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An Army Of Lobbyists For The Middle Class

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Federal Reserve Chairman, Ben Bernanke appeared before the Senate Banking Committee this week to testify about the Fed’s monetary policy.  Scot Kersgaard of The American Independent focused our attention on a five-minute exchange between Colorado Senator Michael Bennett and The Ben Bernank, with an embedded video clip.  Senator Bennett asked Bernanke to share his opinions concerning the recommendations made by President Obama’s bipartisan deficit commission.  Bernanke initially attempted to dodge the question with the disclaimer that the Fed’s authority extends to only monetary policy rather than fiscal policy – such as the work conducted by the deficit commission.  If Congressman Ron Paul had been watching the hearing take place, I’m sure he had a good, hard laugh at that statement.  Nevertheless, Bernanke couldn’t restrain himself from concurring with the effort to place the cost of Wall Street’s larceny on the backs of middle-class taxpayers.

The chant for “entitlement reform” continues to reverberate throughout the mainstream media as it has for the past year.  Last May, economist Dean Baker exposed this latest effort toward upward wealth redistribution:

Emboldened by the fact that none of them have gone to jail for their role in the financial crisis, the Wall Street gang is now gunning for Social Security and Medicare, the country’s most important safety net programs. Led by investment banker Pete Peterson, this crew is spending more than a billion dollars to convince the public that slashing these programs is the only way to protect our children and grandchildren from poverty.

A key propaganda tactic used by the “entitlement reform” crusaders is to characterize Social Security as an “entitlement” even though it is not (as I discussed here).  Phil Davis, avowed capitalist and self-described “serial entrepreneur”, wrote a great essay, which refuted the claim that Social Security is “broken” while explaining why it is not an “entitlement”.  Unfortunately, there are very few politicians who are willing to step forward to provide the simple explanation that Social Security is not an entitlement.  Senator Richard Blumenthal (D-Conn.) recently made a statement to that effect before a senior citizens’ group in East Haven, Connecticut – without really providing an explanation why it is not an entitlement.  Susan Feiner wrote a great commentary on the subject last fall for womensenews.org.  Here is some of what she said:

Moreover, Social Security is not an entitlement program as it’s paid for entirely by payroll taxes.  It is an insurance program, not an entitlement. Not one penny of anyone’s Social Security comes out of the federal government’s general fund.

Social Security is, by law, wholly self-financing.  It has no legal authority to borrow, so it never has.

If this incredibly successful and direly needed program hasn’t ever borrowed a dime, why is the president and his hand-picked commissioners putting Social Security cuts (and/or increases in the retirement age) in the same sentence as deficit reduction?

The attempt to mischaracterize Social Security as an “entitlement” is not a “Right vs. Left” dispute —  It’s a class warfare issue.  There have been commentaries from across the political spectrum emphasizing the same fact:  Social Security is not an “entitlement”.  The assertion has appeared on the conservative patriotsteaparty.net website, the DailyKos on the Left and in a piece by independent commentator, Marti Oakley.

The battle for “entitlement reform” is just one front in the larger war being waged by Wall Street against the middle class.  Kevin Drum discussed this conflict in a recent posting at his Plutocracy Now blog for Mother Jones:

It’s about the loss of a countervailing power robust enough to stand up to the influence of business interests and the rich on equal terms.  With that gone, the response to every new crisis and every new change in the economic landscape has inevitably pointed in the same direction.  And after three decades, the cumulative effect of all those individual responses is an economy focused almost exclusively on the demands of business and finance.  In theory, that’s supposed to produce rapid economic growth that serves us all, and 30 years of free-market evangelism have convinced nearly everyone — even middle-class voters who keep getting the short end of the economic stick — that the policy preferences of the business community are good for everyone.  But in practice, the benefits have gone almost entirely to the very wealthy.

One of my favorite commentators, Paul Farrell of MarketWatch made this observation on March 1:

Wall Street’s corrupt banks have lost their moral compass … their insatiable greed has become a deadly virus destroying its host nation … their campaign billions buy senate votes, stop regulators’ actions, manipulate presidential decisions.  Wall Street money controls voters, runs America, both parties.  Yes, Wall Street is bankrupting America.

Wake up America, listen:

  • “Our country is bankrupt.  It’s not bankrupt in 30 years or five years,” warns economist Larry Kotlikoff, “it’s bankrupt today.”
  • Economist Peter Morici:  “Capitalism is broken, America’s government is two bankrupt political parties bankrupting the country.”
  • David Stockman, Reagan’s budget director:  “If there were such a thing as Chapter 11 for politicians” the “tax cuts would amount to a bankruptcy filing.”
  • BusinessWeek recently asked analyst Mary Meeker to run the numbers.  How bad is it? America really is bankrupt, with a “net worth of a negative $44 trillion.” Bankrupt.

And it will get worse.  Unfortunately, nothing can stop America’s self-destructive Wall Street bankers.  They simply do not care that their “doomsday capitalism” is destroying themselves from within, and is bankrupting America too.

On February 21, I quoted a statement made by bond guru Bill Gross of PIMCO, which included this thought:

America requires more than a makeover or a facelift.  It needs a heart transplant absent the contagious antibodies of money and finance filtering through the system.  It needs a Congress that cannot be bought and sold by lobbyists on K Street, whose pockets in turn are stuffed with corporate and special interest group payola.

That essay by Bill Gross became the subject of an article by Terrence Keeley of Bloomberg News.  Mr. Keeley’s reaction to the suggestions made by Bill Gross was this:

To redeem Wall Street’s soul, radical solutions are clearly needed, but advocating the eradication of profit-based markets that have served humanity well on balance without a viable replacement is fanciful. Gross deserves an “A” for intent — but something more practical than a “heart transplant” is required to restore trust and efficacy to our banking system.

*   *   *

But an economy based on something other than profit risks misery and injustice of another sort.  The antibodies now needed aren’t those that negate profitability.  Rather, they are the ones that bind financial engineering to value creation and advancement of society.

Perhaps the most constructive solution to the problem is my suggestion from February 10:  Recruit and employ an army of lobbyists to represent and advance the interests of the middle class on Capitol Hill.  Some type of non-partisan, “citizens’ lobby” could be created as an online community.  Once its lobbying goals are developed and articulated, an online funding drive would begin.  The basic mission would be to defend middle-class taxpayers from the tyranny of the plutocracy that is destroying not just the middle class – but the entire nation.  Fight lobbyists with lobbyists!


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Absence Of Anger

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I’ve been reading quite a number of articles written in anticipation of a revolutionary uprising by outraged citizens in response to the fallout from Wall Street’s giant Ponzi scheme.  The writers of these items are talking about a more significant uprising than anything we have seen from the Tea Party demonstrators.  Some are expecting riots in the streets.  Since widespread civil unrest has recently taken place in Europe, much attention has been focused on the issue of whether anything like that could happen in the United States.  From my own perspective, I just don’t see it happening.  Nevertheless, I can’t understand what keeps the American public from getting really mad at this point.  It could be due to an epidemic of Attention Deficit Disorder or excessive preoccupation with other distractions.  Perhaps some sort of far-flung conspiratorial effort is under way, involving mass hypnosis via television or drugged drinking water.

On the other hand, I do agree with those commentators on the point that the predicted insurgent reactions are entirely foreseeable.  Are they likely?  Consider what these pundits have said and decide for yourself   .  .  .

One of my favorite commentators, Paul Farrell of MarketWatch, discussed an inevitable backlash against the super-rich, who are waging class warfare by victimizing those of us down the food chain.  Nevertheless, he doesn’t really make it clear how this revolution will manifest itself.  Will there be actual physical violence  . . .  or just a “bloodbath” in the stock market?  Here is how he described it:

Yes, it’s called the Doomsday Capitalism revolution.  And I’m betting you’ll be able to track it on Twitter.

*   *   *

This new preemptive war is already in progress, and America’s billionaires are the aggressors:  Buffett’s billionaire buddies on the Forbes lists, his Wall Street banker buddies, his exporter buddies in China, all of Buffett’s buddies in this “rich class” are already engaged in a hostile takeover war against the American middle class, against the working class and the poor, against all Americans not on the Forbes lists of billionaires.

*   *   *

Here’s how I imagine this revolution unfolding as a series of rapid-fire tweets, as citizen-warriors pass along this collection of earlier warnings to reenergize and drive the rest of America to rebel against Buffett’s “rich class,” tweets that will trigger an anti-capitalist revolution.

Warning to all investors:  Prepare now, play defense.  Expect an economic upheaval rivaling the 1929 crash, creating a climate for true reform that will make the 1930s look like a real tea party.

At The Curious Capitalist blog, Stephen Gandel pondered what would result from all the fear and loathing about whether the Federal Reserve would begin another round of quantitative easing.  His essay was entitled, “Will the Federal Reserve Cause a Civil War?”  Mr. Gandel focused on a recent posting at the Zero Hedge website, which quoted this observation by Karl Denninger:

In a very real sense, Bernanke is throwing Granny and Grandpa down the stairs – on purpose.  He is literally threatening those at the lower end of the economic strata, along with all who are retired, with starvation and death, and in a just nation where the rule of law controlled instead of being abused by the kleptocrats he would be facing charges of Seditious Conspiracy, as his policies will inevitably lead to the destruction of our republic.

Stephen Gandel analyzed the potential for civil war as a consequence of more quantitative easing with this logic:

Lower rates do tend to favor borrowers over savers.  And the largest borrowers in the country are banks, speculators and large corporations.  The largest spenders in our country though tend to be individuals.  Consumer spending makes up 70% of the economy.  And the vast majority of consumers are on the low-end of the income scale.  So I think it is a valid question to ask whether the Fed’s desire to drive down interest rates at all costs policy is working.  Companies are already borrowing at low rates. They are just not spending.        .   .   .

That being said, civil war, probably not.  “It is a gross exaggeration,” says Allan Meltzer, who is a top Fed historian at Carnegie Mellon.  “I cannot recall ever learning about riots or civil war even when the Fed made other mistakes.”

Meanwhile, the prognostications of a gentleman named Gerald Celente appear to be gaining a good deal of traction.  Here are some of Celente’s thoughts as they appeared in his own Trend Alert newsletter, back in April of 2009:

“Nothing short of total repudiation of our entrenched systems can rescue America,” said Celente.  “We are under the control of a two-headed, one party political system.  Wall Street controls our financial lives; the media manipulates our minds.  These systems cannot be changed from within. There is no alternative.  Without a revolution, these institutions will bankrupt the country, keep fighting failed wars, start new ones, and hold us in perpetual intellectual subjugation.”

*   *   *

“I am calling for an ‘Intellectual Revolution’.  I ask American citizens to free their minds from the tyranny of ‘Dumb Think.’  This is a revolution about thinking – not manning the barricades.  It’s about brain power – not brute force.”

It would seem that some degree of anger would be required to incite an “Intellectual Revolution” —  even one without any acts of insurrection.  At this point, it just doesn’t appear as though the American taxpayers are really there yet – Tea Party or not.  People who “want their country back” aren’t the people who will lead this charge.  Watch out for the people who want their jobs, homes and money back.  They will be the ones with the requisite anger to seek real change – as opposed to the “change you can believe in”.


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