Bill Moyers and Trevor Potter On Big Money's Election Effect

Freedom in Europe Is Eroding From the Edges, Financed by the Banks

"Greece is not an exception. It is one of the main testing grounds for a new socio-economic model of potentially unlimited application: a depoliticised technocracy in which bankers and other experts are allowed to demolish democracy."

Slavoj Žižek


"Corruption is a tree, whose branches are of an immeasurable length: they spread everywhere; and the dew that drops from thence hath infected some chairs and stools of authority."

Beaumont and Fletcher, The Honest Man's Fortune

This is a fascinating perspective on the financial situation in Europe from Slavoj Žižek which appeared in a recent edition of the London Review of Books. It reads like a modern variation of an age old script with dollars and bankers replacing bullets and shock troops, at least for now.

The role of Goldman Sachs and some of the other banks, with their attendant politicians who are in many cases now their direct representatives in the erosion of freedom in Europe, is fascinating to watch, in the manner of a train wreck in slow motion.

The monied interests are putting forward their own agendas and candidates while maintaining the charade of popular government, goose-stepping to the tune of financial expediency and the 'iron law of oligarchy' that helped to spawn the cult of the Übermensch at the beginning of the twentieth century.

The counter example is Iceland, and at an earlier period Sweden, which took a different course of action with their banks, direct confrontation and resolution of crony capitalism and the debt trap, rather than accomodation and appeasement.

The US and UK are little better off, having established a temporary equilibrium in which the monied interests are consolidating their gains. How else can one explain the lack of investigations and prosecutions of financial frauds, that become increasingly blatant and brazen, while the national economy continues to stagnate under the burden of crony capitalism and the most powerful political agenda is more tax cuts and sinecures for the super rich? And freedom continues to be assaulted and deconstructed in the name of the endless war on terror.

At some point the people will make a stand, and the Banks will make them an offer which they think that they cannot refuse. This is playing out now in Greece, and is coming to a country near you.

London Review of Books
Save us from the saviours
By Slavoj Žižek
25 May 2012

Imagine a scene from a dystopian movie that depicts our society in the near future. Uniformed guards patrol half-empty downtown streets at night, on the prowl for immigrants, criminals and vagrants. Those they find are brutalised. What seems like a fanciful Hollywood image is a reality in today’s Greece. At night, black-shirted vigilantes from the Holocaust-denying neo-fascist Golden Dawn movement – which won 7 per cent of the vote in the last round of elections, and had the support, it’s said, of 50 per cent of the Athenian police – have been patrolling the street and beating up all the immigrants they can find: Afghans, Pakistanis, Algerians. So this is how Europe is defended in the spring of 2012...

The prophets of doom are right, but not in the way they intend. Critics of our current democratic arrangements complain that elections don’t offer a true choice: what we get instead is the choice between a centre-right and a centre-left party whose programmes are almost indistinguishable. On 17 June, there will be a real choice: the establishment (New Democracy and Pasok) on one side, Syriza on the other.

And, as is usually the case when a real choice is on offer, the establishment is in a panic: chaos, poverty and violence will follow, they say, if the wrong choice is made. The mere possibility of a Syriza victory is said to have sent ripples of fear through global markets. Ideological prosopopoeia has its day: markets talk as if they were persons, expressing their ‘worry’ at what will happen if the elections fail to produce a government with a mandate to persist with the EU-IMF programme of fiscal austerity and structural reform.

The citizens of Greece have no time to worry about these prospects: they have enough to worry about in their everyday lives, which are becoming miserable to a degree unseen in Europe for decades...

Here is the paradox that sustains the ‘free vote’ in democratic societies: one is free to choose on condition that one makes the right choice. This is why, when the wrong choice is made (as it was when Ireland rejected the EU constitution), the choice is treated as a mistake, and the establishment immediately demands that the ‘democratic’ process be repeated in order that the mistake may be corrected. When George Papandreou, then Greek prime minister, proposed a referendum on the eurozone bailout deal at the end of last year, the referendum itself was rejected as a false choice.

There are two main stories about the Greek crisis in the media: the German-European story (the Greeks are irresponsible, lazy, free-spending, tax-dodging etc, and have to be brought under control and taught financial discipline) and the Greek story (our national sovereignty is threatened by the neoliberal technocracy imposed by Brussels).

When it became impossible to ignore the plight of the Greek people, a third story emerged: the Greeks are now presented as humanitarian victims in need of help, as if a war or natural catastrophe had hit the country. While all three stories are false, the third is arguably the most disgusting. The Greeks are not passive victims: they are at war with the European economic establishment, and what they need is solidarity in their struggle, because it is our struggle too.

Greece is not an exception. It is one of the main testing grounds for a new socio-economic model of potentially unlimited application: a depoliticised technocracy in which bankers and other experts are allowed to demolish democracy. By saving Greece from its so-called saviours, we also save Europe itself.

Read the entire article here.

PBS Frontline: Money, Power, and Wall Street

As promised, this has just become available.  You can watch the first two hours here:

PBS Frontline: Money, Power, and Wall Street

Episode One: Derivatives Spark a Credit Boom and the Mispricing of Risk

                      The Attempted Whitewash - "We never saw it coming."
                      Understates the extent of the fraud and Greenspan and others involvement in promoting a bubble.

Watch Money, Power and Wall Street: Part One on PBS. See more from FRONTLINE.

Why Has the American Economic System Failed, and What Are We Going To Do About It?

"We always want to keep in mind what the function, the purpose, of the economy is. The purpose of an economy is not producing GDP. It is increasing the welfare of citizens, and it is increasing the welfare of most citizens. And the American economic system has failed, and failed very badly. Most Americans today are worse off, most American households have lower real income adjusted for inflation than they had fifteen years ago."

Joe Stiglitz made an aside about half way through his talk about mercantilism at INET Berlin this month that is worth noting. I like the way he frames the problems and his fresh look on the situation but do not favor many of his suggested cures, especially the notion of something that sounds dangerously like central planning by a financial elite. I think that is something that needs much more work, but that is a discussion too often impeded by denial, misdirection, and diversion.

Although he initially addresses his talk to America, he goes on to include other countries, especially Germany. I would add the UK, among others including China, which is a disaster in the making.

I start the tape of his talk at 13:25, so you can hear the basic question and the simple truth that so many have overlooked. The American economic system has failed the public, and that failure has its roots in the 1990's, accelerating at the turn of the century into the financial collapse. It is a story of deceit, corruption, and betrayal.

And the majority of the people, who have suffered the most from this injustice, are being asked to suffer even more for a system that does not benefit them and actually works against them. And they are asking, 'is it worthy of our support?'

And history indicates that they will provide an answer that may be unpalatable for those who benefit the most from the current unsustainable arrangement, who are enriched by the misery of others.

I cannot say it more simply or more emphatically, that the gaming of the system by the monied interests, marked by but not wholly due to the repeal of Glass-Steagall, the trade agreement with China without a floating exchange rate, and the Bush tax cuts for the wealthy while initiating aggressive war on multiple fronts, have set the American economy on a spiral of demise and eventual self-destruction.

What has institutionalized this demise and made it pernicious is the corruption of American power and distortion of thought by big money, and the short term selfishness and self-interest of the status quo. That is what I call the credibility trap.

The point must be made, that the system did not fail because our economic models were no good, that our financial leaders were simply mistaken, that the political powers were pursuing the right path but that things went wrong in ways that no one could have foreseen, and that even now, the thought leaders and spokesmodels for the monied interests are hard at work concealing and deceiving and misleading, feeding the rotten system that has brought us to where we are today.

It was never a mistake. They knew, but it was easier to go along or do nothing, being either craven or compromised. It was always about easy money, and the fraud.

Giving even more money to the Banks, and asking the people to pay for it, in the hope that it will eventually trickle down to the people from whom it has been stolen is not a policy, and not even a policy failure. It is an obscenity.

I sense we are in the negotiation phase, in which the powerful monied interests want to be let off with a wrist slap, and no admission of guilt.  And of course for change to come slowly, maximizing their returns. 

The powerful think that they are the system, the economy and the government, and that it exists to serve them. And so any change must suit their needs, first and above all. But a prideful greed and will to power can never really contain itself, as it can never be truly satiated. It always craves just a little more.

The existing US dollar trade regime dominated by global corporations and banks, backed by widely deployed military power, is not sustainable. We are entering the next phase of this unfolding crisis, and some countries are already there, in which we will see growing domestic unrest and repression, and regional trade wars and alliances, in the evolution of the ongoing currency war.

Reform will come, one way or the other.   The writing is on the wall.

For in that universal call,
Few bankers will to heaven be mounters;
They'll cry, "Ye shops, upon us fall!
Conceal and cover us, ye counters!

When other hands the scales shall hold,
And they, in men's and angels' sight
Produced with all their bills and gold,
'Weigh'd in the balance and found light!'

Jonathan Swift, The Run on the Bankers

January 8: Andrew Jackson Day Remembered

"It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions.

In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society — the farmers, mechanics, and laborers — who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their government.

There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing."

Andrew Jackson, Veto of the Second Bank of the United States


"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.

When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin!

Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out."

From the original minutes of the Philadelphia bankers sent to meet with President Jackson February 1834, from Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels

On our dinner cards tonight is a medallion portrait of a man who gave a memorable toast, "The Federal Union, it must be preserved."

This meeting tonight, in the City of Washington, is one of many hundreds being held throughout our forty-eight States and territorial possessions and even on board ships at sea, in honor of the memory of a great General, a great President, Andrew Jackson. To all of you I extend my most sincere and heartfelt greetings.

I am happy to stand here tonight and declare to you that the real issue before the United States is the right of the average man and woman to lead a finer, a better and a happier life. And that was the same issue, more than a hundred years ago, that confronted Andrew Jackson.

I speak tonight to this Democratic meeting, to these Democratic meetings throughout the Nation, in the same language as if I were addressing a Republican gathering, a Progressive gathering, an Independent gathering, a Farmer-Labor gathering, a gathering of business men or a gathering of workers or farmers. There is nothing that I say here tonight that does not apply to every citizen in the country no matter what his or her political affiliations may be.

It is true that we Americans have found party organizations to be useful, and indeed necessary, in the crystallization of opinion and in the demarcation of issues. It is true that I have received many honors at the hands of one of our great parties. It is nevertheless true that in the grave questions that confront the United States at this hour, I, as President of the United States, must and will consider our common problems first, foremost and preeminently from the American point of view.

To most of us, Andrew Jackson appropriately has become the symbol of certain great ideals. I like best to think of him as a man whom the average American deeply and fundamentally understood. To the masses of his countrymen, his purposes and his character were an open book. They loved him well because they understood him well—his passion for justice, his championship of the cause of the exploited and the downtrodden, his ardent: and flaming patriotism.

Jackson sought social justice; Jackson fought for human rights in his many battles to protect the people against autocratic or oligarchic aggression.

If at times his passionate devotion to this cause of the average citizen lent an amazing zeal to his thoughts, to his speech and to his actions, the people loved him for it the more. They realized the intensity of the attacks made by his enemies, by those who, thrust from power and position, pursued him with relentless hatred. The beneficiaries of the abuses to which he put an end pursued him with all the violence that political passions can generate. But the people of his day were not deceived. They loved him for the enemies he had made.

Backed not only by his party but by thousands who had belonged to other parties or belonged to no party at all, Andrew Jackson was compelled to fight every inch of the way for the ideals and the policies of the Democratic Republic which was his ideal. An overwhelming proportion of the material power of the Nation was arrayed against him. The great media for the dissemination of information and the molding of public opinion fought him. Haughty and sterile intellectualism opposed him. Musty reaction disapproved him. Hollow and outworn traditionalism shook a trembling finger at him. It seemed sometimes that all were against him—all but the people of the United States.

Because history so often repeats itself, let me analyze further. Andrew Jackson stands out in the century and a half of our independent history not merely because he was two-fisted, not merely because he fought for the people's rights, but because, through his career, he did as much as any man in our history to increase, on the part of the voters, knowledge of public problems and an interest in their solution. Following the fundamentals of Jefferson, he adhered to the broad philosophy that decisions made by the average of the voters would be more greatly enduring for, and helpful to, the Nation than decisions made by small segments of the electorate representing small or special classes endowed with great advantages of social or economic power.

He, like Jefferson, faced with the grave difficulty of disseminating facts to the electorate, to the voters as a whole, was compelled to combat epithets, generalities, misrepresentation and the suppression of facts by the process of asking his supporters, and indeed all citizens, to constitute themselves informal committees for the purpose of obtaining the facts and of spreading them abroad among their friends, their associates and their fellow workers.

I am aware that some wise-cracking columnist will probably say that good old Jackson no doubt realized that every red-blooded American citizen considered himself a committee of one anyway. Nevertheless, Jackson got his ideas and his ideals across not through any luxurious propaganda, but because the man on the street and the man on the farm believed in his ideas, believed in his ideals and his honesty, went out and dug up the facts and spread them abroad throughout the land.

History repeats—and I am becoming dimly conscious of the fact that this year we are to have a national election. Sometimes at the close of a day I say to myself that the last national election must have been held a dozen years ago—so much water has run under the bridge, so many great events in our history have occurred since then. And yet but thirty-four months, less than three years, have gone by since March, 1933.

History repeats—in those crowded months, as in the days of Jackson, two great achievements stand forth—the rebirth of the interest and understanding of a great citizenry in the problems of the Nation, and an established Government which by positive action has proved its devotion to the recovery and well-being of that citizenry.

Whatever may be the platform, whoever may be the nominee of the Democratic Party—and I am told by the Chairman that a Convention is to be held to decide these momentous questions—the basic issue, my friends, will be inevitably the retention of popular Government—an issue fraught once more with the difficult problem of disseminating facts and yet more facts, in the face of an opposition bent on hiding and distorting facts.

And that, my friends, is why organization, not party organization alone—important as that is—but organization among all those, regardless of party, who believe in retaining progress and ideals, is so essential.

That is why, in addition to organization, I make this specific recommendation—that each and every one of you who are interested in obtaining the facts and in spreading those facts abroad, each and every one of you interested in getting at the truth that lies somewhere behind the smoke screen of charges and countercharges of a national campaign, constitute yourself a committee of one. To do this you need no parchment certificate, to do this you need no title. To do this you need only your own conviction, your own intelligence and your own belief in the highest duty of the American citizen.

To act as such a committee of one you will need only your own appointment, an appointment which carries with it some effort, some obligation on your part to carry out the task you have assigned to yourself. You will have to run down statements made to you by others which you may believe to be false. You will need to analyze the motives of those who make assertions to you. You will need to make an inventory in your own community, in order that you may check and recheck for yourself and thereby be in a position to answer those who have been misled or those who would mislead.

After my Annual Message to the Congress last Friday evening, I received many appreciative letters and telegrams from all over the country, and I think it will interest you to know that within a few hours I received more of these than at any time since the critical days of the spring of 1933. I have carefully read those letters and telegrams and I found two facts that I think are worthy of repeating to you tonight. The first is that out of the many, many hundreds, a very large number were sent to me by families who evidently heard my Message while grouped together in the family home. "My wife and I want you to know how much we appreciate," and so forth—or "The Jones family, gathered tonight with our friends, sends you this message of confidence." In other words, as greatly as and perhaps even more greatly than on any other occasion since I have been in the White House, I have the definite feeling that what I have said about the great problems that face us as a Nation has received a responsive, an appreciative and an understanding answer in the homes of America. This means a lot tome.

The other interesting fact about these letters and telegrams is the very great number of them that come from business men, from storekeepers, from bankers and from manufacturers. The gist of their messages to me is that they are grateful, that they appreciate my statement that it is but a minority of business and finance that would "gang up" against the people's liberties. I reiterate that assertion tonight. By far the greater part of the business men, industrialists, and other employers of the Nation seek no special advantage; they seek only an equal opportunity to share in the common benefits, the common responsibilities and the common obligations of their Government.

I am naturally grateful for this support and for the understanding on their part that the Government of the United States seeks to give them a square deal and a better deal—seeks to protect them, yes, to save them from being plowed under by the small minority of business men and financiers, against whom you and I will continue to wage war.

We can be thankful that men and women in all walks of life realize more and more that Government is still a living force in their lives. They understand that the value of their Government depends on the interest which they display in it and the knowledge they have of its policies.

A Government can be no better than the public opinion which sustains it.

I know that you will not be surprised by lack of comment on my part tonight on the recent decision of the Supreme Court. I cannot and will not render offhand judgment without studying, with the utmost care, two of the most momentous opinions, the majority opinion and the minority opinion, that have ever been rendered, in any case before the Supreme Court of the United States. The ultimate results of the language of these opinions will profoundly affect the lives of Americans for many years to come. It is enough to say that the attainment of justice and the continuance of prosperity for American agriculture remain an immediate and constant objective of my Administration.

Just as Jackson roused the people to their fundamental duties as citizens, so must the leadership of this era do its utmost to encourage and sustain widespread interest in public affairs. There was something of eternal youth in the spirit of Andrew Jackson. The destiny of youth became the destiny of America.

Tasks immediately before us are as arduous as the conquest of the frontiers a century ago. The Nation is still young, still growing, still conscious of its high destiny. Enthusiasm and the intelligence of the youth of the land are necessary to the fulfillment of that destiny.

As I understand the temper of the people, particularly the temper of youth, no party of reaction, no candidates of reaction can fulfill the hope and the faith of that everlasting spirit. It is the sacred duty of us who are vested with the responsibility of leadership to justify the expectations of the young men and women of the United States.

We are at peace with the world; but the fight goes on. Our frontiers of today are economic, not geographic. Our enemies of today are the forces of privilege and greed within our own borders.

May a double portion of Old Hickory's heroic spirit be upon us tonight. May we be inspired by the power and the glory and the justice of his rugged and fearless life.

The people of America know the heart and know the purpose of their Government.

They, and we, will not retreat.

Franklin D. Roosevelt, Jackson Day Dinner Address, Washington, D.C.
January 8, 1936

Remember these leaders, these giants, from days gone by, and their unselfish defense of liberty and the people, as we look upon the empty suits, self-serving spokesmodels, and heartless mannequins, vetted and strutted out by the corporate interests, who pretend to the leadership of their great nation in its time of greatest need.

And let us not blame them, for the fault is ours in not having the courage to stand for the truth, even in the most incidental ways, to pass the honest message on, to resist the allure of demagogues, prejudice and old hatreds, the fear of otherness, the seductive mouthpieces and clever arguments of powerful and the monied interests, and support the voices of fundamental reform and equal protection for all people under the law.

What is remarkable is not how many sell themselves and their honor, but how eagerly, how cheaply. But the profit does not matter if one considers their soul to be worth nothing.

And if lawlessness increases, the hearts of many will grow cold. And then comes the downfall, and hell comes with it.

Time to Take the Nuclear Option in the Deficit Discussions? Not Very Likely

In all this excitement, no one seems to remember that the President unilaterally refused to play the Bush tax cut card back in June. At least in public. I suspect strongly that the deals are being made behind the scenes, and much of what passes in public is for show, and political diversions.

The tax cuts expire in 2012. They offered an excellent bargaining chip, and one of the key drivers, along with the two unfunded discretionary wars and the out of control financial sector, of the current financial crisis that took the US from surplus to crisis in roughly ten years. If you were going to use that chip, the time to have done it was now, and not in an election year.  And in a budget crisis not using it looks to be highly ideological if not mildly insane.

Obama is either a well-prepared Manchurian candidate for the monied interests, something I am not dismissing, or playing chess on a multi-dimensional board that I still do not quite understand, something which I am also not willing to dismiss completely just yet, but it does not look very likely.  He could also be a haplessly inept idiot at the mercy of his advisors, but I doubt that very much now. 

Bush was easy to read, as was Clinton, at least after the few two years. Obama is a bit harder, but perhaps that is by intent. Good or ill, I cannot yet tell. He keeps getting the benefit of the doubt, but as I said on his 100th day in the Presidency, that time is over and done.

No matter the motives, actions speak louder than words, and at the end of the day, he is a disaster, a betrayer to his supporters, a decidedly ineffective and uninspiring leader, a faux reformer, and likely to go down in history as one of the great unrealized moments in greatness, like Jimmy Carter or even worse, Andrew Johnson.  And that is a shame, because it was entirely avoidable.

But for all those smug "I told you so's"  out there, Obama is still probably better than having the Alaskan reality show star a shaky heartbeat away from the presidency, a truly frightening prospect that most people forget. McCain flamed out and sold out before his moment came, and I suspect it was because he had no other choice in a crony corporatist party that rules its members by threat and decree.  Lack of dissent does not always imply a unanimity of thinking.

The door may be open for a viable third party movement in 2012.  I would even welcome a primary challenger from the Democrats, in the manner of Robert Kennedy and Lyndon Johnson.  But where is there any US politicians of that character, that level of leadership?

You may also wish to read The Weirdness of the Ten Year Deficit Reduction Discussion by James Kwak.

The Baseline Scenario
Two Can Play
By James Kwak
26 July 2011

Quick, what was the greatest conservative accomplishment of the George W. Bush presidency? It wasn’t Medicare Part D: that was a clever way to steal a Democratic issue and pass it in a form that was friendly to the pharmaceutical industry. It wasn’t Roberts and Alito: yes, they are young and conservative, but the majority is still only 5-4. It wasn’t Social Security privatization: that didn’t happen. Iraq? Getting political support to invade Iraq was a major coup, but everything went downhill from there.

The answer is obvious: the tax cuts of 2001 and 2003. Together, they were a wish list of conservative tax policy: a reduction in the top marginal income tax rate from 39.1 percent to 35 percent; a reduction in the top rates for capital gains and dividends to 15 percent; much higher contribution limits for tax-preferred retirement accounts (meaning that if you have enough money to save, you can shield more of it from taxes); and eventual elimination of the estate tax. In total, when fully phased in, the Bush-era tax cuts sliced almost 3 percent of GDP out of federal government revenues.*

And most of that money stayed in the pockets of the wealthy. According to the Tax Policy Center, 65 percent of the dollar value of the tax cuts (in 2010, once the 2001 and 2003 tax cuts were phased in) went to the top income quintile, and a staggering 20 percent — that’s tens of billions of dollars — went to the top 0.1 percent. Even if you look at the impact in percentage terms, the rich still took home more than their share: after-tax income went up by 0.7 percent for the bottom quintile, 2.5-2.6 percent for the middle three quintiles, 4.0 percent for the top quintile, and 8.2 percent for the top 0.1 percent.

Everyone knows all that already. Who cares? The point today is that President Obama can make this epic conservative victory vanish by snapping his fingers. He can say, “I promise to veto any bill that extends any of the tax cuts.” (Or, if he prefers, he can say, “I promise to veto any bill that extends any of the tax cuts, except the income tax rate reductions for the ‘middle class.’”)

Why would he do such a thing? Think about where the debt ceiling negotiations are today. The House Republicans are effectively holding the financial system and the economy hostage, demanding a massive, spending-cuts-only deficit reduction package. What makes this a smart move (where “smart” is defined solely in terms of likelihood of winning, not the risk being taken) is that if they can force Obama to choose between (a) raising the debt ceiling on their terms and (b) not raising it at all, he is going to choose (a). Even if he would be better off politically letting the government default and blaming it on the Republicans, no one thinks he would actually let it happen.**

Well, Obama has a hostage, too, if he wants to use it: the Bush tax cuts. From the Republicans’ position, just thinking about themselves and what they want (not about the country as a whole), are a few trillion in spending cuts over ten years — averaging something like 1.5 percent of GDP — worth giving up the greatest accomplishment of the entire conservative revolution?

Now, I’m not enough of a political strategist to know exactly how this would play out. For Obama to use the threat, he has to be willing to go through with it. That means mutual assured destruction: the Republicans insist on $3 trillion in spending cuts as the price to pay for raising the debt ceiling; Obama agrees in order to prevent default; and then Obama lets $3-4 trillion in tax cuts expire. Politically, it means being willing to argue in 2012 that letting the tax cuts expire was the right thing for the country. But that’s not an impossible case. Back in 2001, every aspect of the tax cuts was unpopular, other than the fact that they were tax cuts. (See Hacker and Pierson, Off Center, pp. 50-51.) Alternatively, Obama could propose a bill that extends just the “middle class” tax cuts on a take-it-or-leave-it basis.

As I said, I can’t tell you what the political percentages are. But it seems to me there has to be some leverage here that Obama can use — if he wants to.

* In the January 2007 Budget and Economic Outlook, the total 2017 cost of extending all the tax cuts, in addition to but not including patching the AMT, was projected to be $616 billion (Table 1-5), or 2.9 percent of GDP. I chose the 2007 projection because (a) it goes out to 2017, which is when some tax cuts were scheduled to expire and (b) it is before 2008, when the tax cuts to stimulate the economy began.

** What makes it a somewhat less smart move is that, with the Senate in the hands of the Democrats, the Republicans have no clear way of forcing Obama to sign or veto their deficit reduction bill. If the two houses can’t agree on a plan, Obama can avoid having to make the choice (and the end of the world will be Congress’s fault).



Obama Gives in to GOP on Bush Tax Cuts, and More
By Thomas Hartmann
Tuesday 28 June 2011

Yesterday – Senator Bernie Sander wrote a letter to President Obama telling him not to give in to Republican demands in the debt limit negotiations – and to fight for “shared sacrifice” by taxing millionaires and billionaires along with any new spending cuts. Unfortunately – the President didn’t get the message and the White House stated yesterday that the President is taking repealing the Bush tax cuts for millionaires and billionaires off the table. Which leaves mostly spending cuts targeting working families still on the table. Looks like America's oligarchs - and the Republican Party they own - win again."

The corporatist strategy has been to give generous tax cuts to the wealthy, spend money like drunken sailors on things that benefit the monied interests, and then declare a budget crisis and take the difference out of the hides of the middle class, the weak, and the elderly. So far Obama is following the same playbook, with a little dusting of compassionate sounding hoo-hah.