Economic Panel: Jobless Recovery? ABC News This Week June 12, 2011 Video and Transcript

Posted on June 12, 2011 by William Brighenti

(BEGIN VIDEO CLIP)

OBAMA: We still face some tough times. We still face some challenges. We’re going to pass through some rough terrain. There are still some headwinds that are coming at us.

STEWART: No (bleep). All right. A little rough terrain, a little headwinds still coming at us. Fine, we’re Americans, we’re strong.

OBAMA: It’s just like, if you had a bad illness, if you got hit by a truck, you know, it’s going to take a while for you to mend. And that’s what’s happened to our economy.

(LAUGHTER)

STEWART: How — how do we go from “There’s a little bit of headwind” to “We got hit by a truck”?

(END VIDEO CLIP)

AMANPOUR: If Jon Stewart doesn’t seem convinced, none of my guests here do, either. They think that that was funny, and he is not alone, because a new ABC News-Washington Post poll shows that 90 percent of Americans describe the state of the economy as not so good or poor. What’s more, 57 percent believe the economy has not even started to recover.

No surprise. Look at this. You can see here how long it took the jobs picture to improve after previous recessions over the past 36 years. Now, fast-forward to the current crisis, job losses being deeper and longer lasting. If job growth continues at this pace, it could take until 2016 to return to pre-recession levels of employment.

So how do we jump-start this process? Joining me now, Republican Senator Richard Shelby of Alabama, the ranking member of the Senate Banking Committee, Robert Reich, the former Clinton administration labor secretary and current professor at the University of California at Berkeley. And once again, ABC’s Jon Karl.

So that comedic set-up had you all laughing. What is the reality? Has one been hit by a truck? Is it a headwind? Let me ask you first. You’ve dealt with labor and — and the job market. Is this cyclical? Or is this a real structural hole?

REICH: Christiane, the central problem is on the demand side. Seventy percent of the U.S. economy is consumers, and consumers are hit with the equivalent of a truck. I mean, their housing prices are dropping like mad. Their wages, adjusted for inflation, are dropping. Their jobs are disappearing, and almost everybody knows somebody or has somebody in their own family or themselves are worried about losing a job.

Under these circumstance, consumers are pulling in. They are not spending. And if they’re not spending, then jobs are not going to be created. There has got to be — in fact, the jobs program we need is a way of putting money back in people’s pockets and creating jobs even directly (inaudible)

AMANPOUR: So we sort of know, but is there a plan — is there a plan to get Americans back to work, not long term, but now?

SHELBY: Well, I believe that stimulus basically doesn’t work, for the most part. We’ve tried that. I think what we’ve got to do is create the conditions, tax reform, which we could do and we haven’t, incentives for manufacturing. We’ve lost millions of jobs in manufacturing. And say this a new day. We’ve got to do it. We’ve got to be buoyant about where we’re going. We’ve got to grow this economy. The market grows the economy. Government — we’ve grown the government, but we haven’t grown the economy, and we better be mindful of that.

AMANPOUR: You’re shaking your head. You know, obviously, the debate right now is about how much government intervention. Even people who don’t want to see government intervene say that sometimes that’s what a government has to do in an emergency.

REICH: Look, Christiane, I really — I deeply respect the senator and the senator’s position, but it’s just sheer logic. When consumers and private-sector investors are pulling in because there is not enough economic activity, because consumers are scared, because consumers are 70 percent of the economy, then government has got to fill the gap. I mean, we’ve done this for the last 75 years.

KARL: But look what we’ve tried. I mean, look what the administration’s tried. We’ve done $800-plus billion in economic stimulus. We’ve done tax cuts, the big, you know, tax cuts passed in December. And the Fed has kept interest rates at virtually nothing.

REICH: Yes, but there’s…

KARL: And there aren’t many tools left.

REICH: Look it, the scale of the crisis was much larger than anybody anticipated. This was the worst since the Great Depression. Exempt the first $20,000 of income from payroll taxes for the next year. Redo the bankruptcy code so people can declare bankruptcy on their primary residence and, therefore, have enormous bargaining leverage with their lenders if they are trouble. Have a WPA, a direct employment program.

KARL: But do you really think a new spending plan is going to pass muster in Congress? I mean…

(CROSSTALK)

AMANPOUR: It won’t politically, will it?

SHELBY: First of all, no — I don’t believe any new stimulus is going to pass in Congress. I don’t think it has any credibility. We have seen what the past stimulus did, for the most part. What we need to do is create some certainty, some conditions for people to invest, to grow, to have some confidence. There’s not a lot of confidence in the economy right now all over America.

AMANPOUR: Can I just talk about this idea of jobs, which is the all-important one? You just heard Donna Brazile and Peggy Noonan arguing about whether there had been economic growth and whether jobs were being created. And Donna was saying for the last 15 months there has been. And I asked Austan Goolsbee on this program last week about the jobless recovery that some economists are talking about, and he got very angry. This is what he said.

(BEGIN VIDEO CLIP)

GOOLSBEE: It is not a jobless recovery. That is an incorrect phrase. After the last recession, in this comparable period, post-recession, we had lost 100,000 jobs. We’ve added more than 2 million jobs. There’s a major difference between a jobless recovery and a very deep hole that we’re climbing our way out of. And that is what — the position we’re in.

AMANPOUR: Deep hole? Jobless recovery? Is he right? They have added jobs.

REICH: Look, 2 million jobs have been added, Christiane, but so many jobs have been lost that we still have 13.5 million Americans without work and another million who are too discouraged even to look for work. This is not business as usual. The president has got to come up with a jobs plan. Even if it doesn’t get through a Republican Congress, he’s going to be fighting for it and fighting for Americans. You can’t go into an election year with this kind of unemployment…

AMANPOUR: Are you surprised that he’s not…

REICH: … and not have something substantial.

AMANPOUR: … more sort of passionate on — out in public about this?

REICH: I tell you, I am surprised about the silence coming out of Washington, deafening silence. Republicans talk about, again, with due respect, Senator, I mean, the same, old, cut taxes on the corporations. Corporations have $1.9 trillion dollars they are sitting on right now that they are not spending.

AMANPOUR: Why is that? Why are they not spending? This is something that…

(CROSSTALK)

SHELBY: People — people are not spending because they’re concerned, they’re scared, whether they’re a small medium-sized business or whether it’s an individual. They see the real numbers out there, not numbers that people are hyping on either side of the aisle, but the real numbers.

They see anemic growth. And they see maybe problems in the future for their children. So that’s why they’re not spending and why — and, also, a lot of uncertainty in America. There’s a lot of money that’s been on the sidelines right now that could have been invested, but we need certainty for investment. We need regulations that we know that are going to be there, or fewer of them. And we need a tax policy that means something.

KARL: I mean, a lot of uncertainty is coming from Congress and from the White House. I mean, there’s uncertainty about, are we going to default on our debt? Where’s the debt ceiling coming (ph)? There’s all-consuming right now. There’s uncertainty about taxes. Are the tax cuts going to be renewed? Or are we going to have to see tax increases to pay for all this debt? There’s even uncertainty on the health care bill. I mean, is the Supreme Court going to overturn it?

REICH: Yes, there is that uncertainty. But, look it, the deficit fight, the deficit is important over the long term. But, right now, the issue is not the deficit. The issue is not the debt ceiling. The issue is jobs. And they’re not the same.

Senator, what’s wrong, if I may ask, what’s wrong with a new WPA program or a Civilian Conservation Corps for the 6 million unemployed who’ve been unemployed for more than six months? Why not put them to work?

SHELBY: Well, first of all, I think we should do that, but we should do — work it in the private sector. WPA did not bring us out of the depression. The war did. We look back at the stimulus, nearly a trillion dollars gone down the drain. We’ve got to create the conditions of certainty to get people to have confidence to create jobs.

AMANPOUR: Can I ask you…

REICH: But the war brought us out of the Great Depression because of that spending; 120 percent of the national economy was spending.

AMANPOUR: You’ve also got an issue, obviously, that those who are producing and manufacturing are doing so not necessarily having to hire more workers because of the increasing technologization of the workforce. A, is that going to be structural problem going forward? And, B, is this 8 percent or 9 percent the new normal of unemployment in this country?

REICH: Christiane, there is a deeper structural problem. Even if you did all of the necessary stimulus, and spending, and had an exemption program for the first $20,000 of income from the payroll tax, did the WPA, you still have a deep structural issue, and that is, when so much of the nation’s income and wealth now go to the top 1 percent, the vast middle class doesn’t have enough purchasing power to keep the economy going. And we can’t rely only on exports.

Now, that’s going to take time to do something about. I hope Republicans are as concerned about inequality of income as some of the rest of us. But we’re not going to get it by lowering tax — marginal taxes on the rich. We have to do the opposite.

SHELBY: We’re talking about real income tax reform to give people incentives to create jobs and give them confidence to create jobs. But if you look at history, it’s the free markets that’s going to create and turn this economy around. The government stimulus will never turn the economy around.

KARL: Well, there’s a political reality on the tax reform, which is — you know it’s not going to happen before the next election. I mean, the White House — you know, what I’m hearing is we will see a white paper come out with this plan for corporate tax reform, lowering rates, cutting loopholes, reducing loopholes. But, you know, even the people most enthusiastically pushing this say there’s just no way in this political environment it gets down.

AMANPOUR: All right. I’m afraid that’s the last word.

SHELBY: Thank you.

AMANPOUR: We’ll continue this conversation, because it is number one on America’s agenda.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

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American Jobs Matter Act reintroduced by Connecticut Congressman Chris Murphy fails by four votes. Republicans vote down another jobs bill.

Posted on June 10, 2011 by William Brighenti

Chris Murphy:  Hi, I’m Chris Murphy.

A little over a week ago, I lost a vote on the House floor by a razor-thin margin of 212 to 208.  It’s an amendment that’s been a long time in the making.  It would have finally, for the first time ever, given preference to US contractors, US manufacturers, when bidding on work from the Department of Defense.

You know that I have been working on this agenda for a long time.  The idea is simple:  without spending any more money, we can just use the money that we are already spending to buy things for the US military to grow jobs here in this country. 

This is a big fight because on the other side of it are major international defense contractors who want to offshore the work that they get from the Federal government.

We came really close.  We came within four votes of getting this bill passed….

This is a winnable fight:  we’re this close.  And by joining us,…you can make it perfectly clear that we are not going to let these powerful special interests beat us again, that we are going to make sure that when we send our taxpayer dollars to Washington, that they are spent right here at home on US jobs.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

Accountants CPA Hartford, Connecticut, LLC offers quality accounting, auditing, tax, bookkeeping, and QuickBooks consulting services at fees of one-third of those of our competitors to individuals and businesses across a wide spectrum of industries throughout the entire United States. Call us now at (860) 249-1323.

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The Power Panel on President Obama, Democrats and Republicans regarding the national deficit cutting, jobs, and medicare. Cenk Uygur MSNBC TV June 9, 2011 video and transcript

Posted on June 10, 2011 by William Brighenti

UYGUR:  But let`s go to the next question. What`s the debt got to do with it? Republicans manage to turn everything, including talk on creating jobs into a lecture on the country`s debt. What House Majority Leader Eric Cantor said today after meeting with Vice President Biden? Listen.

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR (R), VIRGINIA: We believe that much of the problem surrounding the lack of job creation and growth in this country has to do with the fact that there isn`t a credible plan to manage down the debt deficit in this country.

(END VIDEO CLIP)

UYGUR: All right. OK. Heidi, do people really believe this? I mean, do Republicans really believe this? That if we cut spending, it will somehow magically jobs will grow?

HARRIS: Well, we have to cut spending because people won`t hire anyone if they`re not — know what the future is going to be for the country. That`s the problem. The biggest problem is confidence. It`s not that all these companies in America don`t have any money. They are just scared to death to spend it just like a lot of average American citizens like me are not spending money that we`re not sure we need to spend. Because we don`t know what`s coming around the corner. So, I think he`s right about that.

PRESS: All of us recognize, we have a serious debt problem, we`ve got a serious deficit problem. But there is a serious plan out there which is the president`s budget plan. And there is a crazy plan which is the Paul Ryan plan. I think the — here is where they are failing. They are making the big mistake, number one, thinking Americans think this is the number one issue. It`s not. Jobs and the economy are the number one issue. And two, they talk fiscal responsibility but they don`t want to get rid of subsidies, for the oil companies, the tax cuts for the wealthy, they don`t want to cut the Pentagon, they don`t want to do anything about the war in Afghanistan. They are hypocrites on this issue.

HARRIS: Oh, come on.

(CROSSTALK)

UYGUR: Hold on. I want Christina in here. Christina, is it credible — is it credible Christina to say, hey, if we cut spending somehow that will create jobs? Especially between now and the election, which is, you know, next year and a half. Is that even feasible? How would that work?

BELLANTONI: I am not an economist. I will point out that we have cut spending. And that is a question that I think the Obama White House is tossing back at the majority leader of looking at, you know, we have made a lot of significant changes and we are working on the economy. But I think it`s also important to throw this question back to Cantor of, look at some of the people in your caucus are saying that it would be OK to default on the nation`s debt if they don`t increase the debt ceiling. I mean, that is a bigger question and that certainly would not create much certainty for businesses who are going to be hiring. So, there is a lot of rhetoric that`s going around. I mean, it`s all politics. And everyone is worried about keeping their own job in the next election.

UYGUR: Now, one more thing about this. You know, when you look at the polls, about half the country trusts President Obama on Medicare. Only 35 percent for the Republicans, but now we are looking at the White House putting Medicare apparently on the table. Bill, is that a terrible idea? Why go down that road with the Republicans?

PRESS: You know, look, it came up today at the briefing, Cenk. And let`s be careful, the president is not putting Medicare on the table to kill it the way Paul Ryan is, the way the Republicans who adopted the Paul Ryan plan are. What the president is saying is there is significant savings and how you deliver Medicare over the next ten years that can save money. And that is reform it, don`t kill it. There is a big difference there. And the American people understand it.

HARRIS: Here`s the problem though.

(CROSSTALK)

PRESS: Heidi, let me finish. I think the Republicans committed political suicide by adopting the Ryan plan. They voted for it. It`s their baby.

HARRIS: Yes. But the problem is your version of saving Medicare, reforming Medicare is to pay doctors less money. I`ve got news for you buddy, a lot of doctors are not going to take Medicare patients. Do you know that doctors don`t have to — doctors don`t have to take Medicare patients?

PRESS: Heidi, that is not part of the plan. You`re behind the curve there, Heidi. You don`t know your facts. That`s behind the curve.

(CROSSTALK)

UYGUR: Heidi, let me ask you a different question. If the White House comes in and says, look, we cut Medicare but are not calling it “Cutting it” we`re calling it “reforming it,” does that let you guys off the hook? Do you feel like, hey, oh thank God, man, we were getting killed on this issue? Now, here comes the Democrats and the rest.

HARRIS: I don`t think we are getting killed on the issue on the right.

UYGUR: Really?

HARRIS: People on the right don`t want to kill grandma. We want grandma to have Medicare. Here is the difference. The Democrats who say that Medicare is not in trouble are lying to you. And if you want to believe their lies, you can. I want grandma to have that. I don`t want grandma to die.

PRESS: Heidi, I got two words for you.

HARRIS: Yes.

PRESS: New York 26. You tried that argument in the most conservative district in New York State and you lost your shirt on it.

BELLANTONI: That is one special election.

UYGUR: Christina, put aside whether you agree or disagree on the Medicare cuts, et cetera. It does seem objectively that Republicans are not in good shape on it. Poll numbers, 26th district, et cetera. Am I seeing that wrong?

BELLANTONI: That was one special election I think it`s not a predictor of what will happen in 2012. And there`s going to a million factors that go into that election including the presidential race. But it is also important to really look at the fact that Republicans are campaigning on this, as well. So, they are looking at certain polling. They are looking at the American people. And they think that this is a winning issue for them. So, it`s not a real clear-cut one person wins and one person loses.

PRESS: All right. I think it is. I really disagree.

UYGUR: Go ahead.

PRESS: I think on this issue, I think this issue Republicans have put the House of Representatives in play on this one issue.

UYGUR: Well, then Bill, OK, if they have, I mean, no matter how you spin it and you say, it`s reform or not reform, if the White House says, yes, we`ll going to help them cut it a little bit, don`t you lose at least the rhetorical advantage much less the policy which I don`t necessarily agree with?

PRESS: No, I think if you look at the president`s plan. You see what the reality is, Cenk. I mean, the president is not going to go out and say, we are just not going to touch Medicare because it`s peachy keen, it`s rosy. There are some problems with Medicare and with Social Security and with the whole…

UYGUR: They would not have acknowledged if the Republicans didn`t force them to, Bill. You know that`s true.

PRESS: But again, the answer is not to kill them. And that`s what the Republicans.

(CROSSTALK)

HARRIS: Oh, yes, the answer is to kick it down the road six more years. I know. It always is. Four more years to kick it down the road.

UYGUR: All right. So, Christian, one last thing. Christina, look, you know, there is a conflicting things here. In Washington, they say you`ve got to show people you`re serious. On the other hand, the Democrats seem to be winning on the Medicare issue. So, politically, how does that split? How does that work? Is the White House convinced, well, even though we are winning on Medicare, and I think they are, convinced that they are doing that, we`ve still got to bite the bullet because the deficit issue is what? More important to the country? More important to Washington? How does the play out?

BELLANTONI: I mean, I think they recognize the deficit is important. That`s why the president has said that that`s what he wants to focus on this year. But consider what Obama has done in many cases. He`s compromised on tax breaks for the wealthy, which he said, he campaigns about taking those away. And he signed a plan that continued extending them. That`s because he is working with the Republicans. And I think that he is under a little bit of pressure. If they come to him with some legitimate plan that can cut this, he`s going to have to take a serious look at that, in part because of his re-election hopes. But in part because people do want to actually get something done in Washington. He`ll have to face that question if it`s just politics or if he wants to get something done.

HARRIS: That`s absolutely right. He only has to deal with the right because he is forced to now. Remember, he didn`t talk to the right, until he lost the House.

UYGUR: Right.

PRESS: Obama is not that dumb.

UYGUR: I will get things done in a different way. But I hear you guys. All right. We`ll going to leave it right there. Bill Press, Heidi Harris, Christina Bellantoni, thank you so much, all of you.

PRESS: Thanks, Cenk.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

Accountants CPA Hartford, Connecticut, LLC offers quality accounting, auditing, tax, bookkeeping, and QuickBooks consulting services at fees of one-third of those of our competitors to individuals and businesses across a wide spectrum of industries throughout the entire United States. Call us now at (860) 249-1323.

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Americans need jobs. Rebuild the dream. Cenk Uygur MSNBC TV June 8, 2011 video and transcript

Posted on June 9, 2011 by William Brighenti

On June 23rd, Van Jones, MoveOn.Org, and the Roots will be kicking off a movement to “Rebuild the [American] Dream” in New York City. Its purpose is to promote the creation of jobs, affordable education, affordability of home ownership, retirement with dignity, and a secure future for our children and communities.

Cenk Uygur: Unemployment is about 9%. America need jobs. We all know it, and Republicans know it, too. So they made it their rallying cry during the 2010 campaign.

Video:

Mike Pence: “We are determined to fight for the future of the American people, to create jobs….”

John Boehner: “Where are the jobs?”

John Boehner: “Where are the jobs?”

John Boehner: “Americans are still asking the question, where are the jobs?”

Cenk Uygur: But then they got elected and they changed their tune. They didn’t propose a single jobs bill. Instead they started talking about something entirely different.

Video:

Cynthia Lummis: “We will continue to fight for the deepest spending cuts that we can get….”

Mike Pence: “We voted to cut spending….”

Eric Cantor: “We are about accomplishing major spending cuts….”

Cenk Uygur: So just spending cuts. It’s all they care about anymore. Yesterday John Kyl called for $2.5 trillion in cuts in exchange for raising the debt ceiling. But while spending cuts may be dominating the national conversation about our economy, they simply don’t create jobs. In fact, they usually cost us jobs. But don’t worry, President Obama says job creation is his top concern:

President Obama: “There are too many people out there who are still out of work…That’s unacceptable to me. It’s unacceptable to all of you. So we’ve got to do everything we can, everything in our power, to strengthen and rebuild the middle class.”

Cenk Uygur: But just last night, the White House rejected the Senate Democrats new jobs bill, complaining that it was too expensive. It was $200 million more than the White House wanted…not billion: million. That’s nothing compared to the cuts that they are making, but even that was too much for the White House. I honestly don’t know what they are thinking there.

But some progressives in the country do get it. The folks at MoveOn.Org are trying to bring the conversation back to jobs. They just announced their “Rebuild the Dream” rally to push the message that we don’t need cuts as much as we need jobs for the middle class.

Now here’s a crazy political idea in the middle of a horrible economy. Ignore what the Republicans want you to do and propose a massive jobs bill instead. I know, people in Washington will lose their minds. Here’s my question. So what? Remember you want to appeal to the American people. Who cares what Washington thinks.

Alright, joining me now is Jared Bernstein, he’s a former Chief Economist for Vice President Biden. He’s now senior fellow with the Center on Budget and Policy Priorities. Now Jared, I read your pieces, I know that you think jobs is the right way to go, and we’ll talk about that in a second, but you were inside the White House. I got to ask you. Why isn’t this as clear to them seemingly as it is to us from the outside?

Jared Bernstein: I think it is clear to them. I think that they are stuck in a box where one side is saying cut spending this much and the other side is saying, oh, that’s too much, let’s cut spending less than that. I think that the kind of pivot to deficit reduction has really taken hold in this town and there are a lot of people who think that the message of the 2010 loss for the Democrats in the midterm was a message to cut spending. But, in fact, as you heard the President say, there is a very strong belief within the White House still that we’ve got to do everything we can still on the jobs front while we’re walking and chewing gum at the same time, while we’re planning a path to deficit reduction.

Cenk Uygur: But the thing is, Jared, should we concentrate on jobs, the fact that they kind of understand that…of course, of course, you’ve got 9% unemployment. My God, of course you should concentrate on that. But it seems like from your description and from their descriptions so often, it’s as if they’re powerless. Oh, they’re caught in this Washing bubble. What are we going to do? We can’t get out. Right? He’s the President of the United States of America. They control the White House. So can’t they do something?

Jared Bernstein: Cenk, you have a great point, and these things are dynamic. And what may have been a reasonable position a month ago strikes me as morphing into a much less reasonable position now. So I’m with you and I’m with MoveOn.Org on this point. But I’d like to take it a little further.

You know there are 20 million people out there who are un- or under-employed and I guarantee you they are not all liberal Democrats. Why is it just a MoveOn.Org rally to create jobs? Why not instead of a Tea Party, a jobs party, a movement across political interests that really has jobs at the heart of what they are about right now. I guarantee you a deficit spending cut kind of agenda in the short run, aggressive cuts to spending, getting rid of Medicare, the whole Republican agenda right now, can’t be resonating with the American people, who really believe that jobs are the biggest problem out there. So I’d like to see this go way beyond MoveOn.Org.

Cenk Uygur: Of course. The Republicans won the 2010 election by pretending that they were going to create jobs. So obviously conservative voters, Independent voters, we all care about jobs. Now you’ve got a proposal of your own. Let me just summarize for the folks at home real quick.

· You’ve got fiscal relief for the states.
· You’ve got infrastructure investments.
· Protecting entitlements.
· And balancing between revenues and spending cuts in budget negotiations.

Right? Now that seems like a very reasonable proposal. Again, why doesn’t it get a hearing at the White House? You were just at the White House.

Jared Bernstein: It’s very possible that that kind of an agenda starts to get more of a hearing now. Now you just had this one month of a very tough jobs report. But I look at it, average it into the past few months and maybe it isn’t as bad as it looked in May but we’re still growing much too slowly. So I think that we’ve really got to press for this agenda, for the White House and the Congress, because it’s got to happen together, to really pivot towards this focus and target on the budget deficit to the jobs deficit now. That doesn’t mean that you abandon your path to budget sustainability. It means that you look at the kind of issues that you just listed off. I think those are all on the list of coulds, things that we actually could do if we put our political shoulder to the wheel on it.

Cenk Uygur: Alright, Jared Bernstein, thank you for your time tonight. And we hope that your former employers are listening.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

Accountants CPA Hartford, Connecticut, LLC offers quality accounting, auditing, tax, bookkeeping, and QuickBooks consulting services at fees of one-third of those of our competitors to individuals and businesses across a wide spectrum of industries throughout the entire United States. Call us now at (860) 249-1323.

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The Bush tax cuts: a decade of disaster. Ed Schultz Show MSNBC TV June 7, 2011

Posted on June 8, 2011 by William Brighenti

(BEGIN VIDEO CLIP)
GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: We recognize loud and clear the surplus is not the government‘s money. The surplus is the people‘s money. And we ought to trust them with their own money.
(END VIDEO CLIP)
SCHULTZ: Yeah. Now we‘re playing with China‘s money. Ten years ago today, George W. Bush looked the American people in the eye and promised us his tax cut would do big things for the country. He promised us the same with another round of tax cuts in 2003.
Well, instead, with a stroke of his pen, Mr. Bush took that budget surplus and turned it into a mountain of debt, 2.5 trillion to be exact.  Bush claimed the cuts would drive economic growth, create jobs. But what followed, question mark, The “New York Times” asked last November, quote, “the decade with the slowest average annual growth since World War II. That statement is true even if you forget about the great recession and simply look at 2001 through 2007.”

But it didn‘t have to be this way, folks. Think Progress, they did the math. They said for the same price as the Bush tax cuts, we could have sent tens of millions of students to college, retrofitted every household in America with the capacity to generate alternative energy, hired millions of firefighters, police officers, given kids health care coverage, or put millions more teachers into the classrooms.”
Pretty steep price to pay if you ask me. Now to be fair, the Bush tax cuts, well, they did help out roughly one percent of the country. One patriotic millionaire told the “Huffington Post” that the Bush tax cuts allowed him to build a dance floor in his house. Yet another says that he was able to buy a bigger boat.

Quote, “the problem is it was built in Italy.”

Joining me now is Pulitzer Prize winning journalist David Cay Johnston. He‘s the author of “Free Lunch, How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill.”  He‘s a columnist for “Tax Notes.” Welcome, Mr. Johnston. Great to have you with us tonight.

So we‘ve already endured a decade of stagnant growth. What‘s going to happen if these Bush tax cuts get extended even further, as it might happen in 2012?

DAVID CAY JOHNSTON, “TAX NOTES”: Well, very simply, we‘ll have a worsening of the conditions we have. We‘ll have more and more debt being taken on by the federal government and we won‘t be meeting basic human needs and services that we have.

We already have food borne illness rates in this country that are significantly higher than in any of the other modern countries. We‘re firing school teachers left and right. At the same time we‘re doing this and cutting taxes, Ed, we continue to be giving away money in various incentives and gifts to billionaires and monopolists all over the country.

So if we continue down this road, there will be fewer jobs, less wealth, and we‘ll all be much worse off.

SCHULTZ: Well, Tim Pawlenty is out there saying that he wants to go even further. Is that even possible?

JOHNSTON: You know, I chuckled as I listened to you talk about that, Ed, because apparently he doesn‘t understand that all Google does is connect you to something. It doesn‘t do anything. So when he connects you — when Google connects you to a library or a government place that does business, all it‘s doing is telling you—helping you find it. They‘re not doing any work. They‘re just connecting you together.
And I marvel that he does not grasp this fundamental about what Google is about.

SCHULTZ: Ten years after the fact, what is the single biggest failure of these Bush tax cuts in your opinion?

JOHNSTON: Oh, it‘s the destruction of jobs all over the place. President Bush—candidate Bush said that if we elected him instead of that other guy, we‘d be better off than we were in the year 2000. Well, incomes are down 2.7 trillion dollars for the eight years of his administration and worse since then.

It‘s continued on a downward path as the tax cuts have continued. The government—federal income tax revenues are down a third from 2001, when the Bush tax cuts started, to today when you look at them per American. A one-third fall.
And at the same time, of course, we‘re continuing to not have the money for the things that will create wealth in the future: research, education, public health, infrastructure.

SCHULTZ: So 2012 is all about priority and what the American people want. David Cay Johnston, thanks for your time tonight. Appreciate it.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

Accountants CPA Hartford, Connecticut, LLC offers quality accounting, auditing, tax, bookkeeping, and QuickBooks consulting services at fees of one-third of those of our competitors to individuals and businesses across a wide spectrum of industries throughout the entire United States. Call us now at (860) 249-1323.

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Ye Gods, another bad experience with Intuit’s ProSeries tax software!

Posted on June 8, 2011 by William Brighenti

Intuit ProSeries Sucks!I don’t know who gave Intuit’s ProSeries a 5-star rating because I give it a 0-star rating. In fact, in my opinion, it sucks!

I have great difficulty finding input sheets in ProSeries. Unlike Lacerte, that has a very helpful table of contents, ProSeries leaves it to the user to find its entry sheets: good luck because you might need the assistance of a posse. I’ve spent needless, unbillable hours trying to find the place where I can enter the information.

And it’s feature, “Where Do I Enter”, to assist the tax preparer with data entry appears only to apply to Federal Form 1040, since whenever I have attempted to use it for Form 1120, 1120S, 1065, etc., and for state tax forms, ProSeries informs me that it’s unavailable for these forms. Lots of luck, pal. Go fish!

And today when I printed out California’s Form 540NR, California Resident or Part-Year Resident Income Tax Return, I discovered to my embarrassment and chastisement from my client that my electronic signature on page 3 was illegible: it overwrote the form’s caption line containing “Firm’s name” and “Firm’s address”. When I called Intuit’s ProSeries, I was placed on hold for what seemed an eternity, then someone in its tech department spent considerable time remotely accessing my computer to understand my problem and attempt to correct it. And then when that failed after another period of time seeming like another eternity, I was transferred to the tax department, who informed me that there was nothing I could do but remove the electronic signature.

The individual in Intuit’s tax department admitted that it was a defect in ProSeries and said that it was never picked up until my call since not many California Form 540NR’s are filed. Right!

Also, when I attempted to print a tax return on May 30th, I was unable: Intuit’s pay-per-return was down. I lost a client over that, since the client came to pick up his tax return and I thought there would not be a problem printing the return. Thanks, Intuit. Needless to say, its call center and customer service were unavailable, too. Perhaps if its server is going to be down, Intuit should have had someone on call to handle its software issues?! That’s poor service.

Recently I filed corporate returns that were subject to penalties for late filing as well as late payment; however, Intuit’s ProSeries, unlike Lacerte, was unable to calculate their penalties and interest charges.  Even worse, there was no entry field in which to insert the manually calculated penalties and interest on Form 1120 in the program:  I was forced to input it opposite the field for the penalties for underpayment of estimated taxes, and, as a result, generated an error message that created a problem for electronic filing of the tax return.  I wasted hours on attempting to file that tax return.  Not surprising to me, a number of individuals on Proseries’ support staff were oblivious to that error.

In addition, I feel as if I am getting banged hard with Intuit’s pay-per-return policy. That takes a big bite out of one’s tax preparer fee. Plus Intuit charges an annual fee as well of nearly $300.

If anyone knows of a better tax software at an affordable price, please let me know. I’ve had it with ProSeries. Do you think ProSeries offered me a refund for the cost of that California tax return since it has a defect? Not a chance! Do you think that I ever received a free copy of QuickBooks for all of the clients I brought to Intuit to use QuickBooks? Are you on drugs? Intuit sucks!

Another rave review brought to you by the inimitable

Barefoot Accountant

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US faces mounting debt. The right gets it wrong. Chris Matthews’ “Hardball” June 7, 2011 video and transcript

Posted on June 7, 2011 by William Brighenti

Matthews: Ten years ago today George W. Bush signed his historic tax cuts. Today the US faces a mounting national debt: $2.6 trillion are from those Bush tax cuts enacted 10 years ago according to the Center on Budget and Policy Priorities. Democrats are looking at millionaires and billionaires to shoulder the burden and pay higher taxes once the tax cuts expire next year.

Congresswoman Jan Schakowsky is a Democrat from Illinois. Let me ask you about this, Congresswoman. $2.6 trillion added to the national debt by Bush’s tax cuts according to these groups, a couple of them, by the way, include the Joint Economic Committee. Would we be better off without the Bush tax cuts never been enacted, period?

Schakowsky: You mean for middle income as well as for upper income?

Matthews: If we had to choose between no tax cuts at all or what we got, would we be better off with not having passed that ten years ago?

Schakowsky: Well, we may be better off, but certainly, the bulk of the tax cuts went to the wealthiest Americans and created the biggest gap in income between the very rich and everyone else that we’ve seen since 1928. But you may be right, but certainly —

Matthews: I’m asking. I don’t know. I’m asking still, I will ask you one more time. Would we be better off without having passed the Bush tax cuts?

Schakowsky: I think the tax cuts for middle income people are appropriate and that the bulk of the tax cuts should be repealed.

Matthews: Let me ask you about the future. Do you think the president, when he gets in these negotiations with Joe Biden, the vice president, et al is Medicare on the table? Is everything on the table or not?

Schakowsky: Well, John Boehner said that no revenues are on the table at all. Of course, we know that Medicare is on the table. Both the Republicans in the House and the Senate overwhelmingly—only four Republicans in the House didn’t vote for it. This is the way they want to solve the debt and the deficit problem when 81% of Americans say tax millionaires and billionaires.

Matthews: So what is it—the last time we had this fight, Congresswoman, we had a proposal by the Democrats to begin to take back the tax cuts for people that make over $250,000 a year. Now you’re moving that up to $1 million. Why are you moving it up to a million as the cut line?

Schakowsky: Well, actually, I support the president’s proposal at $250,000, but in addition —

Matthews: Oh, okay.

Schakowsky: I’m creating new tax cuts in my fairness and taxation act that start at $1 million earners per year, 45 % would be their new tax rate racheting up to people who earned in one year, and they do, $1 billion, and that would be a 49% tax rate and that’s lower than during the Reagan years. So, I’m giving them a bargain and yet asking them to pay their fair share.

Matthews: Do you believe the President agrees with you?

Schakowsky: Well, I don’t know what he thinks is possible, but I certainly think that he does agree that the very richest people, and he said it in his speech at GW last month when he said he believes that rich people actually believe in this country and believe that paying their fair share of taxes is the right thing. I had a millionaire at my press conference this morning who said he doesn’t think it’s moral for him to have his taxes low while seniors are being asked to pay more for Medicare.

Matthews: Well, you’re on the popular side of this issue. Let me ask you about this sticky business with your colleague, Wiener. Anthony Wiener. Should he leave the Caucus? Should he leave the Congress or is this going to go on and on and on? Are you comfortable with him deciding to stay in Congress as long as he can or should he leave?

Schakowsky: Well, you know, you know, Anthony Wiener is my friend and I think he is a great Congressman. I know that Nancy Pelosi, and I think correctly, asked for an investigation to see if any of the resources of the Congressman….

Matthews: Yes, but if that doesn’t prove anything against him, should he leave? If that doesn’t prove he broke any ethics laws, should he stay?

Schakowsky: He said he wants to stay and let the people of his district decide. I think fair enough. but I’m not sure that the pressure, you know, if the pressure mounts anymore that that’s going to be possible, but I understand where he’s coming from. Put it to the voters in that district.

Matthews: So it’s not up to the House?

Schakowsky: Well it is up to the House, I think. And —

Matthews: Well, you just said it is up to the voters of his district. Which is it? Is it up to the house or is it up to the voters in his district, which is it?

Schakowsky: If he violated rules in the House that is a different matter. If he didn’t, I think it is up to the voters of his district.

Matthews: I know where you stand. Thanks very much for coming on “Hardball.” Congresswoman Jan Schakowsky.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

Accountants CPA Hartford, Connecticut, LLC offers quality accounting, auditing, tax, bookkeeping, and QuickBooks consulting services at fees of one-third of those of our competitors to individuals and businesses across a wide spectrum of industries throughout the entire United States. Call us now at (860) 249-1323.

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Dubya’s lost decade: 10 years of Bush tax cuts. Ten (10) year anniversary of Bush tax cuts: thanks for nothing! Cenk Uygur MSNBC TV June 7, 2011, video and transcript

Posted on June 7, 2011 by William Brighenti

Cenk Uygur: We are here to celebrate a dubious anniversary ten years ago today: the first Bush tax cuts were signed into law, starting a decade of pain for the average American taxpayer and huge gains for the richest amongst us. With one stroke of the pen, President Bush set us on a path towards economic injustice, inequality, and bankruptcy. The Bush tax cuts have added $2.6 trillion to the deficit.

Last year just the top 1% of richest Americans got 38% of the benefits of those tax cuts. Through 2007, the last year for which we have numbers, the rich got 65% of the income gains. But wages fell for everybody else. Overall earnings fell 2.3%.

So what happened to trickle down economics? Our wages went down. The income for the rich went way up. And our deficits exploded.

We tell you this today because this fight is long from over. Republicans view this as the winning economic model we must adopt going forward. Are they crazy? They want to cut corporate taxes and slash spending at a time that we need government investment in America more than ever.

One of the problems is that President Obama has been fighting this battle on Republican territory. The only debate we’re having is over how much to cut in spending and how much of a tax break to give to corporate America, which, again, I think is crazy and which is why the President’s poll numbers on the economy, I think, are sinking. A new Washington Post poll shows that 59% of Americans disapprove of his handling of the economy: those were his worse numbers yet.

Obama: “I’m not concerned about a double-dip recession. I am concerned about the fact that the recovery that we are on is not producing jobs as quickly as I want them to happen. We have set a path that will lead us to long-term economic growth, but we’ve still got some enormous work to do”

Now to turn around the economy, President Obama needs to stop fighting on Republican ground and go on the offense. He should stop arguing about how much to cut and start arguing about how best to create jobs.

Alright, now let’s have a conversation about that. Joining me now is MSNBC political analyst, Richard Wolffe and former Bush advisor, Mark McKinnon, who, of course, is co-founder of the No Labels Group. Alright, welcome both. Mark, I am going to start with you. I just don’t get it. Just tell me, what is it, how is it that the last ten years of tax cuts can be such a disaster and the Republicans with a straight face can tell us that the answer is more tax cuts.

Mark McKinnon: Well, let me say, first of all, from a No Labels point of view on the current budget debate, I support our view that everything should be on the table and that everybody should be at the table. But on the issue of the Bush tax cuts, there’s the conventional notion that the fiscal meltdown that we experienced is a result of tax policy, and that wasn’t the case at all. It was the result of housing regulation, which President Bush tried to strengthen and Democrats opposed, and by the way, I supported the Democratic position at the time. I agreed that we should make housing easy but we made it too easy.

But here are the facts on the tax cuts. In 1999 taxes were the highest percentage of GDP that they’ve been since World War II. The recession started in 2001, tax cuts were enacted in 2001, the top rate for taxpayers, the top 1%, was raised. It was raised. The top bracket for lowest income earners was eliminated, meaning five million new people paid no taxes at all. Half of the people in this country don’t pay any federal income taxes.

Then after we got hit by 911, we had 46 straight months of job growth until we had the housing speculation and the bust. So that’s my point of view, and we can disagree about it, but that’s what I believe.

Cenk Uygur: Mark, there’s some things we can disagree on, and there’s some things we cannot disagree on. The collapse did not happen because we had too much regulation on the housing market; we had no regulation. They would go in and make any liar loan that they wanted because they got a higher fee for that, the bankers.

Mark McKinnon: I agree with that. Bush wanted more regulation. The Democrats wanted less.

Cenk Uygur: No, he didn’t. C’mon, I respect you on a lot of fronts here, but that ain’t true. That isn’t even close to true.

Mark McKinnon: The Republicans wanted more regulation.

Cenk Uygur: Bush said, hey, you know what, the SEC should lift all leverage limits. So that allowed them to put unbelievable derivative bets on that housing market. They took away terrible regulations.

Mark McKinnon: They were trying to strengthen the regulations on Fannie and Freddie and Barney Frank and the Democrats fought that. I worked for Fannie, I know, I was there. I thought it was the right policy at the time but I was wrong. The Republicans were right on housing policy.

Cenk Uygur: Okay, Richard, let’s just talk about Obama, because Mark has a fascinating theory about how all those tax cuts somehow were not at fault over these last ten years. But here’s what we know. For example, we lost 1.1 million jobs in that last ten years. 1.1 million jobs! How could President Obama be having this conversation.

I mean, shouldn’t he say, hey, look, I’m not interested in your wacky theories about how we should do more tax cuts for corporations, which you know the President is having a discussion over. I’m not interest in your wacky theories about spending cuts in the middle of a terrible economic situation. Why is he entertaining those thoughts?

Richard Wolffe: Well, for starters, the Federal deficit is unsustainable. So someone has to deal with this at some point and you’ve got to start a conversation now, but you’re right in the short term, the idea of massive spending cuts isn’t going to help job creation; in fact, it’s going to mean you’re cutting jobs. As we saw in the last month alone, if you’re cutting government jobs, the private sector growth is not enough to soak up the difference.

I just want to get back to the kind of debate about tax cuts and job creation. Because the Bush anniversary is actually important here. For starters, I was on the campaign trail in 2000 with my old friend Mark there and the rational for the Bush tax cuts then was that there was $3 trillion of projected surplus. $1 trillion of it was going to go in tax cuts because as then president Bush said, it was the people’s money and not the government’s money.

The problem is that things change very quickly. There was a recession, there was 911, there were wars and the tax cuts stayed in place throughout that period. Job growth was anemic at best; in fact, you could make the case that it was totally insufficient.

So tax cuts alone did not create jobs. They haven’t created jobs in the sense of what the tax cuts were in the Recovery Act or in the last round of the lame duck tax cuts that we just saw at the end of last year. Tax cuts do not do it on its own given the scale of the shock the economy has faced. But clearly you got to deal with deficits moving forward. It’s different, though. Deficits, job creation, they’re not directly connected right now.

Cenk Uygur: So Mark let’s address that point. Even if you think that it was for other reasons that you think that the economy suffered, the idea was that if you do these giant tax cuts, well, then, it’s okay because the economy will pick up. But it didn’t. It didn’t. We lost 1.1 million jobs. You saw the graphy that we put up there where a huge part of our deficit are these tax cuts. We created this giant deficit, etc. So how could more corporate tax cuts, as proposed by the Republicans, possibly be the answer?

Mark McKinnon: As Richard pointed out, there were a lot of external events but there were forty-six months of job growth after those tax cuts. And the real issue, I think we all agree on, is that where we’re really going to get the budget going again is through growth. So we have a debate over what policy is going to stimulate growth the most, but the way we are going to get there, revenue is going to help, and tax cuts are going to help, but it’s growth. So whatever policy stimulates the most growth is what’s going to work. And that’s a legitimate debate to have. But I believe that giving more money and maintaining tax cuts generally speaking, although as I have said, everything’s on the table, is a greater engine for growth.

Cenk Uygur: When you talk about stimulating growth, I don’t know how you do that by cutting spending. But we’re going to have to save that for another conversation when we have you guys both hack on. Richard Wolffe and Mark McKinnon, thank you so much for your time tonight.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

Accountants CPA Hartford, Connecticut, LLC offers quality accounting, auditing, tax, bookkeeping, and QuickBooks consulting services at fees of one-third of those of our competitors to individuals and businesses across a wide spectrum of industries throughout the entire United States. Call us now at (860) 249-1323.

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Is President Barack Obama a Wall Streeter? Of Course!!!!

Posted on June 4, 2011 by William Brighenti

Obama the Wall StreeterDo you recall just before the 2008 election, Barack Obama’s statements pointing to Wall Street greed and regulatory failures as examples of the need for change in America?

“The era of greed and irresponsibility on Wall Street and in Washington has led us to a financial crisis as serious as any that we have faced since the Great Depression.” 

“A lack of oversight in Washington and on Wall Street is exactly what got us into this mess.” 

And after taking office, do you recall President Obama speaking of the need to reform the financial industry? 

“We want a systemic-risk regulator; increased capital requirements.  We need a consumer financial protection agency; we need to change Wall Street’s culture.” 

But when finally enacted in mid-2010, the administration’s financial reforms were weak; and in some critical areas, including the rating agencies, lobbying, and compensation, nothing significant was even proposed.  How come? 

It’s a Wall Street government.  The most senior economic advisors of his administration are the very people who built the financial and political structure that allowed the reckless risk-taking and fraud on Wall Street, resulting in the economic tsunami starting in 2008.  The evidence speaks for itself. 

Obama chose Timothy Geithner as Treasury Secretary. Geithner was the President of the New York Federal Reserve during the crisis, and one of the key players in the decision for AIG to pay Goldman Sachs 100 cents on the dollar for its bets against mortgages. When Tim Geithner was testifying to be confirmed as Treasury Secretary, he said, “I have never been a regulator.” Now doesn’t that statement in and of itself alone suggest that he did not understand his job as President of the New York Federal Reserve?  Note that the new President of the New York Fed is William C. Dudley, the former Chief Economist of Goldman Sachs, who previously co-authored a paper praising derivatives, those complex financial products (that few understand) that have made financial markets very unstable, especially over the recent past, since they facilitated the gambling in risking investments by financial institutions. 

And who are serving on Geithner’s team?  His Chief of Staff is Mark Paterson, a former lobbyist for Goldman; and one of the senior advisors is Lewis Sachs, who oversaw Tricadia, a company heavily involved in betting against the mortgage securities it was selling. 

To head the Commodity Futures Trading Commission, Obama picked Gary Gensler, a former Goldman Sachs executive who had helped ban the regulation of derivatives. 

To run the Securities and Exchange Commission, Obama picked Mary Shapiro, the former CEO of the Financial Industry Regulatory Authority, the investment-banking industry’s self-regulation body.  In a 1993 speech Shapiro argued against regulating derivatives in order to not stifle the “financial innovation” that would result from “a more flexible regulatory paradigm.”  She served on the board of directors of Duke Energy and Kraft Foods as well as on George W. Bush’s President’s Advisory Council on Financial Literacy. In 2008, her last year at FINRA, Schapiro received a total compensation package of  $8,985,334. 

Recall, too, that Obama’s former Chief of Staff, Rahm Emanuel, made $320,000 serving on the board of Freddie Mac. 

Martin Feldstein is a member of Obama’s Economic Recovery Advisory Board.  Martin Feldstein is a professor at Harvard. As President Reagan’s chief economic advisor, he was a major architect of deregulation. And from 1988 until 2009, he was on the board of directors of both AIG and AIG Financial Products, which paid him millions of dollars.

Laura Tyson was a member of Obama’s Economic Recovery Advisory Board.  She is a professor at the University of California, Berkeley. Shortly after leaving government, she joined the board of Morgan Stanley, which pays her $350,000 a year. 

And Obama’s former Chief Economic Advisor was Larry Summers, a Harvard economics professor.  As Treasury Secretary under President Clinton, he played a critical role in the deregulation of derivatives.   While at Harvard, he made millions consulting to hedge funds, and millions more in speaking fees, much of it from investment banks.  According to his federal disclosure report, Summers’s net worth is between $16.5 million and $39.5 million. 

Summers’ successor as Obama’s Chief Economic Advisor, Joseph Stiglitz, has been sharply critical of the Obama Administration’s financial-industry rescue plan, stating that whoever designed the Obama administration’s bank rescue plan was “either in the pocket of the banks” or were “incompetent.” 

Not surprisingly with this Wall Street team, the Obama administration resisted regulation of bank compensation, even as foreign leaders took action.  In September of 2009, the finance ministers of France, Sweden, the Netherlands, Luxembourg, Italy, Spain, and Germany called for the G20 nations, including the United States, to impose strict regulations on bank compensation.  And in July of 2010, the European Parliament enacted those very regulations.  However, the Obama administration, once again, failed to take any action. 

In 2009, Barack Obama reappointed Ben Bernanke.  Bernanke became chairman of the Federal Reserve Board in February 2006, the top year for subprime lending. But despite numerous warnings from economists, including the Chief Economist of the International Monetary Fund among others, about the approaching economic disaster, Bernanke and the Federal Reserve Board did nothing. 

Not a single senior financial executive had been criminally prosecuted, or even arrested; no special prosecutor had been appointed; not a single financial firm had been prosecuted criminally for securities fraud or accounting fraud.  Nobody went to jail, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.  The Obama administration has made no attempt to recover any of the compensation given to financial executives during the economic bubble. 

But there is additional evidence leading to the conclusion that Barack Obama is indeed a Wall Streeter in addition to his having selected his senior economic advisors from that kingdom and his failing to propose and enact significant financial reforms since he took office.  For instance, last year Obama never proposed a single-payer health care system as promised, but opted for a health care plan benefiting the Fortune 500 giants in the industry, including insurance and pharmaceutical companies.  While last December, President Obama immediately caved into the demands of Republicans to extend tax cuts to the richest Americans as well as to make Draconian cuts in tax revenues from the estates of the elite.  And although Barack Obama has appointed a Deficit Commission that has included Social Security, Medicare, and Medicaid “on the table” for cuts, already agreeding to $1 trillion in budget cuts, tax increases have been excluded from its deliberations.  In fact, Obama in recent remarks on the findings of the Fiscal Commission has suggested that he intends to lower corporate tax rates and possibly personal rates as well. 

Moreover, even though he had promised to bring the troops home from Iraq during his campaign in 2008, thereby suggesting a reduced defense budget, his expanded presence of the military in Afghanistan and its involvement in Libya is sustaining the economic life-line between the military and the defense industry to the delight of investors on Wall Street.

Such personnel, policies, proposals, and postures in spite of previous promises clearly show that the office of President Barack Obama is not in the White House but on Wall Street.  Mommy always said, “birds of a feather flock together.” 

But why did Obama choose this course of action after all of his promises to the American people during his campaign for President in 2008?  Simple.  Political campaigns cost hundreds of millions of dollars.  The financial sector employs 3,000 lobbyists, more than five for each member of Congress.  After the crisis, the financial industry worked harder than ever to fight reform.  With the further consolidations of the financial firms following the crash in 2008, the banks are now bigger, more powerful and more concentrated than ever before in the United States.  And they now possess unheard of political influence and power and monies.

President Bill Clinton knew this; now President Barack Obama knows this, too.  Barack Obama, for all of his patriotic rhetoric, is a pragmatist at heart and apparently believes that he would never be re-elected President if he followed through on the reforms of Wall Street that he had promised during his campaign.  And as we all know by now, campaign promises are destined to be broken after the election:  after all, money talks, everything else walks.

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Wall Street: The Untouchables. Why isn’t Wall Street in jail? Exposing Wall Street’s banks.

Posted on June 4, 2011 by William Brighenti

UYGUR:  Now, here‘s a question.  Why isn‘t Wall Street in jail?  It‘s a question I love.  It‘s also the title of a great new expose in “Rolling Stone.”  Reporter Matt Taibbi, we‘ll talk to him in just a moment, wanted to find an answer to that question.  So, he started looking into it.  And a Senate investigator gave him this spoiler alert.  Quote, “Everything is f‘d up and nobody goes to jail.  That‘s the whole story right there.”  Now, that turns out to be slightly inaccurate.  Actually, one guy did go to jail.  His name is Bernie Madoff.  He‘s the Ponzi schemer who‘s serving a 150-year prison sentence. 

But he said in a jailhouse interview released today in “The New York Times,” quote, the banks had to know, but the attitude was sort of, if you‘re doing something wrong, we don‘t want to know.  And that gets it exactly right.  They didn‘t want to know.  They‘re making money hand over fist.  Who wants to find out?  By the way, you know why Madoff went to jail when no one else did?  He stole from the rich.  That was stupid.  If you steal from the average guy, you get away with it.  Now, you want to see examples, how about Dick Fuld, he was running Lehman brothers and of course, it imploded.  You know what he walked away with?  Five hundred and twenty nine million dollars.  He‘s suspected of hiding compensation to make it appear that he got less and he‘s also suspected of lying about his compensation to Congress.  What kind of charges did he get?  None.  How about punishment?  Squat. 

Now, let‘s go to Joe Cassano.  He worked for AIG financial products which crashed spectacularly.  And by the way, that was largely thanks to Joe Cassano, nice work Joe, and he walked away with $280 million during his tenure.  He’s suspected of misrepresenting the risk of mortgage derivatives which he famously said, wouldn‘t, quote, “lose a single dollar in the market.”  What kind of charges did he face?  Oh, my God, look at that, he also faced no charges.  How about punishment?  Zilcho.  Who could have seen that coming?  How about John Mack?  He was on again, off again Head, and actually is the current chairman, of the Board of Morgan Stanley.  He was investigated in 2005 for allegedly giving out insider information.  Which may have resulted in a quid pro quo deal worth $10 million to him personally. 

He also faced no charges and no punishment.  And the way that that went down is actually a perfect illustration of everything that‘s wrong with our financial system and why they get away with all this.  Gary Aguirre was an SEC investigator who smelled something fishy in Mack’s dealing, so he wanted to look into it.  And he—basically, this is the good guy, he was trying to do the right thing.  So, what happened to Gary?  Well, he went to his bosses.  And his boss at the time was Paul Berger, he was the SEC associate director of enforcement.  Oh, he got fired.  But we’re going to get back to that in a second. 

All right.  So, he goes to his boss with the guy we just told you about.  And now where does his boss at the time work for today?  Are you sitting down?  Are you sitting there?  Morgan Stanley.  Weird.  The guy who wouldn‘t prosecute, now works for the guy he wouldn‘t prosecute.  Then Linda Thompson, she was SEC‘s director of enforcement and another boss of Gary.  Guess where she is now.  She‘s a lawyer representing Wall Street firms.  Weird.  Huh?  I didn‘t see that coming.  Now, here‘s the external forces who pushed back on the SEC to make sure that there was no investigation.  Mary Jo White, she was an attorney representing Morgan Stanley. 

Guess where she was before that?  She was the U.S. attorney in New York.  The top cop on Wall Street.  And of course, there was Gary Lynch.  Now, that’s Mack’s attorney, but before that, he was the SEC‘s director of enforcement.  Do you see what‘s happening here, guys?  It‘s called a revolving door.  They‘re waiting for the payout.  Are you going to investigate the guy who might give you millions of dollars in your next job?  If you‘re a really good guy like Gary, you might.  And remember what happened to Gary, now let’s do it: boom, fired.  Gone.  Everybody else gets paid, Gary gets fired for being a good guy.  Now you see how they get away with it?  All right.  Let‘s do more though. 

Joining me now is Matt Taibbi, he wrote that article.  He‘s a contributing editor for “Rolling Stone,” and by the way, that article appears in the new issue of “Rolling Stone.”  It‘s fascinating.  All right.  Matt, look, I‘ve got a lot of guys who I went to school with who are part of the circuit.  And if you go tell them what you tell them or I tell them that, oh come on, you‘re being totally unfair, right?  Are we being unfair to them?  They‘re just good guys trying to do their job?

MATT TAIBBI, REPORTER, ROLLING STONE:  No, we‘re not being unfair.  Look, in this country, the reality is if you go out and you sell a dime bag on the street and a cop sees you, there‘s a very good chance that you will actually go to jail, and you will do real jail time.  But Insider Trading, fraud on a massive scale, stealing billions of dollars, putting a million of people into foreclosure, defrauding thousands of janitors and cops and fire them out of their pensions,  nobody is going to jail for this stuff.  It‘s really, it‘s a class issue.  These guys do not go to jail.  Madoff was the only person in the entire financial crisis who is doing time.  Even somebody like Angelo Mozilo, they couldn‘t find a way to put him in jail and all they did was fire him, less than half of his network.  So, it‘s an incredible situation.  It‘s really, really dangerous for the country. 

UYGUR:  So, Matt.  Look, a lot of them was saying, look, I use bad judgment.  My bad, dog.  So, I lost, you know, a couple of billion dollar, but there‘s nothing criminal here. 

TAIBBI:  Right.  No.  Look, all of these banks on a larger level were complicit in a sort of general fraud scheme, and that fraud scheme was to sell toxic mortgage-backed securities, toxic mortgage-backed securities as triple A-rated investments.  During this mortgage boom, they were essentially selling worthless crap as triple A-rated investments.  And they were selling it to people like pension funds.  That‘s why your pension has decreased in value.  Because some banks sold you phony securities that they knew were going to blow out.  That‘s securities fraud.  That‘s a broad fraud scheme.  All these banks were complicit in.  But at another level, they were also involved in basically every kind of crime you could have in the financial services market.  Insider trading, they were hiding billions of dollars in losses.  A lot of these banks were involved in Enron-Esque schemes to hide losses.  Again, fraud.  You know, insider trading, all of that stuff was going on.  And nobody got prosecuted for it.

UYGUR:  At the banks, were there e-mails specifically saying hey, we know this stuff is toxic or we know it‘s not going to work or we know it‘s junk?

TAIBBI:  Yes, absolutely.  I mean, a great example is the Bear Stearns Hedge Fund that blew up.  This was the one case that they actually took to trial.  Where these two guys, these guys who are running this Hedge Fund that were involved, sub-prime mortgages, and that was the blowing up of this fund is what caused Bear Stearns to go out of business.  But they had e-mails from these guys telling their boss, look, we are never going to make money on this stuff.  And then a few days later, they were out saying publicly, this isn‘t a disaster, it‘s all going to be fine.  And that‘s just straight up fraud when they do that.  That‘s what a Wall Street crime looks like and they weren‘t convicted for it. 

UYGUR:  Right.  And then you‘ve got Goldman Sachs e-mails saying, hey, that we‘re selling craft and stuff, you know, we got Mozilo and his e-mails said, I can‘t believe we‘re selling this crap.  But if people at home got to be wondering, so why are they doing it, right?  It seems like that‘s going to sink your company.  It sunk AIG, sunk Lehman Brothers.  So, why they do it anyway?

TAIBBI:  Well, people have to understand is that the system of incentives on Wall Street has been completely perverted.  I mean, all of these guys, it doesn‘t matter—they don‘t care if they blow up their companies.  They don‘t care if we have to end up having to bail them out.  They get their bonuses anyway.  All these guys, even the ones who are in disgrace now, guys like Joe Cassano who, you know, helped blow up AIG,  he lost—he made $280 million and he‘s keeping all that money.  It doesn‘t matter how irresponsible or how wrong you are, the incentives are there for these guys to do all this stuff because they never have to pay in the end. 

UYGUR:  The taxpayers had to pay every dime of that $280 million eventually when AIG went under.  And the guy—it‘s crazy.  But he‘s not crazy because as you explained it, finish that up for us.  Why don‘t they prosecute?

TAIBBI:  Well, I think the key issue here is the revolving door.  I mean, I think that every source that I talked to in researching this story pointed out the same thing.  All these guys—the two main cops of the SEC, and the U.S. attorney here in New York, if you‘re one of the top investigators in the SEC or the U.S. attorney‘s office, when you leave those offices, there‘s a partnership waiting for you at one of these big corporate defense firms.  And those partnerships are worth millions of dollars a year.  These guys have all the equivalent of all college basketball players waiting for their first NBA deal.  It‘s an enormous amount of money.  And—what‘s happening.  It‘s a collegial, sort of merry-go-round of lawyers who all know each other.  They‘re all on a first-name basis with each other.  You have a situation like Aguirre, you know, he‘s trying to prosecute, investigate Morgan Stanley, and Morgan Stanley‘s lawyers are going five levels over his head to talk to the director of enforcement, they‘re talking to his boss‘ boss while he‘s trying to prosecute this case. 

UYGUR:  Right.  And at the very least, it‘s implicit saying hey, if you‘re good, you‘re a team player, we got a job at Morgan Stanley waiting for you with millions of dollars.

TAIBBI:  Absolutely.

UYGUR:  Or the law firm that is working for Morgan Stanley.  And that‘s how it works.  That‘s what is no prosecutions.  Great piece, Matt.  I really appreciate your time tonight. 

TAIBBI:  Thanks, good to see you, Cenk.

Transcribed by the Barefoot Accountant of Accountants CPA Hartford, Connecticut, LLC

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