Oldspeak: “As a progressive, I am absolutely TERRIFIED that President Obama, quoted RONALD REAGAN last night. That tells you all you need to know about how far to the right this man has moved in his thinking. While he tried to sell his deficit reduction proposal as “balanced” and a “fairly shared burden”, The details he didn’t “want to bore you with” are these: Public assets and lands (some oil and gas rich) would be sold to private entities, and potential government revenue will be lost to the private sector. A ‘tax holiday’ would be provided to corporations to continue to internalize their off-shored profits in the form of bonuses. The corporate tax rate will be reduced from 35% to a range of 23-29%. Loopholes which taxes income on wealth (stock and bond returns) at a lower rate than income on work (salaries and wages) will not be closed. That insures that the richest Americans pay a lower rate of taxes than their chauffeurs.”It will cut retirement deductions, the mortgage deduction and the tax benefits for employer-based health care. This is likely to hurt middle-class homeowners, and workers whose employers provide decent health care. It will add to unemployment in the short term, increase Gilded Age inequality, leave seniors more vulnerable, and shackle any possibility of rebuilding America. It puts the burden of deficit reduction on the elderly, the poor and the vulnerable, endangers jobs and growth.” –Robert Borosage. World Bank/IMF style austerity measures have come home to roost. Bottom line, the rich continue ‘winning’ and you continue to get fucked.”
I noted in 2008:
The powers-that-be have used the “Shock Doctrine” to pass anti-American, fascist legislation while the public was in a state of shock.
This applies to economic shocks, as well as physical attacks like 9/11.
Indeed, right now, Paulson and Bernanke are using the shock doctrine to try to ram through legislation that would help out the fat cats at the expense of taxpayers, and give the government control over the free market.
But there is some resistance. For example, Senator Leahy and the New York Times are questioning Paulson’s use of shock and awe:
- Senator Leahy said “If we learned anything from 9/11, the biggest mistake is to pass anything they ask for just because it’s an emergency”
- The New York Times wrote:
“The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress.”
Mr. Paulson has argued that the powers he seeks are necessary to chase away the wolf howling at the door: a potentially swift shredding of the American financial system. That would be catastrophic for everyone, he argues, not only banks, but also ordinary Americans who depend on their finances to buy homes and cars, and to pay for college.
Some are suspicious of Mr. Paulson’s characterizations, finding in his warnings and demands for extraordinary powers a parallel with the way the Bush administration gained authority for the war in Iraq. Then, the White House suggested that mushroom clouds could accompany Congress’s failure to act. This time, it is financial Armageddon supposedly on the doorstep.
“This is scare tactics to try to do something that’s in the private but not the public interest,” said Allan Meltzer, a former economic adviser to President Reagan, and an expert on monetary policy at the Carnegie Mellon Tepper School of Business. “It’s terrible.”
The Tarp bailouts were passed using apocalyptic – and false – threats. For example, as I’ve previously reported:
The New York Times wrote last year:
In retrospect, Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis — yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.
Indeed, Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn’t passed. That is especially interesting given that the financial crisis had actually been going on for a long time, but – instead of dealing with it – Paulson and the rest of the crew tried to cover it up and pretend it was “contained”, and that it was obvious to world leaders months earlier that it was not a liquidity crisis, but a solvency crisis (and see this).
Bait And Switch
The Tarp Inspector General has said that Paulson misrepresented the big banks’ health in the run-up to passage of TARP. This is no small matter, as the American public would have not been very excited about giving money to insolvent institutions.
And Paulson himself has said:
During the two weeks that Congress considered the [Tarp] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.
So Paulson knew “by the time the bill was signed” that it wouldn’t be used for its advertised purpose – disposing of toxic assets – and would instead be used to give money directly to the big banks?Senator McCain also says that Paulson pulled a bait-and-switch:
Sen. John McCain of Arizona … says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.
“Obviously, that didn’t happen,” McCain said in a meeting Thursday withThe Republic‘s Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. “They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street – I guess it was trickle-down economics – that therefore Main Street would be fine.”
Even the New York Times called Paulson a liar in 2008:
“First [Paulson’s Department of Treasury] says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart.
Now, he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions. Sneaking in the tax break isn’t exactly confidence-inspiring, either.”
What tax breaks is the Times talking about? The article explains:
A new tax break [pushed by Treasury], worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”
Indeed, all of the other “emergency” economic and monetary measures – like quantitative easing – didn’t help the American people, but just helped the richest 1%. And most of the bailout and “easy” money went to foreign banks (and see this, this and this).
The Same Thing Is Happening With the Debt Ceiling
The same thing is now happening with the debt ceiling debate.
What is being discussed would just steal more money from the American people and give it to the richest 1%. For example, Congress is planning on selling off “unused federal property”. Selling off and privatizing public assets and resources is a core tactic in shock doctrine schemes.
As Matt Taibbi shows, another tax holiday for big corporations is one of the main focuses of discussion in D.C.
MSN Money reports:
The plan proposes three [tax brackets] (we now have six) and would lower the top rate — and the corporate tax rate — from 35% to a range of 23% to 29%. That would be great news for rich folks. “That could provide a windfall for wealthy taxpayers because the 35% tax bracket currently applies to taxable income above $379,150,” said The Associated Press.
Robert Borsage notes that the proposed debt agreement:
Would add to unemployment in the short term, increase Gilded Age inequality, leave seniors more vulnerable, and shackle any possibility of rebuilding America. It puts the burden of deficit reduction on the elderly, the poor and the vulnerable, endangers jobs and growth, and lards even more tax breaks on the rich.
The Nation writes:
The [proposed debt ceiling agreement] proposal shafts those who have already borne so much of the burden of the financial crisis and its fallout—lost pensions, lost homes, lost wealth—while the very people who brought the economy to its knees through their recklessness make out like banksters and bandits. In fact, at a time of inequality akin to that of the Gilded Age, the top marginal tax rate would be lowered—lowered!—to 23 to 29 percent, while there would be massive cuts in Social Security, Medicare and Medicaid.Dean Baker, co-director of the Center for Economic and Policy Research (CEPR),notes that JP Morgan CEO Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein would save approximately $2 million to $3 million on their tax bills. But in twenty years, a 90-year-old living on a Social Security income of $15,000 would lose more than $1,200 a year in benefits.
How’s that a “bargain” for this nation and who exactly finds it “grand”?
All along, the alternatives that reflect the popular idea of shared sacrifice have been marginalized—by the political establishment (and, tragically, the Democratic leadership) and the corporate media.
This is not about left and right. This is about right and wrong. And that’s something the political and media establishment just don’t seem to get.
And Senator Sanders points out today that there is no shared sacrifice by the top 1%, but that the government may take from the poor and middle class in numerous ways for years to come:
There will be major cuts in Social Security … Medicare … Medicaid and other health care programs … education … nutrition program[s] … environmental protection.
There are very, very clear provisions making sure that we are going to make massive cuts in programs for working families, for the elderly, for the children. Those cuts are written in black and white. What about the revenue? Well, it’s kind of vague. The projection is that we would rise over a 10-year period $100 billion in revenue. Where is that going to come? Is it necessarily going to come from the wealthiest people in this economy? Is it going to come from large corporations who are enjoying huge tax breaks? That is not clear at all. I want middle-class families to understand that when we talk about increased revenues, do you know where that comes from? It may come from cutbacks in the home mortgage interest deduction program, which is so very important to millions and millions of families. It may mean that if you have a health care program today, that health care program may be taxed. That’s a way to raise revenue. It may be that there will be increased taxes on your retirement programs, your I.R.A.’s, your 401(k)’s.
Note: As usual, it’s not liberal-versus-conservative, but the top 1% versus the rest of the country, and you versus the giant corporations. See this, this, this, this, this, this, this, this, this, this and this.