Archive for February, 2011

Madison, Wisconsin, U.S.A.

February 25, 2011 Leave a comment

The Shock Doctrine by Naomi Klein


Shock Doctrine, U.S.A.



Published: February 24, 2011


“What’s happening in Wisconsin is, instead, a power grab — an attempt to exploit the fiscal crisis to destroy the last major counterweight to the political power of corporations and the wealthy. And the power grab goes beyond union-busting. The bill in question is 144 pages long, and there are some extraordinary things hidden deep inside.

For example, the bill includes language that would allow officials appointed by the governor to make sweeping cuts in health coverage for low-income families without having to go through the normal legislative process.

And then there’s this: ‘Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state-owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).’

What’s that about? The state of Wisconsin owns a number of plants supplying heating, cooling, and electricity to state-run facilities (like the University of Wisconsin). The language in the budget bill would, in effect, let the governor privatize any or all of these facilities at whim. Not only that, he could sell them, without taking bids, to anyone he chooses. And note that any such sale would, by definition, be ‘considered to be in the public interest.’

Koch Industries, owned by the billionaire brothers who are playing such a large role in Mr. Walker’s anti-union push, felt compelled to issue a denial that it’s interested in purchasing any of those power plants. Are you reassured?

The good news from Wisconsin is that the upsurge of public outrage — aided by the maneuvering of Democrats in the State Senate, who absented themselves to deny Republicans a quorum — has slowed the bum’s rush. If Mr. Walker’s plan was to push his bill through before anyone had a chance to realize his true goals, that plan has been foiled. And events in Wisconsin may have given pause to other Republican governors, who seem to be backing off similar moves.

But don’t expect either Mr. Walker or the rest of his party to change those goals. Union-busting and privatization remain G.O.P. priorities, and the party will continue its efforts to smuggle those priorities through in the name of balanced budgets.”


New Radiohead album – The King of Limbs

February 24, 2011 Leave a comment

* I highly recommend it.

Earth…life…Literature & Art

February 22, 2011 Leave a comment

“They both felt a common hilarity, excited by the moving waves; and then by the swift cutting race of a sailing boat, which, having sliced a curve in the bay, stopped; shivered; let its sails drop down; and then, with a natural instinct to complete the picture, after this swift movement, both of them looked at the dunes far away, and instead of merriment felt come over them some sadness—because the thing was completed partly, and partly because distant views seem to outlast by a million years the gazer and to be communing already with a sky which beholds an earth entirely at rest.” – Virginia Woolf

Categories: Literature & Art Tags: ,

Just say NO to KOCH

February 22, 2011 Leave a comment

* These are the same Koch Brothers who, along with the oil companies Valero and Tesoro, tried to stop California from using renewable energy by pushing Proposition 23 in the last election.


Billionaire Brothers’ Money Plays Role in Wisconsin Dispute



Among the thousands of demonstrators who jammed the Wisconsin State Capitol grounds this weekend was a well-financed advocate from Washington who was there to voice praise for cutting state spending by slashing union benefits and bargaining rights.

The visitor, Tim Phillips, the president of Americans for Prosperity, told a large group of counterprotesters who had gathered Saturday at one edge of what otherwise was a mostly union crowd that the cuts were not only necessary, but they also represented the start of a much-needed nationwide move to slash public-sector union benefits.

“We are going to bring fiscal sanity back to this great nation,” he said.

What Mr. Phillips did not mention was that his Virginia-based nonprofit group, whose budget surged to $40 million in 2010 from $7 million three years ago, was created and financed in part by the secretive billionaire brothers Charles G. and David H. Koch.

State records also show that Koch Industries, their energy and consumer products conglomerate based in Wichita, Kan., was one of the biggest contributors to the election campaign of Gov. Scott Walker of Wisconsin, a Republican who has championed the proposed cuts.

Even before the new governor was sworn in last month, executives from the Koch-backed group had worked behind the scenes to try to encourage a union showdown, Mr. Phillips said in an interview on Monday.

State governments have gone into the red, he said, in part because of the excessively generous pay and benefits that unions have been able to negotiate for teachers, police, firefighters and other state and local employees.

“We thought it was important to do,” Mr. Phillips said, adding that his group is already working with activists and state officials in Indiana, Ohio and Pennsylvania to urge them to take similar steps to curtail union benefits or give public employees the power to opt out of unions entirely.

To union leaders and liberal activists in Washington, this intervention in Wisconsin is proof of the expanding role played by nonprofit groups with murky ties to wealthy corporate executives as they push a decidedly conservative agenda.

“The Koch brothers are the poster children of the effort by multinational corporate America to try to redefine the rights and values of American citizens,” said Representative Gwen Moore, Democrat of Wisconsin, who joined with others in the union protests.

A spokesman for Koch Industries, as well as Mr. Phillips, scoffed at that accusation. The companies owned by Koch (pronounced Coke) — which include the Georgia-Pacific Corporation and the Koch Pipeline Company — have no direct stake in the union debate, they said. The company has about 3,000 employees in Wisconsin, including workers at a toilet paper factory and gasoline supply terminals….

Political activism is high on the list of priorities for Charles Koch, who in a letter last September to other business leaders and conservatives explained that he saw no other choice.

“If not us, who? If not now, when?” said the letter, which invited other conservatives to a retreat in January in Rancho Mirage, Calif. “It is up to us to combat what is now the greatest assault on American freedom and prosperity in our lifetimes.”

Campaign finance records in Washington show that donations by Koch Industries and its employees climbed to a total of $2 million in the last election cycle, twice as much as a decade ago, with 92 percent of that money going to Republicans. Donations in state government races — like in Wisconsin — have also surged in recent years, records show.

But the most aggressive expansion of the Koch brothers’ effort to influence public policy has come through the Americans for Prosperity, which runs both a charitable foundation and a grass-roots-activists group. Mr. Phillips serves as president of both branches, and David Koch is chairman of the Americans for Prosperity Foundation.

The grass-roots-activists wing of the organization today has chapters in 32 states, including Wisconsin, and an e-mail list of 1.6 million supporters, said Mary Ellen Burke, a spokeswoman. She would not say how much of last year’s $40 million budget came from the Koch family, but nationwide donations have come in from 70,000 members, she said, offering it as proof that it has wide support.

The organization has taken up a range of topics, including combating the health care law, environmental regulations and spending by state and federal governments. The effort to impose limits on public labor unions has been a particular focus in Ohio, Indiana, Pennsylvania and Wisconsin, all states with Republican governors, Mr. Phillips said, adding that he expects new proposals to emerge soon in some of those states to limit union power.

To Bob Edgar, a former House Democrat who is now president of Common Cause, a liberal group that has been critical of what it sees as the rising influence of corporate interests in American politics, the Koch brothers are using their money to create a façade of grass-roots support for their favorite causes.

“This is a dangerous moment in America history,” Mr. Edgar said. “It is not that these folks don’t have a right to participate in politics. But they are moving democracy into the control of more wealthy corporate hands.”

During a demonstration outside the Wisconsin Capitol Monday, one protester made a similar point, holding a sign saying: “Gov. Walker: Kick the Koch Habit.”

But Mr. Phillips and members of his group and other conservative activists, not surprisingly, see it very differently.

Just as unions organize to fight for their priorities, conservatives are entitled to a voice of their own.

“This is a watershed moment in Wisconsin,” Mr. Phillips said. “For the last two decades, government unions have used their power to drive pensions and benefits and salaries well beyond anything that can be sustained. We are just trying to change that.”


February 22, 2011 Leave a comment

May the uprising against Muhammar Qaddafi turn into a flourishing democracy that results in shared prosperity and a prolonged peace for the Libyan people.

Matt Taibbi bringing the Fande

February 21, 2011 Leave a comment

* Chilling…I feel un-nerved after finishing that article.


Why Isn’t Wall Street in Jail?

Financial crooks brought down the world’s economy — but the feds are doing more to protect them than to prosecute them

By Matt Taibbi
FEBRUARY 16, 2011 9:00 AM ET
EXCERPTS in italics from Rolling Stone:


The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency’s failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America’s most powerful bankers.


Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. “It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller,” Aguirre recalls. “And he wasn’t just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day.” A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million. 

After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg’s who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg’s case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. “Mack is busting my chops” to give him a piece of the action, Samberg told an employee in an e-mail.

A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank’s clients, as it happened, was a firm called Heller Financial. We don’t know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share in sight, right before it was snapped up by GE — a suspiciously timed move that earned him the equivalent of Derek Jeter’s annual salary for just a few minutes of work.

The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn’t likely to fly, explaining that Mack had “powerful political connections.” (The investment banker had been a fundraising “Ranger” for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.)

Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank’s regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn’t take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm’s lawyers, Mary Jo White, was on the phone with the SEC’s director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as “smoke” rather than “fire.” White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street.

Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target’s firm is being represented not only by Eliot Spitzer’s former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC’s enforcement division — not Aguirre’s boss, but his boss’s boss’s boss’s boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement.

Aguirre didn’t stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. “It all happened so fast, I needed a seat belt,” recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.

Rather than going after Mack, the SEC started looking for someone else to blame for tipping off Samberg. (It was, Aguirre quips, “O.J.’s search for the real killers.”) It wasn’t until a year later that the agency finally got around to interviewing Mack, who denied any wrongdoing. The four-hour deposition took place on August 1st, 2006 — just days after the five-year statute of limitations on insider trading had expired in the case.

“At best, the picture shows extraordinarily lax enforcement by the SEC,” Senate investigators would later conclude. “At worse, the picture is colored with overtones of a possible cover-up”….

Gary Aguirre, the SEC investigator who lost his job when he drew the ire of Morgan Stanley, thinks he knows the answer.

Last year, Aguirre noticed that a conference on financial law enforcement was scheduled to be held at the Hilton in New York on November 12th. The list of attendees included 1,500 or so of the country’s leading lawyers who represent Wall Street, as well as some of the government’s top cops from both the SEC and the Justice Department.

Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it’s a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats. At the Hilton conference, regulators and banker-lawyers rubbed elbows during a series of speeches and panel discussions, away from the rabble. “They were chummier in that environment,” says Aguirre, who plunked down $2,200 to attend the conference.

Aguirre saw a lot of familiar faces at the conference, for a simple reason: Many of the SEC regulators he had worked with during his failed attempt to investigate John Mack had made a million-dollar pass through the Revolving Door, going to work for the very same firms they used to police. Aguirre didn’t see Paul Berger, an associate director of enforcement who had rebuffed his attempts to interview Mack — maybe because Berger was tied up at his lucrative new job at Debevoise & Plimpton, the same law firm that Morgan Stanley employed to intervene in the Mack case. But he did see Mary Jo White, the former U.S. attorney, who was still at Debevoise & Plimpton. He also saw Linda Thomsen, the former SEC director of enforcement who had been so helpful to White. Thomsen had gone on to represent Wall Street as a partner at the prestigious firm of Davis Polk & Wardwell.

Two of the government’s top cops were there as well: Preet Bharara, the U.S. attorney for the Southern District of New York, and Robert Khuzami, the SEC’s current director of enforcement. Bharara had been recommended for his post by Chuck Schumer, Wall Street’s favorite senator. And both he and Khuzami had served with Mary Jo White at the U.S. attorney’s office, before Mary Jo went on to become a partner at Debevoise. What’s more, when Khuzami had served as general counsel for Deutsche Bank, he had been hired by none other than Dick Walker, who had been enforcement director at the SEC when it slow-rolled the pivotal fraud case against Rite Aid.

“It wasn’t just one rotation of the revolving door,” says Aguirre. “It just kept spinning. Every single person had rotated in and out of government and private service.”

The Revolving Door isn’t just a footnote in financial law enforcement; over the past decade, more than a dozen high-ranking SEC officials have gone on to lucrative jobs at Wall Street banks or white-shoe law firms, where partnerships are worth millions. That makes SEC officials like Paul Berger and Linda Thomsen the equivalent of college basketball stars waiting for their first NBA contract. Are you really going to give up a shot at the Knicks or the Lakers just to find out whether a Wall Street big shot like John Mack was guilty of insider trading? “You take one of these jobs,” says Turner, the former chief accountant for the SEC, “and you’re fit for life.”

Fit — and happy. The banter between the speakers at the New York conference says everything you need to know about the level of chumminess and mutual admiration that exists between these supposed adversaries of the justice system. At one point in the conference, Mary Jo White introduced Bharara, her old pal from the U.S. attorney’s office.

“I want to first say how pleased I am to be here,” Bharara responded. Then, addressing White, he added, “You’ve spawned all of us. It’s almost 11 years ago to the day that Mary Jo White called me and asked me if I would become an assistant U.S. attorney. So thank you, Dr. Frankenstein.”

Next, addressing the crowd of high-priced lawyers from Wall Street, Bharara made an interesting joke. “I also want to take a moment to applaud the entire staff of the SEC for the really amazing things they have done over the past year,” he said. “They’ve done a real service to the country, to the financial community, and not to mention a lot of your law practices.”

Haw! The line drew snickers from the conference of millionaire lawyers. But the real fireworks came when Khuzami, the SEC’s director of enforcement, talked about a new “cooperation initiative” the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.

“We are going to try to get those individuals answers,” Khuzami announced, as to “whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client.”

Aguirre, listening in the crowd, couldn’t believe Khuzami’s brazenness. The SEC’s enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. “First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC,” Aguirre says. “Then the Justice Department commits itself to pass, so that the player knows he’s ‘safe.’ Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department.”

When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants “get answers” regarding the status of their criminal cases, he initially doesn’t believe it. Then I send him a transcript of the comment. “I am very, very surprised by Khuzami’s statement, which does seem to me to be contrary to past practice — and not a good thing,” the former prosecutor says.

Earlier this month, when Sen. Chuck Grassley found out about Khuzami’s comments, he sent the SEC a letter noting that the agency’s own enforcement manual not only prohibits such “answer getting,” it even bars the SEC from giving defendants the Justice Department’s phone number. “Should counsel or the individual ask which criminal authorities they should contact,” the manual reads, “staff should decline to answer, unless authorized by the relevant criminal authorities.” Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. “We collaborate with the SEC, but they do not consult with us when they resolve their cases,” Assistant Attorney General Lanny Breuer assured Congress in January. “They do that independently.”

Around the same time that Breuer was testifying, however, a story broke that prior to the pathetically small settlement of $75 million that the SEC had arranged with Citigroup, Khuzami had ordered his staff to pursue lighter charges against the megabank’s executives. According to a letter that was sent to Sen. Grassley’s office, Khuzami had a “secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend” of his and “who was counsel for the company.” The unsigned letter, which appears to have come from an SEC investigator on the case, prompted the inspector general to launch an investigation into the charge.

All of this paints a disturbing picture of a closed and corrupt system, a timeless circle of friends that virtually guarantees a collegial approach to the policing of high finance. Even before the corruption starts, the state is crippled by economic reality: Since law enforcement on Wall Street requires serious intellectual firepower, the banks seize a huge advantage from the start by hiring away the top talent. Budde, the former Lehman lawyer, says it’s well known that all the best legal minds go to the big corporate law firms, while the “bottom 20 percent go to the SEC.” Which makes it tough for the agency to track devious legal machinations, like the scheme to hide $263 million of Dick Fuld’s compensation.

“It’s such a mismatch, it’s not even funny,” Budde says.

But even beyond that, the system is skewed by the irrepressible pull of riches and power. If talent rises in the SEC or the Justice Department, it sooner or later jumps ship for those fat NBA contracts. Or, conversely, graduates of the big corporate firms take sabbaticals from their rich lifestyles to slum it in government service for a year or two. Many of those appointments are inevitably hand-picked by lifelong stooges for Wall Street like Chuck Schumer, who has accepted $14.6 million in campaign contributions from Goldman Sachs, Morgan Stanley and other major players in the finance industry, along with their corporate lawyers.

As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. “The betrayal that this represents by Obama to everybody is just — we’re not ready to believe it,” says Budde, a classmate of the president from their Columbia days. “He’s really fucking us over like that? Really? That’s really a JP Morgan guy, really?”

Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would “demean the seriousness” of the offenses.

So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It’s not a crime. Prison is too harsh. Get them to say they’re sorry, and move on. Oh, wait — let’s not even make them say they’re sorry. That’s too mean; let’s just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don’t make them pay it out of their own pockets, and don’t ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What’s next? Taxpayer-funded massages for every Wall Street executive guilty of fraud?

The mental stumbling block, for most Americans, is that financial crimes don’t feel real; you don’t see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They’re crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let’s steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They’re attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone’s claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.


February 21, 2011 Leave a comment


Long ago, human beings decided to stop scavenging in the forest and come together to form “civilization” with representative governments and economies of trade based on businesses that provided a product or a service at a reasonable price for the benefit of the majority in the community.


The mismanagement by 3 consecutive Republican presidents – Harding, Coolidge and Hoover – resulted in the Great Depression…



“As America slipped into economic depression following the Crash of 1929, unemployment exceeded 25%; about 10,000 banks failed; the Gross National Product declined from $105 billion in 1929 to only $55 billion in 1932. Compared to pre-Depression levels, net new business investment was a minus $5.8 billion in 1932. Wages paid to workers declined from $50 billion in 1929 to only $30 billion in 1932.”


In response to the economic devastation that left millions of Americans destitute, Franklin Delano Roosevelt created the “New Deal” programs – Civilian Conservation Corps, Works Progress Administration, Public Works Administration, etc. – which put unemployed Americans back to work building roads, bridges and infrastructure that we still use today, several generations later. In fact, the Public Works Administration helped build the Hoover Dam. To secure prosperity for the majority of Americans after the Wall Street Crash of 1929 and the ensuing Great Depression, FDR also created Unemployment Insurance, Medicare, and Social Security, which several generations of Americans have enjoyed the benefits of in youth and in old age.



“[The WPA] provid[ed] jobs for 8.5 million Americans who otherwise would have been unemployed….[Those federally funded workers built] 125,110 public buildings, 8,192 parks and 853 airports….[as well as assisted with] the Hoover Dam, Chicago’s sewer system and the aircraft carriers Yorktown and Enterprise. In all, the two agencies disbursed $9.8 billion….

The WPA generally paid better than relief, but not as well as private industry. Unskilled laborers earned as little as $19 a month; professional and technical workers not much more than $94 a month. Fortunately, some WPA families were also eligible for relief payments. By law, nine out of ten WPA recruits had to pass a means test, and Congress did not want them to have too much money left for luxuries.

Still it gave eating money in hard times to some Americans who later became famous, including Actors Orson Welles and Burt Lancaster and Artists Jackson Pollock and Willem de Kooning. Oh yes, and a fellow named Richard Nixon earned $3.50 an hour from the National Youth Administration, a division of the WPA, for doing research in the Duke University law library.”

* (Ronald Reagan’s father also found employment during the Great Depression through FDR’s “New Deal” programs.)


EXCERPT from Griftopia by Matt Taibbi, pages 49-51; Spiegel & Grau 2010:

“In 1981 Reagan appointed Greenspan to head the National commission on Social Security Reform, which had been created to deal with an alleged short-term funding crisis that would leave the Old-Age and Survivors Insurance Trust Fund bankrupt by 1983. It goes without saying that any political decision one makes with regard to Social Security is hazardous; cutting benefits is a shortcut to electoral death, and the alternative, raising taxes, isn’t so palatable either.

Greenspan’s solution was to recommend hikes in the Social Security tax, which of course is not considered a real ‘tax’ (Reagan would hilariously later describe such hikes as ‘revenue enhancements’) because the taxpayer theoretically gets that money back later on in benefits. The thinking here was that in the early eighties, with so many baby boomers now in their prime earning years, the Reagan administration would hike payments to build up a surplus that could in twenty to thirty years be used to pay out benefits when those same baby boomers reached retirement age. The administration accepted those proposals, and the Social Security tax rate went from 9.35 percent in 1981 to 15.3 percent by 1990.

Two things about this. One, Social Security taxes are very regressive, among other things because they only apply to wage income (if you’re a hedge fund manager or a Wall Street investor and you make all your money in carried interest or capital gains, you don’t pay) and they are also capped, at this writing at around $106,000, meaning that wages above a certain level are not taxed at all. That means that a married couple earning $100,000 total will pay roughly the same amount of Social Security taxes that Lloyd Blankfein or Bill Gates will (if not more, depending on how the latter two structure their compensation). So if you ignore the notion that Social Security taxes come back as benefits later on, and just think of them as a revenue source for the government, it’s a way for the state to take money from working-and middle-class taxpayers at a highly disproportional rate.

Second, Greenspan’s plan to build up a sort of Social Security war chest for use in paying out benefits to retirees twenty years down the road was based on a fallacy. When you pay money in Social Security, it doesn’t go into a locked box that is separate from the rest of the budget and can’t be used for other government spending. After the Greenspan reforms, the Social Security administration bought T-bills with that money, essentially lending the cash back to the government for use in other appropriations. So if, let’s say, your president wanted an extra few billion dollars or so of short-term spending money, he could just reach into the budget and take all that Social Security money, leaving whoever would be president two decades later holding not cash to pay out Social Security benefits, but government notes or bonds, i.e., IOUs.

And that’s exactly what happened. The recommendations ushered in after Greenspan’s commission effectively resulted in $1.69 Trillion in new, regressive taxes over the next twenty years or so.

But instead of keeping their hands off that money and preserving it for Social Security payments, Reagan, Bush I, Clinton, and Bush II spent it—all of it—inspiring the so-called Social Security crisis of George W. Bush’s presidency, in which it was announced suddenly that Social Security, far from having a surplus, was actually steaming toward bankruptcy. That bad news was released to the public by then-Treasury secretary Paul O’Neill, who let it slip that the Social Security fund had no assets at all, and instead just had pieces of paper in its account.

‘I come to you as managing trustee of Social Security,’ O’Neill said. ‘Today we have no assets in the trust fund. We have the good faith and credit of the United States government that benefits will flow.’

In other words, Greenspan and Reagan had conspired to hike Social Security payments, justifying it with the promise of building up a Social Security nest egg for subsequent decades, then used up that nest egg on current government spending.

Now, it was bad enough that Greenspan, who as a Randian was supposedly against all use of government ‘force,’ would propose such a big tax hike. But what made his role especially villainous was that when George W. Bush decided to start sounding alarm bells about the future of Social Security, it was not other than Alan Greenspan who came out and argued that maybe it was time to cut Social Security benefits. This is from the Washington Post story in February 2004:

Greenspan offered several ways to curtail federal spending growth, including reducing Social Security and Medicare benefits. The Fed chairman again recommended raising the age at which retirees become eligible, to keep pace with the population’s rising longevity. And he reminded lawmakers that they could link cost-of-living increases in benefits levels to a measure of inflation other than the consumer price index, a widely followed measure that some economists believe overstates the rise in overall prices. A measure that showed less inflation would cause benefit levels to rise more slowly.

To recap: Greenspan hikes Social Security taxes by a trillion and a half dollars or so, four presidents spend all that money on other shit (including, in George W. Bush’s case, a massive tax cut for the wealthy), and then, when it comes time to start paying out those promised benefits, Greenspan announces that it can’t be afforded, the money isn’t there, benefits can’t be paid out.

It was a shell game—money comes in the front door as payroll taxes and goes right out the back door as deficit spending, with only new payroll taxes over the years keeping the bubble from popping, continuing the illusion that the money had never left. Senator Daniel Patrick Moynihan, way back in 1983, had called this ‘thievery,’ but as the scam played out over the decades it earned a more specific title. ‘A classic Ponzi scheme’ is how one reporter who covered Greenspan put it.”


The mismanagement of Republican President George W. Bush (2001-2009) and the Republican-majority Congress (2001-2007) led to the Great Recession we are just now creeping and crawling our way out of in 2011.

Reminder: Bill Clinton left a $200 billion surplus (cash in hand) that was projected to be a $5.7 Trillion surplus over the next 10 years. Yes, the dot-com bust happened. Then Enron – the biggest single contributor to the Bush/ Cheney 2000 campaign – declared bankruptcy, along with WorldCom and Tyco. But that was nothing compared to the unregulated Jack-in-the-box surprise of “Subprime.” The Bush S.E.C. allowed “self-regulation” by the Wall Street banks concerning the buying and selling of subprime-mortgage-backed securities.

The result of George W. Bush’s presidency:

– 10% unemployment, 17% underemployment

– 30% (or more) loss of home values

– The Dow Jones Industrial Average lost half its value, dropping from its high of 14,000 in October 2007; consequently many stock portfolios and 401ks lost half their value

– Credit Markets were frozen because Wall Street banks double-crossed us on the use of the $700 billion bailout; the bailout was not used as it was intended

– The average American’s wages were stagnant during the “Lost Decade” that George W. Bush presided over: “The Big Zero”

– $1 Trillion wasted on the false war in Iraq

– $1 Trillion wasted on tax cuts for the Superwealthy

– Even General Motors and Chrysler went bankrupt as a result of Republican Party Rule

– Over 4,000 US soldiers killed during the false war in Iraq

– Over 100,000 innocent Iraqi civilians killed during the false war in Iraq…oh, and the shoes did fly!

So, here we are in “civilization” trying to make sure that we have a country where we “provide for the general Welfare” and our citizens can live out their respective “pursuit of happiness.”

– Universal Health Care saves $$$ and strengthens our country, because healthy workers are more productive workers.



“So anyone who is really serious about the budget should be focusing mainly on health care. And by focusing, I don’t mean writing down a number and expecting someone else to make that number happen — a dodge known in the trade as a ‘magic asterisk.’ I mean getting behind specific actions to rein in costs….

That’s why I say that Mr. Obama gets too little credit. He has done more to rein in long-run deficits than any previous president. And if his opponents were serious about those deficits, they’d be backing his actions and calling for more; instead, they’ve been screaming about death panels.

Now, even if we manage to rein in health costs, we’ll still have a long-run deficit problem — a fundamental gap between the government’s spending and the amount it collects in taxes. So what should be done?

This brings me to the seventh word of my summary of the real fiscal issues: if you’re serious about the deficit, you should be willing to consider closing at least part of this gap with higher taxes. True, higher taxes aren’t popular, but neither are cuts in government programs. So we should add to the roster of fundamentally unserious people anyone who talks about the deficit — as most of our prominent deficit scolds do — as if it were purely a spending issue.

The bottom line, then, is that while the budget is all over the news, we’re not having a real debate; it’s all sound, fury, and posturing, telling us a lot about the cynicism of politicians but signifying nothing in terms of actual deficit reduction. And we shouldn’t indulge those politicians by pretending otherwise.”

– Social Security strengthens our country, because all of us can enjoy our lives without having to work every day of it just to get by.



“Before Social Security was established 75 years ago, more than half of our elderly population lived in poverty. Because of Social Security, the poverty figure for seniors today is less than 10%. Social Security also provides dignified support for millions of widows, widowers, orphans and people with disabilities.

Since it was established, Social Security has paid every nickel it owed to every eligible American, in good times and bad. As corporations over the last 30 years destroyed the retirement dreams of millions of older workers by eliminating defined-benefit pension plans, Social Security was there paying full benefits. When Wall Street greed and recklessness caused working people to lose billions in retirement savings, Social Security was there paying full benefits….

So what are the facts?

According to the latest report of the Social Security Administration, the program will be able to pay all of its promised benefits for the next 26 years. After 2037, Social Security will still be able to pay about 78% of promised benefits.

The nonpartisan Congressional Budget Office has come to a similar conclusion: Social Security will be able to pay full benefits to every eligible recipient until 2039, and after that, it will be able to cover 80% of promised benefits.

Although Social Security will be strong for more than a quarter-century, Congress should strengthen it for the longer term. That is why I agree with the president, who has called for raising the cap on taxable income. Today, that cap is at $106,800; no matter how much money you make, Social Security taxes are only deducted on the first $106,800. But by removing the cap on incomes of $250,000 or more, we can make Social Security fully solvent for generations to come.

Even with no change, the fact is that Social Security has a $2.6-trillion surplus that is projected to grow to more than $4 trillion in 2023. Is this surplus, as some have suggested, just a pile of worthless IOUs? Absolutely not!

Social Security invests its surpluses, as it should, in U.S Treasury bonds, the safest interest-bearing securities in the world. These are the same bonds that wealthy investors and China and other foreign countries have purchased. The bonds are backed by the full faith and credit of the U.S. government, which in our long history has never defaulted on its debt obligations. In other words, Social Security investments are safe.

Further, despite the manufactured hysteria about a crisis, Social Security has not contributed one penny to the very serious deficit situation the United States faces. Social Security is fully funded by the payroll tax that workers and their employers pay; it’s not paid for by the Treasury. Our deficit has been, in recent years, largely caused by the cost of two wars, tax breaks for the rich, a Medicare prescription drug program written by the insurance and pharmaceutical industries, and the Wall Street bailout — not Social Security.

Why has there been such a concerted effort to privatize Social Security, raise the retirement age or cut benefits? First, Wall Street stands to make billions in profits if workers are forced to go to private financial establishments for their retirement accounts. Second, as the Republican Party has moved far to the right and become more anti-government, there are more and more Republicans who simply do not believe government has a responsibility to provide retirement benefits to the elderly, or to help those with disabilities.

Needless to say, I strongly disagree with both of those propositions. In my view, maintaining and strengthening Social Security is absolutely essential to the future well-being of our nation. For 75 years it has successfully provided dignity and support for tens of millions of Americans. Our job is to keep it strong for the next 75 years.”

Bernie Sanders is an independent senator representing Vermont.