A Contribution to the Critique of the Sanders Campaign
by ANN ROBERTSON and BILL LEUMER
Bernie Sanders’ campaign for president within the Democratic Party has posed a challenge for the anti-capitalist left in the U.S.: Should his campaign be endorsed? Two parties within this radical left current have stepped forward, and while agreeing on many basic points, have reached opposing conclusions. The International Socialist Organization (ISO) has argued against endorsing the Sanders’ campaign while Socialist Alternative (SAlt) has chosen to endorse.
The points of agreement between these two parties are numerous. Both point to a multitude of progressive positions Sanders has promoted: he wants to raise taxes on the rich, create green jobs, make it easier for workers to unionize, raise the minimum wage, he defends Social Security, calls for a single-payer health care system, and the list goes on.
Both the ISO and SAlt agree that Sanders’ campaign within the corporate-controlled Democratic Party is a mistake and have encouraged him to run as an independent. For the ISO this is a decisive mistake, and consequently, they refuse to endorse Sanders. But for SAlt, this is not a red line. Instead, SAlt argues Sanders’ campaign, even though conducted within the Democratic Party, has the potential to “mobilize hundreds of thousands against corporate politics,” and it is better to be in the campaign in order to more effectively influence followers of Sanders in the direction of independent political action. “By boldly intervening in the Sanders campaign – supporting its call for a determined fight against big business while arguing for independent politics,” SAlt argues, “we can most effectively advance the project of independent politics under the current circumstances.” In other words, Sanders followers can then be enticed to join truly independent movements, such as the fight for $15.
When Sanders loses the Democratic Party presidential nomination, SAlt will urge him to continue his run as an independent, even though Sanders has insisted he will instead endorse the Democratic Party primary winner.
Surely, Sanders’ decision to plant himself firmly within the Democratic Party and endorse whichever Democrat wins the primary should raise problems for any revolutionary. The Democratic Party is basically top-down, controlled by corporations, and pro-capitalist. When a revolutionary supports a Democratic Party candidate, it is like boarding a train that is headed in the opposite direction of one’s destination. Even though SAlt argues that Sanders can still be supported as a Democratic Party candidate, it is hard not to conclude that such a stance will sow more confusion than clarity among SAlt followers. Sanders has organized his campaign within a corporate, capitalist party and is running on a weak, progressive program. How can such a campaign represent principled, independent working-class politics?
But even if Sanders had chosen to spurn the Democrats and run as an independent, the question can still be raised: Should Sanders be supported by anti-capitalist socialists as an independent? And here the ISO has raised some points of caution.
Todd Cretien of the ISO, for example, notes that Sanders has operated closely with the Democratic Party by routinely caucusing with them; Sanders has supported the reactionary Democratic Party governor of Vermont; and he has supported U.S. government war efforts abroad. Moreover Sanders’ version of “socialism” is of the European social democratic variety, which has little to do with Marx’s definition of socialism. Social democracy accepts capitalism but insists on a strong safety net for the working class. And their acceptance of capitalism is crucial; it means that during an economic crisis, their first impulse is to support corporations, which are the mainstay of the economy. During the current economic crisis in Europe social democrats in one country after another have shamefully embraced severe austerity measures that punish the working class in order to strengthen the corporations.
Ashley Smith, also writing for the ISO, has argued that in many respects Sanders is indistinguishable from Democrats, given that Sanders has voted with them 98 percent of the time, has refused to support the fight for $15 except as a far distant goal, and has refused unambiguously to condemn racist police brutality. She quotes Howard Dean as declaring Sanders to be “basically a liberal Democrat.”
But Ashley Smith does leave a door open for supporting people like Sanders: “If Sanders had his heart set on national politics, he could have run for president like Ralph Nader as an independent, opposing both capitalist parties, the Democrats and Republicans.” Under this condition, Smith seems to imply it would be permissible to support Sanders with his progressive, anti-corporate agenda.”
Yet, the description of Nader’s campaign as “independent,” raises the question: Independent of what? Running independently of the Democrats and Republicans does not in and of itself amount to running a working-class independent campaign. There are more capitalist parties aside from the Democrats and Republicans, and the essential dividing line for revolutionaries is working class versus capitalist class. Like Sanders, Nader is not anti-capitalist; he wants to reform capitalism – remove its worst features and rope in the corporations – but not abolish it altogether. Surely, a candidates’ pro-capitalist position must present an insurmountable obstacle for revolutionaries who want to up-end society and create an entirely new, cooperative economic system.
Nader’s and Sanders’ pro-capitalism is not a trivial issue. Capitalism is above all an economic system that promotes diametrically opposed interests between workers and capitalists. Capitalists must compete against one another in order to survive, and to compete successfully they must maximize profits, which in turn requires keeping production costs, including labor costs, to a minimum. Stores like Walmart thrive on this strategy. Sanders might say he is for ordinary working people or for the “middle class,” but in so far as he embraces capitalism, he is also for corporations, because capitalism cannot operate smoothly without the smooth functioning of corporations, and hence, Sanders’ loyalties are at best divided. His distinguishing attribute is that he favors a tighter leash on corporations and a stronger safety net for the working class, which is mere reformism.
But capitalism is not simply an economic system – it creates an entire culture that invades almost every aspect of life. It is a top-down culture where those on the bottom are virtually powerless and those on the top issue orders. It atomizes people by forcing them to compete against one another rather than join together in the pursuit of the common good. This is the culture that one confronts at work, whether in the private or public sector, in schools where students must compete against one another for grades, and it even infuses the union movement. Union members are rarely encouraged to engage in significant decision-making within their union (with the exception of unions like the Chicago Teachers Union) and hence for the most part do not bother to vote in union elections. Similarly, when unions call for mass demonstrations, few of their members bother to show up.
Both the campaigns of Nader and Sanders adopt this top-down structure. Their programs are issued as proclamations from the top with little input from their supporters. And neither candidate makes an effort to forge solidarity with grassroots movements such as Black Lives Matter or the Fight for $15. Sanders won’t even return Nader’s phone calls.
Even more, as Marx and Engels insisted, the overthrow of capitalism will only be accomplished by the working class. “The emancipation of the working classes [of every country] must be conquered by the working classes themselves….” [Karl Marx: “Provisional Rules of the Association,” in The General Council of the First International, 1864-1866]. Hence, the goal of revolutionaries must be to consistently assist in the organization of the working class so that it is in a position to consciously act in its own self-interests independently of the interests of capitalists. Working people must come to the realization that they are members of an exploited class, that capitalism does not operate in their interests, and their only salvation lies in joining together in order to collectively create an entirely different economic system that actually operates in the interests of the majority. Capitalism will never be abolished by a minority of the population.
Neither Nader nor Sanders is dedicated to promoting the self-organization and self-liberation of the working class. Just the opposite: they reinforce the top-down culture of capitalism. They do not encourage working people to act collectively to defend their own interests, as is being done in the union movement, in Black Lives Matter, and in the fight for $15. Instead, they are prepared, if elected, to occasionally dispense favors for the working class, while leaving working people permanently atomized and powerless.
Similarly, Green Party candidates, such as Nader on occasion, represent equally flawed alternatives. Although the Green Party includes many members who, as individuals, consider themselves socialists, the Green Party itself is not socialist but capitalist. It calls for tighter controls on corporations, not for a collective and democratically controlled economy, despite Naomi Klein’s persuasive argument that saving the environment will require a confrontation with capitalism. The Green Party is not based on working class politics.
Grassroots movements such as the fight for $15, Black Lives Matter, and anti-war demonstrations represent united fronts. In other words, working people who might belong to different political tendencies can activate themselves and wage a united struggle over an issue of common agreement, where their willingness to join forces maximizes their strength. Such united-front movements have the capacity to become massive, as has happened in the recent past in Greece and Spain. These movements can then nurture the rise of new revolutionary working class political parties that represent the interests that these movements have ignited, which is what happened with the creation of Syriza in Greece and Podemos in Spain. These parties then have direct links to the mass movements.
It is not impossible for the anti-capitalist left to launch a principled, class-independent political campaign in the absence of truly massive working class movements, but the chances of missteps are multiplied in their absence. Campaigns such as Sanders’, Nader’s, and those of Green Party candidates unfortunately only serve to blur class lines and miss-educate revolutionaries about the most basic category in Marx’s revolutionary philosophy: the self-emancipation of the working class through class struggle.
Ann Robertson is a Lecturer in the Philosophy Department at San Francisco State University and a member of the California Faculty Association.
Bill Leumer is a member of the International Brotherhood of Teamsters, Local 853 (ret.). Both are writers for Workers Action and may be reached at email@example.com
By MICHAEL WESSEL
May 19, 2015
“You need to tell me what’s wrong with this trade agreement, not one that was passed 25 years ago,” a frustrated President Barack Obama recently complained about criticisms of the Trans Pacific Partnership (TPP). He’s right. The public criticisms of the TPP have been vague. That’s by design—anyone who has read the text of the agreement could be jailed for disclosing its contents. I’ve actually read the TPP text provided to the government’s own advisors, and I’ve given the president an earful about how this trade deal will damage this nation. But I can’t share my criticisms with you.
I can tell you that Elizabeth Warren is right about her criticism of the trade deal. We should be very concerned about what's hidden in this trade deal—and particularly how the Obama administration is keeping information secret even from those of us who are supposed to provide advice.
So-called “cleared advisors” like me are prohibited from sharing publicly the criticisms we’ve lodged about specific proposals and approaches. The government has created a perfect Catch 22: The law prohibits us from talking about the specifics of what we’ve seen, allowing the president to criticize us for not being specific. Instead of simply admitting that he disagrees with me—and with many other cleared advisors—about the merits of the TPP, the president instead pretends that our specific, pointed criticisms don’t exist.
What I can tell you is that the administration is being unfair to those who are raising proper questions about the harms the TPP would do. To the administration, everyone who questions their approach is branded as a protectionist—or worse—dishonest. They broadly criticize organized labor, despite the fact that unions have been the primary force in America pushing for strong rules to promote opportunity and jobs. And they dismiss individuals like me who believe that, first and foremost, a trade agreement should promote the interests of domestic producers and their employees.
I’ve been deeply involved in trade policy for almost four decades. For 21 years, I worked for former Democratic Leader Richard Gephardt and handled all trade policy issues including “fast track,” the North American Free Trade Agreement and the World Trade Organization’s Uruguay Round, which is the largest trade agreement in history. I am also a consultant to various domestic producers and the United Steelworkers union, for whom I serve as a cleared advisor on two trade advisory committees. To top it off, I was a publicly acknowledged advisor to the Obama campaign in 2008.
Obama may no longer be listening to my advice, but Hillary Clinton and Elizabeth Warren might as well be. Warren, of course, has been perhaps the deal’s most vocal critic, but even the more cautious Clinton has raised the right questions on what a good TPP would look like. Her spokesman, Nick Merrill, said: “She will be watching closely to see what is being done to crack down on currency manipulation, improve labor rights, protect the environment and health, promote transparency and open new opportunities for our small businesses to export overseas. As she warned in her book Hard Choices, we shouldn’t be giving special rights to corporations at the expense of workers and consumers.”
On this count, the current TPP doesn’t measure up. And nothing being considered by Congress right now would ensure that the TPP meets the goal of promoting domestic production and job creation.
The text of the TPP, like all trade deals, is a closely guarded secret. That fact makes a genuine public debate impossible and should make robust debate behind closed doors all the more essential. But the ability of TPP critics like me to point out the deal’s many failings is limited by the government’s surprising and unprecedented refusal to make revisions to the language in the TPP fully available to cleared advisors.
Bill Clinton didn’t operate like this. During the debate on NAFTA, as a cleared advisor for the Democratic leadership, I had a copy of the entire text in a safe next to my desk and regularly was briefed on the specifics of the negotiations, including counterproposals made by Mexico and Canada. During the TPP negotiations, the United States Trade Representative (USTR) has never shared proposals being advanced by other TPP partners. Today’s consultations are, in many ways, much more restrictive than those under past administrations.
All advisors, and any liaisons, are required to have security clearances, which entail extensive paperwork and background investigations, before they are able to review text and participate in briefings. But, despite clearances, and a statutory duty to provide advice, advisors do not have access to all the materials that a reasonable person would need to do the job. The negotiators provide us with “proposals” but those are merely initial proposals to trading partners. We are not allowed to see counter-proposals from our trading partners. Often, advisors are provided with updates indicating that the final text will balance all appropriate stakeholder interests but we frequently receive few additional details beyond that flimsy assurance.
Those details have enormous repercussions. For instance, rules of origin specify how much of a product must originate within the TPP countries for the resulting product to be eligible for duty-free treatment. These are complex rules that decide where a company will manufacture its products and where is will purchase raw materials. Under the North American Free Trade Agreement (NAFTA), 62.5 percent of a car needed to originate within NAFTA countries. In the US-Australia Free Trade Agreement, it was lowered to 50 percent. It further dropped to 35 percent in the US-Korea Free Trade Agreement (KORUS). In essence, under our agreement with Korea, 65 percent of a car from South Korea could be made from Chinese parts and still qualify for duty-free treatment when exported to the U.S.
That fact is politically toxic, and for that reason, we should expect the TPP agreement to have higher standards. But will it reach the 62.5 percent NAFTA requirement? Or will it be only a slight improvement over KORUS? Without access to the final text of the agreement, it’s impossible to say.
State-owned enterprises may, for the first time, be addressed in the TPP. But, once again, the details are not clear. Will exemptions be provided to countries like Vietnam, Malaysia and Singapore, all of which could be heavily impacted by such a rule? What will be the test to determine what is or is not acceptable behavior? Will injury be required to occur over a substantial period of time, or will individual acts of non-commercial, damaging trade practices be actionable? Again, it’s impossible to say for sure.
Advisors are almost flying blind on these questions and others.
Only portions of the text have been provided, to be read under the watchful eye of a USTR official. Access, up until recently, was provided on secure web sites. But the government-run website does not contain the most-up-to-date information for cleared advisors. To get that information, we have to travel to certain government facilities and sign in to read the materials. Even then, the administration determines what we can and cannot review and, often, they provide carefully edited summaries rather than the actual underlying text, which is critical to really understanding the consequences of the agreement.
Cleared advisors were created by statute to advise our nation’s trade negotiators. There is a hierarchal structure, starting with the USTR’s Advisory Committee on Trade Policy & Negotiations at the top—a committee that includes people like Steelworkers President Leo Gerard, Mastercard CEO Ajay Banga, Etsy CEO Chad Dickerson and Jill Appell, co-owner of Appell’s Pork Farms. Then there are specific Committees covering subjects like labor, the environment and agriculture that make up the next tier. The last tier consists of the Industry Trade Advisory Committees (ITACS), which focus on individual sectors such as steel and aerospace. At last count, there were more than 600 cleared advisors. The vast majority of them represent business interests.
In an effort to diminish criticism, USTR is now letting cleared advisors review summaries of what the negotiators have done. In response to a question about when the full updated text will be made available, we’ve been told, “We are working on making them available as soon as possible.” That’s not the case overseas: Our trading partners have this text, but the government’s own cleared advisors, serving on statutorily-created advisory committees, are kept in the dark.
How can we properly advise, without knowing the details?
Questions pervade virtually every chapter of the proposed agreement, including labor and the environment, investor-state, intellectual property and others. The answers to these questions affect the sourcing and investment decisions of our companies and resulting jobs for our people. Our elected representatives would be abdicating their Constitutional duty if they failed to raise questions.
Senator Warren should be commended for her courage in standing up to the President, and Secretary Clinton for raising a note of caution, and I encourage all elected officials to raise these important questions. Working Americans can’t afford more failed trade agreements and trade policies.
Congress should refuse to pass fast track trade negotiating authority until the partnership between the branches, and the trust of the American people is restored. That will require a lot of fence mending and disclosure of exactly what the TPP will do. That begins by sharing the final text of the TPP with those of us who won’t simply rubber-stamp it.
by PAUL STREET “Fact and Scrutiny”
So this is how Barack Obama is moving into the final 20 months of his dismal neoliberal presidency, which he once (proudly) described as ideologically akin to the Eisenhower White House. He is nauseating much of his own Wall Street-captive party’s electoral base by trying to push through the absurdly regressive, secretive, eco-cidal, and global-corporatist Trans Pacific Partnership treaty – a massive investor rights measure that promises to reduce wages, deepen inequality, undermine popular sovereignty, and assault already endangered livable ecology in the name of (what else?) “free trade” and “growth.”
The treaty is so toxically capitalist and transparently authoritarian that even the leading right-wing corporate Democrats Bill and Hillary Clinton – champions of the arch-neoliberal North American Free Trade Agreement (NAFTA) – have to keep their distance from it in accord with Mrs. Clinton’s presidential ambitions.
After going on television to childishly claim that U.S. Senator Elizabeth Warren’s elementarily logical and evidence-based “arguments [against TPP] don’t stand the test of fact and scrutiny” (harsh if inept words for a top party colleague and ally), Obama was at first unable to persuade all but one U.S. Senate Democrat not to block his bid for “fast-track” legislation, which would grant the president to bring the TPP to an up-or-down floor vote with no amendments. A subsequent re-do secured enough sold-out Democratic votes to combine with unanimous Republican support to succeed in the upper Congressional body.
“A Striking Piece of This President’s Environmental Legacy”
Speaking of ecological ruin, the Obama administration has just cleared the way for the giant climate-changing multinational oil corporation Royal Dutch/Shell to begin drilling for fossile fuels in the Arctic Ocean this summer. Shell got approval to drill in the U.S. portion of the Chukchi Sea off the coast of Alaska. Shell’s leases are 70 miles out, in a remote, untouched, and pristine area that provides critical habitats for several rare species and large marine mammals. It’s a treacherous area characterized by extreme storms, likely to cause massive oil spills.
The New York Times described Obama’s decision as “a devastating blow to environmentalists.” It might have added “and to prospects for a decent future.” Environmental groups have long warned against the madness of drilling in the area, which holds 22 billion barrels of oil and 93 trillion cubic feet of natural gas. The decision comes just four months after Obama opened up a large portion of the southern U.S. Atlantic coast to new deep-water offshore drilling, the Times notes. The national newspaper of record might have added that it comes five and half years after Obama, elected on a promise (among other things) to reduce climate change, almost singlehandedly undermined desperate international efforts to set binding limits on global carbon emissions in Copenhagen. His environmental record ever since has been calamitous, greasing the eco-cidal skids for the United States’ largely fracking-based emergence as the world’s leading oil and gas producer in the name of an “all-of-the-above” (nuclear included) energy policy and so-called national energy independence.
According to Times environmental reporter Coral Davenport, speaking on the “P”BS Newshour last Monday, the Chukchi Sea announcement “is still a very striking piece of this president’s environmental legacy,” one that has “environmental groups…surprised.”
“Every Four Years”
There are a number of understandable and respectable responses (horror and disgust come to mind) to these latest corporatist White House policies, but surprise is not one of them. This is precisely the capitalist Obama that a good cadre of Left activists and writers tried (none more voluminously than this writer) to warn liberals and progressives about from the beginning of the Obama phenomenon and then presidency. Like the Bill Clinton presidency but with considerable less success to a far less favorable economic and global context and to Obama’s comparative political ineptitude, the Obama administration has been (as predicted) a monument to faux-progressive corporate and Wall Street rule and to the wisdom of left historian Lawrence Shoup’s judgement in early 2008:
“Every four years many Americans put their hopes in an electoral process, hopes that a savior can be elected—someone who will make their daily lives more livable, someone who will raise wages, create well-paying jobs, enforce union rights, provide adequate health care, rebuild our nation’s infrastructure, and end war and militarism. In actuality, the leading ‘electable’ presidential candidates have all been well vetted by the hidden primary of the ruling class and are tied to corporate power in multiple ways. They will stay safely within the bounds set by those who rule America behind the scenes, making sure that members of the plutocracy continue to be the main beneficiaries of the system…It is clear that, at best, U.S. ‘democracy’ is a guided one; at its worst it is a corrupt farce, amounting to manipulation, with the larger population objects of propaganda in a controlled and trivialized electoral process.”
“The Republicans Made Him Do It”
Faced with a relentless onslaught of evidence in favor of Shoup’s judgment over the Age of Obama (a subset of the Age of Bipartisan Neoliberal Oligarchy), liberal and progressive Obama defenders have brandished two justifications for their president’s depressingly Big Business-friendly record. The first rationalization claims that Obama has always and sincerely wanted to do genuinely progressive and left-leaning things to roll back the exaggerated power of the wealthy corporate and financial few and to defend the nation’s poor and working class majority and the common good. Alas, the excuse runs, the nation’s great wannabe people’s president and his peoples’ party has been powerless to act on these noble ambitions because of the combined reactionary and checkmating influences of the Republican Party and its big money and big media (FOX News et al.) backers.
But this is a weak defense. Obama and his fellow Democrats had no actual commitment to the progressive- and populist-sounding things he promised on the campaign trail – things that were well within their capacity to enact after Obama and the Democrats’ sweeping victory in 2008. As the liberal author, Harper’s essayist, and former Obama fan, Thomas Frank, observed on Salon last January, it would have been more than good policy if Obama had enacted populist and progressive measures (“the economy would have recovered more quickly and the danger of a future crisis brought on by concentrated financial power would have been reduced”). It would also have been “good politics,” highly popular with the nation’s mostly white working class majority— something that would “have deflated the rampant false consciousness of the Tea Party movement and prevented the Republican reconquista of the House in 2010.” As the onetime Obama enthusiast Frank had the decency to admit, the financial crisis “worked out the way it did”—with Wall Street unpunished, richer, and more powerful than ever—“in large part because Obama and his team wanted it to work out that way…When historians seek to explain the failures of the Obama years” Frank mused, “they will likely focus on a glaringly obvious, and indeed still more hard-headed explanation that the apologists for Obama’s enfeeblement now overlook: that perhaps Obama didn’t act forcefully to press a populist economic agenda because he didn’t want to. That maybe he didn’t do certain of the things his liberal supporters wanted him to do because he didn’t believe in them.”
Never mind that the privilege-friendly corporate Democratic president Frank described this year is precisely the neoliberal and deeply conservative Obama that a significant number of radical Left writers and activists (myself included) futilely tried to warn Frank and other liberals about from the very beginning
“To Quell the Mob”
My favorite story indicating the depth and degree of Obama’s loyalty to the wealthy Few comes from the spring of 2009. In his important book Confidence Men: Wall Street, Washington, and the Education of a President (2011), the Pulitzer Prize-winning author Ron Suskind tells a remarkable story from March of 2009. Three months into Barack Obama’s supposedly progressive, left-leaning presidency, popular anger at Wall Street was intense and the nation’s leading financial institutions were weak and on the defensive in the wake of the financial collapse and recession they had created. The new president called a meeting of the nation’s top 13 financial executives at the White House. The banking titans came into the meeting full of dread. As Suskind noted:
“They were the CEOs of the thirteen largest banking institutions in the United States… And they were nervous in ways that these men are never nervous. Many would have had to reach back to their college days, or even grade school, to remember a moment when they felt this sort of lump-in-the-throat tension…As some of the most successful men in the country, they weren’t used to being pariahs… [and] they were indeed pariahs. The populist backlash against the financial sector—building steadily since September—was finally beginning to cause grave discomfort on Wall Street. As unemployment ballooned and credit tightened, the country began to look inward, toward the origins of the panic and its disastrous consequences.”
In the end, however, the anxious captains of high finance left the meeting pleased to learn that Obama was totally in their camp. For instead of standing up for those who had been harmed most by the crisis—workers, minorities, and the poor – Obama sided unequivocally with those who had caused the meltdown. “My administration is the only thing between you and the pitchforks,” Obama said. “You guys have an acute public relations problem that’s turning into a political problem. And I want to help…I’m not here to go after you. I’m protecting you…. I’m going to shield you from congressional and public anger.”
For the banking elite who destroyed millions of jobs in their lust for profit, there was, as Suskind puts it, “Nothing to worry about. Whereas [President Franklin Delano] Roosevelt had [during the Great Depression] pushed for tough, viciously opposed reforms of Wall Street and famously said ‘I welcome their hate,’ Obama was saying ‘How can I help?’” As one leading banker told Suskind, “The sense of everyone after the meeting was relief. The president had us at a moment of real vulnerability. At that point, he could have ordered us to do just about anything and we would have rolled over. But he didn’t – he mostly wanted to help us out, to quell the mob.” When “the bankers arrived in the State Dining Room,” Suskind notes, “Obama had them scared and ready to do almost anything he said…. An hour later, they were upbeat, ready to fly home and commence business as usual” (Confidence Men).
This remarkable episode happened in the White House in a time when, to repeat, the Democrats held the majority in both houses of Congress along with an angry populace ready with good reason for Wall Street and 1% blood. And what did the populace get from this seemingly progressive alignment of the stars? The venerable left liberal journalist William Grieder put it very well in a March 2009 Washington Post Op-Ed: “a blunt lesson about power, who has it and who doesn’t.” Americans “watched Washington rush to rescue the very financial interests that caused the catastrophe. They learned that government has plenty of money to spend when the right people want it. ‘Where’s my bailout,’ became the rueful punch line at lunch counters and construction sites nationwide. Then to deepen the insult, people watched as establishment forces re-launched their campaign for ‘entitlement reform’ – a euphemism for whacking Social Security benefits, Medicare and Medicaid.”
“Inside the 40 Yards Lines”
They also watched as Obama moved on to pass a health insurance reform that only the big insurance and drug companies could love, kicking the popular alternative (single payer “Medicare for All”) to the curb while rushing to pass a program drafted by the Republican Heritage Foundation and first carried out in Massachusetts by his 2012 Republican opponent Mitt Romney. As Obama later explained to some of his rich friends at an event called The Wall Street Journal CEO Council a month after trouncing Romney’s bid to unseat him: “When you go to other countries, the political divisions are so much more stark and wider. Here in America, the difference between Democrats and Republicans–we’re fighting inside the 40-yard lines…People call me a socialist sometimes. But no, you’ve got to meet real socialists. (Laughter.) You’ll have a sense of what a socialist is. (Laughter.) I’m talking about lowering the corporate tax rate. My health care reform is based on the private marketplace.”
A year and a half before this tender ruling class moment, the American people had watched Obama offer the Republicans bigger cuts in Social Security and Medicare than they asked for as part of his “Grand Bargain” offered during the elite-manufactured debt-ceiling crisis of 2011
Republican “Obstruction” as Self-Fulfilling Prophecy
It has all unfolded pretty much as I predicted (easily and with no particular claim to originality or clairvoyance) in my spring 2008 book Barack Obama and the Future of American Politics. It’s gone ways that are consistent with my account of Obama’s first year in the White House in my follow-up volume The Empire’s New Clothes: Barack Obama in the Real World of Power (Paradigm Publishers, June 2010).
I was apprehensive about writing the second book when my publisher first suggested it. Did I really want another volume on my resume with the noxious neoliberal Obama’s name in the title? And wasn’t it to too early to write a relevant account of Obama in power? In retrospect, however, I’m glad I followed through on The Empire’s New Clothes – a detailed account of Obama’s predicted betrayals of his progressive “base,” imagery, and campaign promises in different and interrelated realms: race, labor, environment, immigrant rights, civil liberties, war, and empire during his initial eleven months as U.S. president. The book is useful as a record of Obama’s allegiance to the nation’s unelected and interrelated dictatorships of money, empire, institutional racism, nationalism, and eco-cide in a time when his party held Congress and the citizenry was angrily primed for progressive and even populist policy – in the time when it was most transparently ridiculous to say that “the Republicans made him” be neo-Hooverian business conservative.
There’s also Thomas Frank’s important point, something I warned about in both my 2008 book and its spring 2010 sequel: the Republicans wouldn’t have had their great Tea Party movement takeover of Congress in 2010 if Obama had actually governed in accord with the progressive and populist sentiments of the mere citizenry (as I predicted he would not in my 2008 book) instead of the dictates of the nation’s corporate and financial masters.
“We Didn’t Make Him Be the Progressive He Wanted to Be”
A second liberal and “progressive” apology for Obama’s corporatism, imperialism, militarism, and eco-cidalism places the blame on the rest of us. It’s our failure, this second storyline goes. The citizenry and activists are at fault for not making Obama be the progressive, populist, environmentalist, and peace-dividend president he really wanted to be. We didn’t compel him to advance the decent, egalitarian, and ecologically sustainable policies he sincerely desired to enact by organizing and protesting from the bottom up.
This justification for Obama’s power-serving presidency is barely less idiotic than “the Republicans blocked him” excuse. It is certainly true that the U.S. “progressive movement” – if such a thing even exists now or existed in 2009 – has failed badly on numerous levels. Any such movement ought to seek to be powerful enough that it has to be taken into consideration by whoever sits in the White House and other top public offices, elected and otherwise. There isn’t much to say for progressive efforts along those lines in the Age of Obama, with some partial exceptions.
Still, there are two critical flaws in this rationalization. The first problem, shared with the “blame the Republicans” narrative, is the silly idea (revealingly shared with the Teapublican “insurgency”) of Obama as a left-leaning politician who wanted to do good progressive, populist, social-democratic, and peaceful things. Any remotely serious investigation of the real Obama and his career (what I undertook in my 2008 volume) would have revealed someone very different: a “deeply conservative” agent and servant of American Empire and Inequality, Inc. masquerading (like fellow arch-neoliberal Bill Clinton in 1992) as a man of the people – an old and deadly character (with a tantalizing racial twist fit for the post-Civil Rights era in Obama’s case) at the long duplicitous heart of U.S. political culture.
The second flaw is that the Obama administration and Democratic Party operatives and elective officials across the country have worked diligently precisely to destroy left progressive movements through a combination of repression and co-optation. Take the Occupy Movement, a populist uprising against the bipartisan corporate and financial oligarchy in the late summer and fall of 2011. It was crushed by a coordinated federal campaign of surveillance, infiltration, and violent assault, with the lion’s share of the repression carried out by Democrat-run city governments across the country. At the same time, Obama and other corporate Democrats did everything they could to steal and incorporate Occupy’s populist message in their fake-progressive campaign against the former “equity capitalist” Mitt Romney and other “1 percenter Republicans” in the 2012 elections.
Hillary Picks Up the Hitchensian Ball
It was nothing new. The “essence of American politics,” a still left Christopher Hitchens noted in his 1999 book on the Clintons (No One Left to Lie To) “is the manipulation of populism by elitism.” The swindle continues. As I demonstrated in a recent essay, Mrs. Clinton is providing an almost picture-perfect illustration of Hitchens’ thesis in her belatedly announced bid for the 2016 Democratic presidential nomination. If she’s elected (a distinct possibility given the Republican Party’s devolution into what Norman Ornstein calls “an apocalyptic cult”), we can expect bamboozled liberals and progressives to blame the Republicans for her militantly corporatist, imperialist, and eco-cidal policies. There will also be the charge that the people and the Left bear responsibility for the predictable White House ugliness because we didn’t roll up our sleeves to make her be the progressive president she really wants to be. The double-fanged idiotic liberal apology will be passed on from Clinton41 to Obama43 to Clinton44. Never mind that few things could be more preposterous than to dream that a White House ruled by the militantly pro-Big Business and hawkish Hillary Clinton (who last year praised the blood-soaked arch-imperialist coup-manager Henry Kissinger as a great champion of participatory democracy) could be pushed to the progressive and populist left by U.S. citizens and social movements. Few things except perhaps the belief that Bernie Sanders is going to achieve anything more than help his “good friend” Hillary Clinton campaign in accord with Hitchens’ dictum.
“Read a book,” an old Marxist history professor of mine used to tell students: “you might learn something.” U.S. liberals and progressives might want to read up on recent American political history. They might learn something about how they’ve been manipulated by Democratic politicians and presidents again and again and decide to invest their hopes and energies in a different kind of more genuinely progressive and democratic politics beneath and beyond the big money-big media-major party-mass-marketed-candidate-centered presidential “electoral extravaganzas” that are staged as “yet another method for marginalizing the population” (Noam Chomsky, October 27, 2004) once every four years.
Paul Street’s latest book is They Rule: The 1% v. Democracy (Paradigm, 2014)
The President pandering to corporations is not what liberals want to see right now.
By Robert Reich / RobertReich.org May 8, 2015 Today President Obama is giving a speech promoting the Trans-Pacific Partnership. Paradoxically, he’s chosen to give it at Nike headquarters in Oregon.
Nike isn’t the solution to the problem of stagnant wages in America. Nike is the problem.
It’s true that over the past two years Nike has added 2,000 good-paying professional jobs at its Oregon headquarters, fulfilling the requirements of a controversial tax break it wrangled from the state legislature. That’s good for Nike’s new design, research and marketing employees.
Nike’s U.S. workers make only a tiny percent of Nike’s products.
In fact, Americans made only 1 percent of the products that generated Nike’s $27.8 billion revenue last year. And Nike is moving ever more of its production abroad. Last year, a third of Nike’s remaining 13,922 American production workers were laid off.
Most of Nike’s products are made by 990,000 workers in low-wage countries whose abysmal working conditions have made Nike a symbol of global sweatshop labor.
As wages have risen in China, Nike has switched most of its production to Vietnam where wages are less than 60 cents are hour. Almost 340,000 workers cut and assemble Nike products there.
In other words, Nike is a global corporation with no particular loyalty or connection to the United States. Its loyalty is to its global shareholders.
I’m not faulting Nike. Nike is only playing by the rules. I’m faulting the rules.
Trade agreements like the Trans Pacific Partnership protect corporate investors but lead to even more off-shoring of American jobs.
They make it safer for firms to relocate abroad – the Cato Institute describes such investor protections as “lowering the risk premium” on offshoring – thereby reducing corporate incentives to keep jobs in America and upgrade the skills of Americans.
If the Trans Pacific Partnership goes into effect American wages will be dragged down by further losses of manufacturing jobs.
All workers with similar skill levels face downward wage pressure when Americans displaced from better-paying manufacturing jobs join the glut of workers competing for non-offshorable jobs.
Jobs being lost to imports pay Americans higher wages than the jobs left behind. Government data show wages in import-competing industries (e.g. manufacturing jobs) beat those in exporting industries overall.
We can’t educate our way out of this. American workers with a four-year college degree are also highly vulnerable to job offshoring, according to a study by Princeton economist Alan Blinder.
He found that the one out of every four American jobs in finance, information technology and professional services could be offshored in the foreseeable future.
Bottom line: we need new rules for the global economy that allow Americans to win.
Instead, the Trans Pacific Partnership – which includes 12 nations, including Vietnam, but would be open for every nation to join – would lock us into an expanded version of the very policies that have failed most American for the past twenty years.
The White House says the TPP includes strong labor and environmental standards. But these are the same standards included in George W. Bush’s last agreements.
No doubt Nike is supporting the TPP. The corporations would get a tax cut on its Vietnamese and Malaysian-made goods. But even with the tariffs in place, Nike’s current expense for those $100-plus shoes is less than $10 per pair. So don’t expect that tax cut to result in cheaper prices for American consumers.
Needless to say, the TPP wouldn’t require Nike to pay its Vietnamese workers more. Nikes’ workers are not paid enough to buy the shoes they make much less buy U.S. exported goods.
Nike may be the perfect example of life under TPP, but that is not a future many Americans would choose.
Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is "Aftershock: The Next Economy and America's Future." His homepage is www.robertreich.org.
Whatever her populist pitch may be in the 2016 campaign, Hillary Clinton has not publicly condemned Wall Street.
By Nomi Prins / TomDispatch May 7, 2015
[This piece has been adapted and updated by Nomi Prins from chapters 18 and 19 of her book All the Presidents' Bankers: The Hidden Alliances that Drive American Power, just out in paperback (Nation Books).]
The past, especially the political past, doesn’t just provide clues to the present. In the realm of the presidency and Wall Street, it provides an ongoing pathway for political-financial relationships and policies that remain a threat to the American economy going forward.
When Hillary Clinton video-announced her bid for the Oval Office, she claimed she wanted to be a “champion” for the American people. Since then, she has attempted to recast herself as a populist and distance herself from some of the policies of her husband. But Bill Clinton did not become president without sharing the friendships, associations, and ideologies of the elite banking sect, nor will Hillary Clinton. Such relationships run too deep and are too longstanding.
To grasp the dangers that the Big Six banks (JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley) presently pose to the financial stability of our nation and the world, you need to understand their history in Washington, starting with the Clinton years of the 1990s. Alliances established then (not exclusively with Democrats, since bankers are bipartisan by nature) enabled these firms to become as politically powerful as they are today and to exert that power over an unprecedented amount of capital. Rest assured of one thing: their past and present CEOs will prove as critical in backing a Hillary Clinton presidency as they were in enabling her husband’s years in office.
In return, today’s titans of finance and their hordes of lobbyists, more than half of whom held prior positions in the government, exact certain requirements from Washington. They need to know that a safety net or bailout will always be available in times of emergency and that the regulatory road will be open to whatever practices they deem most profitable.
Whatever her populist pitch may be in the 2016 campaign -- and she will have one -- note that, in all these years, Hillary Clinton has not publicly condemned Wall Street or any individual Wall Street leader. Though she may, in the heat of that campaign, raise the bad-apples or bad-situation explanation for Wall Street’s role in the financial crisis of 2007-2008, rest assured that she will not point fingers at her friends. She will not chastise the people that pay her hundreds of thousands of dollars a pop to speak or the ones that have long shared the social circles in which she and her husband move. She is an undeniable component of the Clinton political-financial legacy that came to national fruition more than 23 years ago, which is why looking back at the history of the first Clinton presidency is likely to tell you so much about the shape and character of the possible second one.
The 1992 Election and the Rise of Bill Clinton
Challenging President George H.W. Bush, who was seeking a second term, Arkansas Governor Bill Clinton announced he would seek the 1992 Democratic nomination for the presidency on October 2, 1991. The upcoming presidential election would not, however, turn out to alter the path of mergers or White House support for deregulation that was already in play one iota.
First, though, Clinton needed money. A consummate fundraiser in his home state, he cleverly amassed backing and established early alliances with Wall Street. One of his key supporters would later change American banking forever. As Clinton put it, he received “invaluable early support” from Ken Brody, a Goldman Sachs executive seeking to delve into Democratic politics. Brody took Clinton “to a dinner with high-powered New York businesspeople, including Bob Rubin, whose tightly reasoned arguments for a new economic policy,” Clinton later wrote, “made a lasting impression on me.”
The battle for the White House kicked into high gear the following fall. William Schreyer, chairman and CEO of Merrill Lynch, showed his support for Bush by giving the maximum personal contribution to his campaign committee permitted by law: $1,000. But he wanted to do more. So when one of Bush’s fundraisers solicited him to contribute to the Republican National Committee’s nonfederal, or “soft money,” account, Schreyer made a $100,000 donation.
The bankers’ alliances remained divided among the candidates at first, as they considered which man would be best for their own power trajectories, but their donations were plentiful: mortgage and broker company contributions were $1.2 million; 46% to the GOP and 54% to the Democrats. Commercial banks poured in $14.8 million to the 1992 campaigns at a near 50-50 split.
Clinton, like every good Democrat, campaigned publicly against the bankers: “It’s time to end the greed that consumed Wall Street and ruined our S&Ls [Savings and Loans] in the last decade,” he said. But equally, he had no qualms about taking money from the financial sector. In the early months of his campaign, BusinessWeek estimated that he received $2 million of his initial $8.5 million in contributions from New York, under the care of Ken Brody.
“If I had a Ken Brody working for me in every state, I’d be like the Maytag man with nothing to do,” said Rahm Emanuel, who ran Clinton’s nationwide fundraising committee and later became Barack Obama’s chief of staff. Wealthy donors and prospective fundraisers were invited to a select series of intimate meetings with Clinton at the plush Manhattan office of the prestigious private equity firm Blackstone.
Robert Rubin Comes to Washington
Clinton knew that embracing the bankers would help him get things done in Washington, and what he wanted to get done dovetailed nicely with their desires anyway. To facilitate his policies and maintain ties to Wall Street, he selected a man who had been instrumental to his campaign, Robert Rubin, as his economic adviser.
In 1980, Rubin had landed on Goldman Sachs' management committee alongside fellow Democrat Jon Corzine. A decade later, Rubin and Stephen Friedman were appointed cochairmen of Goldman Sachs. Rubin’s political aspirations met an appropriate opportunity when Clinton captured the White House.
On January 25, 1993, Clinton appointed him as assistant to the president for economic policy. Shortly thereafter, the president created a unique role for his comrade, head of the newly created National Economic Council. “I asked Bob Rubin to take on a new job,” Clinton later wrote, “coordinating economic policy in the White House as Chairman of the National Economic Council, which would operate in much the same way the National Security Council did, bringing all the relevant agencies together to formulate and implement policy... [I]f he could balance all of [Goldman Sachs’] egos and interests, he had a good chance to succeed with the job.” (Ten years later, President George W. Bush gave the same position to Rubin’s old partner, Friedman.)
Back at Goldman, Jon Corzine, co-head of fixed income, and Henry Paulson, co-head of investment banking, were ascending through the ranks. They became co-CEOs when Friedman retired at the end of 1994.
Those two men were the perfect bipartisan duo. Corzine was a staunch Democrat serving on the International Capital Markets Advisory Committee of the Federal Reserve Bank of New York (from 1989 to 1999). He would co-chair a presidential commission for Clinton on capital budgeting between 1997 and 1999, while serving in a key role on the Borrowing Advisory Committee of the Treasury Department. Paulson was a well connected Republican and Harvard graduate who had served on the White House Domestic Council as staff assistant to the president in the Nixon administration.
Bankers Forge Ahead
By May 1995, Rubin was impatiently warning Congress that the Glass-Steagall Act could “conceivably impede safety and soundness by limiting revenue diversification.” Banking deregulation was then inching through Congress. As they had during the previous Bush administration, both the House and Senate Banking Committees had approved separate versions of legislation to repeal Glass-Steagall, the 1933 Act passed by the administration of Franklin Delano Roosevelt that had separated deposit-taking and lending or “commercial” bank activities from speculative or “investment bank” activities, such as securities creation and trading. Conference negotiations had fallen apart, though, and the effort was stalled.
By 1996, however, other industries, representing core clients of the banking sector, were already being deregulated. On February 8, 1996, Clinton signed the Telecom Act, which killed many independent and smaller broadcasting companies by opening a national market for “cross-ownership.” The result was mass mergers in that sector advised by banks.
Deregulation of companies that could transport energy across state lines came next. Before such deregulation, state commissions had regulated companies that owned power plants and transmission lines, which worked together to distribute power. Afterward, these could be divided and effectively traded without uniform regulation or responsibility to regional customers. This would lead to blackouts in California and a slew of energy derivatives, as well as trades at firms such as Enron that used the energy business as a front for fraudulent deals.
The number of mergers and stock and debt issuances ballooned on the back of all the deregulation that eliminated barriers that had kept companies separated. As industries consolidated, they also ramped up their complex transactions and special purpose vehicles (off-balance-sheet, offshore constructions tailored by the banking community to hide the true nature of their debts and shield their profits from taxes). Bankers kicked into overdrive to generate fees and create related deals. Many of these blew up in the early 2000s in a spate of scandals and bankruptcies, causing an earlier millennium recession.
Meanwhile, though, bankers plowed ahead with their advisory services, speculative enterprises, and deregulation pursuits. President Clinton and his team would soon provide them an epic gift, all in the name of U.S. global power and competitiveness. Robert Rubin would steer the White House ship to that goal.
On February 12, 1999, Rubin found a fresh angle to argue on behalf of banking deregulation. He addressed the House Committee on Banking and Financial Services, claiming that, “the problem U.S. financial services firms face abroad is more one of access than lack of competitiveness.”
He was referring to the European banks’ increasing control of distribution channels into the European institutional and retail client base. Unlike U.S. commercial banks, European banks had no restrictions keeping them from buying and teaming up with U.S. or other securities firms and investment banks to create or distribute their products. He did not appear concerned about the destruction caused by sizeable financial bets throughout Europe. The international competitiveness argument allowed him to focus the committee on what needed to be done domestically in the banking sector to remain competitive.
Rubin stressed the necessity of HR 665, the Financial Services Modernization Act of 1999, or the Gramm-Leach-Bliley Act, that was officially introduced on February 10, 1999. He said it took “fundamental actions to modernize our financial system by repealing the Glass-Steagall Act prohibitions on banks affiliating with securities firms and repealing the Bank Holding Company Act prohibitions on insurance underwriting.”
The Gramm-Leach-Bliley Act Marches Forward
On February 24, 1999, in more testimony before the Senate Banking Committee, Rubin pushed for fewer prohibitions on bank affiliates that wanted to perform the same functions as their larger bank holding company, once the different types of financial firms could legally merge. That minor distinction would enable subsidiaries to place all sorts of bets and house all sorts of junk under the false premise that they had the same capital beneath them as their parent. The idea that a subsidiary’s problems can’t taint or destroy the host, or bank holding company, or create “catastrophic” risk, is a myth perpetuated by bankers and political enablers that continues to this day.
Rubin had no qualms with mega-consolidations across multiple service lines. His real problems were those of his banker friends, which lay with the financial modernization bill’s “prohibition on the use of subsidiaries by larger banks.” The bankers wanted the right to establish off-book subsidiaries where they could hide risks, and profits, as needed.
Again, Rubin decided to use the notion of remaining competitive with foreign banks to make his point. This technicality was “unacceptable to the administration,” he said, not least because “foreign banks underwrite and deal in securities through subsidiaries in the United States, and U.S. banks [already] conduct securities and merchant banking activities abroad through so-called Edge subsidiaries.” Rubin got his way. These off-book, risky, and barely regulated subsidiaries would be at the forefront of the 2008 financial crisis.
On March 1, 1999, Senator Phil Gramm released a final draft of the Financial Services Modernization Act of 1999 and scheduled committee consideration for March 4th. A bevy of excited financial titans who were close to Clinton, including Travelers CEO Sandy Weill, Bank of America CEO, Hugh McColl, and American Express CEO Harvey Golub, called for “swift congressional action.”
The Quintessential Revolving-Door Man
The stock market continued its meteoric rise in anticipation of a banker-friendly conclusion to the legislation that would deregulate their industry. Rising consumer confidence reflected the nation’s fondness for the markets and lack of empathy with the rest of the world’s economic plight. On March 29, 1999, the Dow Jones Industrial Average closed above 10,000 for the first time. Six weeks later, on May 6th, the Financial Services Modernization Act passed the Senate. It legalized, after the fact, the merger that created the nation’s biggest bank. Citigroup, the marriage of Citibank and Travelers, had been finalized the previous October.
It was not until that point that one of Glass-Steagall’s main assassins decided to leave Washington. Six days after the bill passed the Senate, on May 12, 1999, Robert Rubin abruptly announced his resignation. As Clinton wrote, “I believed he had been the best and most important treasury secretary since Alexander Hamilton... He had played a decisive role in our efforts to restore economic growth and spread its benefits to more Americans.”
Clinton named Larry Summers to succeed Rubin. Two weeks later, BusinessWeek reported signs of trouble in merger paradise -- in the form of a growing rift between John Reed, the former Chairman of Citibank, and Sandy Weill at the new Citigroup. As Reed said, “Co-CEOs are hard.” Perhaps to patch their rift, or simply to take advantage of a political opportunity, the two men enlisted a third person to join their relationship -- none other than Robert Rubin.
Rubin’s resignation from Treasury became effective on July 2nd. At that time, he announced, “This almost six and a half years has been all-consuming, and I think it is time for me to go home to New York and to do whatever I’m going to do next.” Rubin became chairman of Citigroup’s executive committee and a member of the newly created “office of the chairman.” His initial annual compensation package was worth around $40 million. It was more than worth the “hit” he took when he left Goldman for the Treasury post.
Three days after the conference committee endorsed the Gramm-Leach-Bliley bill, Rubin assumed his Citigroup position, joining the institution destined to dominate the financial industry. That very same day, Reed and Weill issued a joint statement praising Washington for “liberating our financial companies from an antiquated regulatory structure,” stating that “this legislation will unleash the creativity of our industry and ensure our global competitiveness.”
On November 4th, the Senate approved the Gramm-Leach-Bliley Act by a vote of 90 to 8. (The House voted 362–57 in favor.) Critics famously referred to it as the Citigroup Authorization Act.
Mirth abounded in Clinton’s White House. “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the twenty-first century,” Summers said. “This historic legislation will better enable American companies to compete in the new economy.”
But the happiness was misguided. Deregulating the banking industry might have helped the titans of Wall Street but not people on Main Street. The Clinton era epitomized the vast difference between appearance and reality, spin and actuality. As the decade drew to a close, Clinton basked in the glow of a lofty stock market, a budget surplus, and the passage of this key banking “modernization.” It would be revealed in the 2000s that many corporate profits of the 1990s were based on inflated evaluations, manipulation, and fraud. When Clinton left office, the gap between rich and poor was greater than it had been in 1992, and yet the Democrats heralded him as some sort of prosperity hero.
When he resigned in 1997, Robert Reich, Clinton’s labor secretary, said, “America is prospering, but the prosperity is not being widely shared, certainly not as widely shared as it once was... We have made progress in growing the economy. But growing together again must be our central goal in the future.” Instead, the growth of wealth inequality in the United States accelerated, as the men yielding the most financial power wielded it with increasingly less culpability or restriction. By 2015, that wealth or prosperity gap would stand near historic highs.
The power of the bankers increased dramatically in the wake of the repeal of Glass-Steagall. The Clinton administration had rendered twenty-first-century banking practices similar to those of the pre-1929 crash. But worse. “Modernizing” meant utilizing government-backed depositors’ funds as collateral for the creation and distribution of all types of complex securities and derivatives whose proliferation would be increasingly quick and dangerous.
Eviscerating Glass-Steagall allowed big banks to compete against Europe and also enabled them to go on a rampage: more acquisitions, greater speculation, and more risky products. The big banks used their bloated balance sheets to engage in more complex activity, while counting on customer deposits and loans as capital chips on the global betting table. Bankers used hefty trading profits and wealth to increase lobbying funds and campaign donations, creating an endless circle of influence and mutual reinforcement of boundary-less speculation, endorsed by the White House.
Deposits could be used to garner larger windfalls, just as cheap labor and commodities in developing countries were used to formulate more expensive goods for profit in the upper echelons of the global financial hierarchy. Energy and telecoms proved especially fertile ground for the investment banking fee business (and later for fraud, extensive lawsuits, and bankruptcies). Deregulation greased the wheels of complex financial instruments such as collateralized debt obligations, junk bonds, toxic assets, and unregulated derivatives.
The Glass-Steagall repeal led to unfettered derivatives growth and unstable balance sheets at commercial banks that merged with investment banks and at investment banks that preferred to remain solo but engaged in dodgier practices to remain “competitive.” In conjunction with the tight political-financial alignment and associated collaboration that began with Bush and increased under Clinton, bankers channeled the 1920s, only with more power over an immense and growing pile of global financial assets and increasingly "open” markets. In the process, accountability would evaporate.
Every bank accelerated its hunt for acquisitions and deposits to amass global influence while creating, trading, and distributing increasingly convoluted securities and derivatives. These practices would foster the kind of shaky, interconnected, and opaque financial environment that provided the backdrop and conditions leading up to the financial meltdown of 2008.
The Realities of 2016
Hillary Clinton is, of course, not her husband. But her access to his past banker alliances, amplified by the ones that she has formed herself, makes her more of a friend than an adversary to the banking industry. In her brief 2008 candidacy, all four of the New York-based Big Six banks ranked among her top 10 corporate donors. They have also contributed to the Clinton Foundation. She needs them to win, just as both Barack Obama and Bill Clinton did.
No matter what spin is used for campaigning purposes, the idea that a critical distance can be maintained between the White House and Wall Street is naïve given the multiple channels of money and favors that flow between the two. It is even more improbable, given the history of connections that Hillary Clinton has established through her associations with key bank leaders in the early 1990s, during her time as a senator from New York, and given their contributions to the Clinton foundation while she was secretary of state. At some level, the situation couldn’t be less complicated: her path aligns with that of the country’s most powerful bankers. If she becomes president, that will remain the case.
Nomi Prins is the author of All the President’ Bankers: The Hidden Alliances that Drive American Power (Nation Books).
Black Agenda Report
By BAR managing editor Bruce A. Dixon
Vermont senator and ostensible socialist Bernie Sanders is playing the sheepdog candidate for Hillary Clinton this year. Bernie's job is to warm up the crowd for Hillary, herding activist energies and the disaffected left back into the Democratic fold one more time. Bernie aims to tie up activist energies and resources till the summer of 2016 when the only remaining choice will be the usual lesser of two evils.“The sheepdog is a card the Democratic party plays every presidential primary season when there's no White House Democrat running for re-election.”
Spoiler alert: we have seen the Bernie Sanders show before, and we know exactly how it ends. Bernie has zero likelihood of winning the Democratic nomination for president over Hillary Clinton. Bernie will lose, Hillary will win. When Bernie folds his tent in the summer of 2016, the money, the hopes and prayers, the year of activist zeal that folks put behind Bernie Sanders' either vanishes into thin air, or directly benefits the Hillary Clinton campaign.
Don't believe us? Then believe Bernie himself interviewed by George Stephanopoulos on ABC News “This Week” May 3.
STEPHANOPOULOS: So if you lose in this nomination fight, will you support the Democratic nominee?
SANDERS: Yes. I have in the past.
STEPHANOPOULOS: Not going to run as an independent?
SANDERS: No, absolutely not. I've been very clear about that.
Bernie Sanders is this election's Democratic sheepdog. The sheepdog is a card the Democratic party plays every presidential primary season when there's no White House Democrat running for re-election. The sheepdog is a presidential candidate running ostensibly to the left of the establishment Democrat to whom the billionaires will award the nomination. Sheepdogs are herders, and the sheepdog candidate is charged with herding activists and voters back into the Democratic fold who might otherwise drift leftward and outside of the Democratic party, either staying home or trying to build something outside the two party box.
1984 and 88 the sheepdog candidate was Jesse Jackson. In 92 it was California governor Jerry Brown. In 2000 and 2004 the designated sheepdog was Al Sharpton, and in 2008 it was Dennis Kucinich. This year it's Vermont senator Bernie Sanders. The function of the sheepdog candidate is to give left activists and voters a reason, however illusory, to believe there's a place of influence for them inside the Democratic party, if and only if the eventual Democratic nominee can win in November.
Despite casting millions of voters for the likes of Jesse Jackson, Al Sharpton and other sheepdogs, those leftish Democrat voters are always disregarded when Democrats actually win. Bill Clinton gave us NAFTA, a vicious “welfare reform,” no peace dividend or push for DC statehood, lowered unemployment but mostly in part time and low-wage jobs, and mass incarceration of black and brown people. President Obama doubled down on bailouts of banksters and GM, and immunized them from prosecution but failed to address the most catastrophic fall in black household wealth in history. We got health care for some instead of Medicare for All, the Patriot Act renewed instead of repealed, a race to privatize public education, drone wars and still more mass incarceration of black and brown people. And if President Obama gets his way, we may soon have a global job-destroying wage-lowering NAFTA on steroids, with the TTP and TTIP.
The sheepdog's job is to divert the energy and enthusiasm of activists a year, a year and a half out from a November election away from building an alternative to the Democratic party, and into his doomed effort. When the sheepdog inevitably folds in the late spring or early summer before a November election, there's no time remaining to win ballot access for alternative parties or candidates, no time to raise money or organize any effective challenge to the two capitalist parties.
At that point, with all the alternatives foreclosed, the narrative shifts to the familiar “lesser of two evils.” Every sheepdog candidate surrenders the shreds of his credibility to the Democratic nominee in time for the November election. This is how the Bernie Sanders show ends, as the left-leaning warm-up act for Hillary Clinton.
Intent on avoiding the two-party “lesser evil” trap this year, about two hundred activists gathered in Chicago last weekend to consider the future of electoral organizing outside the Democratic and Republican parties. Many of the participants were Greens, including former presidential and vice presidential candidates Jill Stein and Rosa Clemente, the former Green mayor of Richmond California, and many others. There were also representatives from Seattle, where Socialist Alternative's Kshama Sawant won election to Seattle's city council, as well as Angela Walker, a black socialist who received 67,000 votes for Milwaukee County sheriff in 2014, and many others, including some who took part in the recent Chicago mayoral election.
There was trans-partisan interest in a 50-state ballot access drive to put the Green Party's Jill Stein on the presidential ballot for 2016 presidential race. Currently the law keeps Greens and others off the ballot in more than half the states. Precise details vary according to state law, but if a third party candidate after obtaining one-time ballot access receives about 2% of total votes, a new ballot line is created, granting ballot access to any potential candidate from school board to sheriff to US congress who wants to run as something other than a Republican or Democrat. That, many participants agreed, would be a significant puncture in the legal thicket that now protects Democrats against competition on the ballot from their left. But a nationwide trans-partisan ballot access campaign to create a national alternative to the two capitalist parties is something left activists must begin serious work a good 18 months before a November election, essentially right now.
Whether or not a national ballot access campaign is undertaken by Greens and others, a Bernie Sanders candidacy is an invitation to do again what's been done in 1984, 1988, 1992, 2000, 2004 and 2008. Bernie's candidacy is a blast toward the past, an invitation to herd and be herded like sheep back into the Democratic fold, to fundraise and canvass and recruit and mobilize for Bernie, as he warms up the crowd for Hillary. Bernie is a sheepdog.
The question is, are we sheep? Bruce A. Dixon is managing editor at Black Agenda Report, and a state committee member of the GA Green Party. He lives and works near Marietta GA and can be reached at bruce.dixon(at)blackagendareport.com.
International Business Times
By David Sirota and Andrew Perez
Goldman Sachs paid former President Bill Clinton $200,000 to deliver a speech in the spring of 2011, several months before the investment banking giant began lobbying the State Department, then headed by Hillary Clinton, federal records reviewed by International Business Times show.
Goldman’s objective in lobbying the State Department could not be immediately discerned. The lobbying disclosure filings note only that Goldman sought to “monitor deficit reduction issues” -- specifically, a bill known as the Budget Control Act -- and the bank declined to answer questions about the precise nature of its interests.
Three days after Bill Clinton accepted Goldman’s money to make a speech in New York City, Hillary Clinton delivered her own address at the State Department in Washington: She lauded the investment bank’s participation in her department’s campaign to boost the numbers of American students who study in China.
According to an ethics agreement governing Hillary Clinton’s tenure as an Obama administration Cabinet official, all of her husband’s paid speeches while she was secretary of state required the prior approval of department officials. Bill Clinton’s 2011 speech to a conference full of Goldman clients gathered in New York gained the blessing of State Department officials, documents obtained by Judicial Watch say.
The discovery that Bill Clinton accepted a six-figure payday from Goldman Sachs just before the bank sought the ear of his wife’s department seems certain to intensify scrutiny of the Clinton family’s often overlapping personal, philanthropic and official business interests.
In the two weeks since she formally declared herself an aspirant for the presidency, gaining status as the presumptive Democratic nominee, Hillary Clinton has been dogged by allegations that foreign governments and well-connected investors have used generosity to her husband and their family’s philanthropic empire, the Clinton Foundation, as a means of seeking to influence policy at her State Department.
'Any Linkage ... Is Preposterous'
Goldman confirmed that it paid President Clinton for his speech several months before the bank’s Washington lobbying firm, the Duberstein Group, began focusing on State Department policy in addition to other federal agencies. But Goldman said there was no connection between the speech fee paid to Bill Clinton and the bank’s interests at the State Department headed by Hillary Clinton.
“Any linkage between a speech for clients and the outcome of the Budget Control Act is preposterous,” said a Goldman spokesman, Andrew Williams, who previously served as a deputy assistant secretary for public affairs at the Treasury Department in the Obama administration. Despite Goldman's lobbying records, Williams asserted: "We did not lobby the State Department on budget issues, nor did we ask anyone else to."
A spokesperson for Clinton’s presidential campaign declined to answer questions about the propriety of Bill Clinton’s Goldman-financed speaking engagement. The State Department declined to comment. Bill Clinton did not respond to requests for an interview.
This month, IBTimes reported that Hillary Clinton switched her position to support a trade agreement forged by the United States and Colombia just as the Colombian subsidiary of a Canadian oil conglomerate, and its founder, contributed to the Clinton Foundation. Under her leadership, the State Department certified Colombia’s human rights record, enabling American military aid to continue to flow to Colombia, despite complaints from organized labor that the military has been responsible for violent crackdowns on striking workers at the oil company’s facilities. The founder, a Canadian named Frank Giustra, has since said his donations to the Clinton Foundation were made as a bid to promote positive change and were not aimed at influencing the State Department.
The New York Times and Wall Street Journal later detailed contributions that flowed into the Clinton Foundation from an executive at a uranium mining firm that was seeking the State Department’s support for a series of transactions involving interests in Russia and Kazakhstan. The State Department occupies a seat on a powerful government panel that reviews deals involving foreign interests, probing potential threats to national security.
In recent days, attention to overlapping interests that have donated to the Clinton family’s private interests while also allegedly seeking to influence State Department policy has reached a fever pitch amid leaks from a forthcoming book on the subject, “Clinton Cash,” by Peter Schweizer.
The involvement of Goldman Sachs seems certain to amplify that scrutiny. The bank brings a reputation as uniquely well-connected in Washington given that many of its former executives have landed in the uppermost ranks of the Treasury Department. (One Goldman alumnus, Gary Gensler, was recently appointed the chief financial officer of Hillary Clinton’s presidential campaign.) In a time in which many ordinary Americans have grown suspicious of Wall Street, accusing well-placed executives of profiting through unsavory enterprises such as subprime mortgage lending, Goldman has become an emblem of this view -- an institution famously described by the journalist Matt Taibbi as a “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Bill Clinton installed former Goldman Chairman Robert Rubin as his treasury secretary. Since leaving office, President Clinton has received $1.35 million from the bank for eight speeches, the Washington Post reported. Two years ago, Hillary Clinton, having left the Obama administration, gave two speeches at Goldman Sachs events in the span of a week, Mother Jones magazine reported.
State Department records show that Bill Clinton’s $200,000 Goldman Sachs speech was delivered April 11, 2011, to “approximately 250 high level clients and investors” at a United Nations dining room in New York.
In federal disclosure documents, the Duberstein Group is listed as lobbying the Clinton State Department on behalf of Goldman Sachs between July and September 2011. Goldman Sachs paid the Duberstein Group $100,000 during that time.
Those records show that the firm was specifically lobbying the department on “proposed legislation” linked to a series of budget bills. One bill continued congressional authorization for the Export-Import Bank, a government-backed lender whose financing was critical for the prospects of a company in which Goldman owned a stake. The Duberstein Group did not respond to questions about its precise interests in the legislation at issue.
The original budget bill was introduced in July and did not include an extension of the Export-Import Bank, but the bank reauthorization was added in late September, during the same period Goldman was lobbying the State Department on the bill.
In August 2011, the bank authorized a $75 million loan enabling a Chinese firm to purchase aircraft from Beechcraft (known before emerging from bankruptcy in February 2013 as Hawker Beechcraft), a company that was part-owned by Goldman. Beechcraft had lobbied the Clinton State Department on issues relating to foreign military sales in 2009 and 2010, according to its lobbying disclosures.
The State Department is intimately involved in Export-Import Bank decisions. Bank documents say it performs a “human rights review” of countries where loans are made, and also “examine(s) human rights and other foreign policy considerations in their assessment of the risks associated with transactions in specific countries.” In October 2011, Clinton touted the work of her undersecretary, former Goldman Vice Chairman Robert Hormats, saying he was “coordinating with the Export-Import Bank, OPIC, and others to support our investors and exporters in emerging economies.” [OPIC is the Overseas Private Investment Corp., the U.S. government's development finance institution.]
The Export-Import Bank was a source of extraordinary controversy in the latter half of President Barack Obama’s first term. Conservative Republican lawmakers charged that it had become a source of wasteful corporate welfare, echoing traditional criticism from liberal Democrats. Despite the controversy, Congress ultimately passed a bill reauthorizing funding and Obama signed it into law.
The Export-Import Bank appears to have made the loan to the Chinese firm, according to its ledgers, though Hawker Beechcraft filed for bankruptcy protection in 2012.
The Export-Import Bank is again up for reauthorization and faces strong opposition from conservatives, including GOP financiers Charles and David Koch.
Federal documents show that at the same time the Duberstein Group was lobbying for Goldman on the budget bills, it was also lobbying for the bank on issues related to “executive branch action” on pending free trade agreements with South Korea, Colombia and Panama. Clinton was at the time publicly promoting those agreements.
Black Agenda Report
by Margaret Kimberley
Michael Eric Dyson wasn’t just defending President Obama when he unleashed his torrential rant against Cornel West. Dyson was demonstrating his loyalty to Power, in general. “Dyson’s infantile need to reveal personal details about his one-time friend is based on his own vindictiveness but also on a desire to stay in the good graces of the powerful people West has admonished.”
“He stands with our enemies against one of our champions.” How does one dissect Michael Eric Dyson’s 10,000-word screed against Cornel West? Not only is the attack purely personal, an act of bitter malice, but Dyson uses The New Republic, an openly racist organ, as his platform.
The title, “The Ghost of Cornel West,” is rather odd. No one except Dyson was aware that West had declined, even figuratively. Cornel West is the author or co-author of twenty-three books. He is a sought after advocate and is called upon by people all over the world to speak for them and with them as they struggle against police brutality, occupation and environmental destruction. West is a voice of principled conscience and is highly respected.
Of course no one is liked or respected by everyone and degrees of dislike are closely related to the opponents one chooses. Dyson’s infantile need to reveal personal details about his one-time friend is partly based on his own vindictiveness but also on a desire to stay in the good graces of the powerful people West has admonished.
Despite having supported Barack Obama’s campaign in 2008, West has pointedly criticized the president’s policies. Unlike Dyson, his critiques are based on facts, actions taken, and visible outcomes. When Michael Brown’s killer was not indicted by a Ferguson, Missouri, grand jury West made this comment. “Ferguson signifies the end of the age of Obama. It is a very sad end. We began with tremendous hope and we end with great despair.” It is clear that West is acknowledging and mourning the misplaced trust that he and millions of other people placed in the Obama presidency.
“Their outrage is based on loyalty to the cult of black success which is epitomized by Obama’s election.” But there is also something even more insidious going on with Dyson and his ilk. He and many other Obamaphiles not only insist on standing by their man, but they go to great lengths to discredit and disparage anyone who doesn’t share their infatuation.
Dyson and other critics rarely take on the substance of West’s statements. Their outrage is based on loyalty to the cult of black success which is epitomized by Obama’s election. They protect him and their friends who have found themselves in West’s rhetorical cross hairs.
This most recent act of character assassination is significant in another way. The New Republic was for many years owned by Martin Peretz, a founding father of neo-liberalism. The only black writers who appeared in TNR were right wingers like Shelby Steele, John McWhorter and Randall Kennedy. Of course TNR should never live down its role in publishing excerpts from The Bell Curve, a book of discredited scholarly value which posited that black people are genetically inferior to other races.
Neither is Dyson the first to lambast West in the pages of TNR. In a 1995 article, “The Unreal World of Cornel West,” the author states that West’s books are “almost completely worthless.” Now under new ownership, TNR is trying to improve its image and in January 2015 admitted its past racism. Giving Dyson a stage for his attack on a man who embodies black Americans struggle for self-determination proves that the apology was meaningless. Dyson has chosen sides. He stands with our enemies against one of our champions.
Black critics of Obama are often labeled as “haters” or “crabs in a barrel.” Like the crustaceans who can’t escape because they pull each other down, Dyson looks at West and is consumed with a bizarre, jealous rage. Dyson is a talking head who indulges in endless and meaningless verbiage while West chooses to stand with the oppressed and the voiceless. Dyson is an empty suit and a first class suck up. Rather than accept his role as a well paid and mediocre intellect he decided to pull Cornel West down. If there is a crab in the barrel in this sorry episode, it is Michael Eric Dyson.
Margaret Kimberley's Freedom Rider column appears weekly in BAR, and is widely reprinted elsewhere. She maintains a frequently updated blog as well as at http://freedomrider.blogspot.com. Ms. Kimberley lives in New York City, and can be reached via e-Mail at Margaret.Kimberley(at)BlackAgendaReport.com.
by JENNIFER LOEWENSTEIN
The special US-Israeli relationship is as secure today as it has ever been. There is no danger that Benjamin Netanyahu’s speech to Congress will have a “destructive” effect on our commitment to Israel’s “security”. After listening to National Security Adviser, Susan Rice’s, speech to AIPAC this evening, I shut off the television and realized, to my chagrin, that, if anything, Israel may even benefit from the international media soap opera touched off by Netanyahu’s hubris: shame on our political leaders, news commentators and spin doctors for allowing the personal animosity between US President Barack Obama and Israeli Prime Minister, Benjamin Netanyahu, divert us, yet again, from the real issues.
Bypassing President Obama, Netanyahu accepted an invitation by Senate Majority Leader, John Boehner, to address the US Congress on the topic of Iran. It would hardly surprise me to learn that this invitation was deliberately engineered to humiliate Obama publicly; to bolster the mainstream Republican agenda on Iran; and to elevate Netanyahu’s standings in the upcoming Israeli elections this March 17th. Whether his speech to Congress will, in fact, have a positive effect on the latter is arguable and depends, to some extent, on just how outrageous and duplicitous the content of Netanyahu’s lecture turns out to be.
A few things remain unclear: either Netanyahu doesn’t read the news, he is hoping that nobody else notices Israel’s de facto alliance with ISIS, or he is more concerned with poking Obama in the eye publicly than in the future of his country, a fact that would not surprise me. Focusing on the dangerous forces lurking in his “neighborhood”, Netanyahu singles out Iran, Lebanon (by which he presumably means Hizbullah), Syria, and Hamas. Unlike most Americans, Netanyahu views the potential of a nuclear capable Iran as a greater threat to regional stability than the spread of ISIS and extremist groups, such as al-Qaida.
With even Saudi Arabia, fearing Blowback, reversing course on its official policy toward ISIS by making it illegal for its nationals to fight in foreign wars (an about face from the nation whose extremist, fundamentalist form of Islam — Wahhabism — has been among its leading exports for over 40 years, and certainly its deadliest) it is that much more disturbing to note the silence echoing from Tel Aviv.
Instead Netanyahu has regaled us with tirade after tirade on the ramifications of an Iranian nuclear bomb and the existential threat it poses little Israel — ironic since Iran’s Supreme Leader, Ali Khamenei, has categorically stated that his country doesn’t want one.
Why would he lie? A nuclear-armed Iran would be its country’s suicide note to the world before being “obliterated” (to use former Secretary of State, Hillary Clinton’s, word) by the United States. Iran would like to acquire nuclear technological know-how – not an atomic arsenal – the sanest possible acquisition in a ‘neighborhood’ where the only nuclear-armed power, Israel, threatens Iran’s destruction almost daily, and has wreaked havoc on the region routinely for nearly 7 decades. How else might Iran succeed in deterring Israeli militarism, and how else might Iran – a country whose conventional armed forces barely allow a defensive capability – move forward into a future in which it is not bullied and brow-beaten into submission, preferring instead to seek the option of independent energy efficiency, and freedom from a regional hegemon whose godfather already enjoys unrivaled authority over most of that hemisphere?
All speculation aside, what strikes me as the most obvious piece of information to re-emerge from the tempest now brewing in Washington is that Benjamin Netanyahu is an unscrupulous, scheming, vile man who has taken the meaning of “chutzpah” to new heights in his display of unseemly and undiplomatic behavior. That no world leader has yet demanded that he and his regime be made to answer for its brutally criminal, scandalous policies time and again compels us to recognize how grievously weak and flawed the ‘international community’ is, and by extension, how depraved those leaders are whose actions are considered most synonymous with it. It takes the unknown human rights organizations on the ground in the Gaza Strip, the Mezan Center for Human Rights and the Palestine Center for Human Rights, to have to beseech the world repeatedly, day after day, to compel Israel and the United States to adhere to the most fundamental precepts of international law and accepted standards of humanitarian and diplomatic behavior.
What we are watching today, and have been a party to for the past few weeks is yet another media-political circus for the sake of narrow sectarian interests. A genuine rift in US-Israeli relations would manifest itself in long overdue concrete policies the US would demand of its client regime: an immediate end to the building of illegal Jewish settlements on all occupied Palestinian land; recognition of East Jerusalem as the capital of a future Palestinian state; a full moratorium on the on-going theft and use of natural resources outside the boundaries of the Green Line, or borders that existed prior to June 4th, 1967; a complete withdrawal of all military checkpoints and barriers within occupied Palestinian land; an immediate halt to the blockade of the Gaza Strip, the withholding of tax revenues from the Palestinian Authority, and the closure of crossing points into and out of the West Bank and the Gaza Strip.
It would mean the end to all restriction of movement by Palestinians to and from the West Bank, Gaza Strip, and East Jerusalem, and the right of any Palestinian to return to that land now recognized by a majority of the world’s nations as a Palestinian state.
In short, a genuinely ‘destructive’ rift in US-Israeli relations would suggest at the very least a beginning to the end of America’s unconditional support for Israel’s occupation of Palestine. It would commence the end to an occupation whose accompanying militarization and brutalization has had ramifications for countries as far away as Iran and that will continue to contribute to the growing havoc and destruction Western colonial and United States’ imperial history have wrought on the region we know as the Middle East.
Jennifer Loewenstein is a human rights activist and faculty associate in Middle East Studies at the University of Wisconsin-Madison. She can be reached at: firstname.lastname@example.org
When it’s not making us take our shoes off, it’s trampling our civil liberties and ‘building’ centers that don’t exist. Enough already.Are you nervous, America?
The Daily Beast
by Nick Gillespie02/25/2015
If nothing happens before Friday, the mighty Department of Homeland Security (DHS)—every bit as much a WTF legacy of George W. Bush as those surreal White House Christmas videos that featured Treasury Secretary Hank Paulson talking to Barney “the First Dog” like the Son of Sam killer—will lose its funding due to a budget fight between congressional Republicans and President Barack Obama.
And when DHS funding ends, then…well, nothing much, actually, it turns out.
Without funding, about 30,000 “non-essential” DHS employees will be told not to show up for work. The other 210,000 or so workers who are considered “essential” and “exempt” will still have to punch the clock, although most of them won’t get paid until after the budget stalemate is ended. Not optimal, but not the worst outcome, either.
DHS oversees almost two dozen agencies and groups, including the Coast Guard, Customs and Border Patrol, the Federal Emergency Management Agency (FEMA), immigration processing and enforcement, the Secret Service, and the Transportation Security Administration (TSA), the brave folks responsible for an endless series of junk-touching, drug-stealing, and kiddie-porn scandals.
Given all those fearsome responsibilities, you’d figure Barack Obama would be sweating gravy over even a partial shutdown of DHS. Instead, last week he stressed not the “security” part of the department’s functioning, but all the dollars its workers spend in a congressional district near you. After noting that most DHS employees would be working for IOUs during a funding freeze, he said: “These are folks, who if they don’t have a paycheck, are not going to be able to spend that money in your states. It will have a direct impact on your economy.” That’s about as open an admission that federal employment is essentially a form of workfare as you’re likely to hear. Only later in his comments did Obama get around to the idea that these same workers also, you know, keep us safe from the odd underwear bomber and all those undocumented Mexicans we hire to cook our food and clean our houses.
Unsurprisingly, Obama didn’t mention the Secret Service, which is supposed to protect the president but has lately been way too busy opening White House doors for knife-wielding psychos and cheating whores down South America way to focus on its core businesses.
Even Obama’s Secretary of Homeland Security, Jeh Johnson, couldn’t muster much in the way of if-then fearmongering. Earlier this month, Johnson trotted out a parade of horribles that was about as scary as a late-night rerun of Plan 9 From Outer Space. Without uninterrupted funding, warned the secretary, some of the “government activities vital to homeland security and public safety” that might be affected included “new communications equipment for over 80 public safety agencies in the Los Angeles area to replace aging and incompatible radio systems,” “fifteen mobile command centers for possible catastrophic incidents in the state of Kentucky,” and “bomb squads in the state of Idaho.” My God, where have our priorities as a nation gone? Come Friday, Pocatello is a sitting duck.
The current funding situation is the product of an impasse stemming from Obama’s executive action, issued last November, temporarily expanding the number of illegal immigrants protected from deportation proceedings. The Migration Policy Institute figures about 3.7 million illegals (out of a total of around 11 million) would be protected by the action. That move didn’t sit well with Republicans in Congress, who passed a continuing resolution that pointedly left out full funding for DHS until this year, when they would control majorities in the House and the Senate.
How any of this will play out is anybody’s guess, especially since a federal judge in Texas has at least temporarily blocked Obama’s plan and it’s far from clear that the administration’s legal appeals will prove successful.
Senate Majority Leader Mitch McConnell (R-Ky.) has tried his damnedest to force reluctant Democrats to vote yes or no on the president’s immigration action before any sort of DHS funding bill hits the floor. Perhaps mindful of those “fifteen mobile command centers” for Kentucky hanging in the balance, it seems as if McConnell has “thrown in the towel” on the cause even if House Republicans are ready to hang tough.
Such hijinks may well be smart—or dumb—politics, but they distract from a far more important and serious question: Why do we even have a Department of Homeland Security in the first place?
Created in 2002 in the mad crush of panic, paranoia, and patriotic pants-wetting after the 9/11 attacks, DHS has always been a stupid idea. Even at the time, creating a new cabinet-level department responsible for 22 different agencies and services was suspect. Exactly how was adding a new layer of bureaucracy supposed to make us safer (and that’s leaving aside the question of just what the hell “homeland security” actually means)? DHS leaders answer to no fewer than 90 congressional committees and subcommittees that oversee the department’s various functions. Good luck with all that.
But don’t feel sorry for the shmoes running DHS. Over the last decade, the budget for DHS has doubled (to $54 billion in 2014) even as its reputation for general mismanagement, wasteful spending, and civil liberties abuses flourishes. The Government Accountability Office (GAO) routinely lists DHS on its “high risk” list of badly run outfits and surveys of federal workers have concluded “that DHS is the worst department to work for in the government,” writes Chris Edwards of the Cato Institute. He also notes, a “Washington Post investigation found that many DHS employees say they have ‘a dysfunctional work environment’ with ‘abysmal morale.’” Somewhere, the Postmaster General is pumping his fist.
It only gets worse when you look at the sheer amount of junk DHS spends money on. The Customs and Border Patrol (CBP), for instance, built 21 homes for agents in a remote part of Arizona. The price tag was $680,000 per house in a part of the country where the average home sold for less than $90,000. When the TSA isn’t hiring defrocked, child-molesting priests, Edwards notes that it is shelling out hundreds of millions of dollars on radiation detectors for cargo containers that don’t work and full-body airport scanners without bothering to “perform a cost-benefit analysis…before rolling them out nationwide.”
And while the spooks at the National Security Agency and other intelligence and law-enforcement agencies get most of the ink when it comes to imperiling civil liberties, DHS is more than holding its own. It administers “fusion centers,” which pull together all sorts of legal, semi-legal, and flatly illegal surveillance methods of citizens by state and local police.
A 2012 investigation by the Senate’s Committee on Homeland Security and Governmental Affairs found that fusion centers trafficked in “oftentimes shoddy, rarely timely [information, while] sometimes endangering citizens’ civil liberties and Privacy Act protections.” The material collected was “more often than not unrelated to terrorism.” On the upside, as my Reason colleague Jesse Walker noted, the report found “some of the fusion centers touted by the Department of Homeland Security do not, in fact, exist.”
With all this in mind, it would be better for Congress and the president to focus less on two-bit political wrangling over this or that part of DHS funding and more on heaving the whole department into the dustbin. From a politician’s point of view, that might indeed mean fewer dollars being spent in your state right now, but you’d also be repaid in full with votes of grateful citizens from all over the place.