It's getting too late to give President Barack Obama a pass on the economy. Sure, he inherited an enormous mess from George W., who whistled "Dixie" while the banking system imploded. But it's time for Democrats to admit that their guy bears considerable responsibility for not turning things around.
He blindly followed President Bush's would-be remedy of throwing money at the banks and getting nothing in return for beleaguered homeowners. Sadly, Obama has proved to be nothing more than a Bill Clinton clone triangulating with the Wall Street lobbyists at the expense of ordinary folks.
That fatal arc of betrayal was captured by a headline in Tuesday's New York Times: "Soaring Poverty Casts Spotlight on 'Lost Decade.'" The Census Bureau reported that there are now 46.2 million Americans living below the official poverty line -- the highest number in the 52 years since that statistic was first measured -- and median household income has fallen back to the 1996 level. As Harvard economist Lawrence Katz summarized this dreary news: "This is truly a lost decade. We think of America as a place where every generation is doing better, but we're looking at a period when the median family is in worse shape than it was in the late 1990s."
The late 1990s, it should be noted, is when President Clinton, working with Phil Gramm, the Republican head of the Senate Banking Committee, pushed through two critical pieces of legislation ending effective regulation of the banks. The Gramm-Leach-Bliley Act smashed the wall between high-flying Wall Street investment firms and the once staid commercial banks entrusted with the deposits and mortgages of America's innocent souls. The next year Clinton signed the Commodity Futures Modernization Act, banning any effective regulation of the rapidly expanded trade in the collateralized debt obligations and credit default swaps that have since haunted the world's economy.
The collapse of those toxic securities led to the housing crisis and resulted in 15.1 percent of Americans now living in poverty, the same level as when Bill Clinton took office. But thanks to another one of Clinton's grand triangulation strategies, the one he called "welfare reform," the impoverished are now denied the safety net that existed before the Clinton presidency. Although 22 percent of U.S. children are now below the poverty line, the Aid to Families With Dependent Children program no longer exists.
Some of us who voted for Obama thought he was no Clinton, but he was and is, as was demonstrated in his first days in office when he appointed two key veterans of the Clinton Treasury Department, Lawrence Summers and Timothy Geithner, to head up the Obama economic team. Geithner, as treasury secretary, is the point man for the administration's push to pass the so-called American Jobs Act, which the president hyped in his Sept. 8 speech to Congress and the nation. It was pure Clinton bull: I feel your pain while I help the super-rich pick your pocket.
Space permits only one example, that of General Electric CEO Jeffrey Immelt, whom Obama selected to head his "Jobs Council of leaders from different industries who are developing a wide range of new ideas to help companies grow and create jobs." Was that some cruel joke? GE under Immelt has grown and created jobs, but they are abroad rather than in our own troubled country. As a result, by the end of last year, only 134,000 of GE's workforce of 304,000 were based in the United States; the remainder -- and 82 percent of the company's profit -- were sheltered abroad.
Ironically, GE's ability to avoid taxes was restricted by President Ronald Reagan, who had once been a spokesman for GE but was outraged by the company's use of tax loopholes. It remained for President Clinton to offer GE some new tax breaks. As a result of being able to shelter profit abroad last year, GE had profits of $14.2 billion but claimed a tax benefit of $3.2 billion. Immelt was the elephant in the room when Obama said in his speech last week: "Our tax code should not give an advantage to companies that can afford the best-connected lobbyists. It should give an advantage to companies that invest and create jobs right here in the United States of America."
It has been a long time since GE was creating jobs here during its "better light bulb" days, and the last spurt of GE participation in the U.S. economy came through its unit GE Capital, which specialized in toxic mortgage lending that once produced more than half of the company's profits but ultimately led to a taxpayer bailout.
Someone who knows a great deal about that sort of scam is Elizabeth Warren, the consumer advocate and Harvard law professor pushed out of Obama's inner circle. In launching her campaign for the U.S. Senate in Massachusetts this week, Warren posted a video that clearly defined the enemy:
"Washington is rigged for big corporations. A big company, like GE, pays nothing in taxes, and we're asking college students to take on even more debt to get an education?"
Obama in appointing Immelt last January praised him as a business leader who "understands what it takes for America to compete in the global economy." Apparently, what Immelt understands is that what it takes to satisfy corporate interests instead of national needs is conning a president into looking the other way while you send jobs abroad.
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