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.
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.
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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!