He Ain’t Heavy, He’s My Brother

Loss. That’s what I felt when I watched the space shuttle land at LAX, carried to our City of Angels on the back of a close relative, the mighty Boeing 747 – twelve years older than the shuttle and, though aging, nearly as inspiring when you happen to see one. I recalled where I was when Challenger exploded – studying in a library for the California bar exam – and when Columbia burned up on re-entry – at a cottage in Idyllwild with my family. But I’m talking about a different kind of loss.

When I was a kid, growing up in the Sixties, America seemed to be the land of limitless possibilities. President Kennedy launched the space program in 1961, promising we would reach the Moon by the end of the decade and though incredible, no one doubted the USA would do it. In the more distant future described by Gene Roddenberry, a “replicator” would eliminate want of food or material possessions and humans would be freed to explore any part of the universe they chose.

Sure, there were serious problems right here on Earth, and in this country, but the War on Poverty, the civil rights movement and a bipartisan roster of widely respected – even revered – public officials seemed determined to get these matters in hand. We were working on them, and nothing seemed intractable. The cynical snicker about the Sixties now. But such was the energy and enthusiasm of the economic prosperity of post World War II United States, an era that is already gauzy like our refracted impressions of ancient Rome.

Just after three in the afternoon on July 20, 1969, my friends and I gathered around the clunky RCA television in our den, understanding that the rest of the planet was doing the same. I was seventeen. Like all kids who grew up in the era before cable TV, video games and the Internet, we had spent many late nights outdoors contemplating the Moon, which seemed to us as distant as adulthood.  Now we could barely discern the astronauts in the grainy black and white images as they walked on the lunar surface, but there was no mistaking the achievement of that day. And though it was America’s achievement, the whole world celebrated.

A few days from now, shuttle Endeavor will be drawn through the streets of Los Angeles– like a funeral caisson for a fallen soldier – by a magnificent technological beast. That journey, at 2 mph, will end at a museum twenty-four hours later. There it will rest much like the Pyramids or the Great Wall of China, monuments to human will and imagination left to puzzle future generations. No ambitious program to explore the universe will succeed the shuttle.

That’s because there's no money left to pay for our aspirations. The last decade began with a speculation-induced economic recession in 2001. In California, once the home of aerospace, the collapse of the tech-bubble was compounded by the disastrous results of the deregulation of electricity by local lawmakers, which included a bailout for over-priced nuclear power plants that cost consumer ratepayers $28 billion. Then Enron and other Wall Street firms that bought the power plants covertly manipulated the supply of electricity to jack up prices, bankrupting utility companies and forcing the state to buy long term contracts for electricity from the manipulators – at the grossly inflated prices – to keep the lights on and businesses going. The deregulation debacle cost California $71 billion – and the local economy has never been the same.

Many Americans had not recovered from the 2001 recession when the Wall Street derivatives frenzy collapsed in the Fall of 2008. Americans lost their jobs, their homes, their savings. With incomes disappearing, Americans stopped spending. That hurt businesses, especially small businesses that could not borrow. And tax revenues declined. To pay Social Security and jobless benefits, and restart the economy, the federal government spent more than it took in in recent years.

This ignited the raging political debate over the federal government’s stimulus and deficit spending, though few Americans can claim to have been bailed out the way Wall Street was. After taxpayer cash infusions, subsidies, tax breaks and other favors estimated at between $9.7 trillion and $29 trillion, the Money Industry has emerged not merely intact but more profitable than ever.

Add $1.3 trillion for the Afghan and Iraq wars, and you can see why there won’t be a manned mission to Mars anytime soon, much less hyperdrive tours of the galaxy.

Our country paid a heavy price to save Wall Street. Consider that the cost of the getting to the Moon in today’s dollars would be about $26 billion less than taxpayers spent bailing out the insurance giant AIG – about $182 billion. And the Moon program was a massive stimulus program for America in the Sixties, and not just the defense industry. Its benefits included the research and development of a raft of technologies that led to enormous advance in computer, medicine and other industries – not to mention Velcro. Steve Jobs and his colleagues in Silicon Valley didn’t build the modern personal computer industry by themselves: you, the American taxpayer, helped.

Measuring the cost of government assistance to Wall Street versus to business innovators versus to Americans in need compartmentalizes the debate. What does it say about the country – and its future – that the average life expectancy of white Americans who did not graduate high school has dropped by four years, to where it was in the 1950s to Sixties?

Yet a majority of Americans – 54% –believe that the government should do less to solve our country’s problems… though there is a sharp partisan divide on the question, with 82% of Republicans saying less and 67% of Democrats saying more, according to Gallup.

There will be Americans in space in the near future, however. Using the technology and facilities taxpayers built, a number of private companies are developing plans to commercialize orbital space flight, the New York Times reports. And every American who wants to hitch a ride can do so – for somewhere between $50 million and $150 million a ticket, depending on your destination.

As the 747 and the shuttle swung low over Los Angeles, one of my favorite oldies from the Sixties came to mind:

The road is long, with many a winding turn,
That leads us to who knows where, who knows where.

So on we go. His welfare is of my concern.
No burden is he to bear - we'll get there.

For I know: he would not encumber me.
He ain't heavy: he's my brother.

I thought back to that humid afternoon in July, 1969, when Kennedy’s charge was fulfilled by Apollo 11. JFK was gone; along with his brother Robert, and Martin Luther King, struck down by hate, fear, madness.  At the time, they seemed to us pioneers in the still young and uncertain cause of Democracy, and had given their lives to better their fellow Americans and the Nation. The sense of  purpose, destiny, determination and sacrifice – shared by the nation – was inspiring. At least to a young guy from a Boston suburb.

 

Harvey Column - 10/01/2012

Obama to Corporate Persons: And This is How You Thank Me?

Poor President Obama. Confronted with an economic catastrophe when he took office, he made a decision – well documented here and here, for example – to save the financial industry from its own misdeeds, foregoing the opportunity to obtain from the Wall Street CEOs any kind of quid pro quo for beleaguered taxpayers and homeowners. And what does he get in return?

Wall Street contributions to the President’s re-election campaign are down 68%, reports the New York Times.

There’s also been a drop in financial support from some of those who were all-in to elect him in 2008.  Some big-name progressive donors, dismayed by the President’s inability to hold the line on everything from foreclosures to a public health care option (which likely would have survived the Supreme Court’s widely expected invalidation of the health care reform law), are sitting this one out – at least for the moment.

Unfortunately, the worst is yet to come for the President, courtesy of the same Supreme Court. Freed from campaign spending restrictions by the court’s ruling in Citizens United, the highly-skilled right wing corporate apparatus is aiming to raise $500 million in “super PAC” money to beat Obama. Pro-Romney super PACs have already out-raised those supporting the President by a factor of eight.

This comes as no surprise to those familiar with the way big business behaves in public.

If corporations are people, as the Republican majority on the Supreme Court says, then the defining trait of the modern corporate personality is ingratitude. When all the federal bailout programs are totaled up (including indirect assistance like being able to borrow taxpayer money at super-low interest rates), Wall Street and many other firms got somewhere around $14 trillion in financial aid from Washington.

Had that money been put in the hands of the American people, it could have paid off every mortgage, credit card and car loan in the United States.

Like President Obama, we are still waiting for our thank you note from corporate America.

Instead, we get surging credit card interest rates, skyrocketing gas prices, outrageous health insurance premium increases and, adding insult to those injuries, the imposition of undisclosed inflated fees by cell phone, airline and other companies for the dishonest purpose of charging hapless consumers more than the advertised price.

Hence the need for parental supervision of corporate persons, also known as "regulation."

Corporate money had already eroded the democratic process under the patchwork of campaign finance laws that pre-dated Citizens United. Our report, “Sold Out: How Wall Street and Washington Betrayed America” (PDF) gets right to the bottom line. Between 1998 and 2008, Wall Street invested $5 billion in Washington, a combination of money for lobbying and campaign contributions that won deregulation and other policy decisions that enabled the Money Industry to do as it pleased. The ensuing orgy of unbridled speculation came to a halt in 2008 when the big banks threatened to shut down the system unless they got trillions of dollars in loans, tax breaks and other taxpayer bailouts.

But by deregulating corporate money in Citizens United, the U.S. Supreme Court has empowered a crime wave of corporate influence peddling that will dwarf anything this country has ever seen.

Take, for example, Sacramento – California's integrity-free zone.

$ A half-decade-long battle to force health insurance companies to open their books and prove they need rate increases was crushed by industry lobbyists, forcing angry consumers to mount a ballot measure of their own.

$ A package of bills backed by the state’s Attorney General to prevent banks from abusing the home foreclosure process – dubbed the “Homeowners Bill of Rights” – has been blocked by the banking industry, which spent over $70 million on lobbyists and lawmakers in California between 2007 and 2011.

$ A bill that will deregulate telephone service, sponsored by the state’s two biggest phone companies, AT&T and Verizon, is sailing through the state legislature, much as electricity deregulation did in 1998 – to disastrous consequences for California taxpayers.

Once upon a time, average citizens might have had a voice in these policy debates.  Now that corporate America is locked and loaded, we don't stand a chance.

Citizens United / Harvey Column / President Barack Obama / Supreme Court - 04/23/2012

“If We Build It, He Will Come”

Washington has become Wall Street’s “field of dreams.” There, the money conglomerates engage in their beloved sport of financial speculation, cheered on by a small but powerful group of public officials who have sold out the rest of the country.

Deregulation was a home run for the financial industry. Wall Street’s friends in Washington sacked the rules of the game, unleashing the hedge funds, banks, investment firms, insurance companies and other speculators who made billions before the crash, then got billions more from the taxpayers after the crash.

Meanwhile, as today’s New York Times points out, almost nothing has been done about “derivatives,” the virtual technology for the speculation that drove our economy into the dugout three years ago. Federal agencies that were supposed to issue new regulations to prevent another debacle have been tied up in knots by Wall Street lawyers.

Jobless and fearful for their kids’ future, people are furious about what happened.  But it was always going to be a daunting task to mobilize the public behind the necessary reforms when they are so complex, and anything drafted to appeal to directly to Americans’ wallets – say, by providing a cap on credit card interest rates, or low-rate mortgages, or other forms of financial relief – would have inspired the financial industry to retaliate with nuclear weapons. Neither the President nor anyone in Congress were willing to start that fight, principled as it would have been.

So it has all come down to Elizabeth Warren, the brainiac Harvard law professor who suggested, in a law review article in 2005, that Congress create a new federal agency with the mission of protecting consumers against false advertising, misleading contracts and the general thievery of the financial industry.  Democrats proposed the agency as part of the Wall Street reform legislation in 2009, and after the industry thought they had whittled it down to something they could easily live with – or simply get around – Congress created the Consumer Financial Protection Bureau and the President signed it.

Warren was the obvious person for the job, and almost immediately Americans began calling on President Obama to nominate her for the post.

What Wall Street didn’t realize at first is that it is way, way easier for Americans to get behind a human being than a thousand-page piece of legislation that has been lawyered and lobbied into mush. America has become a celebrity-driven culture, and while Elizabeth Warren is no Lady Gaga, she is one of a small number of outsiders that have occasionally busted up the D.C. establishment – just as Ralph Nader did in the 1970s, and Jimmy Stewart fictionally did in the Frank Capra movie “Mr. Smith Goes to Washington.”

Whether President Obama will nominate Warren to the position has become the defining question of his Presidency for millions of Americans, especially those who voted for "change we can believe in" in 2008.

When confronted with demands by civil rights leaders to take action against racial discrimination in the late 1930s, President Franklin Roosevelt’s legendary retort was “make me do it.” Whether he ever said that, the strategy he suggested is literally page one of the best manual for citizen empowerment and political organizing.

Let’s put it in more contemporary terms. President Obama has made it clear he doesn’t want to nominate Warren. It’s just another fight he’d rather not have. He embraces consensus, not controversy.

But the President has to know she’s the best person for the job. So the burden is on Americans to make it impossible for him not to nominate her. Part of that means punishing the people who are working against her – members of Congress, and those in the Administration – because they are doing Wall Street’s dirty work. These are the same people who let Wall Street plunder our nation and then bailed Wall Street out with our money.

My guess is, we can make Obama do it.

Consumer Financial Protection Agency / Harvey Column / Outrage / President Barack Obama / Uncategorized - 06/22/2011

Happy Thanksgiving to You from California First LLC, the New Owner of Your State

This isn’t a tale about turkeys. It’s about pigs.

With America’s economy smashed, and American consumers no longer consuming, these are tough times for everybody, and that includes Wall Street investors and hedge funds. What are they supposed to do with the billions of dollars they have amassed courtesy of the US taxpayers?  Wouldn’t it be great if they could figure out a way to help us while helping themselves?

Harvey Column / Outrage / Uncategorized - 11/23/2010

Barack Obama, Meet Gray Davis

The Massachusetts Massacre rocked the D.C. establishment. But when it comes to political earthquakes, there’s no place like California. A look back at the Golden State’s electricity crisis, when a cautious governor let the state’s taxpayers bear the financial brunt of deregulation and was later ousted, suggests that last Tuesday’s vote was merely a foreshock of what lies ahead unless President Obama and congressional Democrats step up.

Nine years ago, Wall Street energy traders took advantage of California’s newly deregulated electricity market to do what Wall Street always does. By gaming the system, buying and selling electricity contracts multiple times, sending power out of state and ultimately shutting down their power plants to create blackouts, the speculators drove the price of electricity through the roof, until the state’s utilities collapsed and the California economy seized up. It was a massive windfall for Wall Street.

Although deregulation had been signed into law by Republican Governor Pete Wilson, it didn’t take full effect for several years. By the time deregulation proved to be the disaster myself and other consumer advocates predicted it would be, the Governor of California was Gray Davis, a moderate Democrat who was on the short list of contenders for the Presidency in 2004.

Then the lights went off – in middle of January, when consumption in California is at its lowest of the year. The energy industry said its plants were down for maintenance. The Bush Administration blamed California for not building enough power plants. But anyone not on the industry’s payroll or blinded by worship of the free market could figure out that California was being scammed, big time, by an artificial shortage.

With traffic signals dark and businesses shutting down, we called upon Governor Davis to send in the National Guard, seize control of the power plants, and turn the juice back on.

Davis didn’t know what to do. Deregulation wasn’t his idea, but it melted down on his watch. We later heard that representatives of the California Public Utilities Commission and some of the state’s utility companies had privately urged him to use the power of eminent domain to take over the plants. But Davis declined.

Instead, he brought in Wall Street advisors from firms like the Blackstone Group to guide him. At that point, the state’s utility companies had run out of money to pay for electricity. The energy companies refused to generate any more electricity unless the state of California – the taxpayers – stepped in. The Wall Street rating agencies piled on, threatening to downgrade the state’s credit rating if Sacramento didn’t agree. It was “blackout blackmail,” but Davis’s Wall Street advisors convinced him that it was the only solution, and he capitulated.

California borrowed tens of billions of dollars to pay the energy companies their vastly inflated prices for electricity. Our electricity bills will reflect that debt for another 20 years. Meanwhile, Wall Street firms reaped billions of dollars – from the phony crisis, and from the bonds that were floated to pay for it.

The lights came back on. But California voters never forgot how Gray Davis handled the confrontation between Wall Street and Main Street. And when an action figure from the movies gave them an opportunity, they terminated Davis’s political career.

Similar forces were at work in the Massachusetts election. Bay State voters were simply the first in 2010 to have the opportunity to express their dismay at how Washington has handled the financial crash that Wall Street engineered.

Like Davis, President Obama wasn’t even on the scene when Congress and federal regulators dismantled the Depression era safeguards that protected us against a speculation-driven collapse. But when confronted with an unprecedented crisis, President Obama, like Governor Davis, choked.

Instead of using every measure of his presidential authority to stop the speculation, punish the perpetrators, reform the financial system and relieve struggling Americans, Obama brought in a cadre of Wall Street players whose advice was, not surprisingly, to spend trillions of taxpayer dollars to bail out the banks, credit card companies and hedge funds, and let Wall Street go back to business as usual with barely a slap on the wrist. The hundreds of millions of Americans who didn’t qualify for a federal bailout were left empty-handed.

Like Davis, Obama will have a couple of years to turn this political and personal debacle around.

Putting a cap on the interest rates we pay to borrow our own money from banks and credit card firms would help millions of consumers weather the coming months and get the economy going again.  Replacing Geithner, Summers and others who used to work for the industry with a few Nobel Laureates like Joseph Stiglitz who warned of the coming collapse would be good for the White House, now trapped in its own pro-Wall Street bubble. Last week, Obama proposed breaking up the too-big-to-fail banks, which would prevent more reckless speculation and future crash/bailouts. But Americans now wonder if the President will follow his words with deeds, or surrender to the industry lobbyists without a fight, as he did before.

Whether Obama will find the courage that eluded Gray Davis remains to be seen.

Harvey Column / President Barack Obama / Too Big To Fail - 01/25/2010