D.C. Disconnect: It's Just a JOBS Recession

According to one of the pontificators on NPR’s Marketplace, the economy is actually fine, we’re just in a “jobs recession.”

Now I feel better.

This is what passes for insightful commentary among the media elite on the day that unemployment shot back up to 9.2 percent.

“If you’re rich, it’s great,” says Felix Salmon, Reuters columnist. “But if you’re a working person it’s terrible.”
As for President Obama, he reacted to the terrible jobs report by saying: “We still have a long way to go.”

Except he shows no inclination to go there.

He’s wrapped up in the Republican austerity agenda so tight he can’t find his way to suggest anything to reduce unemployment.

He meekly suggested that reducing the deficit would help create jobs, though most economists acknowledge such cuts will hurt the economy – and the unemployed.

We all know that President Obama needs to raise $1 billion for his presidential campaign, and Republicans are falling over themselves to kill financial reform in their efforts to woo Wall Street. You have to admire the Republicans' focus: they don't give a damn about the economy, they only care about getting rid of Obama.

But both Obama and the Republicans they must be counting on only the rich voting.

The day before the jobs report, Obama’s top political adviser told Bloomberg News that the unemployment rate wouldn’t hurt Obama’s reelection chances. Obama adviser David Plouffe also asserted that people thought that the economy was getting better, based on anecdotal evidence.

Here’s what Plouffe had to say:

“You see, people’s — people’s attitude towards their own personal financial situation has actually improved over time. You know, they’re still concerned about the long-term economic future of the country, but it’s things like “My sister was unemployed for six months and was living in my basement and now she has a job.

There’s a — a “help wanted” sign. You know, the local diner was a little busier this week. Home Depot was a little busier. These are the ways people talk about the economy.”

Either Plouffe is drinking his own Kool-Aid or thinks he can play off the worst economic downturn since the Great Depression as a minor dip.

As emptywheel points out on Firedoglake, the measures of consumer confidence don’t agree with Plouffe’s blithe assessment. As emptywheel suggests, if they expect voters to keep them in their jobs, Plouffe, Obama and the rest of the administration need to get out of their bubble and start listening “to the pain of real people.”

Martin Berg

 

Around the Web / Martin Column / Uncategorized - 07/08/2011

Get Off Corporate Crack

I spent last week at the Netroots Nation conference in Minneapolis, a gathering of activists who embrace the progressive label in one way or another.

The news media was there in force, churning out stories about how these progressives are dissatisfied with President Obama’s performance. That’s especially true in his handling of the economy, where unemployment is still too high, the foreclosure crisis is still rampant, the financial sector still hasn’t been adequately reformed after its excesses and Wall Street lobbyists have tangled up in knots even the meager attempts to regulate bankers.

One refrain summed up the frustration with the president’s performance on the economy: “No one has gone to jail.”

But beyond the venting that the media focused on was another, potentially bigger story that has the possibility of leapfrogging the divide between left and right.

That was the emerging demand for a mass movement to rid our politics of the corporate funding that has been as devastating as crack cocaine was in the streets.

Our politicians are hooked on corporate crack, and they will do anything and say anything to get it. They will break any promise, without caring how foolish and hypocritical they look.

This corporate money undermines both parties: Democrats promise to protect workers and consumers but end up promoting ineffective half-measures, while Republicans express support for the free market but actually support the unfettered power of a corporate oligarchy.

I had the opportunity to point out a recent example of how this corporate crack makes fools out of politicians and even the president of the United States during a Netroots session with Jeremy Bird, national strategy adviser to the Obama campaign.

I recounted how one day after reading about a secret meeting between Obama and his Wall Street donors at the White House, I received an email from Obama asking for five bucks, promising a different kind of fundraising campaign that didn’t rely on fat cats.

“Which is it?” I asked Bird. You can read Roll Call’s account here.

Bird responded that Obama’s “multi-faceted” fundraising wouldn’t take money from political campaign committees or lobbyists,  but Wall Street contributions are welcome.

Does the president really see a distinction, or is he just hoping no one is paying attention?

If the politicians are counting on people feeling too cynical and helpless to take action, that may be changing, sparked by the U.S. Supreme Court ruling in Citizens’ United, which said that corporate campaign contributions are a form of free speech so they cannot be restricted.

During another session, John Nichols, the Nation’s crusading Washington correspondent issued a fiery call for a nationwide movement to promote a constitutional amendment to undo Citizens’ United.

He compared the potential impact of such a movement to the impact of  the movement for a constitutional amendment to ban abortion. Though the “right to life” movement hasn’t achieved success. Nichols said, it has changed the nature of the debate.
Back on the subject of overturning Citizens’ United, Nichols said, “I can live without the actual constitutional amendment. But I can’t live without the movement.”

We need a movement that labels corporate crack exactly what it is.  It’s not speech. It’s bribery.

 

Action / Around the Web / Congress / Financial Reform Legislation / Martin Column / Outrage / President Barack Obama - 06/22/2011

“If We Build It, He Will Come”

Washington has become Wall Street’s “field of dreams.” There, the money conglomerates engage in their beloved sport of financial speculation, cheered on by a small but powerful group of public officials who have sold out the rest of the country.

Deregulation was a home run for the financial industry. Wall Street’s friends in Washington sacked the rules of the game, unleashing the hedge funds, banks, investment firms, insurance companies and other speculators who made billions before the crash, then got billions more from the taxpayers after the crash.

Meanwhile, as today’s New York Times points out, almost nothing has been done about “derivatives,” the virtual technology for the speculation that drove our economy into the dugout three years ago. Federal agencies that were supposed to issue new regulations to prevent another debacle have been tied up in knots by Wall Street lawyers.

Jobless and fearful for their kids’ future, people are furious about what happened.  But it was always going to be a daunting task to mobilize the public behind the necessary reforms when they are so complex, and anything drafted to appeal to directly to Americans’ wallets – say, by providing a cap on credit card interest rates, or low-rate mortgages, or other forms of financial relief – would have inspired the financial industry to retaliate with nuclear weapons. Neither the President nor anyone in Congress were willing to start that fight, principled as it would have been.

So it has all come down to Elizabeth Warren, the brainiac Harvard law professor who suggested, in a law review article in 2005, that Congress create a new federal agency with the mission of protecting consumers against false advertising, misleading contracts and the general thievery of the financial industry.  Democrats proposed the agency as part of the Wall Street reform legislation in 2009, and after the industry thought they had whittled it down to something they could easily live with – or simply get around – Congress created the Consumer Financial Protection Bureau and the President signed it.

Warren was the obvious person for the job, and almost immediately Americans began calling on President Obama to nominate her for the post.

What Wall Street didn’t realize at first is that it is way, way easier for Americans to get behind a human being than a thousand-page piece of legislation that has been lawyered and lobbied into mush. America has become a celebrity-driven culture, and while Elizabeth Warren is no Lady Gaga, she is one of a small number of outsiders that have occasionally busted up the D.C. establishment – just as Ralph Nader did in the 1970s, and Jimmy Stewart fictionally did in the Frank Capra movie “Mr. Smith Goes to Washington.”

Whether President Obama will nominate Warren to the position has become the defining question of his Presidency for millions of Americans, especially those who voted for "change we can believe in" in 2008.

When confronted with demands by civil rights leaders to take action against racial discrimination in the late 1930s, President Franklin Roosevelt’s legendary retort was “make me do it.” Whether he ever said that, the strategy he suggested is literally page one of the best manual for citizen empowerment and political organizing.

Let’s put it in more contemporary terms. President Obama has made it clear he doesn’t want to nominate Warren. It’s just another fight he’d rather not have. He embraces consensus, not controversy.

But the President has to know she’s the best person for the job. So the burden is on Americans to make it impossible for him not to nominate her. Part of that means punishing the people who are working against her – members of Congress, and those in the Administration – because they are doing Wall Street’s dirty work. These are the same people who let Wall Street plunder our nation and then bailed Wall Street out with our money.

My guess is, we can make Obama do it.

Consumer Financial Protection Agency / Harvey Column / Outrage / President Barack Obama / Uncategorized - 06/22/2011

P.R. Won't Fix Foreclosure Mess

Will one of the nation’s too big to fail banks succeed in buying its way out of a shameful scandal stemming from dozens of improper foreclosures of military families and overcharging thousands more?

J.P. Morgan Chase, which hauled in $25 billion in the bailout, is in full damage control mode, paying out $56 million to settle a class action brought by military families – about $4,500 per family – and temporarily lowering mortgage interest to 4 percent for other military families.

But the bank is still facing a federal investigation stemming from the allegations. Whether the Justice Department finds the nerve to hold accountable one of the big banks remains an open question.

It hasn’t so far, despite evidence of widespread fraud in the bank’s use of robo-signers who verified the accuracy of thousands of foreclosure documents without ever reading them.

But our political leaders haven’t worked up the courage to call it what it is.

The bank had no choice but to acknowledge it had screwed up. To show just how serious it was about doing right by the nation’s fighting men and women, J.P. Morgan Chase appointed an actual commission with some real-life celebrities on it, including retired general William McChrystal and former football legend Roger Staubach.

The Justice Department has no excuse not to go after J.P. Morgan and other banks that have been violating the Servicemembers Civil Relief Act, which is supposed to keep military families safe from foreclosure while they’re on active duty. Military families have been particularly hard hit by the foreclosure crisis, with 20,000 facing foreclosure last year, a 32 percent increase since 2008.

Federal investigators just made the Justice Department’s job easier – in a recent study GAO found more than a couple of dozen improper foreclosures of military families. You might not think that sounds too bad, until you realize they found those bad foreclosures in an examination of just 2,800 foreclosure files.

Instead of pretending that the foreclosure mess is just going to sort itself out on its own, our political leaders need to acknowledge how deep a hole the big banks have dug for the rest of us to figure a way out of.

We don’t need more hapless PR. A realistic first step would be a foreclosure moratorium. If anybody else but the big banks were engaged in these kind of shenanigans, it would just be labeled what it is: fraud, plain and simple.

 

Around the Web / Foreclosure / Martin Column - 05/09/2011

The Never-Ending Bailout

Even though banks' super-charged profits and eye-popping bonuses are back, they want you to keep paying the costs of their foreclosures.

In California, where the foreclosure crisis has hit with brutal force, it will cost communities between $600 billion and $1 trillion in lost property value, almost $4 billion in lost property tax revenue, and over $17 billion in local government costs between 2008 and 2012, according to Ellen Reese, a University of California Riverside sociologist and Jan Breidenbach, who teaches housing policy at USC, writing in the San Bernardino Sun.

That amounts to be about $20,000 per foreclosure that local governments [meaning you] have to pay every time a bank forecloses on a home.

One California legislator has made a modest suggestion: have banks pay those costs at the time of the foreclosure, so taxpayers don’t have to absorb them later.

The way the banks have responded, you would think that the legislators had proposed seizing the banks and distributing the bankers’ money on Main Street.

The mortgage bankers’ association, in best fear-mongering fashion, told its members that making the banks pay the costs of their failed loans would dry up all future home lending in the state.

In her April 6 letter to her membership, the association’s president, Pam Sosa, doesn’t offer any suggestion how the costs banks are currently passing on to you and me could be mitigated.

Meanwhile the California Bankers’ Association says if the bill becomes law, they’ll simply pass the cost on to their customers.

Why should the banks have to pay when they’ve done such a stellar job convincing the politicians that you won’t mind picking up the tab for the bankers’ losses?

If you thought that the financial collapse would curtail the banks sense of entitlement to write their own rules for their business, you would be wrong.

If you thought that the financial collapse would have made the banks think twice before demanding that we pay the costs when their business goes south, their reaction to AB 935, sponsored by San Fernando Valley Democrat Bob Blumenfield, demonstrates that you would be wrong.

Of course, the real purpose behind AB 935 is not to get the banks’ money. It is provide more of a financial incentive to the banks to work out sustainable modifications that would allow homeowners to remain in their homes. The Obama administration’s Home Affordable Mortgage Program has had little success in encouraging banks to modify loans because in part, the incentives it offers to the banks are too small But the banks find it tough to make their case on the merits. They can’t argue they don’t have enough money to pay their own way. Instead they rely on fear tactics and the inside game, which has served them so well in getting legislators and regulators to water down efforts to crack down in the wake of the financial collapse. In the depths of the recession in California, at the same time bankers were collecting billions in bailout, they were spending $70 million in lobbying fees and campaign contributions to thwart or weaken legislation that would have protected homeowners in the foreclosure process.

Testifying earlier this week on behalf of AB 935, economist and blogger Mike Konczal described foreclosures as a “lose-lose situation.” A foreclosure fee that accurately covers the real costs the community will have to pay will encourage more sustainable modifications, he said. He also debunked the mortgage bankers’ argument that it would have an impact on new lending, because it will only be applied to already existing loans. Citing recent Federal Reserve statistics, Konczal said relatively few homeowners are actually walking away from their “under water” homes, “and are willing to pay to do right by their communities and their promises. It would be great to have a financial system that met them halfway."

But the banks disagreed. They fought back hard on AB 935. Late Tuesday, Peggy Mears of Alliance of Californians for Community Protection sent around an email to say that the legislation appeared to be dead for the year, stuck in legislative committee.

 

 

 

 

 

 

 

Financial Crisis / Foreclosure / Martin Column - 04/26/2011

Happy Talk

Treasury officials and many politicians are busy patting themselves on the back because the Troubled Asset Relief Program will end up costing taxpayers less then expected.

The way these folks describe it the TARP and other aspects of the federal bailout were just supposed to function as a loan program for the banks while they were having some trouble.

TARP is also winning praise for having “restored trust” in our financial system.

Beyond the scary rhetoric that gave birth to the bailout and self-congratulatory sermons it’s being buried with, the bailout consisted of a set of rules and a way of picking winners and losers in the economic crisis that did anything but build trust.

Remember when the Fed chair, Ben Bernanke, insisted that he was a Main Street guy, that he was interested in the financial system only inasmuch as it helped out Main Street?

But the bailout institutionalized a system where the government could only afford to bail out the biggest bankers and corporate officials while abandoning smaller banks and business owners along with millions of troubled homeowners and vulnerable employees.

As Fortune’s Alan Sloane wrote, “the more bailout rocks you turn over, the more well-connected players you find who aren't being forced to pay the full price of their mistakes.”

Oh well, the apologists say, nothing’s perfect. It could have been so much worse.

One official who hasn’t joined in the festivities is Neil Barofsky, the former special inspector for the Troubled Asset Relief Program, who bid the bailout a scathing farewell in the New York Times, which you can read here.

The Obama administration and bailout apologists would like to have us believe that it was just a necessary first stage of the recovery to ensure that the bankers stayed rich and the wealthiest Americans’ increasing share of the nation’s wealth kept on growing.

But in Barofsky’s view, there was nothing inevitable about the no-strings attached bailout that filled the bankers’ pockets while offering little to Main Street. It had nothing to do with the operation of the free market either. It was very carefully crafted by public officials working hand in hand with Wall Street to maintain its power while gnawing away at the increasingly fragile livelihoods of ordinary Americans.

As Barofsky notes, “Treasury officials refuse to address these shortfalls. Instead they continue to 
stubbornly maintain that the program is a success and needs no 
material change, effectively assuring that Treasury's most specific 
Main Street promise will not be honored.”

And while recent employment gains are welcome news, Dean Baker points out the losers – African-Americans among whom unemployment remains distressing high and wage earners in general, whose pay is not keeping up with inflation.

The bailout celebration is just part of the happy talk designed to buoy the notion that the recovery is well underway. But this bailout-fueled recovery continues to pick highly predictable winners – with the powerful, wealthy and politically connected doing swimmingly while everybody else just limps along.

 

 

Around the Web / Martin Column / SIGTARP / TARP - 04/04/2011

D.C. Disconnect: Geek Squad Edition

Deep within the of bowels of the Defense Department is the secretive agency that invented the Internet, known as the Defense Research Projects Agency, aka DARPA, aka the Mad Scientist agency.

With its $3.2 billion budget, the agency is supposed to come up with wild, innovative ideas. Some of their inventions, like military drones, “work,” while others, like psychic CIA agents, robot hummingbirds and mind-bending wormholes, have earned the agency the reputaion of something of a hare-brained money pit.

One of its recent projects, something called the halfnium bomb, apparently ran into problems getting past the basic laws of physics.

President Obama himself recently showered major love on DARPA, hailing it as a source of cutting-edge technology.

At least one aspect of DARPA retains an infuriatingly old-fashioned quality – the reek of conflict-of-interest and nepotism.

Before she became head of the agency in 2009, Regina Dugan started a high-tech explosive detection company called RedX Defense, with her father and her uncle, the Project on Government Oversight reports. She served as CEO and president. Six months after she took over the DARPA, RedX, where her father now serves as CEO, landed a $400,000 contract with the agency, which was recently extended.

Dugan of course, disqualified herself from any decisions regarding her former company when she took over DARPA. The agency’s media office insisted there were no ethical issues with the contract because Dugan didn’t participate in awarding it.

POGO was less generous, and suggested in its understated way, “it surely must have come as a pleasant surprise to learn that DARPA’s contract management office had chosen the company she founded to do work for DARPA.”

Maybe it was a pleasant surprise for Dugan; it was unfortunately no surprise to taxpayers, who have grown way too accustomed to these kinds of shenanigans.

D.C. Disconnect / Martin Column - 03/05/2011

High Court's Low Opinion of Foreclosure Practices

Apparently the Massachusetts Supreme Court neglected to read the bipartisan memo reminding politicians and judges to refrain from doing anything that might upset the banks.

Most judges have shown extraordinary deference to bankers, even amid growing evidence that those bankers haven’t been following the law in pursuing foreclosures.

That may be beginning to change, in the wake of a Massachusetts ruling against banks in a closely watched foreclosure case.

Right now the decision only has force in Massachusetts. But as other cases challenging foreclosures make their way through the courts across the country, other judges are likely to be guided by it. In addition, the ruling will also provide guidance for lawyers posing legal challenges to other mortgages scrambled in the securitization process.

The Obama administration has consistently downplayed evidence of rampant fraud and sloppiness in the way banks split up, packaged and sold off mortgages to investors in the heat of the housing bubble.

Almost all subprime mortgages as well as millions of conventional mortgages originated before the meltdown were securitized and sold to investors. Securitized mortgages account for more than half of the $14.2 trillion in the total outstanding U.S. mortgage debt.

Bankers have tried to dismiss these problems with what’s known as the securitization process as a matter of mixed-up paperwork that can be straightened out.

But the highest level court to examine the issue thus far took the issue much more seriously. Last week the Massachusetts Supreme Court invalidated what had become a common practice – banks seeking to foreclose on properties without properly holding ownership of the promissory note and mortgage as part of the securitization. The court  focused heavily on the use of the power of sale contained in mortgages; the same power exists in the vast majority of California deeds of trust.

Ruling in a closely watched case, the high court rejected arguments by U.S. Bancorp and Wells Fargo & Co. that they didn’t have to prove their authority to foreclose. The banks had argued that evidence that they intended to transfer ownership was enough to establish their standing to foreclose.

The ruling makes dense but fascinating reading, with some passages coming through loud and clear even if you’re not steeped in real estate law.

The justices stressed they weren’t creating any new interpretation of law. “The legal principles and requirements we set forth are well established in our case law and our statutes,” wrote Justice Ralph D. Gants. “All that has changed is the (banks) apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities.”

Banks have argued that their “pooling and servicing agreements” allowed them to transfer mortgages to securitized trusts “in blank” without specifying whom the new owner would be.

But the justices ruled in U.S. Bank v. Ibanez that the “foreclosing party must hold the mortgage at the time of the notice and sale in order accurately to identify itself as the present holder and in order to have the authority to foreclose under the power of sale...”

In a concurring opinion, Justice Robert Cordy wrote: “There is no dispute that the mortgagors (borrowers) had defaulted on their obligations.”

But that’s not the legal standard. “Before commencing such an action...the holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order,” Cordy stated.

The ruling could lead to an increase in complicated and expensive litigation, if those whose homes have already been foreclosed on sue to challenge the financial institutions’ authority to conduct the foreclosures. Investors may also sue, contending that the banks didn’t properly document the ownership trail on the mortgages contained in a particular investment pool.

Can banks go back in and straighten out their securitization mess? So far the banks are downplaying the significance of the ruling. But untangling the paperwork may not be so easy. Many of the entities that created the securitized pools have gone bankrupt or dissolved into other businesses. At the very least, it could pose a costly and complicated process for the bankers, one that would entail taking a hard look at the details of the deals that led to the country’s financial collapse.

Foreclosures / Martin Column - 01/11/2011

In Taxbreakistan, the Usual Casualties

Rather than confronting the country’s growing economic disparity and attempting to reduce it, our political leaders are pursuing policies that just make it worse.

Remember when we were told that the bailout was supposed to save our economy? It worked amazingly well for those who are well off – the banks are back in the black, the bankers are pocketing huge bonuses, corporate profits are soaring and the stock market is humming along.

But for those less fortunate, the situation remains dire: unemployment is stuck around 10 percent, wages are stagnant, state and local governments face staggering cutbacks in all services, and foreclosures continue unabated.

The most recent example of this glaring callousness is the deal President Obama reached with GOP leaders to extend the Bush-era tax cuts for 2 years in exchange for keeping unemployment compensation coming for 13 months.

Both the president and the Republicans profess to be unhappy with everything they had to give up and said nasty things about each other. The president insisted it was simply the best deal to be had to get some stimulus in the face of Republican intransigence.  But the president never took to the airwaves to challenge the Republicans on the tax cuts or the unemployment insurance. After his party’s “shellacking” in the midterms, he just headed for the back room to make a deal on his own, without ever trying to galvanize public opinion, which according to the polls, wasn’t even sympathetic to the high-end tax cuts.

So far the Senate has appears ready to pass the deal with votes to spare but the House has balked.

Back when he was candidate Obama, the president had no qualms about proclaiming just how unfair the tax cuts for the wealthiest were, how little they do for the rest of the economy, and how worthy they were of opposing. Now the president labels as `sanctimonious’ those who agree with the position he took so forcefully when he ran for president.

But the tax cuts for the wealthy won’t work any better now that that they’re the Obama tax cuts than they did when they were the Bush tax cuts.

The Center for American Progress breaks the $954 billion Obama tax cut deal into two parts: first, a $133 billion tax cut for the wealthiest, including $120 billion in lower taxes for the top 2% of U.S. households, plus $13 billion in estate tax savings. The other $821 billion consists of government cash for unemployment benefits, tax cuts for the middle class and small-business job-creation incentives.

The deal is supposed to create somewhere between 2.2 and 3.1 million jobs, though some find those estimates vastly inflated. CAP contends that the deal offers a relatively expensive way to create those jobs.

Economist Dean Baker questions a lot of the phony hysterics being used to sell the deal as scare tactics. He doubts the president’s assertion that is the only way or last chance to extend unemployment benefits. If unemployment stays above 8 percent as the Federal Reserve projects that it will, both Republicans and the president will feel pressure to extend benefits.

But one of the worst aspects of the deal is the way that it actually raises taxes on the working poor, according to the Tax Policy Center. That’s because the president has agreed, as part of the deal, to phase out his own Making Work Pay tax cut (implemented as part of his previous stimulus package) and replaced it with a temporary Social Security payroll tax cut. The Making Work Pay tax cut was focused on the working poor, giving single people with incomes of at least $6,452 and less than $75,000 a $400 tax break and couples making less than $120,000 an $800 tax break. People at the lower end of those income ranges would do worse under the present Obama tax cut deal. Wealthier taxpayers meanwhile, stand to do better with the payroll tax break than they did under Making Work Pay, which phased out at higher income brackets.

To me the tax deal looks suspiciously like the bailout – shoveling money to those who have suffered the least, without any conditions imposed to require that they plow some of that cash back into the economy, only the vain hope that they will share their prosperity.

We assumed that’s what the bailout recipients would do with all of our tax money.

We know now how that worked out.

Federal Reserve / Martin Column / President Barack Obama / TARP - 12/14/2010

`Bloodbath' in Taxbreakistan

Welcome to Taxbreakistan, where the same guys who profited from the financial crisis have launched a treacherous two-fisted propaganda campaign: attacking the benefits of the increasingly fragile middle class while protecting the gains the wealthiest accumulated from the bubble economy and the bailout.

The propaganda war is couched in terms of paternal sobriety and facing up to financial realities, making tough choices and sharing sacrifices.

According to the propaganda, the only thing preventing the anemic economy from taking off is that the wealthiest Americans who have an ever-increasing share of the nation’s wealth don’t have enough money yet. Aside from the wealthy not having their permanent tax cuts, the main impediment to the economic recovery, according to the propaganda, is continuing to pay unemployment checks to those out of work.

What a load of twaddle.

While the U.S. Chamber of Commerce and right-wing think tanks are leading the propaganda campaign, one of the leading bomb throwers in this war is former Wyoming senator Alan Simpson, who President Obama appointed to co-chair a commission to examine options to reduce the federal deficit. A fierce advocate of budget cutting, Simpson, a Republican, said recently that he couldn’t wait for the `bloodbath’ that will ensue when Republicans take a meat cleaver to the federal budget in exchange for raising the federal debt limit.

You may recall Simpson’s earlier colorful quote, in which he compared Social Security to a “milk cow with 310 million teats.”

A couple of weeks ago, Simpson threw down the gauntlet in a draft report he wrote with his co-chair Erskine Bowles, a former Democratic Party honcho and hedge fund partner. They proposed cuts to Social Security and Medicare and a host of other sweeteners long sought by big business, such as caps on medical malpractice verdicts, that have little to do with deficit reduction but everything to do with a corporate political agenda. The full commission’s report could be released this week.

Meanwhile, Congress jockeys over how to deliver a sloppy wet kiss to the nation’s wealthiest in the guise of continuing their Bush era tax cuts, supposedly as a means to stimulate the economy, even though the tax cuts themselves add $700 billion to the deficit. While President Obama expresses opposition to extending the tax cuts for those making over $250,000 a year, the president hasn’t been much of a force in the propaganda war over our economic future.

For their part, the Republicans have dug in their heels on behalf of the nation’s gajillionaires.

The whole propaganda campaign is based on the fraudulent notion that tax cuts for the rich help the economy. That’s not how they started out, before the second George Bush was elected president. He intended them as a way to “starve the beast” – giving back the government surplus that had built up during the Clinton era boom as a way to shrink government. His advisers argued that if the government kept that money it was likely to spend it.

Only later, as the economy began to soften, did Bush add the economic stimulus argument. But the evidence that the tax cuts did anything to boost the economy has always been slim at best. Deficit hawks like Simpson and Bowles are trying to jack up the public’s fear about the deficit in a slow-motion version of the fear-mongering that preceded the no-questions asked bank bailout of 2008, and subsequent highly secretive Federal Reserve money giveaway to the nation’s big banks. We shouldn’t fall for it.

A coalition of progressive-leaning nonprofits have offered an alternative, which favors stimulating the economy first, then cutting the deficit. You can check it out here.

Martin Column / President Barack Obama - 11/30/2010