bush

Ten Years Ago We Were Paying Off The Nation's Debt. But Then We Elected Obama.

Dave Johnson — Tue, 09 Aug 2011 13:16:01 -0400

Just ten years ago this country was running huge surpluses and paying off its debt. But then we elected Obama and all hell broke loose. Oh, wait...

Something Happened

Between the time ten years ago when we had big surpluses and were paying off the debt and now when we are told the "Obama spending and deficit" mean we have to cut back on the things We, the People do for each other, something happened. Something changed. The things that happened, the things that changed, are being ignored in the current DC discussion about what we need to do to fix things.

Separation From Reality

This DC/Tea Party argument over deficits and the Reagan/Bush debt is completely separated from facts and history. And it is completely separated from what the public wants. There are things that we are supposed to just not remember and which seem to be taboo in the national media. There are things that are "off the table" for discussion, and certainly for solving our problems.

But here is some reality anyway, even if we're not supposed to see it. Just ten years ago we were paying off debt at a rate that would have completely paid it all off by now. But under George W. Bush we cut taxes for the rich and more than doubled military spending. We deregulated and stopped enforcing laws. We let the big corporations run rampant. Our federal budget turned from huge surpluses to massive deficits, and Bush said it was "incredibly positive news" because it would lead to a debt crisis they could use to shock people into letting the corporate right privatize and thereby profit.

And then, under and because of Bush, our economy collapsed.

Deficits From Tax Cuts And Military Spending

Once again: the deficits are the direct result of tax cuts for the rich, and huge increases in military spending. Then that huge jump in already-large deficits up past the trillion-dollar level that occurred in Bush's last budget was the result of the Bush-caused financial collapse. The economy collapsed and the government stepped in with hundreds of billions, even trillions, to rescue the wealthy, with "bailouts," while doing little, even cutting back, on what our government does for We, the People. That all happened in Bush's last budget year, not Obama's first.

To Fix The Damage, Undo The Cause

The way to fix deficits is to undo the damage Bush did, by raising taxes on the rich, and cutting back the huge, bloated, extreme, massive, astonishing, incredible, stratospheric military budget. And we have to boost the economy by investing in rebuilding our infrastructure to get people employed. We have millions of jobs that need doing, while millions are looking for jobs. Then those people will be paying taxes instead of collecting unemployment and food stamps. And the infrastructure improvements will bosst our economy's competitiveness. This is all so simple and obvious that only DC insider types could miss it.

Taxes And Spending = Democracy

Cutting spending doesn't cut the need, it shifts the burden. Cutting government spending does not cut the costs to society and the overall economy of meeting those needs. Cutting government spending just shifts -- or privatizes -- those costs onto the backs of people who can't afford to spend that money. That need and cost is still there in the economy, except without government -- democracy -- handling it, doing it for all of us, less expensively. Cutting government's role opens those functions up to private profit, instead of We, the People taking care of and watching out for each other -- and making the decisions.

Do you really think that if you phase out Medicare, that old people won't still need the medical care? Of course they will still need it, but the government won't be negotiating cost-savings for them, they'll be on their own, up against the giant insurance monopolies.

In the 1950s the top tax rate was 90%, and the country's economy worked a lot better for a lot more of us. We didn't have big deficits. We certainly weren't piling up huge debt. With high tax rates at the top, predatory, sell-the-farm business models didn't make sense. We were investing in infrastructure, and that infrastructure made us competitive in world markets. We as a people were doing better every year, paying our bills, getting educated and becoming more civilized. This empowerment led to demands for equal rights for all of us.

Ignored By Media

The "both sides do it" major media is simply ignoring the majority of the public. But people aren't fooled. Poll after poll (did I already say that?) shows that the public "gets it." Poll after poll shows that the public wants our government to address jobs, not deficits, to restore top tax rates, to invest in America's infrastructure, to leave Social Security and Medicare alone (or increase them,) and to put more money into education. Poll after poll.

The Public Wants Jobs

The public gets it. Poll after poll shows that Americans want their government focused on jobs, not deficits. The latest, from CNN, taken August 5-7, shows 49% of Americans think unemployment is the biggest issue facing the country, while only 27% say deficits. Only 16% say the deficit is the country's biggest problem.

Rebuild The Dream

The The American Dream Movement is rolling out their Contract for the American Dream. The Tea-Party-fascinated press is largely ignoring this, but this movement represents the majority of the public, and can't be ignored for long. I'll be writing more about it later. Update: Contract for the American Dream And The Emergency Jobs Bill.

Also the Take Back the American Dream conference is coming up on Oct. 3. Click through and learn more.

10 Years Since Bush Tax Cuts: Do We Even Remember Peace And Prosperity?

Dave Johnson — Mon, 06 Jun 2011 12:55:52 -0400

It is 10 years since the Bush tax cuts passed. When Bush took office (and never forget the Supreme Court's 5-4 role in that) The Onion famously declared, “Our long national nightmare of peace and prosperity is finally over.” They had no way to know how prescient they were. Now we are living the real nightmare.

10 years of Bush tax cuts is enough! Click here to demand your representative supports the Fairness in Taxation Act so the rich contribute their fair share.

The Onion satire had Bush declaring,

"My fellow Americans," Bush said, "at long last, we have reached the end of the dark period in American history that will come to be known as the Clinton Era, eight long years characterized by unprecedented economic expansion, a sharp decrease in crime, and sustained peace overseas. The time has come to put all of that behind us."

Bush swore to do "everything in [his] power" to undo the damage wrought by Clinton's two terms in office, including selling off the national parks to developers, going into massive debt to develop expensive and impractical weapons technologies, and passing sweeping budget cuts that drive the mentally ill out of hospitals and onto the street.

Everything the Onion declared in jest became true right down to the Bush administration proposing to sell national parks. Pushed through using "reconciliation," the Bush tax cuts -- along with the Bush wars and military increases -- have nearly bankrupted the country. As Roger Hickey writes in, 10 Years Of Bush Tax Cuts Is Enough,

Cutting taxes on the wealthy did not create jobs as conservatives promised. ... the Bush Administration [had] the "worst track record on record" for jobs, according to the Wall Street Journal. Bush declared that "the surplus is the people's money," and proceeded to give the surplus away to very few people. Now that we face chronic deficits, it's long past time for millionaires and billionaires to starting giving back.

10 years of Bush tax cuts is enough! Click here to demand your representative supports the Fairness in Taxation Act so the rich contribute their fair share.

Deficits: "Incredibly Positive News"

Ten years ago we had a huge budget surplus. Then came the Bush tax cuts, immediately pushing us into terrible budget deficits. What did Bush say about that? Bush said that turning from surplus to deficit was "Incredibly Positive News,''

President Bush said today that there was a benefit to the government's fast-dwindling surplus, declaring that it will create "a fiscal straitjacket for Congress." He said that was "incredibly positive news" because it would halt the growth of the federal government.

"Incredibly positive news" -- never for a minute think that these deficits and the resulting debt were anything but intentional, a scheme to gut government and force us toward the current rigged and one-sided discussion of cutting Medicare, etc.

Bring Back Peace And Prosperity

It would be so simple to bring back peace and prosperity. First and foremost: undo the Bush tax cuts.

But the Supreme Court helped lock in the Bush nightmare, with the "Citizens United" ruling, allowing unlimited corporate money to interfere in our elections. In the 2010 Congressional midterms more than $300 million was pumped into those nasty smear-ads by corporations, half of it from secret donors, according to Common Cause. How much of that came from, say, China? We don't get to know.

P.S. A Simple Plan To Fix The Jobs Emergency -- And The Economy, Too

Take Action

10 years of Bush tax cuts is enough! Click here to demand your representative supports the Fairness in Taxation Act so the rich contribute their fair share.

Highway Robbery and the Progressive Future

Zach Carter — Wed, 08 Dec 2010 09:27:33 -0500

Kevin Drum gives a pretty thorough analysis of President Obama’s open assault on the mainstream Democratic Party at yesterday’s press conference, and declares that “programmatic liberalism is dead.” I think that’s more than a little exaggerated, but regardless, it’s not a fair description of the policies at stake in Obama’s lousy tax deal. The tax deal is fundamentally about whether the United States still believes it has a basic commitment to protect its most vulnerable citizens from harm. For so basic an intuition to be the subject of political negotiation should be abhorrent to anybody of any ideological stripe in today’s United States. The deal is not a signal of strength or weakness on the left or the right, it is a symbol of rank political cynicism.

Protecting the most vulnerable members of society is not a liberal idea. It is the basic moral intuition of every philosophical and religious tradition but two: cruel interpretations of Friederich Nietzsche, and a brand of libertarianism far more radical than anything in contemporary American politics. Republicans were threatening to cut off unemployment benefits and a poverty tax credit for families with children. Let me emphasize: poverty relief for children.

These policies should never, ever be the subject of political negotiation. Obama could have raised a fuss, he could have publicly shamed his adversaries for threatening a basic moral building block of a decent society. Instead, he offered absurd giveaways to the rich that have not only been the ire of “the professional left,” but of the mainstream Democratic Party for almost a decade. Nearly every Democrat in Congress is now wondering if a primary challenge will be the result of support for this deal. And Obama now has the gall to chastise “the left” for being outraged.

A decent society takes care of its poor. Committing to conservative political thinking does not require one to believe that the poor should suffer for no reason. The number of poor families in the United States has gone up dramatically during the worst recession since the Great Depression, just as the number of unemployed parents has skyrocketed. These problems are caused by major structural economic problems, not by laziness or recklessness on the part of families (and even if it were only the result of laziness or recklessness, a decent society would not take that out on the children of the lazy and reckless). Amid mass poverty, any policymaker should support poverty relief.

This is a moral intuition even more fundamental than the commitment to equality of opportunity—the root belief that a decent society does not let its members endure extreme suffering needlessly. It is not egalitarian, it is not Marxist, it is not socialist, it is not liberal. It is just something a decent society does. It can be described with economic language, but it is not fundamentally an economic problem, unless short-term poverty relief somehow results in total economic calamity. Needless to say, the United States faces no such crisis from aiding its poor.

But Obama did not make this case. He didn’t even try. He entered a room with Republican leaders, and returned to declare they had been given everything they wanted.

Shortly before the deal was announced, Gretchen Morgenson and Louise Story of The New York Times ran a numbers on how the Bush tax cuts affect Wall Street bonuses. For every $1 million in bonus payouts, they calculated, the Bush tax cuts allow Wall Streeters keep an additional $40,000 to $50,000 in income.

The price Republicans demanded for allowing the United States to participate in the basic moral foundation of every decent society the world over was $40,000 for every $1 million in Wall Street bonuses. That should be appalling to liberals and conservatives alike, and a President who does not go to the mat to shame his opponents under such circumstances is bound to lose respect among his followers.

Via a link to a prior post, Kevin defines “programmatic liberalism” as the Progressive Era of 1911 – 1919, the New Deal of the 1930s, and the 1960s. All of these involved significant restructurings of the United States government and its institutions. This is not the sort of thing under discussion in the tax debate. Not even close.

“Should the poor be sustained?” Is a much different question than, “Is it the proper jurisdiction of government to regulate X given recent events?” All kinds of ideological issues can play into regulatory questions. But for quite literally centuries, there has been a broad moral consensus about the right of the poor to live (this glosses over racism and sexism, of course). The “professional left” is not demanding new institutions or government functions. It’s demanding that our society actually be a society.

And so Obama’s assault on what he called “purist” and “sanctimonious” left cannot be viewed as anything but outrageous. MoveOn and DailyKos and FireDogLake are not actually demanding leftist positions on tax policy—their opponents are threatening outright brutality, and the President of the United States is not seriously challenging those threats. Obama’s willingness to capitulate does reveal the man’s fundamental human compassion—but it also portends serious dangers. The next major negotiation, as Matt Yglesias and Mike Konczal have emphasized, will be over raising the federal debt ceiling. If it is not raised, the United States will have no choice but to default on its debt, and the global economy will collapse. If Obama is willing to throw up the Bush tax cuts to preserve the basic moral foundation of society, then he will certainly offer anything to prevent mere economic Armageddon. With this deal, the President has signaled that whenever a difficult choice arrives, he will roll over.

Here’s a leftist tax position: restore tax rates on millionaires to Johnson-era levels of 90 percent, and use that money to guarantee free college education for the children of families earning less than $50,000 a year. Nobody on the “professional left” is demanding that right now. We’re demanding that the basic functioning of society not be ransomed away in the name of bigger bonuses, and that negotiations over economic and tax policy not allow the most vulnerable members of society to be used as bargaining chips.

So perhaps this is what Kevin means. Now that a Democratic president is willing to cave on negotiations about the moral foundation of society, liberals cannot hope for serious economic progress for several decades. I see things otherwise. Two years ago, pundits were forecasting the end of conservatism as it has been practiced for 30 years. “Liberal” thought is not dead. Our president is simply ineffective.

A Tax Deal Fit For The Gilded Age

Zach Carter — Tue, 07 Dec 2010 12:26:28 -0500

President Barack Obama and Congressional Republicans are ready to mortgage the American economy to billionaires in exchange for a few months of unemployment benefits. This deal is easily the gravest economic outrage of the Obama presidency to date, and signals that other political assaults on the economy are ahead.

The basic deal: One year of unemployment benefits, a $40 billion extension of an anti-poverty tax credit, a $120 billion tax cut for workers and some additional tax cuts for American businesses that are already sitting on $1 trillion in cash and refusing to hire new people. In exchange, we get the Bush tax cuts for billionaires, plus an estate tax even more regressive than the worst estate tax implemented by George W. Bush. A few billion for the poor, hundreds of billions for the rich, and nothing—nothing – that will alleviate epic unemployment. It may even fail to prevent the economy from deteriorating further. The best I can say for it is that it will prevent things from getting too much worse.

David Dayen at Firedoglake does some number-crunching and finds $116 billion of actual new stimulus in this deal. He acknowledges that this is a charitable figure, because $56 billion of that total comes from extending unemployment benefits—meaning "not cutting them off"-- not exactly a "new" program. Under either calculation, the result is pathetic. The George W. Bush stimulus from 2008 was $160 billion, and featured a roughly similar approach to the stimulative measures in this one: putting money in workers' pockets. It's better than not putting money in workers' pockets, but it's simply not enough.

This is it, folks—the only economic aid package we are going to see until 2012. If it passes, both parties will praise it as a great bipartisan victory, and critics demanding further economic relief will be told to give it time to "work," as the worst recession since the Great Depression grinds on and on and on. It will be the stimulus package disaster all over again. And remember, Americans actually liked the stimulus plan when it was enacted. Today, most Americans already want to see the Bush tax cuts for billionaires expire.

The actual consequences of this deal, of course, will be more severe than the political fallout in 2012. We'll soon hear about "tough choices" facing the country as a result of our allegedly out-of-control budget deficit (bond interest rates, shmond interest rates!). Now that raising taxes on the rich has been taken off the table, those "choices" will translate to devastating cuts in Social Security. After agreeing to useless tax cuts for the rich in the name of economic "stimulus," Wall Street executives and Congressional Republicans will demand Social Security be slashed, further sabotaging our demand-starved economy, and actually starving our senior citizens.

The United States does not have a deficit problem, with or without the Bush tax cuts for billionaires. Interest rates on U.S. Treasury bonds are at record lows, and aren't going anywhere with Europe, the U.K. and Japan in serious fiscal distress, and with China buying up as much U.S. debt as it can in order to support its own economy.

But that doesn't mean the Bush tax cuts for billionaires will be without consequences. Asset bubbles don't just materialize out of thin air. They occur when a few people have loads of money to invest, while most people don't have the money to buy things. When most people can't buy things, the rich can't invest their money in productive enterprises—however good somebody's new product may be, it can't be sold to people who are broke. So investments flow to things that aren't actually very useful, inflating their value—things like the stock market in the 1990s and the housing market in the Bush years. There are other factors, of course, but severe inequality is a key component.

Right now demand in the economy is much, much weaker than it was in the '90s or the naughties, and we have a too-big-to-fail banking industry that not only receives generous bailouts, but cannot even be bothered to follow the law in carrying out foreclosures. Extending the Bush tax cuts without seriously addressing unemployment, big finance and foreclosures is asking for another asset bubble. And that's how we get to a real fiscal problem: another bubble, another round of epic bailouts for banks that are bigger than those we bailed out in 2008 and 2009.

Today, banks are facing huge losses from foreclosure fraud, and asset valuations based on outrageously optimistic home prices that have not come to fruition (translation: banks are pretending big losses are big profits). This is a problem that can be solved, and one that will not wreak economic havoc if investors are forced to help bear the costs of solving it. But so far policymakers have only attempted to address the issue by papering over the problem for banks, with many actively encouraging more and faster foreclosures (read: deflation).

More Bush tax cuts, more unemployment and more bad banking. So we beat on, boats against the current, borne back ceaselessly into the past.

Starving The SEC Won't Fix Wall Street

Zach Carter — Tue, 31 Aug 2010 12:44:31 -0400

Ezra Klein has a pretty silly post up about the Wall Street regulation bill and the SEC's funding. He argues that since the SEC failed miserably in the years leading up to the crisis, it's absurd to see them getting more funding in its aftermath. Like bloated banks, Ezra says, bloated regulators are just getting bigger, even after Congress passed its Wall Street overhaul. It's not a good argument.

Ezra is unquestionably correct to note that the SEC failed miserably during the Bush years. And there should be no question that the agency's failures were far beyond mere budgetary inadequacies. You can't blame the Madoff missteps—which were repeatedly brought to the agency's attention by whistleblowers, only to be ignored—on insufficient funding. On Madoff, at least, the SEC was slapped in the face with egregious fraud, and failed to do anything about it. The SEC's leadership spent years implementing a hands-off approach to regulation and enforcement, and the Madoff scandal was a direct result.

I'd actually go further in criticizing the agency than Ezra does (at least in his post). It's not just that it failed miserably in the years leading up to the crisis—it's still getting things wrong now. The SEC has ended some high-profile abuses, but it isn't coming down very hard on the people it accuses of malfeasance. The Goldman Sachs settlement was pathetically small for a case that could have sunk the entire firm. The action against Barclays for illegally laundering money from Iran basically lets the bank off the hook. Bank of America executives who lied to their shareholders about their bonuses went unpunished. The proposed settlement with Citibank over its $40 billion lie on its subprime exposure is an absolute disgrace.

But complaining that the SEC is getting some bloated new budget is still totally wrong-headed. The SEC's job is to police all of corporate America for financial fraud. The supposedly outrageous new budget that the agency will receive next year is . . . wait for it . . . $1.2 billion. That's roughly 6 percent of the 2009 bonus pool for financiers who work in New York City alone.

During the Bush years, SEC Chairman Christopher Cox systematically curtailed the SEC's budget in order to prevent regulatory enforcement and fraud prosecution. The agency's budget was virtually unchanged from 2004 through 2009, despite an explosion in the size and scope of Wall Street's activities over that time-frame. Cox was also straightforwardly incompetent and irresponsible—he refused to take part in the Bear Stearns bailout negotiations because he didn't want to leave a birthday party.

The problem is not that the SEC is so bloated it can't get anything done. The problem is that political appointees at the agency are making decisions that are very bad for the economy thanks to political motivations. If we want the basic functions of law enforcement to be fulfilled, we have to put cops on the beat. The $1.2 billion budget for next year is 20 percent higher than last year's budget, and it will go toward putting more rank-and-file regulators to work looking for fraud and abuse. Does anybody really want to see fewer cops on the beat after what happened in 2008?

When a regulatory agency is starved for funding and lead by an astonishingly inept laissez-faire ideologue, the result is going to be failure. That doesn't mean that a better-funded agency with different leadership can't get something right. Reasonable funding alone won't solve things—people at the top still have to make good decisions. But securing decent funding levels is still a necessary step. The alternative, which Ezra appears to be backing, is regulatory nihilism in which failures committed by people who don't believe the government can ever do anything right prove that the government can never do anything right.

That's not to say that regulators alone should be relied on to protect the economy from financial calamity. Empowering regulators is a necessary step for economic security, not a sufficient one. We also have to structure markets so that epic frauds and financial calamities are much more difficult to create. That means breaking up the big banks, enacting hard, Congressionally-binding caps on leverage and creating strong barriers against the types of financial business that different firms can engage in (Glass-Steagall, or something like it).

Congress failed to adopt any of these serious structural reforms with its Wall Street overhaul, instead taking the Obama administration's advice and simply granting regulators broader powers to cope with trouble when it arises. That's not going to work. But continuing to starve the SEC isn't going to improve things either.

"Government Doesn’t Have the Resources to Stop It"

Dave Johnson — Thu, 27 May 2010 13:31:04 -0400

People want the President to exert leadership to turn things around.

The oil leak. Unemployment. Credit card scams. Foreclosures. Predatory corporations. Environmental destruction. Global warming. Roads and bridges crumbling. Incomes stagnant. Schools getting worse. Companies moving overseas. Problem after problem.

People want to know, "Why doesn't the government push BP aside and take over?" The answer is, "Government doesn't have the resources to stop it."

People want to know why the government can't do more to help unemployed people, help with health care, help provide good educations, help with college, maintain the infrastructure, and all the other things that government does.

The answer, these days, is always, "Government doesn't have the resources." And that, in a nutshell, was exactly the plan.

We, the People no longer have the resources to solve our problems. We now must depend on and defer to the corporations and the wealthy few to make the important decisions and get things done instead of being able to decide and do on our own.

This is the legacy of 30 years of conservatism. They called it "starving the beast." Reagan called it “cutting their allowance.” President Bush, told that his policies had turned the country back to massive deficits, said this was, "Incredibly positive news'' because it will create "a fiscal straitjacket for Congress." He came into office with a $236 billion surplus. His last budget left us with a $1.4 trillion deficit. "Incredibly positive news."

They disemboweled the regulatory agencies. They "privatized" government functions and resources, letting a well-connected few profit at the expense of the rest of us.

The Reagan deficit plan was right there for everyone to see:

Step 1: Cut taxes to "cut the allowance" of government so that it can't function on the side of We, the People. Intentionally force the government into greater and greater debt.
Step 2: Use the debt as a reason to cut the things government does for We, the People. When the resulting deficits pile up scare people that the government is "going bankrupt" so they'll let you sell off the people's assets and "privatize" the functions of government. Of course, insist that putting taxes back where they were will "harm the economy."
Step 3: Blame liberals for the disastrous effects of spending cutbacks.

And here we are. Every time you hear someone say that we have to fight the deficit instead of getting things done that We, the People need done you are witnessing The Plan in action.

And now, government doesn't have the resources to stop it.

The Real Lehman Lesson: Break Up The Banks

Zach Carter — Tue, 20 Apr 2010 19:12:06 -0400

Tuesday's hearing on Lehman Brothers' now infamous Repo 105 scam was only tangentially related to the megabank's accounting deceptions and subsequent collapse. That story is simple: Lehman almost certainly committed fraud, regulators failed to stop it, and many of the people who screwed up under President George W. Bush inexplicably remain in power under President Barack Obama.

But most of the hearing consisted of Republican members of Congress attempting to paint the failure of Republican regulators as proof that no regulator can ever regulate effectively ever, no matter what. After observers had been subjected to several hours of this argument, former bank regulator William Black took the stand and eviscerated it.

When Black was working as a bank regulator in the early 1990s, his agency helped block a major subprime lending outbreak by cracking down on the banks that were engaging in reckless and predatory lending. Nobody ever talks about the subprime crisis of 1991, because it didn't happen. Regulators stopped it.

By contrast, Bush-appointed regulators at the Federal Reserve, the Securities and Exchange Commission and the Treasury Department all dropped the ball in the years leading up to the Great Wall Street Crash of 2008. For their failure, everybody but Treasury Secretary Henry Paulson and SEC Chairman Christopher Cox were given top posts in the Obama administration (it should be emphasized that FDIC Chairman Sheila Bair deserved to keep her position).

The U.S. effectively regulated the banking industry for 50 years after the Great Depression, because regulators believed in regulating, and Congress didn't enact destructive deregulatory legislation. Both regulators and Congress have spent the past 30 years destroying that system.

Here's how Repo 105 worked. Lehman took a big batch of assets, and sold them to another company, on the condition that Lehman would buy them back at lower price in a few days. That's basically a loan from the other company to Lehman. But Lehman was characterizing these deals as a sale. That allowed Lehman to tell investors it wasn't leveraged as heavily as it actually was. "Highly leveraged" basically means "borrowing tons of money," and when asset prices are falling, as they were in 2008, lots of leverage also means losing tons of money. So far as investors were concerned, the less leverage, the better.

So Lehman structured these transactions around their quarterly financial statements, allowing them to drop leverage for a few days just before the company filed its investor reports. When it bought back the assets a few days later, its leverage ratio jumped up again, but investors didn't know.

Lehman insiders referred to this as a "sham transaction." Lehman's President and Chief Operation Officer referred to Repo 105 as "a drug." The purpose was to deceive Lehman's investors about how highly leveraged Lehman actually was.

Black argued that Lehman's Repo 105 actions constitute not only civil fraud, but criminal fraud. He should know. When Black was a regulator during the savings and loan crisis, nearly 1,100 bank officials went to prison for fraud. The SEC didn't stop Lehman's scam, and to date, there have been no arrests.

The S&L crisis was much smaller than the catastrophe our economy has been living through since the summer of 2007. Regulators clearly have a lot of work to catch up on regarding corporate accountability. That's not likely to happen so long as the same people who allowed the mess to take place are overseeing the clean-up. Regulation works, but not when the powerful regulators are focused on covering their own tails.

So Republicans are wrong to argue that regulation can never, ever work, and Obama made a big mistake by keeping Ben Bernanke, Timothy Geithner and John Dugan when he came into office. That means it's important for Congress to establish another economic line of defense, just in case regulators do drop the ball again in the future. One of the most interesting exchanges of the day came when Rep. Brad Miller (D-NC) pressed Lehman CEO Dick Fuld and Lehman director Thomas Cruikshank on too-big-to-fail.

Miller noted that every single published report of the negotiations surrounding Lehman's collapse have indicated that Fuld believed the government would bailout his company. Miller asked what Congress could do to convince major decision-makers on Wall Street that big firms would not be bailed out in a crisis.

Both Fuld and Cruikshank dodged the question. Here's the real answer: Nothing.

The only way to convince bigwig bankers that their firms are not too-big-to-fail is to break up their companies into smaller institutions that are not too-big-to-fail. Democrats pushing reform want people to believe that a new "resolution mechanism" will solve the problems regulators faced in 2008. Republicans just want to block any reform whatsoever. Congress should establish that new resolution mechanism, but doing so will not end too-big-to-fail.

The FDIC currently has a resolution authority that it uses to shut down failing commercial banks, like Wachovia and Washington Mutual. That authority does not extend to complex bank holding companies that do both commercial banking and other investment banking activities. The FDIC invoked its powers when it shut down Washington Mutual, a $300 billion bank, in September 2008. When Wachovia, a $700 billion bank, found itself on the brink of collapse a few days later, FDIC Chair Sheila Bair wanted to do the same thing.

But the FDIC didn't shut down Wachovia. Timothy Geithner led a push to skirt the resolution mechanism, and put the government behind a merger between Wachovia and another bank. Geithner won. Even though regulators had the authority to shut down Wachovia and wipe out its shareholders, the government arranged a merger with Wells Fargo that landed Wachovia's shareholders $15 billion in Wells Fargo stock. A few weeks later, the government kicked Wells $25 billion in TARP funds, another gift to the Wachovia shareholders, who were now Wells Fargo shareholders.

Even though the government had the authority to shut down Wachovia, it chose not to do so, even though the head of the agency with the authority to shut down the bank actually wanted to shut it down. This absurdity will repeat itself the next time any megabank gets into trouble. If we want to protect the economy against Wall Street excess and regulatory failures, breaking up the big banks is the only serious option.

America's King George III may get a challenge from the left on Afghanistan.

Michael Kwiatkowski — Thu, 10 Dec 2009 23:22:38 -0500

Leave it to Ohio's Dennis Kucinich to do what no one else in Congress has the courage to do. The Representative from the Buckeye State's tenth Congressional District is looking to force a vote on withdrawal from Afghanistan, according to a report by RAW Story.

For congressman Dennis Kucinich (D-OH), Afghan President Hamid Karzai's announcement Tuesday that his country would need the US's military support for another 10 or 15 years seems to have been the last straw.

The outspoken House representative says it was Karzai's statement that prompted him to draft a resolution calling for a House vote on the withdrawal of US troops from Afghanistan and Pakistan.

"We shouldn't be there another 15 to 20 months, let alone 15 to 20 years," Kucinich told the Cleveland Plain Dealer. "When I'm in my district talking to people, nobody has come up to me and said we need to be in Afghanistan for the next 15 to 20 years. They do say we need jobs, we need to protect our basic industry, we need education, we need to protect retirement security. I'd like to see us start taking care of things here at home."

Kucinich tried to initiate impeachment proceedings against Dick Cheney using this same method. Unfortunately, he'll get absolutely no support from his own political party. We can't pay for basic services here in the United States, such as medical care and infrastructure including bridges, highways, and electrical grids, but oh how we have money for genocidal killing and for Wall Street criminals. And the political party that is supposed to be against all this is instead enabling it. It's madness.

Small wonder that rumblings of a repeat of 1994 abound. With Democrats like the bunch we elected to power, who needs Republicans? I don't know about you, but it's time we on the left finally get Dennis Kucinich's back and help him end these wars. Click the link to the House Telephone Directory and use it to get in touch with your representatives. Tell them that if they want your money and votes next year, they'd damn well better do as they're told and end this occupation.

Lobbyists Paid Off by China vs. 30,000 U.S. Workers: Which Side Will Obama Choose?

Mike Elk — Mon, 10 Aug 2009 05:12:53 -0400

As the International Trade Commission considers comments on its recommendation to impose tariffs on Chinese tire imports, President Obama stands at a crossroads in the fight to rebuild the American economy.

President Obama has made a commitment in the past to uphold previously signed trade agreements. China, however, is violating these agreements by flooding the market with a massive 300 percent increase in tire imports in an attempt to wipe out American tire manufacturers. In 2004, China sent 14 million tires to the U.S. valued at $453 million. By last year, that had increased to 46 million tires valued at $1.7 billion.

The Chinese are shipping cheaply made tires in an effort that isn't just killing American manufacturing, but also killing people. So far, two people have died as a result of the low quality of some of these Chinese import tires. The U.S. Government has launched a massive of recall of the tire in question, but so far the Chinese manufacturer has refused to cooperate fully with the recall.

So far over 8,000 people have lost their jobs, and over 20,000 more jobs are at risk if the Chinese are allowed to continue with this strategy of not obeying trade laws.

Next month Obama will be challenged to uphold his campaign pledge to enforce current trade laws when a decision on illegal Chinese tire imports came to his desk. Last month, a majority of the U.S. International Trade Commission (ITC) found that tariff relief was needed to urgently reduce tire imports because of market disruption. According to the United Steelworkers, between 2004 and the end of this year, more than 8,100 workers in the tire industry have lost or will lose their jobs and another 20,000 jobs are threatened.

Speaking last week, USW President Leo Gerard said that this will "prove to be a test of enforcement of trade laws that China agreed to." A ruling to enforce current U.S. trade laws would mark a clear break with Bush era economic policy. During the Bush Administration the United State International Trade Commission ruled four separate times that China had violated trade law and recommended measures to stop the flow. However, each time Bush refused to obey these recommendations.

If President Obama follows the commission recommendations, it would send a stern message to China that the Obama administration, unlike the Bush administration, intends to enforce U.S. trade law. He is expected to decide on September 17, one week before the G-20 summit in Pittsburgh. If Obama chooses to enforce tariffs on illegal Chinese competition, that would send a message throughout the world that U.S. intends to enforce trade law.

Unfortunately, corporate lobbyists paid for by the Chinese Chamber of Commerce, like former Bush official and Ohio U.S. Senate candidate Robert Portman, are running an aggressive misinformation campaign in attempt to thwart U.S. trade law. These groups have been claiming that limiting tire imports would cost Americans jobs and raise the costs of tires for consumers. However, the United States Commission on Trade found that the total benefits exceed the costs by $884 million.

Chinese importers, in conjunction with the Chinese Chamber of Commerce, have ironically formed a lobbying front group ironically named American Coalition for Free Trade in Tires. The coalition is run by Jochum, Shore & Trossevin, a Washington D.C. lobby firm run by former Bush trade officials who are cashing in on their years of U.S. government service to advise foreign competitors. The law firm has used its ties to power to advise Chinese manufacturers on how to get around loopholes in the law. As a result, eight members of Congress wrote a letter this past June calling on the Government Accountability Office to investigate.

Congressman Michael Michaud of Maine said " "Many of these individuals appear to be repaying the investment that the American taxpayers made in them with their hard-earned tax dollars by using the knowledge, expertise and contacts they gained while on the federal payroll in ways that are adverse to the interests of our workers and our producers."

Speaking last week at a factory in Indiana, President Obama said that rebuilding American manufacturing was the key to build a vibrant economy. As President Obama has said previously many times we can't go back to an economy, where 45 percent of our profits come from the financial sector. As Dave Johnson pointed out last week we in his piece "Manufacture or Borrow (Until We Can't)":

"When it comes down to it you can't have a healthy service sector unless you are manufacturing items to sell and trade because you can't pay for the restaurant bill or insurance or hotel room or lawyer or even the doctor if you don't make something to sell and trade. And mostly you can't keep buying the things made elsewhere. You can only borrow for so long."

President Obama has announced bold new initiatives to invest billions of dollars into new green energy initiatives. However, if we don't have to even enforce the current trade laws that we have, American manufacturing will be wiped out by low-wage Chinese manufacturing. As I highlighted previously, companies such as GE have already begun to move so-called green jobs to China already.

The fight over whether to enforce trade laws against illegal Chinese tire imports will set a precedent that the U.S. will enforce previous trade agreements. President Obama has a choice of whether he will side with American workers or corporate lobbyists paid off by China.

John Crippen

John Crippen — Wed, 21 Jan 2009 00:20:48 -0500