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“The GOP’s Self-Inflicted Wounds”: Keep One Thing In Mind; The Party Establishment Brought This Plague Upon Itself

As the leading Republican presidential candidates rant and rave about deporting 11 million immigrants, fighting some kind of world war against Islam, implementing gimmicky tax plans that would bankrupt the nation and other such madness, keep one thing in mind: The party establishment brought this plague upon itself.

The self-harming was unintentional but inevitable — and should have been foreseeable. Donald Trump and Ben Carson didn’t come out of nowhere. Fully half of the party’s voters didn’t wake up one morning and decide, for no particular reason, that experience as a Republican elected official was the last thing they wanted in a presidential candidate.

The insurrection that has reduced Jeb Bush to single-digit support while Trump and Carson soar is nothing more than the understandable reaction of the jilted. Republican leaders have spent the years of the Obama presidency inflaming GOP base voters with extreme rhetoric and wooing them with empty promises. The establishment won its goal — electoral gains in Congress and many statehouses — but in the process may have lost the party.

Unrest was brewing among true-believer conservatives even before Barack Obama took office as the first African-American president. George W. Bush had angered the base with his budget-busting expenditures for Middle East wars and a new prescription drug benefit under Medicare. What had happened to the party’s commitment to fiscal responsibility?

The final straw for many came when the financial crisis hit in 2008 and Bush, in his final days, won authorization of the $700 billion Troubled Asset Relief Program — a massive bailout for the big Wall Street banks. It was a wholesale violation of conservative principles that helped inspire the birth of the tea party movement.

With the economy still in crisis, Obama took actions that further riled conservatives — pushing through Congress a messy economic stimulus package and rescuing General Motors and Chrysler. And then the president turned to health care, ultimately winning passage of the Affordable Care Act.

The GOP saw a golden political opportunity. Rather than work with Obama toward compromise, Republicans positioned themselves as implacable foes of the president and all he stood for.

As the tea party increasingly came to demonize Obama for being an alleged Muslim or socialist — and even to delegitimize him as supposedly having been born in Kenya — the Republican establishment shamefully played along despite knowing that none of this rubbish was true.

The result was a sweeping victory in the 2010 election. Republicans captured the House by electing dozens of tea party-backed candidates, who came to Washington with revolution on their minds.

Experienced GOP politicians who should have known better allowed this insurgency to push the party into a series of showdowns with Obama that Republicans could not possibly win. Having told the base that great things could be accomplished by shutting down the government or threatening default on the national debt, the establishment had to say, in effect, never mind.

Voters began to realize that they’d been had. The Republican leadership talked a good game at election time, but never delivered.

Is it any wonder, then, that 51 percent of Republican voters (according to the Real Clear Politics poll average) say they favor Trump, Carson or Carly Fiorina, none of whom has ever held public office? Or that another 11 percent support Ted Cruz, whose career in the Senate has consisted of vehemently opposing his own party’s leadership as a bunch of weak-kneed quislings?

If you add it up, roughly six of 10 GOP voters tell pollsters they reject any candidate the Republican establishment likes. That amounts to a party in open revolt.

There are those in the Republican establishment who look at prior elections and predict the outsider candidates will eventually fade. There are those who believe the fear of terrorism, post-Paris, will lead voters to choose safety over adventure. Perhaps this is something other than whistling past the graveyard, but that’s what it sounds like to me.

Are voters who have been on the raucous, anything-goes Trump bandwagon for months going to fall meekly in line behind someone like Bush or Marco Rubio? It gets harder and harder to imagine such a thing.

Meanwhile, the whole field is being pulled so far to the right on issues such as immigration and taxes that any of the likely nominees will have a hard time winning the general election. This is a fine mess the Republican Party has gotten itself into, and we won’t know until the early primaries whether there’s any hope of a way out.

 

By: Eugene Robinson, Opinion Writer, The Washington Post, November 26, 2015

November 29, 2015 Posted by | Donald Trump, GOP Base, GOP Establishment, GOP Presidential Candidates | , , , , , , , , | 3 Comments

“Citigroup Becomes Its Own Self-Serving Lawmaker”: 21st Century Civics Lesson; How A Corporate Bill Becomes A Law

Congress, which has long been so tied up in a partisan knot by right-wing extremists that it has been unable to move, suddenly sprang loose at the end of the year and put on a phenomenal show of acrobatic lawmaking.

In one big, bipartisan spending bill, our legislative gymnasts pulled off a breathtaking, flat-footed backflip for Wall Street, and then set a dizzying new height record for the amount of money deep-pocketed donors can give to the two major political parties. It was the best scratch-my-back performance you never saw. You and I didn’t see it — because it happened in secret.

The favor was huge — allowing Wall Street’s most reckless speculators to have their losses on risky derivative deals insured by us taxpayers. Yes, such losses were a central cause of the 2008 financial crash and subsequent unholy bank bailout, which led to passage of the Dodd-Frank reform law, including a provision sparing taxpayers from covering future losses. But with one, compact, 85-line provision inserted deep inside the 1,600-page, trillion-dollar spending bill, Congress did a dazzling flip-flop on that regulation, putting us taxpayers back on the hook for the banksters’ high-risk speculation.

In this same spending bill, Congress also used its legislative athleticism to free rich donors (such as Wall Street bankers) from a limit of under $100,000 on the donation that any one of them can give to political parties. In a spectacular gravity-defying stunt, lawmakers flung the limit on these donations to a record-setting 15 times higher than before. So now bankers who are grateful to either party for being able to make a killing on taxpayer-backed deals can give $1.5 million each to the parties.

Perhaps you recall from your high school civics class that neat, one-page flow chart showing the perfectly logical, beautifully democratic process that Congress must go through to pass our laws.

What a bunch of kidders those chart makers were! To see how the sausage is really made, let’s take a look at that trillion-dollar budget bill that Congress squeezed out just before Christmas. It was crammed with special corporate favors, such as: reinstating a Bush rule allowing mining giants to explode the tops off ancient Appalachian mountains and then bulldoze the rubble down into the valley below, destroying pristine mountain streams; another letting long-haul trucking outfits require their drivers to be on the road more than 11 hours a day and up to 82 hours per week, filling our highways with highballing, sleep-deprived truckers; and cutting $60 billion from the Environmental Protection Agency, freeing up polluters to go unpunished for polluting.

None of these favors had anything to do with that “how a bill becomes law” flow chart in our civics textbook. No bill was filed, no public hearings, no debate, no vote. Just — BAM! — there they were, a thicket of benefits secretly slipped into the 1,600-page budget bill by … well, by whom? Largely by corporate lobbyists, though they get one of their for-hire congresscritters to do the actual dirty deed.

The taxpayer subsidy for Wall Street, for example, was written by Citigroup. The bank’s lobbyists then handed the provision to Kansas Republican Kevin Yoder, who slipped it into the bill. Thus, the Wall Street conglomerate that took a $50 billion bailout from us taxpayers just seven years ago to save itself from its own bad deals essentially was allowed to become an unelected, self-serving, do-it-yourself, backroom “lawmaker” to make sure that your and my tax dollars will be there to cover its next mess-up.

And that, boys and girls, is the real flow chart for making our laws. It’s always an amazing sight when Wall Street and Congress get together — especially when they get together out of sight.

 

By: Jim Hightower, The National Memo, December 24, 2014

December 27, 2014 Posted by | Citigroup, Congress, Wall Street | , , , , , , , , | Leave a comment

“Elizabeth Warren’s Real And Imaginary Appeal”: The Trap Of The ‘Hidden Majority’ Is Too Often ‘Fools Gold’

Friday night on the floor of the U.S. Senate as part of a doomed effort no one is much paying attention to is not the ideal context for a Big, Memorable Speech. But the excerpts of Elizabeth Warren’s speech against the Wall Street derivatives swap language of the Cromnibus touted by Miles Mogulescu at HuffPost are indeed pretty powerful, though again, comparing them to Obama’s 2004 Democratic Convention speech viewed live by a big chunk of the politically active population seems more than a bit of a stretch.

If, however, Warren keeps this up, she could very quickly make herself the kind of big public figure she has long been to smaller circles of progressive activists. What’s most interesting about her speech is that she placed as great an emphasis on Wall Street influence in the Obama administration Treasury Department as she did on the legislative provisions in the Cromnibus. She’s pulling no punches. And not only does this indicate she will go to the mats to stop the nomination of Antonio Weiss to a top position at Treasury–a fight she looks likely to win–but that she’s launching a broad challenge to the acceptability of any recent Wall Street vets in the ranks of Democratic executive branch officials or advisors. This represents a clear collision course with the administration, and with Hillary Rodham Clinton (Warren’s constant references to Citi in her speech–so closely identified with the key Clintonian advisory Robert Rubin–could not be a coincidence), even if Warren’s public disavowals of interest in a primary challenge to Clinton represent an unshakable private conviction. You could see, say, Bernie Sanders taking up the banner of a primary challenge with Warren playing a key role in the background whether or not she’s formally in the insurgent camp.

Mogolescu, however, probably reflects the views of a lot of Warren’s fans in thinking that she and only she can topple Clinton, but that she can also put together the transformative super-partisan coalition that progressives once thought Barack Obama might spearhead:

It [Warren’s speech] transformed the conventional wisdom about American politics that the main divide is between left, right, and center, when it is really between pro-corporate and anti-corporate. Her declaration that neither Democrats nor Republicans (meaning the voters, not the Washington politicians) don’t like bank bailouts rings loud and true. Tea party supporters don’t like bailouts and crony capitalism any more that progressives do.

I’m afraid we need to call B.S. on this idea of Elizabeth Warren (or any other “populist) becoming a pied piper to the Tea Folk, pulling them across the barricades to support The Good Fight against “crony capitalism.” Yes, many “constitutional conservatives” oppose corporate bailouts. But they also typically support eliminating not just subsidies but regulation of big banks and other corporations; oppose most if not all of the social safety net (and certainly its expansion); and also oppose legalized abortion and marriage equality, for that matter. It’s not even all that clear that Warren-style “populism” will improve Democratic prospects with the white working class, which harbors a host of grievances with the traditional liberalism that Warren embraces beyond her signature financial “issues.”

To most Democrats most of the time, Warren is raising important and legitimate concerns about Wall Street that must be addressed, not just dismissed as “class warfare.” To some Democrats some of the time, she represents a decisive break with the Clinton and Obama traditions that is morally necessary. But let’s don’t pretend there’s a slam-dunk “electability” case for this kind of politics. Yes, the “median voter theorem” of politics that dictates a perpetual “move to the center” by general election candidates has lost a lot of its power just in the last few years. But the countervailing “hidden majority” argument for more ideological politicians of the left and the right is hardly self-evident, and has in the past often been fool’s gold.

 

By: Ed Kilgore, Contributing Writer, Political Animal, The Washington Monthly, December 15, 2014

December 16, 2014 Posted by | Elizabeth Warren, Politics, Progressives | , , , , , , , | 2 Comments

“Giving Wall Street More Leeway”: How Paul Ryan’s Budget Paves The Way For Another Financial Crisis

Representative Paul Ryan released his budget blueprint this week, and fans of his work were no doubt pleased: it called for $5 trillion in spending cuts over the next decade, focused heavily on domestic, non-military spending. Safety net programs like Medicaid and food stamps would face savage cuts, and the Affordable Health Care Act would be repealed entirely. Meanwhile, both corporate and individual tax rates would be lowered.

It is easy to make the case that the rich get richer and the poor get poorer under Ryan’s so-called “Path to Prosperity” plan: one needs only to look at the literally trillions cut from Medicaid and food stamps while the rich pay much less in taxes.

But it’s important to refine that point and note that the financial sector in particular gets many special favors in the Ryan plan. After all, it is one of Ryan’s leading benefactors and he can even be spotted sipping $350 bottles of wine with industry leaders from time to time. And his budget is no doubt a path to prosperity for them.

Moreover, in three crucial ways Ryan’s budget not only gives Wall Street more leeway to act recklessly, but makes it more likely that average Americans face the consequences.

Cutting the Securities and Exchange Commission budget: Already, the head of the SEC is complaining that her agency’s budget is not nearly adequate to police the country’s massive financial sector. In a speech earlier this year at SEC headquarters, director Mary Jo White said, “our funding falls significantly short of the level we need to fulfill our mission to investors, companies and the markets.” The SEC has only 4,200 employees, but must regulate eighteen different stock exchanges and over 25,000 different market participants—and the agency’s responsibilities are growing thanks to new mandates from the Dodd-Frank financial reform legislation.

Ryan has a much different take in his budget: he thinks the SEC is just too big. He doesn’t apply a dollar figure, but makes it clear the agency’s already meager budget should be substantially “streamlined.”

“In the run-up to the financial crisis and its aftermath, the SEC repeatedly failed to fulfill any part of its mission,” his blueprint notes, ticking off a familiar list of whiffs, from the unsound nature of Bear Stearns and Lehman Brothers to the Ponzi schemes run by Allen Stanford and Bernie Madoff.

So far, so good. But Ryan goes on: “These failures have taken place despite significant increases in funding at the SEC, which has seen its budget increase almost sixty-six percent since 2004.”

Apparently, the extra money was the problem. “This resolution questions the premise that more funding for the SEC means better, smarter regulation. Adding reams of regulations to the books and scores of regulators to the payrolls will not provide greater transparency, consumer protection and enforcement for increasingly complex markets. Instead, the SEC should streamline and make more efficient its operations and resources.”

In short: since the SEC failed to adequately police Wall Street at a time its budget was increasing, the magic solution would be to cut the agency’s budget, because ipso facto the agency’s performance would get better.

This line of thinking would not be unfamiliar to those who follow Ryan’s recommendations for federal anti-poverty programs, and it’s just as wrong here as it is there. As the agency’s director herself pointed out (on several different occasions), the SEC plainly needs more resources to conduct better regulation of a huge financial sector. Ryan provides no evidence, aside from that odd logical twist, that reducing the number of SEC staffers poring over filings from hedge funds would somehow increase oversight of those outfits.

Transferring the Consumer Financial Protection Bureau budget to Congress: Here Ryan resurrects a longstanding GOP proposal: that Congress, not the Federal Reserve, should fund the CFPB.

As it stands now, the bureau’s budget is essentially guaranteed. It can ask the Federal Reserve for funding up to a certain cap, and that request cannot be denied. The caps are fixed percentages of the Fed’s operating expenses. This guarantees autonomy from a Congress where many members (like, say, Ryan) are elected thanks to campaign contributions from the big financial institutions the CFPB polices.

Ryan claims to have a problem with this arrangement only because the Federal Reserve’s profits are supposed to be returned to the Treasury to reduce the deficit, but instead a portion of them are siphoned off to a new bureaucracy—one in which he suggests via scare quotes is ineffective. “Now, instead of directing these remittances to reduce the deficit, Dodd-Frank requires diverting a portion of them to pay for a new bureaucracy with the authority to write far-reaching rules on financial products and restrict credit to the very customers it seeks to ‘protect,’” says the blueprint.

CFPB funding would thus be transferred to Congress under the Ryan plan, and subject to annual appropriations. He doesn’t say what Congress should do with that budget once its under legislators control, but one needs only to look to his SEC budget proposals to get a sense of what would likely happen.

Ensuring Taxpayer Bailouts of Big Banks: This is another up-is-down situation where a lot of unpacking of Ryan’s language is needed. His budget says:

Although the proponents of Dodd-Frank went to great lengths to denounce bailouts, this law only sustains them. The Federal Deposit Insurance Corporation now has the authority to access taxpayer dollars in order to bail out the creditors of large, ‘‘systemically significant’’ financial institutions. This resolution calls for ending this regime, now enshrined into law, which paves the way for future bailouts. House Republicans put forth an enhanced bankruptcy alternative that—instead of rewarding corporate failure with taxpayer dollars—would place the responsibility for large, failing firms in the hands of the shareholders who own them, the managers who run them, and the creditors who finance them.

Sounds good! But that would actually accomplish the exact opposite.

Indeed, Dodd-Frank gave the FDIC the power to wind down too-big-to-fail banks, which is called “resolution authority.” In a crisis, if a failing bank is deemed too big for traditional bankruptcy, a panel of bankruptcy judges can place it in receivership under the FDIC. That FDIC in turn then makes a plan for winding down the institution safely—something Barney Frank called a “death panel” for big banks.

Crucially, under this structure, taxpayers can’t end up paying for this wind down—Dodd-Frank explicitly forbids it. Any taxpayer money used upfront to ease the firm into bankruptcy would be recouped by a structured sale of the bank’s assets. (Note that Ryan sneakily says the FDIC has the authority to “access taxpayer dollars,” eliding the fact that in the end it has to pay them back.)

Ryan’s alternative is to end FDIC’s resolution authority and simply “place the responsibility for large, failing firms in the hands of the shareholders who own them, the managers who run them, and the creditors who finance them.”

That’s akin to just saying “it will all work out.” It is unlikely in the extreme that the shareholders and managers can somehow bail out a failing big bank, especially in a crisis. Inevitably, Congress and thus taxpayers would have to step in, without any of the established authority like asset sales that the FDIC now possesses.

Ryan’s plan would lead to more taxpayer bailouts of failing big banks—and by stripping down the budgets of the agencies meant to oversee those institutions, make failure more likely in the first place. But in the meantime, his friends on Wall Street could enjoy less regulation, less oversight, and more comfort that taxpayers will someday come to the rescue.

 

By: George Zornick, The Nation, April 2, 2014

April 5, 2014 Posted by | Paul Ryan, Ryan Budget Plan | , , , , , , , | Leave a comment

“J.P. Morgan, The Man And The Bank”: Bassackwards Justice, Fining Banks Is Not A Crime-Stopper

J.P Morgan was recently socked in the wallet by financial regulators, who levied a fine of nearly a billion bucks against the Wall Street baron for massive illegalities.

Well, not a fine against John Pierpont Morgan, the man. This 19th century robber baron was born to a great banking fortune and, by hook and crook, leveraged it to become the “King of American Finance.” During the Gilded Age, Morgan cornered U.S. financial markets, gained monopoly ownership of railroads, amassed a vast supply of the nation’s gold and used his investment power to create U.S. Steel and take control of that market.

From his earliest days in high finance, Morgan was a hustler who often traded on the shady side. In the Civil War, for example, his family bought his way out of military duty, but he saw another way to serve. Himself, that is. Morgan bought defective rifles for $3.50 each and sold them to a general in the Union Army for $22 each. The rifles blew off soldiers’ thumbs, but Morgan pleaded ignorance, and government investigators graciously absolved the young, wealthy, well-connected financier of any fault.

That seems to have set a pattern for his lifetime of antitrust violations, union busting and other over-the-edge profiteering practices. He drew numerous official charges — but of course, he never did any jail time.

Moving the clock forward, we come to JPMorgan Chase, today’s financial powerhouse bearing J.P.’s name. The bank also inherited his pattern of committing multiple illegalities — and walking away scot-free. Oh sure, the bank was hit with that billion-dollar fine, but that’s hardly devastating to a behemoth that hauled in $6.5 billion in just the previous three months. Besides, note that not a single one of the top bankers who committed gross wrongdoing was charged or even fired — much less sent to jail. Fining banks is not a crime-stopper, for banks don’t commit crimes. Bankers do. And they won’t ever stop if they don’t have to pay for their crimes.

In fact, someone should make a movie about JPM’s honchos and title it Bankers Gone Wild! Not long ago, America’s biggest Wall Street empire was hailed as a paragon of financial integrity. But today it’s a house of crime, currently under investigation for management illegalities by seven federal agencies, several states and two foreign nations.

But there’s an additional “crime” taking place, hidden within that billion-dollar fine that regulators levied on the bank for top-level mismanagement, which caused shareholders to lose a whopping $6 billion in a trade scandal last year. Media reports say the bank agreed to pay the fine to settle those charges, but when it’s reported that “the bank” will pony up a billion dollars, who exactly is that?

Not the bankers who committed the illegalities, but Chase’s shareholders. Wow, how’s that for a raw deal? The money the bankers lost belonged to shareholders, yet they’re being socked for another billion to cover the bankers’ fine. Imagine if you got burglarized, then were fined for being burglarized! As one law professor said, “It’s not just adding insult to injury, it’s adding injury to injury.”

Federal regulators say it’s easier to get bankers to settle a case if they can hand the fine to shareholders, who don’t even get a say in the decision. But going after the bankers, they claim, would require a jury trial — and jurors might not convict.

Huh? What kind of bassackwards justice is that? Besides, it’s ridiculous to think that jurors wouldn’t jump at the chance to convict Wall Street banksters. That’s a jury I’d like to serve on. Wouldn’t you? Nail a couple of them, and that’d chill all of their wild finagling.

 

By: Jim Hightower, The National Memo, October 20, 2013

October 21, 2013 Posted by | Big Banks, Financial Institutions, Wall Street | , , , , , | Leave a comment

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