On this date, October 3, 2008, the
American people were betrayed by those whom they had
elected to represent them. The members of Congress who
voted for the Wall Street "bailout" violated their oath of
office to "support and defend the Constitution" ... "that
I will bear true faith and allegiance to the same" ...
"and that I will well and faithfully discharge the duties
of the office on which I am about to enter: ..."
Without holding
any meaningful hearings or public discussions and
listening only to those most responsible for the economic
disaster, Federal Reserve Board Chairman Ben Bernanke and
Treasury Secretary Henry Paulson, Congress abdicated its
responsibility to the American people.
Locking out most
members from all discussions, the congressional
"leadership" emerged from their backrooms with legislation
that grants Secretary Paulson the ability to spend at
least $700 billion to "take such actions as [he] deems
necessary" ... " to promote financial market stability."
Entrusting
tremendous political and financial power (and a ton of
borrowed money that taxpayers will have to repay with
interest) into Paulson’s sole discretion, members of
Congress must have been aware that, prior to his cabinet
appointment in 2006, Paulson worked for 32 years at
Goldman Sachs, one of the Wall Street firms that stands to
benefit greatly from his "actions."
Paulson, who
cashed out his Goldman stock valued at $575 million to
become the Secretary of Treasury (without having to pay
any taxes on the sale), earned more than $53 million
in pocket change during just his last two years at Goldman
Sachs for innovations such as a new line of "Mortgage
Backed Securities." Gambling more than a trillion dollars
on risky subprime second mortgages, Paulson cleverly
converted them into AAA-rated "secure" investments by
purchasing guarantees from the American International
Group.
AIG,
coincidentally, was just "bailed out" two weeks ago by
Secretary Paulson for $85 billion (of borrowed money that
taxpayers will have to repay with interest), averting a
devastating loss by Goldman Sachs, who was holding more
than $20 billion in otherwise worthless second mortgages.
Is it surprising
that Lloyd Blankfein, Goldman’s current CEO, was present
with Paulson when the decision was made to bailout AIG?
The bailout’s $700
billion price tag is only an arbitrary guess by Paulson
and is most likely just the first installment of many more
to come. Other economists, with more successful track
records, believe the total will be much greater, perhaps
$5 trillion, as concealed losses are uncovered and foreign
companies dump their toxic investment waste into their
American offices.
In passing the
"Emergency Economic Stabilization Act of 2008," Congress
ignored the "great concern" expressed by almost two
hundred of the nation’s leading economists who pleaded
with Congress "not to rush, to hold appropriate hearings,
and to carefully consider the right course of action,..."
In addition to its ambiguity and long-term effects, the
economists believed the bailout plan to be "a subsidy to
investors at taxpayers’ expense" and to be "desperately
short-sighted." Ultimately, more than 400 top economists,
including two Nobel Prize winners, voiced opposition to
the bailout.
The economists
were not alone in being ignored by the politicians. It is
widely reported that calls and emails to Congress from
constituents were running as high as 300 to one against
the bailout. Mike Whitney reports one analyst saying that
"the calls to Congress are 50 percent ‘No’ and 50 percent
‘Hell, No’." The percentages adjusted as the stock market
tumbled, but public opposition to the bailout remains
strong.
An AP poll only
identified 30 percent of the public in favor of the
bailout, and a CNN Money opinion poll found 77 percent of
the people believing the bailout would benefit those most
responsible for the economic downturn.
Who Benefits?
The Latin adage,
Cui bono, asks "to whose death are you going?" Law
enforcement investigators quickly learn that the guilty
party can usually be found among those who stand to gain
from a murder or other crime.
There is no doubt
the bailout will most benefit some of the richest and
highest paid individuals in the American economy. But, why
did the politicians betray the wishes of those who elected
them in favor of the criminals who committed the fraud?
Perhaps the answer can be found in another Latin phrase,
quid pro quo, meaning "what for what; something for
something."
Individuals
working for Wall Street finance, insurance and real estate
companies and the companies’ political action committees
have contributed more than $47 million to the campaigns of
Senator Obama (three of top five sources) and Senator
McCain (top five sources), both of whom voted for the
bailout.
More to the point,
Wall Street has contributed more than $1.1 billion dollars
to congressional candidates since 2002. Nine of the top
ten House recipients of Wall Street largesse, who each
received an average of $1.5 million, are on the financial
oversight and taxation committees.
Even more telling,
the bipartisan Congressional "leaders" most responsible
for pushing the bailout through Congress, Senators Dodd
and Gregg and Representatives Frank and Blunt have taken
almost $20 million from Wall Street sources during the
last 20 years. Dodd recently received $6 million in
contributions during his presidential primary campaign,
and Frank has collected $720,000 this year.
Other key players
also have been well compensated this year: Congressman
Kanjorski received $755,000 and Congressman Bachus banked
$704,000.
Who Loses?
The ordinary,
hard-working voters, who were opposed to the bailout, and
their children and grandchildren, will be the ones who
will ultimately have to repay, with compound interest, the
money that will have to be borrowed to give away to Wall
Street bankers.
The bailout was
"sweetened" in the Senate by another $110 billion in tax
relief and renewable energy incentives to get enough House
votes for passage; however, only the temporary one-year
slowdown of the Alternative Minimum Tax offered any succor
to the middle-class workers affected by it.
The bailout raises
the debt ceiling to $11.3 trillion, or about $37,524 for
each man, woman and child in the United States. How is
this burden ever going to be repaid? Workers already know
their wages are falling, their jobs are at risk, their
health care, food and fuel costs are skyrocketing, and
they are being kicked out of their apartments and homes
because they can’t pay the rents and mortgages.
Didn’t each member
of Congress have a sworn duty to rescue the millions of
Americans suffering from the reckless gambling of Wall
Street moguls, rather than to reward an obscene excess of
greed?
Foreclosure Rescue
At least six million homeowners will probably default on
their mortgages this year and next, and millions more will
have their equity wiped out by declining property values.
More than 770,000 homes have been seized by lenders since
2007, and 91,000 families were just kicked out of their
homes in August.
These American
homeowners were betrayed by their elected representatives!
The only provision
in the bailout legislation to remotely "benefit"
homeowners whose homes are being foreclosed upon only
"encourages" mortgage service companies to modify
mortgages. Paulson is required to "maximize assistance for
homeowners ... and minimize foreclosures"; however, he
also has to ensure that the government doesn’t incur any
additional costs. Thus, there’s little or no hope of any
meaningful benefit to distressed homeowners resulting from
the bailout.
The legislation
could have required the government to directly purchase
the defaulting mortgages and to adjust them to the reduced
value of the property, as was done in the Great
Depression. Instead, Paulson is authorized to purchase the
complex derivatives (Wall Street’s gambling debts) piled
on top of the original mortgages. The difference is
whether homeowners or Wall Street receives the benefit of
the bailout.
Bankruptcy Rescue
More than 4,476 Americans filed for bankruptcy every day
during August, the highest number since changes in the law
in 2005 made it much more difficult, and even impossible
in many cases, to obtain debt relief. More than a million,
increasingly elderly, people will petition for bankruptcy
this year.
These destitute
Americans were betrayed by their elected representatives!
Under the current
law, bankruptcy judges do not have the power to modify
mortgages of a petitioner’s primary residence,
irrespective of how the mortgages have been sliced, diced
and repackaged. The bailout could have provided judges
with the authority, in appropriate cases, to adjust the
amount secured by the mortgage to the value of the
property and to adjust the interest rate to a reasonable
percentage.
Unemployment
Rescue
New claims for unemployment benefits rose to 493,000 last
week, the highest level in seven years. The economy has
already lost 605,000 jobs thus far this year, and it
dumped 159,000 payroll jobs just during September, the
greatest drop in five years.
These unemployed
Americans were betrayed by their elected representatives!
Although the House
of Representatives passed an economic stimulus bill that
would fund job creation and extent jobless benefits for
long-term unemployed workers on September 26th,
the Senate failed to pass its own stimulus bill on the
same day. President Bush has promised to veto the
legislation if passed.
The bailout
legislation could have provided for an extension of
jobless benefits, but it didn’t.
Homeless Rescue
More than 750,000 and as many as a million Americans are
homeless today, and the numbers are increasing
dramatically. The National Coalition for the Homeless
reports that homelessness is growing because of
foreclosures, loss of jobs, and the rising price of fuel
and food.
These homeless
Americans were betrayed by their elected representatives!
Homeless sites are
appearing all across the country as people with no place
to stay are pitching tents and huddling together for
support and protection. Their plight did not receive any
consideration by the Congressional leadership that rammed
the bailout through Congress.
Hunger Rescue
The most recent report by the Department of Agriculture
found that in 2006, 35.5 million Americans lived in
households with insecure food supplies and the numbers
were increasing. At risk children numbered more than 12.6
million, and African Americans and Hispanic Americans
suffered at higher rates than the national average.
In 2006, 9.6
million Americans had to frequently skip meals or eat too
little, and often had to go without food for a whole day.
Today, as members of Congress voted to reward the richest
and most greedy members of our society, they ignored those
without the most basic necessity for survival. This
morning, they rewarded the most powerful and best-fed
members of our society, and gave no thought to the
helpless children who will go to bed hungry tonight.
Food banks who
serve as the last resort for the hungry are running out of
food. They are having to reduce rations and to dip into
emergency supplies of staple items. There are reports of a
40 percent increase in requests for food assistance and a
30 percent drop in supplies.
These hungry
Americans were betrayed by their elected representatives!
The bailout could
have increased the amount of federal assistance for food
banks in the Emergency Food Assistance Program, but it
didn’t.
The Consequences
The real estate
bubble that has been driving the United States economy has
now popped, and there is no replacement engine to
transport America’s consumer society down the highway to
happiness. Americans are facing the mother of all
depressions; it will be hard and it will last a long time.
What are all of these homeless, hopeless, and hungry
people going to do?
Many have already
exercised their First Amendment right to petition their
government for the redress of grievances. A majority of
the members of Congress, the two presidential candidates,
and the President paid no attention to the economic
experts and the thousands and thousands of voters who
protested the bailout and who begged them to rescue the
people rather than the rich and powerful.
The people can
always take to the streets in protest, and they probably
will do so in growing numbers as the economic
circumstances become more harsh.
The U.S.
government is already planning for the eventuality – not
with the helping hand of supplemental legislation to help
with mortgages, jobs, shelter or food, but with the mailed
fist of military suppression. The Army Times reports the
current deployment within the United States "homeland" of
an "on-call federal response force for natural or manmade
emergencies or disasters, including terrorist attacks."
The Army acknowledges that the Northern Command may call
upon the 3rd Infantry Division’s 1st
Brigade Combat Team to help with "civil unrest and crowd
control."
With almost a
trillion dollars picked from their pockets to reimburse
reckless Wall Street gamblers, many Americans righteously
feel betrayed tonight. A majority will elect a new
president one month from tomorrow, and most will wait to
see who it will be, and what if anything he can or will do
to alleviate their suffering.
There are others,
undoubtedly, who agree with the Supreme Court’s recent
decision that the Second Amendment right to bear arms is
individually held, and who believe that the use of their
personal weapons is justified to overthrow a government
that betrays them and which destroys their very means of
existence. The right of legitimate self defense is
recognized by every criminal law in America.
Perhaps democracy
in the United States is not dead; if not, it’s on its
deathbed. Resuscitation in the form of responsible
representation is possible, but time is growing short.
William John Cox
is a retired supervising prosecutor for the State Bar of
California. As a police officer he wrote the Policy Manual
of the Los Angeles Police Department and the Role of the
Police in America for a national advisory commission.
Acting as a public interest, pro bono lawyer, he filed a
class action lawsuit in 1979 on behalf of every citizen of
the United States petitioning the Supreme Court to order
the other two branches of the federal government to
conduct a National Policy Referendum; he investigated and
successfully sued a group of radical right-wing
organizations in 1981 that denied the Holocaust; and he
arranged in 1991 for publication of the suppressed Dead
Sea Scrolls.
His 2004 book, You’re Not Stupid! Get the Truth: A Brief
on the Bush Presidency is reviewed at
http://www.yourenotstupid.com,
and he is currently working on a fact-based fictional
political philosophy. His writings are collected at
http://www.thevoters.org,
and he can be contacted at
u2cox@msn.com.