“Wall Street’s Threat To The American Middle Class”: Do We Really Need To Be Reminded About What Happened Six Years Ago?
Presidential aspirants in both parties are talking about saving the middle class. But the middle class can’t be saved unless Wall Street is tamed.
The Street’s excesses pose a continuing danger to average Americans. And its ongoing use of confidential corporate information is defrauding millions of middle-class investors.
Yet most presidential aspirants don’t want to talk about taming the Street because Wall Street is one of their largest sources of campaign money.
Do we really need reminding about what happened six years ago? The financial collapse crippled the middle class and poor — consuming the savings of millions of average Americans, and causing 23 million to lose their jobs, 9.3 million to lose their health insurance, and some 1 million to lose their homes.
A repeat performance is not unlikely. Wall Street’s biggest banks are much larger now than they were then. Five of them hold about 45 percent of America’s banking assets. In 2000, they held 25 percent.
And money is cheaper than ever. The Fed continues to hold the prime interest rate near zero.
This has fueled the Street’s eagerness to borrow money at rock-bottom rates and use it to make risky bets that will pay off big if they succeed, but will cause big problems if they go bad.
We learned last week that Goldman Sachs has been on a shopping binge, buying cheap real estate stretching from Utah to Spain, and a variety of companies.
If not technically a violation of the new Dodd-Frank banking law, Goldman’s binge surely violates its spirit.
Meanwhile, the Street’s lobbyists have gotten Congress to repeal a provision of Dodd-Frank curbing excessive speculation by the big banks.
The language was drafted by Citigroup and personally pushed by Jamie Dimon, CEO of JPMorgan Chase.
Not incidentally, Dimon recently complained of being “under assault” by bank regulators.
Last year JPMorgan’s board voted to boost Dimon’s pay to $20 million, despite the bank paying out more than $20 billion to settle various legal problems going back to financial crisis.
The American middle class needs stronger bank regulations, not weaker ones.
Last summer, bank regulators told the big banks their plans for orderly bankruptcies were “unrealistic.” In other words, if the banks collapsed, they’d bring the economy down with them.
Dodd-Frank doesn’t even cover bank bets on foreign exchanges. Yet recent turbulence in the foreign exchange market has caused huge losses at hedge funds and brokerages.
This comes on top of revelations of widespread manipulation by the big banks of the foreign-exchange market.
Wall Street is also awash in inside information unavailable to average investors.
Just weeks ago a three- judge panel of the U.S. court of appeals that oversees Wall Street reversed an insider-trading conviction, saying guilt requires proof a trader knows the tip was leaked in exchange for some “personal benefit” that’s “of some consequence.”
Meaning that if a CEO tells his Wall Street golfing buddy about a pending merger, the buddy and his friends can make a bundle — to the detriment of small, typically middle-class, investors.
That three-judge panel was composed entirely of appointees of Ronald Reagan and George W. Bush.
But both parties have been drinking at the Wall Street trough.
In the 2008 presidential campaign, the financial sector ranked fourth among all industry groups giving to then candidate Barack Obama and the Democratic National Committee. In fact, Obama reaped far more in contributions from the Street than did his Republican opponent.
Wall Street also supplies both administrations with key economic officials. The treasury secretaries under Bill Clinton and George W. Bush – Robert Rubin and Henry Paulson, respectfully, had both chaired Goldman Sachs before coming to Washington.
And before becoming Obama’s treasury secretary, Timothy Geithner had been handpicked by Rubin to become president of Federal Reserve Bank of New York. (Geithner is now back on the Street as president of the private-equity firm Warburg Pincus.)
It’s nice that presidential aspirants are talking about rebuilding America’s middle class.
But to be credible, he (or she) has to take clear aim at the Street.
That means proposing to limit the size of the biggest Wall Street banks; resurrect the Glass-Steagall Act (which used to separate investment from commercial banking); define insider trading the way most other countries do – using information any reasonable person would know is unavailable to most investors; and close the revolving door between the Street and the U.S. Treasury.
It also means not depending on the Street to finance their campaigns.
By: Robert Reich, The Robert Reich Blog, January 26, 2015
“GOP Struggles With Phony Deficit Pretense”: Literally The Same People Who Ignored The Deficit In The Previous Decade
The perception of the Republican Party as the anti-deficit party used to be 100% true. A couple of generations ago, the GOP actually saw the deficit as a legitimate concern, and shaped their policy agenda accordingly. During the Eisenhower era, Republicans kept very high tax rates in place, first approved to pay for WWII, in the name of fiscal conservativism. Many Republicans balked at JFK’s tax breaks out of fear of higher deficits.
Obviously, those eras are long gone. The GOP’s shift began in earnest under Reagan, but became almost ridiculous under George W. Bush – an era in which Republicans put the cost of two wars, a Wall Street bailout, massive tax cuts, and Medicare expansion on the national charge card for some future generation to worry about.
But once the Obama era began, GOP leaders decided they cared about the deficit again. It was impossible to take seriously – we’re talking about literally the same people who ignored the deficit in the previous decade – but Republicans actively pretended they had both credibility and genuine concerns about budget shortfalls.
It’s hard not to notice, however, that much of the new congressional Republican agenda has a common thread. See if you notice what these measures have in common. On health care:
A Republican bill to change how Obamacare defines a full work-week would raise the deficit by $53.2 billion over the next decade.
And abortion:
The official budget scorekeeper of Congress says the Pain-Capable Unborn Child Protection Act, which would ban abortions after 20 weeks, would increase Medicaid costs by as much as $400 million…. CBO officially estimates that the bill increases federal deficits by $75 million between 2014 and 2018, and $225 million between 2014 and 2023.
And immigration:
Senate Democrats threatened Thursday to block action on legislation funding the Homeland Security Department until Republicans jettison House-passed provisions that reverse President Barack Obama’s key immigration policies…. The Congressional Budget Office estimates that the measure would increase the federal deficit by $7.5 billion over a decade.
How would Republicans prevent these proposals from increasing the deficit? With offsetting cuts? Higher taxes? Neither, actually – GOP lawmakers are content to approve their priorities regardless of the impact on the budget shortfall.
It seems about once a week or so, GOP lawmakers unveil some new priority, they learn their idea would make the deficit worse, and they quietly make clear they couldn’t care less.
All of which made it quite amusing to see Republicans complaining about President Obama’s upcoming budget plan, claiming that it – you guessed it – doesn’t go far enough to reduce the deficit that Republicans created in the Bush/Cheney era.
Danny Vinik is absolutely right:
Republicans shouldn’t be allowed to get away with this two-faced policymaking. If they care about the deficit, they have to care about it in all contexts. If not, then they shouldn’t justify their opposition to Obama’s policies on grounds that they increase the deficit. When Republican congressmen react to Obama’s budget and undoubtedly invoke the deficit, the media should ask them why they didn’t care about the deficit last year. Maybe there will be some accountability for a change.
Well, there certainly should be some accountability for a change, but Republicans seem awfully confident that that they’ll face no consequences whatsoever for their incoherent whining about the deficit. Given recent history and misplaced public perceptions, I suspect their expectations are probably correct.
By: Steve Benen, The Maddow Blog, January 29, 2015
“Bobby Jindal’s Public Humiliation”: Why There’s A Nasty Side To His Thirst For Power
Of the many rituals that accompany U.S. politics, one of the least-important but most-discussed is the spectacle of watching a hopeless, clueless and joyless presidential campaign falter on the runway before swiftly concluding in a fiery crash. Every four years, there’s at least one — and often more than one — such campaign. The candidate is usually already a figure of derision among the press, and it’s often not clear to outsiders whether even they truly believe they will, or even should, become the president. The whole quadrennial enterprise tends to be either a guilty pleasure or a cause for sorrow, depending on how idealistic (and sadistic) you are already.
Some recent examples: In 2004, Democratic Rep. Dennis Kucinich was the at least somewhat earnest candidate that the press preemptively dismissed, while Rev. Al Sharpton was the one whose sincerity was widely questioned. Kucinich reprised the role somewhat in 2008, but had competition from former Alaska Sen. Mike Gravel; Sen. Joe Biden, meanwhile, was the guy the press didn’t take seriously enough to let voters decide for themselves. On the Republican side in 2008, Rep. Ron Paul ran a heartfelt campaign that the media deemed unserious, while one-time ambassador Alan Keyes provided comic relief. And in 2012, one of the media’s favorite punching bags, Rep. Michele Bachmann, was a kind of right-wing Kucinich, while pizza mogul Herman Cain left many wondering whether he was engaged in an elaborate form of performance art.
At this point, it’s too early to know for sure who will fill these designated roles in the 2016 presidential race. And if former Secretary of State Hillary Clinton nabs the Democratic nomination with little effort, as many expect, the potential cast of characters will be smaller than is the norm. Still, it’s starting to look like there will be at least one presidential candidate who will waste everyone’s time by pursuing the White House. I’m thinking, of course, about the nascent presidential campaign of Gov. Bobby Jindal, who has begun flirting with some noxious forces in our society, and who is otherwise completely undeserving of anyone outside of Louisiana’s attention. Jindal will never be president — but whether his campaign is remembered as a routine failure, or a shameful disgrace, is far less certain.
Most of the worst stuff Jindal’s done lately has flown under the radar, so here’s a primer for those of you who haven’t paid much attention to the Louisiana pol since 2009, when he blew his State of the Union response by reminding everyone of “30 Rock’s” Kenneth. While Jindal still hasn’t formally announced his intention to run for president — and hasn’t even launched the pro forma exploratory committee, either — his desire to live at 1600 remains one of Louisiana’s “worst-kept” secrets. Yet ever since that embarrassing introduction to the television-watching public, Jindal’s had a problem: beyond his own ambition, a reason for him to run has been hard to find. And with each new iteration of a pre-campaign shtick, Jindal gets worse and worse.
Initially, Jindal wanted to be seen as a new kind of Republican, a GOPer for the Obama era. Needless to say, Jindal’s Indian ancestry was a component of this framing. But so was his allegedly fearsome intellect, which earned him degrees from Brown and Oxford and made him a Rhodes scholar. When his disastrous TV debut necessitated he shed that persona in favor of another, however, Jindal decided to go the other way, presenting himself as the ultimate anti-tax governor. He proposed Louisiana scrap income taxes altogether, but in part because his plan made up the revenue difference with sales taxes, which disproportionately hit the middle and working classes, the policy achieved little beyond sinking his approval rating. It remains low to this day.
After President Obama’s reelection in 2012, Jindal seemed to think he had another chance to claim the mantle of Sensible Republican. He charged out of the gate in 2013 with a call for the GOP to “stop being the stupid party,” which was, as you might imagine, not particularly well-received by the people who thought he was calling them stupid. Having seen his latest attempt fizzle out nearly as soon as it had started, Jindal proceeded to lay low for a while, but did little to change the perception that he still intended to run for president. Over the past few weeks, though, we’ve gotten a sense of what the latest version of Bobby Jindal might look like. And it isn’t pretty.
Lately, the man who urged his fellow Republicans to stop being stupid has grabbed headlines by pandering to the Islamophobic sentiment that’s widespread among the fundamentalist Christian bloc of the GOP base. The first sign was Jindal’s embrace of a paranoid fantasy that’s increasingly popular among far-right Christians, the supposed prevalence in the United Kingdom and Europe of “no-go” zones. These zones, according to the McCarthyite narrative, are neighborhoods or regions that have become so dominated by Muslim immigrants (and, of course, Shariah Law) that non-Muslims dare not enter them. The whole idea is a hysterical exaggeration, so much so that even Fox News has apologized for disseminating it. But Jindal has refused to downplay the no-go threat, despite being unable to point to any real examples.
If Jindal had left it there, you could have chalked it up as a momentary lapse in judgment, coupled with the typical arrogance of powerful men who are not accustomed to admitting they’re wrong. But he didn’t leave it there; he took it much further. He not only went on to flaunt his defiance on Fox News, promising he would never “tiptoe around the truth” when it came to “radical Islamic terrorism,” but also made clear that his turn to angry tribalism was no accident by grousing that he was “ready for us to stop calling ourselves hyphenated-Americans.” What connection there was between these two fearful mental spasms (it would be too charitable to call them thoughts) was unclear — until, that is, Jindal was able to get to what seemed to be his real message, which was little more than a nativist rant:
My parents came over here 40 years ago, they wanted their kids to be Americans, they love India, they love our heritage, if they wanted us to be Indians, they would have stayed in India. We also need to be teaching our kids in civics, in our schools about American Exceptionalism. We need to insist on English as our language in this country. I have nothing against anybody who wants to come here to be an American, but if people don’t want to come here to integrate and assimilate, what they’re really trying to do is set up their own culture, their communities, what they’re really trying to do is overturn our culture.
Unsurprisingly, the governor’s attempt to explicitly intertwine the conservative base’s dual fears of Muslims and immigrants was met with cheers from some of the more xenophobic and fear-stricken of conservatism’s leading lights. National Review’s Andrew McCarthy, for example, took a break from promoting torture to praise Jindal for his “Reaganesque” vision and willingness to call out the Islamic enemy within. But if Bobby Jindal wants his impending campaign for president to resonate outside the confines of National Review, his new persona is his most embarrassing miscalculation yet. Pretending to be a combination non-white Joe Arpaio and Christian Pamela Geller may do wonders for Jindal’s standing among the religious fundamentalists in the GOP, but to those of us who think America has more serious concerns than creeping Shariah, it makes him look like a fool. At best.
By: Elias Isquith, Salon, January 30, 2015
“Deja Vu, All Over Again”: Every Day Is Groundhog Day For The GOP’s Obamacare Replacement
In a moment of irony not lost on observers, the GOP-led House Rules Committee will spend Groundhog Day considering the 114th Congress’s first destined-to-be-vetoed attempt to repeal Obamacare. Adding to the déjà vu is the fact that, despite promises to replace the health care law, Republicans still don’t have a firm plan.
The latest repeal bill, sponsored by Rep. Bradley Byrne, an Alabama Republican, doesn’t propose a replacement, but mandates that relevant committees “report to the House of Representatives legislation proposing changes to existing law.” Those proposals, in the language of the bill, should meet 12 provisions, all of which either rehash generic Republican priorities (“foster economic growth and private sector job creation by eliminating job-killing policies and regulations”) or repeat old conservative health care proposals, like medical liability reform.
Further to Byrne’s bill, Reps. Paul Ryan, Fred Upton, and John Kline are expected to lead a task force to create an alternative. “House Republicans’ most serious attempt thus far to develop their health care reform package,” Politico reported Friday.
Early last year, Republicans devoted considerable time to hyping up possible replacements. There was the proposal from Senators Tom Coburn and Orrin Hatch last January; then a March measure from the House Republicans, which The Washington Post described as a “conservative approach to fixing the nation’s health-care system”; and, a few weeks later, Louisiana Gov. Bobby Jindal’s Bobbycare.
And then in April 2014, Rep. Ryan released a budget for 2015 that repealed the law without endorsing any kind of replacement. When asked about his party’s plans, Ryan told The Washington Examiner that “we have lots of ideas of how to offer patient-centered health care… So you’ll see a lot of different comprehensive Republican alternative plans.”
Those alternatives never really solidified. The problem in 2014 was that Republicans couldn’t agree on one, or even on whether it was politically worthwhile to push an alternative that might distract from the Democrats’ Obamacare woes. The problem now is that the Supreme Court might completely gut the health care law in June by ruling that the three dozen states issuing Obamacare subsidies through federal exchanges are acting unlawfully.
Republicans have said that they want to be ready when the court decides—but they don’t seem to have a plan for that scenario. Then again, the Obama administration might not have a plan themselves.
By: Arit John, Bloomberg Politics, January 31, 2015
“For The Patriots, Without Apology”: Even Though Loyalties Can Be Misplaced, A Life Lived Without Them Makes No Sense
I never knew how much fun it was to be loyal to a hated outlaw sports team until the whole world came down on my dear New England Patriots.
Having rooted over the years for Boston teams that many felt sorry for — God help us — and found psychologically interesting, it was a rush to hear MSNBC’s Joe Scarborough the other morning describe my Patriots as a “ruthless killing machine.” Wow!
It’s a long way from the early days of the quarterback-wide receiver combination of Babe Parilli and Gino Cappelletti (he was also a great kicker). Back then, many didn’t even take the upstart American Football League seriously. As a kid, I insisted on being faithful to our local guys, so I’ve been a Pats fan from the day they were created.
And I now understand far better what life is like for those who work as spinmeisters. In a fight like this, you look for whatever arguments come to hand and judge their merits later, in a quiet room with fellow fans.
If those footballs were deflated, why didn’t the refs, who handled them dozens of times, notice? Maybe the balls lost air. Besides, didn’t you catch the fact that Tom Brady did far better with the regulation, non-deflated balls in the second half of the Indianapolis Colts game? And anyway, everybody messes with the football, right?
All Patriots fans are Taylor Swift partisans these days: “The haters gonna hate, hate, hate, hate, hate.” She didn’t invent the line, but many loyalists are using her buoyant and defiant lyrics to shake off the Pats’ critics as jealous souls who just can’t stand this team’s dominance in the long Tom Brady-Bill Belichick era.
Already, I can imagine the sighs of impatience from those who think loyalty to professional sports teams is a silly and even pernicious waste of energy. Aren’t they just a bunch of businesses owned by rich guys who use them to make more money and stroke their already large egos by paying a share of that cash to athletes, some of whom get wealthy themselves? Didn’t we see what a moral mess the National Football League made of the Ray Rice affair?
And isn’t loyalty itself a questionable virtue that can lead people to overlook many ethical issues and to ignore more important moral callings?
On the last question, I share what the 19th-century philosopher Josiah Royce called a “loyalty to loyalty.” Of course loyalty can be misplaced, as Royce acknowledged. “A family engaged in a murderous feud, a pirate crew, a savage tribe, a Highland robber clan of the old days — these might constitute causes to which somebody has been, or is, profoundly loyal,” Royce wrote, and he agreed that such relationships are problematic.
But even though loyalties can be misplaced, a life lived without them makes no sense. They are defined by the legal scholar George Fletcher in his fine book Loyalty as obligations “implied in every person’s sense of being historically rooted in a set of defining familial, institutional, and national relationships.” There really are, he argues, “groups and individuals that have entered into our sense of who we are.”
For many, sports teams become part of this fabric, usually through powerful regional ties (I really do love New England), bonds of friendship (only a fellow fan could understand what it felt like to lose the 2008 Super Bowl to the Giants, or to win the “Snow Bowl” against the Raiders in 2002), and the draw of history (see everything above).
Do the owners of these teams exploit such feelings? You bet, which is why fans feel so outraged and betrayed when a team gets moved from one place to another. But is there anything intrinsically wrong with their loyalties, or with the admiration of fans for heroism in an athletic encounter involving “their” team? I don’t think so.
Given such strong sentiments, the people who own these teams have an obligation to stewardship that they don’t always discharge. Even as a profoundly loyal Patriots fan, I’d be upset if the team and the league simply threw a locker room attendant under the bus to get out of their problem. Loyalty runs both ways, and it most certainly extends to the locker room attendant. (And if he did deflate 11 balls in 90 seconds, he should have been in the Pro Bowl.)
But I know which side I’ll be on this Sunday, without any mental reservations. The Patriots, including the attendant, are my guys.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post; The National Memo, January 29, 2015
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