By Robert Scheer
Newt Gingrich is right: “It is European socialism transplanted to Washington.” How else to describe an economy in which the government controls the entire financial center and is now supplying life support for the auto industry? That’s on top of the existing socialist economy run by the military-industrial complex, which, thanks to George W. Bush, now absorbs upward of 60 percent of the non-entitlement federal budget.
Although we still have a way to go to catch up with the good parts of the European system, including universal health care, high-quality public education and decent working conditions, we do have a system that is now as socialist in budget size as Europe’s. That part I get when I listen to the right-wingers on Fox News bemoaning the reversal of the Reagan Revolution. But what I don’t understand is how in the world they can blame this startling turn of events on Barack Obama.
The vast majority of money allocated so far on President Obama’s watch is an extension of Bush’s banking bailout, which has committed trillions to failed Wall Street conglomerates. I certainly don’t want to defend the bailout and personally think the banks and stockbrokers deserve to go belly up, but what does that mess have to do with Obama, who was in college when the Reagan Revolution launched the deregulation that allowed Wall Street to run wild?
Didn’t Obama inherit the current financial meltdown less than two months ago from the Republicans, who for eight years under Bush assured us that the markets were not in any need of tighter regulation? Wasn’t it GOP congressional members led by folks like Gingrich who pushed though the deregulation legislation that enabled the growth of “too big to fail” financial institutions that now have to be saved by the taxpayers?
Nor has Obama demanded anything more in the way of accountability from those Wall Street swindlers than had the Bush administration. Under both presidents a total of $170 billion was given to insurance giant AIG, and, as The Wall Street Journal reported, at least $50 billion of that money was passed on to top foreign and domestic banks without any public accounting. Indeed, the second in command at the Fed told a Senate committee last week that he wouldn’t reveal the names of the banks that grabbed our money.
Nor has there been any serious demand put on the banks to use the hundreds of billions in federal funds they received to increase liquidity. Indeed, the banks are raising interest rates and cutting limits on credit cards at a time when the government is hoping consumers will use those cards to pump some life into the retail market. As bank industry analyst Meredith Whitney wrote in a Wall Street Journal Op-Ed article, consumer credit card lines “were reduced by nearly $500 billion in the fourth quarter of 2008 alone.” She estimates that credit card limits for consumers will be halved over the next year, mostly on consumers who have not done anything wrong. This will take “credit away from people who have the ability to pay their bills,” she notes.
So what we have here is socialism without even the pretense of a soul. Certainly that has been the case with the abject refusal of the banks that received government bailouts to be more aggressive in preventing home foreclosures. And the Obama administration has made it clear that it has no intention of taking over the operation of any of the mega-companies that are in trouble, even when, as in the case of AIG, the government already owns 80 percent of the shares. The reason? Because that would be viewed as nationalization.
So what exactly would Obama’s critics do differently? Nothing on the bailout side. Instead, they have settled for carping criticism of the stimulus package, playing games by nitpicking lesser-cost programs while ignoring the big items that most governors, be they Republican or Democrat, eagerly want. The great fear of the GOP seems to be that some of the stimulus program might actually prove helpful to struggling Americans, but the Republicans can’t just come out of the closet and say so.
What they have picked up on instead is that Obama’s tax cuts provide some redistribution of income to favor the rapidly disappearing middle class at the expense of the super-wealthy, who have profited wildly from Bush tax cuts. Which brings us back to Gingrich’s complaint that Obama is importing European socialism. If that means a system of governance in which a robust middle class is rewarded for work with a strong social safety net supported by higher taxes on the most affluent, well, let’s get it on.
AP photo / Mary Altaffer
Iconic and ironic: The Wall Street bull runs wild.