The Bailout Double Standard And The Revival Of Reaganism
I appeared on Rachel Maddow's MSNBC show last night to discuss the seeming double standard between the Obama administration's treatment of car companies and Wall Street firms. You can watch it here.
There is clearly a double standard at work: Just a few days ago, Wall Street executives were hosted at the White House for a cheery photo op and reassurance that they will be getting hundreds of billions more in no-strings-attached bailout cash. Then this week, Obama demanded the firing of GM's CEO, and said he may withhold the mere $30 billion or so that the automakers are requesting.
I'm not saying that automakers don't deserve to be pushed around, nor am I saying even that GM's CEO shouldn't have been fired. What I am saying, however, is that there are two different standards at work here.
Why? Shockingly, the Politico quotes "a Democratic official close to the White House" as saying the president has "more confidence in the leadership on the banking side - that there are people in place who understand what went wrong and the steps necessary to deal with this disaster." How anyone could have confidence in banking executives at a time like this is, as I said, shocking. But, then, this is a White House chock full of longtime Wall Street allies - a White House that appointed corporate raider Steve Rattner to head the auto bailout, a White House who the Wall Street Journal today reports is aiming to use the bailout to force autoworkers to accept cuts to their health care benefits.
What's fascinating about all this is the surprising revival of tactics first pioneered under Ronald Reagan.
Last year, you may recall that Obama took some flack for seeming to idealize The Gipper. However you felt about those comments, I think we're seeing that they previewed an effort to emulate Reagan's tactics - in particular, when it comes to bailouts.
Reagan famously backed a massive increase in the defense budget and corporate welfare while pretending to be a budget hawk by bemoaning the supposed wastefulness of programs like welfare - programs whose expenditures were tiny in comparison to those on the Pentagon and corporate welfare.
Likewise, we've seen Obama support giving away hundreds of billions of dollars - no strings attached - to Wall Street banks while simultaneously presenting himself as getting tough on Corporate America with his promise to hold the auto industry accountable for its failures. Of course, the automakers are asking for a tiny fraction of what Wall Street has already gotten.
It's the same paradigm. Hand out huge sums of cash to powerful political constituencies (for Reagan, defense contractors; for Obama, Wall Street), withhold a relatively small amount of cash from disempowered political constituencies (for Reagan, welfare recipients; for Obama, struggling automakers) - then cite the latter action as proof of "toughness," and hope nobody remembers the former largesse.
Again, I'm not saying the auto industry doesn't deserve to be pushed around - but I am saying that in embracing this brazen double standard, the Obama administration (at least when it comes to the issue of bailouts) is resurrecting the fundamentally dishonest tenets of Reaganism, and that's not a good sign.
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Has anyone noticed the sheer size of the companies involved in these bail-outs? They are all huge. To qualify for bail-out funds, your failure has to be perceived as potentially catastrophic. And for that you need to be big.
Small businesses are the driver of growth and jobs, and big businesses pose huge financial and job loss risks.
Really big companies employ tens, sometimes hundreds, of thousands of people. If they fail, a lot of jobs are lost. Enough to make headlines. Politicians don’t like those kinds of headlines. And a failure of a company employing that many people causes a lot of personal devastation, often within a smaller community. Placing a physical limit on the size of companies would reduce or eliminate a lot of these problems.
We have long known that distributed systems in other fields are better than centralized ones.
Why would we, as a society, organize ourselves to allow so much wealth, power, and employment concentrated in just a few companies?
Lest you think that limiting the size of companies is somehow counter-capitalistic, remember that we already do limit the size of companies. And we do it for good reason: to limit unfair competition.
This observation, that large companies pose a real risk to the financial system when they fail, may or may not help us to figure out how to prevent another economic meltdown, but limiting the size of companies would limit the devastation. No bail-out cash required.
www.newcorpia.com
The auto companies have two problems and one has nobody mentioning it. The hostile takeovers also started during the Raygun administration have left companies with no reserves to buffet economic storms. Reserves were called over funding and a reason to takeover a company and plunder it. The other problem is the design of American cars is terrible..once again we are screwed by the weakness of the arts education in the US. They can make them as dependable as the Japenese but they are stupid looking!!!
The Reagan Revolution has always meant one thing to me: A WAR AGAINST THE AMERICAN PUBLIC. Because of Reagan, our government and the corporations that benefit from it have managed to keep the needs and appeals of the American people under control. If you look at history, the railroad companies, Ma Bell and Standard Oil were broken up by the government as a benefit to the American public becuase they had become too big. This essential task of our government has been eliminated now that they have partnered with the corporations. One of the things that made me red flag Obama is that he has the same attitude that he would not allow the PEOPLE of the left to control his presidency. This is proof that he is part of the same status quo of elites. The American people need to rise up and due the one thing that will bring terror to these individuals that have so much control over our lives. We need to deny them the tools that give them their power. Let's rise up like the Europeans have during the G-20 and let them understand that this is OUR COUNTRY. No more taxpayer money for corporations. And my liberal brethren may hate this but we need to SHRINK this government if we want to eliminate this corporate welfare/government relationship. If we do government sponsored health care with the system we have, it will turn into another corporate welfare program. I can absolutely GUARANTEE this.
Unfortunately the banks have to be saved until such time that their foreign obligations are for the most part are met.
Your double standard point is something that our country needs to address morally. It is not right and has never been right that those at the top reap all the rewards at the expense of those at the bottom. They've gotten away with it too long by their political influence and now their unconsienable and unsatiable greed has brought our dear United States of America to the edge collapse. From CEOs to sports heroes to the few stars in hollywood, it's time the wealth is fairly shared and if it takes a tax overhaul to do it, so be it. It was the undoing of the Eisenhower tax rates by the spineless, easily pushed over congresses and administrations since him that helped bring us here.
What you are promoting on this blog is class warfare. The truth of the matter is that both the financial industries and the American auto industry scr ewed (without consent) the American people. Just becase the disparate size of the crime is mindblowing, doesn't mean the "ra pe" from both perps wasn't hurtful. The only difference is that the auto industry left us some money on the nightstand (America's middle-class). I am confident that what goes around comes around-the bankers will be dealt with-just not in the same timeframe. Yes We Can became No He Didn't in three months time. Give the President a break-you gave Bush a second term.
So sorry, Sister: the class warfare is evident in the bailout numbers.
Compare the concessions demanded from autoworkers; Wagoner's resignation; the relatively small amount Detroit has gotten compared to Wall Street, and do the math.
The class warfare on this benighted land, has always been of a venture-capital funded elite enslaving the rest of us and in process, making us pay for our own enslavement.
It's called privatizing profits while socializing costs. Take a good look at Geithner's plan, and you'll see that we're the ones under fire from our own government;
NO FAIR DEAL
wall sreet bankers have a real clout
the white house will bail them all out
they gambled with their clients wealth
while keeping their own financial health
instead of rightfully letting them fail
geithner sent them billions by the bale
those poor detroit factory boys did not receive similar joys
they were told to reduce the workforce
and cut the pay of workers of course
their C.E.O had to go
sales were poor they had no dough
why were working men treated so unfair
while wall street plundered on without a care?
ther's something wrong with a system so slanted
maybe we should think of haveing it supplanted
When then candidate Obama made that Reagan paen anyone who dared to say that it concerned them was smacked down by his faithful as being completely reactionary. Well, it was a concern for me and so far as I can tell -- he meant every word he said! The diehard supporters of Pres Obama need to get over it and realize that while he is already a better President than the last guy, he is going to need a lot of pressure to move away from that centrist comfort zone he's in. Until We the People find the nerve to not love him no matter what, we will be shortchanged on all that hope we built up during the campaign.
There is a double standard, and it is a million times worse than most of you realize.
Are you reading my thoughts?
I thought his adoration of the Gipper was sort of an adoration of technique but if he adores trickle down economics, which is a truly scary thought and truly plausible considering his picks and policy so far, he should have been very explicit about this as part of the campaign. Talk about bait and switch!
The diffrence is, as you said, that the banks have their champions on the economic team that Obama chose and continues to support without question. The blind eye to the plans and the economic advisors have made it possible for the financial system to continue limping along, with the market going up a few points and down many more points. Wall St. generally LOVES Geithner and Geithner has no intention of bringing them to heel. Very sad. Yes, the car industry has been supported for decades even as it was on the rack and even as the Japanese industry moved in and were successful. Even with mergers with European car makers, the American cars have ceased to show anyone cause to buy them. And, perhaps even more important, when the cars with long lasting gas mileage were developed, those cars never went into mass production. American leaders in the car industry seem to have lost their way as leaders, as innovators, and as risk takers. The CEOs and the white collar staff of the car industry make it quite clear who they think is at fault: UNIONS! Don't blame them for the huge bonuses their executives get! They earned those. The unions, no.
One way Obama is unlike Reagan is that he can't even moan or pretend to be a budget hawk.
To be fair the US Banking Industry kicked ass until 2007. We had a run of about 20+ years of performing wonderfully (aside from the fees they charge the people). That being said the US Car industry has been dead for the last 20 years due to poor leadership. The problem with the banking system is everything looked too pretty and beautiful. The problem with the car industry is we made ugly as sin cars no one wanted to ever be seen in unless they were renting a car.
I agree. It's amazing the industry lasted this long.
We did not have a run of 20+ years of our banking performing wonderfully -- that's what our current problems are all about! They were making short term gains doing things that should have been illegal and not thinking at all about the long term. The whole thing was predicated on the housing bubble never bursting. How in the world can you consider that "...performing wonderfully..."?! The US Banking Industry is no better at "...performing wonderfully...." than is the US Auto Industry and both should be taken to task with an equally firm hand.
President Obama has a very big and very powerful ally (ok, just a great big impotent ally): the American people, who demonstrate even as they are being taken to the cleaners by Wall Street's henchmen in the Treasury that they can be persuaded to turn on their own. One after another blithering idiot decries the "gold plated" contracts of the UAW - as if whatever they bring home from their non-union white-collar job is not totally dependent upon the long and painful history of union efforts to wrest a decent living from their capitalist overlords. Bottom line: there's a great big monstrous reason why Wall Street gets everything it asks for: they friggin' stick together! I wouldn't doubt if they didn't draw straws to see who would be the token sacrificial lamb (Lehman evidently drew the short straw). Contrast that with Main Street, which is all over the political spectrum, each separate block trashing the next block for getting a slice of bread too much. People either stick together, and take up for each other, and laud any one group's success at forging a decent living - or else they stand to lose everything. Because, people: Wall Street means business. They have no intention of sharing. So let's please stop bashing the UAW just because the folks who ran GM ran the American car into a brick wall.
When OBAMA brought up REAGAN campaigning it was a jolt. Just the mention in favorable light that some of his ideas were okay. Name one. He busted Unions. Control Tower people''s stand out. Supported Nicaraugua terrorism. Contra's, furnishing money/weapons. Traded arms to Iran, undercover.Likely lied about it. Promoted if not initiated deregulations of most any industry his GE laissez faire sponsers educated him to do. Sweet talked from both sides of his mouth considering entreaty to workers but took away or reduced entitlements like any good conservative Republican does loyal to Republican anti populist mandate favor Corportist State. Big Business first always. Reagan started revolution of recidivism. Dismantliing the kind of democracy serves PEOPLE FIRST that FDR insisted on. On second thought I gave OBAMA room referencing an icon managed to insiniuate himself benevolent for AMERICA. Smart campaigning. Throw out 'good' REAGAN to hook Reagan democrats if not Republicans. But it is getting scary. His appointments. Choices. Advance Afghanistan/Pakistan wars. Never said he wouldn't but in time his decency, wisdom if you will, understanding cause and effect, what terror put out you get back, would soon be revealed and he would withdraw our war plans. Deceipt from the man in this way would be welcome. Turncoat on his wrong headed expressions. Gosh. You don't suppose BARACK OBAMA actually IS centrist CLINTONIAN . . .
No. I suppose he is actually a Republican.
Global capitalism is a miserable failure for the majority of people on the planet. Period.
And what would you prefer? Communism?
You don't care what the answer is. To you and your ilk, the only options are economic anarchy or communism.
I'd prefer sensible regulation. So far, Obama has not closed the barn door. He has provided lots more animals that can escape, but not fence. All carrot and no stick -- when it comes to finance.
Manufacturing? Go back and break the union. Have your suppliers take ten cents on the dollar, revise those pension plans. Downsize and outsource. If he is a fan of the global economy, we will all be third world.
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