THE STIMULUS--OBAMA, THE DEMOCRATS, AND THE REPUBLICANS
It seems like only yesterday that Paulson was pleading with the Congress to pass a $750 billion TART (Troubled Asset Relief Program) that was going directly to some of the country’s largest banks, brokerage firms and insurance companies to prevent them from going under and taking the entire U. S. economy down with them. The original plan as laid out by Secretary Henry Paulson was to buy the mortgages of millions of homes that were in foreclosure and to reduce the bad debt that had spilled red ink on the balance sheets of too many of the nation’s banks.
The Congress, caught off guard, confused by complex economic practices they did not fully comprehend and frightened that the country was going to the dogs on their watch, they hurriedly passed a bill that handed out $750 billion dollars to some of the very corporations whose ill-advised, imprudent and unscrupulous business practices mismanaged their companies straight to the brink of insolvency.
To add insult to injury the Congress—Pelosi, Boehner, Reed, and friends passed a bill with no constraints on the corporations that came to them with hat in hand for billions of dollars to save their asses. The House leadership failed to compel constraints on the compensation of the executives, force the banks to loan this money to credit-worthy companies and individuals in order to jump start the economy.
That statement is not quite fair. The Congress did, indeed, place restraints on those companies whose toxic paper was to be sold at auction, at the urging of the Bush administration and the Secretary of the Treasury; unfortunately, or should I say, by design, the Treasury Secretary, elected not—that’s correct—elected not to sell any toxic paper at auction, thereby giving every key executives of every institution that was given massive government funds, to keep the outlandish salaries, benefits and bonus’ they were given by boards of directors who were nothing more than puppets in the hands of CEO’s, Chairmen, CFO’s and VP’s who were taking down total compensation packages they neither earned nor deserved.
Damn you Paulson! Damn you Bush! Damn you Republicans! And damn you leaders of Congress who allowed this contaminated legislation to get passed and signed by President Bush without the restrictions the American people demanded.
Now the Republicans, as well as many American citizens who do not know better, are saying, “See, it did not work. You cannot give government money and expect it to work.”
Even more absurd is comments by right wing Republicans and blue dog Democrats that the price is too high and the debt too enormous to be placed on the backs of the American people. These comments are absurd because it these very people whose failure to oversee these banks, insurance companies and brokerage firms, whose vote to fight an unwarranted war in Iraq and who gave massive tax cuts to the very wealthy in our midst that created this huge debt in the first place.
Unfortunately, the idiots who are saying this are people who do not realize that the billions of our money that was given to these over-compensated executives received this money as a result of Paulson and Bush who “deceptively” planned it this way to keep the pockets of their Wall Street buddies loaded with money they did not honestly earn.
That day is past, and that terribly mishandled stimulus package must not be permitted to occur again.
But there are some serious problems in the package that passed the House and is presently in the throes of Senate debate.
The House Democrats filled the stimulus bill with perks that had nothing to do with creating new jobs and rescuing banks and home owners from the mortgage crisis. Those are the only two themes that must emerge from the bill presently before the Senate.
I blame Pelosi and the Democratic House leadership for not delivery to the U. S. Senate a bill free of all the garbage that is cluttering up the bill that finally passed and is so utterly confusing to the American public because the Republicans have taken to the airwaves to tear the bill from limb to limb in hopes of killing it in the Senate and regain some political points..
Pelosi’s job as Speaker is to bring to the Senate a bill that contains only those funding measures supported by the new President and only those measures that speak to the issue of revitalizing the economy.
This is no time to insert into this vital legislation any projects that do not create new jobs immediately, or set the stage for economic expansion in the very near future.
To be honest I was shocked to hear of some of the funding projects the House included in this bill. People are worried. People want something new that truly addresses their urgent needs now. That does not include funding for the Arts or other extraneous projects that do not create jobs and put bread on the table of the millions who are out of work and are losing their homes.
First of all, remove all of the toxic paper held by banks into a new bank that will free all banks of debt they cannot tolerate in their balance sheet or at the very least, guarantee the paper so the banks’ balance sheets are freed from the stench of toxic waste. Remove the fear of foreclosure from the backs of those who are about to lose their homes and allow them the freedom to purchase the necessities they require with the money that their reduced mortgage payment and tax deductions allow.
Infra-structure is an immediate need for the entire nation; the second priority must be the rebuilding of our highways, transit systems [that gives commuters the options to use public transportation for their commutes], bridges, sewer systems, airport security, complete security of our docks and the goods being imported into this country, train security and upgraded airline security. Our food and water supply in vulnerable. This bill should make dramatic in-roads into securitizing these two vital resources of the people of this nation—protect the water supply and the food supplies both of which are vulnerable to terrorist attacks.
If the Republicans truly wanted to aid in restoring this economy to its former greatness, it would make reasonable recommendations instead of coughing up their ancient recipes—cut taxes on corporations and capital gains—which has been tried for the last eight years to the benefit of no one except the very rich. Come on Boehner and McConnell; try to come up with at least one new idea before your term is up.
Banks that have overdosed on toxic paper must be freed by the federal government to open up credit to those with exceptional credit histories both on the personal and small business sides of the equation so that individuals can begin to purchase goods and services and companies can expand their businesses and hire more people.
Banks that do not aggressively loan money to credit worthy customers must be severely penalized if they accept funds from the federal government. No excuses this time around. For all practical purposes Paulson wasted $350 billion dollars in November and December by practicing his “free market” delusions.
And by the way, Elizabeth Warren, the Harvard Law School professor who oversees the TARP program reported to Congress on February 5, 2009 that after a comprehensive study by numerous experts in the field Paulson lied to them and to the Congress when he reported that he was getting par value for taxpayers’ investments in the banks that received the first tranches of federal money. According to Warren, the people received only 66 percent value for the money invested. There is something criminal in this whole Paulson scenario.
The Democrats in the Congress must know unequivocally that this is not a circumstance ripe for the chance to play “gotch you” with the Bush Republicans for all of occasions over the last eight years when issues dear to their hearts were thwarted by the Conservative Congress. The bill coming out of the House was filled with projects unrelated to the banking crisis, the housing crisis, the general economic crisis confronting our nation. The bill coming out of the House appears too many of us, including this writer, to contain more “pork” than “the meat” necessary for economic recovery.
Projects such “Funds for the Art” unless explicitly related to the economic recovery should be placed on the “wait list.” Let us be clear and we have not been. Democrats, including President Obama need to keep this vital piece of legislation simple, understandable and easily communicated to the American public.
The Republicans are playing the same old dirty political game they employ in the recent political campaign. Obama must stop attempting to obtain a bi-partisan solution because the Republicans can’t even spell the word “bi-partisan.” The issues before the Congress are too important for the Republicans to attempt to gain political advantage out of a serious national crisis for which their party and their president are responsible.
Every time I hear John Boehner, Mitch McConnell, Lindsay Graham, John McCain, Orrin Hatch or any of their like-minded conservatives say that this package is too big, that it creates too much debt, and that it needs more tax cuts, I have this deep seated urge to “punch someone in the mouth.” Surely, the people from Southwestern Ohio can find someone with a scintilla of intelligence and a pinch of common sense to represent them in the “house of the people,” other than Boehner.
First of all, many top economists believe the package passed by the House is too small. Many are saying it will take every cent of a trillion dollars to come to grips with this economic predicament. And please, Senators McCain, McConnell, Burr, Graham, Cornyn and all others who plan to vote against the “stimulus” package, remember how we got here:
§ We got here because of an unwarranted war started by your president Bush and your party that costs this nation and its people $10 billion per month.
§ We got here because your party is so in love with “the free enterprise system” that you failed to fulfill your responsibility to oversee the operations of the departments of the Executive Branch that are called upon to regulate banks, insurance companies and brokerage houses to insure they do nothing that will injure our economic security.
§ We got here because of a massive tax cut for the very rich that has caused our debt to increase with the speed of torrential waters hammering their way over a broken dam.
§ We got here because of the corruption, greed, and lack of loyalty to the people who voted them into office.
Fareed Zakaria of Newsweek wrote a very perceptive article in its February 2, 2009 issue entitled, “There’s More to Fear Than Fear.”
“The American economy is entering its sharpest economic contraction since 1974—a recession that is likely to be the longest since the Second World War. But that’s not the worst of it. The American financial system is effectively broken. Major banks are moving toward insolvency, and credit activity remains extremely weak. As long as the financial sector remains moribund, American consumers and companies—who collectively make up 80 percent of GDP—will not have access to credit, and economic activity cannot really resume on any significant scale. We have not turned the corner. In fact, we can’t even see the corner right now.”
One of first things the government must do is bring our financial institutions back from the brink of collapse! By the way, this is not a joke. Many people thought that the first $350 billion rushed through Congress by Bush and Secretary Paulson did not solve the problem. The reason is simple; they continued to believe in the now proven fantasy that the free market works. The fact is that through a scheme described in detail at another part of this piece, Washington threw three hundred and fifty billion dollars at several major banks and rather than beginning to loan the money out to customer they either are sitting on it or in one or two cases using it to buy other banks.
It was Alan Greenspan who after serving as the chairman of the Federal Reserve, said that he had been totally wrong in believing that “the free market” philosophy was the only way to operate our economic system. It doesn’t work, he admitted after seeing what has occurred recently as a result of twenty-nine years of free market propaganda.
The banks must be secured from the travails of toxic paper overload. Through government guarantees or by transferring their “worthless paper” to an aggregator bank, thus relieving them of balance sheets printed only in red ink, should give them the confidence to begin to loan out money which is their only business.
When the government releases the additional $350 billion, it must be accompanied with guidelines on what the banks must do—including loaning out the money to their best customers and it must have overseers who will enforce the requirements sets by Congress and the President.
The second thing it must do in addition to relieve the burden of toxic mortgages from the balance sheets of our banks, it must place the mortgage holders safe from foreclosure either by guaranteeing the loans, rewriting the loans to make it possible for them to be repaid, or handing them over to this aggregator bank until the real estate climate changes.
I agree with some members of both parties who insist that one of the weaknesses of the House bill is its failure to deal with the bank crisis and its silence on the mortgage catastrophe. While banks remained saddled with tons of dead paper they will not lend money even to those worthy of credit in normal times [once either that dead paper is resurrected through government guarantees or purchase of the toxic paper by the government or a newly established entity.]
Tax cuts are important for the middle class. We know from experience that tax cuts alone do not stimulate the economy in spite of what every Senator who rose to his feet today to denounce the stimulus package for insufficient tax cuts has proclaimed. In fact, a recent study pointed out that after last year’s tax cut only two percent of those that received the money, spent it.
As Rachel Maddow pointed out on her show, if you looked carefully at the newscasts today, on the poster standing behind the infamous Senator from Utah, Orrin Hatch you were immediately attracted to two sentences that Hatch insists is the answer to the crisis—tax cuts for corporation and reduction (tax cuts) of the capital gains taxes [again for the wealthiest of our number]. Corporate tax cuts and reduction of the capital gains tax has been the only mantra of the Republican Party since the Reagan years that did nothing throughout his career, but wail against big government and deficit spending. He made huge promises he was never able to keep and yet today, because people like Grover Norquist, William Krystol and a handful of Republicans who became known as Neo-Conservatives elected to make Ronald Reagan the god of the Republican Party with the philosophy that lower taxes and smaller government are the only way to save this nation.
Unfortunately, Reagan failed at both. He promised to eliminate the deficit by the end of his first term—which he did not. And he promised to make a smaller federal government—which he did not. He is famous for his campaign phrase, “Government is not the solution; government is the problem.” His governance did not match his oratory. He increased the deficit 2.7 times by the end of his second terms [from $900 billion when he assumed office to $2.3 trillion when he departed] and the number employees of the federal government increased by 200,000; so much for the Republican philosophy of government. The past eight years under Bush have been even a bigger disaster.
I would refer you to a new book by Will Bunch entitled “Tear down that Myth: How the Reagan legacy has distorted out politics and haunts our future.”
The trouble is that since Reagan, the Republican Party and its members of the Congress refuse to spend money where the money is vital to our nation’s well-being.
One of the reasons that Obama has paid so much time and attention to rebuilding our infra structure—bridges, highways, electrical grids, communications interconnects, hospitals, schools, is that under the leadership or to be accurate, the lack of leadership, of the Republican Party the nation’s infrastructure is in critical condition. To rebuild our infra-structure will also put people to work in large numbers.
My only criticism of the bill before the Senate this very day, is that the president did not coordinate with the Speaker and the leadership of both parties to bring to the Senate a package that comprised the best of both world’s—tax cuts and government spending.
Zaharia writes further in his depiction of our economic climate: “The American public believes that we have already spent far too much money on bailing out the banks. But the economic fact is that we have not spent enough.” I would add, we have not spent enough in the right way i.e. with the kind of restrictions that will never again allow the banking industry to strangle itself to death with toxic paper.
The president must focus. Granted he has only been in office seventeen days, he has nonetheless approached this crucial issue with a shot gun rather than a rifle approach. If the banking fiasco and the mortgage quandary had been addressed in the House bill as the president should have insisted, Speaker Pelosi would have been forced to do a bit more overseeing herself. There would be much less confusion on the part of the American people and the Republicans would have had much less room for their perpetual tendency to attack any bill that smelled of progressivism, as the Senator from Missouri, Claire McCaskill so vigorously pointed out yesterday on the Senate floor. By the way, I am really impressed by that Senator.
Many, again, on both sides of the aisle, would like to create an “aggregator bank” to buy up all of the bad debt and figuratively speaking, place it in a sealed vault, or if you will, an infamous “lock box” until the real estate market is rejuvenated. Fine! Do it!
Others, including me, would rather see the government simply guarantee the bad mortgages that the buyer could no longer afford, relieving the banks of the worrisome task of attempting to revive their balance sheets and giving them the incentive to loan money to those who need it and will be in a position to repay it.
The Republicans are not out to change or modify this bill, they are out to kill it and they do it at their own peril. There is very little time left and for the good of the country, McConnell had damn well better come up some ideas that are more constructive that reduction of capital gains taxes and diminution of corporate taxes. You had nearly twenty-nine years to prove that your ancient theory of government could succeed. McCain ran it past this generation of tax payers and they told McCain to go back to the Senate where he belongs. For once in the decade-- be honest; if those are the only ideas you have to offer, shut up, sit down and vote for the stimulus package the Democrats finally agree upon.
12:57:02 PM 
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