Tucson Progressive

Pamela Powers Hannley, a progressive voice for Arizona

‘The false debate on the debt’

Here is an awesome commentary on the national debt debate from The Nation

In the ever-so-smug company of the rich and powerful it is a given that there is never to be any expression of remorse or other acknowledgment of the pain they have inflicted on the lesser mortals they so cavalierly plunder. It’s convenient for them that the media and the politicians, which they happen to own, rarely connect the dots between the scams that made the rich so rich and the alarming rise in the federal debt that is crushing this nation.

The result of this purchased public myopia is that we are left with an absurd debate over how deeply to cut teachers’ pensions and seniors’ medical benefits while preserving tax breaks for the superrich and their large corporations. At a time when 10 million American families will have lost their homes by year’s end, when $5.6 trillion in home equity has been wiped out, when most Americans face steep unemployment rates and stagnant wages, a Democratic president is likely to compromise with Republican ideologues who insist that further cuts in taxes for the rich is the way to bring back jobs.

Let’s deal right off with that canard. There is currently no shortage of corporate profits or excessive executive compensation to explain away the failure of the private sector to create jobs. On the contrary, as the New York Times reports, “In the fourth quarter, profits at American businesses were up an astounding 29.2 percent, 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 jobs or adequately reward their workers, have increased their own compensation by a whopping 12 percent over the previous year, setting the median pay at $9.6 million per year for those in control of the leading 200 companies. The Times adds 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.”

Lost in this faux debate is the reality that our debt now looms so large because the government had to bail out many of those same corporations, quite a few of which, like General Electric and AIG, pay no taxes and have no problem paying truly obscene amounts to their top executives. GE CEO Jeffrey Immelt, whom President Barack Obama named chairman of the Council on Jobs and Competitiveness, 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 just lavishly rewarded its top executives but has providing no relief for the homeowners ripped off by its phony credit default swaps.

The AIG deal was engineered by then-President of the New York Fed Timothy Geithner, who was rewarded for his efforts to save the bankers by being named Obama’s treasury secretary. Geithner, an energetic member of the team of Robert Rubin and Lawrence Summers that ran Treasury when the Bill Clinton administration cooperated with Congressional Republicans in gutting regulation of the financial community, is proud of saving the banks from the wreckage that they and the Clinton policies caused. Last October he proclaimed the TARP banker bailout program “the most effective government program in recent memory.”

What he is referring to is that in order to escape the federal restrictions on executive compensation, the banks have been eager to pay back the TARP funds. What he and other apologists for the Obama and George W. Bush administrations’ Bankers First program choose to ignore—as Paul Atkins and two other members of the Congressional Oversight Panel for the Troubled Asset Relief Program revealed in a damning Wall Street Journal column titled “TARP Was No Win for the Taxpayers”—is that the banks are not paying back the trillions of dollars in non-TARP governmental assistance that saved them from bankruptcy. “It hides the full story of the government’s financial crisis effort, of which TARP is but a minor part,” the op-ed column said of the maneuvering. The major part is the $1.1 trillion in toxic-mortgage-based securities that the Fed purchased, relieving the banks of their obligations, and the $380 billion bailout of Fannie Mae and Freddie Mac, organizations that backed those securities, along with “other Fed and FDIC programs [that] added another $2 trillion of taxpayer money at risk to the 19 stress-tested banks alone.”

What Geithner celebrates is a shell game of his own construction in which far more costly federal programs, with no serious restrictions on banker greed, were used by the banks to “repay” the TARP funds. Nothing was obtained in return from those banks in the way of mortgage cramdowns to keep people in their homes or any restrictions on the interest rates that banks charge on credit cards: Clearly usurious rates of more than 25 percent are now the norm for those struggling to keep their families above water. No wonder consumer confidence is down, the housing market is expected to decline an additional 10 percent over the next year, and the job market is predicted by most of the experts to stagnate for years to come. Continued tax breaks for the 1 percent of the population that controls 40 percent of the nation’s wealth will do nothing to restore the confidence of the other 99 percent of consumers who are suffering so.

This at least Obama seems to understand, but count on him to betray his own better instincts by once again following the advice of his treasury secretary and the Wall Street crowd that contributed so lavishly to his first presidential campaign and whose support he seeks once again. [Emphasis added.]

All of the players are counting on the continued myopia of the American public. If we were really paying attention, we wouldn’t stand for this.

5 comments on “‘The false debate on the debt’

  1. leftfield
    April 16, 2011

    Well, you can’t say your Uncle Karl didn’t warn you this was all just as predictable as the sunrise.

    • commieLOVER
      April 16, 2011

      Yes, we should adopt his ideologies, take people’s property, force them to continue to work, take the products of their labor and starve them to death.  Go Marxism!

  2. YouBetcha
    April 16, 2011

    “Lost in this faux debate is the reality that our debt now looms so large because the government had to bail out many of those same corporations, quite a few of which, like General Electric and AIG, pay no taxes and have no problem paying truly obscene amounts to their top executives. ”
    We should increase the size of government and the number of regulations that stifle smaller businesses and innovations.

  3. YouBetcha
    April 16, 2011

    Hey, here are some FACTS in case you ever want to start writing a different type of blog.
    http://www.nationalreview.com/articles/264296/rich-aren-t-getting-richer-kevin-d-williamson
    “the average income growth for actual households in the lowest income bracket was 77 percent over the course of a decade; income growth for actual households in the top group was only 5 percent during those same years. Of those who were in the poorest fifth in 1979, 85.8 percent had moved to a higher bracket by 1988, and 14.7 percent of them moved to the top bracket — which is to say, the poor of 1979 were more likely to be the rich of 1988 than to be the poor of 1988. The poor got richer, and some of them got a lot richer. Reagan’s record has not been matched — Ronald Reagan was the champion of the poor, as it turns out — but economic mobility has been pretty stable for the past 20 years: About 50 percent of U.S. households move from one income group to a different one every decade, and actual households initially in the low-income groups see proportionally more income growth than do actual households initially in the high-income groups.”

  4. Bill Chestnut
    April 19, 2011

    RE: [AIG, saved with a government infusion of $170 billion, has just lavishly rewarded its top executives but has providing [sic] no relief for the homeowners ripped off by its phony credit default swaps.]

    Pretty good – 3 errors in one sentence. 
    1. “but has providing……” ??????  (gramatical error here.)
    2. homeowners weren’t ripped off by credit default swaps. AIG lost billions on them, but not home owners.
    3. The credit default swaps weren’t phony. They were very real, otherwise there would have been no losses, just law suits.

    It seems pretty clear this whole subject is well beyond your comprehension. Better write about something else.

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About

The Tucson Progressive: Pamela Powers Hannley

I stand on the side of Love. I believe in kindness to all creatures on Earth and the inherent self-worth of all individuals--not just people who agree with me or look like me.

Widespread economic and social injustice prompted me to become a candidate for the Arizona House, representing Legislative District 9 in the 2016 election. My platform focuses on economic reforms to grow Arizona's economy, establish a state-based public bank, fix our infrastructure, fully fund public education, growlocal small businesses and community banks, and put people back to work at good-paying jobs. I also stand for equal rights, choice, and paycheck fairness for women. I am running as a progressive and running clean.

My day job is managing editor for the American Journal of Medicine, an academic medicine journal with a worldwide circulation. In addition, my husband and I co-direct Arizonans for a New Economy, Arizona's public banking initiative. I am a member of the national board of the Public Banking Institute, and I am co-chair of the Arizona Democratic Progressive Caucus, the largest caucus of the Arizona Democratic Party.

I am a published author, photographer, videographer, clay artist, mother, nana, and wife. I have a bachelor's degree in journalism from Ohio State University and a masters in public health from the University of Arizona. I grew up in Amherst, Ohio, but I have lived in Tucson, Arizona since 1981. I am a proud member of the Unitarian Universalist Church of Tucson and the Public Relations Society of America.

My Tucson Progressive blog and Facebook page feature large doses of liberal ideas, local, state, and national politics, and random bits of humor. I also blog at Blog for Arizona and the Huffington Post.

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Chicago blues + surf rock = fun dancing. #tucson #dancing #swing
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