Suburban Guerrilla

There are a lot of reasons why Obama’s fundraising lags Romney’s. It’s always harder to govern than campaign, Fox viewers have been thoroughly brainwashed into seeing the Kenyan Socialist and his National Healthcare Takeover as A Major Threat To Our Democracy, Wall Street is too narcissistic to realize they’re not in jail because of Obama, and instead see him as ungrateful for their past beneficence. Also, a lot of voters are quite blatantly racist.

Finally, a lot of the people who trusted him to make things better feel betrayed. They thought he would punish the banks, stop the Bush assaults on privacy and human rights, and stop the economic cascade of mortgage foreclosures. Not only didn’t it happen, he started trying to trade away Social Security and Medicare, all in the name of bipartisanship – something Grover Norquist told us long ago was “date rape.”

But at some point, bitterly disappointed voters still have to make a decision. Do they hold back support from someone they no longer see as a friend, knowing it will result in the election of someone they do know is their enemy? It’s a tough decision:

In the battle for political cash, President Obama is finding himself in an unaccustomed place during the final months of the 2012 campaign: he is losing.

Mitt Romney and the Republican National Committee easily outraised the formidable Obama money machine for the second month in a row. A nonstop schedule of high-dollar events around the country brought in $106 million during June to Mr. Obama’s $71 million, giving him and his party four times the cash on hand that it had just three months ago.

Mr. Obama’s fund-raising deficit in part reflects how steeply the terrain has shifted since 2008, when many Republican donors embraced the candidate and his campaign raised millions of dollars from Wall Street and other traditionally right-leaning industries. Now those donors are swinging hard back to the Republican Party — and to Mr. Romney, whose promise to curtail regulation and cut taxes has helped draw a torrent of five-figure checks.

In a worrisome development for the Obama campaign, Mr. Romney, who until now has been heavily dependent on donors giving the maximum federal contribution, also showed success in June drawing small donors, a traditional strength of the Obama campaign. Reflecting the intensifying general election matchup with Mr. Obama and conservative anger over the recent Supreme Court decision upholding the president’s signature health care law, Mr. Romney raised about a third of his total in checks of under $250, officials said on Monday. Mr. Romney and the R.N.C. now have about $160 million in cash.

“This month’s fund-raising is a statement from voters that they want a change of direction in Washington,” Spencer Zwick, Mr. Romney’s finance chief, said in a statement.

Well, yes. I think that’s true, but not in the way Mr. Zwick says. I believe if more Democrats saw the president acting like he was on our side – indicting bankers, telling the Republicans to go to hell the next time they play debt ceiling games, and announce he will not pursue his Grand Bargain, why, they might be more interested in laying out some cash to support their team.

Call it a hunch.

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Matt Taibbi does a real nice job on a topic that has been my own obsession for decades: Municipal bonds. Bonds are where all the political kickbacks and thievery have always been hidden, and the despicable thing is, regular people lose real, tangible things as a result, yet are none the wiser.

I remember years ago, I attended a charity banquet at a local hospital, and someone running for county council came over and said, “I was told I should come over and introduce myself to you.” He then proceeded to talk about what wonderful things he did for charities, and what a humble man he was. I stopped him: “I’m sure you’re very nice to your wife and family, and I’m sure your dog loves you. But you’re a municipal bond dealer, and that’s really all I need to know about you.”

He protested. “My firm won’t be bidding on any business with the county if I’m elected.” (Of course he was going to be elected; he was a Republican in a GOP-controlled county.) I looked at him. “Mr. N., you and I both know that all your firm has to do is rubber stamp another firm’s deal, and they’ll do the same for you. It’s corrupt and it costs the taxpayers money.” (Requiring approval from another firm is supposed to make sure the deal is fairly priced. Hah!)

After the banquet, he made a point of letting me know he was taking all the leftover food to a homeless shelter. It reminded me of those old Mafia guys who built all those magnificent churches in South Philly, presumably to buy their way into heaven.

All this corruption is hidden by many layers, helped along by the fact that – surprise, surprise – things like bond deals are exempt from public bid. So I’m very hopeful that this trial will put at least a little fear into these pinstriped scum:

Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won’t hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm called anything like that. If you heard about it at all, you’re probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government’s massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony “Tony Ducks” Corallo.

But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from “virtually every state, district and territory in the United States,” according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What’s more, in the manner of old mob trials, Wall Street’s secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves’ cant, or Italian mobsters who talked about “getting a button man to clip the capo,” on tape after tape these Wall Street crooks coughed up phrases like “pull a nickel out” or “get to the right level” or “you’re hanging out there” – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.
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From Frank Rich, for anyone who hasn’t read much about the history of presidential campaigns, a group that seems to include all the talking heads and editorial writers who tut-tut about negative ads:

The serious questions raised by the early Obama ads are not whether they were too much but too little: Was waiting until May behind the curve? Are the ads vicious enough to inflict lasting damage? Is there a nuclear option in Obama’s advertising arsenal that can blow Romney out of the water as LBJ’s immortal mushroom-cloud “Daisy” ad did Barry Goldwater on Labor Day in 1964? Given the anemic employment numbers and the pack of billionaire GOP sugar daddies smelling blood after their Wisconsin victory, a reboot of hope and change would truly be the reelection campaign’s most self-destructive option…

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Dean Baker points out that the Villagers see what they want to see in a new poll:

That arguably should have been the headline of a Post segment discussing the release of new polling data from the Pew Research Center, which Kohut heads. The Center’s poll asked people a series of questions about the budget, taxes, and various programs. Most people answered that they viewed the deficit as a major concern. They were also strongly supportive of all major areas of federal spending with the exception of the military. In the case of military spending, there were almost equal numbers of people favoring cuts as increases. In the case of Medicare and Social Security, those favoring increases outnumbered those supporting cuts by more than 3 to 1.

In the case of Social Security, an overwhelming majority of respondents said that they supported raising the cap on taxable wages (currently $110,000). In addition, an overwhelming majority also said that they would rather see the tax rate increased than face a cut in benefits.

The conclusion of the Post piece tells readers:

“But ultimately, despite listing the deficit as a priority, most Americans — about 60 percent in a 2011 poll — would prefer to maintain benefits than take steps to reduce federal spending. As Kohut explains, this puts legislators in a real bind: ‘They are dealing with a public that is demanding solution to a problem which it has declared to be a major priority, but at the same time Americans are resistant, or divided at best, on the sacrifices that would be required to achieve a solution.’”

Contrary to what Kohut asserted, legislators are not in a bind if they want to follow public opinion. They can easily deal with the problems facing Social Security by raising the cap on taxable wages and phasing in an increase in tax rates over many decades in the future. If ordinary workers again share in the economy’s productivity growth, as the Social Security trustees projections assume, these tax increases would be a small fraction of future wage gains.

The public didn’t “demand” solutions to the deficit — a carefully orchestrated campaign by conservative interests and the media convinced them the sky was falling. The media is just as capable of reversing that as they were of creating it – but that, of course, isn’t what they and their corporate owners want.

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What Scott said. Bob Kerrey = DLC tool. Matt Bai = Very Serious Journalist.

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For years Democrats from Obama on down have largely refrained from accusing Republicans, out loud and unambiguously, of blocking legislation meant to get the economy — the real economy, the one that involves job creation — up and running again. Don’t bet on it, but maybe some Congressional Dems have finally realized they don’t impress unemployed or underemployed voters by reaching across the aisle to saboteurs:

If economic growth continues to slow ahead of the election, Democrats’ pitch to voters may have to sharpen as the party’s odds of victory in the presidential and congressional elections would likely worsen.

Senate Majority Leader Harry Reid (D-NV) floated one possible trial balloon Tuesday afternoon when he accused House Majority Leader Eric Cantor (R-VA) of deliberately sabotaging the economy for partisan gain.

“You have heard, as I’ve heard, that there’s a battle going on between Cantor and [House Speaker John] Boehner as to whether or not there should be a [highway] bill,” Reid told reporters. “Cantor, of course — I’m told by others that he wants to not do a bill to make the economy worse, because he feels that’s better for them. I hope that’s not true…”

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Matt Stoller doesn’t pull any punches in assessing the Wisconsin recall disaster and President Obama, who continues to work hard to distance himself and the entire Democratic Party from progressive traditions and policies:

…Obama’s policy framework is now the policy framework of the Democratic Party, liberals, and unionism. Up and down the ticket, Democrats are operating under the shadow of the President, associated with unpopular policies that make the lives of voters worse and show government to be an incompetent, corrupt handmaiden to big business. So they keep losing…

…Obama has largely insulated himself from the consequences of his policies, so far, with a strong and aggressive PR campaign that has kept his approval ratings high enough to potentially win in 2012. This PR campaign blames everyone else for policy failures, from Democrats in Congress to Republicans in Congress to the Eurozone. Regardless of what happens, Obama will reap enormous monetary rewards for what he’s done, as Bill Clinton’s $80 million post-election payday shows. And if Obama loses, the recriminations will start, and liberals will take the blame for not allowing Obama to be centrist enough. At this point, the Democratic Party is hopelessly broken and overrun by the same interests that are running the Republican Party…

Read the whole, damningly persuasive piece in Naked Capitalism.

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Watch the Thom Hartmann video, it’s quite informative. Don’t you love how this game is played? The temporary Bush tax cuts, the very same ones that helped ballooned the deficit to record levels, are about to expire and the Capitol Hill Chicken Littles are running around screaming “The sky is falling! The sky is falling!” So letting them expire will throw the country into recession? For those of us outside the Village, how would we even know the difference? We’re already out of work, or working for peanuts.

Now, you realize where this is going: This is the scary story that’s supposed to provide cover for the usual suspects who want to make the Grand Bargain on Social Security. The Greek chorus is gathering, chanting about the “obvious” solutions (hint, hint). “We’ll let you have a little stimulus now, provided we can slash the hell out of your earned benefits later!”

And because this is a complicated idea, most people won’t understand, the librul media can’t explain because they’re too hooked on access to make waves, only a few reporters will bring up the idea of simply raising new revenue, and the hollowing of Social Security and Medicare will soon be a “bipartisan” victory. Don’t you love politics?

Tax hikes and spending cuts set to take effect in January would suck $607 billion out of the economy next year, plunging the nation at least briefly back into recession, the nonpartisan Congressional Budget Office said Tuesday.

Unless lawmakers act, the economy is likely to contract in the first half of 2013 at an annualized rate of 1.3 percent, the CBO said, before returning to 2.3 percent growth later in the year.

Canceling those tax and spending policies would protect the recovery in the short run and encourage more vibrant growth, around 4.4 percent, in 2013, the CBO said. However, unless lawmakers adopt policies that would reduce budget deficits by a comparable amount down the road, the CBO said, the national debt would continue to climb, imperiling future economic growth.

The report, “Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013,” comes as policymakers are bracing for the most consequential battle over government tax and spending policies in years. The George W. Bush-era tax cuts are set to expire on Dec. 31, along with a payroll tax cut proposed by President Obama. Meanwhile, sharp cuts are scheduled to hit the Pentagon and other federal agencies to meet a deal cut during last summer’s showdown over the nation’s debt limit.

Anxiety is growing over how the impact of those tax and spending cuts would affect the nation’s economic recovery come January, when what’s been nicknamed “taxmageddon” hits. After the November election, a lame-duck Congress will have barely two months to resolve a grinding standoff over taxes and spending — a battle that brought the United States to the brink of default last summer.

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It’s no secret in my part of the world that Cory Booker is a very ambitious man, whose horizons stretch far beyond New Jersey. (Until the election of Barack Obama, many observers thought he would be the first black president.)

This might explain his fondness for Bain Capital – their employees were among his earliest financial backers:

A ThinkProgress examination of New Jersey campaign finance records for Booker’s first run for Mayor — back in 2002 — suggests a possible reason for his unease with attacks on Bain Capital and venture capital. They were among his earliest and most generous backers.

Contributions to his 2002 campaign from venture capitalists, investors, and big Wall Street bankers brought him more than $115,000 for his 2002 campaign. Among those contributing to his campaign were John Connaughton ($2,000), Steve Pagliuca ($2,200), Jonathan Lavine ($1,000) — all of Bain Capital. While the forms are not totally clear, it appears the campaign raised less than $800,000 total, making this a significant percentage.

He and his slate also jointly raised funds for the “Booker Team for Newark” joint committee. They received more than $450,000 for the 2002 campaign from the sector — including a pair of $15,400 contributions from Bain Capital Managing Directors Joshua Bekenstein and Mark Nunnelly. It appears that for the initial campaign and runoff, the slate raised less than $4 million — again making this a sizable chunk.

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Nobel Prize-winning economist Joseph Stiglitz:

NEW YORK – This year’s annual meeting of the International Monetary Fund made clear that Europe and the international community remain rudderless when it comes to economic policy. Financial leaders, from finance ministers to leaders of private financial institutions, reiterated the current mantra: the crisis countries have to get their houses in order, reduce their deficits, bring down their national debts, undertake structural reforms, and promote growth. Confidence, it was repeatedly said, needs to be restored.

It is a little precious to hear such pontifications from those who, at the helm of central banks, finance ministries, and private banks, steered the global financial system to the brink of ruin – and created the ongoing mess. Worse, seldom is it explained how to square the circle. How can confidence be restored as the crisis economies plunge into recession? How can growth be revived when austerity will almost surely mean a further decrease in aggregate demand, sending output and employment even lower?

This we should know by now: markets on their own are not stable. Not only do they repeatedly generate destabilizing asset bubbles, but, when demand weakens, forces that exacerbate the downturn come into play. Unemployment, and fear that it will spread, drives down wages, incomes, and consumption – and thus total demand. Decreased rates of household formation – young Americans, for example, are increasingly moving back in with their parents – depress housing prices, leading to still more foreclosures. States with balanced-budget frameworks are forced to cut spending as tax revenues fall – an automatic destabilizer that Europe seems mindlessly bent on adopting.

There are alternative strategies. Some countries, like Germany, have room for fiscal maneuver. Using it for investment would enhance long-term growth, with positive spillovers to the rest of Europe. A long-recognized principle is that balanced expansion of taxes and spending stimulates the economy; if the program is well designed (taxes at the top, combined with spending on education), the increase in GDP and employment can be significant.

Europe as a whole is not in bad fiscal shape; its debt-to-GDP ratio compares favorably with that of the United States. If each US state were totally responsible for its own budget, including paying all unemployment benefits, America, too, would be in fiscal crisis. The lesson is obvious: the whole is more than the sum of its parts. If Europe – particularly the European Central Bank – were to borrow, and re-lend the proceeds, the costs of servicing Europe’s debt would fall, creating room for the kinds of expenditure that would promote growth and employment.

There are already institutions within Europe, such as the European Investment Bank, that could help finance needed investments in the cash-starved economies. The EIB should expand its lending. There need to be increased funds available to support small and medium-size enterprises – the main source of job creation in all economies – which is especially important, given that credit contraction by banks hits these enterprises especially hard.

Europe’s single-minded focus on austerity is a result of a misdiagnosis of its problems. Greece overspent, but Spain and Ireland had fiscal surpluses and low debt-to-GDP ratios before the crisis. Giving lectures about fiscal prudence is beside the point. Taking the lectures seriously – even adopting tight budget frameworks – can be counterproductive. Regardless of whether Europe’s problems are temporary or fundamental – the eurozone, for example, is far from an “optimal” currency area, and tax competition in a free-trade and free-migration area can erode a viable state – austerity will make matters worse.
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