The CEO's were not the only ones busily tightening the screws on us ordinary, gullible and dumped-on Americans. The new class of business aristocracy that had emerged starting in the 1960s from Harvard Business School, Wharton and other mass producers of financial whiz kids were emptying our pockets as we stood tied to a pole, ready to be cannibalized by savages dancing to the beat of a jungle (survival of the fittest and best connected) drummer.
We were overnight transformed from a producing society to a consuming society, overnight transformed to consumers of Wall Street's raging bull droppings. Instead of making things, we are now selling things made by others. But, there are not enough sales jobs in warehouses and retail stores to go around, so we sell each other financial products invented for us by the financial wizards in our midst. The financial whiz kids from Harvard and Wharton sold us a gargantuan Ponzi scheme that dwarfed even Bernie Madoff. They sold us securities consisting of worthless mortgages and products not the smartest among us could understand.
Wall Street icons sold us worthless securities knowing full well they were worthless, bet against the products they were selling us, effectively tanking their reputations by telling us those securities were opportunities of a lifetime. They were out for the quick buck, these gleaming cap-toothed suits, they were not concerned for their long-term reputations. "A horse, a horse, my reputation for a horse!"
Continuing with Robert Borosage's blog post, "Obama and the CEO's: Looking for Love in all the Wrong Places":
Financial Speculation and Soaring Insecurity
40 percent of American households have experienced unemployment, foreclosure, underwater homes or mortgage arrears in the financial collapse. Americans lost some $11 trillion in savings and home values, dashing retirement plans. At the height of the Bush economy, Wall Street was capturing fully 40 percent of corporate profits, as the housing bubble built on a tsunami of financial speculation. UBS and General Electric, whose CEOs met with the president, were among the financial institutions bailed out by the Federal Reserve and the Treasury.
This bubble-bust Wall Street economy was a product of deregulation, the growth of a shadow banking system, and the spread of leveraged speculation with other people's money. President Obama was right when he said Wall Street needs to be smaller and engaged more in real investment than in speculation. But the president's cautious reforms engendered a multimillion-dollar lobby reaction from Wall Street. The banks were rescued but not reformed, the casino has reopened, and Wall Street's back to paying record levels of million dollar bonuses. The pervasive fraud and abuse revealed in the housing bubble has resulting in shockingly few prosecutions.
(Nykos2: We as a country do not want to learn. We are split by ideology. Those in the right are getting hoarse, screaming into our ears that we must leave business alone. They are drilling into our cerebellums the notion that government is the problem, therefore, government cannot possibly have the solution. Our government, effectively neutered, has stepped back. Wall Street is back in business, selling us on their latest Ponzi schemes.)
The economy can't work well without major reforms that curb financial speculation and make banking boring again. That requires tighter control on leverage and activities, curbs on banker's compensation schemes, and, as even the IMF now supports, taxes on banks -- including a financial transaction tax that would dampen computer-driven speculation. Needless to say, America's financial barons and their lobbies will oppose these reforms fiercely.
(Nykos2: From the Washington insider bloggers' website, The Hill: "One idea for raising taxes to pay down the debt is the bill introduced this February by Rep. Chaka Fattah (D-Pa.). His “Debt Free America Act” (H.R. 4646) would impose a 1 percent “transaction tax” on every financial transaction — whether paid by cash, credit card or any form of financial transfer, the only exception being transactions involving the purchase or sale of stock. Theoretically, everyone would pay one cent on the dollar for every such transaction in America every day — whether $3 million on a $300 million business acquisition, $300 on the purchase of a $30,000 car, or $5 on a $500 ATM withdrawal.
"To reduce the impact of such a flat tax on the poor, Fattah’s bill provides for a 1 percent tax credit for couples earning $250,000 or less ($125,000 or less for individuals) and discretion by the Treasury Department to exempt certain transactions on which lower-income people disproportionately rely. Another idea would be to amend his bill to exempt all transactions below $500.
"Using 2008 numbers as an example: There was $755 trillion in total transactions that year. If you deduct the exempted $312 trillion in stock transactions, that leaves $443 trillion in revenues, minus the cost of the tax credit and other possible measures to soften the impact on the poor. This means that with Fattah’s transaction tax in place, there is a real chance for eliminating the national debt within the next 10 years..."
This is a great idea, and easily enforceable. Will the U.S. Congress pass this bill? Of course not. Many in the lower House and in the Senate are kangaroos in Wall Street's pockets.)
Top End Tax Cuts and a Collapsing Infrastructure
America is literally falling apart. Collapsing bridges, exploding water mains, crumbling levees are a deadly clear and present danger. Children go to schools that are dangerous to their health. Our declining infrastructure is also costly economically, with outmoded transport, crowded highways, slow and inadequate broadband impeding our ability to compete. As President Obama has suggested, we need to make significant investments in building a 21st-century infrastructure, in education and training, in research and development as a foundation for a revived American economy.
In theory, the business lobby supports these investments. But they also lobby hard for top end and corporate tax cuts, and for spending cuts that makes it impossible to finance them. A fruitful conversation with the CEOs might have focused on whether they would commit real resources in a drive to increase investment in areas vital to our future. Instead, reports are that the president promised to move directly from the egregious top-end tax cuts in December to cutting spending and reducing deficits in January. If the wealthiest Americans, like those around the table with the president, are going to continue to pay a lower effective tax rate than their secretaries -- as Warren Buffett has noted -- then America will continue to starve investments in the areas vital to our future.
(Nykos2: Why shouldn't America's secretaries pay a higher effective tax rate than their bosses? The secretaries are lucky to have jobs. Top executives, after all, no longer need secretaries. They can do all their communication themselves via the Internet, using their companies' sophisticated email. The filing work can and is being done in India by some outsourcing company at the fraction of the cost of America's secretaries.
Their coffees? The executives can designate one of them to be in charge of coffee for the day. Each executive from division manager on shall function as the coffee guy or gal to serve all the other executives. By installing such a system, the executives will be forced to communicate with their fellow executives, promoting inter-department, inter-division communication.
Why shouldn't the executives eliminate the position of secretaries? They've eliminated their personnel managers, their data processing people, their accountants, their factory workers, their staff managers, etc. Every job that can be off-shored or outsourced to China, India and other countries is already either in China or other countries, or on a plane going to destinations suspected but officially unknown.
Their Boards of Directors are rewarding executives for shipping jobs overseas. Wall Street loves news about jobs going to China and making multinationals enormously profitable.
Secretaries who still have jobs should be eternally grateful that their jobs are not yet being outsourced to some heavily-accented Indian. So, yes, tax the secretaries more than their S.O.B. bosses.)
Regressive Tax Reforms and Record Poverty
More than 43 million Americans are in poverty, the highest number since they began keeping records. More than 42 million are on food stamps. Millions of homeowners are still facing foreclosure and loss of their homes. Mass unemployment continues, with more than 20 million Americans in need of full-time work. An entire generation of urban kids is essentially being written off, sentenced to crowded schools, broken families, dangerous streets, and joblessness. This is the tinder for social explosion.
Yet, programs for the poor will be on the chopping block from conservatives when the new Congress convenes. The politicians that the CEOs supported will be adding to, not subtracting from, the burdens of the "least of these." For there to be a serious effort to address poverty, to promise a fair start for every child, to provide the core elements of a real hand up that offers them the opportunity for a good education, a decent job, an affordable home and hope, we'll need costly new priorities that will have to be pursued largely without significant corporate support.
(Nykos2: The rich, the powerful, the well-connected are the new aristocracy in America. The outrageous compensations that they have packaged for each other have put them on a rocket ship to space. They no longer identify with ordinary, everyday Americans. "Americans are starving? Let them eat cake. I don't have time for them," they seemingly say to each other. "They are scum because they choose to be scum."
Listen to these new American aristocrats talk. Then, and only then, will you know if you still have a future in this country.)
Corporate Power and Corrupted Democracy
Corporate lobbies and corporate money are corrupting our politics. Over the last two years, we've witnessed graphic scenes in how powerful and entrenched corporate lobbies could fend off common sense reforms in health care, energy, finance and trade. The decision of the conservative Supreme Court gang of five in Citizen's United, overturning settled precedent to declare that corporations had the same free speech rights as people and could spend unlimited amounts in independent expenditure campaigns to influence elections, contributed to the flood of corporate money that helped to bring Republicans the majority in the House.
Washington can't work as an instrument of common purpose so long as corporate lobbies dominate the backrooms and corporate money dominates elections. Hundreds of billions of subsidies are now wasted on entrenched corporate complexes -- the military industrial complex, the drug and health care complex, the agribusiness and Big Oil complexes. Needless to say, the Obama CEOs aren't about to cut back their lobbying unilaterally and oppose bitterly any restrictions on their political activity. Yet, no reform agenda can survive unless the corporate hold on Washington is challenged.
This list can go on. Talking with CEOs makes much sense. Finding areas of agreement -- perhaps around infrastructure investment, education, R&D -- is useful. (It remains bizarre that corporate America so vociferously opposes single-payer health care that would remove from their balance sheets a major expense that harms their ability to compete). Making an alliance with the small businesses and national companies that actually want to prosper in America might be possible.
But the president should not use his "bully pulpit" to teach the wrong lesson. America can't succeed without prosperous companies, but global corporations now are prospering while America fails. They stand in the way of reforms vital to our economy and society. If Obama is at peace with America's corporate barons, he isn't doing his job. Embracing their agenda isn't "moving to the center," it is abandoning the fundamental reforms this country desperately needs.
(Nykos2: Obama has not completely capitulated to the business interests. I know, I was overly harsh on him in my past comments. Further reflection has convinced me that this guy may have the right stuff after all. He has allowed Big Business, Big Oil, Big Insurance, etc. to win this round. Hopefully, if he is re-elected in 2012, we will see the real fight between this administration and a business community that is drunk with power. The CEOs and their satellites and sycophants have, after all, most of the power centers, including the U.S. Supreme Court, seemingly in their pockets.)
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