Dean Baker takes on NPR

This morning on my way in to work I heard a segment on NPR’s Morning Edition featuring the Wall Street Journal’s David Wessel, talking about tax fairness and the deficit. It started out fine, but then became a radically conservative editorial with Wessel arguing that there are lots of people out there who are upset because a small portion of the population, the very poor, pay no federal income taxes (though they do pay payroll taxes) and another portion which is even more poor that they pay neither income nor payroll taxes. Wessel doesn’t say he’s talking about the very poor, but that’s who he’s talking about. Dean Baker notes that this is a position which Wessel also does not provide evidence for anyone actually holding:

The segment also included the bizarre claim that there is widespread resentment against low and moderate income people who do not pay income taxes. It would be interesting if it presented evidence that supported this view. It is undoubtedly true that many people resent millionaires who use tax shelters in order to pay very low taxes, it is not clear that there is widespread anger over the fact that families earning $20,000-$30,000 a year are not paying income taxes (they do pay payroll taxes).

When this is applied to a conversation about the budget deficit, Wessel goes to the extreme implication that if we want to reduce it, we will need to raise taxes on the poor. Baker notes that NPR and Wessel’s entire framing around the budget deficit is wrong:

The first sentence of the piece refers to the “ballooning deficit.” In fact the deficit is actually shrinking. While NPR can argue that the deficit is larger than it would like it to be, the direction of change is wrong. It cannot accurately be described as “ballooning.”

There’s lots of deficit hawkery, but little of it is grounded in reality.

Sandy Weill & Banker Feelings

Yesterday Sandy Weill, former head of Citigroup and one of the people most primarily responsible for the repeal of Glass-Steagall and the rise of Too Big To Fail banks, came out in favor of breaking up big banks and separating investment banking from commercial banking. As a result, the world of finance has been knocked off its rocker. This is quite a big deal.

I wonder if part of the reason Weill has come out against himself (basically) is that though there have been no meaningful reforms or regulations put in place after Wall Street trashed the American economy in 2008 (and has kept us wrecked since then), there has been a marked rise in awareness that bankers are to blame. Being a banker is not quite the honorable profession it once was.

Jason Linkins at Huffington Post, writing on Neil Barofsky’s new book and a bad review of it by Jackie Calmes (the review was in itself bad in its inaccurate and lazy panning of Barofsky’s book), makes this observation:

If you’re living in America, and you can’t figure out why “Wall Street turned so hostile to President Obama’s re-election,” then you haven’t been paying sufficient attention. In the first place, people on Wall Street have made it pretty clear that their major beef with Obama is that he refuses to characterize them as all-knowing, all-wise, fully redeemed individuals. Instead, he has been critical of the role they played in the financial crisis. And that’s what hacks them off. As Jamelle Bouie of the American Prospect observes: “By criticizing Wall Street–and placing some blame for the crisis on their shoulders–Obama is diminishing the psychic rewards of working in the financial sector. People respect bankers far less than they did in the past, and that’s what Wall Street is reacting against.”

This could point to some of the reason Weill is getting on the regulation bandwagon now: he’s recognizing that he and his kind aren’t thought of highly and he doesn’t like that feeling.

Of course, while Weill’s comments are good in their validation of what lots of people have been saying for years, Yves Smith notes that it’s all a bit too easy for Weill to say these things now:

When I see someone like Weill or Dick Parsons putting a big chunk of their ill-gotten gains to fund lobbying or a think tank promoting tough-minded financial services reform, I’ll give the backers their due for making a sincere and serious effort to undo the considerable damage they have done. But absent that, this career death-bed conversion is a hollow and insulting gesture.


Nonetheless, Weill’s comments offer an opportunity to push breaking up the TBTF banks. If there were a major political party which supported this move, it might happen. But there isn’t, so it won’t.

Doing Nothing

Via John Aravosis, Roger Simon has a good column on the coming inaction in response to the Aurora shooting by President Obama. Simon writes:

Barack Obama looked haggard, spent, drained. He had just met with survivors and the families who lost loved ones in the Aurora, Colo., shootings.

Now, in front of the cameras and a small crowd Sunday, he stood in a blue suit, with no tie, his shirt collar open. It was about 8:45 p.m. East Coast time, and there was the beginning of stubble on his chin.

It was not his words that got to me, though they were simple and powerful: “Scripture says that ‘He will wipe away every tear from their eyes, and death shall be no more.’”

No, it was a few minutes later, when Obama described a teenager who had been shot in the neck by a bullet, and Obama put his hand to his throat to mark the spot and, as he kept talking, let his fingers linger there.

It was wrenching, touching, dramatic, sincere.

And baloney.

Not baloney because he was not moved by the terrible violence, not baloney because he did not feel for all the dead, their loved ones and the survivors. No, all those things were real to him.

What was baloney is that he intends to do nothing about preventing it in the future.

Of course Mitt Romney is just as bad as Obama here. But let’s take a look at what Obama’s Press Secretary Jay Carney said earlier this week, as documented in Playbook.

NO NEW OBAMA PUSH ON GUN CONTROL – From Jay Carney’s gaggle on Air Force One, en route Aurora yesterday afternoon: “[T]he President … believes we need to take steps that protect Second Amendment rights of the American people but that ensure that we are not allowing weapons into the hands of individuals who should not, by existing law, obtain those weapons. … [T]he President’s view is that we can take steps to keep guns out of the hands of people who should not have them under existing law. And that’s his focus right now.

Q: “In terms of like assault weapons or something like that, there’s no renewed push for a renewed assault weapons ban?”

CARNEY: “[A]s you know, there has been opposition to that since it expired within Congress … I wouldn’t argue with your assessment about that. So the President is focused on doing the things that we can do that protect Second Amendment rights, which he thinks is important, but also to make it harder for individuals who should not, under existing law, have weapons to obtain them.”

It’s hard to think of a more craven political response to this moment. In short, James Holmes’ killing of twelve people in Aurora and shooting of almost sixty more is not preventable. There is nothing the President supports doing to make such an event less likely in the future, as Holmes had done nothing illegal prior to opening fire on a theater full of Batman fans.

I have plenty of friends who are gun owners and I often see memes or off-hand comments on Facebook about Obama coming after their guns. It’s hard to think of a narrative less based in reality in American politics than this one. Obama has zero desire to increase regulation of guns, let alone try to take them away from gun owners. It’s a joke. Keep in mind, even before Obama had refused to pursue gun control following the shooting of Arizona Congresswoman Gabriel Giffords, the Brady Campaign had given Obama an “F” on every issue it scored.

I don’t have a perfect conception of what sane gun control policies would be and where the line between protecting our Second Amendment rights balanced with not having a massacre in our country every few months is. I would guess something along the lines of not allowing weapons whose sole purpose to kill many people at once – things like 100 round drum clips and assault weapons. The answer is likely going to be somewhat arbitrary, but that doesn’t mean we shouldn’t strive for a system of laws which seeks to prevent these shootings, not take them as an unavoidable given in America.

Barofsky vs Treasury

Former Special Inspector General of TARP Neil Barofsky’s media tour around his new book release is producing lots of insightful and important revelations about the ways in which choices were made, many by the Treasury Department, that helped the banks as opposed to homeowners and the general public.

Barofsky did a powerful interview on CBS This Morning which David Dayen highlights today. Barofsky also has a strong op-ed in Bloomberg on how the policy choices that benefit banks have continued to hurt homeowners.

Treasury’s focus on TARP’s financial costs, of course, detracts from its significant nonfinancial costs, including the worsening of “too big to fail” and the lost opportunity to help struggling homeowners. But a separate cost — the loss of many Americans’ faith in their government — may still yield a major benefit.

The missteps by Treasury have produced a valuable byproduct: the widespread anger that may contain the only hope for meaningful reform. Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.

I hope that Barofsky is right – that there will continue to be more and more anger at how the government has handled its response to the 2008 financial collapse and that anger could eventually compel the government to do more in response. Sadly I think it’s more likely that the anger will only reach a breaking point after another collapse happens, a collapse that only is possible because the government chose not to regulate the banks following the collapse of Lehman, AIG and Bear Stearns in 2008.

Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.

Wall Street WATBs

Paul Krugman:

It’s no secret that, at this point, many of America’s richest men — including some former Obama supporters — hate, just hate, President Obama. Why? Well, according to them, it’s because he “demonizes” business — or as Mitt Romney put it earlier this week, he “attacks success.” Listening to them, you’d think that the president was the second coming of Huey Long, preaching class hatred and the need to soak the rich.

Needless to say, this is crazy. In fact, Mr. Obama always bends over backward to declare his support for free enterprise and his belief that getting rich is perfectly fine. All that he has done is to suggest that sometimes businesses behave badly, and that this is one reason we need things like financial regulation. No matter: even this hint that sometimes the rich aren’t completely praiseworthy has been enough to drive plutocrats wild. For two years or more, Wall Street in particular has been crying: “Ma! He’s looking at me funny!”

But never mind. Because the rich are different from you and me, many of them are incredibly self-centered. They don’t even see how funny it is — how ridiculous they look — when they attribute the weakness of a $15 trillion economy to their own hurt feelings. After all, who’s going to tell them? They’re safely ensconced in a bubble of deference and flattery.

Krugman’s analysis of Wall Street millionaires as oversensitive, coddled, whiny babies is spot on, though he completely soft peddles how much Obama is on their side despite their protestations and delusions of persecution. Be that as it may, we really are ruled by the worst people in the world.

Climate Change Terror

First, read this article by Bill McKibben in Rolling Stone.

OK, now that you’ve done that and we’re both terrified, let’s move forward. McKibben sees a real need as making the fossil fuel industry out to be a villain, a global villain. Here’s why:

If you told Exxon or Lukoil that, in order to avoid wrecking the climate, they couldn’t pump out their reserves, the value of their companies would plummet. John Fullerton, a former managing director at JP Morgan who now runs the Capital Institute, calculates that at today’s market value, those 2,795 gigatons of carbon emissions are worth about $27 trillion. Which is to say, if you paid attention to the scientists and kept 80 percent of it underground, you’d be writing off $20 trillion in assets. The numbers aren’t exact, of course, but that carbon bubble makes the housing bubble look small by comparison. It won’t necessarily burst – we might well burn all that carbon, in which case investors will do fine. But if we do, the planet will crater. You can have a healthy fossil-fuel balance sheet, or a relatively healthy planet – but now that we know the numbers, it looks like you can’t have both. Do the math: 2,795 is five times 565. That’s how the story ends.

Given this hard math, we need to view the fossil-fuel industry in a new light. It has become a rogue industry, reckless like no other force on Earth. It is Public Enemy Number One to the survival of our planetary civilization. “Lots of companies do rotten things in the course of their business – pay terrible wages, make people work in sweatshops – and we pressure them to change those practices,” says veteran anti-corporate leader Naomi Klein, who is at work on a book about the climate crisis. “But these numbers make clear that with the fossil-fuel industry, wrecking the planet is their business model. It’s what they do.”

McKibben sees a need to weaken the fossil fuel industry’s political power to enable major reforms and change the business incentive to functionally kill the world. He sees a large carbon tax as a primary vehicle to do this. While I can see that mechanically working, I just don’t know how we get from here to there. Politicians are just as captured by the fossil fuel industry as they are by the financial sector.

We just lived through a financial crisis of the largest scale since the Great Depression. And Wall Street was barely touched in response. Frankly it’s hard to imagine a scenario short of some sort of climate-caused doomsday event compelling politicians to consider action on a scale that is needed. Again, this looks a bit like the reality for financial regulation. Only the consequences aren’t economic hardship but the end of the world as we know it. Naturally it’s hard to put our eggs in this basket.

I really don’t know what the answer is and I don’t think McKibben has one either, at least not one that is realistic. All I can recommend at this point is to read this article and get scared. Really fucking scared. Then share it with as many people as you can and make sure they are sufficiently scared too. Maybe if we get enough people scared about what is happening and how perilous a situation we are in, then change can happen. But again, this isn’t much to pin our hopes on.