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Seven Years Ago, Wall Street Was the Villian, Now It Gets To Call the Shots

The recent passage by Congress of new legislation favorable to loosening controls on risky Wall Street trading is just the most recent example of the consolidation of plutocratic power in Washington. The new rules, written largely by Citibank lobbyists and embraced by the Obama administration, allow large banks to continue using depositors’ money for high-risk investments, the very pattern that helped create the 2008 financial crisis.

This move was supported largely by the establishment in each party. Opposition came from two very different groups: the Tea Party Republicans, who largely represent the views of Main Street businesses, and a residue of old-line progressive social democrats, led by Massachusetts Senator Elizabeth Warren.

Support for big finance is no surprise from Republicans, who are used to worshipping at the altar of Wall Street. But the suborning of “progressivism” to Wall Street has been a permanent feature of this administration. From the onset of his presidential run, Barack Obama had strong ties to Wall Street grandees. New York Times Wall Street maven Andrew Ross Sorkin noted in 2008 how Obama had “nailed down the hedge fund vote”.

The ultra-rich so backed the president that, at his first inaugural, noted one sympathetic chronicler, the biggest problem for donors was finding parking space for their private jets. Since then, despite occasional flights of populist rhetoric, the president has kept close ties with top financial firms, including the well-connected Jamie Dimon, chairman of JP Morgan, often called Obama’s “favourite banker”. He appears to have been instrumental in getting Democrats to support the recent loosening of financial controls on big banks.

These Wall Street connections have continued to play dividends for the president, in terms of contributions. The financiers benefited from Obama’s choice of financial managers, such as former treasury secretary Tim Geithner, widely known as a reliable ally of the financial sector. (He liked to explain his support by equating its importance to that of the technology and manufacturing industries.) To no sensible person’s surprise, Geithner, when he left the Treasury last winter, found his reward by joining a large private equity firm. (By way of completing the circle, Geithner’s successor, Jacob Lew, used to work for Citibank.)

The Justice Department has also been cosy with the plutocracy. Attorney general Eric Holder allowed Wall Street a kind of “get out of jail free card” by failing to launch tough prosecutions of the grandees. In contrast to the situation under previous administrations, both Republican and Democratic, the financial plutocrats have not been forced to pay for their numerous depredations. Instead, most prosecutions have been aimed at low-level traders, Ponzi schemers or inside traders.

So if you still think 2008 and the financial crisis changed everything, still think of it as a progressive triumph, think again. Instead of the brave new world of reformed finance, what’s been created in the US is something close to a perfect world, policy-wise, for the plutocrats. The biggest rewards have come from an economic policy, backed by the Federal Reserve and the administration, that has maintained ultra-low interest rates. This has forced investors into the market, at the expense of middle-class savers, particularly the elderly. The steady supply of bond purchases has essentially given free money to those least in need and most likely to do damage to everyone else.

The results make a mockery of the Democrats’ attempts to stoke populist sentiments. In this recovery, the top 1% gained 11% in their incomes while the other 99% experienced, at best, stagnant incomes. As one writer at the Huffington Post put it: “The rising tide has lifted fewer boats during the Obama years – and the ones it’s lifted have been mostly yachts.” If this had occurred during a Republican administration, many progressives would have been horrified. But Democrats, led by New York senator Charles Schumer, Wall Street’s consigliere on the Hill, have been as complicit as Republicans in coddling Wall Street. Democrats, for example, despite their rhetoric about inequality and fairness, have refused to challenge the outrageous discount on taxes for capital gains as opposed to income. A successful professional making $300,000 a year is often taxed at rates twice as high as the rate paid by hedge fund investors, venture capitalists, tech entrepreneurs and Wall Street stock jobbers.

At the same time, the Obama years have been something of a disaster for Main Street, where most Americans work. A 2014 Brookings report revealed that small business “dynamism”, measured by the growth of new firms compared with the closing of older ones, has declined significantly over the past decade, with more firms closing than starting for the first time in a quarter of a century.

Small banks, long a critical source of funding for small businesses, have also been pummelled by the very regulatory regime that also allows mega-banks to enjoy both “too big to fail” protections as well as their sacred right to indulge their most cherished risk-oriented strategies. In 1995, the assets of the six largest bank holding companies accounted for 15% of gross domestic product; by 2011, aided by the massive bailout of “ big banks”, this percentage had soared to 64%.

These trends do much to explain what happened in the recent midterm elections, which saw a massive shift of middle- and working-class voters, especially whites, to the Republicans. Increasingly, Americans suspect that the economic system is rigged against them. By a margin of two to one, according to a 2013 Bloomberg poll, adults feel the American Dream is increasingly out of reach. This pessimism is particularly intense among white working-class voters and large sections of the middle class .

The other major cause for the Democratic demise in November was the low turnout among minority voters. They certainly have ample reason to be indifferent. Both African American and Latino incomes have declined during the current administration, in large part because neither group tends to benefit much from the appreciation of stocks and high-end real estate.

In caving in to Wall Street and its economic priorities, members of both parties have demonstrated where their primary loyalties lie. Amid the obscene levels of compensation going to the financial grandees, it seems the ideal time for politicians, right or left, to challenge Wall Street’s control of Washington. High finance has so devastatingly rocked the world of the middle and working classes. Voters, it might be thought, now need leaders who will take these grandees down a notch or two.

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About the Author:  Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA. This piece first appeared at The Guardian and is republished here with permission.

Dear Randi,

You seem to be very unhappy lately, but cheer up – things aren’t nearly as bad as you think! 

In your recent foray into BuzzFeed, you seemed a bit verklempt (for you non-Yids, that means overwrought) and I would like to help you feel better!

Regarding Common Core, the piece reads:

‘The right’s vitriol is ideological. The losing of parents and teachers is a matter of incompetence, Weingarten said. She attributed the program’s poor reception to groups like the Gates Foundation ‘wanting to measure more than wanting to teach.’

Oh my goodness! You mention Bill Gates and “the right” in the same breath. Surely you know that Mr. Gates is hardly a part of the vast right wing conspiracy. And if you think the right is vitriolic on the subject, let me introduce you to one Karen Lewis who has cornered the market on vitriol. Just watch any one of dozens of videos where the Chicago Teachers Union leader lashes out at, well, just about everyone, regularly dumping on rich people, white people, Common Core, Arne Duncan, et al. And if you want more vitriol about Common Core, a trip to the Bad Ass Teachers Facebook page will undoubtedly sate you. You will then see that being anti-Common Core certainly isn’t just a rightwing thing. I hope this lightens your mood, Randi.

Then, of course, is the inevitable swipe at the Koch Brothers.

All these conservative governors left to their own devices initially supported the standards…  What changed? The Koch brothers decided not to support the standards, ALEC didn’t support the standards, others who fund right-wing causes don’t support the standards.

Fiddlesticks! You seem to think that the right does what only the Kochs want them to do. (Seems that you have become afflicted with the Harry Reid’s Koch-o-loco Syndrome.) Actually, most folks came to their anti-Common Core position without Charles’ and David’s help. In fact, you and many others on the left greatly exaggerate the power of the Brothers. And I’m sure you simply forgot to grouse about Tom Steyer and other hypocritical, crony capitalist power-brokers on the left.

As I’m sure you know, our political contribution rules are quite arcane and are taken advantage of by both the right and the left. When teacher union watchdog Mike Antonucci was asked how much the National Education Association spends on politics, he responded, “What do you mean by ‘NEA’ and what do you mean by ‘politics?’ As an example, he says, “If NEA sends a mailer to a member calling for the election of Candidate X, or the passage of Measure Y, it is probably not a campaign expenditure. But if NEA sends the same mailer to me, it is.” He ends his piece with, “As you can see, there isn’t a sound bite reply to the headline question, ‘How Much Does NEA Spend on Politics?’ But you wouldn’t be far wrong if you simply answered, “As much as it wants to.” His article gets deep into the weeds on this issue and is very informative; I suggest you read the whole thing, Rand, it will brighten your day.

Perhaps we can best put the whole campaign finance mess into perspective by looking at actual dollar amounts. Gateway Pundit did just that and found via Open Secrets that between 1989-2014 the “‘Evil’ Koch Brothers Rank 59th in Political Donations Behind 18 Different Unions.” And this is sure to bring a smile to your face: NEA is #4 at $53,594,488 and your American Federation of Teachers is 12th at $36,713,325 (#12, Randi!) and the Kochs are way down the list in 59th place, having spent a measly $18,083,948 during that time period. (Am I hearing a big sigh of relief, Randi?!)

And homegirl, the news gets even better!! You recently joined Democracy Alliance, an organization that “takes pains to ensure that its work disbursing millions of dollars to top left-wing organizations remains secretive and free from public scrutiny.” So when it comes to “dark money,” you can out-Koch the Kochs every day of the week and thrice on Sunday! (Btw, it was a shame that someone was so careless to leave a list of new DA members lying around at that gathering last month, subsequently winding up on the internet. I can imagine you must have been very ticked off. But frankly as a 1%er who pulls in over a half a million a year, you can just put that behind you, especially since that $30,000 entry fee to join DA is really sofa cushion change for you.

And there’s even more good news! As you perhaps know the new president of this club for filthy rich, dark money-loving lefties is none other than NEA executive director John Stocks!! Isn’t that terrif!! An organization with people whose last names are Munger and Soros is being led by a union guy!!! C’mon, that should chase those dark clouds away!

Once you got off Common Core, your comments in the BuzzFeed piece took a worrisome turn, but again, I am here to help!

There’s not anything I stand for that [people on the right] like… From the fact that I’m a gay leader of a teachers union, to the fact that I’m Jewish and actually religious about that, but not in the orthodox kind of way. My partner’s the rabbi of a gay temple…and I’m the head of a labor union and I’m a public schoolteacher. So there’s just nothing about me that the Tea Party will ever like.

Randi, Randi, Randi … that’s such poppycock! In fact, here you sound just a tad meshugana (Yiddish for whacky). As a Jew who has been to many Tea Party events (I’ve spoken at several: here, here and here), I can tell you that I have never heard one disparaging word about Jews … or gays either, for that matter. Tea Partiers don’t get into religious or sexual orientation issues. Their mission is actually fairly narrow: they champion fiscal responsibility, constitutionally limited government and free markets – you know, the principles our country was founded on. Whom you play with behind closed doors and whether you pray on Saturday or Sunday are of absolutely of no interest to them. I sincerely hope this offers some solace to you. In fact, since you are very fond of Twitter, please follow national Tea Party leader Jenny Beth Martin (@jennybethm). You will learn a lot and be disabused of so many things that bring you unnecessary angst.

And in my never ending quest to bring that twinkle back in your eyes – you are just going to love this! – the Koch Brothers are not actually conservative, but are in fact libertarian. As such, they are in favor of gay marriage. Now I don’t expect you to send the brothers a gift basket (however, if you do, please use my wife’s company, The Lone Arranger; she’ll give you a 20% discount!), but, in any event, maybe you could lighten up on the Brother-bashing?

See, now, don’t you feel better?!! The poor Kochs can’t compete with the unions and their fellow travelers when it comes to political spending. And along with the Tea Partiers, they couldn’t care less about your religion or sexual orientation. Best of all, unlike most of us, you are a 1%er, have access to the rich and famous and of course, as a teacher union boss, you have the tools – really blunt instruments – to inflict education policy on millions of school children nationwide. Pop the champagne!!

As always, looking out for you!!

Best,

Larry Sand

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

Ideological Battles Divide Both of America's Major Political Parties

To our progressive friends, it seemed like a century of advocating for government-sponsored universal health care reached fruition when the Affordable Care Act became the law of the land. But triumph turned to tragedy when Progressivism’s signature accomplishment blew up on the launch pad. Not only did this make a shambles of our wounded president’s governing philosophy, it sent the most vulnerable Democratic officeholders scurrying for cover, leaving damage control to a few befuddled party elders.

Far-left true believers, putting their faith in hope over experience, are insisting that Obamacare’s woes were brought about by compromise, and are demanding what they wanted all along and expected to get when Obamacare ultimately went bankrupt: single-payer, nationalized health insurance. To lead the charge, they will recruit their newest champion, Elizabeth Warren, anti-banking demagogue and untiring defender of unsustainable middle class entitlements.

The populist professor recently made headlines with the extraordinary claim that Social Security is $2.7 trillion in surplus and could easily provide increased benefits. She will have no trouble doubling down on the hoary promises her fellow progressives so fervently promote. As for the math? Who cares! It’s greedy insurance companies, Republican sabotage, and the wicked one percent who are really to blame for the Obamacare fiasco. Keep your focus on the enemies of the people and all will be well.

Old-bull Democrats, determined to recreate the glory days of the 1990s, will rally around their presumptive presidential nominee, Hillary Clinton. Hillary has been doing her level best to stay out of the line of fire as the wheels come off her former rival’s presidency, leaving it to Bill to prick Obama’s balloon whenever the opportunity arises. Watch these two old hands try to triangulate their party back to the center, perhaps even reaching across the aisle to old-bull Republicans as Clinton Inc. tells an angry and frightened electorate that things will surely get better if adults are put back in charge.

Old-bull Republicans, fearing a Tea Party insurgency even more than the Clinton campaign steamroller, will seek to strike a grand bargain on … well, everything. Remember the good old days when Tip and the Gipper could deliver both guns and butter while maintaining a respectful professional rivalry. So what if this means spending the country into oblivion? Politics is the art of the possible, which makes winning elections more important than defending principles. And wouldn’t life be better if Washington insiders could get back to scratching each other’s backs without having to worry about primary challenges?

And the Tea Party? These Constitution-thumping reactionaries will remain the wild card, biding their time, picking off the weakest of the old bulls, and preparing for the moment when America is finally forced to make hard choices. That moment will come when our QE besotted fiat currency system begins to totter, threatening to take the too-big-to-fail banks down with it. Will they convince America to hit the reset button—scrapping the bankrupt entitlements and crony capitalist policies that are sucking the life out of our economy? Or will they be driven back to their survival cabins to impotently watch the country sink into permanent Eurosclerosis?

Oddly enough, one solution to the Obamacare mess that could produce a stable political outcome is to give both extremes what they want—a government funded, owned, and operated national healthcare service freely accessible by the needy and a deregulated, privately insured health care delivery market where people of means can avoid the poor quality of care a public service will surely deliver. How to unwind the disastrous attempt to glue public and private systems together in an effort to disguise the underlying income redistribution will be the story of the next three years. And figuring out how to honestly pay for a new public healthcare service on top of Social Security and Medicare will force a conversation about means-testing that may eventually get the middle class off the dole, future generations off the hook, and Ponzi entitlement schemes out of bankruptcy.

About the Author:  In the 35 years since Bill Frezza graduated from MIT with degrees in electrical engineering and biology he has been a scientist, an engineer, a product manager, a salesman, a consultant, an entrepreneur, an author, a technology evangelist, and a venture capitalist. His early career on high-tech’s bleeding edge included the development of first generation electronic newspapers, home banking, home shopping, cable modems, multi-user videogames, wireless LANs, and wireless email, all of which became a success – for someone else a decade later. His 15 years as a venture capital investor working with early stage telecom, semiconductor, and biotech startups taught him humbleness, risk aversion, and the ability to identify ten fatal flaws out of five in any startup business plan. Frezza is a frequent guest on CNBC, FOX, and CBN News where he is challenged to reduce complex economic and policy issues into thirty second sound bites. More writing by Frezza can be found at BillFrezza.com. This article originally appeared in Forbes and appears here with permission from the author.

The “Let’s Brainwash American Children Club” Has a New Member

Venerable Scholastic has joined progressive educators and teachers unions in an effort to indoctrinate and radicalize American school children.

Scholastic, a student magazine that has been in business for over 90 years, has caught the progressive fever. (H/T Mary Grabar.) This malady affects common sense and good judgment and leads the afflicted to report news from a biased, progressive viewpoint.

In its December issue, Scholastic, which purports to “believe that all sides of the issues of our times should be fairly discussed — with deep respect for facts and logical thinking,” gets all gooey-eyed about the Occupy Wall Street phenomenon, mentioning that OWS concerns itself with “protesters,” “voicing concerns,” “Americans wanting more opportunity to share in company’s prosperity,” and “workers that they feel that they can never get ahead.” To be sure, some of these types are present at OWS events.

But, Scholastic omits a few inconvenient details, like the fact that the OWS camps have been a magnet for Communists, anarchists, street hustlers, and common criminals and have been breeding grounds for murder, rape, vandalism, robbery and anti-Jewish sentiment. The filth left by many of these criminals — I mean protesters — has taxed municipal sanitation systems at great cost to taxpayers. As of December 9th, there were 417 incidents in all. You would think that Scholastic could have managed to mention that all is not sweetness and light in OWSland.

How did Scholastic treat the Tea Partiers? Not so well. Tina Korbe at Hot Air quotes from the October 2010 Scholastic,

“Tea Party candidates also had some surprise wins in primary elections, which determine who will represent their political parties on the November ballot. Christine O’Donnell, a candidate for Vice President Joseph Biden’s Senate seat in Delaware, was backed by the Tea Party. She has since become known as the candidate who has had to declare publicly that she is ‘not a witch.’

“In Nevada, Sharron Angle, a Tea Party-backed Republican candidate, has become a real threat to U.S. Senator Harry Reid, who currently serves as the Senate Majority Leader. Reid called out the big guns to go up against his opponent. Former President Bill Clinton was recently in Nevada campaigning for him and warning voters against casting their ballots in anger.

“’If any time in your life you make an important decision when you’re mad, there’s an 80 per cent chance you’re going to make a mistake,’ Clinton said at a rally for Reid. ‘I don’t want people to abandon their anger. I want them to channel it so they can think clearly.’”

So, the OWSers have “concerns” but the Tea Partiers are “angry.” Christine O’Donnell is reduced to her unfortunate “Not a witch” comment, but Harry “Taxes are voluntary” Reed gets only positive words. (Just a personal note – I have been to many Tea Parties and have spoken at a couple and never saw or heard about any rapes robberies, assaults, vandalism or Jew hatred. And the area the Tea Party was held was in pristine condition after those involved held their event and went home.)

We would be lucky if it were just a student magazine like Scholastic that is spreading the bowdlerized OWS message to kids, but this is just not the case. Just a few examples of other offenders are the people behind the Facebook page Teach • Occupy Wall Street which claims,

Teach Occupy Wall Street is for educators to share ideas, lesson plans, resources, website, youtubes, classroom practice etc. as we teach about the Occupy Wall Street movement. It is important for teachers to model civic courage to their students — the notion that we should act as if we live in a real democracy. One way to do that is to engage students in deep thinking about what is going on in the world around them. Spread the word. Teach OWS!”

Where to begin? “…we should act as if we live in a real democracy.” Don’t these “educators” know that our founders gave us not a democracy but a republic? Benjamin Franklin put the reason for this succinctly, “Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.”

Then there are the teachers unions that have done their best to take advantage of the class warfare sentiment inherent in the OWS movement, whose motto could very well be “I’m poor because you’re rich.” As I wrote back in October,

“A couple of weeks ago, United Federation of Teachers President Michael Mulgrew and American Federation of Teachers President Randi Weingarten made sympathetic statements about the Occupy Wall Street movement. Now the California Teachers Association has jumped in with a full endorsement and suggestions on its website as to how teachers and others can get involved in OWS activities.

“Stunning in its mendacity, CTA issued a press release (H/T Mike Antonucci) which announced its “support of the nationwide ‘Occupy Wall Street’ movement for tax fairness and against corporate greed.” It goes on to say, ‘…a stable tax structure begins with everyone paying their fair share.’”

Additionally, when OWS fever was peaking last month, teachers actually called in sick and encouraged their students to join them in solidarity with other protesters on the frontlines.

At the end of the day, school children are being manipulated, lied to and taught a one-sided, distorted view of the world. From the mainstream media, many of their teachers and their unions and “educational” magazines, kids are getting hit foursquare with highly politicized, progressive propaganda. Its purveyors have no interest in education or the truth, only presenting the “facts” that fit their worldview. It’s disgusting and everyone involved in this enterprise should be ashamed of themselves.

About the author: Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

The Tea Party and the Teachers Unions

Teachers unions wield great power in determining school board races, but with state legislation and Tea Party activism, their power is being diminished.

As I write this, a school board election held in Los Angeles on May 17th is too close to call. Even with the backing of Mayor Villaraigosa, Luis Sanchez is still lagging union-supported frontrunner Bennett Kayser by a few hundred votes.

Whoever prevails, there is a much bigger story – less than 8% of eligible voters voted in this election. And even worse than that, 8% is nothing out of the ordinary. The size of the district doesn’t seem to matter; people just don’t seem to be interested in voting in school board elections.

To be sure, part of the low voter problem is that these elections are held in the spring when there is nothing else on the ballot. The groups that have to gain the most by a small turnout are the special interests that are the most organized. Terry Moe, in his excellent new book Special Interest: Teachers Unions and America’s Public Schools, leaves no doubt that the teachers unions are by far the most dominant of these groups. The unions, even if they don’t outspend their opponents, have a great advantage because of their organizational mechanism and a large group of ready voters (teachers and other school workers) who reliably turn out to vote for the union-endorsed candidates.

School boards are a very important part of the educational process. They have a great effect on the quality of education and how monies are allocated in a given school district. Specifically, a school board is involved with such things as making policies that govern recruitment of teachers, protecting the morals and health of pupils, establishing budgets, guiding collective bargaining, adopting textbooks, etc. On union-dominated school boards, frequently teachers and other education workers’ needs dominate, leaving fiscal restraint and children’s needs in the dust.

This kind of irresponsibility has been prevalent for years now. In 2003-04, of 982 school districts across California (many dominated by union-friendly board members), 552 combined for $682 million in red ink. Then, in Los Angeles in 2007, the school board voted to give health care benefits to part-time cafeteria workers — a decision that cost the already cash-strapped district $105 million over three years. In addition to the burden on taxpayers, wasteful spending also impacts students by cutting back on basic needs like enrichment programs, summer school sessions and functioning school libraries

How do we best deal with all this? Indiana Governor Mitch Daniels has one solution. He just signed into law a measure that will require elections for school board seats be held in the fall, rather than in the spring. If this were to be replicated in all 50 states, the low voter turnout problem would be resolved. But we would still be burdened with the fact that the teachers unions are very well organized, giving their candidates a distinct advantage.

Enter the Tea Party. Another special interest group – this one mostly concerned with taxpayers and children – has begun to insert itself into school board races all over the country. Sick and tired of business as usual, Tea Partiers have begun to point their flintier and more child-centered arrows at school boards. Whether by raising a ruckus at school board meetings or running candidates, Tea Partiers are starting to give the unions a run for their money.

Headlines like Tea party gets involved in local school board elections (Utah), Tea Party Candidates Impacting School Board Races (North Carolina), Tea party leader seeks school board seat (Wisconsin) and IL Tea Party Activists Expose Alleged Gift Cards-For-Votes School Scam (Illinois) are starting to sprout up all over.

The damage that a union-influenced school board can do is considerable. Such a board can wantonly waste taxpayer dollars and never be held accountable. Even if we do manage to get the spendthrifts voted out of office, they are frequently replaced by others who also toe the union line. As such, people of all political stripes should welcome – and support – the Tea Party as a force ready to combat the teachers unions’ dominance of our nation’s school boards.

About the author: Larry Sand is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.