The Stimulus and The Confidence Game

by Cameron Salisbury

The Sears appliances I bought last summer came with great teaser financing from Citibank available only if I took out a new credit card. The interest rate on the card was a bargain at only 19% because of my sterling credit history. The accompanying disclosure statement informed me that the rate could go as high as 32% if I screwed up and went over my credit limit, paid late, missed a payment, acted badly with any of my other creditors, jaywalked, yelled at my kids or did anything else they frowned on.

Their disclosure statement was not required to tell me that if I paid no more than their monthly minimum my balance would double every few years.

Last week, along with a notice that their interest charges were going up, they sent a note defending the increase by shamelessly blaming the current tough economic climate – the one that they have relentlessly and unapologetically done so much to create.

Everyone knows that U.S. consumers have put away their wallets. But while American consumption and the use of credit cards is dropping like a millstone, the total amount of outstanding debt remains ominously, bizarrely, unchanged (Federal Reserve, release G 19). Because the unregulated credit industry is allowed to change the rules, their interest rates and conditions, and your indebtedness in the middle of the game, spending less does not mean owing less.

In Detroit, the elderly freeze to death when their gas is turned off. In Florida, the formerly employed live in cars for months and longer. Roughly one in nine homes are now vacant and no one seems to have a good handle on whatever has become of the foreclosed families.

The evening news is filled with stories about the newly unemployed, the newly uninsured, and those watching in their living rooms feel a chill of recognition. They look so much like the rest of us. How long before we’re a part of, instead of a spectator at, society’s unraveling?

Despite the illogical daily bluster of the Wall Street swindlers, their academic and government enablers and TVs talking bobble-heads, the trillion dollar bail out of the financial sector, has not, will not, and cannot solve the nation’s economic problems.

All that ever actually sustained our financial system was an illusion that has evaporated: confidence in the protective capacity of our government and regulatory systems. The most critical obstacle to economic recovery now is the national sense of alienation from the institutions and the government we once thought would protect us from the capitalist crapshoot. The public’s deep sense of anxiety, distrust and betrayal, the crisis of confidence, will not be fixed until our institutions are, with or without full employment.

During the 1930s President Franklin Roosevelt initiated regulatory reforms of Wall Street and the banking industry that restored a battered nation’s faith in the future. With the introduction of the Social Security safety net to protect the unemployed, the aged, the disabled and the widowed, the launching platform for the ‘American Century’ was in place.

It lasted 50 prosperous years until Reagan, Clinton, and Bush II systematically deep-sixed as many of those guaranteed protections as they could get away with, and handed the levers of the nation’s well-being to privateers. American economic power shifted from a manufacturing base to the mainly East Coast, mainly Wall Street, financial sector. Anti trust laws were decimated and mergers infested the economy leaving consumers with fewer and more expensive choices as well as declining wages and increasing responsibility for themselves, their families and their future. Now, corporations reign anew, the safety net is in tatters, and people are scared. Again.

Thanks to our politicians, much of the way back has been sealed off.. Shoring up American workers and American jobs is decried as ‘protectionism’ by the same lost souls in the media and government who brought us ‘free trade’ and the current national and personal catastrophe.

There won’t be a return to the American century, but there can be a good life in our future, and a workable transition now, if we strengthen the safety net while we work for re-regulation and responsive politicians. Here are my suggestions:

First, people thrown out of work by Wall Street grifters and their government enablers deserve a little dignity in the form of a guaranteed income for the duration. Unemployment benefits should be extended until the economy recovers, possibly ten years. Pay for it by yanking back, clawing back, and redirecting the $1.7 (so far) trillion bail out for banking and Wall Street hucksters whose behavior throughout has been the very definition of criminal, a fact that only our politicians seem to misunderstand.

Second, the banking system must be reformed from the ground up. The American people are starved for honesty, accountability and transparency in finances that now seem out of their hands and out of control. Bring ethics, reason and capitalism back to the financial sector by letting banks that have driven themselves into bankruptcy fail and regulating the new ones that form. Stop using the American taxpayer to protect the lawless from the results of their own behavior.

Usury laws must return to the financial system to keep credit users from being thrown under the bus by rapacious and unpredictable creditors, and to lessen the sense of chaos in the social fabric.

Third, stop foreclosures by freezing the teaser rates for anyone who still has a job and a house they want to keep. Our wealthy bankers can afford to make a reasonable profit instead of a windfall on every transaction, but if it can’t, well, taxpayers should foreclose them.
The feds have a huge problem with buying toxic mortgage assets because no decision maker wants to admit that they have no value. If derivatives were ‘marked to market’, investors could lose big time, and politicians Paulson, Bernanke and Geithner certainly don’t want to inconvenience the wealthy. Better to stick taxpayers with a fairy tale and let us restore those fortunes.

In return for our unwilling largesse, the least bankers can do is ‘mark to market’ personal mortgages so homeowners are paying on actual value instead of the false prices created by the policies of the banking system. The banks have it coming. Couldn’t happen to nicer people. Besides, what else are they using their bailout billions for?

The most recent ‘stimulus’ theory, that banks should reconfigure mortgages to 31% of a person’s income with the Treasury subsidizing the difference up to 38% of income, is crazy. We don’t need to provide additional taxpayer dollars to hedge funds. Banks should lower mortgage payments to 31% of income because we’ve already given them boatloads of loot! Like all the other bits of insanity drifting out of the fog in Washington, D.C., this one is on track to become the latest citizen-financed boondoggle.

Fourth, health care must be provided to the increasing numbers of uninsured by federally funding Medicaid and taking the burden off the fiscally drowning states. We must also rethink Medicare. To control costs we’ll have to give up the outdated, corrosive and costly third party payer system as well as the flagrant violation of common sense that prevents the government from negotiating drug prices. It will require political will and WE – you and I – have to supply that. It can’t be trusted to anyone else.

Fifth, forget the stop-gap teensy tax cut drivel and permanently eliminate the payroll tax on everyone making less than $75,000 a year as well as on the vulnerable small businesses that provide so many jobs. That will put another 7.65% of personal earnings into the economy and give businesses another 7.65% of payroll to use as needed.

Now that’s a stimulus!

The payroll tax is unconscionably regressive, hitting hardest those making the least. It should be replaced with a tax on all earnings above the $75,000 threshold, not just wages, and it should not be capped. That should guarantee the future of Social Security and eliminated one endless, tiresome conversation from the national discourse. Instead, maybe we can begin to discuss the cost of keeping military bases in 100 countries. Or we can talk about how to elect a responsive government.

Contributing their share to the Social Security system seems like the least the wealthy can do given the massive financial rewards they’ve received from the political and economic stability our tax dollars buy them. Not to mention the tax dollars that are now restoring their fortunes. I’m sure they’ll be happy to do their part.

That’s my plan.

In the meantime, I’ve cancelled my Citibank credit card.

 

Bashing Hillary; Electing Obama

by Cameron Salisbury

 

I’m sick to death of the Hillary bashing so I can imagine how her supporters feel.

 

The blatant sexism, poor judgment and self satisfied insolence of media commentators from both the left and the right, TV and radio, is matched only by the blatant sexism, poor judgment and self satisfied insolence of the progressive blogosphere. With two viable presidential candidates who enjoy broad national support, progressives should be thanking providence. Instead, we’ve gone out of our way to throw away all claim to ethical or intellectual high ground.

 

The 2008 Hillary bashing sounds a lot like the 2000 Gore bashing, except that Gore’s trouble came largely from the terminally myopic arrogance of the national press in league with the far right. Hillary, on the other hand has to deal with those and everyone else, too, including us. 

 

Regardless of our own personal candidate of choice, we could react generously and applaud her candidacy, or, if we can’t bring ourselves that far, to give  reasons for our disengagement. Instead, the progressive blogosphere, much like the mainstream media, is full of snide, rationale-free invective, which is also known as misogyny. 

 

Despite the fact that many of us think she has lost her way on some issues, she deserves respect for her sound record of liberal leadership and for being an intrepid trail blazer for women. She has kept the faith with us better, on most days, than we have with her.  Her voting record is among the most liberal in Washington, far more liberal than Edward Kennedy’s (http://www.nationaljournal.com/voteratings/sen/lib.htm.) 

 

 Much has been made of Hillary’s so-called name calling of her opponent, another example of what for her is a treacherously uneven playing field. Every one of her comments about Obama has been fact-based.  She has said nothing that comes close to the mindless venom that has been directed at her. 

 

To prove that there are female misogynists, a woman at a McCain rally called Hillary a bitch.  To show that he was on her side as a misogynist, Senator McCain tittered in apparent agreement, although you probably can’t expect much from a man who calls his wife far worse in public.

  

Hillary didn’t deserve to be called a monster by an Obama campaign aid. 

  

She didn’t deserve to be compared to Tonya Harding by an apparently deranged questioner at a Democratic rally.

  

She also didn’t deserve her remarkable array of false friends. She has been gratuitously and  publicly betrayed by Ted Kennedy and Bill Richardson, as well as by NARAL for whom she’s has been stalwart.  It’s hard to imagine any competent, qualified and viable male candidate getting the same treatment from either gender. 

  

Recently, when giving reasons for ignoring the pundits who  have been calling for her withdrawal since February, she mentioned campaigns that went into June including her husband’s and Bobby Kennedy’s race that ended in his assassination.  The mention of the word ‘assassination’ was certainly ill-advised and she apologized immediately, but that wasn’t good enough because no one else in history has ever said anything they instantly regretted.

  

Dunderheads in both the media and in the blogosphere have said that she really meant that Obama should be assassinated.  Where do these people come from?   Obama brushed it off as did Bobby Kennedy, Jr.  Even conservative  NY Times columnist David Brooks said that the reaction to her statement has been overblown and small minded.  David Brooks, for godsakes!

  

No one in the media or among progressives seems to consider the favor Hillary has done Obama just by staying in the race.  Had she allowed herself to be railroaded out of the campaign by the mindless hatred that came from all sides, we would never have learned so much about Obama.

  

In January, Hillary was the media’s clear favorite with lots of campaign financing, nearly 100% name recognition, and  a double digit lead in the polls. The election was hers to lose, they said. 

   

By February, in what surely must be one of the fastest and most ill-considered u-turns in pundit history, the same talking heads had begun saying that she should abandon the race – for the good of the party, of course. 

  

Lucky for Obama, she’s bright enough to recognize bad advice when she hears it.

    

For many people, Obama is an acquired taste. To know him is often to like him but how would that have happened if he was alone in the field and talkng to himself?  As the race has gone on, the polls have shown increasing numbers of people who like his manner, like what he says, and who plan to vote for him.  

  

They were converted by time, the time to learn about him, time that was given to them by a campaign that was not foreshortened by a  media stampede.

 

But Hillary has also done the rest of us a favor by refusing to abandon the race.

 

By staying the course, she has involved the entire country in the election process, a novelty in the day when winners can and have been announced before the polls close. She’s made voters feel as though they mattered and that politics had a place for them –at the ballot box. 

 

I wish I wasn’t the only one saying,  “Thanks, Hillary.”