News 
Market Data 
Discover
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Thomas Paine and Ben Franklin: You Didn't Build That
By Jason Koebler
July 27, 2012 http://www.usnews.com/news/blogs/washington-whispers/2012/07/27/thomas-paine-and-ben-franklin-you-didnt-build-that
When President Obama said at a rally earlier this month that "if you've been successful, you didn't get there on your own … if you've got a business, you didn't build that," he started a political firestorm, and an opposing "I built that" campaign from Mitt Romney. But it turns out Obama didn't build that argument from scratch, either. And his comments seem to be closer to the founding fathers' principles than opponents might like to believe.
As noticed by Reddit, Benjamin Franklin and Thomas Paine, two men who literally built the country, expressed similar sentiments in the 1700s. And, reading the passages suggests that they wouldn't take all the credit for founding the country, either.
In a Christmas Day letter to Robert Morris in 1783, Franklin wrote that "the remissness of our people in paying taxes is highly blameable," and that "all property…seems to me to be the creature of public convention."
He continues:
"All the Property that is necessary to a man, for the conservation of the individual and the propagation of the species, is his natural right, which none can justly deprive him of: But all property superfluous to such purposes is the property of the publick, who, by their laws, have created it, and who may therefore by other laws dispose of it, whenever the welfare of the publick shall demand such disposition. He that does not like civil society on these terms, let him retire and live among savages."
Paine, in 1795's Agrarian Justice, puts it even more bluntly: "Personal property is the effect of society; and it is as impossible for an individual to acquire personal property without the aid of society, as it is for him to make land originally."
"Separate an individual from society, and give him an island or a continent to possess, and he cannot acquire personal property. He cannot be rich," he writes.
Obama, Franklin, and Paine say it's OK to become rich through hard work—just don't trample on the people who helped make it happen.
In the everlasting words of one Mister Spock, "the needs of the many outweigh the needs of the few."
The Cats of Mirikitani
http://www.thecatsofmirikitani.com/
Eighty-year-old Jimmy Mirikitani survived the trauma of WWII internment camps, Hiroshima, and homelessness by creating art. But when 9/11 threatens his life on the New York City streets and a local filmmaker brings him to her home, the two embark on a journey to confront Jimmy's painful past. An intimate exploration of the lingering wounds of war and the healing powers of friendship and art, this documentary won the Audience Award at its premiere in the 2006 Tribeca Film Festival.
SYNOPSIS
"Make art not war" is Jimmy Mirikitani's motto. This 85-year-old Japanese American artist was born in Sacramento and raised in Hiroshima, but by 2001 he is living on the streets of New York with the twin towers of the World Trade Center still ominously anchoring the horizon behind him. What begins as a simple verite portrait of one homeless man will become a rare document of daily life in New York in the months leading up to 9/11. How deeply these two stories will be intertwined cannot yet be imagined. This is the story of losing "home" on many levels.
How did Mirikitani end up on the streets? The answer is in his art. As tourists and shoppers hurry past, he sits alone on a windy corner in Soho drawing whimsical cats, bleak internment camps, and the angry red flames of the atomic bomb. When a neighboring filmmaker stops to ask about Mirikitani's art, a friendship begins that will change both their lives. In sunshine, rain, and snow, she returns again and again to document his drawings, trying to decipher the stories behind them. The tales spill out in a jumble -- childhood picnics in Hiroshima, ancient samurai ancestors, lost American citizenship, Jackson Pollock, Pearl Harbor, thousands of Americans imprisoned in WWII desert camps, a boy who loved cats... As winter warms to spring and summer, she begins to piece together the puzzle of Mirikitani's past. One thing is clear from his prolific sidewalk displays: he has survived terrible traumas and is determined to make his history visible through his art.
September 11 thrusts Mirikitani once again into a world at war and challenges the filmmaker to move from witness to advocate. In the chaos following the collapse of the World Trade Center, she finds herself unable to passively photograph this elderly man coughing in the toxic smoke, and invites him into her small apartment. In this uncharted landscape, the two navigate the maze of social welfare, seek out family and friends, and research Jimmy's painful past -- finding eerie parallels to events unfolding around them in the present.
Discovering that Jimmy is related to Janice Mirikitani, Poet Laureate of San Francisco, is the first in a series of small miracles along the road to recovery.
Jimmy's story comes full circle when he travels back to the West Coast to reconnect with a community of former internees at a healing pilgrimage to the site of his internment camp Tule Lake, and to see the sister he was separated from half a century ago.
Blending beauty and humor with tragedy and loss, THE CATS OF MIRIKITANI is an intimate exploration of the lingering wounds of war and the healing power of art. A heart-warming affirmation of humanity that will appeal to all lovers of peace, art, and cats.
Fox News
John Boehner says Romney’s wealth won’t hurt him: “the American people don’t want to vote for a loser”
http://thinkprogress.org/special/2012/04/29/473280/boehner-romneys-wealth-wont-hurt-him-because-the-american-people-dont-want-to-vote-for-a-loser/
Amazing perspective on what constitutes winners and losers from the GOP’s John Boehner:
Asked by CNN’s Candy Crowley whether Romney’s wealth presented him with a “hill to climb” in tough economic times, Boehner said: “No. The American people don’t want to vote for a loser. They don’t want to vote for someone that hasn’t been successful. I think Mitt Romney has an opportunity to show the American people that they, too, can succeed.”
Romney has consistently reminded voters of his wealth, noting that he is friends with the owners of NASCAR and pro football teams, that his wife has “a couple of Cadillacs,” or that he doesn’t consider $374,000 in speaking fees to be “very much.” That top Republicans consider Americans who don’t enjoy those luxuries losers or unsuccessful, however, may be why its nominee has had such a tough time gaining favor with average voters throughout the 2012 election.
It will be interesting to see how many conservative “losers” will give their vote to the party protecting corporations and the wealthiest individuals in our current economy — and how many will support the presidential candidate who exemplifies exactly what went wrong with the American Dream of social and economic mobility.
The Trees Are All Right
By TIMOTHY EGAN March 8, 2012, 8:30 pm
In most of the American West, the trees are not the right height, which may frighten Mitt Romney, and some of them are so old as to challenge the biblical view of creation that Rick Santorum wants taught in schools.
The tallest trees in the world, the coast redwoods of northern California, grow to 378 feet — more than half the size of Seattle’s Space Needle. The oldest trees in the world, bristlecone pines that cling to hard ground in Nevada’s Great Basin, can live for up to 5,000 years.
The saguaro cactus, with its droopy, anthropomorphic limbs, is the signature tree of the Southwest, though some say it is not technically a tree. And the western red cedar, armored in bark that Indians made into waterproof clothing, is a symbol of the Northwest.
This arbor tutorial is prompted by the slack-jawed ignorance of the last Republicans standing in the bad-idea-fest that is their party primary. Every week, it seems, the conveyor belt of craziness serves up another archaic idea from the people who want to represent a party that claims at least 40 percent of the electorate.
Romney, of course, famously said he liked the trees of Michigan because they were “just the right height” — a bizarre and harmless pander. But last month, in a campaign swing that was overlooked by the national press, Romney told a gathering in Nevada that he wasn’t much of a fan of the trees on public land — at least that was the impression he left.
He said, “I don’t know what the purpose is” of the great American public land legacy — a domain that includes 190 million acres of national forests, 52 million acres of national parks, and more than 500 million acres of open range, wildlife refuges and other turf under management of the Interior Department.
Romney has never been much of an outdoor guy, and strikes me as the kind of person who would wear wingtips on a hike. Once, asked to give a sense of his outdoor cred, Romney said, “I’ve always been a rodent and rabbit hunter — small varmints, if you will.”
Had he ever taken something other than a BB gun beyond the bunny range, Romney would know that American hunters consider themselves privileged to have so much unfenced country that is theirs as a birthright of citizenship. A clueless rich man, Romney can afford the private ranches of Texas, where one-percenters chase exotic animals without breaking a sweat.
The rest of us need our public land. The West is defined by new, fast-growing cities surrounded by the mountains, mesas, forests, sandstone spires and various shared settings. There is no other place in the world where urban and wild coexist over such a huge area. If you are poor, you can feel rich just minutes from the city, in your estate that is a national forest. If you ski in the high Sierra, or raft a runaway river in Utah, you are most likely doing it on land whose only deed of title is held by all citizens.
“Unless there’s a valid, legitimate and compelling public purpose, I don’t know why the government owns so much of this land,” said Romney.
Using Romney’s calculation — in which these lands can only be viewed as a commodity — the public domain more than pays for itself. Federal lands in Nevada, for example, provide about $1 billion in economic impact and support 13,311 jobs — and that doesn’t include the Forest Service. A poll by Colorado College found that 93 percent of the state’s voters agree that national parks, forests and wildlife areas “are an essential part of Colorado’s economy.”
Not to be outdone, Rick Santorum has channeled his inner robber baron while in the West. Speaking in Boise last month, he promised to sell our land to the private sector. The last time somebody seriously proposed that — James Watt, the secretary of the interior under President Reagan — he got a bipartisan round of boos from all corners of the West.
“The federal government doesn’t care about this land,” Santorum said. “They don’t live here, they don’t care about it. We don’t care about it in Washington. It’s flyover country for most of the bureaucrats in Washington, D.C.”
It’s clearly flyover country to Santorum. But try telling the many federal forest and park rangers, the smokejumpers and fish biologists, the backcountry avalanche experts and the game wardens, all of whom live in Western towns — and keep the economy in those places humming — that they “don’t live here.”
Gifford Pinchot, first Chief of the United States Forest Service, in Pennsylvania in 1933. The New York Times
Santorum makes national forests sound like crack houses. Some of them, after long neglect, do look a bit ratty. But the best are American cathedrals. Santorum probably doesn’t know that a former governor of his home state, Gifford Pinchot, was the founder of the modern Forest Service. Pinchot was a rich man who spent his life advocating for places where “the little man,” in his parlance, would be king.
We can thank a hunter, a lover of nature and a man who was always thinking about the kind of country his great-grandchildren would inherit — the fire-breathing Republican Teddy Roosevelt — for most of the nation’s public land. But today, no Republican would dare stand with T.R.
So it goes in this retrograde campaign. Is there any long-held, much-cherished American principle that Republicans and their media outlets will not renounce? Is there any bad idea from the 19th century — or earlier — they will not resurrect?
Romney has shown that he knows the lyrics to “America the Beautiful.” Too bad he doesn’t know anything about the land itself — a gift of better minds than his, one that ensures that some things are equal in this democracy.
http://opinionator.blogs.nytimes.com/2012/03/08/the-trees-are-all-right/
Missing Limbs, More Suicides, No Jobs
Suicide:
1,000 veterans attempt suicide every month. That means every 80 minutes a veteran attempts suicide, every day 18 veterans succeed.
Now more than ever, the military is talking about suicides. In 2010, an Army task force released a massive report, including 250 recommendation, on reducing suicides among soldiers and veterans. “The hard part is eliminating the long-standing stigma, breaking down the invisible barrier,” Army Gen. Peter Chiarelli said. “I do not believe we are losing this battle.”
Homelessness:
The U.S. Department of Veterans Affairs (VA) states the nation’s homeless veterans are predominantly male, with roughly five percent being female. The majority of them are single; come from urban areas; and suffer from mental illness, alcohol and/or substance abuse, or co-occurring disorders. About one-third of the adult homeless population are veterans.
Roughly 56 percent of all homeless veterans are African American or Hispanic, despite only accounting for 12.8 percent and 15.4 percent of the U.S. population respectively.
About 1.5 million other veterans, meanwhile, are considered at risk of homelessness due to poverty, lack of support networks, and dismal living conditions in overcrowded or substandard housing.
Unemployment:
The rate of employment in veterans is 12.1 percent, vs. 9 percent for the U.S. overall.
Dig deeper into the pages of U.S. Bureau of Labor Statistics employment data and you;ll find some disturbing statistics.
Younger vets are coming right out of high school; the job market punishes those with less education.
The youngest of veterans, aged 18 to 24, had a 30.4 percent jobless rate in October, way up from 18.4 percent a year earlier.
For black veterans aged 18-24, the unemployment rate is a striking 48 percent!
Rape:
As veterans, women now face unprecedented challenges. One 2010 study estimated that 15 percent experienced sexual trauma overseas, while a recent Pentagon report found that female vets were twice as likely as men to develop combat-related PTSD, but less likely to seek treatment. Not to mention that for women, a return from war often means reconciling life as a former soldier with life as a mother.
Women are 3 times more likely to be raped by while serving than being killed in combat.
Some women in the military stop drinking water at 7pm to reduce the odds of being raped in a bathroom at night.
Does anyone remember the soldier who was assaulted when she went out for a cigarette? She didn’t report the assault because she was afraid of being demoted for having gone out without her weapon.
Close to one-third of women veterans say they were victims of assault or raped while they were serving. Twice the rate in the civilian population.
The Pentagon estimates that 80% to 90% of sexual assaults go unreported.
Only 8% of cases that are investigated end in prosecution, compared with 40% for civilians arrested sex crimes. Astonishingly, about 80% of those CONVICTED are honorably discharged.
Greg Jeloudov was 35 and new to America when he decided to join the Army.
Jeloudov arrived at Fort Benning, Georgia, for basic training in May 2009.
The soldiers in his unit called him a “champagne socialist” and a “commie faggot.”
Less than two weeks after arriving on base, he was gang-raped in the barracks by men who said they were showing him who was in charge of the United States.
When he reported the attack to unit commanders, he says they told him, “It must have been your fault. You must have provoked them.”
Last year nearly 50,000 male veterans screened positive for “military sexual trauma” at the Department of Veterans Affairs, up from just over 30,000 in 2003.
Male-on-Male sexual assault is common in the military and hidden by personal shame and official denial.
Military Family:
Recent research suggests that military kids are more likely to suffer learning disabilities, behavioral disorders and violent tendencies. Military spouses are vulnerable to alcohol and drug abuse, as are veterans themselves.
And as a couple, they’re twice as likely as civilians to divorce and four times more likely to contend with domestic violence.
Drug Pandemic:
A combination of chronic pain and mental health symptoms mean thousands of soldiers have been prescribed narcotic pain-killers, psychotropics, sleeping pills and other addictive, often dangerous drugs.
14 percent of Army soldiers have been proffered an opiate pain-killer.
73 percent of the Army’s accidental deaths in 2010 were blamed on prescription medication overdoses.
For many of those coming home with a bottle of pills, the habit can be tough to shake.
At least 25 percent of injured soldiers in one warrior transition unit were hooked on prescription meds, according to an Army inspector general report, and 31 percent of those at Walter Reed were using both prescription and street drugs.
Illness From Chemicals:
Today’s veterans might also be up against their very own Agent Orange. Open-air burn pits, used to incinerate household trash, computer parts and human waste at most bases in Iraq and Afghanistan, are now being linked to a host of serious health ailments.
But we might never know what — whether burn pits, toxic dust storms or chemical agent exposure — caused the conditions, which so far include neurological disorders, cancers and chronic respiratory infections.
A recent Institute of Medicine report noted that it was impossible to determine the source of airborne toxins overseas, because of “a lack of data” collected by the Department of Defense.
PTSD:
Arguably the signature wound of the wars in Iraq and Afghanistan, post-traumatic stress disorder affects at least 20 percent of all soldiers deployed since 2001. And symptoms like insomnia, rage and depression are, despite a swath of prescription meds doled out by VA doctors, largely untreatable.
At least, for now. The Pentagon has invested millions into all kinds of research that aims to find a better remedy for PTSD. So far, the military has studied dozens of treatments, including fear-erasing drugs, yoga, virtual-reality therapy and meditation. Sadly, they still aren’t open to everything: Marijuana, one substance that’s got a lengthy track record helping vets calm down, has yet to get the green light.
Source http://www.wired.com/dangerroom/2011/11/veterans-challenges/?pid=944&viewall=true
“Despite everything, I believe that people are really good at heart.”
-Ann Frank
Survivorman of the Day
Feb. 19, 2012
A 45-year-old man in Sweden has reportedly managed to survive for two months trapped inside a snowed-in car with no food and only a sleeping bag to keep warm.
Snowmobilers who spotted his vehicle near the northern city of Umea initially believed it to be an abandoned wreck. Upon clearing away the snow, they discovered a dangerously thin person living inside.
“Just incredible that he’s alive considering that he had no food, but also since it’s been really cold for some time after Christmas,” said a rescue team member.
Doctors believe the man managed to survive by going into a “dormant-like state,” similar to ursine hibernation. “Humans can do that,” said doctor Stefan Branth. “He probably had a body temperature of around 31 degrees (Celsius) which the body adjusted to. Due to the low temperature, not much energy was used up.”
It remained unclear how the man found himself stuck in the snow to begin with.
[msnbc / photo: photoblog.]
http://thedailywh.at/2012/02/19/survivorman-of-the-day/
The light has gone out of my life
February 14, 1884...
...Theodore Roosevelt received a terrible blow—both his wife and mother died within hours of one another in the Roosevelt house in New York City. His mother, age 50, succumbed to typhus, and his wife Alice died at the age of 22 giving birth to her namesake. The following diary entries lovingly describe his courtship, wedding, happiness in marriage, and his grief over the death of his wife Alice, after which he never spoke of the union again.
Roosevelt's Pocket Diary
http://www.loc.gov/exhibits/treasures/trm052.html
http://en.wikipedia.org/wiki/Alice_Hathaway_Lee_Roosevelt
http://en.wikipedia.org/wiki/Alice_Roosevelt_Longworth
Alex, loved the videos close here .. don't ask me how i missed a reply before ..
NBC wants their Golden Girl to know just how she's loved. So they're putting together a very special Betty White birthday show for all to see!
Betty White’s 90th Birthday: A Tribute to America’s Golden Girl will air January 16 from 8-9:30pm. Following this awesome 90 minute special will be a sneak peek of her upcoming hidden camera show — Off Their Rockers.
The series shows Betty sending senior citizens on the streets to prank the Facebook generation. LOL!! Yes, what an awesome concept!
Well Betty, we're glad NBC is wishing you such a happy birthday and we are too!!! We want you to know you're loved all across the board!
http://perezhilton.com/2011-12-19-betty-white-90th-birthday-special#.TwxO-IHvqi0
All the very best for 2012!
ps: Yahoo! .. thanks to, too!!
See also .. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54495125 ..
both LADIES were great the 2nd time around .. take care ..
American deceptionalism
Under the growing influence of the 1 per cent, American exceptionalism has become American deceptionalism.
Paul Rosenberg Last Modified: 29 Nov 2011 12:56
http://www.aljazeera.com/indepth/opinion/2011/11/2011112995048821377.html
The US media has downplayed the power of the Occupy protests, says author [GALLO/GETTY]
From the dawn of the colonial era, long before they even had a national identity, Americans have always felt they had a special role in the world, though the exact nature of American exceptionalism has always been a matter of some dispute.
Many have taken it to be a special religious destiny, but Alexis de Tocqueville, the first to consider it systematically, affirmed the exact opposite: "a thousand special causes ... have singularly concurred to fix the mind of the American upon purely practical objects." Ironically enough, the exact term "American exceptionalism" was first used by Joseph Stalin, in order to reject it.
And yet, for 70 years American exceptionalism has been most prominently and consistently associated with imperialism ("benevolent", of course!), via the phrase "the American Century". It was coined by Time-Life publisher Henry Luce in February, 1941, 10 months before Japan's Pearl Harbour attack drew the US into World War II. The history of Luce's coinage provides a depth of resonance for a recent twist: a not uncommon, but particularly telling juxtaposition of four Time magazine covers from around the world this week.
In three editions - Europe, Asia and South Pacific - Time magazine's visually hot, tumultuous cover featured a gasmask-protected Egyptian protester, upraised fist overhead with a chaotic street background behind. The headline: "Revolution Redux". Not so in the exceptional American edition. There, the visually cool, wanna-be New Yorker-ish cover was a text-dominated cartoon against a light gray background: "Why Anxiety is Good For You."
Clearly, Time is whistling past the graveyard. As mostly Democratic mayors clamp down hard on Occupy Wall Street outposts across the land, it's obvious that the US' political class is having none of it. They do not believe that anxiety is good for them and they are doing their darnedest to keep a lid on things. Agitated citizens out in the streets are bad enough. Pictures of agitated citizens are simply too much.
Once upon a time, those pictures coming from a Third World dictatorship in a (hopefully) democratic transition would have been comfortably distant, even reassuring - exotic, other, subsumed in history, striving to become more like us, the transcendent ones at the "end of history".
That, after all, was part of the message of Luce's "American Century". But nowadays, everyone knows that the differences between Zuccotti Park and Tahrir Square are increasingly less significant than their similarities. They are matters of degree more than kind. There is no such place as "outside of history" anymore. Those making history know it, and those fighting history know it just as well.
Democratic mayors to the 99 per cent
In the US, the message from the mayors is simple: You've made your point. Now go to your room and shut up. We've got a lawn to keep up, and you've spoiled it. America's "grown-ups" as the political class likes to think of itself, have never had much patience when it comes to the "children", as its mere citizens are known. And yet, America's democratic revolutionary origins are at the very centre of a radically different vision of what American exceptionalism is all about.
The situation in Los Angeles is particularly exemplary. Although city officials welcomed Occupy LA at first, for weeks on end Mayor Antonio Villaraigosa and others have been saying it's time to leave. Villaraigosa - like Obama - is a former progressive organiser turned neo-liberal politician. He was a teacher's union organiser when I first met him in the 1980s, as part of a progressive precinct network aimed at getting disaffected progressive voters to the pols.
Also within the coalition's core was the LA National Lawyers Guild's executive director. When Villaraigosa first took office in 2006, his first big battle was against the teacher's union he used to work for. He took them on with the backing of billionaire real estate developer and education "reformer" Eli Broad. Five years later, as he faces off against Occupy LA, the current NLG executive director, James Lafferty, is one of his major opponents.
With no sense of irony, Villaraigosa thought Thanksgiving weekend was the perfect time for an eviction. "It's clear that this mayor cares more about dead grass than a dead economy," Lafferty responded at an Occupy LA press conference. "The 99 per cent that have been thrown out of their homes, jobless, without proper healthcare and all the rest seem to be less important to him than that lawn."
America's exceptional democracy
As indicated above, the idea of American exceptionalism was always a contested one. But it's hard to deny that the New World in general was seen as a land of opportunity, and the American colonies were the place where the most opportunity was seen for people to actually settle in significant numbers. Yet, the way most people managed to get to this new land of opportunity and freedom was through indentured servitude, and when that failed to provide enough labour, the African slave trade was "Plan B".
The land itself came courtesy of the earliest stages of America's centuries-long series of genocidal wars. And when the American Revolution came, it was lead in large part by slaveholder advocates of freedom - men like Washington, Jefferson and Patrick Henry, whose influence only expanded as the new nation was established.
Although their primary arguments were grounded in universalist appeals, the actual rights-holding subjects of their political system were a relatively tiny minority of well-to-do white males. The promise of rights-based liberal democracy was intoxicating to all, but forbidden to most. Equality was for gentlemen only. And yet, those excluded would not be denied. Scattered state and local battles coalesced into a national abolitionist movement by the 1830s, which in turn spawned a women's rights movement in the 1840s.
In Europe, the US example spawned the French and Polish revolutions, followed by more than a century of struggles in which the example of the US' existence powerfully transformed the Old World in combination with Europe's own internal modernising forces.
And even though the United States itself embarked on an imperialist course sparked by the Spanish-American War in 1898, its example as the first anti-colonial revolutionary regime inspired colonial revolutionaries as well. It was no accident that Ho Chi Minh approached Woodrow Wilson for his support at Versailles after World War I, before turning to communism as his second choice in seeking to rid his country of French colonialism.
From exceptionalism to deceptionalism
But the US had a hard time keeping up with itself, or with the world that it helped create. The European welfare state was a direct response to popular demands for a better, more just, less arbitrary life, demands that were sparked in part by the very existence of the US as an alternative.
As the US itself became more like Europe - more industrialised, more urbanised, less composed of small farmers and more composed of urban workers - the resistance to learning from European advances became increasingly irrational, and at odds with American pragmatism. Our political system lagged behind as well, lacking the fluidity and inventiveness that made parliamentary systems the dominant form of democracy elsewhere around the world.
This perverse refusal to learn from others who have been inspired by us in the political realm is strikingly at odds with Americans' grassroots improvisatory traditions. From food to music to everything in between, Americans have always adopted diverse influences, mixed them together and made them their own, based on the sole criteria of what works.
Yet, with far too few exceptions, we Americans have spectacularly failed to do this in the realms of economics and politics, where powerful elites have emerged to repeatedly stifle the US' spirit of ingenuity. Not only that, they have successfully blinded us as well. Under the growing influence of the 1 per cent, American exceptionalism has become American deceptionalism: a perverse refusal to see what others have done - often inspired by our own earlier examples - and use that knowledge to continue advancing ourselves.
The US' patch-work welfare state is the prime example of this dysfunction. But our lack of industrial policy is even more bizarre, given that we used to believe in it so. Indeed, the same could be said about the welfare state as well. Universal public education was an American idea - outside the South, of course - before catching on elsewhere around the globe. What's more, most of the US was homesteaded through a subsidised process of free or cheap land, supported by public infrastructure - or, in the case of railroads, publicly-subsidised infrastructure.
But when it came to an industrial welfare state, suddenly, everything changed. It's not so hard to understand why: the original industrial workforce was largely immigrant and culturally "other" - Irish at first, then central and southern European, predominantly Catholic or Jewish. It was not until the Great Depression pushed the US economy to the wall that we began to even partially catch up with Germany, which had created its welfare state half a century earlier.
Even then, it took another 30 years for us to add universal health care, but only for senior citizens. The results of creating Medicare were dramatic: Within a decade, American seniors went from being the age-group with the highest poverty rate to the lowest. But that was nearly 50 years ago, 130 years after Germany established its universal healthcare system. Since then, conservative resistance to America's welfare state has stiffened dramatically. Cultural differences between whites of European descent are nothing compared differences with people of colour - which moved dramatic to the fore as legal segregation was finally being dismantled.
Welfare in the US
A 2001 paper from the Brookings Institute, "Why Doesn't the United States Have a European-Style Welfare State?" found a direct correlation between welfare state spending and the size of minority populations - the more minorities, the lower the levels of spending. This held true both internationally (comparing more than 60 different countries) and nationally (comparing all 50 states). The paper did not argue that racial animosity was the sole reason for the US' fragmented and under-sized welfare state. It also cited the US' backwards political institutions - such as our lack of proportional representation - which in turn have roots in our history and geography.
The report stated, "Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor."
Among other things, the report offered comparisons across time, which showed the US lagging decades behind Europe throughout the 20th century. The size of subsidies and transfers in the US in 1970 was roughly the same as that in the European Union in 1937. US figures in 1998 roughly matched the EU in 1960.
While American conservatives have long been hysterical about the welfare state in the US, two major points need to be stressed. First: German conservatives established the first comprehensive welfare state, under Chancellor Bismarck in the 1880s. Second, the American welfare state is the smallest and least comprehensive in the Western world. While American conservatives denounce the welfare state for supposedly strangling capitalism, Germany's welfare state has been crucial to its long-term prosperity, even as the US' incomplete welfare state has harmed us considerably. For example, without a national system, healthcare costs built into American cars were a crucial factor leading up to the bankruptcy crisis of 2009.
Nearly a half-century after Medicare, the US was finally ready to take a modest half-step forward toward expanding healthcare coverage. But President Obama's approach was so compromised, and so poorly argued that it's now opened the doorway for a massive reversal that could actually eliminate Medicare - a major decimation of the US' welfare state that would plunge millions of seniors into abject poverty, deprive them of healthcare and subject them to premature death.
Grand bargains
Obama is obsessed with trying to strike a series of "grand bargains" with conservatives, even though they keep rejecting him. As a consequence, he repeatedly begins his negotiations with positions that conservatives have supported in the past, hoping they will support those positions again. At the same time, he refrains from making energetic arguments for the liberal position.
As a result, his stimulus programme was roughly 40 per cent tax cuts (even though they're less effective in creating jobs than direct spending is) in a vain attempt to get Republican support. And when it came to health care, his approach was based on Republican proposals from the 1990s, developed by the conservative Heritage Foundation. It was the same foundation used by Mitt Romney when he was governor of Massachusetts.
Obama never used the popularity, efficiency and overall success of Medicare to argue for a government-centered approach, either an immediate full-fledged socialisation, aka "Medicare for all", or a gradualist approach - a public option for those currently without private insurance. Indeed, Obama collaborated with conservative Democrats in the Senate - most notably Max Baucus - to silence those who advocated for these approaches.
Medicare-for-all advocates were reduced to shouting from the audience and getting arrested, despite representing a substantial body of public opinion. Support for the more gradual public-option approach hovered around 60 per cent or more throughout the year-long legislative process. And yet, these proposals - tried and true in the rest of the industrialised world - could not even get a serious hearing.
Such is the power of American deceptionalism: No one else's experience in the world matters to the American political system.
Less than two years after Obama's Republican healthcare plan passed, its very modesty is being used against it. Although it did involve considerable long-term cost reductions, it was nothing remotely close to reducing costs to full-fledged welfare state levels. For example, calculations by the Centre for Economic and Policy Research show that, for example, if we Americans could get our per-capita health-care costs down to the level of most central European nations, we would have a budget surplus of around 10 per cent in 2080, rather than the current projected deficit of over 40 per cent.
By ignoring the example of other countries, the American political class has spun itself off into an alternate reality in which nothing short of catastrophically bad choices remain. (The situation of global warming denialism is an instructive parallel, in which facts have become entirely irrelevant.) And so, fuelled by an obsession with long-term deficits decades in the future, and ignoring the sky-high level of the unemployed, the US congress may well be about to drift toward abolishing Medicare as its so-called "solution".
Of course, Republicans like Congressman Paul Ryan, who originated the plan, won't come right out and say that. And neither will Democrats, now rumoured to be thinking of joining them in search of yet another "grand bargain". Ryan and company say they want to "save" Medicare by replacing it with a voucher system. As one wag put it, it's like killing my dog named Spot, and giving me a cat named Spot instead, then telling me you haven't killed Spot. But a variety of studies have stripped all the pretense away.
Most significantly, the vouchers ("premium support" in Orwellian Newspeak) would come nowhere near to paying the cost of health insurance for seniors, and the shortfall would only grow more severe over time. So instead of the government going broke, the people would. That's the anti-government Republican plan! But at least the plan would keep the private insurance companies making money hand over fist as they deny you coverage.
And since they're private companies, that counts as a win, according to the rules of American deceptionalism. Even if there is no real competition involved, and Adam Smith would have a heart attack if he saw what was being done in his name.
I've concentrated here on healthcare as a key welfare state component. But the same pattern of delusionary grand bargaining can be seen wherever you care to look. Consider "education reform". "America's schools are failing!" we're told. We have to privatise, voucherise, give parents more choice - that alone can save us.
But none of this is supported by evidence, certainly not the evidence of other countries, whose systems are more centralised and less privatised than those of the United States. The US accounts of nearly half of military spending worldwide. The only folks whose overspending ever came close to us was the Soviet Union, and we sure didn't learn anything from them. On the drug war? Don't even think of thinking about it!
The list could be extended indefinitely. There is not a single area in which Republicans won't condemn anything foreign just for being foreign (unless, for some reason they like it, the way Michele Bachmann likes Chinese slave labour). And there's not a single area where Democrats won't be defensive about thinking outside the box that Republicans have put them in.
If all this leaves you feeling anxious, relax. After all, as Time will tell you, "Anxiety is good for you!"
Paul Rosenberg is the Senior Editor of Random Lengths News, a bi-weekly alternative community newspaper.
You can follow Paul on Twitter @PaulHRosenberg.
The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.
Faceoff: Occupy Wall Street vs. Tea Party Movement (Infographic)
http://www.accelerated-degree.com/faceoff-occupy-wall-street-vs-tea-party-movement-infographic/
The Woman Who Knew Too Much
http://www.vanityfair.com/politics/features/2011/11/elizabeth-warren-201111
Millions of Americans hoped President Obama would nominate Elizabeth Warren to head the consumer financial watchdog agency she had created. Instead, she was pushed aside. As Warren kicks off her run for Scott Brown’s Senate seat in Massachusetts, Suzanna Andrews charts the Harvard professor’s emergence as a champion of the beleaguered middle class, and her fight against a powerful alliance of bankers, lobbyists, and politicians.
By Suzanna Andrews Photograph by Nigel Parry
TO PROTECT AND SERVE
Consumer advocate and Senate hopeful Elizabeth Warren, photographed in Washington, D.C.
On the afternoon of July 18, in remarks from the Rose Garden amid the bruising showdown with congressional Republicans over the debt ceiling, President Obama made what the White House billed as a simple “personnel announcement.” In a brief speech, the president announced that he was nominating Richard Cordray, the former attorney general of Ohio, to head the Consumer Financial Protection Bureau, the new government agency set up to protect consumers from abusive lending practices. In his remarks he described the agency, part of the massive 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, as creating “the strongest consumer protections in history,” set up “so ordinary people were dealt with fairly.” After which he turned to thank the woman standing to his right, Elizabeth Warren.
A Harvard law professor, one of the nation’s leading bankruptcy experts and consumer advocates, the 62-year-old Warren had come up with the idea for the agency in 2007. She had advised the Obama administration on its creation in the aftermath of the 2008 financial collapse and helped to push it through Congress. Warren had also spent the last 10 months working tirelessly to build the agency from scratch—hiring its staff of 500, including Richard Cordray, organizing its management structure, and getting the C.F.P.B. up and running for its opening on July 21.
As she crisscrossed the country, spreading the word about the C.F.P.B., Warren became a familiar face to many, especially to those who had seen her on television—on CNBC, Real Time with Bill Maher, and The Daily Show with Jon Stewart. She had gained millions of supporters. With her passionate defense of America’s beleaguered middle class, under assault today from seemingly every direction, she had become like a modern-day Mr. Smith, giving voice to regular citizens astonished at the failure of Washington to protect Main Street—and what increasingly appeared to be its abandonment of middle-class America. By July, the A.F.L.-C.I.O.—speaking for its 12 million members—had called on Obama to name Warren to head the agency. So had scores of consumer groups. Eighty-nine Democrats in the House of Representatives had signed a letter, publicly urging him to choose Warren. Newspapers around the country editorialized on her behalf, as did hundreds of bloggers. By July 18, when Obama announced that he was passing Warren over, he did so after receiving petitions signed by several hundred thousand people and organizations urging him to appoint Warren as the country’s top consumer watchdog.
At the end of his remarks, Obama turned to Warren and kissed her on the cheek. She smiled gamely, though if there are kisses a woman can do without, this was one of them. A Judas kiss, some would say. But if so, the betrayal was not just of Elizabeth Warren. In his remarks, Obama would hint at what had happened to Warren, commenting that she had faced “very tough opposition” and had taken “a fair amount of heat.” He also alluded to the powerful forces arrayed against her, and against the C.F.P.B.—“the army of lobbyists and lawyers right now working to water down the protections and reforms that we’ve passed,” the corporations that pumped “tens of millions of dollars” into the fight, and “[their] allies in Congress.” But he was mincing his words. The fight against Warren and the C.F.P.B. was one of the most brutal Washington battles this year, up there with the debt-ceiling showdown and now the looming battle over the jobs bill—but part of the same war. Arrayed against Warren, and today against the very existence of the C.F.P.B., was the full force of what many, most notably Simon Johnson, the M.I.T. professor and former International Monetary Fund chief economist, have called the American financial oligarchy: Wall Street firms and banks supported mainly by Republican members of Congress, but also politicians on the other side of the aisle, along with members of Obama’s own inner circle.
At a time of record corporate profits, a time when 14 million Americans are out of work, when millions have lost their homes and, according to the Census Bureau, the ranks of those living in poverty has grown to one in six—that Elizabeth Warren could be publicly kneecapped and an agency devoted to protecting American consumers could come under such intense attack is, ultimately, the story about who holds power in America today.
When the C.F.P.B. was first proposed to Congress, in early 2009, the Chamber of Commerce, the leading business lobbying group in the country, announced that it would “spend whatever it takes” to defeat the agency. According to the Center for Public Integrity, from 2009 through the beginning of 2010, it would be one of the biggest spenders among the more than 850 businesses and trade groups that together paid lobbyists $1.3 billion to fight financial reform.
Although a Gallup poll in the fall of 2010 would show that 61 percent of Americans supported Dodd-Frank—which was designed to curb the risky bank activities that triggered the 2008 meltdown and the ensuing recession—the financial establishment would continue to attack it even after it became law on July 21, 2010.
According to the Center for Responsive Politics, in 2010 the financial industry flooded Congress with 2,565 lobbyists. They were financed by the likes of the Financial Services Roundtable, which, according to the Center, paid lobbyists $7.5 million, and is on its way to spending as much or more this year. The Chamber of Commerce spent $132 million on lobbying Washington in 2010. The American Bankers Association spent $7.8 million. As for individual banks: JPMorgan Chase, which received $25 billion in TARP funds from taxpayers, spent nearly $14 million on lobbying during the 2009–10 election cycle; Goldman Sachs, which received more than $10 billion from taxpayers, spent $7.4 million; Citigroup, which was teetering on the brink of insolvency and received a $45 billion infusion, has paid more than $14 million to lobbyists since 2009. And none of this money includes the direct campaign donations these organizations, and their surrogates, made to members of Congress.
The banks “do not like to lose,” says Ed Mierzwinski, of the National Association of State Public Interest Research Groups, which was part of the grossly outmatched consumer coalition that managed to scrape together a paltry $2 million to lobby in favor of reform.
While Wall Street and the banks oppose virtually every aspect of Dodd-Frank—from the new rules on derivatives to higher capital requirements—the C.F.P.B. would become among the most controversial aspects of the reforms, the banking industry’s particular bête noire. Its chief mission, on the face of it, would seem unremarkable: enforcing the rules protecting consumers already on the books, bringing laws that had been overseen by seven different federal agencies under a single authority. Most of the rules were overseen by the bank regulators. The catch was that none of them had paid much attention to consumer protection. Their primary focus had been ensuring the “safety and soundness” of the banks, which for decades had translated as ensuring bank profits. For the banks, the C.F.P.B. meant not only a new regulator rifling around in their books but also a regulator with a mission that did not focus on their bottom lines. And in a world where the banking industry makes billions of dollars off consumers from what’s hidden in the fine print—including $22.5 billion in credit-card penalty fees last year, according to R. K. Hammer, a bank-card consultant—the banks perhaps had reason to be concerned.
Talk to most bank executives and they’ll still place the blame for the 2008 financial crisis on “irresponsible consumers” who took out mortgages they couldn’t afford; dishonest mortgage brokers; and—at the top of the list—the government, which used Fannie Mae and Freddie Mac to finance mortgage lending to “people who shouldn’t own homes,” as one senior New York bank executive put it to me recently. All of which is partly true but omits the enthusiasm with which Wall Street feasted on that market, and the fact, as Warren puts it, “that Wall Street made tens of billions of dollars” from it. In short, there is no remorse, let alone a sense of obligation, because bank executives generally do not believe they were the cause of the financial collapse. As Neil Barofsky, Treasury’s former inspector general charged with oversight of TARP, the $700 billion government bailout of the banks, recalls from his interviews with bankers, the attitude instead was that “shit happens.” The state of denial has been massive. On Wall Street today, says the vice-chairman of a private-equity firm, “there is this enormous persecution complex in the banking industry about Dodd-Frank, that everyone is going after the banks.”
This Wall Street psychosis—“We did nothing wrong, but everyone is trying to hurt us”—was given a dramatic airing in June by Jamie Dimon, the chairman of JPMorgan Chase, at a conference in Atlanta. Clearly agitated during a Q&A with Federal Reserve chairman Ben Bernanke, Dimon launched into the reasons why the regulators were being too tough on banks. The causes of the financial crisis had been dealt with. “Most of the bad actors are gone,” he said, rattling off a long list of the perpetrators, which included C.D.O.’s, Fannie Mae, Freddie Mac, “thrifts, all the mortgage brokers, and, uh, obviously some banks.” He said that he worried that Dodd-Frank was “holding us back at this point”—suggesting that the regulation of banks was the reason why the economy was not recovering. In other words, what was bad for Wall Street was very bad for the country.
What Dimon did not say is that having been supported through the crisis by billions of dollars in TARP aid from American taxpayers, and another $1.2 trillion in emergency loans from the Fed, the largest banks are bigger today than they were before the crisis—way too big to fail—and that many of them are generating even fatter profits. At Dimon’s $2 trillion JPMorgan Chase—which rewarded Dimon’s performance last year with pay estimated at $20.8 million and $17 million in restricted stock and options—revenues hit $27.4 billion, with a profit of $5.4 billion, in the second quarter of 2011 alone. Nevertheless, Dimon’s argument was essentially the one that bank executives, their lobbyists, and supporters in Congress would make against financial reform: that it would kill job creation, cut off lending to businesses and consumers, stifle financial innovation, and strangle free enterprise in America. Spencer Bachus, the Alabama Republican who chairs the powerful House Committee on Financial Services and who is one of the C.F.P.B.’s leading opponents, would—invoking Mao Zedong—even suggest at a Chamber of Commerce gathering in March that Dodd-Frank was, as he put it, a move toward “a government command-and-control” economy.
Warren followed Bachus to the podium at that conference. It was one of countless meetings she had been having with bankers and business leaders to win their support for the C.F.P.B. She spoke about her belief in free markets, and in government regulation as a mechanism that protected free enterprise by ensuring that the markets functioned fairly and honestly. Perhaps because she did not expect—or get—a rousing reception, she refrained from giving the passionate cri de coeur on the plight of the middle class that brought resounding applause and cheers from audiences around the country.
In those speeches, sometimes using slides filled with numbers and graphs, she would, as she did at a speech in Manhattan in early June, outline the impact on middle-class Americans of rising health-care costs, burgeoning debt, and the depletion of not only their savings but also, with the rise in joblessness, their confidence. She spoke of “the Wild West” conditions deregulation had created, where banks could sell virtually any product they wanted, on any terms: mortgages they knew consumers could not pay off, credit cards whose rates they could raise at whim, products that came with a mind-boggling array of penalty fees, many of them not fully disclosed. But it was her final remarks that brought down the standing-room-only house in June. “We cannot run our country without a strong middle class. We cannot run a democracy without a strong middle class,” she said, her voice quavering slightly. “If we hollow out the middle class,” she said, “then the country we know is gone.”
But while audiences applauded her, Warren’s opponents lacerated her. She was called incompetent, power-hungry, ignorant, a media whore, and, in a widely televised moment, a liar, by a Republican congressman during a hearing in May. “It was like she was the Antichrist,” says Roger Beverage, the president of the Oklahoma Bankers Association and one of the few bankers who publicly supported her. She had become the lightning rod for the opposition to the C.F.P.B. Says Barney Frank, the Massachusetts congressman who is the “Frank” in “Dodd-Frank,” “It’s partly sore-losership. They are blaming her for something they all swore would never happen.” But it was also because she was eloquent and convincing, and relentlessly tough in her criticism of Wall Street and its enablers.
That bluntness was evident in an interview even in late May, when Warren, who learned only in July that she wouldn’t get the job, still believed that Obama might ask her to run the C.F.P.B. “It’s money and power, the only two things we are talking about here,” she said, speaking of the people who were trying to kill the C.F.P.B. “in the back alleys,” as she put it. “There are many who are rich and powerful who say the system works fine as it is,” she continued. “America had been a boom-and-bust economy going into the Great Depression—just over and over and over, fortunes were wiped out, ordinary families were crushed under it. Coming out of the Great Depression we said, We can build a structure that makes us all safer. And notice, it’s from the end of the Great Depression to the 1980s that we built America’s middle class. That’s when we got stronger as a country. That’s when that big, solid, boring, hardworking, play-by-the-rules group in the middle emerged and defined what America was. You still had the ability to become a billionaire, but the center stayed strong and, notice, provided opportunity for growth, opportunity for getting ahead, opportunity that your kids were going to do better than you did. That was what defined America. And then we started, inch by inch, pulling the threads out of that regulatory fabric, starting in the 1980s.”
Today, Warren says, one “vision of how America works is that it’s an even game, that anybody can get started—just roll those dice; that booms and busts will come and millions of people will lose their homes, millions more will lose their jobs, and trillions of dollars in savings retirement accounts will be wiped out. The question is, Do we have a different vision of what we can do? This agency is out here in a sense to try to hold accountable a financial-services industry that ran wild, that brought our economy to the edge of collapse,” she said. “There’s been such a sense that there’s one set of rules for trillion-dollar financial institutions and a different set for all the rest of us. It’s so pervasive that it’s not even hidden.”
Warren was not always a critic. Born and raised in Oklahoma, Elizabeth Herring spent most of her early life performing all the good-girl Stations of the Cross. She won the Betty Crocker competitions, married for the first time at 19, had two children before she was 30, and was once a registered Republican. She was the youngest of four children and the only daughter. Her father worked as a janitor, and her mother brought in extra money working in the catalogue-order department at Sears. Warren would recall her mother hesitating to take her to the doctor because money was so tight. A brilliant and competitive student, Warren was named Oklahoma’s top high-school debater at 16, the same year she graduated with a full debating scholarship to George Washington University. She left G.W. after two years to marry her high-school boyfriend and moved to Houston, where she finished her degree in speech pathology. The first member of her immediate family to graduate from college, Warren then worked as a teacher, followed her husband to New Jersey, and had her first child in 1971. She got her law degree in 1976 from Rutgers University. In the next years, as she divorced and remarried—her current husband, Bruce Mann, is a Harvard law professor—she moved around the country, teaching at the University of Texas, the University of Michigan, and the University of Pennsylvania, before finally settling at Harvard in 1995.
It was in 1979 that Warren had her Damascene conversion—the experience that would lead her to become the nation’s top authority on the economic pressures facing the American middle class, and trigger her passionate advocacy. In 1978, Congress had passed a law that made it easier for companies and individuals to declare bankruptcy. Warren decided to investigate the reasons why Americans were ending up in bankruptcy court. “I set out to prove they were all a bunch of cheaters,” she said in a 2007 interview. “I was going to expose these people who were taking advantage of the rest of us.” What she found, after conducting with two colleagues one of the most rigorous bankruptcy studies ever, shook her deeply. The vast majority of those in bankruptcy courts, she discovered, were from hardworking middle-class families, people who lost jobs or had “family breakups” or illnesses that wiped out their savings. “It changed my vision,” she said.
From then on, Warren would focus her research on the economic forces bearing down on the American middle class. She would chart the disintegration of government policies that, since the New Deal, had helped create perhaps the strongest middle class in the world—in particular, the deregulation of the banks that began in the 1980s. It was a process that she says transformed the middle class into “the turkey at Thanksgiving dinner,” carved, “pulled from,” picked at, something from which everyone “could make a profit.” Her research into how that profit was made would take her into the world of subprime and teaser-rate mortgages, huge credit-card and checking-account penalties, and everything that was buried deep in incomprehensibly worded fine print—the “tricks and traps,” as she calls them, that banks used to lure people into increasingly risky credit products. It would be her immense knowledge of banking practices that would make her such a dangerous and natural foe to Wall Street.
Warren’s first foray into politics was a bitter experience. It began in 1995, when she was asked to advise the new National Bankruptcy Review Commission. She helped draft the commission’s report and then spent several years fighting congressional legislation that would severely restrict the right of consumers to file for bankruptcy. It was a brutal fight. “On the one side you had a huge business alliance, starting with the credit-card companies,” says Travis Plunkett, legislative director of the Consumer Federation of America. “And on the other side you had a sort of ragtag public-interest coalition.” The bill that finally passed in 2005 was a resounding victory for the business lobby and a defeat for consumers. The wheeling and dealing—the millions in political donations, the spectacle of even sympathetic allies in Congress swayed by wealthy special interests, particularly the banks and credit-card companies—left its mark on Warren. And what happened next would be the genesis of Wall Street’s outrage at her.
In November 2008, Warren received a call from Senator Harry Reid. Lehman Brothers had collapsed two months before; A.I.G.’s bailout had just been upped to $150 billion, and Congress had passed TARP. Reid asked Warren to head the congressional panel overseeing the $700 billion bailout. The job was vague, with no clear goals, but Warren would turn it into a tough, prosecutorial committee. She did real investigations, grilled government officials, and issued blunt monthly reports demanding more accountability from banks and better returns for the taxpayer. She held public hearings that were televised, asking the questions that many taxpayers wanted asked—and questions that bankers and Treasury officials did not want to answer.
Perhaps the most widely watched hearing is the one that took place in September 2009. A video of part of that hearing can still be found on YouTube, under the title “Elizabeth Warren Makes Timmy Geithner Squirm.” It opens with Warren asking the question that was on the minds of many taxpayers: “A.I.G. has received about $70 billion in TARP money, about $100 billion in loans from the Fed. Do you know where the money went?” What followed during the rest of the hearing was the spectacle of the Treasury secretary tripping over his words, his eyes darting around the room as Warren, calm and prosecutorial, kept hammering him with questions. At another hearing, in December 2009, Geithner appeared to be barely able to contain his annoyance, at one point almost shouting at her. Warren’s questioning “was masterful,” says Neil Barofsky, who ran the TARP oversight for Treasury. “She eviscerated him.” But Warren would pay a price for those hearings.
“Geithner hated her,” says a former administration official. Part of it was seen as personal because she had scorched him in public. But the whole thrust of her work on the oversight panel—getting the facts out to the public—was at odds with Geithner’s perceived conviction, shared by the Wall Street establishment, that the details of the banks’ TARP rescue should be hidden from public scrutiny whenever possible in order to give the banks time to recover, an assessment that a Treasury spokesperson disputes, insisting that “Secretary Geithner initiated unprecedented disclosure requirements for financial institutions.”
According to Barofsky, however, “Treasury’s descriptions of what was happening were very skewed towards the positive and often incomprehensible. There was this reluctance towards transparency,” and Warren’s work on the oversight panel “helped bring light in a lot of dark areas.” As Treasury sought to cosset the banks, never requiring them, for example, as Barofsky points out, to explain what they were doing with their billions in TARP bailout money, Warren persisted. She went on television shows to criticize the government’s secrecy, the huge bank bonuses, the fact that even after the bailout the banks had escaped disciplinary measures. Obama’s top economic advisers, according to a former administration official, thought Warren was “a pain in the ass.” On Wall Street, Warren was regarded, says one bank vice-chairman, as “the Devil incarnate,” and, according to another executive, a “showboater,” who didn’t really know what she was talking about.
But her sin was actually quite the opposite: she knew what she was talking about. Wall Street’s power in Washington, says a former congressional staffer who worked on the Dodd-Frank bill, has been built partly on the fact that few people outside Wall Street understand the esoterica of finance—the intricacies of C.D.O.’s and the labyrinthian structures of credit-default swaps. And that knowledge is used to control and confuse. But Warren did understand. Says Carolyn Maloney, a New York Democratic representative, “She understands the information as well as the top players in the business.” She knew the secret handshake, the secret language—and she used it against “that tight little group,” as Warren would refer to Wall Street C.E.O.’s and Washington officials who basically controlled the terms of the bailout.
In early spring, several weeks before Obama’s April announcement that he was running for re-election, 24 Wall Street executives gathered in the Blue Room of the White House for a meeting with the president. According to the New York Times account of the meeting, Obama spent more than an hour listening to the financiers’ thoughts on the economy, the deficit, and financial regulation. After the meeting, Obama would follow up with phone calls to the executives who had not been able to attend. The event, the Times wrote, was organized by the Democratic National Committee and “kicked off an aggressive push by Mr. Obama to win back the allegiance of one of his most vital sources of campaign cash.” The financial industry contributed $43 million to Obama’s 2008 presidential campaign, a record haul. But his relations with Wall Street had soured—remarkably many of them were enraged over his criticism of their bonuses in late 2009, which is also when he called them “fat cat bankers.”
By April, however, Warren’s standing in the White House was shaky. Three months earlier, in what was seen as an attempt to “repair” his relationship with his Wall Street donors, Obama had brought in William Daley as his new chief of staff. A former banker at JPMorgan Chase, Daley came into the administration just as senior Obama adviser David Axelrod left. But while Axelrod and another top adviser, Valerie Jarrett, were perceived as strong Warren supporters, Daley had reportedly opposed the creation of the C.F.P.B. A spokesperson for the White House said that, although Daley was “not recused from” discussions about the C.F.P.B., he chose “not to participate in the process of selecting a nominee for C.F.P.B. director.” Which is possible. But with Daley and Geithner—one of Obama’s closest advisers—sharing center stage, the balance of power in the debate over Warren shifted. Geithner would never criticize Warren publicly—and indeed, as a Treasury spokesperson says, he “has expressed his support and admiration for Professor Warren many times”—but few people in Washington doubted that he remained opposed to her candidacy. To at least one person who saw them in meetings together it appeared that “he looked down on her for no apparent or justifiable reason.” As for Warren, if one mentions the video “Elizabeth Warren Makes Timmy Geithner Squirm,” she says nothing, but an impish smile crosses her face.
By this spring, Spencer Bachus, along with his fellow Alabaman, Senator Richard Shelby, was one of the C.F.P.B.’s leading opponents. But they would be joined by the vast majority of Republicans. Some of them had previously admitted to having no particular interest in or understanding of banking, but had developed strong feelings about the C.F.P.B. after receiving campaign donations from banking groups. Among them was former MTV Real World star Sean Duffy, a Wisconsin Republican elected to Congress in 2010, who has been showered with $178,000 in campaign donations from the financial sector for his next election. But the real battle was against Dodd-Frank. Attempts were popping up throughout Congress to slash the budgets of regulatory agencies, including the C.F.P.B. There was even one that denied funding for a consumer-complaint database at the Consumer Product Safety Commission, which businesses had opposed on the grounds that consumers might call in fake complaints. In a sense, says Barney Frank, the C.F.P.B. and Warren had become “a symbol” in a broader battle that was partly ideological. The anti-government, free-market, unregulated-business-as-the-savior-of-America sentiment of the Republican Party today, assisted by Wall Street’s campaign donations, dovetailed perfectly with the interests of the country’s banking Goliaths. To a degree, the attitude regarding Warren, Frank says, was “How dare this woman criticize the free-enterprise system?”
But it wasn’t just Republicans. In May, Christopher Dodd, the former Democratic senator from Connecticut, who had chaired the powerful Senate Banking Committee, denied to Politico the rumors that he was trying to kill Warren’s nomination. But his cryptic statement about people with “ego” problems standing in the way of the bureau was widely seen as a poison dart aimed at Warren. During the passage of Dodd-Frank, Dodd, who is now chairman of the Motion Picture Association of America, was seen as one of Warren’s more influential opponents. Among Wall Street’s staunchest allies—to the tune, in his last election, of almost $4 million in campaign donations for a race he did not even complete—he had sponsored the reform bill in the Senate but had several times appeared to yield to bank opposition, entertaining a number of proposals that would have either killed the C.F.P.B. outright or severely restricted its independence. Warren fought back, not only by calling in support from the White House, but also by speaking out in public. In March 2010 she lashed out in the Huffington Post: “My first choice is a strong consumer agency,” she said. “My second choice is no agency at all and plenty of blood and teeth left on the floor.”
If the friction between Warren and Dodd was an open secret, there would be other Democrats—apparent allies—who also appeared to be trying to pry her away from the C.F.P.B. Those most notable would be Senators Harry Reid and Chuck Schumer, who led the effort, which began in the late spring, to encourage Warren to leave Washington to run against Scott Brown, the Massachusetts Republican, who is up for re-election next year. Some speculated that they were doing the president’s dirty work, trying to rescue him from a tough decision. But others would note the gush of Wall Street donations these Democrats received for their 2010 elections: $6.2 million for Chuck Schumer, the most of any senator, and $4.7 million for Harry Reid, who would clock in as the third-highest beneficiary of Wall Street largesse in the Senate—after New York Democrat Kirsten Gillibrand—according to the Center for Responsive Politics.
In a letter dated May 2, 2011, 44 Republican senators issued an ultimatum to Obama. Citing “the lack of accountability in the structure” of the C.F.P.B., and “the unprecedented authority” of its director “over financial institutions and main street businesses,” they announced that they would block the confirmation of anyone he chose to nominate as C.F.P.B. director unless the bureau’s structure was overhauled. There were many in Washington who viewed this as the perfect opportunity for Obama to appoint Warren during a congressional recess. It would have triggered a bitter fight in Congress, but one that many of Warren’s supporters believed was worth having. “It would have sharpened the issues,” says Jonathan Alter, the author of The Promise: President Obama, Year One.
But for weeks Obama did nothing. As the attacks on Warren and the C.F.P.B. heated up during May and June, the silence from the White House was deafening. Even leading Democrats, like Barney Frank, were confused about the president’s intentions—would he name Warren in a recess appointment or not? And they were stunned when Obama jettisoned her.
Today, David Axelrod, who is now Obama’s chief campaign strategist, denies that placating Wall Street donors influenced Obama’s thinking on the C.F.P.B. “If we were concerned about that, we never would have brought in Elizabeth in the first place,” he says. Nominating Warren to head the C.F.P.B. would have been “a big bloody fight,” he says, insisting that if it had been the right battle Obama would have gone for it. “Look, the president expended a lot of political currency on passing Dodd-Frank and on passing this consumer bureau because he believes in it. So we’re not averse to battles,” he says. “The question is: What are the battles that are in the best interests of the enterprise?” While the fight “would be a wonderful rallying tool in the campaign,” a “symbolic battle that would thrill people,” he says that trying to “score political points by martyring her” would ultimately have hurt the C.F.P.B. “With middle-class people and consumers having so much at stake here, we don’t have the luxury of self-immolation; we don’t have the luxury of symbolism.”
Axelrod’s argument that a fight over Warren’s nomination might damage the C.F.P.B.—although utterly pragmatic and a passionate argument against taking a stand on principle, a view which seems to have overtaken the president on many issues—makes sense. Except for one key point. The man Obama chose, Richard Cordray, is hardly more likely to win Senate confirmation, or Wall Street’s support, than Elizabeth Warren. The Wall Street Journal would write that his career “sounds like Mrs. Warren without the charm.” As Ohio’s attorney general, he had been one of the nation’s leading prosecutors of the financial industry. Before he was nominated, Cordray, who was then chief of enforcement at the C.F.P.B., announced that once the agency went into business he would continue his tough approach “on a 50-state basis … with a more robust and a more comprehensive authority.”
On September 6, Cordray went before the Senate Banking Committee for his confirmation hearing. He met with far more polite treatment from Republican members than Warren ever had, but Republican senators reiterated their pledge to block any nomination to the C.F.P.B. until their demands for changes to the agency were met. Whether they will back down from that promise is anyone’s guess. But the C.F.P.B. will be under fire either way, as will Dodd-Frank. Today, with the battle over regulating Wall Street already an issue in the 2012 presidential race, there are at least a dozen bills and amendments floating around Congress that would weaken the C.F.P.B. or kill it outright. How hard the Obama administration will fight the attacks is another question. The president’s concessions to Republicans on the debt-ceiling deal inspired little confidence among the agency’s supporters. But a new Obama appears to have suddenly emerged—one who, perhaps propelled by his sagging approval ratings and the coming campaign, has suddenly stopped compromising “with himself,” as The New York Times recently editorialized. An Obama who—with his jobs plan and his call for economic fairness in cutting the deficit, including raising taxes on corporations and the rich—seems, for the moment, to be taking a stand for Main Street.
As for Elizabeth Warren, on September 14, ending weeks of speculation, she officially announced that she was entering the Massachusetts Senate race. Today, Warren is considered the Democratic front-runner in what is likely to be one of the most closely watched congressional elections next year. In early September, one poll put her within nine points of Scott Brown—even before she had announced her candidacy. A few weeks later, after her official entry into the field, another poll had her ahead of Brown by two points.
Speaking from a car on her way from one campaign event to another, Warren told me that the stakes are too high for her not to run, too high not to try to continue the fight “for the middle class.” Too high not to try to bring it into the belly of the beast, to the floor of the U.S. Congress. Middle-class families “are getting hammered and you know Washington doesn’t get it,” she said. “G.E. doesn’t pay any taxes and we are asking college kids to take on even more debt to get an education, and asking seniors to get by on less. These aren’t just economic questions. These are moral questions.”
Although heavily lobbied by leading Democrats to run, Warren was warned by many that the fight would be brutal. Even her brother David told her, “Don’t do this, it’s too nasty.” Looking back on her time in Washington, though, and the months she spent setting up and fighting for the C.F.P.B., she says, “I’ve done brutal.”
But the fight for Ted Kennedy’s old Senate seat is expected to redefine brutal. A Republican golden boy and Wall Street favorite, Brown was rolling in campaign money—some $10 million—even before Warren’s announcement, thanks in large part to the financial industry’s largesse. With Warren in the race, the Republican party and the nation’s corporatocracy is expected to flood Brown’s coffers with even more cash.
Chacaltaya mountain in Bolivia with an elevation of 17,785 ft once had one of the highest glaciers in South America. The 18,000-year-old glacier had the world’s highest ski run - the first built in Latin America. After losing 80% of its area in the last 2 decades, it finally disappeared in 2009, much faster than scientists had predicted. All that remains is a bedrock. Photo by Nick Ballon
http://www.tumblr.com/photo/1280/12299258712/1/tumblr_lu3thuKkHj1qzprlb
Farewell to a melting glacier
Latin America analyst James Painter returns to the Chacaltaya glacier in Bolivia for the first time in 15 years to find it is melting fast.
http://news.bbc.co.uk/2/hi/americas/6496429.stm
Obama’s Flunking Economy: The Real Cause
November 24, 2011
Ezra Klein
The NY Review of Books
Confidence Men: Wall Street, Washington, and the Education of a President
by Ron Suskind
Harper, 515 pp., $29.99
Alex Wong/Getty Images
Lawrence Summers, then director of the National Economic Council, and Treasury Secretary Timothy Geithner, Washington, D.C., December 2010
Ron Suskind’s Confidence Men is not a calm first draft of history. It is not an impartial or unbiased look at the Obama administration’s first two years. Rather, it is an investigation. The crime is homicide, and the victim is the promise of Barack Obama’s presidency. But this isn’t a suspenseful whodunit. Suskind tips his hand in the first pages.
He’s describing the press conference in September 2010 where President Obama announced that Elizabeth Warren would help set up the Consumer Financial Protection Bureau. Warren is one of Suskind’s heroes. She’s introduced as “the nation’s town crier” and “a leading voice for tough, restorative reforms.” The mystery of the initial chapter is why Obama seems to be holding her at arm’s length.
It’s quickly solved. The villain of this vignette—and one of the key villains of the rest of the book—is “the boyish man in the too-long jacket at Obama’s right hip, bunched cuffs around his shoes, looking more than anything like a teenager who just grabbed a suit out of his dad’s closet.” So who is this man-child who can’t find a properly sized suit to wear to the Rose Garden? Who couldn’t take the time to get his pants hemmed before stepping in front of the cameras? “That’s Treasury secretary Tim Geithner,” Suskind says, “looking sheepish.”
That “looking sheepish” is a common Suskind trick. His book doesn’t just have good guys and bad guys. It has good guys who look like good guys, and bad guys who squirm beneath the weight of their badness. You’re never left to wonder long over which is which. Of Larry Summers, Obama’s first director of the National Economic Council, Suskind says that his personality “recalls that of Nixon and Henry Kissinger, or, more recently, Dick Cheney.” As for Rahm Emanuel, Obama’s first chief of staff, he’s “all impulse and action, with very modest organizational skills.”
By contrast Peter Orszag, Obama’s first budget director, “could think in numbers, talk in full sentences, and work nonstop.” Former Senate Majority Leader Tom Daschle’s comments are “counterintuitive, but incisive.” Financial regulator “Gary Gensler fell into one of those discrete categories of people who create lasting change in Washington’s marketplace of ideas.” When Treasury economist Alan Krueger passes around a pack of slides, each is “a chart of blazing, graphed insight.” Suskind offers little evidence for these descriptions. The book does not explain which of Gensler’s ideas will be current in thirty years. Suskind’s approach asks, rather, that we trust his assessments.
I prefer to verify. So I went back to the tape. I rewatched the September 2010 press conference where Obama introduced Warren to the country. I paid special attention to Geithner. Suskind’s right: his suit is too big. But he doesn’t look sheepish or ashamed. He looks, by turns, bored and interested. He clasps his hands behind his back. He nods attentively. He tries not to fidget. He looks like every experienced bureaucrat looks when they’re asked to stand like a prop near the president. Blank, and trying not to make any news. He failed.
I mentioned this was a murder mystery, so I won’t leave you in suspense about the perpetrator: Suskind’s investigation leads him right to Obama’s senior staff, who he believes took advantage of the young president’s inexperience and led a refreshingly unconventional candidate into a depressingly conventional presidency.
Suskind’s story goes something like this: in 2008, Obama was presented with an economic crisis of astonishing severity and complexity. In the beginning, he showed himself to be unexpectedly prepared to deal with it, both intellectually and temperamentally. His self-assurance and personal magnetism attracted a variety of impressive and able advisers, including former Federal Reserve Chairman Paul Volcker, billionaire investor Warren Buffett, UBS America chief Robert Wolf, former Labor Secretary Robert Reich, and former SEC Chairman William Donaldson.
But as “the severity of the crisis bore down on him,” Obama found himself leaning toward a different sort of adviser—safer, more predictable. He wanted people who knew Washington, and knew how to get things done. The “bold visions of the campaign season had meanwhile resolved into the serious, often risk-averse business of actually governing,” writes Suskind. “In the midst of a battering economic storm, it no longer seemed like the right time to be making waves.”
And no single adviser better encapsulates Suskind’s criticisms, and the contradictions in his argument, than Larry Summers. Even more than Geithner, Summers is the villain of the book. Suskind describes him as “brilliant at cultivating the sense of control, even as events spun far beyond what could be managed with any certainty.” He calls that talent “an illusionist’s trick calling for a certain true genius.”
It’s that trick that gives the book its title. Merriam-Webster defines a “confidence man” as “a swindler who exploits the confidence of his victim.” Suskind’s definition is more subtle. “Confidence is the public face of competence,” Suskind writes. “Separating the two—gaining the trust without earning it—is the age-old work of confidence men.” To Suskind, Summers was the ultimate confidence man, and Obama the ultimate mark. Summers offered what Obama wanted—certainty—and Obama was just terrified enough to take it. But the certainties Summers offered were not, in Suskind’s view, the certainties the moment required.
The work that went into Confidence Men cannot be denied. Suskind conducted hundreds of interviews. He spoke to almost every member of the Obama administration, including the President. He takes you inside Gensler’s home and into the Oval Office. He heads to Wall Street and back. He quotes memos no one else has published. He gives you scenes that no one else has managed to capture. The book is valuable for these contributions alone. But Suskind’s reporting seems, at times, to contradict his thesis.
It is not enough, of course, to say that Summers’s personality is reminiscent of Richard Nixon’s, or that “people think he knows more than he does.” What Suskind needs to prove is that Summers, as director of the National Economic Council, gave Obama bad advice. After all, if every dark intimation about Summers’s capture of the President is true, but Summers used his influence to steer Obama toward better ideas, we should be applauding him.
Suskind ultimately identifies two opportunities when Obama could have made decisions that might have substantially affected today’s economy. The first was in the debate over bank nationalization. The second was in the debate over whether to propose further rounds of stimulus. In both cases, Suskind clearly wishes the Obama administration had pushed harder, demanded more, been less respectful of the status quo. In both cases, Suskind’s own reporting shows that Summers agreed with him. And in both cases, Summers—the same Summers who was said to be able to convince anyone of anything, who had Obama’s ear, who allegedly controlled the economic process—lost the fight. But Suskind never resolves, or even addresses, the difficulty that poses for his thesis.
Suskind’s most explosive reporting comes in his recounting of the debate over nationalizing Citigroup. He alleges that the President directed Geithner to develop a plan to take over the failing bank and Geithner simply ignored the President’s order. Geithner and the White House deny this, of course. But this moment is central to Suskind’s story. In his conclusion, he says a successful nationalization of Citigroup would been the moment when “the American people would see that ‘government could do this right,’” and it would have killed off the fear “that if another financial institution failed, it would spark a financial crisis similar to what happened after Lehman.”
Summers, contrary to what you might gather from Suskind’s description, was in favor of nationalizing Citigroup, and he fought for it. Suskind reports that Summers ran interference for Christina Romer, head of the Council of the Economic Advisers, when she made the President aware that Geithner wasn’t developing a plan to take over the bank. He also reports that Summers personally “worked the phones in early March to try to gather the information” needed to produce the takeover plan that Treasury was refusing to provide.
Similarly, in what is perhaps the second-most-explosive portion of Suskind’s book, Suskind recounts a White House meeting in which Romer tried to persuade the President to pursue a second round of stimulus. In a reply that Suskind uses to establish the President’s rough treatment of female staffers, Obama harshly dismisses her. In the next passage, however, Suskind reports on a subsequent meeting when “Summers stepped up, offering, almost word for word, the position Romer had voiced previously.”
So if Summers was really the Svengali Suskind presents him as, if he really had such mastery over the President and the policymaking process, Citigroup would have been nationalized and the administration would have been more aggressive in its pursuit of more stimulus. Neither happened. If you take Suskind’s policy preferences seriously, the implication is that Summers wasn’t persuasive enough to save Obama’s presidency.
That incoherence speaks to the weakness of Suskind’s book, which is also a weakness that afflicts much punditry about the presidency: it is very surefooted in its reporting on personalities and the process by which decisions were made, and very vague when it comes to assessing the policy that was under consideration and judging whether the final approach performed better or worse than the alternative proposals.
The President’s poll numbers aren’t the mystery Suskind presents them as. If you want to know what killed Obamaism, the answer is the stagnant economy. No president, no matter how politically graceful or personally confident, looks good in the midst of an economic crisis. When unemployment rose during the 1980–1981 recession, President Ronald Reagan’s approval ratings fell below 40 percent and his party lost twenty-six House seats in the midterm election. When Franklin Delano Roosevelt and the Federal Reserve twisted toward austerity too early and sparked the 1937 recession, Democrats lost more than seventy seats the following year. No one would accuse either president of insufficient charisma or weak leadership. Americans don’t want leaders so much as they want jobs. And that’s Obama’s problem now, too.
The great counterfactual of Suskind’s book is “What if Obama had chosen a different team of advisers?” But by the end of his book, the counterfactual was coming true. Emanuel was out. Summers, too. Romer had left, and so had Orszag. Even David Axelrod, Obama’s longtime political adviser, was decamping back to Chicago. Only Geithner remains.
In his conclusion, Suskind seems appreciative of the replacements Obama chose. “Following the midterms,” reports Suskind, “the president seemed to be assembling the team he’d originally wanted.” He quotes an anonymous Obama adviser who says, “Rahm and Larry especially, but others on senior staff as well, didn’t have a strong appreciation of what got [Obama] elected, the power of it and how to harness it.” He says that the housecleaning left Obama looking “oddly liberated.”
Stephen Crowley/The New York Times
President Barack Obama outside the White House just before discussing the latest job numbers, with his economic team, Timothy Geithner, Hilda Solis, Gary Locker, Peter Orzag, Christina Romer, and Lawrence -Summers, Washington, D.C., May 2010
That was almost a year ago. Today, President Obama’s poll numbers are weaker than ever. The political betting markets give him a less than 50 percent chance of being reelected in 2012. Why? It’s that unemployment is stuck above 9 percent. It’s that a double-dip recession is a real possibility. It’s that the market seems to dive on most days that end in “y.”
Obama’s fortunes won’t rebound until the economy rebounds. And so any account of what he has done wrong, or what he could do right, needs to provide, first and foremost, a persuasive case of how the White House could have done more to promote an economic recovery over the last three years, or could do more to accelerate one now.
That account, however, doesn’t make for as satisfying a story. It’s not about heroes and villains, or dramatic meetings and angry confrontations. It’s about tough tradeoffs between what was politically possible, operationally plausible, and substantively wise. It is about whether more stimulus could have passed Congress or a different chairman of the Federal Reserve would have unleashed more effective monetary policy. And it’s much more about the collision of America’s political and economic institutions than the collision of particular personalities.
Suskind’s narrative takes place in the White House. But the economic response really took place elsewhere. Almost anything the White House wanted to do that would cost money had to be authorized by Congress. Tax cuts? State and local aid? Infrastructure spending? Nationalizing the banks? Congress. Giving bankruptcy judges the power to write down mortgage principal? Direct-employment programs? German-style work-sharing programs? In each case, Congress.
And that was what the discussions in the White House were really about. Congress. Suskind doesn’t dwell on this fact, but his reporting backs it up. The idea to nationalize Citigroup came up as a sort of consolation policy after the idea to nationalize the entire banking system was killed by Emanuel.
“Everyone shut the fuck up,” Suskind quotes the profane chief of staff as saying. “Let me be clear—taking down the banking system in a program that could cost $700 billion is a fantasy. With all the money that already went to TARP, no one is getting that kind of money through Congress.”
The same goes for stimulus. When Obama angrily dismisses Romer’s umpteenth argument for more stimulus, it’s not because he disagrees. It’s because he can’t get it passed. “Enough!” Suskind quotes him as shouting. “I said it before, I’ll say it again. It’s not going to happen. We can’t go back to Congress again. We just can’t!”
The truth of the matter is this: every member of the White House’s economic and political team was closer to every other member than any of them were to the swing votes in the Senate. Tim Geithner and Christina Romer have their differences, but they’re mostly talking the same language. Put them in a room with Senators Ben Nelson, Scott Brown, and Susan Collins—all of whom would have rejected a strong new stimulus—and they may as well be Martians.
It is easy to tell the story of what the White House did wrong in its response to the financial crisis: it underestimated it. It had good reason to underestimate it, of course. Almost everyone was underestimating it. In the fourth quarter of 2008, when Obama’s economic team was meeting in Chicago to map out their policies, the Bureau of Economic Accounts thought the economy was contracting at a rate of 3.8 percent per year. It wouldn’t be until this year that we learned the economy was really contracting at a rate of 9 percent. And it wasn’t just the BEA. The Federal Reserve has been continuously overoptimistic. So have the leading private forecasting firms, like Macroeconomic Advisers and Moody’s Analytics. And so have Wall Street banks like Goldman Sachs and JPMorgan.
The observers who got it right were the ones who could tell a story that didn’t rely on the early data. Kenneth Rogoff and Carmen Reinhart, who would publish This Time Is Different: Eight Centuries of Financial Folly, their epic history of financial crises, in late 2009, saw that the recovery would be slow and tough. Economists like Paul Krugman and Joseph Stiglitz, who were more knowledgeable about the struggles over recession in Japan and had their own Keynesian understanding of financial panics, were also suitably pessimistic.
But early mistakes can be corrected. If the initial stimulus is too small, you make it bigger. If your housing policies are too modest, you toughen them up. If the private sector sheds jobs and long-term unemployment becomes a problem, you begin hiring workers directly.
Or so goes the theory. The reality is more troubling. The initial stimulus was too small, but there’s no plausible case that Congress would have been willing to make it much bigger just because the Obama administration had a theory that the financial crisis would lead to a worse recession than most forecasters expected. The trouble was that attacking a financial crisis with a too-small stimulus was a bit like attacking pneumonia with too-few antibiotics: you feel better for awhile, and then it comes back. And this time, it’s harder to kill.
The problem is political. Having very publicly passed a very big policy that you promised would revive the economy, the country blames you when the economy does not, in fact, revive. Your policies are discredited and your opponents are emboldened. You lose seats in the next election and your leverage over lawmakers. So you can’t, with any prospect of success, go back to the well and ask for a bigger stimulus or more money to buy up bad mortgages. And then, when the economy gets worse, you’re simultaneously in charge and out of options. You came to Washington promising change and now you’re begging for patience. It’s a crummy situation, and there’s no combination of policy proposals or speeches that can get you out of it. But this is the vise that has tightened around Barack Obama’s presidency.
The combination of stimulus, TARP, and aggressive monetary policy quickly broke the recession. We went from losing 800,000 jobs a month in January 2009 to losing 39,000 jobs a month in January 2010. By March 2010—the same month Obama signed his health care bill into law—we were adding jobs again. It looked like we were on a steady path back to recovery.
Then, in the summer of 2010, the recovery began to wobble. We lost jobs for four months straight. Though employment picked up in the fall and the monthly jobs report never again turned negative, the economy proved unexpectedly stuck at what PIMCO CEO Mohamed el-Erian calls “stall speed”—it’s neither getting worse nor getting much better. Job growth, though positive, has been too slow to cut into the unemployment rate. If it were up to the administration, it would have passed substantially more stimulus as it realized the initial round was much too small. But the Republican Party, which opposed the initial stimulus, has successfully blocked the administration from passing further jobs programs.
It’s possible that if Obama had chosen a different set of advisers, they could have changed the outcome around the margins. The initial stimulus could have focused more on jobs and less on tax cuts, and the President could have emphasized that more would likely be needed. The Obama administration could have moved more quickly to nominate its own director for Fannie Mae and Freddie Mac back when Democrats had sixty seats in the Senate, and that would have given it more freedom to ramp up its housing policy even in the absence of congressional action.
But in general, the fundamental constraints on the administration’s leaders have not been economic or conceptual, but political. They know they need to act. But they can’t act, or at least they can’t act at the scale necessary to really change the economic situation. Republicans won’t let them. Between 2009 and 2011, Senate Republicans launched more filibusters than we had seen in the 1950s, 1960s, and 1970s combined. Democrats had sixty votes for a short period of time, but with Senators Ben Nelson and Joe Lieberman included in that total, they never had easy control of the Senate, whose minority leader, Mitch McConnell, said in October 2010, “The single most important thing we want to achieve is for President Obama to be a one-term president.”
The question, then, is whether the administration could have done more to plan for its inevitable political weakness when it was at the height of its powers. One oft-promoted possibility would have been to abandon health care reform and focus solely on jobs. But it’s not clear what, exactly, that would have meant doing. Health care reform took up most of 2009. The stimulus didn’t really begin spending its money until 2010, and the recovery didn’t flag until later that year.
There is little reason to believe that in 2009, before the stimulus had actually begun doing its work, the Obama administration could have gone back to Congress asking for more. And if the White House, which commanded the largest Democratic majority since the 1970s, had spent the year sitting on its hands waiting to see how the stimulus turned out rather than taking on health care reform or energy or financial regulation, its base would never have forgiven it.
Another option would have been to mount a frontal assault on the filibuster, much as John F. Kennedy’s administration began by launching a frontal assault on the House Rules Committee, which was bottling up civil rights legislation.
I don’t consider this plausible. For one thing, the White House understandably wanted to use its political capital on policies that would be understandable and tangible to Americans rather than on a divisive set of procedural reforms. For another, it would have been very difficult for a candidate who had come to power promising a new era of postpartisanship to begin his presidency by ripping minority protections out of the United States Senate. And finally, there is no evidence that Democratic senators, many of whom quite like the power that the filibuster gives them, would have gone along with the plan.
But if the White House couldn’t go through Congress, perhaps it could have done a better job going around it. A major omission in Suskind’s book—which is also a major omission in political punditry more generally—is that it makes little mention of the Federal Reserve. But the Fed is arguably more powerful than Congress when it comes to setting economic policy, and it is certainly more powerful than the president.
The White House made two major mistakes here. One was leaving two seats on the Fed’s Board of Governors unfilled. Congress certainly deserves some of the blame for this—Senate Republicans filibustered Peter Diamond, a Nobel laureate economist whom the Obama administration nominated to fill one of the open slots—but the truth is that the White House was slow to nominate Diamond, passive once it did nominate him, and seemingly lost once his nomination failed. At the moment, the two seats on the Fed’s Board of Governors remain open, and the White House has not put forward any new candidates. Those seats matter because the Federal Reserve is a cautious institution that is more comfortable fighting inflation than pursuing full employment, and if you want it to act with more vigor, you need to bring that energy in from the outside.
Of course, the most straightforward path to energizing the Fed isn’t adding two new members to its Board of Governors, but replacing its chairman. And the White House had an opportunity to do so in 2010, when Ben Bernanke’s term expired. Instead, Obama chose to renominate Bernanke. The thinking was that Bernanke had pursued an extraordinary set of activist policies during the worst of the crisis—he probably deserves more credit than any single person for preventing a second Great Depression—and he was respected in the institution and by the markets. Reappointing him would thus help with confidence and ensure that the White House had an able partner if the economy turned south again.
But Bernanke has been much more cautious in accelerating the recovery than he was in combating the initial crisis. When the financial markets were collapsing, he went far beyond the traditional limits of the Fed to support the financial markets, purchase depressed assets, and inject liquidity directly into the banking system. But he has not been nearly as aggressive in his efforts to support the recovery. The second round of quantitative easing could have been much bigger. The Fed’s commitment to employment—even at the cost of modest inflation—could have been communicated directly to the markets. Unorthodox policies, such as targeting a specific level of nominal GDP growth, have been left untried.
At this point, even quite mainstream voices have come to worry over Bernanke’s apparent timidity. In September, Charles Evans, the president of the Chicago Federal Reserve, gave a pointed speech in which he asked:
Imagine that inflation was running at 5 percent against our inflation objective of 2 percent. Is there a doubt that any central banker worth their salt would be reacting strongly to fight this high inflation rate? No, there isn’t any doubt. They would be acting as if their hair was on fire. We should be similarly energized about improving conditions in the labor market.
This raises the question of whether the Obama administration made a mistake in reappointing Bernanke. If it had managed to install a more activist chairman at the Federal Reserve, then its inaction might have been more effectively offset by the Fed’s actions.
As it is, both major channels for economic change are clogged, and there appears to be little immediate hope of unblocking them. The president is but one actor in the drama of American politics, and he is quite constrained in his capacity to make—or remake—American policy.
The mass media rarely mentions that, but nor do most presidents. Indeed, the greatest confidence man of the last few years, at least going by Suskind’s definition, was not Larry Summers or Timothy Geithner, but Barack Obama. Being a confidence man is almost in the job description of the insurgent presidential candidate. Having not been president before, you must, by definition, ask the American people for a trust you have not earned.
And Obama was better at this than most. He gave America hope. He made America believe he could deliver change. And, by the standards of Washington, he has probably done more than anyone could rightly have expected. Stimulus, health care reform, the end of “don’t ask, don’t tell,” the creation of the Consumer Financial Protection Bureau, the Lily Ledbetter Fair Pay Act, the payroll tax cut, new tobacco regulation—this is much more than your average first-term president achieves. But by the standards of the speeches and spirit that animated Obama’s campaign, he has not done nearly enough.
At the end of the book, Suskind is sitting in the White House with Obama. “Leadership in this office is not a matter of you being confident,” the President reflects. “Leadership in this office is a matter of helping the American people feel confident.”
But the president needs to do more than lead. He needs to govern. And when he has so convinced the American people of his leadership that their expectations for his term far exceed his—or anyone’s—capacity to govern, disappointment results. That’s when they go looking for another confidence man—one whose promises aren’t sullied by the compromises and concession made in the effort to deliver results—and the cycle begins anew.
Copyright © 1963-2011 NYREV, Inc. All rights reserved.
