The stock market was stronger before the bailout passed.

Dow Jones Industrial Average Close
Monday September 29th — Bailout fails	10,365.45
Friday October 3rd — Bailout passes	10,325.38
Monday October 6th (as of 11:08am closing)	9,797.56 9,955.50

Robert Reich thinks America is about to explode in a wave of angry populism following the $700 billion Wall St. bailout. Reich writes:

The larger economic outlook is not encouraging. All signs point to the economy worsening, bailout or no bailout. Unemployment will continue to rise. Median earnings will continue to drop, adjusted for inflation. More Americans will lose their health insurance.

The Era of Angry Populism has only just begun. Let’s hope Obama wins, and is able to mobilize the anger into fierce pressure on Congress to get his agenda enacted, as well as reform Wall Street and Washington.

That would certainly be a positive manifestation of popular sentiment in tumultuous times, but I’m unclear how he thinks we get from here to there. We’re here precisely because the leadership of both parties in Washington has identified with and worked on behalf of corporate interests far more than working Americans. Populism is regularly laughed at by DC elites (See: Jim Webb & Jon Tester’s 2006 victories as an example). The most mainstream populism we see in the American political spectrum today is anti-immigrant, pseudo-racist variety provided by Lou Dobbs and the Minute Men.

Reich thinks McCain could play the role of Angry Populist better than Obama, which I suppose is true but only to the extent that McCain is infinitely more practiced at saying whatever is politically advantageous at a given moment than Obama. Were today to call for McCain to become an economic populist, his likely reaction would be, “Hell, why not?” if it wins him votes in Ohio, Michigan, and Wisconsin.

But angry populism can only be an effective political response to economic and political disenfranchisement of the majority of the American populus if the people articulating it are genuine. Late arrivers need not apply. While that may be evident with imposters like John McCain and Sarah Palin, it’s also why some of our great liberals — Chris Dodd, Barack Obama, Hillary Clinton — would not do well as populists either.

Reich is onto something in suggesting that the coming populist outpouring could be a useful weapon in Obama’s efforts to enact his legislative agenda. But I don’t think it’s easy to go from Point A to Point B. Again I’m drawn to what I wrote about a few days ago — Huey Long’s Share The Wealth campaign. We can’t wait for someone who isn’t a populist to produce a populist agenda and harness support for it. If a legislative agenda were to be created that articulated the populist sentiments brewing during this crisis, it would best serve a President Obama to have it originate with an outside body who actually was a populist. We just don’t really have that person now on the Left.

What I think is most likely is that an outpouring of populist support will continue to rise across the nation and our political elites of both parties will ignore, miss, or marginalize it. We’ll have a few figures who harness it in circumscribed situations that don’t inform their legislative actions, as Jim Webb did on the bailout vote. Others will embrace populist rhetoric solely in electoral settings, like railing against high gas prices while oil executives pocket record profits, but then never once vote to change things when in office. At the end of the day, I don’t see any manifestation of populism on the Left that makes me optimistic about the prospects of Democrats currently serving at the federal level finding a way to hear and act upon the uprising to come.  Maybe someone like Brian Schweitzer in Montana will find a way to speak to these times, but again, I think even the list of politicians outside of federal office is short.

The opportunity is here for the Democratic Party to give birth to another Paul Wellstone or Huey Long. There is the popular will for their sort of politics. Will one emerge? And will it be someone we already know (Russ Feingold? Donna Edwards? Robert Wexler?) or someone coming from obscurity to speak truth about the state of affairs in the United States of America?

Digby has a great post on the need for Democrats to take the opportunity to proactively push a progressive policy agenda in the wake of current economic turmoil. The Paulson plan and $700 billion for Wall Street has all the hallmarks of conservative shock doctrine: step into a crisis and put through an aggressive policy structure that moves the country drastically rightward while empowering a small handful of interests (in this case, Wall St. financiers and the GOP operatives who provide them with filthy lucre).

Fundamentally speaking, there is zero reason why progressives (or at least Democrats) cannot take the same legislative opportunity to effect a strong move leftward. Digby quotes an emailer who lays out a strong case for doing just this. She goes on to make the case for the how and the why Democrats could take the opportunity in front of them to shift the Overton window of how we think about policy in America for a long time to come.

But the Democrats are failing to take advantage of the complexity of the situation and use simple politics to sell it. They should say that the economy is failing and we need massive government action to solve it. That’s what Democrats do in a crisis like this. But they need to make the political message about the Democratic agenda for restoring the economy not about rescuing “the financial system” which nobody understands anyway...Let’s have the argument and let the American people decide. If the Democrats win it they will have a mandate for real progressive change in the middle of a crisis that demands it. If they play their cards right they’ll end up neutering the failed conservative ideology for a generation, put in place some important and long neglected structural changes and mitigate the worst of this downturn at the same time. There’s no reason that the Shock Doctrine can’t be used for good.

Digby’s emailer and Rick Perlstein both suggest the goal for Democrats should be to put in place a new version of FDR’s New Deal. I hate to disagree with Perlstein, one of our nation’s finest historians, but I wonder if a better model for progressives today (keeping in mind the origination for any policy plan as of now will be in the legislature) would be Huey Long’s Share Our Wealth campaign. Share Our Wealth was a more radical plan than the New Deal, which did appropriate some parts of Long’s vision for how the crisis of the Great Depression could provide opportunity for wholesale change in the American economic system.

Here are the bullet points from the Share Our Wealth campaign:

1. No person would be allowed to accumulate a personal net worth of more than 100 to 300 times the average family fortune, which would limit personal assets to between $1.5 million and $5 million. Income taxes would be levied to ensure this. Annual capital levy taxes would be assessed on all persons with a net worth exceeding $1 million.
2. Every family was to be furnished with a homestead allowance of not less than one-third the average family wealth of the country. Every family was to be guaranteed an annual family income of at least $2,000 to $2,500, or not less than one-third of the average annual family income in the United States. Yearly income, however, cannot exceed more than 100 to 300 times the size of the average family income.
3. An old-age pension would be made available for all persons over 60.
4. To balance agricultural production, the government will preserve/store surplus. This is made so no food is wasted.
5. Veterans are paid what they are owed
6. Education and training for all children to be equal in opportunity in all schools, colleges, universities, and other institutions for training in the professions and vocations of life.
7. The raising of revenue and taxes for the support of this program was to come from the reduction of swollen fortunes from the top, as well as for the support of public works to give employment whenever there may be any slackening necessary in private enterprise.

Some of the more aggressive policy visions being put out by some bloggers, intellectuals, and unions have scope that goes far beyond the financial markets. Speaking broadly, there are better options than just looking to Wall Street and no further. As David Sirota has noted, no one has yet explained why if we can throw $700b at the financial markets, we can’t spend a comparable amount on health care, education, greening the economy, and the social support system. Now is the opportunity to be the most aggressive in defining what is possible with American public policy and government spending. In attempting to make that definition, we have to look far beyond what may be easily achievable and set out what would be most beneficial, knowing that the GOP and corporate, centrist Democrats will work to undercut the program as much as possible.

To the extent that the Share Our Wealth program created both political demand and political cover for large steps in the government’s involvement in the economy under the executive’s New Deal program, a progressive shock doctrine today originating from the legislature could do the same. Long presented America with a truly populist, progressive economic agenda. The response was strong and Share Our Wealth chapters around the country could well have carried Long through a presidential campaign, taking enough votes from Roosevelt to allow a Republican win (Long projected that four more years of suffering in the Depression under a Republican would bring the country to the point where they would elect him president in 1940 and empower him to enact his policy agenda).

From a political standpoint, the problem with relying on Obama as the author of a policy solution is that he cannot be the left flank as a candidate as he has no power to institute his legislative agenda. What is presented now, then, becomes incredibly important. We shouldn’t hold back or strive to compromise before we even sit down at the bargaining table. We should be presenting the most aggressive progressive economic program we can come up with. It should be pushed by outside groups and championed by key legislators on the Hill (Calling Pete Stark, Chris Dodd, & Donna Edwards). Our congressional challengers should embrace this plan now and make clear to voters that if they want to stabilize the economy not just for next week but for the next 100 years, a dose of progressive shock is in order.

A progressive shock doctrine will not be passed into law while Bush is in office, but we can move the Overton window during the short term of this crisis. That would facilitate the election of Barack Obama. Once in office, Obama could give signal that he’d embrace whatever legislative Share Our Wealth program is created now or he can step forward and do an FDR style New Deal — somewhat less aggressive, but benefitting from the recent rise in populist sentiments supporting large-scale change in government economic policies and social programs.

The strength of the call to action now will determine what is politically possible in January 2009. Let’s not hold back.

Brad at Sadly, No! has an intriguing solution to the financial crisis:

Were I to structure a rescue package for the economy, it would involve locking up the CEOs of financial firms in pillory stocks and letting Americans hurl rotten vegetables and feces at them for $20 a pop. Assuming all 300 million Americans hurl an average of five tomatoes/crap balls at their least favorite corporate execs, that would raise a total of $300 billion, or nearly half of the money needed to buy up worthless assets. This way, the typical voter could at least get some schadenfreude in exchange for their trouble. I call this the Brad Righteously Pissed-Off Revenge Act of 2008. I think it’s a winner.

My friend and former co-blogger Antonino D’Ambrossio has a great article up at SleptOn about how Wall Street firms are seeking to rake American taxpayers over the coals after taking all they could from the economy for years. Here’s a snippet:

In Martin Scorsese’s now classic film Goodfellas, there is a scene where wiseguys Henry Hill (Ray Liotta) and Tommy DeVito (Joe Peschi) burn down the Bamboo Lounge, a nightclub the gangsters had been using as a way station to house cases of liquor, food, and expensive clothes that they then “flipped” (to turn a huge profit on) on the street. Watching as the U-Hauls pull up and unload the merchandise, Henry Hill sets up the scene with the following voice-over:

As soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and sell it for a hundred. It doesn’t matter. It’s all profit.

Sonny, the club’s owner, is unable to make the payments and soon the debt is insurmountable. The gangsters have been profiting and now they will score one last huge gain by burning the place down and leave Sonny, the owner, with a huge load of debt impossible to repay. Liotta as Hill once again in voice-over:

And, finally, when there’s nothing left, when you can’t borrow another buck from the bank or buy another case of booze, you bust the joint out.

When I read the endless stories of private equity’s record breaking billionaire buyouts in today’s news, this scene in Goodfellas plays like a constant loop in my mind. In essence, private equity companies like KKR, Blackstone, and the Carlyle Group (these names should ring a bell for most folks reading this because they are key players in the sub-prime mortgage catastrophe and the debt crunch that threatens to plow this country deep into recession) have perfected the art of the legal “bust out.” I’m sure the gangster in Goodfella wish they had thought of this greatly profitable scheme. What these firms do is use risky debt-laden business models to earn hundreds of millions a year while allowing their partners to pay a lower tax rate on their huge investment income than nurses have to pay on a $50,000 salary (15% for the billionaire and 35% for the nurse). These companies make exorbitant profits the old fashioned way — they don’t earn it. Instead they make money by loading debt onto the companies they buy, cutting out as much cost as they can (which can mean laying off employees), and then selling the companies for a profit.
…
Clearly, the private equity “bust-out” business model is threatening an already tenuous 21st-century American democracy. For workers, the buyout and subsequent “bust out” of scores of American companies has helped to stagnate wages, roll back hard-fought labor protections, undermine unionization, inflate the already astronomical price of healthcare, and make it nearly impossible for many to save and build towards retirement or the semblance of a secure future.

Antonino’s whole piece is worth a read. There’s been a lot of talk about how big investment firms and banks holding mortgages are going to benefit from a big bailout. But there hasn’t been much attention on how private equity firms will benefit, let alone how their actions have contributed to the current mess.