Going Downhill

When I was born, liberal New Deal politics was dominant. As I grew up, Republicans first made headway using the Red scare, McCarthyism and anti-union propaganda: "union bosses," vs "corporate statesmen." The first chinks were Taft-Hartley, the McCarran Act, and Cold War hysteria.

Still, Ike, a Republican, continued New Deal policies (including top-end tax rates of 91%) and sponsored large government programs like the Inter-State Highway system. Then, the John Birch Society was at the right-wing fringe of politics, inveighing against the Communist threat, and seeing liberal movements like civil rights for blacks as Communist conspiracies.

Ron Paul keynoted last year at the 50th anniversary of the Birchites, and yet it appears the only reason that conservative Republicans ignore his Presidential campaign is because he says things like: the empire is nearing its end.

On other issues, Paul is even to the right of Bachman and Perry. He's against all abortions, even pregnancies caused by rape. In effect, he'd enable rapists to pick the "carriers" of their babies. He'd also abolish the Fed and the income tax, both of which date to the Progressive era before we entered WWI, yet he's even popular among some progressives.

How did we get here from there, from a political system in which a relatively conservative Texas Democrat--LBJ--could propose and pass Medicare, Medicaid and the voting rights act?

Part of the answer has to be the success of a reactionary slice of the wealthy, which sank billions of dollars into think tanks, educational institutions and the media, beginning as a reaction against LBJ's Great Society, and Nixon's continuation of it--and Nixon's elimination of the last remnant of the gold standard, (which Ron Paul would undo).

Part of the answer is the successful demonization of "big government" as partial welfare state, when the demand-driven inflation from the Vietnam War, met the supply-driven inflation caused by OPEC.

And part of the answer is the successful recruitment of front men: Reagan, especially, and a whole series of young, conservative Supreme Court Justices.

And then, along came Bush II. He may not be the culmination of this conservative counter-revolution, despite the crash, in part because liberals/progressives did such a poor job recruiting their own front men. Obama is determinedly non-ideological and appears constitutionally incapable of confrontational politics. I bemoan Truman's absence: he was re-elected by bashing the "Do-nothing Republican Congress."

Even if Obama is re-elected, he'll stand for little but the lesser evil. Perry, Bachman and Ron Paul offer small government premised on the dominance of the super-wealthy (the selfish class)--who wish to eviscerate government services, because they don't need them--they only want profitable government contracts.

It'll be a privatized world of crony corporations. However, they won't create jobs when there's no demand (only government would do that). It's doubtful they can resuscitate a dying empire, either.

Maybe they'll try to "outsource" and privatize it.

Buffett's Good Deed

Whee, it's great to be a billionaire! You can do good and make even more money at the same time! I'm writing about Warren Buffett: he sinks $5 billion into Bank of America preferred stock, which pays a guaranteed 6% dividend, gets a warrant for buying 700 million more shares at $7.14: the stock opens at $8.29 and still closes at $7.65.

Buffett supported a bank that has a legion of lawsuits against it for it’s alleged fraudulent mortgage vehicles; it lost 36% of its stock value because of its overexposure to those same mortgages, made worse by the continued decline of the housing market, and its over-investment in European sovereign debt: Greece, Ireland, etc.

Buffett is viewed as doing the administration a favor, by helping to rescue a bank that looked as if it might lead to a replay of 2008. Credit Default Swaps on BAC had reached higher spreads than it faced in 2008-09 at the height of the financial panic.

So, Warren Buffett is not only a rich man getting richer, he's a hero to the administration, especially since he just advocated (in a New York Times op ed) that Congress should raise taxes on people like him. If he weren't so old, perhaps Obama should ask him to run for Vice President, or other Democrats might urge him to run against Obama.

Billionaires. Have you noticed that billionaires seem to be taking over our politics? On the "left" we have Warren, George Soros and… (are there any others?), in the center there is Michael Bloomberg, and on the far right there are the Koch brothers, among many, many others.

Does that tell you something?

One of our two political parties refuses to raise taxes on the wealthy. On the other hand, the GOP wants, in effect, to raise taxes on the middle class. It advocates discontinuing the payroll tax cut put in place last year to stimulate the economy, while insisting on extending the Bush tax cuts permanently.

The Bush tax cuts disproportionately favor the wealthy, which is one of the reasons why there is such a proliferation of billionaires, and other super-wealthy. Not only are the top tax rates the lowest they've been since the 1920's, many dividends are exempt, and capital gains are taxed at less than half the top rate--lower than middle class incomes. On the other hand, the payroll tax is a flat tax with a cap at a bit over the first $100,000 of income. A cut in its rate disproportionately favors those earning under that, but, those with million dollar incomes only pay the tax on one-tenth of their income. The tax cut hardly matters to them, so, the GOP wants to scrap it. Why?

Perhaps to drive the nation back into recession, to enable Republicans to beat Obama, to dismantle the New Deal and to insure that the wealthy rule. The takeover of the new Roman Senators: it could happen here.

Rip-off Artists

The King of Kings is on the run, but it doesn't really matter. Qaddafi started out with apparent promise, ruling for the common man, so he claimed. But really, he just ended up ripping people off in novel ways, while attempting to control their lives.

What does matter is that the Wall Street banks are not on the run, and they are also ripping off the common man in novel ways. Now, paralleling the obstructionist extortion of the GOP in Congress, the banks are "negotiating" with the states' Attorneys General, who are also being pushed by the Arbitrator-in-chief, for a quick, painless settlement (for the banks).

The primary issue is the robo-signing scandal, in which millions of mortgage defaults were falsified, but the other questionable, probably illegal, practices of the banks are also in question.

Some State Attorneys General, Eric Schneiderman of NY chief among them, insist that there must be thorough investigations of the fraud, before any settlement can be reached.

But the banks, those same huge banks that drove us into the "Great Recession," the same banks that are now falling all over themselves with mega bonuses, are offering a paltry $50 billion or so. to help defaulting homeowners keep their homes in some circumstances, or help them move to an apartment in others. But the banks did over $750 billion in damages to homeowners, and are worth trillions.

What are they asking in exchange for that $50 billion? Immunity. In other words, this whole "negotiation" on what really amounts to massive banking fraud, is like the plea deal that prosecutors strike with some felons, in order to convict other felons. Except, in this case, they're all buying immunity, and for that they're willing to pay $50 billion.

If they can't get Schneiderman and four or five other state Attorneys General, to sign on, however, then they'll offer less, not even $50 billion. Administration officials are urging the AG's to sign on: their model seems to be, everybody rich and powerful should be protected, but those whom the R and P have exploited, can't be helped, except with rhetoric, or that measly $50 billion. House underwater and you've lost a job because of the banking debacle, well, too bad. There's only that tiny fund to go around for all of you.

Schneiderman has just been kicked off the AGs' committee negotiating with the banks, because he's not willing to give them immunity; he wants to investigate them, and is doing so. The New York Times applauded him, but it's likely that, with three or five exceptions, a settlement will be reached soon; it will not hold the banks responsible, will not investigate and will not permit any party to the agreement to investigate the banks further.

It looks like Schneiderman will try to hold our contemporary Roman Senators accountable; his chances aren't great, given his opponents' resources. But that's the 21st century, more and more like the 5th.

Empire or Republic?

--the crippling costs of a defense policy that makes global hegemony a mindless imperative. Salon, 8/13/11: "The Pentagon's New China War Plan."

Congressman Chris Gibson, R, NY, comment: "America is a republic, not an empire."

The Pentagon, it appears, is an independent entity that throws its weight around. It is much like the field army of the later Roman Empire, which operated independently of the Emperor. The major difference: the field army enthroned and dethroned Emperors; the Pentagon only controls the President.

Just Foreign Policy News notes that on Pentagon spending, the President is to the right of conservative Republican Senator Coburn. Obama's Defense Secretary, Leon Panetta, is insisting now that any cuts to his budget beyond the $420 billion already passed in the budget-ceiling agreement will "hollow out" the military. He and his underlings are also attempting to persuade Iraqis that we should keep 10,000+ troops in Iraq after the end of the year, when they're all scheduled to leave, as per Bush's negotiated settlement. Iraqis are resistant, as well they should be.

Senators like Coburn and Congressmen like Gibson may be very conservative and even pro-military (Gibson was a Colonel, and served 4 tours in Iraq), but their positions on the military budget are getting closer to anti-war Democrats: spending has to be cut, and the military should bear the brunt of it. Coburn apparently approves of a cut of a trillion dollars to defense, which is what the fall-back position of the debt-ceiling agreement will call for if the "super committee" fails to reach agreement on cuts.

This "new China war policy?" It appears that our military is moving to protect their perceived global hegemony. Cuts to troop strength in the Middle East are matched by naval and air force deployments to places like Guam and Diego Garcia. One observer commented on the buildup of those two island bases: twin anchors for maintaining global supremacy. Further, the military appears intent on picking a fight with China. It sees China's new assertiveness, especially in the South China Sea, as a threat. Why? Perhaps China would be a threat if it muscled in on the eastern Pacific rim, or the Caribbean, but do we have to protect the Communist Vietnamese from the Communist Chinese?

The military thinks in military/strategic terms, but doesn't appear to consider their economic impact, nor their political/psychological impact, either. All they see is the global map: land masses, sea lanes, communications routes, resources and potential threats to "their" people, which includes global corporations and US clients, regardless of how corrupt or exploitative they may be.

The military is oblivious to their effect upon the US, but some American conservatives are beginning to get it: the military will drive us into bankruptcy if it gets its way, bending Obama and Panetta before it.

Obama the Cowardly Lion

I voted for Kennedy, and LBJ, with diminishing hope for Carter, and with a certain detachment for Bill. But with Barack Obama, I confess I was won over, as I had been for JFK back in early 1960.

Kennedy was far from perfect, but Obama isn't just a disappointment; he isn't just a failing President the way Carter was, he's failing the country, and it's probably because of who he is. Drew Westen's essay in the NYT is damning, with faint praise. Clearly, Westen is an admirer of the New Deal (so am I), but he sees Obama as someone who doesn't really know who he is; it changes with each person he works with; and he doesn't know how to deal with a bully.

Obama's pacific nature would have been well-suited to the situation Bush W faced in 2001. The outcome would have been very different, as it probably would if the Supremes had allowed Gore to be elected.

Westen pointed out that Obama's stories never include a real villain; anything bad is rather abstract, or in passive mode. And, he doesn't stand up to a bully, like McConnell, or Boehner; he wants to appease.

My wife, the inestimable Elizabeth Cunningham, told me long ago, "He's just like me! He wants to placate so the unpleasantness will go away. I know how to stand up to a bully, though; he doesn't."

But he also doesn't know if he's for progressive politics, although that's where he started, or if he really thinks more like Reagan. He may have been corrupted, in the moral sense, or he's just more of a chameleon than anyone knew: conservative when Republicans make everyone seem to be to his right--not a comfortable place to be--progressive when among Democrats, but never far out left.

That's why "centrism" is like a religion in the Obama White House: along with Change We Can Believe In, Obama's other great theme in the election was Unity. After health care, it's been little change, but too much effort for achieving unity when none is possible, except through a dead-pan or ambiguous surrender.

It's true that S&P blamed the GOP's obstructionism in their downgrade missive, but they're seeing only half of the picture; the other half has Obama cringing before GOP leaders. Obama enables bullies. The bullies are also incredibly destructive. They brought the US over the brink of fiscal credibility, and it's probably like the title of my long ago discarded first novel: When Wrong Ways Prevail.

The novel wasn't about the Roman Empire; it took place in modern India, and the wrong ways were personal, not economic or political. However, my non-fiction book, the Selfish Class, available onsite, details 21st Century parallels with the late Roman Empire's takeover by the wealthy and the military.

That's what seems to be happening here, now: tragically, even with Obama.

My novel, Attila, also onsite, takes place only decades before Rome's fall.

Money Trumps Empire

"We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act." On Page 4 of the official Standard & Poor's "Research Update."



Republican obstructionism on behalf of their constituency, the wealthy and selfish (cf. the Selfish Class on this site), has done what the debt-ceiling agreement narrowly averted: brought into question the financial credibility of the US Government.

This is a big deal. Whether S&P used questionable measurements, whether it acted out of its own political agenda, it still did what no one had done since the US dollar became the reserve currency of the world. A credit downgrade from AAA to AA+, unless it is quickly reversed (unlikely), will lead, first of all, to higher borrowing costs for all of us.

Take that, barely whimpering economy!

But the decision will also hasten the day when the dollar will no longer be The reserve currency. That's an even bigger deal. It could mean the beginning of the end of the American Empire, because how can the US pay for its bloated military in 120+ countries, when borrowing costs really begin to rise? It can no longer just continue to borrow and expect the rest of the world to lend to us at rock bottom rates. Of course, the US can continue to borrow, and to inflate the value of the dollar, since it still owns its own printing press (the Treasury), and supposedly controls its own reserve bank (the Fed).

But then the US would be acting like any banana republic, except that US debt far exceeds the debt of any other country, or combination of them. There is no one who could bail us out, and most economies--including the US, of course--would be driven into such a Depression that the 1930's would look like an early rehearsal.

The world economy would have good reason to collapse. If it doesn't do so, then political leaders will have finally come together to save our civilization, but, on the evidence of the last 12 years, cooperation is not a great bet.

America's fall may come a lot faster than Rome's.

Rome had terrible credit and was continually diluting (inflating) its currency. But during Rome's long expansion it was also robbing the wealth of the peoples it conquered; it paid off its debts with the proceeds: gold, other treasures, and most of all, slaves. In the US, the considerable profits of empire are pocketed not by the US government, but by private, effectively stateless, global corporations. Maybe that's why they pay so little in US taxes, even with billions in profits--profits are earned abroad. Corporations avoid declaring profits in those nations, also. It's easy to find an island/city-state with nearly zero taxes.

We'll Always Be Rich

What a wealthy man said to a plumber, working for him.

That's what's most tragic about the whole debt-ceiling "debate;" the rich are always sure they'll always have it all. The plumber was "ripped off for $40,000" by a friend of the man who said this. He was also rich.

Not all wealthy people are indifferent, or feel so entitled, or are as unfeeling and cheap, but a lot are. The debate, if you can call a one-sided shouting fest a debate, so often appeared to be based on the same assumption, but with one further step: if they're always rich, then I have to court them, because I need campaign funds if I'm going to get re-elected.

Yes, there were some Democrats (and one independent) who objected that not raising taxes on the wealthy was unfair, but most Democrats were rather circumspect with the same argument. None, not even independent Sanders, were as vehement as were the Republicans against raising taxes. Many Tea Party Republicans had actually signed a pledge never to raise taxes, and people like Boehner declared that he would not raise taxes on the "job creators." He added, that he'd never voted to raise taxes, and never would.

To get a debt-ceiling compromise, somebody had to blink; it was the Democrats. You could argue that Obama and the Democrats were the grown-ups, while the GOP was having a tantrum--and got away with it. However, Democrats didn't get such a bad deal. They gained a veto over any further cuts, by requiring that half of all cuts would have to come from the military ($750 billion), if the super-committee did not come up with an additional $1.5 trillion reduction in the deficit.

Republicans hate cutting Defense about as much as they hate raising taxes. Further, the Bush tax cuts will be expiring, reducing the deficit, and raising taxes on the rich, as well as everyone else. In addition, entitlements are protected in this second round, except for Medicare providers, and so is Medicaid and some other programs benefiting the needy.

There are enough pro-Defense Democrats on the committee to make a majority, so they will have to come up with a solution. Will there be enough Democrats to prevent that "the solution" will only cut programs that don't affect the rich? There aren't enough of them; they'll have to raise taxes somehow.

Will the rich always be rich? FDR attempted redistribution, to moderate extremes of wealth and poverty; he probably saved capitalism. Without the New Deal, we could have had a Communist or Fascist revolution. If the New Deal is turned on its head, we could have Tahrir Square, or a Fascist takeover. In Pinochet's Chile, the wealthy were happy; they were in charge again.

In Rome, the Senators drove the Empire into the hands of the barbarians, and thought, until the end: "We'll always be rich."

Their selfishness cut their throats (and almost everyone else's).