The Rich Get Richer: Obama-Style Crony Capitalism
The sequester struck, and the stock markets went up. Lloyd Green on the 1 percent president.
For most Americans, Friday was not a very good day. Sequestration kicked in amid a drumbeat of reports about the pocketbook hits that we would take and the illegal immigrants released because of the cuts, the Commerce Department announced that personal income took its biggest hit in 20 years, and the Performance of Manufacturing Index reported a drop. Oh, and earlier in the week, fourth-quarter GDP growth was revised to a paltry 0.1 percent. Unemployment has remained up, the ranks of the poor have swelled, existing small businesses are staggering, and few new ones are being created.
But, for the privileged few at the high-end of President Obama’s coalition, things look far less bleak. The stock market yawned at sequestration and then rose. The S&P is near a five-year high and is up by 10 percent over the past 12 months.
How concerned is Obama by the bad news and the sequester cuts that on Friday he termed “dumb,” “unnecessary,” “arbitrary,” and “inexcusable”? Not very, one would think, since his own 2012 budget forecast projected the very cuts in discretionary spending that the president now abjures, and described them in glowing terms. As Columbia’s Jeffrey Sachs recently pointed out. “the level of spending for fiscal year 2013 under the sequestration will be nearly the same as Mr. Obama called for in the draft budget presented in mid-2012.” Indeed, the White House budget forecast boasted that it would “bring domestic discretionary spending to its lowest level as a share of the economy since the Eisenhower administration.”
For some reason, none of this feels like government by or for the people, and it isn’t. Rather, it seems as though “crony capitalism” is the watchword for this administration. Strip away Obama’s showmanship and scolding, and the president has done just fine in protecting the interests of the top 1 percent, especially among those who were his contributors and the right kind of 1 percenters.
Take green energy, the holy grail of the high end of the president’s base. Solyndra, the now-bankrupt manufacturer of solar panels, received more than half a billion dollars in government-guaranteed loans. One of the company’s key backers was billionaire George Kaiser, a 2008 Obama fundraiser—small world.
And then there is Comcast. The cable giant’s senior vice president, David Cohen, raised more than $500,000 for the president’s reelection. Notwithstanding that Comcast is America’s biggest cable television and Internet provider, in 2011 the Obama-dominated Federal Communications Commission approved Comcast’s purchase of the 49 percent of NBC that it did not already own. MSNBC has since hired Obama White House alumni David Axelrod and Robert Gibbs and fired conservative firebrand and Nixon and Reagan White House veteran Pat Buchanan.
And then there is the Treasury Department. Despite Citigroup’s mounting losses when Lew departed, he received a $944,578 TARP-fueled bonus—that was actually tied to his leaving the megabank to take a job in the Obama administration. Sadly, there is no indication that the symbiotic relationship between the Obama administration and its favored industries and business sectors will be changing any time soon.
Lew’s predecessor, Tim Geithner, just announced that he will be conducting a series of university seminars on “the craft of crisis response—so that future policymakers can draw on his ideas, and the public can use to better understand how and why governments act in crisis.”
“Craft,” as if spin doctors are members of some ancient and honorable guild of master artisans, tinkering around that medieval workshop downtown, at a little workplace called the Federal Reserve Bank of New York.
It is all of a piece. Obama had tapped Geithner for Treasury despite his failure to pay until nominated more than $30,000 in federal taxes and having hired an ill-documented immigrant. As Randy Newman sings, “It’s Money That Matters.”
February’s State of the Union Address was replete with bromides about saving the middle class, but the Obama record gives no reason to believe that these promises will amount to much of anything. Despite its oft-repeated vow to hike tax at the top of the income ladder, the administration allowed the 2 percent Social Security payroll tax moratorium to expire. Although the beneficiaries of that tax break were decidedly working Americans with incomes below $100,000, there was not a peep out of the president or Lew about the death of this highly valued benefit—which amounts to a pay cut for millions of Americans.
On the other hand, the haute-bourgeois of Blue America’s bedroom communities, like Geithner’s hometown of Larchmont, New York, mostly dodged the proverbial bullet in the final deal that averted the fiscal cliff. As F. Scott Fitzgerald observed, the rich are different.
If the past is prologue, don’t expect much to change. Until he was shamed into dropping Jim Johnson in June 2008, Obama was content in having the disgraced former Fannie Mae honcho oversee his vice-presidential vetting process. Likewise, Obama displayed a curious myopia in turning to Franklin Raines—another disgraced Fannie Mae refugee—for advice on housing policy until that blew up, too.
During his first presidential bid, Obama vowed to use public funds to finance his general election drive, until it was no longer expedient. In his 2010 State of the Union, Obama publicly upbraided the Supreme Court for its decision in Citizens United. Fast forward. After having actually outraised and outspent the Romney campaign, the permanent Obama campaign has now formed Organizing for Action, where $500,000 donors will have easy White House access. Common Cause President Bob Edgar remarked that it was “like selling the Lincoln Bedroom, but without the sheets.”
A recent report issued by Transparency International, an international anti-corruption NGO, noted that the United States ranked lower than “many of its partners” in the OECD in combating corruption. In particular, the TI report singled out “undisclosed conflicts of interest by government officials.”
The bazaar is now open for business, and its home is 1600 Pennsylvania Avenue. The chief executive is also the chief money changer. Sequestration has arrived.