Important article in Salon, by David Dayen explaining how and why the Agriculture Committee is trying to gut some of the most important Dodd-Frank reforms.
Important article in Salon, by David Dayen explaining how and why the Agriculture Committee is trying to gut some of the most important Dodd-Frank reforms.
It is a grey day in Fort Greene, with a light mid-March snow; the trees that sit across from my window are gnarled, ominous, waiting to bud. I do not want to think about the Koch brothers.
In fact, for several years, I have been avoiding thinking about the Koch brothers in anything but the most glib way. I don’t want to think about them even as I feel them entering the veins of every conversation. I am trying to think of the last political conversation about the structure of our economy and our politics in which they played no role, and I cannot. But their explicit effort to buy the Tribune newspapers and television stations makes not thinking about them impossible. They have been buying in every area protected by the First Amendment—political speech, petition (lobbying), assembly (through Americans for Prosperity) and now they are making a go the press.
They are clearly interested in money, but I think the focus on their greed is not as helpful as the focus on their desire for power, the machgelust, the desire to dominate. They are not like King Midas, foolishly hoping for gold, or like Bloomberg, who seems most to want the status of monarch: instead, their desires for power and wealth and entangled each with eachother, each feeding the other in an acquisitive, ever-growing need.
But I have been avoiding thinking about them because I don’t know how to think about them, and I don’t know how to think about them because I don’t know how they can be stopped or slowed. Unlike, say, Bob Dole, there is no reason to think that any appeal to civic virtue or patriotism or an obligation to a public sphere would have any meaning to David or Charles Koch, both of which have an expressed disdain for that “love of equality” that Montesquieu talked about and Tocqueville witnessed in America, the love that is essential for a democratic self-governing society. In his formulation, the love of a country, or republic, in a democracy must be the love of democracy itself, and a love of that democracy is a love of equality. But if one does not credit that love, then there is no leverage in the accusation.
Nor is there much of a solution in the protests against products and efforts to boycott them. Unlike some individual companies, that might at the margins respond to consumer boycotts, the Koch’s goal is not in any particular product, but in power itself, and so these boycotts might cost a little—and be ethically important to participate in for other reasons, including highlighting their reach—but not actually have an impact on the overall strategy.
To get to the core of the Koch brothers problem is to look at the core of how they can exist in the first place, in a democracy dedicated to making sure that such powerful individuals cannot exist. We cannot structure a society on the assumption that those who become extremely rich will not want to buy the intellectual life of the country in order to centralize their power. They are not accidents, they are symptoms of something that is not working, and it is only the love of democracy and equality or an indifference towards power that keeps our other most wealthy citizens from overtaking this space.
If we could go back in time and create a world where the Koch’s could never amass so much power, how would we do that?
I know one thing: Citizens United and Buckley v. Valeo and all their relatives is important, cases that made in impossible for the public to pass laws limiting the sphere of influence of private concentrated power in public electoral debates is important. This is a goal, and can happen. So too can we pass laws, like the Fair Elections Law in New York, that give politicians real reasons to go begging and listening to their true masters—the public—instead of to the phantom threats of Koch Brothers’ spending.
But after that, I have a series of questions.
What anti-conglomerate rules would have made a difference in the development of Koch Industries?
What rules about sitting on multiple boards?
What merger rules would have made a difference?
What rules about vertical integration would have made a difference?
Why do we provide the subsidy of limited liability to companies over a certain size?
I feel like understanding the answers to these questions—working backwards from the Koch experience—will help us work forwards. One of the key jobs of democratic governance is choosing the nature of the marketplace we want to support. There is no natural market, no equilibrium to which markets, set “free,” naturally tend—we know that just by the briefest scan of world history. Instead, the general shape of a market, what gets encouraged and discouraged, is a public collective choice, and arguably one of the most important public and collective choices. Right now, we have chosen to support through our laws and institutions a marketplace that is highly concentrated and leads to the immense concentration of individual wealth, and a marketplace with no meaningful limits on the spheres in which one can use that wealth.
Now you can see why I avoid it—one would have to go backwards and look at all their activities, and see whether, in fact, a serious competition policy would have made a difference. Maybe I’m wrong. Maybe it wouldn’t have made a difference. But I’m betting that I’m not.
And then there’s the final question—how to deal, going forward, with media ownership. Unlike in the industrial and extractive arenas, I have a much harder time imagining a good media ownership policy. Should media corporations not be able to be subsidiaries? If so, what good definitions of media do we have? Just as most companies are becoming banks, most companies are becoming media, in one way or another. What is Google if not a media company? How do we compare Google to the Tribune? We need a new competition policy for an information era, and I don’t know what that looks like.
These are constitutional questions, just as much if not more as Buckley v. Valeo is a constitutional question–they go to how we constitute ourselves, what we are made of. Our critical rights exist on top of our collective constitution, and the most virile rights will do little if the substructure is weak.
In Benjamin Franklin’s written speech at the beginning of the Constitutional Convention, he argued:
Sir, there are two passions which have a powerful influence in the affairs of men. These are ambition and avarice—the love of power and the love of money. Separately, each of these has great force in prompting men to action; but, when united in view of the same object, they have, in many minds, the most violent effects. Place before the eyes of such men a post of honor, that shall, at the same time, be a place of profit, and they will move heaven and earth to obtain it.
Franklin was animated by the fear that people would go into public office in order to get rich and powerful. He was troubled by the history of office-buying and selling in England. With the Koch brothers, they are buying offices wholesale, and the joined love of money and power is already having “the most violent effects” on the minds of the country. They have entered the veins of the country and the veins of the trees in the park.
Their industries are both polluting and using a blend of paid media, paid pundits, paid think tanks, and electoral spending to make sure that nothing serious is done about climate change. Because of the Koch brothers, the trees are budding differently this year, and sap is running differently in my home state of Vermont. If they are willing to change the seasons of the year, we must be willing to change something far less permanent, the nature of our markets.
Read this great article by Lina Khan, tracking what happened to what could have been an important case against Monsanto’s monopolistic practices. She writes:
The public will suffer the costs of Monsanto’s capture of almost total control over much of the U.S. seed business. Since 2001 the company has more than doubled the price of soybean and corn seeds, whose crops are used in foods ranging from cereal and pizza to chocolate and soda… “Monsanto has used its power to raise prices and retain control over genetics at the public’s expense,” says Neil Harl, agricultural economist at Iowa State University who has studied the seed industry and antitrust law for decades and consulted with the Iowa attorney general’s office during the state investigation.
The big banks and concentrated industries have taken over and dominate politics. They are too big to fail, and too big to jail. 70% of Americans want to break them up and believe that “the solution is to break up big banks and empower communities.”
Dodd-Frank did not make the banks any less concentrated and they are still making risky bets, knowing that the American public will pay if they crash again.
We don’t need Too Big To Fail Banks.
We don’t need to subsidize the accumulation of political and economic power. Instead of just talking about jobs, we need to talk about the structure of our economy. We can have a sustainable, growing economy with real competition. We can have an economy that stops transferring wealth and power to a few .
A few years back, Simon Johnson wrote a brilliant and important piece in The Atlantic, called “The Quiet Coup.” Johnson’s basic point was that the United States, like a banana republic, has been taken over by oligopolistic powers. Looking at the financial crisis, he saw how concentrated, elite business interests took risks with government backing, got bailed out by the government, and were then protected by the government. Instead of a representative democracy, you had a quasi-oligopolistic political system. Since his article, the concentration and power of those financial institutions has only grown, despite some important legislative reforms in Dodd-Frank.
Johnson’s analysis is fairly widely shared by people across the political spectrum. But those who agree with his analysis of the political economy have different views of the solution. There are two mainstream views about how to solve the problem, and one traditional American view that has not gotten enough attention:
My goal in this post is simply to lay out the three ways of thinking about the problem and look at a few core premises. This is something I’m thinking about a lot and I’d welcome a response, feedback, and suggestions.
Change the Way Campaigns are Funded
The first view tends to be associated with Democratic and progressive views, although public support is broad. The logic goes like this: Politicians are currently dependent on the richest Americans, and that dependency leads them to effectively work for them. Sometimes they are doing so consciously; they don’t dare support a financial transactions tax that might poll well because of fear of retaliatory spending at reelection. Sometimes they do so unconsciously; in order to ask for campaign money, they spend a great of time with the lobbyists and the wealthiest Americans, so they believe the lobbyists’ stories and internalize the world-view of the wealthy. Natural human empathy, combined with ongoing contact with a particular subset of society, makes the politician see the world through totally distorted lenses.
We can change both the conscious and subconscious subservience to the oligarchs if we change the way campaigns are funded. A citizen-funded elections model does that. If a candidate is going to raise more money talking about popular and populist issues, then she does that to get reelected. She doesn’t have to provide access to lobbyists in order to get funded, so she can hear the lobbyists’ “fact-sheets” more objectively, and when needed. (One of my favorite anecdotal stories about citizen-funded elections, from Connecticut, is that the “lobbyists hang outside the bathrooms now,” trying to get access to politicians who they used to be able to schedule meetings with because of implicit relationship of access to campaign cash).
I find this argument very persuasive. It does not address independent spending, or the role of media, or other non-campaign-finance related ways in which concentrated financial power exerts political power, but it does not pretend to; it changes the core behavior of political representatives, and in so doing radically diminishes the oligarchic risk.
Shrink the Size of Government
This view tends to be associated with the Republican Party, although depending upon how you poll it, there is broad cross-partisan support for it. The theory behind this is that if government is smaller, business interests won’t go to it for favors. If you are a businesswoman who sells soap in a small-government world, and have a million dollars to spend, you are going to spend it on making better soap. If you are the same businesswoman in a big government world, you are going to spend 70 percent of it on making soap, and 30 percent on trying to extract money from the government through subsidies. A government with lots of disposable income will encourage a flood of money to go into buying government, instead of into improving the economy — thereby creating oligarchs.
Therefore, if you can shrink the total size of government, you will keep business people from turning into oligarchs. However, there is a flaw in the model. As I understand it, the model generally assumes a relatively low upper level on gains from governmental favors. Returning to the strategies faced by the soap manufacturer, she would want to know the potential value of the gain from government before deciding what money to spend on government and what money to spend on making better soap. In his classic 1983 paper modeling this kind of behavior (which is generally called rent-seeking), Gary Becker writes, “The total amount raised from taxes, including hidden taxes like inflation, equals the total amount available for subsidies, including hidden subsidies like restrictions on entry into an industry.” However, the creative rent-seeker, like the entrepreneur in any area, will not look at present flows to determine potential flows, but will look at possible flows given political limitations. The potential value of a tax reduction is up to the total amount of taxes currently levied; the potential amount the soap maker can get for her political contributions is constrained by the existing size of the tax. When it comes to regulations, the potential gain is the absolute removal of all soap regulations. The potential value of intellectual property laws and other favors could lead to a government grant of monopolization in her own field, or, if she’s ambitious, a grant of monopoly across several fields. All of those are huge potential values, even with a “small” government. But they are all constrained and somewhat related to government size.
There is no theoretical constraint, however, on the potential size of a soap subsidy. The potential value of the subsidy is not defined by existing taxes. More taxes can be levied; the existing population of the country does not define it, because levies (direct and indirect) can be brought to bear on other countries’ populations. This is, of course, one of the stories of empire. As a theoretical matter, then, the upper limit of a subsidy from a government is the maximum revenue it can generate through the use of its police power. There are plenty of real-world examples where rents are sought and created despite the absence of existing revenue. The bailout of the financial institutions is just one example: The country did not already have a pot of money to give the financial giants, but it created one. The “size” of the government did not limit the political efforts to take it over.
Having said that, there are certain areas where there is real truth in this analysis, in particular in the area of earmarks and other highly discretionary funds that are relatively easy to extract. In general, the less public involvement in a decision, the easier it is to spend money to get money from government.
Break up the Big Companies
This third view does not traditionally have the same partisan affiliations as either of the others. The very little polling done of this view suggests overwhelming public support — 70 percent for breaking up banks — but the general question of breaking up big companies is unfortunately not being asked often enough. At different times, different parties have been more or less involved in both building up and destroying antitrust. The Sherrod Brown-David Vitter alliance on breaking up big banks is not unusual; it is part of a long tradition of left-right populist agreement on antitrust.
The theory behind this view is that smaller companies don’t create oligarchs, and truly competitive industries invest in the economy, not government. If our soap seller, above, has less than a certain amount of total employees and total cash, she is far less likely to spend a dime on trying to get something out of Congress. This is in part because of the high costs of setting up and maintaining political relationships, which larger companies regularly do. This is in part because the small or medium-sized business doesn’t have the additional “Too Big to Fail” threat, which makes each dollar they spend on campaigns or advertisements worth more, backed as it is by the implicit threat that company failure leads to societal breakdown. Furthermore, if our soap seller is in a truly competitive industry, as opposed to an industry with a handful of powerful soap companies, she will have to turn her energies to her product.
If we want a society of smaller and medium-sized firms, we can have it — there are no constitutional constraints. We need a strong antitrust regime and stronger antitrust laws, and the capacity to enforce those laws located in people who aren’t tied into the oligopoly.
This view has the advantage of simplicity and if the laws are well and simply crafted with bright lines, it also has the advantage of taking government out of most business decisions (therefore also reducing the incentive for soap sellers to spend their time trying to be oligarchs.
This is not the first time we’ve faced an oligopoly problem, and the amazing thing is that we solved it — not perfectly, but fairly impressively. In 1902, Teddy Roosevelt started his trust-busting career, and in 1907, corporate donations to federal campaigns were banned for the first time.
A Report from A Front That May Soon Be Shut Down
These are the faces of a wannabe revolution, more than a protest but not yet quite a major Movement, The spirit is infectious perhaps because of the sincerity of the participants and their obvious commitment to their ideals.
Occupy Wall Street is more than a protest; it is as much an exercise in building a leaderless, bottom-up resistance community with a more democratic approach to challenging the system where everyone is encouraged to have a say.
But saying that also leads to a conflict between my emotional identification with the kids that have rallied in this small park/public space on Liberty Street to exercise some liberty, with a despairing analysis that wishes this enterprise well but harbors deep doubts about its staying power and impact.
This privately owned park, devastated by debris on 9/11 and then rebuilt by a real estate magnate who named it after himself, is also a place that is under 24 hour surveillance from a hostile New York City police Department which has put up a fence on one side of the park, and brought down a spy tower from Times Square to track the participants from on high, sprinkled infiltrators into the crowd.
By the time I left, late on Saturday afternoon, the police arrested 70 people who had joined a march that went from Wall Street to Union Square, New York’s traditional gathering place for political rallies for nearly l00 years.
You can watch it all on a live stream.
In many ways this is a 2011 style protest modeled after Tahrir Square in Cairo. It is non-violent, organized around what’s called a “General Assembly” where the community meets daily to debate its political direction and discuss how it sees itself. There are no formal leaders or spokespeople, no written down political agenda and no shared demands.
They focus on using social media. Twitter is their megaphone.’
They have no soundsystem. When participants want to make an announcement, they yell “Mike Check” which is repeated by the whole crowd. They also repeat the announcement, a few words at a time so everyone can hear it.
This bottom-up anarchist sensibility and ideology conflicts with the mass mobilizations of old where an organization issues a call and a coalition of groups carries it out.
I ran into some of yesterday’s movement leaders, Leslie Cagan who ran United for Peace and Justice and organized the massive anti-Iraq war protests and marches in New York and Washington before and after. She was as intrigued as I was about this gathering of the committed. She found the focus a bit vague but seemed willing to give it a chance to grow and learn by making its own mistakes.
Other 60’s activists like Aron Kay, known as the “pie man” for all the famous and infamous people he pied in the face to protest their crimes and misdemeanors—including Andy Warhol for dining with the Shah of Iran—was also showing his solidarity by turning up and squatting in the park.
Lower Manhattan on a Saturday is usually a Mosque less Mecca for tourists visiting Ground Zero, a crime scene if there ever was one. It is a symbol of a national failure to defend this country as well.
It’s also the place where the 911 Truth Movement shares its findings weekly about what “really happened” with visitors
Just a few blocks away is another crime scene: Wall Street, which symbolizes an ongoing economic failure. In this past week, access has been limited and in this free country of ours protestors could not parade in front of the NY Stock Exchange, another privately run financial institution. That led Yves Smith of the Naked Capitalism blog to opine, “I’m beginning to wonder whether the right to assemble is effectively dead in the US.”
Many banks like Chase doubled their security forces and put up fences to protect themselves from the people the NY media has labeled “kids and ageing hippies.”
The panic in the exchange is mirrored in the insecurity in the streets where surveillance cameras, private police forces and NY cops defend the bastions of privilege.
The police went on the offensive Saturday with mass arrests of activists. Scott Galindez filed this report on Reader Supported News, “ While the live feeds were up I witnessed a very powerful arrest of a law student whose parents were recently evicted from their home. He dropped to his knees and gave an impassioned plea for the American people to wake up! There are reports of police kettling protesters with a big orange net, at least five maced, and police using tasers.”
There were also reports of the use of mace, tear gasm and pepper sprat which hit, two old women. We are so used to these storm trooper tactics that most expect them. There had been fewer arrests last week although the police seem to now have identified key organizers and are singling them out
On Saturday, police gave out a notice saying that it is now illegal to sleep in the park. They then put up a sign on a park wall. I watched a member of the police command, a “white shirt” named Timoney, marched into the park and gruffly ordered the communications team that spends most of its time tweeting out the latest news, to take down some large umbrellas the activists were using to protect their computers from rain.
The police consider these “structures” and prohibit them. Earlier in the week, they arrested people for using tarps to protect their gear. (They don’t see the irony in that term given the way the TARP law bailed out the banksters.)
Many of the people in park believe the end may becoming with the police eager to end what they see as a Woodstock on Wall Street complete with topless teens and long hairedmilitants. This assemblage clearly affects their macho identity as upholders of law and order, as they define it. The probably agree with the right wing Red State website that calls the protesters a “menagerie.”
I wouldn’t rule out mass arrests once a provocation, theirs or the protests, provides the pretext.
Will the Occupy Wall Street collectives be able to continue to occupy a zone that has been occupied for years by the greedsters of the finance world?
More importantly, will the issues they are trying to draw attention to, however symbolically, be taken up by others?
Will it take more cracked heads or even a police killing to move New Yorkers to support a campaign to rein in Wall Street?
Where are the unions and New York’s progressive democrats and organizations? Why aren’t they in the streets?
Why don’t they realize that economic justice issues are essential to transforming this oligarch driven country?
I having been calling for years for more protests on Wall Street to put the issues of Wall Street crime on the agenda, But with media barely covering this “occupation,” with the activists being denigrated for their youth and inexperience, will this one have the impact I was hoping for.
It seems unlikely.
News Dissector Danny Schechter directed Plunder The Crime of Our Time, and wrote a companion book about the financial crisis as a crime story. (Plunderthecrimeofourtime.com) Comments to Dissector@mediachannel.org
Last year’s Dodd-Frank financial reform bill didn’t directly fix the too-big-to-fail problem that necessitated the 2008 bailouts. Instead, it allowed the big banks to grow even bigger, but gave regulators new authority to require the big banks to report more information to the government and force them to follow stricter rules. It also gave regulators new guidelines to consider when deciding whether or not to allow bank mergers that could create new too-big-to-fail entities. Basically, the bill took a noncommittal approach to addressing issues of bank size and interconnectedness. Congress punted the big decisions off to regulators and made it possible for regulators to take drastic action, but gave them a lot of leeway to maintain the status quo if they so choose.
These provisions of the bill are about to get their first big test. Capital One, currently the ninth largest bank-holding company in the U.S., has reached an agreement with the Ducth ING Groep to purchase their U.S. arm, ING Direct. They are planning to then turn around and leverage assets gained in that deal to purchase HSBC’s subprime credit card division. The acquisitions would make Capital One the fifth largest bank in the U.S., right behind such infamous too-big-to-fail giants as Bank of America, Chase, Citigroup, and Wells Fargo. It would mean that financial assets and power in the U.S. would become even more concentrated in a small group of top corporations.
In Section 163 of Dodd-Frank, the Federal Reserve Board of Governor’s is given new guidelines to consider when deciding whether or not to approve the acquisition of one large bank by another large bank. “The Board of Governors shall consider the extent to which the proposed acquisition would result in greater or more concentrated risks to global or United States financial stability or the United States economy,” the bill states.
This language is typical of the bill. Far from being a dictate from Congress (i.e. no mergers that will create new banks with more than $xxx in assets), it doesn’t even give the Fed a specific directive to reject an acquisition that would result in more concentrated risks. But it clearly does provides them with justification to reject it on those grounds.
In June, Fed Board of Governors member Daneil Tarullo said that regulators should oppose mergers that increase risk in the financial system unless there is a significant public benefit. “The regulatory structure for SIFIs [systemically important financial institutions] should discourage systemically consequential growth or mergers unless the benefits to society are clearly significant.” So far, though, it’s not clear what the public benefit of a bigger Capital One might be. Recent research from the New York Times shows that Capital One has basically eliminated their small business lending in recent years. In 2006, they approved $228 million in small business loans, but by 2010 that lending had been reduced to just $600,000 nationwide. It’s by far the most dramatic drop-off in small business lending by any of the top-25 banks the Times looked at.
The National Community Reinvestment Coalition is running a letter-writing campaign asking the Federal Reserve to extend the public comment period on the acquisition by 60 days and to hold public hearings in at least 5 major cities before the deal is approved or rejected. “If the Capital One acquisition is approved without substantial regulatory review, it will signal a continuation of a regulatory culture that brought us the foreclosure crisis, the financial crisis and financial institutions that were Too-Big-to-Fail and are even bigger today,” they write. They’re asking for letters to be submitted by August 22nd.
Cross-posted from Open Congress.
Both liberty and democracy are seriously threatened by the growth of big business. Today the need is not so much for freedom from physical restraint as for freedom from economic oppression. Already the displacement of the small independent businessman by the huge corporation with its myriad of employees, its absentee ownership, and its financier control, presents a grave danger to our democracy. The social loss is great; and there is no economic gain. Political liberty, then, is not enough; it must be attended by economic and industrial liberty. — Louis Brandeis
When speaking of wealth redistribution, the conversation, if it can be started at all, begins and ends with taxes. Taxing the concentration of wealth in America today is certainly necessary, but it is in no way sufficient. A century ago, at the birth of the Progressive Movement, the burgeoning industrial era brought with it the concentration of wealth under the industrial corporate structure. The Progressive Movement brought forth many ideas, including higher wages and the forty hour work week, but the most democratic and least implemented was anti-trust — to breakup the concentration of wealth by breaking up large corporations.
Today, any conversation on wealth redistribution, let’s be more accurate and call it democratic revitalization certainly begins with taxing wealth and breaking up the big corporations, none more so important then the big banks, and remember, there’s really six of them who hold your government subservient. But, in speaking of wealth redistribution for the 21st century, we must bring in our knowledge of technology, and the role it plays in wealth concentration, and how technology, but certainly not it alone, can be used to counter what is an increasingly fatal stranglehold, as wealth tightens its grip on our collective democratic necks.
Industrial technologies concentrated wealth. The two easiest examples are fossil fuel electricity generation and the oil powered internal combustion engine. Taxing and breaking up the corporate structure of the utilities, oil, and auto companies, while necessary are not sufficient policies for wealth redistribution, technology must also be used to redistribute, not create new wealth. For example in the electric industry, the 500 megawatt coal plant, using advancing solar technologies needs to redistributed onto thousands of rooftops in Los Angeles, giving the home and business owner the ability to generate their own power, and network together to deliver power to others.
The same goes with oil and the internal combustion engine. Mass transit, car pooling, and the redesign of communities to make them more conducive to walking and biking, disperses the concentrated power of the oil and auto industries. Again, this is not about creating new wealth, but redistributing existing wealth.
Most importantly we must stop the concentration of wealth in our developing information culture. Microsoft, Amazon, The Google, and most obscene yet, Facebook, are the industrial corporate structure being used to concentrate wealth with new technologies. Paradoxically, they use new technologies which could provide the opportunity to create a new democratic distributed networked order, if, we used the more deeply qualitative value of information, not its cruder quantitative value, simply accounted as product. Microsoft used its control of the operating system to ruthlessly concentrate wealth for its top brass. Google has used the openness of the Net’s architecture to give it a more centralized order, while Facebook incredulously mines the data of its users to sell to others.
What we have learned in the brief history of the networked microprocessor is that technology may have certain determinant factors, and of course its very adaption changes the society which preceded it, but without a politics, even the most inherently distributed technologies can be used to concentrate power. And if the networked microprocessor is to reach its democratic promise, those concerned about its evolution are going to have to become much more concerned with the evolution of the society of which it is part. As Mr. Brandeis would well have understood, to
gain political liberty we must attend not just economic and industrial liberty, but technological liberty.
gain political liberty we must attend not just economic and industrial liberty, but technological liberty.
THE WAR OF THE KAMIKAZES AS THE DEBT CEILING DEBATE TAKES CENTER STAGE AND APPEARS SUICIDAL
New York: During World War 2, the Japanese deployed units of pilots who turned their planes into bombs, and sacrificed themselves in the name of their emperor in a holy war against US ships. They would aim for the deck of aircraft carriers and do as much damage as they could at a cost of their equipment and their lives.
Guerilla armies refined the tactic and made it less pricey. Much lower cost suicide belts with explosives are now used by individuals to terrorize their enemies without having to sacrifice weapons systems.
Now, American politics has spawned its own kamikazes in the persona of ultra-right wing fanatics in suits who were ready to blow up the world financial system if they don’t get their way.
The use of the $14.3 debt ceiling was carefully calculated as a political weapon to terrorize financial institutions and governments by playing a game of their own version of apocalypse now. Concede to our political demands to shrink the government, no matter what the cost to the poor and or benefit dependent and even federal employees, or we will further destabilize the system.
Our issues trump yours say these contemporary kamikazes because we have the votes. We don’t care of the nation defaults on its financial obligations. Take no prisoners is their approach; ‘Let it all fall apart’ is the threat, ‘our way or the highway’ is their mantra.
In response, the Administration has been offering what it calls “a grand bargain” which was off the table and is now back on after the they agreed to accept a short term debt ceiling hike. This approach, however, assures that this issue will stick around like a club to keep the battle going.
The new deal will allow for $4 trillion in budget cuts over the next decade. It will cut Medicare and Social Security in the name of “closing loopholes.”
The tension is overheating in a Washington drenched in the sweat of summer humidity. National Public Radio compares the discussions to a game of high stakes poker:
“If you remove the politics, the talking points and the media from the debt-ceiling showdown, you end up with something that looks like a high-stakes, no-limit Texas Hold ‘em poker game. You’ve got posturing, risk taking, betting and, of course, bluffing.”
“It’s a war zone. You can’t be a top-notch poker player without bluffing,” says Antonio Esfandiari, a champion poker player who has won millions at the tables.”
The Atlantic Wire reports: “ As the deadline approaches, both parties will start flexing less and compromising more…. According to The New York Times, the Republican hard-line stance on raising taxes is starting to splinter. Some have “appeared more willing to consider a deal locking in spending cuts that Mr. Obama has said he would take if balanced by new revenues.”
The relentless righteousness of the ideologically driven Tea Party backed ‘caucus of the crazy’ freaked out not just the President and the Democrats but many Republicans who, like them, depend on financing by Wall Street.
In a world of crashing currencies and defaults on the European horizon they don’t want the same here as trigger happy hardliners dictate to the country, and by extension the world.
Their political coup threatens to turn into an economic coup even though economic issues are being used for partisan political purposes.
Wall Street is doing some political bombing of its own to get the GOP leadership to try to rein in their renegade factions out to please a base, which is, in turn, funded by the billionaire Koch brothers and others with self-interested agendas of their own.
Schoolyard bullies have nothing on these guys who have been holding the political debate hostage to their simplistic message points, which are then drilled into the nodding minds of their base over the years by the likes of the Fox Views Network and their rightwing radio brigade.
The politicians will keep dancing and prancing until the music stops.
Our fearless President who has rarely seen a compromise he won’t embrace is playing his usual double game, telling his supporters how firm he will be, and telling his avowed enemies he is willing to play in their pigpen if they would just be more “reasonable.”
The whole point of their exercise is to posture at not being reasonable, to maintain the appearance of a united front to get as much as they can by way of concessions and goodies for their own districts while lambasting all government spending.
New York Times points out that many of the Tea Party boosters on the hill are not shy about seeking government pork while they are blasting government excess,
“WASHINGTON: Freshman House Republicans who rode a wave of voter discontent into office last year vowed to stop out-of-control spending, but that has not stopped several of them from quietly trying to funnel millions of federal dollars into projects back home.”
Progressive Democrats are furious and smell betrayal. Here’s what MoveOn had to say:
“Reports that the White House is negotiating a secret debt deal directly with House Republicans that could include deep cuts to Medicare, Medicaid and Social Security with limited or no immediate revenue increases are deeply troubling. Any deal that slashes programs for seniors and working families while doing nothing to make the rich and corporations pay their share is a total non-starter and Democrats in Congress should rule it out immediately.?
“The Democratic base did not work night and day to elect Democrats so that they could cave to Tea Party extremists who are intent on gutting the social safety net millions of us fought to establish and protect.”
At the same time, Obama is following in Bill Clinton’s footsteps, according to former Labor Secretary Robert Reich:
“After a bruising midterm election, the president moves to the political center. He distances himself from his Democratic base. He calls for cuts in Social Security and signs historic legislation ending a major entitlement program. He agrees to balance the budget with major cuts in domestic discretionary spending. He has a showdown with Republicans who threaten to bring government to its knees if their budget demands aren’t met. He wins the showdown, successfully painting them as radicals. He goes on to win re-election.
Barack Obama in 2012? Maybe. But the president who actually did it was Bill Clinton.”
This debt issue has been calculated to focus attention on government as the fount of all evil, and distract attention away from out of control corporate enrichment, Wall Street crimes and looting in form of higher and higher CEO bonuses and greed driven compensation schemes. There is little mention about how the failed and deceptive wars in Iraq and Afghanistan drove the deficit up–with GOP backing of course!
A new poll shows public outrage at the government at their highest levels ever. (Some of this is fueled by the stalemate on the hill.)
This jihad on debt was hatched by right wing think tanks and the studies commissioned by billionaire Pete Peterson paint alarmist scenarios about the government going broke through a combination of reckless entitlement programs like Social Security and Medicare and runaway spending. There’s no mention of the amount wasted on wars or the debt that finances programs spawned by the Pentagon and the private sector that they believe can do no wrong.
It is in sharp contrast to the debt issue I explored in my 2006 film In Debt We Trust: America Before The Bubble Burst. I focused on mounting consumer debt and how it turned so many families into serfs, living to pay off high interest credit cards, crushing student loans and fraudulent sub prime mortgages.
Not only is this debt crisis that so many American feel deeply and personally not on the Republican agenda, but the kamikazes have fought successfully to neuter proposed reforms to protect consumers and have managed to force the Administration to abandon Harvard Professor Elizabeth Warren who led the fight for government agency to stop the abuses by banks and credit card companies.
These Republicans have no shame in weakening attempts to make the octopus of loan companies more transparent and less predatory.
Protecting people is not one of their priorities. Defending the privileged is.
While their narrative of negativity became dominant, progressives either became a cheering squad for corporate democrats or over focused on the machinations of the flamboyant Michelle Bachman’s, Sarah Palins and Glenn Becks.
They mostly reacted instead of acting.
They did not fight their narrative with another one attacking the economic powers in a crusade for justice. They watched as community organizations like ACORN were driven into the ground and only woke up when the Governor or Wisconsin went after the collective bargaining rights of unions.
Instead of organizing and united around campaigns based on program for substantive change, they went on the defensive designed to hold on existing rights instead of also fighting for new ones for all Americans.
As a result, the left has left itself out of this polarized political war even as the economy worsens while the media focuses on the clash of the gladiators in the hill. Reich reminds us these are not Clinton times:
“When the Great Recession wiped out $7.8 trillion of home values, it crushed the nest eggs and eliminated the collateral of America’s middle class. As a result, consumer spending has been decimated. Households have been forced to reduce their debt to 115% of disposable personal income from 130% in 2007, and there’s more to come. Household debt averaged 75% of personal income between 1975 and 2000.
We’re in a vicious cycle in which job and wage losses further reduce Americans’ willingness to spend, which further slows the economy. Job growth has effectively stopped. The fraction of the population now working (58.2%) is near a 25-year low—lower than it was when recession officially ended in June 2009.”
Who is talking about this disaster?
News Dissector Danny Schechter directed the DVD Plunder The Crime of Our Time to expose Wall Street Crimes. (PlundertheCrimeOfOurTime.com)
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