Deficits

The White House is trumpeting news that the U.S. deficit is at the lowest level since President Obama took office. Wall Street, diverted by international crises, has been unimpressed (as are Conservatives). What is on the surface good news, really isn’t. The deficit has been reduced and that means the financial markets will improve. This will make a lot of money for a few people, but I wonder if it is worth it. The deficit reduction has been carried on the backs of people who could least afford it: the poor and the middle class. The nougat of economic and political gains hardly seems worth the suffering of the people who paid for it. 

There are alternatives to reducing the deficit that would spare the most vulnerable Americans. For example, raising the minimum wage would help, a very modest tax hike for the upper 2% of income earners would virtually eliminate the deficit in the short run. Maybe the real deficit is one of conscience. With so many Americans unemployed, so many working full time for poverty level wages, and for so many other Americans struggling to survive … how can we continue to expect them to take most of the pain in the cuts in government spending?

It bothers me. Doesn’t it bother you?    

 

State of the Union

When President Obama delivers his fifth State of the Union address he is reported to be emphasizing the problem of economic injustice. At first glance, this would seem to be a good thing, since the extraordinary re-distribution of wealth to the top 1% has only accelerated in the past 4 years, and the ability of Americans to improve their financial situation has significantly declined.

I say “at first glance” because without a radical change of policy the Obama Administration will only continue to accelerate these trends. Maybe some of you remember Jim DeMint’s infamous “you lie” outburst during the first State of the Union address by Obama? Maybe it should have been held in reserve for this one. Let me explain why …

The fact is that 95% of the benefits of the “Obama Recovery” have gone to only the top 1% of the wealthiest Americans. The fact is that during the same Administration that has prosecuted more whistle-blowers than all other Presidents combined, prosecutions of white collar crime has virtually stopped. Journalists, Congress, academics … all agree that illegal activity by Wall Street bankers has escalated since the taxpayer bailouts, illegal activity that has robbed the taxpayers of countless billions SINCE the bailout. I think we all understand now that Congress has been beholden to Wall St. and billionaire donors for years, but “say it ain’t so Barak”! 

A few years back, March 27, 2009 to be exact, President Obama held a meeting with the Lords of Wall St. at the White House.  During that meeting he reportedly cut a deal to not criminally prosecute any of the bankers for the massive fraud that had nearly destroyed the economy. At the time, the President denied this leak, but facts speak for themselves. Prosecutions of white collar crimes has reached an all time low under the Obama Justice Department, even as more and more evidence of white collar crime is being unearthed. 

Many of the rich and their hired apologists in government and the media accuse economic justice advocates of simply being envious of the rich and desirous of a something for nothing society. The fact is that much of what has caused such an unjust distribution of wealth has been a rigged tax code and illegal activity by banks “too big to fail”. We simply want a fair playing field.

When President Obama talks about the need to “protect the middle class” and to “restore the ability of Americans to improve their financial opportunities”, realize that his policies have been designed by Wall St. to protect Wall St. and not our own well being.  Without a radical reversal of his own policies, it would be a false promise (a lie).    

 

Leverage

Don’t let them fool you. There is a way to stop the economic terrorism of AIG and their latest act of outrage: giving multi-million dollar bonuses to the same people who ran the division of AIG that caused the economic crisis in the first place. AIG FORCED us to bail them out with over $170 billion dollars of tax money (our money) in order to save the financial markets. The same people who made a decision to put not only their own company at risk but hundreds of other financial institutions, are now going to get over $165 million dollars in bonuses for making the worst economic decisions in corporate history. It is outrageous, but it is certainly NOT unstoppable.

The problem with the Obama administration is that the people he has solving the economic crisis on Wall St. are FROM Wall St. – they are part of the club. Geinthner, Summers, Bernanke, Romer, Rubin – they all say they are “outraged”, but a contract is a contract and there is nothing we can do. First of all, they are all current or former members of the same club. They all had their time of doing deals, having lunch and playing golf with the same AIG people. I don’t trust any of them in terms of holding their buddies accountable. Sure, the Obama economic team wants to solve the problem, but they don’t seem interested at all in holding the people who nearly destroyed our economy accountable. What they did to our economy with their greed has done far more damage to the security of our Country than anything Al Qaeda has done.

A contract is a contract, but contracts can be re-negotiated, especially when there is a strong incentive. The GOP has no problems at all forcing the hard working auto workers to renegotiate their contract under a threat of mass layoffs. Why is such a threat made to the UAW but not thieving AIG executives? After all, a contract is just a contract, isn’t it?

Here’s incentive for the Wall St. terrorists: criminal prosecutions. What the people at AIG did was deliberately hidden from regulators and stockholders. Even if derivatives were exempted from trade regulations (by an amendment pushed by the almost Treasury Secretary Phil Gramm), they were not exempted from tax laws and other legal statutes that could apply if some lawyer with half a brain at the DOJ researched it. That’s the leverage we have as the people. We need to force the Justice Department to start criminal investigations of these white-collar criminals and if they want to re-negotiate tax funded bonuses for shorter prison terms then they can have their lawyers call our lawyers.

Lets’ see how much laughing the Wall St. terrorists do when they start being held accountable for their crimes instead of being paid for them – crimes which are long overdue to be prosecuted.