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Left and Right Converging

AV columnist Bruce Fisher sends in this reflection on How Treasury Secretary Tim Geithner’s bad economics could turn Blue states Red in 2010:

Jim Hightower, the former Texas politician and veteran political wit, was fond of excoriating political moderates as he was of skewering Republicans. “Ain’t nothin’ in the middle of the road but yellow lines and dead armadillos,” he’d say. In the Blue states, the curious phenomenon of middle-of-the-road economic policy in 2009 may turn politics Red in 2010. That’s because trillions of American tax dollars spent on “stimulus” spending have gone into bailing out banks rather than into buying America any new jobs. And the political effect is terrible for Congressional Democrats, who are getting angrier and angrier, just like their constituents. By the time of the next Congressional elections in 2010, the political impact of the economic policy decisions of George W. Bush’s and Barack Obama’s Treasury Secretaries, Henry Paulson and Timothy Geithner, could destroy Obama’s majority support in Congress.

Treasury Secretary Tim Geithner

Treasury Secretary Tim Geithner

A group of non-mainstream economists has been warning about the wrong-headedness of the Bush-Obama approach to financial stabilization. At the recent international conference of Post Keynesians held at Buffalo State College, the consensus was pretty clear that both the Bush and Obama administrations gave America a policy that will do nothing to prevent the financial instability that gave us the financial collapse and the resulting recession.

Current policy, according to L. Randall Wray and Eric Tymoigne of the Levy Institute, “serves to preserve the interests of big financial companies rather than to implement government programs that would directly sustain employment and restore state finances.”

In one of those rare papers that non-specialists can read, these economists don’t go anywhere near the political question of why it is that first the Bush Treasury and then the Obama Treasury flushed trillions of US taxpayer dollars into propping up banks that are “too big to fail” while doing nothing about the crushing burden of household debt—and still leaving at least 26 million people without a steady full-time job. Unfortunately, Obama’s economic advisory crew is led by people whose views are undistinguishable from Bush’s—the very people who have personally profited from what historian Kevin Phillips calls “the financialization of the American economy.” The Post Keynesians who gathered in Buffalo warned that the incentives for money-manager capitalism have become far, far lucrative than for industrial capitalism, evidenced by the far higher level of profits scored by financial firms than by industrial firms.

The astounding surge of influence of the financial world has been a bipartisan phenomenon. Former President Bill Clinton’s own Treasury Secretary, Larry Summers, was one of the architects (if deconstruction can be called architecture) of the changes in financial regulation that had been in place since the New Deal. Republicans and Democrats alike gleefully went along with all of that and more, raising money from Wall Street hand over fist. They all sang from the same “free market” hymnbook. Markets were supposed to be self-correcting. Indeed, the Republicans who are called “free-market fundamentalists,” like Congressman Ron Paul and Senator Richard Shelby, criticized the Paulson and Geithner bank-bailout policies by making at has least one point in common with the Post Keynesians: They all say that there should be no such thing as a bank or an insurance company that is “too big to fail.”

This past week, Senator Shelby rose in opposition to Senate Banking Committee Chairman Chris Dodd’s legislation that, Shelby says, “significantly expands the federal government’s ability to bail out not only banks, but any large, politically connected company.” The Post Keynesians make the same point.

Thus President Obama is facing a brewing rebellion on the Left as well as the one that has been hammering him from the Right. His bailout of the banks massively swelled the federal deficit without providing a public-works program that resulted in a surge of hiring. As the Christmastime consumer spending-frenzy approaches, there is still double-digit unemployment almost everywhere and no relief in sight. The Congressional Black Caucus is in open rebellion at the Tim Geithner-Larry Summers “brain trust” that still apparently believes that macro-measures of economic output are a perfectly adequate gauge of economic recovery, even while middle-class and working-class household stress is boiling over.

Even worse, the economic pain in 2010 will hit home even harder. The Pew Center on the States reports that most state governments are so strapped for cash that tax increases, layoffs and service cutbacks loom. Brookings Institution economists have issued a dire warning that local governments everywhere will be following suit.

Thus it’s no surprise that Congressional sentiment in favor of a new round of “stimulus” spending seems to be growing—because folks at home, from governors and mayors to households and shopkeepers, are all asking “Where’s my bailout?” Here’s the political problem: the apologists for the “free market” will be happy to bash the proposed financial reforms the same way they’ve bashed the stimulus spending and the healthcare reform—as big-government programs that don’t, haven’t and won’t deliver benefits to the average family. The Levy Institute economists of the Post Keynesian school warn that the free-marketeers, whether they worked for Bush, for Obama, for Ron Paul or Richard Shelby, are dangerously wrong. The average family would benefit tremendously from the policies prescribed by Tymoigne and Wray, policies that include a permanent public-works jobs program at a living wage, plus household debt-forgiveness, plus “a return toward term lending by regulated financial institutions that hold loans and a restoration of incentives to engage in proper underwriting.” Tymoigne and Wray argue that the only way to fix the lending institutions is to give working people a chance to start paying their mortgage payments and their credit-card bills.

That’s sober advice that also happens to have a certain genius about it as political advice, though as non-politicians, they never say as much. Sadly, the political rhetoric of 2010 will likely be dominated by Republicans who will bash the Bush-Obama bank bailouts and also bash the massive deficits that those bailouts caused.

As non-Keynesian and Post-Keynesian economists alike know, though, the most dangerous thing in the world would be to try to enact aggressive anti-deficit measures because of this thing called demand. If deficit hawks get elected in 2010, and succeed in restricting the actually stimulative “stimulus” spending, then unemployment could get much, much worse, and the downward spiral toward the Depression could get going faster than it could be stopped.

So here’s the punchline: If Obama sticks with Bush economic policies, and if his Senate allies like Connecticut’s Chris Dodd push financial non-reforms that institutionalize “too big to fail” for Wall Street’s irresponsible giant firms, then hunger and hurt in the heartland will tip the Blue states toward Red.

There’s already a tax revolt on Long Island and in the Hudson Valley in New York State, and a shrill anti-government movement in the permanently dependent, permanently job-losing Buffalo area. Ohio voters just this month reversed themselves with a vote to legalize casino gambling, which is always a sign that a depressed area has become a desperate area, as study after study has shown that casinos cause deadweight economic loss in addition to criminality and family woe. In Michigan, northern Ohio and elsewhere in the Great Lakes, other automobile-industry centers are already seeing red. Unemployment, housing foreclosures and overall economic stress make those areas prime targets of former Alaska Governor Sarah Palin’s book-promotion tour, where she delivers her anti-government message to some seriously hurting folks.

The Bush and Obama teams delivered for the financial elites on Wall Street, whose bonuses this Christmas will still have them consuming lots of jewelry, high-end watches, designer clothing and imported luxury cars. Meanwhile, a recent Wall Street Journal report shows that sales of low- and moderately-priced items at shopping malls are still depressed. The Target-brand department stores, whose customers briefly became Democrats in 2008, expect lower-than-usual sales because their customers don’t have the money this year.


  • Peter A Reese

    Not directly on point, but has me wondering…. Why don’t we see events like this taking place at SUNY Buffalo? Forty years ago UB was a hotbed of left wing revolutionary ferment, and SUCNY Buffalo was a candy store teachers college. Since that time (while most of us were busy earning a living), it appears that the local moneyed elite have leveraged a trivial amount of private contributions into total control of the massive public investment at UB. They now name the buildings after themselves, control the agenda and apparently appoint like minded university leaders who share their taste for backroom handouts of corporate welfare to their pals. UB is now a bastion for wealthcare and conservative values across every part of their curriculum. This has actually taken on dizzying levels of silliness. For instance, Justice Scalia is the hero of our law school. The dean wrings his hands over the plight of Africans in Kenya, while UB force evicts African Americans from their homes at McCarley Gardens in the furtherance of the UB2020 agenda which no one outside the chamber of commerce asked for.

    Now Buff State is the home of enlightened progressive thought? How the hell did this happen?

  • Ken

    These cops are cowards. They would never arbitrarily hit a man in the face. They do this because the victim is zip tied. All his buddies with weapons and in their eyes holding a get away with abusing citizens card. I have a uncle that says the cops are very different today. He told me a way to get back at the one that shot my dogs and get away with it. I will be a good citizen and know in my heart the idiot thug will get his. After an officer thug shoots a loved one. So often they will pour salt on the wound verbally saying its just a dog. Or man up. You know their not saying this to really help you and comfort you in a time of need. Their are no wars pressing. Yes this sort of abuse proves whole heartily that their are hundreds if not thousands of cop thugs that need to be fired and arrested. While there doing their time. volunteers from the list of victims should be allowed to police them in prison. I was raised to respect police wave to them. It was even good until one time my daughter was 8 and waved to an officer. Where she got a dirty look didnt wave back. All i could think of was what an asshole maybe he was having a bad day. until it happened again and again. The police that think they are good cops. Your work although might be lawfully done. The bad thugs are making there lawlessness reflect on you. Rightfully so.

  • Farelane

    Not only is unethical attorney Matt Albert so out of touch with these slanderous comments against police he also has no idea of actual facts. Or he does and still spews nonsense to his followers who drink the koolaid. This clown who who attempts to represent animal cases is a common thug himself with arrests and ethic violations deeper than most know. Public knowledge just check with BPD. Anyway he gets fired from every place he works. Do you really think he’s providing accurate info for these cases when he can’t manage his own career. Smh.

    • mkayw

      MR. Albert is not the person telling the stories in this article. These stories are being told by the people to which this happened. These people were there. They saw what was done. THEY LIVED IT. No one was charged with anything in any of these incidents. They saw the warrants and did not even remotely resemble the persons sought by the cops. The sanctity of their homes was destroyed by cops serving no knock warrants on wrong or unreliable information. Personal property was destroyed and children were traumatized. I suppose that is okay with you. Heil Hitler!

      • Farelane

        Not only is he commenting on his law web page he has discussions on other sites as well. All non facts and slander. The comment has nothing to do with art voice stories from the owners or whoever was effected. Only his slanderous and unethical business is all I’m referring to.

      • mkayw

        Well then, why did you post your comment here? It appears like you are trivializing what these folks went through.

      • Farelane

        When you go to unethical attorney Matt Alberta site and go to comment on his take of these stories/interviews it kicks you to this site for comment. This way his readers from his unethical site can see it. Anymore questions. It’s all fair comments on these sites.

    • KYSER SOZE

      Thank you officer. Now go back to eating donuts until you and your cowardly pals kill another innocent dog.

      • Farelane

        Ha ha. Your funny. Obviously a Matt Albert fan club member. I feel for anyone’s loss but all those facts he supposedly spews aren’t even close to the truth. I believe there is a bad issue at hand but don’t let this unethical fool guide you. He’s lost and needs fools to follow to keep up. I love donuts.

      • mkayw

        So again, with your comments, you cast unjust suspicion on these folks whose lives were turned horribly upside down. Even though none of them were charged with anything by any law enforcement body. You don’t even have the guts to come out and say it directly. I suppose you wouldn’t mind jack booted thugs breaking down your door, cuffing you for no reason, shooting your dog, tearing up your home, and traumatizing your children.

      • Farelane

        I’m not gonna make an argument with you over these people’s traumatic situations. I’m stating don’t be fooled by useless info that’s not correct coming from unethical attorney Matt Alberts mouth. He hates the justice system and cops and judges and honest lawyers. I’m just ensuring readers look into this clown before believing what he spews. Move on.

      • mkayw

        I am not going on any information from Mr. Albert. I am going on the information presented by these interviews. Frankly, I don’t really care what Mr. Albert thinks about the justice system, or cops, or judges, or anything else. Why don’t you move on?

      • Ken

        are you not trying to fool people by assuming the guys attorney is unethical. Shouldn’t you wait until the facts have come out before making your assumptions. I guess someone like you who spews the hate and tries to victimize the person who’s dog was shot shows how bias you are and should not even comment on the issue.

    • Ken

      as you can see by reading the comment by farelane officers are bootlickers of the worst kind. It is a fact police lie to the public as a standard practice in order to take advantage of a citizen that is trying to cooperate after a wrongful stop. Helping out the officers quota of more arrests. When an officer shot my two dogs. One was 14 yo blind and toothless. They approached my attorney informing her they had photos of bite marks. My attorney responded i can not wait to see what a dog bite looks like when the dog has no teeth. very quickly My dogs body was destroyed under a no destruction order.

      • Farelane

        Obviously Ken doesn’t research anything and believes anything he hears. Google this unethical attorney and read his wrongdoings and unethical incidents. Numerous sites talk of the laughing stock unethical attorney Matt Albert. Check for yourself before you speak incorrectly.

      • Ken

        Sure if the attorney was unethical the judge wouldn’t have any of it. Best to wait until it all comes out so it’ll prove you wrong in the end

      • Farelane

        I’m not worried about proving his unethical abilities. He had multiple ethics complaints filed against him right now as well as pending legal action against him. You will see. It doesn’t get anymore unethical than that. His past history of getting fired from every firm he’s worked for due to misconduct. It’s no secret it all can be verified by checking.