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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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Geithner Watch

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August 19, 2010

It’s that time once again.  The Treasury Department has launched another “charm offensive” – and not a moment too soon.  “Turbo” Tim Geithner got some really bad publicity at the Daily Beast website by way of a piece by Philip Shenon.  The story concerned the fact that a man named Daniel Zelikow — while in between revolving door spins at JP Morgan Chase — let Geithner live rent-free in Zelikow’s $3.5 million Washington townhouse, during Geithner’s first eight months as Treasury Secretary.  Zelikow (who had previously worked for JP Morgan Chase from 1999 until 2007) was working at the Inter-American Development Bank at the time.  The Daily Beast described the situation this way:

At that time, Geithner was overseeing the bailout of several huge Wall Street banks, including JPMorgan, which received $25 billion in federal rescue funds from the TARP program.

Zelikow, a friend of Geithner’s since they were classmates at Dartmouth College in the early 1980s, begins work this month running JPMorgan’s new 12-member International Public Sector Group, which will develop foreign governments as clients.

*   *   *

Stephen Gillers, a law professor at New York University who is a specialist in government ethics and author of a leading textbook on legal ethics, described Geithner’s original decision to move in with Zelikow last year as “just awful” —  given the conflict-of-interest problems it seemed to create.

He tells The Daily Beast that Geithner now needs to avoid even the appearance of assisting JPMorgan in any way that suggested a “thank-you note” to Zelikow in exchange for last year’s free rent.

“He needs to be purer than Caesar’s wife — purer than Caesar’s whole family,” Gillers said of the Treasury secretary.

The Daily Beast story came right on the heels of Matt Taibbi’s superlative article in Rolling Stone, exposing the skullduggery involved in removing all the teeth from the financial “reform” bill.  Taibbi did not speak kindly of Geithner:

If Obama’s team had had their way, last month’s debate over the Volcker rule would never have happened.  When the original version of the finance-­reform bill passed the House last fall  – heavily influenced by treasury secretary and noted pencil-necked Wall Street stooge Timothy Geithner – it contained no attempt to ban banks with federally insured deposits from engaging in prop trading.

Just when it became clear that Geithner needed to make some new friends in the blogosphere, another conclave with financial bloggers took place on Monday, August 16.  The first such event took place last November.  I reviewed several accounts of the November meeting in a piece entitled “Avoiding The Kool -Aid”.  Since that time, Treasury has decided to conduct such meetings 4 – 6 times per year.  The conferences follow an “open discussion” format, led by individual senior Treasury officials (including Turbo Tim himself) with three presenters, each leading a 45-minute session.  A small number of financial bloggers are invited to attend.  Some of the bloggers who were unable to attend last November’s session were sorry they missed it.  The August 16 meeting was the first one I’d heard about since the November event.  The following bloggers attended the August 16 session:  Phil Davis of Phil’s Stock World, Yves Smith of Naked Capitalism, John Lounsbury for Ed Harrison’s Credit Writedowns, Michael Konczal of Rortybomb, Steve Waldman of Interfluidity, as well as Tyler Cowen and Alex Tabarrok of Marginal Revolution.  As of this writing, Alex Tabarrok and John Lounsbury were the only attendees to have written about the event.  You can expect to see something soon from Yves Smith of Naked Capitalism.

At this juncture, the effort appears to have worked to Geithner’s advantage, since he made a favorable impression on Alex Tabarrok, just as he had done last November with Tabarrok’s partner at Marginal Revolution, Tyler Cowen:

As Tyler said after an earlier visit, Geithner is smart and deep.  Geithner took questions on any topic.  Bear in mind that taking questions from people like Mike Konczal, Tyler, or Interfluidity is not like taking questions from the press.  Geithner quickly identified the heart of every question and responded in a way that showed a command of both theory and fact.  We went way over scheduled time.  He seemed to be having fun.

It will be interesting to see whether the upcoming accounts of the meeting continue to provide Geithner with the image makeover he so desperately needs.


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The War On YOU

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July 26, 2010

The fifth annual conclave of the Netroots Nation (a group of liberal bloggers) took place in Las Vegas last week.  Among the stories emerging from that event was the plea that progressive bloggers “quit beating up on Obama”.  I found this very amusing.  After Obama betrayed his supporters by pushing through a faux healthcare “reform” bill, which lacked the promised “public option” and turned out to be a giveaway to big pharma and the health insurance industry – the new President turned the long-overdue, financial “reform” bill into yet another hoax.

As I pointed out on July 12, Mike Konczal of the Roosevelt Institute documented the extent to which Obama’s Treasury Department undermined the financial reform bill at every step.  On the following day, Rich Miller of Bloomberg News examined the results of a Bloomberg National Poll, which measured the public’s reaction to the financial reform bill.  Almost eighty percent of those who responded were of the opinion that the new bill would do little or nothing to prevent or mitigate another financial crisis.  Beyond that, 47 percent shared the view that the bill would do more to protect the financial industry than consumers.  Both healthcare and financial “reform” legislation turned out to be “bait and switch” scams used by the Obama administration against its own supporters.  After that double-double-cross, the liberal blogosphere was being told to “pay no attention to that man behind the curtain”.

Despite the partisan efforts by Democrats to blame our nation’s economic decline exclusively on the Bush administration, reading between the lines of a recent essay by Senator Bernie Sanders provides some insight on how the problem he discusses has festered during the Obama administration:

The 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth.  Four hundred families!  During the last fifteen years, while these enormously rich people became much richer their effective tax rates were slashed almost in half.  While the highest-paid 400 Americans had an average income of $345 million in 2007, as a result of Bush tax policy they now pay an effective tax rate of 16.6 percent, the lowest on record.

Let me get this straight  .  .  .   Is Senator Sanders telling us that it took the 400 families the entire eight Bush years just to pick up $400 billion and that once Obama came to the White House, those families were able to pick up another $827 billion in less than two years?  In fairness, Senator Sanders made a great argument to reinstate what I call, “the tax on dead millionaires”.  He began by discussing  the harsh reality experienced by mere mortals:

And while the Great Wall Street Recession has devastated the middle class, the truth is that working families have been experiencing a decline for decades.

Nevertheless, to understand how the middle class has been destroyed by those 400 families, their corporate alter egos and the lobbyists they employ, one need not rely on the words of a Senator, who is an “avowed socialist” (a real one – not just someone called a socialist by partisan blowhards).  Consider, for example, a great essay by Phil Davis, avowed capitalist and self-described “serial entrepreneur”.  The title of the piece might sound familiar:  “It’s the End of the World As We Know It”.  Mr. Davis discussed the latest battle in the war against Social Security and the current efforts to raise the retirement age to 70:

So, what is this all about?  It’s about forcing 5M people a year who reach the age 65 to remain in the work-force.  The top 0.01% have already taken your money, they have already put you in debt, they have already bankrupted the government as well so it has no choice but to do their bidding.  Now the top 0.01% want to make even MORE profits by paying American workers even LESS money.  If they raise the retirement age to 70 to “balance” Social Security – that will guarantee that another 25M people remain in the workforce (less the ones that drop dead on the job – saving the bother of paying them severance).

Those who believe that President Obama would never let this happen need look no further than a recent posting by Glenn Greenwald (a liberal Constitutional lawyer – just like our President) at Salon.com:

It is absolutely beyond the Republicans’ power to cut Social Security, even if they retake the House and Senate in November, since Obama will continue to wield veto power.  The real impetus for Social Security cuts is from the “Deficit Commission” which Obama created in January by Executive Order, then stacked with people (including its bipartisan co-Chairs) who have long favored slashing the program, and whose recommendations now enjoy the right of an up-or-down vote in Congress after the November election, thanks to the recent maneuvering by Nancy Pelosi.  The desire to cut Social Security is fully bipartisan (otherwise it couldn’t happen) and pushed by the billionaire class that controls the Government.

Despite the efforts to characterize Social Security as an “entitlement program” – it’s not.  It’s something you have already paid for – as documented by your income tax returns and W-2 forms.  Pay close attention and watch how our one-party system, controlled by the Republi-cratic Corporatist Party  steals that money away from you.  Both Phil Davis and Glenn Greenwald have each just given you a big “heads-up”.  What are you going to do about it?