DOWNSIZING THE MIDDLE CLASS IS A RISKY BUSINESS.

by Robert Scheer for HUSTLER Magazine

Poverty is not just for the poor anymore. Ever greater numbers among the 99% being screwed by the top 1%, who control more than 40% of the wealth in this country, should stop pretending to be middle-class and admit that they are on the deep, losing end of America’s fierce class struggle.

We used to think poverty was just for urban ghetto folk who looked, talked and acted differently than the rest of us. No more. Poverty has been democratized, and the poor are everywhere. “Funny, you don’t look poor” is what you might say to your neighbor in that white suburb who is surviving on food stamps and skipping mortgage payments until eviction. But when it comes to poverty, America is now an equal-opportunity society. Sure, folks don’t go around in rags and visibly malnourished.

Thanks to Walmart’s steady supply of Chinese sweatshop-produced clothes and our own government’s vastly expanded food stamp program, poverty is disguised.

In the past ten years, poverty in suburban America has jumped an astounding 53%, twice its rise in urban centers. For the first time in U.S. history, poverty in the suburbs exceeds that of the cities they surround. While the superrich scurry for safety in their fortress enclaves, suburbs across the country feature boarded-up houses with mortgages that are deeply underwater.

Six months before the appearance of an Occupy Wall Street encampment, Joseph E. Stieglitz wrote an article for Vanity Fair— titled “Of the 1%, by the 1%, for the 1%”— that provided the movement with its essential manifesto. In a prescient prediction of the protests to come, the Nobel Prize-winning economist issued a warning to the power elite that tends to read Vanity Fair : “Americans have been watching protests against repressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1% of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.”

What they will regret, if they retain a shred of caution born of common sense, is that despite an economic meltdown caused by bankers run wild and requiring massive taxpayer-financed government intervention to avoid another Great Depression, the financial overlords continued to pay themselves enormous bonuses while ordinary folk went bankrupt. Hiding behind the fig leaf of Adam Smith’s freemarket capitalism, they invented gimmicks never before known in the financial world that destroyed the real estate market and turned peoples homes into gambling chips in the Wall Street casino.

Thanks to the Republicans in Congress back in the 1990s and Democratic President Bill Clinton, who became their water boy, the rules of the regulatory road were changed. Swindles called collateralized debt obligations and credit default swaps—transactions that would have been judged patently illegal if the Mafia had invented them—were made legal as a matter of federal law. The result was a boom-and-bust cycle that vastly increased the gap between America’s superwealthy and the rest of the nation. In the process, the bedrock of the American Dream—an ever better-off middle class— was demolished.

Even during the Clinton years, which many Americans now think of as good times, the class divide in America was growing with a vengeance. As I document in my book The Great American Stickup, the income of the top 1% increased 10.1% per year under Clinton, while it rose only 2.4% for the other 99% of the population. Things got worse under George W. Bush. Even before the banking meltdown of 2007, the top 1% enjoyed an 11% annual rise in income, while the rest received the crumbs—sharing in a 1% increase. With the imminent collapse of their Ponzi scheme, the bankers were saved. In the meantime, their victims were thrown under the bus.

As libertarian Ron Paul, the Republicans’ only honest Presidential candidate, put it: “The bailouts came from both parties. Guess who they bailed out? The big corporations, the people who were ripping off the people in the derivatives market.… But who got stuck? The middle class got stuck…they lost their jobs, and they lost their houses. If you had money to give out, you should have given it to the people who were losing their homes, not to the banks.”

In his Vanity Fair article, Stieglitz hit the nail on the head: “The top 1% have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99% live. Throughout history, this is something that the top 1% eventually do learn. Too late.”

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Before serving almost 30 years as a Los Angeles Times columnist and editor, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hardhitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

AMERICA DESPERATELY NEEDS A NEW DEAL FROM THE WHITE HOUSE, BUT DON’T ROLL OUT THE RED CARPET FOR ANOTHER REPUBLICAN.

by Robert Scheer for HUSTLER Magazine

The “lost decade” is the way Harvard economics professor Lawrence Katz refers to the ten-year downslide of the U.S. economy since the election of Republican George W. Bush in November 2000. The road to ruin was paved by Bush, who impoverished the nation by waging two unnecessary trillion dollar wars while cutting taxes for the superrich. Yet, despite the fact that the Republicans created the mess, an all-too-easily-fooled public seems destined to put another one back in the White House.

The worst that can be said about President Barack Obama is that his response to the deep financial crisis he inherited from Bush was to continue the GOP strategy of throwing money at the banks instead of letting them go bankrupt. The banks were saved, but it was their victims—the suckers swindled into phony mortgages—who went bankrupt.

When Obama attempted to help ordinary folks with a relatively small stimulus check and save jobs in the automobile industry, before the last one of them went abroad, the Republicans and their allies among the Wall Street lobbyists branded him a socialist. Instead, we got socialism for the superrich when the Republicans seized control of the House of Representatives and prevented any further help for the foreclosed and unemployed.

The result of Republican power from the time of Bush has allowed 1% percent of the population to control 40% of this country’s wealth. In the past decade of greed run wild, the income of that 1% rose 18%, while that of the middle class declined. The total worth of the average American has been cut in half thanks to the banking/housing meltdown; an all-time-record 46.2 million people—including 22% of America’s children—are living below the government’s official poverty level ($22,350 for a family of four); and good jobs are going, going, gone.

“This is truly a lost decade,” Professor Katz told the New York Times. “We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s.”

Nor will it get better in the foreseeable future. The Federal Reserve estimates that the housing crisis that is at the root of the meltdown will go unabated for years to come. With 50 million Americans losing their homes, you can’t expect consumer confidence—now at record lows—to be restored; and since those consumers account for 70% of economic activity, forget the job situation improving anytime soon.

Yet dumb and dumber American voters look set to restore full power to the Republicans, who favor welfare for the superrich and Big Business. What voters can’t seem to grasp is that the days are over when the average Joe could legitimately hook his future to the prosperity of large corporations.

Those companies are called multinational for a reason: The bulk of their profits are sheltered abroad. Take GE, that old American-as-apple-pie company that had Ronald Reagan as a shill before Big Business needed him to run for President in 1980. Now two-thirds of GE’s workforce is abroad, along with 82% of the company’s profits. In addition, GE has paid no U.S. taxes for the past three years.

The multinational corporations are awash in cash, sitting on at least $2 trillion in funds they refuse to invest in creating jobs. Meanwhile, the big banks that were bailed out by the Federal Reserve—which took trillions of dollars of toxic mortgages off their books—refuse to make loans to deserving small businesses and creditable would-be home buyers.

The investments the multinational corporations do make are abroad, where they send the good-paying jobs that once were the basis of America’s economic leadership of the world. In September, Citigroup—the bankrupted banking giant bailed out by the American taxpayers—held its board of directors meeting, not in Chicago or Los Angeles, but in Singapore. Apparently, Citigroup chose that location because 30% of its profits are now derived from the Asian market, where the bank expanded using U.S. taxpayer dollars.

As the Wall Street Journal reported, “Citi’s business in Asia will likely help it as the West slows down.” But the West that they are ignoring, in case you didn’t happen to notice, is where the U.S. taxpayers who bailed out the bank happen to live and try to find work. Citigroup and other financial institutions were made whole by Republican-inspired bailouts, but fully 25 million Americans who are looking can’t find full-time work.

The only Republican candidate who can make any kind of claim to a record of job creation is Texas Governor Rick Perry. But when you realize that Texas leads the nation in the number of workers earning the minimum wage or less, you learn all you need to know about the GOP’s view of job creation. Republican politicians always make it a point to pin a little American flag on their jacket lapel, but they are false patriots conspiring to ship the American Dream abroad.

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Before serving almost 30 years as a Los Angeles Times columnist and editor, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

THE BANKERS AND OTHER WHEELER-DEALERS WHO IMPOVERISHED THE NATION CONTINUE TO ENRICH THEMSELVES.

By Robert Scheer
From HUSTLER MAGAZINE September 2011

Republicans are the party of the super rich, pure and simple, and all that Tea Party garbage about small government is nothing but a big-lie propaganda ploy by an extremely radicalized fringe of the GOP that betrays its moderate heritage.

This is coming from a journalist who still thinks Dwight D. Eisenhower was the best modern day American President after Franklin Delano Roosevelt and who got along just fine with Ronald Reagan and Richard Nixon when he profiled them. Nixon even wrote me a letter expressing thanks for my “objective” reporting on his domestic policy, which included a call for a guaranteed minimum income for all Americans and the creation of the Environmental Protection Agency.

Try finding a single Republican politician today who is proud to support either of those sensible Nixon proposals. Even the two Bushes look pretty reasonable compared to the current crowd that wants to wipe out Medicare and Social Security to save our tax dollars for even more exorbitant gifts to the bankers and other corporate hotshots who impoverished the nation while enriching themselves.

At a time when 10 million Americans will have lost their homes by year’s end, when $5.6 trillion in home equity has been wiped out, when most workers face steep unemployment rates and stagnant wages, Republican ideologues insist that extending the Bush-era tax cuts is the best way to create jobs. The Republicans are drunk on the notions of voodoo economics whereby giving more money to those who already have obscene amounts is good for the rest of us.

Even former Fed Chairman Alan Greenspan, who supported the Bush tax cuts, has come to his senses by arguing against their extension in the midst of the global economic crisis: During an appearance on NBC’s Meet the Press he stated, “This crisis is so imminent and so difficult that I think we have to allow the so-called Bush tax cuts all to expire. ”With regard to how much the U.S. government could save from letting income taxes go back up to levels last seen under President Bill Clinton—an estimated $3.6 trillion—Greenspan said, “That is a very big number.”

He specifically shot down the absurd notion that those tax cuts will reduce the deficit by freeing up more money in the hands of the rich for investment. When host David Gregory asked his guest if he believed that the tax cuts pay for themselves, as Republicans argue, Greenspan replied unequivocally, “They do not.”

The GOP argument that the tax cuts will generate new economic activity because wealthy people will invest more flies in the face of a reality in which the rich are awash with cash but do not spend it in ways that create jobs in this country, as opposed to U.S. corporate investment abroad.

As the New York Times reported, “In the fourth quarter, profits at American businesses were up an astounding 29.2%, the fastest growth in more than 60 years. Collectively, American corporations logged profits at an annual rate of $1.678 trillion.”

And to add insult to injury, the top executives—who seem unable or unwilling to create increased their own compensation by a whopping 12% over the previous year, leaving the median pay at $9.6 million for those in control of the 200 leading companies. The Times report added that “CEO pay is also on the rise again at companies like Capital One and Goldman Sachs, which survived the economic storm with the help of all of those taxpayer-financed bailouts.”

What the Republicans want you to forget is that the recession brought about by their wild deregulatory policies, allowing Wall Street greed to run wild, was launched by their much-hyped “Reagan Revolution, ”which is the basis of our debt crisis. The debt now looms so large because the government had to bail out many of those same corporations, quite a few of which—most notably General Electric and AIG—pay no taxes and have no problem paying truly obscene amounts to their top executives.

General Electric CEO Jeffrey Immelt is making as much as he did before the recession hit, a recession that his GE Capital division did much to cause with its reckless loans. AIG, saved with a government infusion of $170 billion, has lavishly rewarded its top executives but has provided no relief for the homeowners ripped off by its phony credit default swaps.

The result of the Reagan Revolution is that the top 1% of Americans own 40% of the total national wealth, mocking the idea that we are a middle-class-based democracy. That is because the after-tax income of that top 1% has more than doubled in the 30 years since Reagan assumed the Presidency. That’s after-tax income, so don’t tell me they are hurting from too high taxation.

The reality is quite the opposite: The rich are getting richer while the purchasing power of wages and other income for most Americans has been declining. How obscene then that the Republicans want to gut programs like Medicare, Social Security and workers pensions, which are the main barrier keeping most Americans from a life of retirement in poverty.
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Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

OBAMA PROPOSES KILLING FEDERAL AGENCIES THAT PROVIDE LOW-INTEREST MORTGAGES IN FAVOR OF PRIVATE BANKS.

by Robert Scheer
from HUSTLER Magazine July 2011

The idea that your home is your castle has deep roots in the history of human liberation, and owning your own home, providing an inviolable sanctuary for the family, is a cherished aspect of the American Dream. Your turf, protected by the Constitution from official intrusion, has been key to the notion of a democracy of middleclass stakeholders supported by various government programs going back to the Founders. Not being beholden to the whims of an oppressive landlord, possessing a property deed and buying out the mortgage is a critical enterprise in preserving freedom. That enterprise is now under frontal assault from the Obama Administration.

According to a 31-page policy statement issued in February 2011, the administration is abandoning the government’s time-honored role in helping Americans achieve home ownership by underwriting low-interest mortgages through the government-sponsored agencies Freddie Mac and Fannie Mae. Now President Barack Obama proposes to turn over the entire mortgage industry to the same private banks that sabotaged the American ideal of a nation of stakeholders by “securitizing” our homesteads into poker chips to be gambled away in the Wall Street casino. Instead of punishing those banks, which forced 50 million people into foreclosure or deeply under water on their mortgages, he wants to reward them.

The proposal was originated by Treasury Secretary Timothy Geithner and involves nothing less than a total “winding down” of the nearly 80-year-old federal housing program, setting instead a new goal of a twotiered America in which the masses are content to be mere renters of the American Dream. Such a deal for a country where, as the report concedes, “half of all renters spend more than a third of their income on housing, and a quarter spend more than half.”

This is the same Geithner who during his tenure in the Clinton Treasury Department championed the total deregulation of the then-emerging market in collateralized debt obligations. As a result, people’s home mortgages were sliced and diced into the toxic securities that created what Geithner’s new report calls the greatest economic crisis since the Great Depression. Later, as president of the New York Fed, Geithner cheered on the banks as they went hog-wild, conning folks into buying homes they couldn’t afford and stuffing them into the incomprehensible securities that form the rot at the core of our bankrupt economy.

This is a made-in-the-U.S. nightmare that we inflicted on the world, thanks to an explosion in those toxic securities brought on by the deregulation that most of the Obama economic brain trust supported when they worked for President Bill Clinton and during the ensuing bubble years when they enriched themselves. As the report admits: “The U.S. is…the only high-income country in which securitization plays a major role in housing finance.”

Yet instead of ending that practice, Obama now calls for more of the same: “The administration believes the securitization market should continue to play a key role in housing finance.” Indeed, the plan’s goal of eliminating Fannie Mae and Freddie Mac will dry up the alternative public funding that has provided a source of mortgage support ever since President Franklin Delano Roosevelt launched Fannie Mae to check the power of the banks over mortgages. Now Obama proposes to eliminate that check, leaving would-be homeowners to the tender mercy of the banking giants.

Of course Fannie Mae and Freddie Mac, which had morphed into for-profit enterprises, also bear responsibility for the meltdown. Just as with the Wall Street firms, the massive bonuses paid out to these housing agencies’ top executives were contingent on the value of their stock prices, which in turn were fattened by the sale of those same toxic assets. As the Obama report puts it, “Fannie Mae and Freddie Mac’s profit-maximizing structure undermined their public mission.” What the administration should have proposed is to return the government-sponsored housing agencies to their original function as nonprofit entities supplementing, rather than aping, the practices of greedy bankers.

What Obama neglected to discuss is the demise of President Franklin D. Roosevelt’s grand experiment at the hands of Democratic Party hustlers who turned the agencies away from their “original mission” and into their personal piggy banks while getting Democrats in Congress to approve regulations enabling their greed.

The folks around President Obama know this sad tale well because some of them were principal actors in the housing agencies’ betrayal of the public trust. Just take the case of Tom Donilon, whom Obama recently appointed to the highly sensitive position of National Security Advisor. It was Donilon who was the top legal counsel and lobbyist for Fannie Mae from 1999 to 2005, a period when the agency went off the tracks in backing Countrywide and other private-sector bandits in their irresponsible ripoff scams.

Donilon, who reportedly received $10 million in the three years leading up to the scandal of 2004—when Fannie Mae was fined $400 million for juggling its books to enhance executive bonuses—will never have any trouble financing a home purchase. Not so the tens of millions of Americans who have lost their homes because of Donilon’s reprehensible actions and the many more in the future who will be denied government support in trying to get a place of their own.

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Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

ADDRESSING AMERICA’S ECONOMIC WOES, PRESIDENT OBAMA ADMONISHES UNDERACHIEVING STUDENTS, YET CONTINUES TO IGNORE THE REAL CULPRIT.

by Robert Scheer
from HUSTLER Magazine June 2011

There is something perverse about how Presidents, every time they get in trouble over the state of the nation, seize upon education- related scapegoats for all that ails us.

John F. Kennedy did it with his Sputnik speech prompted by the Soviets, who’d managed to launch the first artificial satellite and later put the first man into space—propaganda coups that did nothing to mitigate the USSR’s miserably sagging economy.

George W. Bush devised the “No Child Left Behind” slogan to justify his multitude of screwups, most notably coddling Wall Street while it defrauded American mortgage buyers and incurred the trillions in bad loans that had to be picked up by the taxpayers. Now Barack Obama has seized upon students’ lackluster test scores to explain the miserable state of the U.S. economy, playing the Sputnik card by way of justifying saving Wall Street while ignoring the rest of us.

In his 2011 State of the Union address, Obama—who moved sharply to the right after the Democrats’ setback in the midterm elections— fully embraced the Wall Street bandits, whose unfettered greed sucked us into this mess. Nevertheless, Obama blamed American students’ subpar test scores for our economic woes. What the hell did Sputnik or low aptitude have to do with the Made-in-America financial meltdown that Wall Street bankers inflicted on the entire world?

It is they, the best and the brightest graduates of our business and law schools—not kids struggling at public high schools and community colleges—who designed the toxic derivatives that almost destroyed the world economy. Obama’s focus on education in his State of the Union speech is a deliberate diversion from what seriously ails and afflicts us: an unabated mortgage crisis, stubbornly high unemployment and a debt that spiraled out of control while the government wasted trillions of tax dollars making the bankers whole.

What nonsense to insist that low test scores of students at public schools hobbled our economy when it was the highest-achieving graduates of our elite colleges who designed and sold the financial gimmicks that created the Great Recession. Indeed, some of the folks who once designed the phony mathematical formulas underwriting subprime mortgage-based derivatives won Nobel Prizes for their effort. A pioneer in securitizing mortgage debt, as well as in exporting jobs abroad, was one Jeffrey Immelt, the CEO of General Electric, whom Obama appointed to head his new job-creation panel.

That the financial meltdown at the heart of our economic crisis was “avoidable” and not the result of long-run economic problems related to education and foreign competition is detailed in a sweeping report by the Democratic majority on the Financial Crisis Inquiry Commission. In a 576-page book the commission concluded: “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again.”

That is just the warning that Obama has ignored by continually appointing the very people who engineered this crisis, mostly Clinton alums, to reverse its ongoing dire consequences. The commission noted that the decision made in 2000 in the closing days of the Clinton Administration to exempt the complex financial instruments known as over-thecounter derivatives from regulation was “a key turning point in the march toward the financial crisis.”

Obama appointed as his top economic adviser Lawrence Summers—who, as Clinton’s Treasury secretary, was the key architect of that “turning point”—and Summers’s protégé Timothy Geithner as his own Treasury secretary. The finding of the ten members—six Democrats and four Republicans—on the Financial Crisis Inquiry Commission was that Geithner, who had been president of the New York Fed before Obama appointed him, “could have clamped down” on excesses by Citigroup, the subprime mortgage leader that Geithner and the Fed bailed out along with other unworthy banking supplicants.

That profligate behavior of Wall Street crippled the economy and ran up an enormous debt, which Obama now uses as an excuse for a five-year freeze on discretionary domestic spending, the small part of the budget that might actually help ordinary people. Speaking of our legacy of deficit spending, Obama stated, “…in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs and put money in people’s pockets. But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in.”

Why now? It is an absurd demarcation to freeze spending when so many remain unemployed just because corporate profits, and therefore stock market valuations, seem firm. Wall Street profits are booming, but the price has been—as the Financial Crisis Inquiry Commission reported—26 million Americans out of work, more than 8 million families that have lost their homes and “nearly $11 trillion in household wealth [that] has vanished, with retirement accounts and life savings swept away.” America is a union divided between those who agree with Obama that “the worst of the recession is over” and the far larger number in deep pain that this President, like his Republican predecessor, is bent on ignoring.

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

by Robert Scheer
from HUSTLER Magazine January 2011

ROBERT RUBIN GIVEN PASS FOR KEY ROLE IN DESTROYING ECONOMY

One of the hallmarks of American power elites—in contrast to those of, say, Japan—is that they never seem to be held accountable for their crimes and incompetence. Instead of committing hara-kiri, they just lay low for a few months and then pretend they had nothing to do with any of it.

So it is that CNN pundit Fareed Zakaria, who suffered no apparent shame or career consequences for initially backing the biggest U.S. foreign-policy blunder since Vietnam—the invasion of Iraq, can be paid to blithely toss softball questions on national television to Robert Rubin, key backer of the most destructive domestic policies in the same time period: the deregulation of the banking industry.

Ah, television “journalism.”

On this particular Sunday, I was trapped on a treadmill in front of an overhead television and unable to turn the thing off in time to avoid this assault on my mental and physical health. As a result I was forced to hear Rubin, Treasury secretary under President Clinton, insist he always favored regulating toxic derivatives and is therefore not at all responsible for the ensuing economic meltdown.

Rubin was responding to the sole critical question from the CNN host, who quoted a question by New York Times columnist Paul Krugman: “Did all the senior members of the [Obama] economics team have to be protégés of Robert Rubin, the apostle of financial deregulation?”

Unfortunately, Zakaria just rolled over when his guest simply lied in response: “First of all,” Rubin said, “I am not the apostle of financial deregulation. Quite the contrary. On derivatives…I developed a deep concern about the systemic problem that was created. When I was back at Goldman Sachs, it was a concern I had…a concern I had when I was in government. And, in fact, when I wrote my book in 2003, I was so concerned about it that I actually included that discussion in there.”

Zakaria ended the show recommending it as his book of the week: “He [Rubin] wrote a great memoir that covered his two distinguished careers, both…on Wall Street and in Washington. … It was written with Jacob Weisberg, a great writer, the [former] editor of Slate, and the two men weave a compelling tale that has many lessons for today.”

To be charitable, I will assume that Zakaria has not actually read that book, which omits any discussion of the radical deregulation legislation that Rubin ushered through Congress and got the President to sign. Clinton is on record stating he got bad advice from Rubin and his handpicked successor, Lawrence Summers, on derivatives regulation: “On derivatives, yeah, I think they were wrong, and I think I was wrong to take [their advice],” Clinton told ABC News in April 2010.

Rubin and Summers were responsible for forcing Brooksley Born out of the Clinton Administration because, as chair of the Commodity Futures Trading Commission, she had the temerity to suggest regulating the mortgage- backed securities that eventually proved to be so toxic. Instead, Rubin and Summers pushed the Commodity Futures Modernization Act, which Clinton signed into law before his last month in office, categorically exempting those suspect derivatives from any government regulation.

By then, Rubin had moved on to a $15- million-a-year job at Citigroup, which became a prime exploiter of the subprime housing market. As a result of its massive involvement with toxic securities, Citigroup— with Rubin in a leading role until early 2009—had to be bailed out by the federal government with a $45-billion direct investment and a guaranteed Fed protection for $306 billion in potentially toxic assets.

Citigroup, a merger of the old Citicorp and Travelers Group, was made legal only by the Financial Services Modernization Act, which Rubin backed while serving as Treasury secretary.

Then, in one of the most egregious conflicts of interest in U.S. history, Rubin went to work for the new bank, which took advantage of the changes in the law to buy up the infamous subprime lenders, beginning with Associates First Capital. The Economist magazine questioned whether investors would see Citi’s bold new venture “as something smart, such as ‘evolved credit extension,’ or something seamy, such as loan-sharking.”

Rubin was a major proponent of the firm’s seamy expansion into the mortgages that proved to be toxic, and by 2007 Citigroup was the second-largest subprime servicer, after the only slightly more infamous Countrywide.

There is much more, and I haven’t even touched on Rubin’s shameful role in Enron’s shenanigans. Enough said, though, to question not only Fareed Zakaria’s journalism but, far more important, Barack Obama’s leadership in first turning to Rubin as a key campaign adviser and then putting his disciples in charge of the U.S. economy.

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

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by Robert Scheer
from HUSTLER Magazine December 2010

ON ELECTION DAY REMEMBER THAT THE GOP MAJORITY REJECTED EXTENDING UNEMPLOYMENT
CHECKS TO MILLIONS OF CITIZENS THROWN OUT OF WORK BY THE WALL STREET DEBACLE.

The garbage charge of this year’s midterm elections is that Barack Obama and the Democrats in Congress are anti-business or, even worse, some kind of socialists. Just the opposite is the case with this President, who—like Bill Clinton before him—has given the Wall Street lobbyists just about everything they had paid for. Those same lobbyists, ingrates that they are, now are pushing for Republican control of Congress because they want to pressure our Democratic President for even greater concessions in the remainder of his term.

That’s what they did to Clinton after his first two years in office, and the tactic worked brilliantly, turning the Arkansas poor boy populist into a submissive water carrier for Wall Street for his next six years in office. It was Clinton who reversed the Depressionera Glass-Steagall Act that prevented highflying investment banks from playing with the federally insured banking deposits of ordinary folk. And when those bankers all too predictably abused their newfound freedom from sensible regulation by designing and marketing the Ponzi scheme of toxic derivatives and credit default swaps, it was Obama who went even further than George W. Bush in bailing them out.

This is a far cry from your grandfather’s Democratic Party, when President Franklin Delano Roosevelt responded to the lessons of the Great Depression by corralling Wall Street greed with legislation designed to prevent the big banks from being too big to fail. Ever since Ronald Reagan, the Republicans have talked a good game of ending those New Deal restraints on big finance, but it was Clinton who got it done. That’s what freed Wall Street to run amok, almost sending the entire economic system off the cliff. And it was Obama who kept open the spigot for a federal bailout following George W.’s welfare program to save the bankers from the consequence of their uncontrolled greed.

Faced with that disaster, Bush just threw taxpayer money at Wall Street while asking absolutely nothing in return to help those same taxpayers who were hurting so thanks to Wall Street excess. Obama is now attacked because he got back a few very modest new regulations to prevent a future financial meltdown, and for that sensible protection of the public interest he is being damned.

The Democrats, whose voting base is centered more on those who still have to work for a living than on the country-club set at the heart of Republican power, do have to spread the wealth just a bit. That’s why the Democrats favor healthcare reform and job-stimulus programs, while the Republicans are all heart for rich retired golfers. But the irony is that, in the crunch, the Democrats, despite offering a few morsels for the rest of us, have been better for Big Business than their Republican opponents.

Both major parties are under the control of Wall Street, but the Democrats are the lesser evil because they have to deliver some crumbs to ordinary folks. All you should require as a reason for not voting for a Republican is that the GOP led a filibuster against legislation that would extend unemployment benefits for some of the 8 million people thrown out of work by the Wall Street debacle. Only two Republicans—Maine Senators Olympia Snowe and Susan Collins—voted to support the extension. It seems Republicans—who, under George W. Bush, threw trillions at Wall Street—are suddenly worried about the national debt when it comes to putting food on the table of unemployed workers. The Republicans in Congress voted against every effort to force the banks to help people stay in their homes; at least the Democrats made some effort to put people first.

That was too much for the bankers who want it all. Their attacks on Obama as antibusiness are nothing more than shameful hypocrisy on the part of the corporate lobbyists who know that the Democrats deliver for them even if the right-wing nutjobs on talk radio and television don’t. When the Big Business hotshots complain about Obama, it’s nothing more than their way of upping the ante. The best defense is a good offense, so why not cry foul about a rising national debt whenever the government spends money on anyone but the undeserving rich?

“Play the victim, woe is me” is the cry of such ripoff artists as Goldman Sachs and Citigroup, so maybe no one will notice that your financial banditry turned millions of foreclosed homeowners and unemployed workers into virtual paupers. That’s what’s up with this election: It’s a naked power grab to weaken the Democratic hold over Congress in order to push Obama further into the ungrateful arms of the Wall Street fat cats who want even more.

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

by Robert Scheer
from HUSTLER Magazine November 2010

LURKING BENEATH THE GULF OIL CATASTROPHE IS THE CORPORATE CORRUPTION OF AMERICA’S POLITICAL CULTURE.

What’s with Barack Obama’s war analogy on the Gulf oil spill? It’s as if some extraterrestrial force had suddenly launched “The Invasion of the Slippery Sludge.”

“Abroad, our brave men and women in uniform are taking the fight to al-Qaeda,” the President said in his June 15 prime-time address from the Oval Office after weeks of being slammed for apparent passivity in the face of mounting disaster. “And tonight, I’ve returned from a trip to the Gulf Coast to speak with you about the battle we’re waging against an oil spill that is assaulting our shores and our citizens.”

What nonsense! The oil was minding its own business until some multinational corporations, enabled by a dysfunctional government regulatory regime, decided to wage war on the ecological balance of the oceans by employing technology that they were not prepared to control. Cleaning up the mess we made by raping the environment to satiate our consumer gluttony is not a glorious battle against evil but rather obligatory penance for the profound error of our ways.

You wound Mother Nature by punching a hole deep in her pristine waters, where you have no business going, and when she bleeds uncontrollably, you dare blame her for the assault? This from a President who, shortly before this disaster, had given the oil companies permission to pillage in the deep seas at will.

At least Obama now admits to having been extremely naive in his belief that they knew what they were doing: “A few months ago, I approved a proposal to consider new, limited offshore drilling under the assurance that it would be absolutely safe—that the proper technology would be in place and the necessary precautions would be taken. That obviously was not the case on the Deepwater Horizon rig, and I want to know why.”

The President already knows why! It’s the same ideological obsession that led to the deregulation of the banking industry—a policy based on the assumption that the unfettered pursuit of multinational corporation profits would somehow serve the public good. In every area of federal governance, the story is the same: The mammoth corporations, through their lobbyists and campaign contributions, end up controlling the government agencies ostensibly regulating the activities of the military-industrial, health, financial and communications complexes. Why be surprised that the oil conglomerates are also in bed with their pretend Washington regulators?  Obviously, Obama cannot be blamed for the bipartisan endorsement of the Reagan Revolution’s siren song, a call to make the world safe for multinational corporations. The radical antiregulation campaign—endorsed by Bill Clinton as well as the father-and-son Bush team—corrupted rather than improved the efficiency of the entire private sector, and what happened with the oil industry was the rule and not the exception.

In explaining the failure of the Minerals Management Service, whose responsibilities include regulating oil drillers, Obama stated: “Over the last decade, this agency has become emblematic of a failed philosophy that views all regulation with hostility—a philosophy that says corporations should be allowed to play by their own rules and police themselves. At this agency, industry insiders were put in charge of industry oversight. Oil companies showered regulators with gifts and favors, and were essentially allowed to conduct their own safety inspections and write their own regulations.”

That damning indictment of the corporate corruption of our political process should stand as a cautionary tale to everyone, but particularly to the citizens of those red states now suffering, thanks to offshore drilling previously approved by the majority of their voters. Hopefully they, and the President who catered to such impulses, will take away from this very costly mess a justifiable skepticism about the risk assessments of plunderers that treat natural treasures as nothing more than potential profit centers.

The public goes along because, as with the jobs created by military spending and the false wealth of financial bubbles, it is blinded by lavishly funded corporate PR that cloaks the true costs of such reckless corporate behavior.

Coinciding with Obama’s June speech, one Republican congressman said British Petroleum— which took steps toward creating a $20-billion fund to pay for spill reparations— was the victim of a “shakedown” by the President. However, even financial experts noted that this may have been as much a crafty Wall Street move as anything, creating with the obligation a “poison pill” for potential “hostile takeover” predators.

Of course, it is quite possible BP could be chopped up and sold—its huge international oil reserves going one way to produce more billions in profits while a rump portion is left to languish through decades of liability litigation.  Ultimately, what must be fought and won is the war against corporate dominance of every important aspect of our political culture. The catastrophic Gulf oil spill is the wake-up call to fight corporate arrogance that we, and our President, desperately needed.

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

by Robert Scheer
from HUSTLER Magazine October 2010

FATHER AND SON ARE IRASCIBLE POPULISTS, AND WE NEED MORE LIKE THEM IN BOTH PARTIES.

Count me as one lefty liberal who is not the least bit unhappy with the victory by Rand Paul in Kentucky’s Republican primary for the U.S. Senate. Not because it might make it easier for some Democratic Party hack to win in the general election, but rather because he seems to be a principled libertarian in the mold of his father, Representative Ron Paul (R-Texas), and we need more of that impulse in the Congress.

After all, what’s wrong with cutting back big government that mostly exists to serve the interests of megacorporations? Of course, for me it would be better if that challenge came from populist progressives of the Left, in the Bernie Sanders mold, but this is Kentucky we’re talking about.

Rand Paul, like his dad, is worthy of praise for standing in opposition to the Wall Street bailout, which will come to be marked as the greatest swindle in U.S. history, and which was, as he noted on his Web site, an unconstitutional redistribution of income in favor of the undeserving rich:

“Federal bailouts reward inefficient and corrupt management, rob taxpayers, hurt smaller and more responsible private firms, exacerbate our budget problems, explode national debt and destroy our U.S. dollar. Even more importantly, any bailout of private industry is in direct violation of the Constitution. It is a transfer of wealth from those who have earned to those who have squandered.”

An opponent in hindsight of the Iraq War, Rand Paul is a bit more inclined than his father to waffle on his libertarianism when it comes to supporting an interventionist foreign policy. Yet while he deems a U.S. invasion of Afghanistan to be legitimate, since the 9/11 attacks allegedly were planned there under Taliban protection, he claims he would have insisted on a formal declaration of war, as called for by the Constitution, before he would have supported it.

“If I had been in the U.S. Senate, I would have stopped them and said no more; we will have a vote,” he said. “We will declare war with Afghanistan. We will declare war with Iraq. I would have voted for a declaration of war with Afghanistan, but I would have voted against a declaration of war with Iraq. But I would have made them vote. And that’s the problem; they no longer pay attention to the rules.”

In any case, his Republican establishment opponent, Trey Grayson, attacked Paul for his opposition to an interventionist foreign policy as well as for favoring the legalization of marijuana. On both counts it is a good sign that Kentucky voters rejected Grayson’s lines of attack.

True, to wax warmly about a potential Republican libertarian senator is an act of desperation for a liberal who still hopes that the federal government might be moved by the embattled band of progressive Democrats in Congress to put the power of the federal government at the service of the needy. But when has that happened recently?

With a commanding Democratic majority in Congress and a former community organizer as President, the focus of economic policy in this time of enormous economic pain has been on saving the bankers who created this mess. With the D.C. Democrats trusting our well-being to the likes of Lawrence Summers and Timothy Geithner, who under President Bill Clinton did so much to enable Wall Street greed, would it not be good to have at least one Republican senator questioning the Washington spending spree?

Yes, Rand Paul is bad on a lot of social issues I care about (such as his stance on civil rights legislation and whether it infringes on the rights of private businesses). And no, I don’t embrace his faith in the social compassion of unfettered free markets. In this, he will likely follow the path of the “moderate” weightlifter-governor of my state of California, who is now telling us we must choose between honoring state pension plans or providing assistance to children living in poverty. We can’t do both, because raising taxes, corporate or otherwise, is a nonstarter in the land of Prop. 13.

But the alternative we have experienced under Democrats is not one of a progressive government properly restraining free-market greed, but rather, as was amply demonstrated in the pretend regulation of the oil industry, of government as a partner in corporate crime. It is the power of the corporate lobbyists that is at issue, and it is refreshing that candidate Paul has labeled Washington lobbyists a “distinctly criminal class” and favors a ban on lobbying and campaign contributions by those who hold more than a million dollars in federal contracts.

Heresy, I know, but it is only thanks to Ron Paul, the father and hopefully the mentor of the potential Kentucky senator, that we got a Congressional mandate to audit the Fed’s role in the banking bailout. How bad could it be to have another irascible Paul in the Congress? Not that bad at all.

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

by Robert Scheer
from HUSTLER Magazine September 2010

THE INVESTMENT FIRM’S DOMINATION OF GOVERNMENT BANKING POLICY GREEN-LIGHTED DISASTER.

Goldman Sachs is right to claim innocence of any charges, criminal or civil, that the government brings against the financial conglomerate for banking fraud. Of course the firm is innocent, no matter the ugly facts of its hustling the unsuspecting, from New York to Athens and many other points worldwide. Sure, its CEO, Lloyd Blankfein, was paid $68 million in 2007, the year Goldman bet against its own customers with those phony “synthetic” derivatives. But you’d better believe it was all legal.

How could it be otherwise when Goldman got to help write the laws governing the selling of derivatives and other key aspects of financial deregulation that allowed it to grow too big to fail and thus be eligible for generous government bailouts? Its lobbyists, one of whom got to be chief of staff in the Obama Treasury Department, were the leaders in getting the government to make the regulations Goldman-friendly. If convicted of anything, Goldman’s wiseguys have a right to the outrage of handcuffed Mafia bosses in the bad old days when they felt betrayed by judges and legislators they assumed had been properly bought.

That’s more than a wild rhetorical point. The massive bank-lobbying effort that Goldman’s big bucks helped pay for forced through the radical deregulation that ended effective government supervision of the big investment banks and resulted in the banking debacle that wiped out the home ownership and jobs of tens of millions of people worldwide. Under the presidencies of Bill Clinton and George W. Bush, when laws enacted during the Great Depression were made moot, the Treasury Department was practically a subsidiary of Goldman Sachs. It was the most blatant takeover of the government by one firm in American history. Clinton named former Goldman Sachs Vice- Chairman Robert Rubin to be his Treasury secretary, and Bush did the same giveaway of power when he named Goldman Chairman Henry Paulson to fill that post in his administration. Goldman’s total domination of the Bush Administration’s banking policy was so widespread that the New York Times ran an article headlined “The Guys From Government Sachs.”

As the Times story pointed out, “Goldman’s presence in the [Treasury] department and around the federal response to the financial bailout is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.”

Ex-Goldman CEO-turned-Treasury Secretary Paulson had an eager accomplice in Timothy Geithner, who was serving as head of the New York Fed before he replaced Paulson at Treasury in the Obama Administration. While at the New York Fed, it was Geithner who presided over the shameful payouts of taxpayer dollars to Goldman, as well as facilitating its overnight transformation into a bank holding company eligible for access to low-interest borrowing from the Fed and other profitable favors. If that privilege had been granted to Lehman Brothers, the company would still be with us instead of having disappeared through bankruptcy.

The closeness of the Geithner-Goldman connection was underscored by a Wall Street Journal report that concluded: “The Federal Reserve Bank of New York shaped Washington’s response to the financial crisis last year [2008], which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.”

With friends like that running Washington’s oversight of Wall Street, it’s no wonder that Goldman traders got a bit wild in their greed and that the firm’s top leaders gave them the green light to milk the system and, ultimately, we taxpayers for all it was worth. CEO Blankfein would later claim in testimony before a Senate committee that he “did not know” the details of those trades, but if that is true, it is obviously because he didn’t want to know as long as the money was pouring in.

The synthetic deals now at the heart of various lawsuits against Goldman would have smelled rotten to an experienced trader like Blankfein if he had paid scant attention to the derivatives packages that his company’s own internal e-mails described as “a shitty deal” and “a piece of crap” for the suckers buying them from Goldman. He didn’t have to care, because those deals were expected to go sour. Goldman bet on that outcome even as it failed to inform its customers of that likely result.

When the Mafia played those kinds of games, it was called “loan-sharking,” and the Mafiosi were put away behind bars for long stretches. But they didn’t have the right lobbyists and their own shills on the inside of the federal government. Not so the guys from Government Sachs, who are never going to require the services of the Witness Protection Program.

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.