In my last posting, I discussed how advocates for more transparency concerning the U.S. government’s knowledge of the UFO / UAP subject were experiencing a significant amount of pushback from the Pentagon as they sought more information on this topic.
Initially, there was significant criticism of this proposed legislation, due to concern that there were too many loopholes allowing the government to delay — or completely avoid disclosure of this information. On Episode 1722 of the Fade to Black podcast with Jimmy Church, (at the 45-minute mark) attorney Danny Sheehan (who represents UAP whistleblower Lue Elizondo) criticized some provisions of the Schumer-Rounds Amendment which he found “troublesome”.
Meanwhile, in the House of Representatives, opposition to disclosure of the government’s knowledge about UAPs is being led by House Armed Services Committee Chair Mike Rogers (R-Ala.) and House Intelligence Committee Chair Mike Turner (R-Ohio). Senate Minority Leader Mitch McConnell (R Ky.) and the new House Speaker Mike Johnson are also aligned with this opposition.
Ultimately, the final version of the Schumer – Rounds Amendment, as approved by the full Senate, did away with two key provisions: establishment of a 9-member Citizens’ Review Board, composed of experts and civilians, to be selected by the President and confirmed by the Senate. Also stricken was a controversial provision which would have granted the federal government a right of “eminent domain” over any technologies or “biologics” recovered from UAPs.
Many individuals who had previously been critical of the Schumer-Rounds Amendment (out of concern that it did not go far enough) became even more critical of the scaled-down version. These criticisms were discussed by Christopher Sharp of the Liberation Times in an article entitled “Operation Kill Bill”.
After the Schumer – Rounds Amendment was decimated, whistleblower David Grusch commented that: “What we’re witnessing right now is the greatest legislative failure in American history”.
Despite widespread disappointment with the current state of the Schumer – Rounds Amendment, many people are voicing enthusiasm that as recently as a few years ago, nobody would have expected that the U.S. government would be taking the UFO subject so seriously right now. In The December 14 New York Times, Senator Chuck Schumer described this Amendment as a major win for government transparency on this subject, which could provide a strong foundation for future action.
We have never experienced a Presidential campaign with more fact-checking than what we are seeing during the current cycle. The well-timed release of a popular new book by Janine Driver entitled, You Can’t Lie to Me might be one of the reasons why this is happening. Fact-checking websites such as PolitiFact and FactCheck have been overflowing with reports of exaggerations, half-truths and flat-out lies by the candidates and their surrogates.
PolitiFact’s roots at the Tampa Bay Times made it particularly well-situated to expose the false claims made during speeches at the Republican Convention. One good example was the “Pants on Fire” rating given to a remark by South Dakota Senator John Thune, who claimed that the Obama administration proposed banning farm kids from doing basic chores.
Paul Ryan’s acceptance speech drew instant criticism from a number of news outlets. I quickly felt vindicated for my last posting, which asserted that Romney made a mistake by selecting Ryan, rather than Ohio Senator Rob Portman, as his running mate. FactCheck provided this breakdown of the misrepresentations in Ryan’s speech:
Paul Ryan’s acceptance speech at the Republican convention contained several false claims and misleading statements. Delegates cheered as the vice presidential nominee:
Accused President Obama’s health care law of funneling money away from Medicare “at the expense of the elderly.” In fact, Medicare’s chief actuary says the law “substantially improves” the system’s finances, and Ryan himself has embraced the same savings.
Accused Obama of doing “exactly nothing” about recommendations of a bipartisan deficit commission — which Ryan himself helped scuttle.
Claimed the American people were “cut out” of stimulus spending. Actually, more than a quarter of all stimulus dollars went for tax relief for workers.
Faulted Obama for failing to deliver a 2008 campaign promise to keep a Wisconsin plant open. It closed less than a month before Obama took office.
Blamed Obama for the loss of a AAA credit rating for the U.S. Actually, Standard & Poor’s blamed the downgrade on the uncompromising stands of both Republicans and Democrats.
If the widespread criticism of the veracity of Ryan’s speech had not been bad enough, Runner’s World saw fit to bust Ryan for making a false claim that he once ran a marathon in less than three hours. In reality, it took him just over four hours.
At the conclusion of FoxNewsapalooza, the Media Matters website posted an analysis of how Mitt Romney’s acceptance speech was a smorgasbord of falsehoods concocted by bloviators from the right-wing media.
Ultimately, convention speeches are about making the argument for your team. We should fully expect politicians to make their case using facts and figures that either tilt positive about their accomplishment – or negative about their opponents. As the fact-checking business has blossomed in the news media, it has been increasingly hard for politicians to get away with such truth-shading without someone noticing.
Both political parties will stretch the truth if they believe it will advance their political interests. It’s been a rough campaign so far, but the GOP convention that just ended was strictly in the mainstream for such party celebrations.
As the Democratic Convention approaches, a good deal of attention has been focused on PolitiFact’s Obameter, which measures how well Obama has delivered on his campaign promises. PolitiFact’s most recent status report offered this analysis:
Our scorecard shows Obama kept 37 percent of his promises. He brought the war in Iraq to a close and finally achieved the Democratic dream of a universal health care program. When the United States had Osama bin Laden in its sights, Obama issued the order to kill.
Sixteen percent are rated Broken, often because they hit a brick wall in Congress. Global warming legislation passed the House but died in the Senate. He didn’t even push for comprehensive immigration reform. His program to help homeowners facing foreclosure didn’t even meet its own benchmarks. (PolitiFact rates campaign promises based on outcomes, not intentions.)
With four months left in Obama’s term, PolitiFact has rated Obama’s remaining promises Compromise (14 percent), Stalled (10 percent) or In the Works (22 percent).
One of the Obama campaign’s negative ads concerning Romney’s economic record as Governor of Massachusetts drew some criticism from FactCheck:
The ad claims that Romney raised taxes on the middle class. It’s true that Romney imposed a number of fees, but none of them targeted middle-income persons. Also, Romney proposed cutting the state income tax three times – a measure that would have resulted in tax cuts for all taxpayers – but he was rebuffed every time by the state’s Democratic Legislature.
I suspect that the Obama campaign has a secret plan in the works to avoid the scrutiny of fact-checkers during their convention. Their plan to have John Kerry speak is actually part of a plot to cause the fact-checkers to fall asleep. Once “Operation Snoozeboat” is complete, the speakers who follow Kerry will be able to make the wildest claims imaginable – and get away with it!
Comments Off on Geithner Redeems Himself – For Now
I’ve never been a fan of Treasury Secretary Tim Geithner. Nevertheless, I have to give the guy credit for delivering a great speech at the Economic Club of Chicago on April 4. The event took place in a building which was formerly home to an off-track betting parlor, with an “upscale” section called The Derby Club (where Gene Siskel spent lots of time and money) – in an era before discretionary income became an obsolete concept.
At a time when the U.S. Chamber of Commerce is suffering from “buyer’s remorse” after bankrolling the election of ideologues opposed to infrastructure spending, Geithner spoke out in favor of common sense. We have come a long, painful way from the days when the Chamber of Commerce aligned itself against the interests of the “little people”. As Keith Laing reported for The Hill, the Chamber no longer considers “stimulus” to be such a dirty word. Laing discussed the joint efforts by the Chamber of Commerce and AFL-CIO executive Edward Wytkind to advance the transportation bill through a Congressional roadblock:
“We’re going to be pounding away during the recess to get House members to know they’ve got to check their party at the door,” Wytkind said of Republicans in the House who opposed accepting the Senate’s transportation bill.
Other transportation supporters were similarly pessimistic. U.S. Chamber of Commerce executive director of transportation and infrastructure Janet Kavinoky said the 90-day extension could lead to a longer agreement, but only if lawmakers get right back to work after the two-week recess.
“No length of time is going to be good for construction or business, but at least 90 days provides a length of time Congress could get a long-term bill done,” Kavinoky said. “But the House in particular is going to have their nose to the grindstone, or whatever metaphor you want to use, to get a bill off the House floor and into a conference.”
The timing could not have been better for someone in a position of national leadership to deliver a warning that premature austerity policies (implemented before economic recovery gains traction) can have the same destructive consequences as we are witnessing in Europe. To his credit, Tim Geithner stepped up to the plate and hit a home run. Here are his most important remarks, delivered in Chicago on Wednesday:
Much of the political debate and the critiques of business lobbyists misread the underlying dynamics of the economy today. Many have claimed that the basic foundations of American business are in crisis, critically undermined by taxes and regulation.
And yet, business profits are higher than before the crisis and have recovered much more quickly than overall growth and employment. Business investment in equipment and software is up by 33 percent over the past 2 ½ years. Exports have grown 24 percent in real terms over the same period. And manufacturing is coming back, with factory payrolls up by more than 400,000 since the start of 2010.
The business environment in the United States is in numerous ways better than that of many of our major competitors, as measured by international comparisons of regulatory burden, the tax burden on workers, the quality of legal protections of property rights, the ease of starting a business, the availability of capital, and the broader flexibility of the economy.
The challenges facing the American economy today are not primarily about the vibrancy or efficiency of the business community. They are about the barriers to economic opportunity and economic security for many Americans and the political constraints that now stand in the way of better economic outcomes.
These challenges can only be addressed by government action to help speed the recovery and repair the remaining damage from the crisis and reforms and investments to lay the foundation for stronger future growth.
This means taking action to support growth in the short-term – such as helping Americans refinance their mortgages and investing in infrastructure projects – so that we don’t jeopardize the gains our economy has made over the last three years.
And it means making the investments and reforms necessary for a stronger economy in the future. Investments in things like education, to help Americans compete in the global economy. Investments in innovation, so that our economy can offer the best jobs possible. Investments in infrastructure, to reduce costs and increase productivity. Policies to expand exports. And reforms to improve incentives for investing in the United States – including reform of our business tax system.
A growth strategy for the American economy requires more than promises to cut taxes and spending.
We have to be willing to do things, not just cut things.
To expand exports, we have to support programs like the Export-Import Bank, which provides financing at no cost to the government for American businesses trying to compete in foreign markets.
To make us more competitive, we have to be willing to make larger long-term investments in infrastructure, not just limp forward with temporary extensions.
Any credible growth agenda has to recognize that there are parts of the economy, like the financial system, that need reform and regulation. Businesses need to be able to rely on a more stable source of capital, with a financial system that allocates resources to their most productive uses, not misallocating them to an unsustainable real estate boom.
Cutting government investments in education and infrastructure and basic science is not a growth strategy. Cutting deeply into the safety net for low-income Americans is not financially necessary and cannot plausibly help strengthen economic growth. Repealing Wall Street Reform will not make the economy grow faster – it would just make us more vulnerable to another crisis.
This strategy is a recipe to make us a declining power – a less exceptional nation. It is a dark and pessimistic vision of America.
Is this simply another example of the Obama administration’s habit of “doing the talk” without “doing the walk”? Time will tell.
On March 21, the Federal Reserve Bank of Dallas released a fantastic document: its 2011 Annual Report, featuring an essay entitled, “Choosing the Road to Prosperity – Why We Must End Too Big to Fail – Now”. The essay was written by Harvey Rosenblum, the head of the Dallas Fed’s Research Department and the former president of the National Association for Business Economics. Rosenblum’s essay provided an historical analysis of the events leading up to the 2008 financial crisis and the regulatory efforts which resulted from that catastrophe – particularly the Dodd-Frank Act.
While reading Harvey Rosenblum’s essay, I was constantly reminded of the creepy “JOBS Act” which is on its way to President Obama’s desk. Simon Johnson (former chief economist for the International Monetary Fund) recently explained why the JOBS Act poses the same threat as the deregulatory measures which helped cause the financial crisis:
With the so-called JOBS bill, on which the Senate is due to vote Tuesday, Congress is about to make the same kind of mistake again – this time abandoning much of the 1930s-era securities legislation that both served investors well and helped make the US one of the best places in the world to raise capital. We find ourselves again on a bipartisan route to disaster.
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The idea behind the JOBS bill is that our existing securities laws – requiring a great deal of disclosure – are significantly holding back the economy.
The bill, HR3606, received bipartisan support in the House (only 23 Democrats voted against). The bill’s title is JumpStart Our Business Startup Act, a clever slogan – but also a complete misrepresentation.
The bill’s proponents point out that Initial Public Offerings (IPOs) of stock are way down. That is true – but that is also exactly what you should expect when the economy teeters on the brink of an economic depression and then struggles to recover because households’ still have a great deal of debt.
* * *
Professor John Coates hit the nail on the head:
“While the various proposals being considered have been characterized as promoting jobs and economic growth by reducing regulatory burdens and costs, it is better to understand them as changing, in similar ways, the balance that existing securities laws and regulations have struck between the transaction costs of raising capital, on the one hand, and the combined costs of fraud risk and asymmetric and unverifiable information, on the other hand.” (See p.3 of this December 2011 testimony.)
In other words, you will be ripped off more. Knowing this, any smart investor will want to be better compensated for investing in a particular firm – this raises, not lowers, the cost of capital. The effect on job creation is likely to be negative, not positive.
Simon Johnson’s last paragraph reminded me of a passage from Harvey Rosenblum’s Dallas Fed essay, wherein he was discussing why the economic recovery from the financial crisis has been so sluggish:
Similarly, the contributions to recovery from securities markets and asset prices and wealth have been weaker than expected. A prime reason is that burned investors demand higher-than-normal compensation for investing in private-sector projects. They remain uncertain about whether the financial system has been fixed and whether an economic recovery is sustainable.
To repeat what Simon Johnson said, combined with the above-quoted paragraph: the demand by “burned investors” for “higher-than-normal compensation for investing in private-sector projects” raises, not lowers, the cost of capital. How quickly we forget the lessons of the financial crisis!
The Dallas Fed’s Annual Report began with an introductory letter from its president, Richard W. Fisher. Fisher noted that while “memory fades with the passage of time” it is important to recall the position in which the “too-big-to fail” banks placed our economy, thus leading Congress to pass into law the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank). Although Harvey Rosenblum’s essay was primarily focused on the Dodd-Frank Act’s efforts to address the systemic risk posed by the existence of those “too-big-to-fail” (TBTF) banks, other measures from Dodd-Frank were mentioned. More important is the fact that the TBTFs have actually grown since the enactment of Dodd-Frank. Beyond that, Rosenblum emphasized why this has happened:
The TBTF survivors of the financial crisis look a lot like they did in 2008. They maintain corporate cultures based on the short-term incentives of fees and bonuses derived from increased oligopoly power. They remain difficult to control because they have the lawyers and the money to resist the pressures of federal regulation. Just as important, their significant presence in dozens of states confers enormous political clout in their quest to refocus banking statutes and regulatory enforcement to their advantage.
The ability of the financial sector “to resist the pressures of federal regulation” also happens to be the primary reason for the perverse effort toward de-regulation, known as the JOBS Act. At the Seeking Alpha website, Felix Salmon reflected on the venality which is driving this bill through the legislative process:
There’s no good reason at all for this: it’s basically a way for unpopular incumbent lawmakers who voted for Dodd-Frank to try to weasel their way back into the big banks’ good graces and thereby open a campaign-finance spigot they desperately need.
I don’t fully understand the political dynamics here. A bill which was essentially drafted by a small group of bankers and financiers has managed to get itself widespread bipartisan support, even as it rolls back decades of investor protections. That wouldn’t have been possible a couple of years ago, and I’m unclear (about) what has changed. But one thing is coming through loud and clear: anybody looking to Congress to be helpful in the fight to have effective regulation of financial institutions, is going to be very disappointed. Much more likely is that Congress will be actively unhelpful, and will do whatever the financial industry wants in terms of hobbling regulators and deregulating as much activity as it possibly can. Dodd-Frank, it seems, was a brief aberration. Now, we’re back to business as usual, and a captured Congress.
The next financial crisis can’t be too far down the road . . .
Comments Off on Latest Obama Cave-in Is Likely To Further Erode His Base
Well, he did it again. Despite the fact that President Obama had vowed to veto the 2012 National Defense Authorization Act (NDAA), which allows for indefinite detention of American citizens without trial, the White House announced that the President will breach yet another promise and sign the controversial bill.
Jeremy Herb at The Hill reported on the administration’s concern that if Obama were to veto the bill, there might not have been enough votes in Congress to prevent an override of that veto. In other words: Obama was afraid of being embarrassed. The report noted the defensive language contained in the official White House spin, to the effect that some minor changes in wording were made to satisfy the President:
The White House backed down from its veto threat of the defense authorization bill Wednesday, saying that the bill’s updated language would not constrain the Obama administration’s counterterrorism efforts.
* * *
The administration won some changes in conference committee, which wrapped up Monday, including the addition of a clause stating that FBI and local law enforcement counterterrorism activities would not be altered by the law.
Big deal. Let the outrage begin! At the Huffington Post, Michael McAuliff noted that the President had already decided to back down on his veto threat before the House of Representatives passed the bill:
The switch came just before the House voted 283-136 to pass the National Defense Authorization Act despite impassioned opposition that crossed party lines, with Democrats splitting on the bill and more than 40 Republicans opposing it. Numerous national security experts and civil liberties advocates had argued that the indefinite detention measure enshrines recent, questionable investigative practices that are contrary to fundamental American rights.
At the Human Rights Watch website, no punches were pulled in their criticism of Obama’s latest betrayal of those very principles his supporters expected him to advance:
The Obama administration had threatened to veto the bill, the 2012 National Defense Authorization Act (NDAA), over detainee provisions, but on December 14, 2011, issued a statement indicating the president would likely sign the legislation.
“By signing this defense spending bill, President Obama will go down in history as the president who enshrined indefinite detention without trial in US law,” said Kenneth Roth, executive director of Human Rights Watch. “In the past, Obama has lauded the importance of being on the right side of history, but today he is definitely on the wrong side.”
* * *
The far-reaching detainee provisions would codify indefinite detention without trial into US law for the first time since the McCarthy era when Congress in 1950 overrode the veto of then-President Harry Truman and passed the Internal Security Act.
* * *
“It is a sad moment when a president who has prided himself on his knowledge of and belief in constitutional principles succumbs to the politics of the moment to sign a bill that poses so great a threat to basic constitutional rights,” Roth said.
Many people might not know that quantitative equity research analyst and former hedge fund manager, Barry Ritholtz (author of Bailout Nation) is an alumnus of the Benjamin N. Cardozo School of Law in New York, where he served on the Law Review, and graduated Cum Laude with a 3.56 GPA. Here are some of the recent comments made by Mr. Ritholtz concerning the National Defense Authorization Act:
While this is shocking, it is not occurring in a vacuum. Indeed, it is part of a 30 year-long process of militarization inside our borders and a destruction of the American concepts of limited government and separation of powers.
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Other Encroachments On Civil Rights Under Obama
As bad as Bush was, the truth is that, in many ways, freedom and constitutional rights are under attack even more than during the Bush years.
Obama has presided over the most draconian crackdown on leaks in our history – even more so than Nixon.
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Furthermore – as hard as it is for Democrats to believe – the disinformation and propaganda campaigns launched by Bush have only increased under Obama. See this and this.
An FBI memo also labels peace protesters as “terrorists”.
At his blog, The Big Picture, Ritholtz made these points in a December 3 argument against the passage of this bill:
You might assume – in a vacuum – that this might be okay (even though it trashes the Constitution, the separation of military and police actions, and the division between internal and external affairs).
Once again, President Obama has breached a promise to his supporters out of fear that he could be embarrassed in a showdown with Congress. Worse yet, Obama has acted to subvert the Constitutional right of Due Process simply because he wants to avoid the shame of a veto override. As many commentators have observed, George W. Bush was not plagued by any such weakness and he went on to push a good number of controversial initiatives through Congress – most notably the Iraq War Resolution. I find it surprising that so many of President Obama’s important decisions have been motivated by a fear of embarrassment, while at the same time he has exhibited no concern about exposing such timidity to both his allies and his opponents – wherever they may be.
Comments Off on Congressional Sleaze In The Spotlight
Last February, I wrote a piece entitled, “License To Steal”, concerning a certain legal loophole which allows members of Congress to trade stocks using “insider information”:
On January 26, 2009, Congressman Brian Baird introduced H.R.682, the “Stop Trading on Congressional Knowledge Act” (STOCK Act). The bill was intended to resolve the situation concerning one of the more sleazy “perks” of serving in Congress. As it presently stands, the law prohibiting “insider trading” (e.g. acting on confidential corporate information when making a transaction involving that company’s publicly-traded stock) does not apply to members of Congress. Remember how Martha Stewart went to prison? Well, if she had been representing Connecticut in Congress, she might have been able to interpose the defense that she was inspired to sell her ImClone stock based on information she acquired in the exercise of her official duties. In that scenario, Ms. Stewart’s sale of the ImClone stock would have been entirely legal. That’s because the laws which apply to you and I do not apply to those in Congress. Needless to say, within six months of its introduction, H.R.682 was referred to the Subcommittee on the Constitution, Civil Rights, and Civil Liberties where it died of neglect. Since that time, there have been no further efforts to propose similar legislation.
At a time when the public is finally beginning to understand how our elected officials are benefiting from a system of “legalized graft” in the form of campaign contributions, more attention is being focused on how the “real money” is made in Congress. A new book by Peter Schweizer – Throw Them All Out – deals with this very subject. The book’s subtitle is reminiscent of the point I tried to make in my February posting: “How politicians and their friends get rich off insider stock tips, land deals and cronyism that would send the rest of us to prison”.
Peter J. Boyer wrote an article for Newsweek, explaining how Peter Schweizer came about writing this book. Schweizer is the William J. Casey research fellow at the Hoover Institution and as Boyer pointed out, Schweizer is considered by liberal critics as a “right wing hit man”. It’s nice to see someone from the right provide us with an important treatise on crony capitalism. The book exposes insider trading by both Democrats and Republicans – hell-bent on profiteering from the laws they enact. Boyer’s essay provided us with some examples of the sleazy trades made by Congress-cretins, as described in Throw Them All Out. Here are a few examples:
Indeed, Schweizer reports that, during the debate over Obama’s health-care reform package, John Boehner, then the House minority leader, was investing “tens of thousands of dollars” in health-insurance-company stocks, which made sizable gains when the proposed public option in the reform deal was killed.
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One of the more dramatic episodes in the book recounts the trading activity of Republican Rep. Spencer Bachus, of Alabama, who, as the ranking member of the House Financial Services Committee, was privy to sensitive high-level meetings during the 2008 financial crisis and proceeded to make a series of profitable stock-option trades.
Bachus was known in the House as a guy who liked to play the market, and in fact he was pretty good at it; one year, he reported a capital gain in excess of $150,000 from his trading activities. More striking is that Bachus boldly carried forth his trading in the teeth of the impending financial collapse, the nightmarish dimensions of which he had learned about first-hand in confidential briefings from Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. On Sept. 19, 2008, after attending two such briefings, Bachus bought options in an index fund (ProShares UltraShort QQQ) that effectively amounted to a bet that the market would fall. That is indeed what happened, and, on Sept. 23, Bachus sold his “short” options, purchased for $7,846, for more than $13,000—nearly doubling his investment in four days.
Around the time Congress and the Bush administration worked out a TARP bailout, Bachus made another options buy and again nearly doubled his money.
* * *
After the first briefing from Bernanke and Paulson, brokers for Democratic Congressman Jim Moran, of Virginia, and his wife sold their shares in 90 companies, dodging the losses that others who stayed in the market would soon face. Republican Rep. Shelley Capito, of West Virginia, sold between $100,000 and $250,000 of Citigroup stock the day after the first meeting, recording capital gains on Citigroup transactions in that rocky period.
Peter Schweizer’s analysis of the bipartisan culture of corruption on Capitol Hill reinforces one of my favorite criticisms of American government: Our Sham Two-Party System. The Republi-Cratic Corporatist Party owes its allegiance to no population, no principle, no cause – other than pocketing as much money as possible. Just as there have been some recent “pushback” efforts by outraged citizens, Schweizer is now advocating a “Throw Them All Out” campaign. This could have a potentially significant impact on Congress, because the term of office in the House of Representatives lasts for only two years. Consider Schweizer’s thought at the close of the Newsweek piece:
“I was troubled,” he says, “by the fact that the political elite gets to play by a different set of rules than the rest of us. In the process of researching this book, I came to the conclusion that political party and political philosophy matter a lot less than we think. Washington is a company town, and politics is a business. People wonder why we don’t get more change in Washington, and the reason is that the permanent political class is very comfortable. Business is good.”
“Inside information” empowers the party in possession of that knowledge with something known as “information asymmetry”, allowing that person to take advantage of (or steal from) the less-informed person on the other side of the trade. Because membership in Congress includes a license to steal, can we ever expect those same individuals to surrender those licenses? Well, if they were honest . . .
A successful “Throw Them All Out” campaign would obviate the necessity of attempting to convince this Congress to pass the “Stop Trading on Congressional Knowledge Act” (STOCK Act). If the next Congress knows that its political survival is depending on its passage of the STOCK Act, we might see it become law.
This was bound to happen. Now that the Occupy Wall Street protest has become a big deal, the Democrats are trying to claim it as their own franchise. Fortunately, the protesters aren’t interested. My October 6 posting focused on the hypocrisy of the pseudo-populist Democrats, who – as of that time – had failed to express any support for this new movement:
The Occupy Wall Street protest has exposed the politicians – who have always claimed to be populists – for what they really are: tools of the plutocracy. Conspicuously absent from the Wall Street occupation have been nearly all Democrats – despite their party’s efforts to portray itself as the champion of Main Street in its battle against the tyranny of the megabanks. As has always been the case, the Democrats won’t really do anything that could disrupt the flow of bribes campaign contributions they receive from our nation’s financial elites.
The party-crashing Democrats are now attempting to advance their status from interlopers to hosts. At the Occupy Wall Street website, this question was posted with an invitation for comments:
“Are you cool with the Democrats taking ownership of OWS?”
Not surprisingly, the responses were overwhelmingly negative. Here are a few examples:
WorkingClassAntiHero (Manchester, NH):
Anyone thinking about this thing in the old terms of left, right, Democrat, Republican, etc…is either not paying attention or isn’t really involved.
IndpendentTX:
There needs to be more visible demonstration that this is not a Democrat movement but a movement by a non-partisan group against the corporate political machine. More signs protesting Democrats people!
Also make more signs that clearly state that both parties can get lost. They’re BOTH part of the problem.
1zouzouna:
We no longer accept the idea of political ownership. It is the corporate media wolves trying to define us as Republicrat’s, because they want to deny there is a Revolution happening here and all over the globe. They so desperately need to define us because they are scared shitless of us. They pretend to not comprehend our agenda, they keep saying we don’t know what we want. They only see in Republicrat terms. Both parties Rep. and Dem. alike have had a direct hand in passing legislation that has aided in this ponzi scheme whereby we, the 99% have been robbed of our wealth and savings and dignity. This is a global societal movement/revolution, which I am proud to be witnessing and participating in. Together with all our brothers and sisters of the world we will effect global change so we can all enjoy our right to abundance.
Glenn Greenwald of Salon did a thorough job of trashing the notion that Occupy Wall Street could be turned into a Democratic Party movement:
Can the Occupy Wall Street protests be transformed into a get-out-the-vote organ of Obama 2012 and the Democratic Party? To determine if this is likely, let’s review a few relevant facts.
In March, 2008, The Los Angeles Times published an article with the headline “Democrats are darlings of Wall St“, which reported that both Obama and Clinton “are benefiting handsomely from Wall Street donations, easily surpassing Republican John McCain in campaign contributions.” In June, 2008, Reuters published an article entitled “Wall Street puts its money behind Obama”; it detailed that Obama had almost twice as much in contributions from “the securities and investment industry” and that “Democrats garnered 57 percent of the contributions from” that industry. When the financial collapse exploded, then-candidate Obama became an outspoken supporter of the Wall Street bailout.
After Obama’s election, the Democratic Party controlled the White House, the Senate and the House for the first two years, and the White House and Senate for the ten months after that. During this time, unemployment and home foreclosures were painfully high, while Wall Street and corporate profits exploded, along with income inequality. In July, 2009, The New York Times dubbed JPMorgan Chase CEO Jamie Dimon “Obama’s favorite banker” because of his close relationship with, and heavy influence on, leading Democrats, including the President. In February, 2010, President Obama defended Dimon’s $17 million bonus and the $9 million bonus to Goldman CEO Lloyd Blankfein – both of whose firms received substantial taxpayer bailouts – as fair and reasonable.
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Would it not be a bit odd for a protest movement to “Occupy Wall Street” while simultaneously devoting itself to keeping Wall Street’s most lavishly funded politician in power?
At Washington’s Blog, we were informed about an attempt by the Democratic-aligned MoveOn organization to wrest control of Occupy Wall Street:
David DeGraw – one of the primary Wall Street protest organizers – just sent me the following email:
Top MoveOn leaders / executives are all over national television speaking for the movement. fully appreciate the help and support of MoveOn, but the MSM is clearly using them as the spokespeople for OWS. This is an blatant attempt to fracture the 99% into a Democratic Party organization. The leadership of MoveON are Democratic Party operatives. they are divide and conquer pawns. For years they ignored Wall Street protests to keep complete focus on the Republicans, in favor of Goldman’s Obama and Wall Street’s Democratic leadership.
If anyone at Move On or Daily Kos would like to have a public debate about these comments, we invite it.
Please help us stop this divide and conquer attempt.
DeGraw – who is wholly non-partisan [like the writers at Washington’s Blog] – tells me that there are many political views represented, and that Occupy Wall Street is very diverse with opinions across the political spectrum (and see this.)
This mirrors what some of the original organizers of various “Occupy” protests in other cities have said as well: MoveOn attempted to take credit for the events.
Everyone’s trying to cash in on the courage and conviction of the Wall Street protesters.
People are trying to associate Occupy Wall Street with their pet projects, in the same way that advertisers try to associate the goodwill of the Super Bowl, NBA playoffs, World Series or Olympics with their product.
But I hear from OWS organizers that the protesters come from totally diverse political affiliations. Many protesters support Ron Paul, many like Obama, others are for other parties or candidates or don’t vote at all.
The protesters themselves are having none of it, tweeting today:
We don’t want to be the democratic tea party or liberal tea party. We want to be our own movement separate of any political affiliation.
Just as President Obama disregarded the opportunity to turn the economy around in 2009, his party scoffed at the opportunity to rehabilitate its tattered reputation in the wake of its failure to enact meaningful financial reform legislation. The efforts by Democrats to jump the OWS train at this point are transparently specious. They aren’t fooling anyone.
As a result of the increasing popularity of the Occupy Wall Street movement (which now gets so much coverage, it’s referred to as “OWS”) President Obama has found it necessary to crank up the populist rhetoric. He must walk a fine line because his injecting too much enthusiasm into any populist-themed discussion of the economic crisis will alienate those deep-pocketed campaign donors from the financial sector. Don’t forget: Goldman Sachs was Obama’s leading private source of 2008 campaign contributions, providing more than one million dollars for the cause.
The Occupy Wall Street protest has now placed Obama and his fellow Democrats in a double-bind situation. Many commentators – while pondering that predicament – have found it necessary to take a good, hard look at the favorable treatment given to Wall Street by the current administration. A recent essay by Robert Reich approached this subject by noting that Obama is as far from left-wing populism as any Democratic President in modern history:
To the contrary, Obama has been extraordinarily solicitous of Wall Street and big business – making Timothy Geithner Treasury Secretary and de facto ambassador from the Street; seeing to it that Bush’s Fed appointee, Ben Bernanke, got another term; and appointing GE Chair Jeffrey Immelt to head his jobs council.
Most tellingly, it was President Obama’s unwillingness to place conditions on the bailout of Wall Street – not demanding, for example, that the banks reorganize the mortgages of distressed homeowners, and that they accept the resurrection of the Glass-Steagall Act, as conditions for getting hundreds of billions of taxpayer dollars – that contributed to the new populist insurrection.
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But the modern Democratic Party is not likely to embrace left-wing populism the way the GOP has embraced – or, more accurately, been forced to embrace – right-wing populism. Just follow the money, and remember history.
Another commentator, who has usually been positive in his analysis of the current administration’s policies – Tom Friedman of The New York Times – couldn’t help but criticize Obama’s performance while lamenting the loss a great American leader, Steve Jobs:
Obama supporters complain that the G.O.P. has tried to block him at every turn. That is true. But why have they gotten away with it? It’s because Obama never persuaded people that he had a Grand Bargain tied to a vision worth fighting for.
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The paucity of Obama’s audacity is striking.
As I recently pointed out, any discussion of our nation’s economic problems ultimately focuses on President Obama’s failure to seize the opportunity – during the first year of his Presidency – to turn the economy around and reduce unemployment. Despite the administration’s repeated claims that it has reduced unemployment, Pro Publica offered an honest look of that claim:
Ron Suskind’s new book, Confidence Men provided a shocking revelation about Obama’s decision allow unemployment to remain above 9 percent by ignoring the advice of Larry Summers (Chair of the National Economic Council) and Christina Romer (Chair of the Council of Economic Advisers). I discussed that issue and the outrage expressed in reaction to Obama’s attitude on September 22.
At The Washington Post, Ezra Klein wrote an engaging piece, which provided us with a close look at how the Obama administration was fighting the economic crisis. Klein interviewed several people from inside the administration and provided a sympathetic perspective on Obama’s decisions. Nevertheless, Klein’s ultimate conclusion – although nuanced – didn’t do much for the President:
From the outset, the policies were too small for the recession the administration and economists thought we faced. They were much too small for the recession we actually faced. More and better stimulus, more aggressive interventions in the housing market, more aggressive policy from the Fed, and more attention to preventing layoffs and hiring the unemployed could have led to millions more jobs. At least in theory.
Of course, ideas always sound better than policies. Policies must be implemented, and they have unintended consequences and unforeseen flaws. In the best of circumstances, the policymaking process is imperfect. But January 2009 had the worst of circumstances – a once-in-a-lifetime economic emergency during a presidential transition.
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These sorts of economic crises are, in other words, inherently politically destabilizing, and that makes a sufficient response, at least in a democracy, nearly impossible.
Klein’s apologia simply underscored the necessity for a President to exhibit good leadership qualities. Despite a “Presidential transition”, the Democratic Party held the majority of seats in both the Senate and the House. In July of 2009, when it was obvious that the stimulus had been inadequate, Obama was too preoccupied with his healthcare bill to refocus on economic recovery. As I said back then:
President Obama should have done it right the first time. His penchant for compromise – simply for the sake of compromise itself – is bound to bite him in the ass on this issue, as it surely will on health care reform – should he abandon the “public option”. The new President made the mistake of assuming that if he established a reputation for being flexible, his opposition would be flexible in return. The voting public will perceive this as weak leadership. As a result, President Obama will need to re-invent this aspect of his public image before he can even consider presenting a second economic stimulus proposal.
Weak leadership is hardly a justifiable excuse for an inadequate, half-done, economic stimulus program. Beyond that, President Obama’s sell-out to Wall Street by way of a sham financial “reform” bill has drawn widespread criticism. In his March 29 op-ed piece for The New York Times, Neil Barofsky, the retiring Special Inspector General for TARP (SIGTARP) criticized the Obama administration’s failure to make good on its promises of “financial reform”:
Finally, the country was assured that regulatory reform would address the threat to our financial system posed by large banks that have become effectively guaranteed by the government no matter how reckless their behavior. This promise also appears likely to go unfulfilled. The biggest banks are 20 percent larger than they were before the crisis and control a larger part of our economy than ever. They reasonably assume that the government will rescue them again, if necessary.
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Worse, Treasury apparently has chosen to ignore rather than support real efforts at reform, such as those advocated by Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, to simplify or shrink the most complex financial institutions.
Running as an incumbent President presents a unique challenge to Mr. Obama. He must now reconcile his populist rhetoric with his record as President. The contrast is too sharp to ignore.
Comments Off on Why Au-scare-ity Still Has Traction
Many economists have been watching Britain’s experiment with austerity for quite a while. Britain has been following a course of using cuts in government programs along with mass layoffs of public sector workers in attempt to stimulate economic growth. Back in February, economist Dean Baker made this observation:
That’s bad news for the citizens of the United Kingdom. They will be forced to suffer through years of unnecessarily high unemployment. They will also have to endure cutbacks in support for important public services like healthcare and education.
But the pain for the people in England could provide a useful example for the United States.
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Prior to this episode, there was already a solid economic case that large public deficits were necessary to support the economy in the period following the collapse of an asset bubble. The point is simply that the private sector is not prepared to make up the demand gap, at least in the short term. Both short-term and long-term interest rates are pretty much as low as they can be.
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From this side of the pond, though, the goal is simply to encourage people to pay attention. The UK might be home to 60 million people, but from the standpoint of US economic policy, it is simply exhibit A: it is the country that did what our deficit hawks want to do in the US.
The takeaway lesson should be “austerity does not work; don’t go there.” Unfortunately, in the land of faith-based economics, evidence does not count for much. The UK may pursue a disastrous austerity path and those of us in the United States may still have to follow the same road anyhow.
After discussing the above-quoted commentary by Dean Baker, economist Mark Thoma added this:
Yes — it’s not about evidence, it’s about finding an excuse to implement an ideology. The recession got in the way of those efforts until the idea that austerity is stimulative came along. Thus, “austerity is stimulative” is being used very much like “tax cuts increase revenues.” It’s a means of claiming that ideological goals are good for the economy so that supporters in Congress and elsewhere have a means of rationalizing the policies they want to put in place. It’s the idea that matters, and contrary evidence is brushed aside.
There seems to be an effort in many quarters to deny that the financial crisis ever happened. Although it will eventually become absolutely imperative to get deficits under control, most sober economists emphasize that attempting to do so before the economy begins to recover and before the unemployment crisis is even addressed – would destroy any chance of economic recovery. Barack Obama’s opponents know that the easiest route toward subverting the success of his re-election campaign involves undermining any efforts toward improving the economy to any degree by November of 2012. Beyond that, the fast-track implementation of a British-style austerity program could guarantee a double-dip recession, which could prove disastrous to Obama’s re-election hopes. As a result, the pressure is on to initiate some significant austerity measures as quickly as possible. The propaganda employed to expedite this effort involves scaring the sheeple into believing that the horrifying budget deficit is about to bite them in the ass right now. There is a rapidly increasing drumbeat to crank-up the scare factor.
Of course, the existence of this situation is the result of Obama’s own blunder. Although he did manage to defeat Osama bin Laden, President Obama’s February, 2009 decision to “punt” on the economic stimulus program – by holding it at $862 billion and relying on the Federal Reserve to “play defense” with quantitative easing programs – was a mistake, similar in magnitude to that of allowing Bin Laden to escape at Tora Bora. In his own “Tora Bora moment”, President Obama decided to rely on the advice of the very people who helped cause the financial crisis, by doing more for the zombie banks of Wall Street and less for Main Street – by sparing the banks from temporary receivership (also referred to as “temporary nationalization”) while spending less on financial stimulus. Obama ignored the 50 economists surveyed by Bloomberg News, who warned that an $800 billion stimulus package would be inadequate. In April of 2009, Obama chose to parrot the discredited “money multiplier” myth, fed to him by Larry Summers and “Turbo” Tim Geithner, in order to justify continuous corporate welfare for the megabanks. If Obama had followed the right course, by pushing a stronger, more infrastructure-based stimulus program through the Democrat-controlled Senate and House, we would be enjoying a more healthy economy right now. A significant number of the nearly fifteen million people currently unemployed could have found jobs from which they would now be paying income taxes, which reduce the deficit. But that didn’t happen. President Obama has no one else to blame for that error. His opponents are now attempting to “snowball” that mistake into a disaster that could make him a one-term President.
Former Labor Secretary Robert Reich saw this coming back in March:
House Majority Leader Eric Cantor recently stated the Republican view succinctly: “Less government spending equals more private sector jobs.”
In the past I’ve often wondered whether they’re knaves or fools. Now I’m sure. Republicans wouldn’t mind a double-dip recession between now and Election Day 2012.
They figure it’s the one sure way to unseat Obama. They know that when the economy is heading downward, voters always fire the boss. Call them knaves.
What about the Democrats? Most know how fragile the economy is but they’re afraid to say it because the White House wants to paint a more positive picture.
And most of them are afraid of calling for what must be done because it runs so counter to the dominant deficit-cutting theme in our nation’s capital that they fear being marginalized. So they’re reduced to mumbling “don’t cut so much.” Call them fools.
Professor Simon Johnson, former Chief Economist of the International Monetary Fund, recently brought the focus of the current economic debate back to where it belongs:
In the nation’s latest fiscal mood swing, the mainstream consensus has swung from “we must extend the Bush tax cuts” (in December 2010) towards “we must immediately cut the budget deficit.” The prevailing assumption, increasingly heard from both left and right, is that we already have far too much government debt – and any further significant increase will likely ruin us all.
This way of framing the debate is misleading – and very much at odds with US fiscal history. It masks the deeper and important issues here, which are much more about distribution, in particular how much are relatively wealthy Americans willing to transfer to relatively poor Americans?
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The real budget debate is not about a few billion here or there – for example in the context of when the government’s “debt ceiling” will be raised. And it is not particularly about the last decade’s jump in government debt level – although this has grabbed the headlines, this is something that we can grow out of (unless the political elite decides to keep cutting taxes).
The real issue is how much relatively rich people are willing to pay and on what basis in the form of transfers to relatively poor people – and how rising healthcare costs should affect those transfers.
As the Tea Partiers flock to movie theaters to watch Atlas Shrugged, perhaps it’s time for a porno send-up, based on a steamy encounter between Ayn Rand and Gordon Gekko called, Greed Feels Good.
Comments Off on Congress Could Be Quite Different After 2012 Elections
They come up for re-election every two years. Each of the 435 members of the House of Representatives is in a constant “campaign mode” because the term of office is so short. Lee White of the American Historical Association summed-up the impact of the 2010 elections this way:
On Tuesday, November 2, 2010, U.S. voters dramatically changed the landscape in Washington. Republicans gained control of the House and, although the Democrats retained control of the Senate their margin in that body has been reduced to 53-47.
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Clearly the most dramatic change will be in the House with new Republican committee and subcommittee chairs taking over.
Voter discontent was revealed by the fact that just before the 2010 elections, the Congressional approval rating was at 17 percent. More recently, according to a Gallup poll, taken during April 7-11 of 2011, Congressional job approval is now back down to 17 percent, after a bump up to 23 percent in February. Of particular interest were the conclusions drawn by the pollsters at Gallup concerning the implications of the latest polling results:
Congress’ approval rating in Gallup’s April 7-11 survey is just four points above its all-time low. The probability of a significant improvement in congressional approval in the months ahead is not high. Congress is now engaged in a highly contentious battle over the federal budget, with a controversial vote on the federal debt ceiling forthcoming in the next several months. The Republican-controlled House often appears to be battling with itself, as conservative newly elected House members hold out for substantial cuts in government spending. Additionally, Americans’ economic confidence is as low as it has been since last summer, and satisfaction with the way things are going in the U.S. is at 19%.
At this point, it appears as though we could be looking at an even larger crop of freshmen in the 2013 Congress than we saw in January, 2011. (According to polling guru, Nate Silver, the fate of the 33 Senate incumbents is still an open question.)
One poster child for voter ire could be Republican Congressman Spencer Bachus of Alabama. You might recall that at approximately this time last year, Matt Taibbi wrote another one of his great exposés for Rolling Stone entitled, “Looting Main Street”. In his exceptional style, Taibbi explained how JPMorgan Chase bribed the local crooked politicians into replacing Jefferson County’s bonds, issued to finance an expensive sewer project, with variable interest rate swaps (also known as synthetic rate swaps). Then came the financial crisis. As a result, the rate Jefferson County had to pay on the bonds went up while the rates paid by banks to the county went down. It didn’t take long for the bond rating companies to downgrade those sewer bonds to “junk” status.
JPMorgan Chase unsuccessfully attempted to dismiss a lawsuit arising from this snafu. Law 360 reported on April 15 that the Alabama Supreme Court recently affirmed the denial of JPMorgan’s attempt to dismiss the case, which was based on these facts:
Jefferson County accuses JPMorgan of paying bribes to county officials in exchange for an appointment as lead underwriter for what turned out to be a highly risky refinancing of the county’s sewer debt, which caused Jefferson County billions of dollars in losses. According to the complaint, JPMorgan, JPMorgan Chase and underwriting firm Blount Parrish & Co. handed out bribes, kickbacks and payoffs to swindle the county out of millions in inflated fees.
JPMorgan claimed that only the Governor of Alabama had authority to bring such a suit. I wonder why former Alabama Governor Bob Riley didn’t bother to join Jefferson County as a party plaintiff, making the issue moot and saving Jefferson County some legal fees, before the case found its way to the state Supreme Court?
Joe Nocera of The New York Times recently put the spotlight on another character from Alabama politics:
Has Spencer Bachus, as the local congressman, decried this debacle? Of course – what local congressman wouldn’t? In a letter last year to Mary Schapiro, the chairwoman of the S.E.C., he said that the county’s financing schemes “magnified the inherent risks of the municipal finance market.”
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Bachus is not just your garden variety local congressman, though. As chairman of the Financial Services Committee, he is uniquely positioned to help make sure that similar disasters never happen again – not just in Jefferson County but anywhere. After all, the new Dodd-Frank financial reform law will, at long last, regulate derivatives. And the implementation of that law is being overseen by Bachus and his committee.
Among its many provisions related to derivatives – all designed to lessen their systemic risk – is a series of rules that would make it close to impossible for the likes of JPMorgan to pawn risky derivatives off on municipalities. Dodd-Frank requires sellers of derivatives to take a near-fiduciary interest in the well-being of a municipality.
You would think Bachus would want these regulations in place as quickly as possible, given the pain his constituents are suffering. Yet, last week, along with a handful of other House Republican bigwigs, he introduced legislation that would do just the opposite: It would delay derivative regulation until January 2013.
As Joe Nocera suggested, this might be more than simply a delaying tactic, to keep derivatives trading unregulated for another two years. Bachus could be counting on Republican takeovers of the Senate and the White House after the 2012 election cycle. At that point, Bachus and his fellow Tools of Wall Street could finally drive a stake through the heart of the nearly-stillborn baby known as “financial reform”.
On the other hand, the people vested with the authority to cast those votes that keep Spencer Bachus in office, could realize that he is betraying them in favor of the Wall Street banksters. The “public memory” may be short but – fortunately – the term of office for a Congressman is equally brief.
TheCenterLane.com offers opinion, news and commentary on politics, the economy, finance and other random events that either find their way into the news or are ignored by the news reporting business. As the name suggests, our focus will be on what seems to be happening in The Center Lane of American politics and what the view from the Center reveals about the events in the left and right lanes. Your Host, John T. Burke, Jr., earned his Bachelor of Arts degree from Boston College with a double major in Speech Communications and Philosophy. He earned his law degree (Juris Doctor) from the Illinois Institute of Technology / Chicago-Kent College of Law.
