The Real Legacy of the 'Reagan Revolution'
McCain campaign co-chair Phil Gramm is right: We have "become a nation of whiners." But who is whining more than the bankers that former Sen. Gramm's financial deregulation legislation benefited? The very bankers who now expect a government bailout, such as those at UBS Investment Bank, where Gramm found lucrative employment.
As chair of the powerful Senate Banking Committee, Gramm engineered passage of legislation that effectively ended the major regulatory restraints applied to the financial industry in response to the Great Depression. The purpose of the Gramm-Leach-Bliley Act -- co-authored by Gramm, passed in 1999 by a Republican-controlled Congress and signed by President Bill Clinton -- was to liberate the banks, stockbrokers and insurance companies from restraints imposed on their activities more than seven decades ago. It was legislation that the financial community, which contributed heavily to Gramm's campaigns in the previous five years, desperately wanted and obviously has abused. So why now bail these institutions out?
Hows about some "tough love" for those bankers suddenly in trouble? You know, the sink-or-swim approach of "welfare reform" that Gramm and Clinton applied to poor people to end their addiction to government handouts. Or, perhaps a heavy dose of "faith-based" personal responsibility initiatives to get those knaves who messed up our entire housing market back on the straight and narrow. Sounds ridiculous I know, because nothing but the bleeding-heart, big-government, throw-money-at-the-problem approach will do when it comes to salvaging corrupt corporations.
That is the real legacy of what has been ballyhooed as the "Reagan Revolution," which Clinton went along with, but which found its full flowering in the administration of George W. Bush. The bookends of the Bush years are the Enron debacle and the federal bailout of bankers drunk on their own greed. And no two people in this country are more responsible for enabling this sordid behavior than the power couple Phil and Wendy Gramm.
Enron, lest we forget, was their baby. Then-Sen. Gramm sponsored the Commodity Futures Modernization Act of 2000, which allowed Enron's scamming to happen. As Ken Lay, who was chair of Gramm's election finance committee, put it quite candidly when asked for the secret of Enron's success, "basically, we are entering or in markets that are deregulating or have recently deregulated."
Part of that deregulation involved rulings of the U.S. Commodity Futures Trading Commission, then chaired by Wendy Gramm, who upon retiring from that post became a highly compensated member of the Enron board of directors, serving for eight years. She even was on the board's audit committee during the time of the corporation's despicable financial shenanigans. While on the Enron board, Wendy Gramm also chaired an anti-regulatory think tank that received funding from Enron and other corporations that benefited directly from the policies her institute espoused.
My point here is not to expose the dubious ethics of the Gramms' various business ventures but rather to question why Sen. John McCain turned to Phil Gramm for leadership in his presidential campaign. Indeed, until his verbal gaffe, Gramm was highly visible and rumored to be the choice for secretary of the treasury should McCain win.
McCain has long promised voters that he learned the hard lessons provided by his being one of the infamous Keating Five in the nefarious savings and loan scandal that cost taxpayers hundreds of billions of dollars. Yet he chose as his campaign co-chair a former senator whose push for government deregulation facilitated the far deeper scandal we now are experiencing. Here is a man whose legislation created what financial guru Warren Buffett termed "financial weapons of mass destruction."
Why in the world would you designate as your key economic adviser someone who left the Senate to become an officer of the bank that is at the very center of this mess, a former senator who not only secured highly paid employment with a banking giant that benefited from legislation he helped pass, but who then lobbied Congress for even more of the deregulatory breaks that got the bank into such deep trouble?
The answer cannot simply be that McCain doesn't care much about economics, as he himself has indicated. Perhaps that would explain his having voted for all of the measures pushed through the Senate by Gramm. Perhaps it even would explain McCain's having been chair of Gramm's own failed presidential bid. But indifference to economics does not explain the prominence of Gramm in the McCain campaign as the top economic adviser during these past months of the U.S. financial crisis. Indifference to the folks losing their homes is a more plausible explanation.
Robert Scheer is the author, most recently, of "The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America," published by Twelve Books.
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Reagan was a calculating politician who not only did not defeat Communism, but stood at that wall telling Gorbachev what to do what he was already in the process of tearing the wall down! Reagan, who saw t fit to shut down Cummunity care facilities that rendered psychiatric help for Vets and others, who ended mandatory consent laws for families insisting their psychiatrically troubled member receive medication vital to their day-to-day existance in these facilities, is the Father of Homelessness, so why should we be surprised when Gramm tells us to quit whining? The callousness of these Repubs who are purely socialistic with their banking industry yet refuse government funding for medical care, education, housing for the poor, and food programs for the needy, prefering to burden the churches and local communities...
When former treasury secretary Paul O'Neill expressed concern about lowering taxes while deficits were increasing Cheney fatuously responded, "Deficits don't matter. Reagan proved that." Now here we are with a $9T budget deficit, $3T war without end, $3T mortgage debacle, $1T annual trade deficit. What happens when Russia, China, Japan, and Saudi Arabia decide they aren't going to extend credit any longer? Things that can't go on forever don't. What happens when we have to pay for our imported oil with exports?? What happens when our credit is no longer believable? These days are coming sooner than you think.
Currency valuation being the leading indicator that that day may be approaching.
7000 homes have been going into some form of foreclosure each day for the last 2 years. If a payment is more than 10 days late a pre-foreclosure notice is sent. It used to be if a payment was 30 days late they would send a notice. What I think is happening is people are juggling too many bills and they are living check to check. So in essence what they are doing is waiting until they get paid again before making the mortgage payment, and that takes up to 14 days.
The problem is debt and lower salaries, as brought on by Ronald Reagan.
Once in Congress Gramm was asked, "what about the poor and the middle class?" His response was," no one poor or middle class ever gave me a job. Why should I care about them?"
I am not sure I am quoting this verbatim but it's close. Mr. Gramm and his cohorts know that only the rich count in this country. The rest of the population is just cheap labor to be exploited to build up already large fortunes.
Or, in the words of the GOP Economic gurus of the past 20 years, "I got mine, too bad about you."
Great Post! American corruption is pretty extreme these days. People often refer to Nigeria as a cleptocracy, i wonder what you call it when you pass laws to allow for theft. Obama has been a bit of a let down in taking on these kind of things, he is too busy sucking up to special interest groups to do that. Maybe Obama will find some new religion once the backlash against him hits the tipping point.
Regardless soon their won't be enough extra money, or patience from the voters to allow for the extreme corruption we have seen the past 20 years. The global competition is leveling the playing field by predictable reducing quality of life for Americans. We will have to allocate resources efficiently just to remain competitive. Our out of control defense spending and corporate welfare that does not produce prosperity will be too large of a liability to sustain.
Gramm is right! All we do is whine witness the posts on this thread. Whining won't feed the bulldog. We all know what is wrong and all you hear is whining. The question is what are the masses willing to do about it? This is the stuff of revolutions but who will step up and pledge their lives, fortunes and sacred honor? Anyone here with guts?
Perhaps you haven't really been reading the posts. ALL of us are willing to sacrifice as needed to make this country great again. We are ESPECIALLY willing to have the taxes go back to what they were when things were better, as long as the other side goes back as well!
No such things as "masses" . Americans are individuals not "masses" to be directed. I am a liberal but I tend to distrust people who want to reduce disparate human being to "masses.
Well aren't you special. Let's try this and maybe you will get my meaning. The large population of middle class and working poor that are being ravaged by the privileged elites who control the wealth and power of this country and use it against that large population of middle class and working poor who should be fighting back. Get a dictionary and you will find that large populations constitute the masses you say are "no such things". You say you are a liberal but your knee jerks like a Fox devotee. Totally missed the forest for the little tree. Bah!
We're all in this together, whether you like it or not.. It's America's "Every man for himself" philosophy that's created the huge disparity in America. Greed and privilage; that's the "American Way". Me me me! Mine mine mine!
If one complains verbally about some circumstance, condition or need that can always be called whining. the right always whines about such complaints and calls it whining. So what does Dr Phil want us to do? Stop complaining and do something about it. Lets take from the rich what we need. We heard you, no more asking for things lets just take them.
Republican economic theology is not complicated. Republicans intentionally transfer wealth from the poor to the rich, a kind of mix of fascism and feudalism. Yes, it's dishonest and hypocritical; they know that, and they are not troubled by it.
The poor enable this kind of behaviour by voting against their own economic interest. In large numbers, they vote Republican because of a single issue ot two, like abortion or flag burning. After the election, the poor and middle-class get taken to the cleaners economically.
For some reason, people aren't thinking about economics when voting Republican.
Oh well, ....
Yep, Reagan and his dirty little wars, the reason Oliver North is a talking head on FIX news instead of being a senator is the Iran/Contra affair.
People walked away from their upside down houses in the 80's!! The S&L catastrophe was under his watch.
He broke the unions with his firing of the airport controllers!!
Turned up the helicopter motors so he could claim he couldn't hear the questions!!
On and on.
LarryJ
I think it is more a visceral aversion to any wealth transfer from them to the people they perceive as social parasites. They're naive.
Examining Reagan's life is interesting when you split it into pre and post Nancy (Mommy).
Isn't that the same with most people that get married or have kids?
Good Post It's scary when you think that Phil Gramm could become the Secretary of the Treasury
( IRS) Seeing how he enabled the Enron stealing I can only imagine what will happen to the average person. Wasn't Reagan the one that talked about the "trickle down theory" ? The only things that his policies accomplished was sending millions of industrial jobs overseas. Just another failed economic policy by the Republicans.
But I guess it's okay that McCain doesn't need to understand the economy, and won't be whining since he is a millionaire, also.
Of course, the IRS is just a tool to help the wealthy avoid paying taxes.
Was Reagan's policy failing in the 90s when we were booming? I love how people try and tie bad times with with a specific idea when in reality there are more factors than you could even imagine. Continue spewing BS though.
Yes, as a matter of fact Reagan's policy was failing in the 90s. Deregulation was in the midst of destroying the power industry with all the crackpots who came in to exploit it. Do you remember a little company called Enron? Yeah, that was a long time in the making, and it was a direct reflection of Reagan policy. Just because the country wasn't demonstrably suffering (well it was until the mid 90s) doesn't mean Reagan's policy wasn't failing.
The dot-com boom of the 90s was enough to temporarily keep the disasters at bay - and disillusion enough people to sucessfully usher in the era of BushCo. And here we are.
YES. We just did not know it yet. Enron did not develop overnight in 2000.
Obama was right when he said Reagan was a transformative president. Unfortunately almost all his economic transformations were in a really bad direction in the long run, as we have seen with their logical conclusion in the present administration. The right wing cohort set out to undo all the transformations made by FDR to correct the conditions that led to the last great depression. They have by and large done all that plus more. Now we are on the verge of another great depression. Maybe we will find a positive transformer again, and as a citizenery rise to the occasion, or maybe our nation/society will fail.
erm, Reagan was president during the *80s* when America ran up a 3 trillion dollar debt to pay for his corporate welfare programs. Clinton was president in the *90s* when America paid down Reagan's debt, won its wars and had the respect of the world.
I know it's hard to remember those silly fact thingies, but you really should try to know something before your write something really stupid.
Standard republican dogma: anything good is caused by us any thing bad is caused by them no matter the time frame or sequence of events.
Here is the thing, 9 out of the last 10 recessions have happened with a Republican president in office. The best Republican on economic and job growth in the modern era was Reagan, the worst Democratic president was Jimmy Carter, yet Carter still had better job and economic growth than Reagan did. The best Republican isn't even as good as the worst Democrat on economics. It's ideology. One philosophy works, and the other one really doesn't.
what an ironic name. if something god happens no matter when it must be due to republicans, if something bad happens no matter when it must be due to democrats. no bias there...
I'm glad someone traced this back to Reaganomics.
Our young people think of Reagan as a hero who defeated Communism, but they don't learn about his deregulation that led to abuses of power.
In his defense, he may not have realized just how much abuse would occur, but plenty of people warned him at the time and he chose to not listen believing the markets would take care of it. But as you so aptly pointed out, the free markets don't apply at the highest levels.
Reagan may have claimed to have "Defeated Communism" [yeah, right. . . .tell it to the Chinese who now own us], but Gorbachev pointed it was Chernobyl that took down the former U.S.S.R.
The wonderful job that Big Oil and Big Auto and Big Banks have done on the planet, displaying their total and predictable lack of concern for the environment will defeat the rest of the world, including us.
Interesting point.
The Fall of the Soviet Union was in part caused by an environmental catastrophe. Something that is almost always overlooked.
But i think the main reason the Soviets collapsed was because trhey built an economic and political system that simply did not work. And could not be made to work.
It was a self induced collapse.
But then there were cultural factors also. John Lennon and the Beatles had more to do with the fall of the Soviet Union than Saint Ronald. And Frank Zappa of course.
He knew! Of course he knew, since back in the 50s he was OPPOSED to the very policies that he USED in the 80s!!
Actually, it was disturbing, since I listen to the Tom Hartman program on AirAmerica on my way home, and a few weeks ago he found a clip from the 50s where raygun did a political ad (radio) talking about how the deregulation of the oil industry was causing harm to ordinary Americans paying for gas and giving the oil companies profits which (while NOWHERE near as high as today!) then record setting!
What caused the Soviet Union to collapse was their venture into Afghanistan which caused them to be bankrupted. So Reagan by that time was well into his early stage alzheimers and nodding off at the Icelandic summit.
And so off the US toddled into Afghanistan....hey, just because the other greatest superpower the world has ever known was brought to the knees by the mujahaddin doesn't mean they can beat US, dammit!
there really are no free markets except in the land of absolute vacuums and frictionless mediums. A free market might exist for a moment when everyone has equal wealth. but if you define a free market as one where neither the buyer nor the seller are under any compulsion--- the way this actually works in our real world is that one is free to create as much compulsion as possible in the market. the use of this term is newspeak for the right. I have literally had someone tell me because of the market conditions re my labor I had no choice but to work 16 hours a day 6-7 days a week. How dare I question his freedom to do that!!!
My favorite Gramm moment still is the time he came to my Air Force base to see how we felt about the "Don't ask, don't tell" policy being debated at the time. Most got up and said that gays were in the military, they'd always been in the military and the policy was stupid. He ended up yelling at active duty personnel and shouting what we should believe, which was gays were bad
Seeing Gramm did not serve what would he know about gays in the military. There has always been and always will be gays in the military.
But he DAMN sure knew about GAY people!!!! :D
As opposed to straight porn, which apparently is just fine. ;)
I have conservative friends in that very position, they have not lost there home, but both of them have lost jobs in this economy and their stock portfolio which my friend referred to as a 3 salary in 1995 is under assault. They will not admit to the failures of the Regan-Bush agenda, instead blaming everything on Congress, except Congress dose not set fiscal policy, they just vote on it or in the case of people like Graham they corrupt it. I almost feel sorry for them, they cannot vote for there own best interest, and yammer endlessly about smaller government which has never been accomplished by a Republican administration, in my life time. Regan al least compromised, when Paul Volker told him the only way he could have lower interest rates was to reduce spending or raise taxes, Regan raised taxes in most sneaky way possible. Even Kramer, host of Mad Money of CNBC, was forced to admit that extending the Bush Tax cuts is a fiction in the current economic climate, and said that McCain’s will have to break this promise if he is elected.
Is this the same Jim Cramer that is buddies with Spitzer and the same Jim Cramer that said keep your money in Bear Stearns?
The guy throws a lot of stuff out there and a lot of it is BS.
Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? –Peter
Cramer says: “No! No! No! Bear Stearns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear.
"That is the real legacy of what has been ballyhooed as the "Reagan Revolution," which Clinton went along with, but which found its full flowering in the administration of George W. Bush.
The bookends of the Bush years are the Enron debacle and the federal bailout of bankers drunk on their own greed. And no two people in this country are more responsible for enabling this sordid behavior than the power couple Phil and Wendy Gramm."
Has anyone else noticed that most of these mega-buck fiascoes started "DEEP IN DA HEART OF TEXas"?
That 'state' that believes it's really a country all unto itself and the rest of US be damned?
Any one else ready to hold that state accountable for allowing such thievery and greed be raised to unholy heights?
Texas - you got's some BIG "splainin'" to do.
I live in Texas and it is almost surreal here politically. Much of the 28% approval rating Bush still enjoys I'm sure is from the Republicans in Texas. This state is filled with middle class and lower middle class whites who consistently vote against their own economic interests and continue to install Republicans in high office. People here actually buy into the anti-Obama pseudo religious based emails that circulate claiming that Obama is the anti-Christ and is a secret Muslim. Many of them believe this crap.
There are also a lot of progressives here in Texas. We are swimming against a huge tide of ignorance. We have been able to claim some small victories here. In Dallas county we elected the first black District Attorney in the history of the state! He has reviewed dozens of criminal convictions and exonerated several wrongfully-convicted men by DNA evidence. Dallas county also has an openly gay Sherriff-Lupe Valdez. We progressives in Texas live in a sea of Red State nonsense. I can wait to see a Democratic victory in November.
Ditto for Utah. Same sordid political story. We like to attribute our dysfunction to too much religious indoctrination. Sheeple following self-serving, corrupt "leaders" and voting consistently against their own best interests.
I live in Indiana. It's the same thing here. I've played with the idea of doing an accounting of all the shenannigans that go on here. I was going to call it 'The Red Sea Scrolls'. Wanna share some experiences?
Its amazing there still are people writing about the great Reagan era, regonomics, wall coming down( they are now building a wall at the border!) Reagan ending communism in Russia and winning the war in GRANADA the great enemy to our east! It is sad, many middle class and uneducated and poor, Americans vote republican..thinking that they are on the way to riches, as the politicians and Rush and Hannity tell them, if only they vote republicans in, and Dems. out. These same folks have their parents and grandparents taking advantage of Medicare, Medicaid, veteran's benefits, and social security, all due to hard work ,by forward thinking Congressmen and Presidents of the Democratic party, often fighting republicans to pass bills. Example: recent veto by the great Pres Bush, a bill that would keep doctors being paid adequately for serving our poor and old! Shame on you , people who still think the republican party is your party, and they protect your interests. Just think for a minute, how can they reduce taxes and increase war spending and money for education, veteran benefits, schools and bridges. A former President who was running against Mr Reagan called it vodoo economics. But Sen McCain and Gramm still believe its o.k to tax the poor and give a break to the very rich. Let average citizen pay 5 dollars for gas, and the rich take a tax break for it as business expense!
We should also blame the Washington establishment that allowed Reagan and his accomplices to get away with their crimes. (Remember, NOBODY was ultimately punished as a result of Iran-Contra.) I don't just mean Congress, though Reagan clearly should have been impeached. I'm also talking about the Washington press corps: faced with Iran-Contra, they changed the subject to "the Seven Dwarfs" running for the Democratic presidential nomination.
I love it when in one context the right will say the fall of the soviet union proves communism fell because it cannot work when it suits an argument and then for another argument will claim Reagan brought it down from his own actions. Which is it? Fell of its own faults or Reagan brought it down.
I spent considerable time driving Texas youth church groups from the ski area to town. And how can I say this politely?
They were intellectually challenged. Large groups of them. Mostly Baptists and Methodist church groups. (never Catholic or Jewish) Fundamentalists.
George W. Bush is one of them. It is very frightening that these are the people in charge of the USA.
But I am not in the least bit surprised by the outcome.
Mr. Scheer,
Thank you for bringing light to the farse that is Reaganomics. You are doing a great service to Americans by helping expose the GOP's "Sacred Cow" for what it really is.
However, Reaganomics (aka Neoliberalism) is not and exclusively American problem. Since the 60s, there has been an orchestrated campaign to convert the world to this slavery system and, until the past few years, they were very successful.
The economic problems all stem from Neoliberalism: Darwinistic ideology and theory proven bogus that is still recognized as a foundation for U.S. ecomomic policy (consolidate the wealth, strip the middle class, unfettered trade) Instead of pointing the finger at failing cogs, why aren't we talking about an overhaul of the entire machine?
I guess what I'm saying is; Why don't we change the system back (or forward) to a system that we know works?
The term 'Neoliberalism' is an intentional misnomer along the same lines as equating socialism with 'the left'. Neoconservatives promote this economic snakeoil and then, when it produces undesirable results, turn around and blame the 'liberals' for the mess.
Reagan was the head of a union, the Screen Actors Guild, before he became governor of Cali. Turning his back on the air traffic controllers marked him as the sellout he was. He had no role in defeating communism, he merely took credit for it.
BTW, wasn't the recent 'stimulus checks' sent out, the most blatant example of 'redistribution of wealth' you've ever seen? These guys have learned how to talk the talk, but as for their walking ... lame.
Human nature is ... what human nature is. Particularly since 1974, we have as a nation been living on the kool-aid that "money is free." Kind of like a trust-fund baby with daddy's gold-plated American Express card. We cannot depend on human-nature to cause people to make business decisions that are "smart" or "in the public interest." When you're a CEO bringing-down six figures, by god, you think you deserve it.
If you're a Senator or a Congressman, well, "absolute power corrupts absolutely."
But anyway... here we are, and guess what, the rest of the world community is turning away from us, as well they should. Even though from the American perspective "the world revolves around U.S.," we're only about 20% of this planet's population. The money we "borrow" to the tune of millions of dollars per minute will not continue to be accepted at-par. It won't continue to be "the only currency that can be used to buy oil." (There won't be any one, anymore.) And the shenanigans of uncontrolled businesses and their paid-off so-called regulators won't be sloughed-off to the rest of the world's financial community. "You made your own bed, you lie in it."
What's to be done? Be grown-up, and go clean your own house. Business IS international, by its very nature, but the obnoxious and hostile party in any situation ... a boardroom, a playground ... gets locked-out.
CEO? Six figures? Are you in 1960s time capsule?
:-D
oops...
There are CEO's who get 6 figure salaries, but they tend to be the honest ones. The rest are looking at 10-12 figure salaries.
Actually we're only 5% of the world's population, using 25% of the resources.
Make that "we're only 5% this planet's population" (about 300 million / 6 billion)
Only a very small percentage of us Americans were responsible for this. I agree they should be held accountable. Most of us have already been suffering at their pleasure and we're used to it by now. Good news is, the bigger they are, the harder they fall. It'll be quite a show, won't it?
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