Undue Influence

Political contenders, tea partiers and free market enthusiasts are echoing what a banker said in the 1939 movie “Stagecoach”. The banker complained that the government wanted to examine his books and said rather than examine his books the government should reduce the deficit and cut taxes.

Back then, at least the government had the guts to examine the books of the banks; now, we have stress tests administered by Treasury Secretary Timothy Geithner, a loyal friend to the banks. The results were predictable, they all passed with flying colors and are on sound footing.

What they should be examining is how the banks hijacked our economy by creating this new financial industry engineered by Wall Street and founded on sub prime loans. Mathematical wizards devised complex equations to over value our homes, then transferred the trillions in these over valuations into the hands of the few mega banks. (Which we have due to the banking deregulation of the seventies, which led to the public bail out of the Savings and Loans in the ‘80’s which then led to banks too big to fail, and another tax payer bailout).

The government has been cutting taxes on the wealthy for decades, and we see where it’s gotten us; trillion dollar deficits. According to Robert Reich, the government “halved the top income tax rate from the range of 70 to 90 percent to 25 to 39 percent; allowed many of the nation‘s rich to treat their income as capital gains subject to no more than 15 percent tax; and shrank inheritance taxes that affected only the topmost 1.5 percent.” Imagine, paying only 15 percent on profits made in the government sanctioned and bank hidden derivatives market, while the pay of common workers is reported to the government and taxed at over 30 percent.

Anyone who is against keeping the Bush tax cuts is called a socialist. Yet while the sub prime loan market was exploding, bankers were denying reality by insisting prices of houses would never come down, or if they did, they wouldn’t come down across the country all at once. Contrary to their idealistic free market beliefs, housing prices did fall and when they did it brought us this ongoing Recession.

We need a return to the realism of Marriner Eccles, former federal reserve Chairman from 1934 to 1948, who said in the 1920’s, that people with the concentrated wealth had “great economic power” and “ had an undue influence in the making of the rules of the economic game.”

This concentrated wealth and the “undue influence” it buys, caused the Great Depression. Concentrated wealth and its “undue influence” has once again caused financial catastrophe for many Americans. And just like the first time, it will be years before we get out of it.

Reforming the Entitlement Mentality

Tea Party candidates say we need entitlement reform. We need reform alright, but sadly, there isn’t much agreement on which ones should be addressed.

For instance, banks are now entitled to be bailed out. In March 2009 Paul Volcker said, “What all this amounts to is an unintended and unanticipated extension of the official “safety net”…the obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted. Ultimately, the possibility of further crises-even greater crises-will increase.”

There’s not much Tea Party coverage of this entitlement danger, but when it’s a social safety net like Social Security, that’s an entitlement they say we just can’t afford.

In 2009, after the tax payer bailed them out, Goldman Sachs set aside 14 billion in bonuses for their employees, which works out to 750,000 per employee. Not only are they entitled to tax payer bonuses, the banks don’t even think they should pay taxes on any of it.

In his review on the book Casualty Gap, about poorer and less educated citizens being more likely to die in America’s wars, former West Point instructor Andrew Bacevich, said, “…the powerful are determined to preserve arrangements that serve their own interests. Those who enjoy these privileges and the politicians who do their bidding-are determined to retain them.” And “…for the rich and well connected, inequality translates into privilege“. Isn’t privileged synonymous with entitled?

When it comes to this year’s campaigning, the heated rhetoric insists it’s Social Security, Medicare and Medicaid bankrupting the country, not a word about the trillions in entitlements we’re giving to Wall Street bankers and war machines.

Dislike for one another is gaining momentum, and it’s being used as a political platform for the privileged to maintain their entitlements, while the rest of us lose entitlements, like dignity in old age.