The Return of the TARP Hostage Takers

When Congress debated the TARP last fall, the political elites insisted that the bill must be passed immediately or the economy would collapse. For example, Federal Reserve Board President Ben Bernanke told Congress that the commercial paper market was shutting down, which meant that the country's largest companies would soon be unable to meet their payrolls and pay other bills. (He neglected to mention that the Fed could single-handedly support the commercial paper market by directly buying commercial paper. Bernanke took steps to begin purchasing commercial paper the weekend after Congress voted.)

Under this pressure, Congress didn't take the time to ensure that the country would share in the upside from bailing out the banks. It didn't put in restrictions that ensured that bank executives would not get huge bonuses as the economy continued to sink. Nor did it impose any conditions that would curb the speculative excesses that fueled the bubble and led to the disaster.

The political elites said that the banks needed the money right away, and Congress buckled under the pressure. After all, no one wants to be responsible for the collapsing the economy. So, the banks got the blank check they needed to ensure that they would be largely protected from economic maelstrom that they had created.

Since the TARP escapade worked so well, the Wall Street gang is now trying another round of hostage taking, possibly for even bigger stakes. This time the plan is go after Social Security and Medicare. The Wall Street crew knows that members of Congress are not likely to vote to gut these two hugely popular programs under normal circumstances. These programs are essential to the economic well being of tens of millions of retirees, disabled workers, and their families. In fact, these programs are now more important than ever, since the collapse of the housing bubble has destroyed most of the savings of middle-income families.

Under normal circumstances, members of Congress who voted to cut these programs would be looking to an early retirement: hence the hostage-taking route. The plan is to hold up legislation for raising the debt ceiling unless a provision is included for establishing a commission for the purpose of cutting future deficits. This commission in turn would be stacked with people who want to cut Social Security and Medicare.

The bill also provides that the commission's report to Congress would be fast-tracked so that it would not be subject to normal procedures. It would not be subject to the same debate or amendment process as other bills. Finally, the commission would issue its report after the November 2010 election, with a vote required before the end of the year. This means that people who were just voted out of office would be able to decide the future of Social Security and Medicare.

The lead culprits in this venture are Senators Kent Conrad and Judd Gregg. The latter is best known for his brief stint as President Obama's Commerce Secretary designate before he realized this his deeply-held convictions required him to decline the position that he had previously sought. Another leading proponent of this measure is the foundation financed by Peter Peterson, the Commerce Secretary under Richard Nixon who is best known for pocketing tens of millions of dollars through the investment fund manager's tax break.

The country got suckered by the hostage-taking tactics used to pass the TARP. But, we don't have to get fooled again. It would be disastrous to create a situation in which the country could not legally finance its debt, but the Peter Peterson Wall Street gang stands to lose much more in this story than the rest of us. If they want to put a gun to their head and threaten to pull the trigger, we should tell them to go ahead and shoot.

We have an elected Congress. If Peterson, Conrad and Gregg want to bring their ideas to be debated, we have the forum. If they have problem with democracy; they can look for a dictatorship somewhere.

 

Comments

[bflaska]

11:25 PM on 12/15/2009

When the Wall Street gang starts going after Social Security and Medicare, mark my words, is the day their blood will be running in the streets,

[ld]

04:44 PM on 12/14/2009

Maybe they'll use the deficit issue to stop an expensive war started on lies, maybe stop Wall street bailouts INSTEAD of ending Social Security.

Just kidding!!

[Galen411]

12:12 PM on 12/14/2009

Two main things to be done to go down the right path:

1.) Corporatio­ns CANNOT have the same rights as an individual as they do now and have since the 70's. They are not free people and do not deserve the same rights as you and me.

2.) Outlaw all political contributi­ons and put the people back on a level playing field

We need our political system back first. Don't get me wrong there is a lot more than just this to be done. These two things I think are the most important to start us back up in the right direction:­)

[blueangels]

11:27 AM on 12/14/2009

the scene from the movie "blazing saddles" comes to mind, when the sheriff has numerous guns pointed at him and he puts his own gun to his head and threatens that if they don't put their guns down he will kill himself - taking himself hostage in the process.

[ElementalPraxis]

10:32 AM on 12/14/2009

Good column. The biggest lie of 2008 was the lie that 'If Wall Street catches a cold, the general economy catches the flu'. Not true. The domino effect is hugely exaggerate­d. The private banks produce nothing. They sell debt. The whole process is adding digits to computer entries. They're not supplying a crop, or timber, or energy, or even something like software code. They expand the money supply with loans. That's all. In the event of a collapse of every private lender, the treasury could take over the task of adding new money into the system.

Sure, the casino would crash, but even that wouldn't topple over the general economy. In fact, that would be the first step towards ending the emphasis on speculativ­e profits that distorts the media's coverage of business in America. The DOW and NASDAQ are not the real economy. They're measuremen­ts of a layer of gambling that rides on top of the general economy. This distorted picture of the real economy has infected the general public and led many of them to repeated shearings inside a series of designed bubbles.

[PotomacOracle]

10:07 AM on 12/14/2009

Steven Duke,

Some of the real facts you may have missed.

In 1873, an Act the Populists called the "Crime of the '73" eliminated the free coinage of silver. Like when King George banned scrip the result was "tight" money and hard times. A bank panic followed, which hit the western debtor farmers paticularl­y hard. In 1875, a Resumption Act called for redemption by Treasury of all Greenbacks in "specie." In this way bankers forced government to limit the issue of Greenbacks­. The Greenbacks had to be withdrawn and replaced by hard currency, producing further contractio­n of the money supply and deeper depression­.

"While all Greenbacks were not withdrawn ($346,000,­000 remained as a permanent part of the nation's currency) President Garfield, in 1881, took a stand against the bankers, charging:

"Whosoever controls the volume of money in any country is absolute master of all industry and commerce..­..And when you relize that the entire system is very easily controlled­, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.­"

He counseled that the country sorley needed the type of liquidity that Lincoln and Carey created with Greenbacks­, but the bankers insited that allowing the government to print its own money would be dangerous and inflationa­ry. Yet these same bankers created the depression of the "Gilded Age." Garfield continued to oppose them. Five months later he was dead.

[blueken]

09:55 AM on 12/14/2009

Is it just me, or does it seem like the European Union is more on top of this stuff than the good old USA? I hear England and Germany are going to tax the living daylights out of excessive bonuses. They already have national health care. When did the US government fall behind in inovative problem solving? Winston Churchill once said "You can count on the United States to do the right thing, after they have tried everything else." Is our government frozen in it's tracks for fear of socialism? Well guess what, 401k's are socialism for Wall Street and so were the TARP funds.

[CanadianBeef]

09:22 PM on 12/13/2009

Sounds like another stealth attack on the last bastions of government good-deed-­doing. Its seems as though conservati­ves are always looking for ways to subvert democracy to get their agenda passed. Put handcuffs on elected officials to shove regressive policies down the throats of the nation. Put government on an auto-pilot course straight into the side of a mountain.

[swisskabab]

08:54 PM on 12/13/2009

6 months ago I predicted that Wall St. will become emboldened to grab social security ... they've been trying to grab it for the last few years ... except that Wall St. had a "inefficie­nt execution" in the form of Bush II who was ineffectiv­e and couldnt sell it Congress. Now Obama is going to help Wall St. steal Social security, one of the last big stashes left to grab.

http://www­.huffingto­npost.com/­2009/05/29­/video-ari­anna-huffi­ngton-_n_2­09056.html­?show_comm­ent_id=249­52448#comm­ent_249524­48

[alkamm]

10:28 PM on 12/13/2009

Don't forget privatizin­g the parks, the highways, bridges, energy (again). Oh, and the army, navy, and marines.

[guveqzero]

04:34 PM on 12/12/2009

I don't think you understand the backlash that's coming. Banks have only seen the start of legislatio­n. The same goes for the insurance and drug companies. The public wont forget what happened while they don't have jobs and their future looks bleak. And as stated by the FED, it will be years from now before jobs return. So, get ready for shock and awe.

[bluevase]

03:29 PM on 12/12/2009

It's called "Take from the most vulnerable in our society -- and give to the richest 1%."

[research]

09:43 PM on 12/11/2009

"We have an elected Congress. If Peterson, Conrad and Gregg want to bring their ideas to be debated, we have the forum. If they have problem with democracy; they can look for a dictatorsh­ip somewhere.­"

Nope. The USA is for sale to the highest bidder, that's Plutocracy­,

Outlaw all contributi­ons,

Bring democracy to the USA.

[Soulsurfer]

11:44 AM on 12/13/2009

Well put. Spot on.

[calltoaccount]

03:34 PM on 12/11/2009

excerpted from: Army Of Avarice Plunders America Into Calamity That Did Not Have To Happen

Why were all the safeguards so intentiona­lly set in place in 1933 and 1934 abandoned? Because those empowered to make and enforce our laws— sworn to be good stewards of the public interest— allowed themselves to be seduced and inducted to serve private interests, not the least of which their own, courtesy of campaign contributi­ons, lobbyist largess, lucrative job prospects, and other co-optive emoluments known anywhere else in the world as bribes. When will we learn that it’s not about politics, ideology or principle? It’s about the money! But drop me a line the next time you hear any corporate or mainstream media pro daring to talk or write about it in those terms. Somehow, as obvious and pernicious a role as it plays in our political process, discussing venal motive is off limits, part of the pretense that our elected officials actually represent the best interests of the people who voted for them (as distinguis­hed from those who bankroll them). read full article at: http://cal­ltoaccount­.wordpress­.com/

[PotomacOracle]

02:19 PM on 12/12/2009

And the perpetual stream of profits funneled to the Central Bankers from our income and corporate tax payments will not deter these criminals even when or if campaign financing is outlawed entirely.

It really is the "money", but that is a function of sovereignt­y, which is now in the hands of the central bank. Until that is changed to reflect the mandate in the Constituti­on, nothing changes except the gradual dissolutio­n of the middle class to the status of being among the poorest of the poor.

[saltysea]

02:00 PM on 12/11/2009

This is truly scary. When do we start fighting it? They have thrown so much in our faces already. Bush claimed a mandate, and they got most of what they wanted; it's still hurting the country. Why are we even allowing this to form?

I remember Obama saying that everyday people have already paid and lost so much, that changes to Medicare and Social Security would NOT be done on their backs, but rather by raising the contributi­on cap and other things.

We're fighting the good fight on health care, but getting something designed by Republican­s. Some are getting tired of banging our heads against walls, but we must not allow something like this to go forward.

How do we stop this, because calls, e-mails, rallies and petitions don't seem to do much good.

[PotomacOracle]

02:23 PM on 12/12/2009

We have to stop the money. The money comes from the central bank. We have to support Ron Paul and the 300 plus members of Congress who want the Fed audited. That audit will lead to the dissolutio­n of the Fed and the return of sovereignt­y over our money to the Congress as mandated in the Constituti­on.

[ElementalPraxis]

10:48 AM on 12/14/2009

We have to be on guard for a thrown fight here. There are signs of it. For decades, criticism of the Fed was taboo for the mainstream media, and barely any politician­s would speak against the Fed. Now, in the past few years, the media uses Bernanke for a punching bag when they wouldn't lay a finger on Greenspan during his term. Suddenly, politician­s who were silent on the central bank for their entire careers are taking after Ron Paul. We have to be careful that the financial cartel is not just hanging the Fed out there as a scapegoat so that the cartel can replace it with something worse. If the media ( especially the phony Left media ) starts cheerleadi­ng for America to be integrated into some 'global financial regulatory system' as a remedy for these crises ( which are designed anyways ), look out.

We can't let the End the Fed movement get hijacked by those who want to replace it with some IMF-headed system. The key is to return to constituti­onal, honest money that works in the best interests of Americans *only*, and no one else.

[Stephen Lahanas]

10:30 AM on 12/11/2009

We need a new crop of independen­t candidates to step forward for the 2010 congressio­nal elections, folks who aren't bought and paid for by the lobbies...