Occupy Washington

Emboldened by the U.S. Supreme Court, big corporations have been busy exercising their newly granted First Amendment rights. Now a growing number of Americans are exercising theirs, assembling in cities throughout the nation to protest the bailouts, budget cuts and other artifacts of the Wall Street financial debacle three years ago this month.

Americans are notoriously slow to rouse, even when they are hurting. And we are certainly hurting: nine percent of Americans are “officially” unemployed; count those who have given up looking or have taken jobs far beneath their skill and ability, and one in five are struggling to stay afloat. Those fortunate enough to hang on to their jobs have to worry about the cost of health insurance, gas and groceries. 81% of Americans say the country is on the wrong track. The other twenty percent are presumably among those who lay claim to most of the wealth of our country.

Eighteen days ago, a few hundred citizens rallied in New York City, inspired by a call to “Occupy Wall Street” proposed by a magazine article. At first, the protestors – largely young people - got a snide blow-off from the New York Times. But thanks in part to some gratuitous pepper spray from the police, media coverage grew along with the protestors’ numbers. Last weekend, thousands marched in New York, while citizens in Los Angeles, Chicago, St. Louis, Philadelphia, Denver, Madison, Atlanta and Boston have turned out. The list is growing. Participants defy categorization or caricature: they come from all walks of life, all age groups, all ideologies. All share the view that the country has run off the rails.

Europeans have been protesting for months, their economies suffering severe collateral damage from the economic contagion unleashed by the Great Recession here at home. In Iran, Egypt and other Middle East nations, anger at poverty and political oppression boiled over earlier this year; dictators were overthrown.

But until now, most Americans have occupied nothing more than their living rooms – odd, since America’s own citizen revolution has been the beacon of democracy for the rest of the world. Many no doubt are simply too busy and too tired: two wage earner families, with some parents holding two jobs each. Some have lost so much confidence in government and in themselves that their sense of powerlessness has led to personal paralysis. No one can challenge the decision to stay home.

But the choice to stand in protest is the one singular act of political power left to the silent majority of the American people. A radical United States Supreme Court has concluded that corporate donations to politicians – a.k.a. bribery – are a form of “expression” that is protected by the First Amendment. The multinational conglomerates have used their vast wealth to seize control of our country. This has to change, and it has to be done by an amendment to the U.S. Constitution specifying that the right to support candidates and causes in elections belongs only to human beings - you can start the process right here. In the meantime, powerful as they are, corporations cannot march down our streets. Only human beings can do that.

Inevitably, the defenders of the intolerable status quo try to brand protests and protestors as insubordinate. They know that a citizenry, aroused, is a fearsome force. In recent days, as more Americans stand up to denounce the virulently destructive disparity in incomes and opportunities between the corporate elites and everyone else, the corporate hacks on Capitol Hill and the talk radio commentariat indicted the discussion as “class warfare.” Apparently that’s impermissible in our democracy because it challenges the core concept that “we the people” rule, and “we” is supposed to mean all of us. That’s precisely what’s at stake, of course, and the people demanding that it be addressed are nothing short of patriots.

Warren Buffet, the world’s second richest person according to Forbes, told CNN last week: “Actually, there’s been class warfare going on for the last 20 years, and my class has won.”

As we reported back in 2009, Wall Street has occupied Washington for too long. Now it’s up to us to take it back.

 

Harvey Column - 10/04/2011

Of, By and For

I wrote this about the Tea Party a year ago:

I’m not one of those people who is offended by the eruption of angry Tea Party organizations around the country. To the contrary, the TPʼrs are raising questions, pointing out problems and demanding answers from elected officials – just what an active citizenry is supposed to do.

But I disagree with their premise, which is that government is responsible for all that is wrong with our country, and that the solution therefore is a castrated federal government or no federal government at all.

A recent post by a Tea Party supporter framed the split this way:

The key difference between the left and right is that the left sees government as the answer to its dreams while the right sees government as the problem, not the solution.

Take away the hyperbole and that’s pretty much the debate that’s underway today in our country.

I believe that government of, by and for the People is one of the great inventions of humankind in history– along with the rule of law: We need police. We need the military. We also need a cop on the corporate beat in the executive suites of Wall Street. And we need rules and regulations to prevent health insurance companies from ripping us off or condemning us to death.

But a series of catastrophic failures by the U.S. government –  the failure to detect and prevent 9/11, the U.S. Supreme Court’s decision to award the 2000 election to George Bush, and especially the financial debacle that Washington suborned (PDF) – has deeply shaken public confidence in the basic institutions of our democracy.

During the Summer of Our Discontent two years ago, I traced the Town Hall confrontations over health care to displaced rage over the bailout. But let’s consider what happened to health reform, probably the single most urgently needed big government fix since Social Security nearly eighty years ago. President Obama did what Presidents Truman, Nixon and Clinton were unable to do: create a national health program under which all Americans will receive care, and several of the most unfair practices in the private marketplace will end. All Americans will be required to buy coverage. But in a compromise to win the support of the insurance industry – and its beholden members of Congress – Obama failed to include any controls on the price Americans will have to pay  the private insurance companies.

What happened in California when lawmakers in 1984 required people to buy auto insurance, but failed to regulate industry prices or practices? A way of protecting innocent people against bad drivers became a license to steal for the insurance industry, and led to a revolt that I took part in.

A viral New York Times oped on President Obama put a fine point on the administration’s failures:

To the average American, who was still staring into the abyss, the half-stimulus did nothing but prove that Ronald Reagan was right, that government is the problem. In fact, the average American had no idea what Democrats were trying to accomplish by deficit spending because no one bothered to explain it to them with the repetition and evocative imagery that our brains require to make an idea, particularly a paradoxical one, “stick.” Nor did anyone explain what health care reform was supposed to accomplish (other than the unbelievable and even more uninspiring claim that it would “bend the cost curve”), or why “credit card reform” had led to an increase in the interest rates they were already struggling to pay. Nor did anyone explain why saving the banks was such a priority, when saving the homes the banks were foreclosing didn’t seem to be. All Americans knew, and all they know today, is that they’re still unemployed, they’re still worried about how they’re going to pay their bills at the end of the month and their kids still can’t get a job.

This is not merely a “messaging” problem, however. If government can’t protect average people’s wallets from thievery; if instead, all government can do is protect the interests of the wealthy and big corporations at the expense of vast numbers of the rest of us who sink into economic oblivion; if the United States Supreme Court is right that corporate power, won through campaign contributions and lobbying, is protected by the First Amendment… then those who say government is too big and costs too much are going to find an increasingly receptive audience.

Not in my lifetime has the ideological divide been so stark as it is today. But the debate was just as intense when our Founders, constructing a new nation based on a constitution backed by a Bill of Rights, contended with competing visions of the role that the federal government would play in the new nation.

In the midst of economic and political chaos, I am reassured by that.

Harvey Column / Tea Party - 08/20/2011

Fill In the Blanks

A New Yorker story published online this morning describes yet another example of a financial debacle abetted by government corruption. As I read the first paragraph, it struck me that the basic plot is always the same – all you need to do is fill in the blanks:

In the spring of _______, as the reelection campaign of ______ was gathering momentum, a group of prominent _____ businessmen met for breakfast at the ________ to see the candidate. Among them was _____, the chief executive officer of _____, a fast and freewheeling financial institution that had brought together some of the most colorful and politically well-connected _____ in the country….

Last week’s final report of the Financial Crisis Inquiry Commission explains in intricate detail why and how the U.S. economy imploded in 2008, but isolates no single, primary cause of the crisis. The Commission says that the crisis was “avoidable” and notes that “widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets,” but this is just one Commission conclusion of many. As Joe Nocera points out, the report never gets to the bottom line.

Our report, “Sold Out: How Wall Street and Washington Betrayed America,” published in March 2009, got right to the bottom line in its title. We didn't need subpoena power or a large staff to figure out what happened, just the willingness to say what everybody in the Wall Street/Washington axis of power already knew. 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 financial industry to do as it pleased. The ensuing orgy of unbridled speculation, based on "derivatives" and other financial schemes that even the CEOs themselves didn't understand, came to a halt when the housing bubble burst and Wall Street couldn't even figure out the value of the investments it held. The financial industry panicked, threatened to shut down the system, and got the government to undertake the mother of all bailouts - trillions of dollars in loans, tax breaks and other goodies.

In short: the power of money poisoned our policies and our politics, with dire consequences for all of us who don't enjoy the special favors that only vast quantities of money can buy.

The Commission, created and appointed by Congress and composed of members of the political elite, could not possibly issue that indictment. Which is why the discussion of the bailout – the most obvious example of the special status of the privileged in our country – is a measly five pages out of 410.

The American public deserves better. In other man-made national disasters, like the explosion of the Challenger space shuttle 25 years ago, experts in the field – astrophysicists, geologists, academics – were asked to undertake an independent investigation. Their reports secured the confidence of the public, and led to remedial actions. NASA was not allowed to investigate itself, and lo and behold, it turned out that the culture at NASA was ultimately responsible for a design defect in the rocket.

Because it retreats from the fundamental truths, the Commission's report does nothing to help us come to grips with the root cause of the financial crisis: the corruption of our democracy by special interest money.  I know from more than thirty years of fighting for consumer rights – particularly in the insurance marketplace – that industry lobbyists and unlimited money to politicians almost inevitably kill  legislation that would help average people. Even the feeble, loophole-ridden campaign laws that limited how much big corporations could spend in elections are in jeopardy, thanks to the United States Supreme Court’s decision last year in the Citizens United case, which decreed that corporations have the same First Amendment rights as human beings. Here in California, the voters have the ability to go around a paralyzed legislature and put matters on the ballot for a direct vote of the people, but even this populist process is increasingly abused by special interests that want to block consumers from having their day in court, or by a single company like Mercury Insurance, who thought it could fool the voters into permitting auto insurance overcharging.

Naming a thing for what it is aids understanding, which leads to action and ultimately recovery. Absent the cleansing force of honesty, we remain rooted in fear for our kids, for America’s future. Indeed, there is something deeply foreboding about the country’s degraded democracy and disabled economy. Some of the old clichés are becoming a sickening reality. We used to idly wonder, are we Rome, a corrupt empire in the process of collapse? A thoughtful, almost poetic book by that name, written by Cullen Murphy, suggests we are.

The term “third world” was once a sneer, connoting abject poverty, corruption, gross disparities between rich and poor, the absence of government services, a state controlled by a cabal of self-perpetuating leaders. Now consider the statistics on post-collapse America, which Arianna Huffington marshals in her latest book, "Third World America."

This would be a good point to fill in the blanks in the piece I excerpted above from the New Yorker story. The missing words are: 2009, President Hamid Karzai, Afghan, presidential palace, Khalil Ferozi, Kabul Bank, Afghans. Yesterday’s New York Times reported that fraud and mismanagement at the largest bank in Afghanistan has resulted in $900 million in losses, potentially triggering a financial debacle. Kabul Bank is “too big to fail,” according to Western diplomats quoted by the Times. It's the same story everywhere, and thus it would hardly come as a surprise if U.S. taxpayers ended up funding the bailout of Kabul Bank.

Congress / Financial Crisis Inquiry Commission / Harvey Column / Too Big To Fail - 01/31/2011

Around the Web: Landmark or Pit Stop?

I understand why people feel the need to tout the historical significance of the financial reform package that passed the conference committee. The president needs it politically and those who support him want to give him credit for getting anything at all in the face of the onslaught of bank lobbyists. Lots of folks worked very hard against tremendous odds to get something passed.

But I think a more sober analysis shows that what’s been achieved is pretty modest. It hands over many crucial details to the same regulators who oversaw our financial debacle.

Summing up, Bloomberg reports: “Legislation to overhaul financial regulation will help curb risk-taking and boost capital buffers. What it won’t do is fundamentally reshape Wall Street’s biggest banks or prevent another crisis, analysts said.”

Zach Carter characterizes it as a good first step. The Roosevelt Institute’s Robert Johnson writes: “This first round was not the whole fight. It was the wake-up call and the beginning of the fight. Rest up and get ready. There is so much more to do.”

The question is when we’ll get the chance to take the additional steps that are needed. The public is skeptical that the new rules will prevent another crisis, according to this AP poll. The Big Picture’s Barry Ritholtz grades the various aspects of the reform effort. Overall grade? C-. Top marks go to the new minimum mortgage underwriting standards. But legislators get failing grades for leaving four critical issues on the table: “to big to fail banks,” bank leverage, credit rating agencies and corporate pay.

Ritholtz saves some of his harshest evaluation for the proposal to house the new consumer protection agency inside the Federal Reserve, which he finds “beyond idiotic.”

Around the Web / Executive Pay / Financial Reform Legislation / Martin Column - 06/25/2010