Budget Shenanigans Become Dangerous
What do cutting pensions for retirees, drastically increasing maximum campaign donations and eliminating one of the key provisions of the Dodd-Frank financial services regulations have to do with the federal budget? Not much, but all three were included in the bill passed last week in both houses of Congress. In order to get a long-term (by the low standards of this Congress) budget deal in place, these extraneous riders were included by budget negotiators of both political parties and supported by the White House and Wall Street alike. There was much in the bill that both Democrats and Republicans liked, but the negatives of these three provisions, none of which directly affect spending by the federal government for the duration of the bill, may be far more damaging in the long run than a longer respite from budget crises provides in the form benefits.
Making it easier to cut pensions may save some money, but it potentially reneges on promises made to retired workers and makes their lives in retirement less sustainable. Working hard to obtain a certain income level upon retirement is something which both the government and private industry encourage. To have it yanked away when someone is no longer able to work to replace it is wrong. Keeping promises to workers is important. Don’t make them if you can’t keep them. What credibility will the promises broken give those responsible in the future? What incentive is there for the workers? This trend continues a long-term attack on the social safety net by rightwing political forces that have been itching to take more noticeable steps, such as privatizing Social Security and Medicare, increasing the age of eligibility for those programs, or outright cutting benefits.
This becomes a class-based attack on the working class that benefits the wealthy who do not require the government assistance in retirement and do not wish to pay their fair share in the increasing costs of providing it. Wall Street benefits greatly through the privatization of all that stuff – they see dollar signs in the way of fees for investing the trillions of dollars involved in the long term. They have proven to be extremely risky keepers of the public purse in the past – as seen most recently during the Great Recession. Quick to decry any regulation of their practices, they are quicker to put out a hand when they can’t meet their obligations during a downturn.
I find it hard to believe that President Obama, who a few years ago decried the Supreme Court decision in the Citizens United case a few years back as being counter to our desires to a democracy that meets the needs of all our citizens without currying favor for the wealthy, was willing to sign a bill into law that further exacerbates our need for campaign finance reform. We need less money in politics, not more. Buying Congress and the Presidency to protect and defend the wealth, power and values of the super-wealthy should become more difficult instead of easier if we are to avoid or turn back oligarchy and reclaim democracy in our government.
With the Congress we face in January, I sincerely doubt any bills to restrict this tendency for permitting larger and larger amounts of dark money to surface anytime soon. Expect the 2016 campaign circus to be even more costly than 2012, with the lies flying over the airwaves like never before. No wonder so few decent candidates emerge for public office these days – ideas get lost in the shuffle and drowned out by fallacious ads sponsored by money from the Kochs and Adelsons and other wealthy folk on both sides of the political spectrum which are designed to mislead us into voting for the person who can afford the most airtime and best run the government in THEIR interests, rather than the interests of us all. Concentrating more political clout in the wallets of the wealthy than ever before does not portend well for election of a more representative government in the future.
Perhaps the most dangerous provision of all those included in this continuing resolution is the one regarding the ability of the big banks to gamble depositors’ money on risky investments and receiving bailouts from the federal government if they turn sour. In one fell swoop, a major provision of the Dodd-Frank financial regulations has been repealed. Most of the noise provided in opposition to the bill was caused by this provision – and with good reason. The law, once signed by President Obama, basically returns our economy to the same lack of regulation as precipitated the financial collapse of 2008.
The financial deregulation which occurred under the Clinton Administration (authored, of course, by a GOP-controlled Congress) is in the process of being repeated in a piecemeal fashion starting with this act. Dodd-Frank has resulted in some significant gains in the arena of economic and financial security. The Consumer Financial Protection Board has provided a much needed consumer watchdog over policies and practices of the industry. It has also been a major target of opponents to any and all regulation of financial institutions, many of whom non-coincidentally are employed in elected office or supposed regulatory bodies in DC. Not to anyone’s surprise, their campaign coffers are often topped up by donations from the financial sector or they are chosen from the ranks of private sector employment in that industry for their expertise in order to try to regulate it.
To paraphrase what Senator Elizabeth Warren so eloquently stated in her address to the Senate last week that preceded the vote in that body, Dodd-Frank was good, but not good enough to protect us from Too Big To Fail banking institutions. They’ve gotten even bigger since 2008, not smaller. Regulatory requirements have been fought tooth and nail every step of the way by both industry lobbyists and their well-financed backers in Congress. Through this failure to keep separate the deposits of appropriately insured consumer accounts in banks from the investment capital sides of their institutions, they are seeking to have their cake and eat it to. Heads I win, tails you lose. If the banks make risky investments that pan out, they get the profits. If the investments tank and the money is lost, we the people with money in the bank, take the loss through a taxpayer bailout of the banks such as we saw during the last recession. Going into a casino and playing with House money may be every gambler’s dream, but it is no way to run a responsible financial institution. Top that off with the fact that none of those responsible for the last go-around of risky investments gone bad has had to face any personal financial or criminal penalties for their actions, and it is easy to see why many are leery of repeating the experience.
While Jamie Dimon was cheerily phoning members of Congress soliciting votes for passage of this bill, many of those harmed by the morally (and some think legally) reprehensible actions of his and peer corporations have seen little or no recompense for their losses. He and fellow financial executives intend to do everything possible to keep it that way, while going about their business as unfettered as possible by those who seek to prevent a repeat performance. “Settlements” are paid by shareholders or deducted from taxes owed and considered to be a cost of doing business. They rarely rectify the harm done to those forced into bankruptcy or who have had their houses foreclosed on and retirement nest eggs obliterated as a result. This trend is extremely disconcerting. It needs to stop before we once again face an economic disaster as bad as or even worse that the one many people are still trying to recover from.
This budget resolution funds many areas of our government very well. Defense (or more accurately – war), ebola and various and sundry everyday government functions have been saved the inconvenience of another GOP-orchestrated shutdown (much to the chagrin of Ted Cruz and some others) – but at what long-term cost to the nation and its economic wellbeing? This may have been the best deal available politically at this point in time, but that does not make it acceptable. Our politicians are setting the bar far too low. Wall Street and the Congressional budgetary hostage-takers are still winning. Only a few in Congress are speaking for the vast majority of Americans who stand to lose out due to the provisions included in this agreement. Fewer still will be there come January. If Congress and the President will not stand up for our interests, who will?
Further Suggested Readings: