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‘Reverse’ revolving door now common in D. C.

 By George Waring 3-26-14

                In addition to his “Nation” magazine articles on contemporary lobbying in Washington, D.C., reporter Lee Fang is publishing articles on line in RepublicReport.org. These give us detailed descriptions of the extent to which an unregulated lobbying system now dominates Congress and the Executive Branch. It’s difficult to pick out the most obnoxious examples of this conquest of our government by wealthy lobbyists and their corporate paymasters, but a scan of just the past few weeks surfaces these three examples of the oligarchy’s method of controlling American “Democracy.”

Example One: Stephen Sayle

                During last year Mr. Sayle was the CEO of Dow Lohnes Government Strategies, a lobbying firm retained by Chevron to influence Congress and the White House. For fees that totaled $320,000 a year, Sayle and his team of lawyers lobbied on a range of energy-related issues. These included weakening the enforcement of the Environmental Protection Agency’s rules adopted under the Clean Air Act and the regulation of ozone standards. Sayle and his assistants also lobbied Congress and the EPA to weaken the laws and regulations “related to offshore oil, natural gas development and oil spills.”

                Since the beginning of this year, Mr. Sayle has procured a new occupation. He went from being a lobbyist to being a senior staff member of the House of Representatives Committee on Science. The Committee sports seventeen Republicans who have received $3.5 million of oil industry contributions in their careers. The committee’s mandate is to maintain the United States’ “scientific and technical leadership in the world.” Sayle’s transition from outsider to insider was engineered by Committee Chair, Rep. Lamar Smith.    

                Representing a gerrymandered district in San Antonio, Smith has served 26 years in the House, compiling a perfect voting record for Big Oil in opposing EPA’s regulation of greenhouse gases, proposals to give tax credits for renewable energy or energy conservation, and attempts to raise fuel efficiency standards. In December, Smith chaired a subcommittee hearing focused on testimony from climate change skeptics refuting the thesis that climate change is manmade. Smith’s committee also heard oil industry bankrolled scientists refuting government studies on the direct connection between air pollution and disease.

                Shortly before Smith hired Chevron’s chief lobbyist, Sayle was given a $500,000 bonus by his lobbying firm, which cynics considered a “pass-through” from an appreciative oil giant.

Example Two: Stefan Selig

                Mr. Selig has been recently the Executive Vice Chairman of Global Corporate and Investment Banking at Bank of America in New York. As such he received several multimillion dollar Christmas bonuses since the Paulson-Bernanke bailout of 2008 for “too-big-to-fail banks.”

                In November of 2013, last year, President Obama nominated Selig to be the new Under Secretary for International Trade at the Department of Commerce. This position makes him the administration’s leader in the Trans-Pacific Partnership trade negotiations. Selig received some $9 million in bonus pay from B of A when he was nominated. That bonus came in addition to $5.1 million in incentive pay awarded Selig last year.

Example Three: Michael Froman

                Michael Froman is President Obama’s current U.S. Trade Representative, appointed in June last year. He had been serving as a White House adviser on international trade and national security issues. Before 2009 Froman had been an investment banker at Citigroup in New York. During the 1990s he was an assistant to Treasury Secretary Robert Rubin, a former head of Goldman Sachs and then, more recently of Citigroup.

                Mr. Froman’s transition from the world of finance to that of government was oiled this time around by Citigroup’s exit payment of over $4 million plus an additional $2 million for his holdings in investment funds. Since the heyday of Robert Rubin during the Clinton Administration, CitiGroup has had an executive contract that provides additional retirement pay for those fortunate enough to take a “full time high level position with the U.S. government or regulatory body.”

                Mr. Froman has been the lead negotiator for the Commerce Department in the Trans-Pacific Partnership talks.

                For reporter Lee Fang, these three gentlemen are examples of a new phenomenon in Washington, the“reverse” revolving door. Instead of the traditional “revolving door” where the chief of staff of Senator Max Baucus’s Finance Committee would leave the government to become an executive in a Wall Street investment bank or in a K Street lobbying firm, now the corporate world is rewarding those loyal executives willing to accept government jobs paying only $200,000 per year. Luckily, as Lee Fang points out, our new government servants have earned quite large corporate bonuses before donning the sackcloth of upper middle class poverty in public service.

George Waring is a retired Montana Tech history professor.

The Thirty Years War continues

By George Waring (Butte News) 3-12-14

 

                As William Greider maintains in his latest “Nation” article, since the union crushing days of Paul Volker’s Federal Reserve policies in the late 1970s and for all of the Reagan-Bush 1980s, the middle class has been under attack. The Clinton and George W. Bush administrations simply followed the triumphant neoliberal policies of Milton Friedman, Alan Greenspan and Ben Bernanke. The federal government’s tax, trade and labor policies have been crafted in the interest of the nation’s wealthiest campaign contributors.

                In mid-February, the Economic Policy Institute created a web site showing the extent of the damage done in this successful class war conducted by government on behalf of the one per cent. It is the first web site I’ve found that provides a state by state display focused on the widening income gap between our rulers and us.

                The following is a brief summary of the data collected by EPI. Our memories and imagination may be able to fashion a kind of “body count” for this domestic civil war. If the data is too dry, read “Nickel and Dimed: On (Not) Getting By in America” (2001) by Butte’s Barbara Ehrenreich. It’s a bottom up report on folks who work full-time, year-round, for the poverty-level wages fostered by our oligarchy.

                On average, income across the board in the U.S. grew between 1979 and 2007 by 36.9 percent. The wealthiest one percent received a 54 percent of that income growth.

                Looked at from the perspective of income change, the top one percent saw its income double, a 200.5 percent increase. The bottom 99 percent’s income increase was almost 19 percent in those 28 years.

                What happened through our Great Recession? The one percent has recovered quite well, but the bottom 99 percent’s income declined during what the mainstream media has agreed to call “the recovery.”

                The top one per cent has been the big winner during the Obama years, with an increase in income of 11.5 percent. For the 99 percent the news has been a decline in income measuring a minus seven-tenths of a percent.

                If the entire period from 1979 to 2011 is considered, the 32 years give us the concluding statements: (1) The top one percent had an increase of 129 per cent in its income; (2) The bottom 99 percent saw its income grow by 2.3 per cent. The contrast between the income of the one percent and the income of the rest of us puts us right back in the society of Herbert Hoover in 1929.

                By 2011 the average income of the one per cent was over 24 times greater than the average income of the bottom 99 percent. For the top one percent the average income was $1,040,506. It was $42,694 for the bottom 99 percent.

                The New Deal of Franklin Roosevelt and the post-World War II of a growing unionized middle class has been wiped from memory. We now live in the atomized, dog-eat-dog society created by the atheistic libertarian Ayn Rand’s disciples. Congratulations on this stunning ruling class triumph go to its wizard economists, Milton Friedman, Paul Volcker, Alan Greenspan, and Ben Bernanke. And to Rand’s two most prominent protagonists enjoying power today, Paul Ryan and Rand Paul.

                On what’s left of “the other side,” what can we say about those so-called “Democrats,” the “neoliberal” or “New Democrats” who exercised power within the period from 1979 to 2011? Jimmy Carter and Fed Chairman, Paul Volcker; Bill Clinton with economic and financial advisers, Robert Rubin, Larry Summers, and Alan Greenspan. Finally, Barack Obama with Clinton retreads, Timothy Geithner and Larry Summers. Not to forget, through the entire period, our own Senator Max Baucus. Quite a legacy to leave.

                The EPI site gives income data by state. No surprise that Connecticut’s one percent  did better than others. That’s where Wall Street CEOs reside. It’s top one per cent had an income growth of 273 percent (1979-2011) It’s bottom 99 percent had income growth under 15 percent. The top one percent claimed over 70 per cent of the state’s income growth since Carter’s presidency.

                Finally, David Cay Johnston reports that between the official end of the Great Recession in mid-2009 and the end of 2012, the top ten percent saw a 15 percent increase in income. The income of the bottom 90 percent declined 15.7 percent, putting its average income back to the 1966 level. And that happened “after” the Great Recession.

                Greider’s article is on “The Nation” magazine website: http://www.thenation.com/article/178366/why-federal-reserve-needs-overhaul

Appreciating the Greenspan-Bernanke Legacy

By George Waring  02-19-14

 

                With Wall Street’s current praise for newly retired Federal Reserve Chairman Ben Bernanke, its appropriate to remember our very recent past, our past and present, actually. The unprecedented wealth redistribution upwards from middle class and poorer home owners to the wealthiest Americans is continuing. The great mortgage scam of this century still proceeds. At the very center of this scam have been the policies of the Federal Reserve.

                To celebrate Bernanke’s retirement, the PBS News Hour offered assessments by two economists, a Clinton Democrat and a Bush Republican. They praised Bernanke, crediting him with having stabilized Wall Street’s financial institutions. Thus, PBS trumpeted Wall Street’s view: Bernanke as a hero who helped Secretary of the Treasury, Hank Paulson, save the world during a financial panic and prevented the slide into another Great Depression.

                Bernanke was Alan Greenspan’s colleague and successor at the Fed. He supported Greenspan’s refusal to recognize that homeowners were heading for a huge black hole by relying on the rapid increase in home equity to fuel consumer spending. The bursting of the real estate speculative bubble in 2006-7 caused our Great Recession. By supporting deregulation, maintaining record low interest rates, ignoring Wall Street’s highly leveraged derivative activity and its role in predatory mortgage lending, the Greenspan-Bernanke Fed failed at its job.

                Several good books relate this story, ranging from Michael W. Hudson’s” The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America—and Spawned a Global Crisis” to Simon Johnson’s “13 Bankers: The Wall Street Takeover and the Next Financial Meltdown.” However, my favorite is Matt Taibbi’s “Griftopia: Bubble Machines, Vampire Squids, and the Long Con That is Breaking America.” Chapter Two provides a truthful brief survey of Alan Greenspan’s sycophantic and disastrous career.

Read more: Appreciating the Greenspan-Bernanke Legacy

Comprehensive economic plans needed

This editorial is from the Butte Weekly's opinion pages. It stands as the "opinion of the paper."

2-12-14

                Recent business closures and layoffs have prompted the usual chicken-little, “Sky is falling” talk and the bromides that a big-box store or more franchise restaurants will be the panacea for all of Butte’s economic woes.

                These assertions are false; what is needed is a better big-picture viewpoint to address ways to improve Butte’s overall economy and concerted local efforts that focus on doable steps to help that process that address a broader range of businesses and industry and encourage growth throughout them all, from small manufacturers and mom-and-pop stores to larger enterprises.

                We’ve heard for years that Butte is dying and that any day, the streets will be rolled up and everyone will move to greener pastures elsewhere.  We heard it in the old days during every union strike against the mining companies, we heard it when the Berkeley Pit ceased operations and we’ve heard it every time a retailer or restaurant has closed its doors.  Somehow, reports of Butte’s death, like that of Mark Twain, have been greatly exaggerated. 

                The town has shifted in many ways with time.  Although Butte still depends heavily on the mining industry, mining is no longer the only game in town.  Our population has been steadily declining for many years, but new census figures show that it has stabilized and even increased a bit.  Many residents and businesses have moved off the hill and the town has spread to the south and east, but redevelopment and reuse of historic Uptown buildings continues.  In recent years, more historic properties have been redeveloped for residential use, prompted by renewed interest from those who want to live in the central business district. 

                Butte has always endured its ups and downs, but it continues to survive and there are many bright signs that point to diverse economic growth that should be stronger over the long-haul than our previous dependence on a single industry. 

                Efforts like that underway to locate a major manufacturing hub, one of 8 nationwide, to bring together educational institutions and industry in research and development, hold promise.  The start of a pilot “Economic Gardening” program to help local businesses grow, thus supporting economic growth from within, is a positive step.  Our Chief Executive’s participation in national conversations about urban planning and development of plans to improve the corridor between Montana Tech and the Uptown business district signal promise.  With the completion of its high-speed fiber optic network, Butte is poised to attract more high-tech businesses and industries.

                Efforts to woo a big-box retailer to the Mining City seem even more likely to fail than they did in the 1990s.  Nationally, big retailers are not building as many brick-and-mortar outlets, partly due to changes in American shopping habits, such as the dramatic rise in internet sales in the past few years.  Companies like Home Depot, Lowes and Target seem unlikely to build in Butte, especially since their stores in other communities 60 to 90 miles away already draw customers from Butte and is surrounding area. 

                Even if Butte could land a big-box store, study after study has shown that economically, it would hurt locally owned competitors in the market and shuttle more local dollars out of the community. 

                Rather than putting all our focus on attracting “one big thing,” we need to continue to work steadily in multiple areas to improve our economy.  We need to steer clear of the old “flat versus Uptown” thinking that divides the community instead of uniting us. 

                A realistic approach, based on solid knowledge about business and industrial trends nationwide and statewide, is key to crafting future plans for economic development.  Our leaders need to be as aware of Butte’s weaknesses as well as its strengths in order to move forward.  We need multiple strategies to provide more value in the community that will attract new businesses and industries.  Our eyes need to be open to all new possibilities and to all avenues for growth. 

                We have to realize that great victories come from fighting many battles on many fronts.  We need to move forward one step at a time and pick ourselves up from setbacks, not let them defeat us.  Change is difficult, but the truth is that Butte can and will survive and thrive if we can work together and not be tempted to fall for the false prophets of gloom and doom.  

George Waring dives into Davos

By George Waring 2-12-14

The best of times, the worst of times

                1789. “It was the best of times. It was the worst of times.” I thank my Jr. High English teacher for having us read Dickens’ Tale of Two Cities, and then for treating us to the Ronald Coleman movie version. Some sixty years ago lessons in social justice were presented by union teachers in public schools, right here in the U.S.

                This reminiscence introduces my subject: “the best of times” for the fortunate few. In the Swiss Alps in January, 2,500 global “aristocrats” gathered by day to solve our planet’s problems. They only partied through the nights. Christopher Dickey, formerly Newsweek’s Paris correspondent, wrote a column about the revelers last month entitled: “Income Inequality Was Quickly Forgotten at Davos.” He began his account with the following sentence: “’It kind of disappeared,’ said one woman at the end of the World Economic Forum when someone asked what happened to perhaps the greatest issue facing the world today.”

                Prior to the Forum our corporate media fed us nonsense about the serious attention that Davos would give to the growing global problem of accelerating poverty. The conference organizers commenced the forum by calling on attendees “to address the explosive imbalance between the world’s astronomical rich and those who live in grinding poverty.” Pope Francis sent the glitterati a “polite but blunt” plea: “I ask you to ensure that humanity is served by wealth and not ruled by it.”

                Coinciding with the Davos forum, Oxfam issued a working paper  on growing global poverty, “Working for the Few: Political capture and economic inequality.” Three points made the news: “Almost half of the world’s wealth is now owned by just one percent of the population. The wealth of the one percent richest people in the world amounts to $110 trillion, 65 times the total wealth of the bottom half of the world’s population. The bottom half of the world’s population owns the same as the richest 85 people in the world.”

                Dickey’s report concluded with this summation:

                “The consensus among the rich guys I talked to (most of whom had left in their chauffeur-driven Audis and private jets on Friday), was that Davos this year was just the way it should be: a place to make more deals face to face with more people much faster than they could anywhere else – then spend a few hours on the slopes or taking in the esoteric offerings on the conference agenda, like Goldie Hawn talking about meditation. “I like to improve my mind,” one influential American CEO told me.”

                Who knows? Maybe that influential American was Jamie Dimon, the celebrated JPMorganChase CEO. He had just received a bonus of $20 million from his Board of Directors. This windfall came after surviving a year in which his firm had been fined more than $20 billion by the U.S. Justice Department for violating criminal laws and banking regulations.

                Sam Pizzigati’s website TOO MUCH ranked Dimon ninth on its 2012 list of the ten greediest American CEOs. Since the housing bubble burst in 2008, Dimon’s earnings have totaled $90 million. His 74% pay raise in January forced a New York Times business editor to compose a long piece justifying Dimon’s record-setting Wall Street bonus. His bank’s salary committee was composed of former CEOs from Exxon Mobil, Johnson & Johnson, and NBC Universal. Who could question the judgment of those capitalist rulers of the universe? They must recognize value when they see it.

                Dimon earned the reputation of being the most outspoken Wall Street critic of the Dodd-Frank Act of 2009 that created new regulations for the financial industry. He was credited with masterminding the lobbying effort in Congress that defanged the hated re-regulatory effort. In other words, Dimon earned every penny of his big bonus by saving the financial industry’s “free market.” And “every penny,” of his bonus was tax deductible for JPMorganChase. That’s because the $20 million was awarded in “performance pay,” a gift to corporations from their friends on the tax writing committees in Congress. There is no limit on how much of a CEO’s “pay for performance” is tax deductible. It falls to the little people who actually pay taxes to make up the governmental cost of Mr. Dimon’s fortunate political friendships.

                If Dimon were a European banker, he would not have been so blessed. The European Union just enacted a new rule which bars bankers from receiving bonuses greater than twice their salary.

                Meanwhile, for “the worst of times” imagine a Congress that cuts food stamps and unemployment benefits during our continuing Great Recession.

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