error.

UPDATE: Jim Geraghty offers up “A hopefully-useful Kos-Armstrong timeline.” It is, in fact, useful. Still, aside from the Dean case, where Kos definitely took money, and the Warner case, where we have no proof that Kos is getting anything for his shilling, the “Kos-ola” scandal seems misnamed. If there’s undisclosed pay-for-post going on, we have a scandal; otherwise, not so much. The Armstrong SEC thing combined with his blogging for Dean while clandestinely being on his payroll provide two strikes for Armstrong; so far, it’s only one strike for Kos.

UPDATE: Mickey Kaus responds to the last line of the previous update: What about Ohio? The link describes Kos’ sudden reverse on Paul Hackett–I mean, diametrically opposed positions [here and here] in the space of 8 hours–once Armstrong took on his opponent’s campaign. Strike two.

UPDATE: Kos responds:

I haven’t consulted since 2004. I don’t plan on consulting in the future. I don’t want to consult. Why would I consult when I have the sweetest gig in the world? I mean, I get paid to blog and write! Why would I mess with that formula?

My only sources of revenue are this site (advertising and subscriptions), some freelance writings in places like the American Prospect, and CTG (eventually. It takes publishers ages to send out royalty checks). At some point in the future, SportsBlogs will be a source of revenue, but it’s nowhere near that point yet. No politician, campaign, issue group, nor any other organization has directly or indirectly paid me for anything.

That’s pretty unequivocal. So far, though, nothing explaining the dovetailing of his endorsements and Armstrong’s clients, notably the 180 on Paul Hackett vice Sherrod Brown.

CORRECTION: Above, I stated that Jerome Armstrong was “blogging for Dean while clandestinely being on his payroll.” While that was indeed my recollection, it was in error. He in fact shut down myDD–at the time, more popular than DailyKos–during the entire period. My apologies.