“Economic Facts Get In The Way”: For Republicans, Pretending That ‘Up Is Down’ Won’t Cut It
Uh-oh. Now that the economy is doing well, what are Republicans – especially those running for president – going to complain about? And what are Democrats willing to celebrate?
Last week’s announcement that the economy grew at a 5 percent rate in the third quarter of 2014 – following 4.6 percent second-quarter growth – was the clearest and least debatable indication to date that sustained recovery is no longer a promise, it’s a fact.
Remember how Mitt Romney painted President Obama as an economic naïf, presented himself as the consummate job-creator and promised to reduce unemployment to 6 percent by the end of his first term? Obama beat him by two full years: The jobless rate stands at 5.8 percent, which isn’t quite full unemployment but represents a stunning turnaround.
Since the day Obama took office, the U.S. economy has created well over 5 million jobs; if you measure from the low point of the Great Recession, as the administration prefers, the number approaches 10 million. It is true that the percentage of Americans participating in the workforce has declined, but this has to do with long-term demographic and social trends beyond any president’s control.
Middle-class incomes have been flat, despite a recent uptick in wages. But gasoline prices have plummeted to an average of $2.29 a gallon nationwide, according to AAA. This translates into more disposable income for consumers; as far as the economy is concerned, it’s as if everyone got a raise.
The stock market, meanwhile, is at an all-time high, with the Dow soaring above 18,000. This is terrific for Wall Street and the 1 percenters, but it also fattens the pension funds and retirement accounts of the middle class.
All this happy economic news presents political problems – mostly for Republicans but to some extent Democrats as well.
For Rand Paul, Jeb Bush, Chris Christie, Marco Rubio and other potential GOP presidential contenders, the first question is whether to deny the obvious, accept it grudgingly or somehow embrace it.
For years, a central tenet of the Republican argument has been that on economic issues, Obama is either an incompetent or a socialist. It should have been clear from the beginning that he is neither, given the fact that he rescued an economy that was on the brink of tipping into depression – and did it in a way that was friendly to Wall Street’s interests. But the GOP rarely lets the facts get in the way of a good story, so attacks on Obama’s economic stewardship have persisted.
The numbers we’re seeing now, however, make these charges of incompetence and/or socialism untenable. Even the Affordable Care Act – which Republicans still claim to want to repeal – turned out not to be the job-killer that critics imagined. All it has done, aside from making it possible for millions of uninsured Americans to get coverage, is help hold down the cost of medical care, which is rising at its slowest rate in decades.
GOP candidates face a dilemma. To win in the primaries, where the influence of the far-right activist base is magnified, it may be necessary to continue the give-no-quarter attacks on Obama’s record, regardless of what the facts might say. But in the general election, against a capable Democratic candidate – someone like Hillary Clinton, if she decides to run – pretending that up is down won’t cut it.
Likewise, the Republican leadership in the House and now the Senate will confront a stark choice. Do they collaborate with Obama on issues such as tax reform, infrastructure and the minimum wage in an attempt to further boost the recovery? Or do they grumble on the sidelines, giving the impression they are rooting against the country’s success?
Democrats, too, have choices to make. The fall in gas prices is partly due to a huge increase in U.S. production of fossil fuels. “Drill, baby, drill” may have been a GOP slogan, but it became reality under the Obama administration. Is the party prepared to celebrate fracking? Will Democratic candidates trumpet the prospect of energy independence?
Likewise, Elizabeth Warren charges that the administration’s coziness with Wall Street helps ensure that the deck remains stacked against the middle class. Warren says she isn’t running for president but wants to influence the debate. She has. Clinton’s speeches have begun sounding more populist, in spite of her long-standing Wall Street ties.
You know the old saying about how there’s no arguing with success? Our politicians are about to prove it wrong.
By: Eugene Robinson, Opinion Writer, The Washington Post, December 20, 2014
“Risky Business”: Brinksmanship And The Return Of Financial Crisis
A government shutdown once again loomed, and familiar deadlines and ultimatums flew around Washington. And Congress just used the threat to loosen the rules created in the wake of the financial crisis, a victory for Wall Street banks in their constant and well-funded campaign against reform.
The rules they have targeted are designed to reduce the risk of another financial meltdown, like the one that drove us into the Great Recession and could have been much worse. Though the repeal has been styled by some as a technical amendment, nothing could be farther from the truth.
Think about the best way to decide legislative policy in the devilishly complex and risk-laden area of derivatives. These are the financial contracts that brought down AIG, the event that triggered the crisis. You might imagine careful deliberation and debate, leading to a thoughtful vote in Congress in which elected representatives must stand up and be counted so that they could be held responsible for a difficult decision.
Of course, that is not how the House of Representatives works, especially not the current lame duck version. A 1,600 page Omnibus Spending Bill appeared Tuesday night and passed the House late on Thursday night. We have become familiar with these spending bills that have replaced reasoned budgeting and serially risk shutdowns just so the administration can be bullied every few months.
This time around, House sponsors attached a provision amending the Dodd-Frank financial reform law. They did this in the dead of night and at the last minute. Lobbyists, who are paid to make certain that the banks can continue to do as much risky business as possible despite the new regulatory regime, pushed to have a provision repealing the “swaps push-out” section of Dodd-Frank slipped into the spending bill so that any resistance to the repeal would risk another shutdown. Citigroup lobbyists wrote 70 out of 85 lines of the original bill.
That’s Washington style representative democracy for you.
The swaps push-out provision requires banks to transact their swaps business in separate subsidiaries. The concept is that any bank swaps business should be done outside the bank itself, which is backed by FDIC deposit insurance and the many supports provided by the Federal Reserve.
Swaps are complex derivatives contracts requiring payments in the future that change as markets prices for stocks, bonds, oil and many other traded assets change. Thus, they create large and volatile financial obligations going back and forth between a bank and its contract “counterparty,” either a company (like AIG), a government or another bank.
Counterparties to the banks who rely on the banks’ performance of its obligations can rely on these federal supports and can assume that the government will step in if a problem occurs. This can embroil the government in any bank default making a bailout more likely, good news for bank creditors like the swap counterparties. To avoid this, the swaps push-out requires a separate corporation, not entitled to the federal supports, to create a firewall, insulating taxpayers from the riskiest trading.
Though swaps were regulated in Dodd-Frank, there were plenty of loopholes, so a great deal of that business will go forward just as before. The swaps push-out section now under threat was already watered down in the original Dodd-Frank deliberations. Nonetheless, it still provides important protection. With swaps push-out, there’s some possibility that the federal government wouldn’t be dragged into a bank default because of the bank safety net.
But members of Congress, urged on by big money from Wall Street, decided that this sensible buffer between casino-like derivatives trading and the American taxpayer was such a bad idea that it had to be discarded through surreptitious and disguised means.
The banks have been out to kill the swaps push-out from the beginning. That makes sense for them since the capital needed to back a subsidiary would cost them more than their basic capital. Banks can raise general capital cheaply since investors have learned that failure is not a concern for banks that are too-big-to-fail. Capital funding for a subsidiary that is separated from this safety net is more costly because a bail out is less likely.
The banks also got some of their customers who often enter into swaps with the banks to urge repeal. The customers complained that their swaps would cost more. Of course they would, since the bank subsidiary’s capital backing the swaps would cost more. But the customers, as contract counterparties, have been relying on the too-big-to-fail safety net. Like investors in the banks, these customers simply should not benefit from a pipeline to the American taxpayers. Any additional cost is an element of elimination of that benefit, nothing more.
In Washington, banks have been allowed to set the terms of the regulatory debate. The financial crisis provides many lessons, but one of its central was that allowing banks free reign leads to disastrous results for all Americans. Six years after the onset of the financial crisis, it’s too soon to forget that lesson and revive too-big-to-fail.
By: Wallace Turbeville, The American Prospect, December 12, 2014
“Evangelical Myth Won. Wall Street Won. The Banks Won. America Lost”: Since Lies Worked So Well For Republicans, We’ll Have More
The Republican Party base is white evangelicals. So no wonder the GOP lies about the country, the economy and the president worked. The folks who base their lives on religious mythology have spent lifetimes being trained to believe lies. And if you point that out then they kick into victim mode and denounce people who question them as persecutors. Last night they won. Lies won.
As the New York Times noted:
“Republican candidates campaigned on only one thing: what they called the failure of President Obama. In speech after speech, ad after ad, they relentlessly linked their Democratic opponent to the president and vowed that they would put an end to everything they say the public hates about his administration. On Tuesday morning, the Republican National Committee released a series of get-out-the-vote images showing Mr. Obama and Democratic Senate candidates next to this message: ‘If you’re not a voter, you can’t stop Obama.’ The most important promises that winning Republicans made were negative in nature. They will repeal health care reform. They will roll back new regulations on banks and Wall Street. They will stop the Obama administration’s plans to curb coal emissions and reform immigration and invest in education.”
Since the economy has rebounded, health care reform has worked, all that remained for the GOP was to lie. And since the base of the GOP is white aging southern evangelicals the GOP was in luck. These are easy folks to lie to. That’s because they already accept an alternative version of reality. Also, of course since the lies are about a black man, that doesn’t hurt. Yes, race is “still” an issue.
The midterm election boiled down to xenophobia about the “Other.” Ebola was the president’s fault! ISIS was coming to get us! We aren’t safe!
None of this is true, but no matter. In fact judging by actual facts the Obama presidency has been successful in spite of the GOP obstruction. The economy is back. Jobs are up. Health care reform is working. We’ve been kept safe from terror attacks. America is strong.
What we’ll now see is a reinvigorated religious right. And since lies worked so well we’ll have more. Creationism, anti-gay initiatives, anti-choice initiatives, and of course pro-Koch-Brother-Financed lies upon lies to bury climate change debate is on the way.
The Republican-dominated Supreme Court stands ready to back corporate and religious right-financed attacks of the environment, pro-Wall Street laws and all the rest.
Racism won. Evangelical myth won. Wall Street won. The banks won. America lost.
By: Frank Schaeffer, The Huffington Post Blog, Movember 5, 2014
“In The Short Term, Absolutely Nothing”: Are GOP Donors Going To Get Anything In Return For Their Millions?
If you’re a liberal zillionaire who contributed lots of money this year to prevent a Republican takeover of the Senate, on Tuesday you’re probably going to be pretty unhappy. Which is why, Ken Vogel of Politico reports, the people who run the groups through which all those millions are being channeled are rushing to reassure their donors that it was still money well spent. Which got me thinking about the conservative donors who are probably going to be celebrating next week. For some of them, Republican victories are an end in themselves, but others have a more specific agenda in mind. They help Republicans get elected because they expect something in return.
To be clear, I’m not talking about quasi-legal bribery. If you’re an oil company or a Wall Street firm, you donate to Republicans not so that they’ll be forced to do what you want whether they like it or not, but because you know they like it quite well. Republicans want, deep in their hearts, to cut taxes and slash regulations and open up public lands to drilling and all the other things that would benefit their donors. But are they actually going to be able to deliver?
Those investments have been huge. Here are just a couple of details from the Center for Responsive Politics:
Wall Street as a whole has contributed $171.1 million, more than any other industry or interest group that CRP tracks. Of that total, $100.8 million has gone to candidates and party committees, with an overwhelming 62 percent of it winding up in the hands of Republicans and just 38 percent in the hands of Democrats. The remaining money, more than $70 million, went to outside groups, and $45.8 million of that went to conservative-leaning organizations.
But while securities and investment was the top donor industry for GOP candidates, for Democrats the No. 1 slot was occupied by lawyers and law firms. Overall, that was the third-ranking industry this election cycle, giving $66.4 million to Democrats and $28.4 to Republicans through the third quarter.
One grouping new to the top 10 is Environment—a category that includes a number of fairly small-spending groups like the Natural Resources Defense Council. What made the difference this year were contributions from Tom Steyer, a billionaire who made his money in hedge funds; he has contributed $73.7 million this cycle to outside groups, all focused on the environment or aligned with Democrats.
Steyer has said that his goals are long-term—specifically, he wants to elevate the place of climate change in public debate and elect people who will (eventually) do something about it. But if Wall Street has contributed over $100 million to Republicans this year, they want something in return. And what are they going to get? The answer is probably not too much. Republicans have no doubt been telling them, “Help us get elected, and then you’ll see!” But Barack Obama still has a veto pen, and the Treasury Department and the SEC are still staffed by his appointees (not that they’re unfriendly to Wall Street, but they’ll be no more friendly next year than they were this year). Republicans aren’t going to be passing any major legislation—or much legislation at all—that will actually reward their friends, because if the legislation they pass would meaningfully advance conservative goals, Obama would veto it.
But people all over the place may be overestimating just how much change is going to come. Look, for instance, at this article (also from Politico) about how all the K Street lobbying firms are getting ready for boom times:
GOP lobbyists and consultants are strategizing about landing new business and looking forward to advising clients if Republicans take control of the Senate—setting off rapid change in the political dynamics of Capitol Hill.
Several lobbyists said they expect a bump in business in the first half of 2015 when companies look to recalibrate their outside rosters to engage more heavily with Senate Republicans.
“There will be a burst of excitement and activity as a result of that change,” said former Senate Majority Leader Trent Lott (R-Miss.), who now heads Squire Patton Boggs’ lobbying operation. “There is a lot of pent-up demand in the tax area, infrastructure, immigration, the budget and tax policy.”
Lott said he thinks it will be a shot in the arm to K Street with a much busier legislative agenda.
Lobbyists need legislation in order to do their jobs. They especially like big bills that can be larded with lots of obscure provisions they obtain on behalf of their clients but that few people notice. And these have indeed been lean times—I have one friend who’s been lobbying for years, who told me not long ago that he was considering a career change, because without any legislation going through Congress, his job had become all but irrelevant.
But what the hell is Trent Lott talking about here? Is a Republican Congress going to start passing bills on taxes, infrastructure, and immigration that Barack Obama will sign?
Of course they won’t. What they will do, however, is write, debate, and maybe even pass a lot of bills that are ultimately doomed. Some will get filibustered by Senate Democrats, others may be vetoed. But at least Lott will be able to go to his clients and say that he earned his six-figure monthly retainer, because he got things inserted into bills for them, and it isn’t really his fault if they never actually became law.
And that’s what they’ll get for their millions, at least in the short term: nothing.
By: Paul Waldman, Contributing Editor, The American Prospect, October 31, 2014
“Elizabeth Warren Makes A Powerful Case”: Who Does The Government Work For?
Sen. Elizabeth Warren says she isn’t running for president. At this rate, however, she may have to.
The Massachusetts Democrat has become the brightest ideological and rhetorical light in a party whose prospects are dimmed by — to use a word Jimmy Carter never uttered — malaise. Her weekend swing through Colorado, Minnesota and Iowa to rally the faithful displayed something no other potential contender for the 2016 presidential nomination, including Hillary Clinton, seems able to present: a message.
“We can go through the list over and over, but at the end of every line is this: Republicans believe this country should work for those who are rich, those who are powerful, those who can hire armies of lobbyists and lawyers,” she said Friday in Englewood, Colo. “I will tell you we can whimper about it, we can whine about it or we can fight back. I’m here with [Sen.] Mark Udall so we can fight back.”
Warren was making her second visit to the state in two months because Udall’s reelection race against Republican Cory Gardner is what Dan Rather used to call “tight as a tick.” If Democrats are to keep their majority in the Senate, the party’s base must break with form and turn out in large numbers for a midterm election. Voters won’t do this unless somebody gives them a reason.
Warren may be that somebody. Her grand theme is economic inequality and her critique, both populist and progressive, includes a searing indictment of Wall Street. Liberals eat it up.
“The game is rigged, and the Republicans rigged it,” she said Saturday at Carleton College in Northfield, Minn. The line drew a huge ovation — as did mention of legislation she has sponsored to allow students to refinance their student loans.
Later, Sen. Al Franken (Minn.) — a rare Democratic incumbent who is expected to cruise to reelection next month — gave a heartfelt, if less-than-original, assessment of Warren’s performance: “She’s a rock star.”
In these appearances, Warren talks about comprehensive immigration reform, support for same-sex marriage, the need to raise the minimum wage, abortion rights and contraception — a list of red-button issues at which she jabs and pokes with enthusiasm.
The centerpiece, though, is her progressive analysis of how bad decisions in Washington have allowed powerful interests to re-engineer the financial system so that it serves the wealthy and well-connected, not the middle class.
On Sunday, Warren was in Des Moines campaigning for Democrat Bruce Braley, who faces Republican Joni Ernst in another of those tick-tight Senate races. It may be sheer coincidence that Warren chose the first-in-the-nation nominating caucus state to deliver what the Des Moines Register called a “passion-filled liberal stemwinder.”
There once was consensus on the need for government investment in areas such as education and infrastructure that produced long-term dividends, she said. “Here’s the amazing thing: It worked. It absolutely, positively worked.”
But starting in the 1980s, she said, Republicans took the country in a different direction, beginning with the decision to “fire the cops on Wall Street.”
“They called it deregulation,” Warren said, “but what it really meant was: Have at ’em, boys. They were saying, in effect, to the biggest financial institutions, any way you can trick or trap or fool anybody into signing anything, man, you can just rake in the profits.”
She went on to say that “Republicans, man, they ought to be wearing a T-shirt. . . . The T-shirt should say, ‘I got mine. The rest of you are on your own.’ ”
The core issue in all the Senate races, she said, is this: “Who does the government work for? Does it work just for millionaires, just for the billionaires, just for those who have armies of lobbyists and lawyers, or does it work for the people?”
So far this year, Warren has published a memoir, “A Fighting Chance,” that tells of her working-class roots, her family’s economic struggles, her rise to become a Harvard Law School professor and a U.S. senator, and, yes, her distant Native American ancestry. She has emerged as her party’s go-to speaker for connecting with young voters. She has honed a stump speech with a clear and focused message, a host of applause lines and a stirring call to action.
She’s not running for president apparently because everyone assumes the nomination is Clinton’s. But everyone was making that same assumption eight years ago, and we know what happened. If the choice is between inspiration and inevitability, Warren may be forced to change her plans.
By: Eugene Robinson, Opinion Writer, The Washington Post, October 20, 2014
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