Pres. Obama Must Share Blame for Wall Street’s Implosion (Part II)
by Rawlein G. Soberano, Ph.D.
The tanking economy, high unemployment rate and ridiculously high gas prices are taking a huge toll on average Americans, but the Big Five oil companies (Exxon Mobil, Shell, Chevron, BP and Conoco Phillips) made a whopping $36 billion in profits in Q2 of 2011. Their minions and lapdogs in Congress (GOP) are fighting with fanatic subservience to their masters to hold on to their government subsidies. There are 140 Super PACs; one is generating $150 million in this election cycle to buy more lawmakers; they’re cheap. Poverty among Americans 65 and older is statistically unchanged in recent years because of Social Security. Republicans want their buddies to run it (the more accurate description is—to raid it).
“Authority” and “shared sacrifice” are Washington code words for preserving tax advantages and privileges for the wealthiest while transferring private debt and risk to the pubic on the back of working/middle class. Twenty-four million Americans are unemployed or underemployed and nearly $9 trillion n household wealth has vanished since the 2008 economic crisis. Over the last four years, 53% of black wealth has just disappeared (from 2005 to 2009). The mega-rich pay about 15% in taxes while the middle class fall into the 15% and 25% income tax brackets and then are hit with heavy payroll taxes to boot. Since 2000, nearly 12 million Americans have slipped out of the middle class and into poverty.
Are the demonstrators justified in their actions? A tax increase will damage America’s economic future and kill jobs (standard GOP inaccurate, false and misleading talking points) which sounds good and energizes their base (4% of voters are right wing, die hard, uneducated, misinformed, typically southern) but has very little support in fact. There is a $1.9 trillion sitting idle but large businesses are not hiring because they are waiting for a climate (more tax cuts and no regulations) that will fire up their greedy appetite. How they wish to do away with minimum wage, labor unions, extend the 40-hour week, require workers pay their own health insurance, eliminate minimum-age hiring and paid vacation, do away with government monitoring of hazardous materials and questionable practices!
Inequity in America has gone too far with 1% of its population owning more than what the 90% own together, where 400 families own more than the bottom 60% put together. This is the GOP paradox—they claim financial responsibility and debt reduction as their priorities but reject any deal that would cut the debt by at least $3 trillion. If they succeed in stealing the next presidential elections in 2012 as they had done in 2000 in FL and 2004 in OH, by disenfranchising 5 million voters (poor, young, elderly, African-Americans and Hispanics), there will be larger and more violent demonstrations. Their greatest problem is their growing inability to win national elections without cheating with the help of some high-priced criminals to make a mockery of our democracy. That would make the OWS gathering look like Mary Poppins. This time around the country is watching them with eagle eyes.
If we cut $1 trillion in defense spending, we lose 160,000 good, high-paying jobs, according to one defense contractors. That’s $6 million in public money per job. Looking at this, why don’t we just pay these people to burn money? For $6 million, 50 weeks a year, 40 hours a week, we can hire someone to burn $2,500 each hour ($1 per second, once you figure him lunch, breaks, training and fire safety seminars) and take home $500 for himself. We can also press the hit to make sure these people keep a roof over their heads. By comparison, the notion of giving all of the poor a few thousand dollars in welfare is just outrageous. The notion of subsidizing ordinary jobs directly, offering a few thousand dollars in outside funding to businesses that arrange to hire a few tens of millions of unemployed Americans, not even worth considering. After all, thousands of millions add up to billions of dollars, an inconceivable sum. What a boondoggle!
It was December 2008, and Pres. Barack Obama was the president-elect. He already made the decision to select Tim Geithner as his Treasury secretary and Lawrence Summers to head the National Economic Council, the top posts in his administration. Ron Susskind described this event clearly in his latest book, Confidence Men. Sen. Byron Dorgan (D-ND) was incredulous at the selection of these two Wall Street sleaze balls. BHO ignored the warning, in spite of their role in the very financial disaster they were hired to fix. Geithner was accused as a tax evader. In 2006 the IRS determined that he did not pay taxes in 2003 and 2004 ($17,230) because he incorrectly (?) believed they were deducted at source by the International Monetary Fund (IMF). Foreigners working at IMF don’t pay taxes but Americans do. Summers was a controversial figure but his position did not require Senate confirmation.
The worst aspect of the Treasury bailouts designed by Secretary Hank Paulson was that they were designed not to do what they were supposed to do. In many ways, it was not only a giveaway but one designed not to work. He gave lip service to lawmakers obsessed with TARP (Troubled Assets Relief Program). Columbia Prof. Joseph Tiglitz described the pricey mechanism as a “gimmick to make sure they were giving away something worth nothing.” He added that if Paulson did this as an employee of Goldman Sachs, he would have been fired. He owned $500 million in Goldman Sachs stocks which he was forced to sell by accepting the job at Treasury. He didn’t pay any capital gains taxes (zero) on the sale of the stocks. His tax savings was $200 million, not a bad compensation for less than 3 years of work at a “public service” gig. He also got a nice salary and generous benefits. It sent the wrong message to others after him that a government job with conflicted interest is a fantastic tax dodge.
It was Tim Geithner, New York Federal Reserve president, who should have withdrawn after the Senate Finance Committee released a 30-page memo that makes him unfit to serve a Secretary of Treasury. He used his position to bail out his Wall Street buddies. Regardless of his knowledge of various programs, e.g., TARP, the man is dishonest and a cheat. Nobody is that indispensable. Larry Summers had pilloried the idea of regulating derivatives, the esoteric financial products, e.g., credit default swaps that led the way to sub-prime meltdown when he was at Treasury. He led the opposition against it. Geithner served under him in the Clinton administration, and both men had ties to Robert Rubin, the former Goldman Sachs Group’s executive who became Treasury secretary and chairman of Citigroup as that bank careened towards disaster. It’s accurate to say that these sleazy crooks converted their high-ranking government posts into Wall Street riches.
What is baffling is why BHO chose Geithner and Summers over former Federal Reserve chairman Paul Volcker. It also shows flaws in his judgment, e.g. wrong timing on healthcare reform when 80% of Americans were happy with their coverage. He was a “brilliant amateur” but short on management experience, who has turned out just to be a smooth talker and turned his popular support into a tepid and reluctant approval for his job performance. He got elected in 2008 on “hope” and “change.” There is no hope when promises fell by the wayside and the leader gives in like a wet puppy to GOP demands, unreasonable as they had been. There is “no change” to count on when he can’t get this done, without the support of the American people, especially his supporters who are African-American, Hispanics, the young and the elderly whom he has taken for granted. His election in 2008 was a gratuitous victory handed him on a golden platter after 8 years of GWB and GOP quasi-criminal behavior, with at home spying on Americans and two wars abroad (lies about the non-existent WMD) at a cost of $1 trillion and 7k lives lost.
No one will question that BHO is a good orator. He fooled a lot of people getting elected (there was really not much contest against John McCain and Sarah Palin), pretending to help the middle- and lower-classes, end the winless wars, provide real healthcare reform (not just health insurance revisions) that enrich unfairly insurance companies), inter alia. There is no distinction between Republicans and Democrats when it comes to support for and from Wall Street, Big Oil, Big Pharma, the MIC, the media. His Harvard hubris, his close ties to the rich elite and his lack of principles did not bode well for any positive change in the past two and a half years. But don’t count him out because that it is still his priority (hope and change) over everything else.
Polls show at least two-thirds of Americans think the country is headed in the wrong direction. Consumer confidence is diving south, consumer confidence is hitting 2-year lows, and majorities disapprove of BHO’s handling of the economy. His job approval was slumping down even before the global stock sell-off and twin-debt crisis in Europe and US which featured a US credit rating downgrade and chaotic talks on a deal to raise the debt ceiling. Many people believe BHO is a Wall Street tool (hisfundraising there was at $35k per person) who never intended to fulfill the promise of “change we believe in.” He lied about where his campaign money came from, he lied about supporting the public option, and he lied about the tax cuts. He was going to do something about it, fist off. Then he said we needed to accept this as a compromise. The only people he fights against are the people who elected him in the first place. No wonder the average American is disappointed at his job performance.
The nation was ready for change but BHO (traveling lecturer) chose the status quo. So much of the public anger, disappointment and frustration have been turned on a leader who failed to lead. Had the right-wing succeeded in winning both houses of Congress in 2010, they would have tried to cut government, and our lives will now be governed by corporations. We will have a government by corporations for corporate profit. It will be a cruel government, a government of foreclosures, outsourcing, union-busting and outrageous payments for every little thing. Some Democrats, in their disappointment at his job performance, even called him corrupt for buying into GWB’s corruption and made the Bush corruption his own. The good news for him is that there is enough time to bring about the change he promised, though he already wasted two and a half years in the process. (11-01-11)
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