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The Administration’s Lame Plan on the Economy? It Gets Worse

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You know that article portraying the White House paralysis in the face of 9.1% unemployment? Should they do nothing and run on the promise of more deficit and entitlement cuts in a second term? Or should they do almost nothing, like renaming the Department of Commerce “The Department of Confidence Fairies”?

It gets still worse:

There’s an article in today’s NYT on the economic debate within the White House.  The print version—not the online one—contains this quote from an admin official:

“It would be political folly to make the argument that government spending equals jobs.”

Really?  I mean, I get the reluctance, and certainly the “spending=jobs” frame, while essentially correct, may not be the right way to frame it.

But in fact, the best way to get people back to work right now, with consumers weakened and investment on the sidelines is through more government spending…it should be targeted and temporary, but jeez, the President himself has been making this point, and correctly pointing out that R’s are blocking him on it. [my emphasis]

The President did an event on Thursday in a shiny new factory that owes its existence to government spending. The jobs at that factory are some of the best jobs created in the last decade, because they’re innovative, they include high end jobs in a new segment, and (if the President doesn’t send them all away with trade deals) they make us competitive internationally.

But rather than actually claim credit for those jobs–which Obama was willing to do a year ago–he now says “freedom” created those jobs, not government spending.

Still More Deficit Reduction and “Department of Competitiveness”?!?!?

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Calculated Risk says most of what needs to be said about this article describing the debate within the White House over whether or not to “pivot to jobs” after all.

Tax incentives are the “bigger idea“? It sounds like the debate is between doing nothing and doing very little.

But it’s worth looking at two parts of this argument that appear to be new.

The article reports the Administration is considering proposing great economic policies that it would deliver in a second term. And those ideas? More neoliberal policies that won’t actually create jobs.

The issue is being framed by the 2012 election. Administration officials, frustrated by the intransigence of House Republicans, have increasingly concluded that the best thing Mr. Obama can do for the economy may be winning a second term, with a mandate to advance his ideas on deficit reduction, entitlement changes, housing policy and other issues.

So the side currently winning this debate is not only arguing against a pivot to jobs right now, but arguing it should continue its obsessive focus on the deficit and “entitlement” cuts through a second term.

And housing policy?!?!? This Administration wants to run on a promise to implement more housing policy, an area in which it has thus far achieved unmitigated failure?

But way at the end of the article, there is what I believe is a completely new policy, one which betrays just how misguided this Administration’s economic policy has become. The new big idea? Renaming the Department of Commerce.

The administration may also merge the Department of Commerce, the Office of the United States Trade Representative and some economic divisions at the State Department into a new agency, administration officials said. Possible names include the Department of Jobs or the Department of Competitiveness.

As bad as the suggestion that simply rearranging the Titanic’s deck chairs might be a great new idea is, the underlying implications of this proposed policy change are worse. Someone on Obama’s team thinks that by merging the entity that negotiates deals to send our jobs overseas with the Department of Commerce and those parts of the State Department that serve the interests of Monsanto rather than the American people, you’ll end up with more Jobs or better Competitiveness.

Atrios is right. We’re doomed.

Yet More Proof Big Business Is Unamerican

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The WaPo notes with some curiosity that the business community did almost nothing to get the debt ceiling passed. It’s a remarkable story: perhaps unintentionally noting that while our banana republic status was being confirmed, the Chamber of Commerce was lobbying not to prevent that, but to get a Panama trade deal; describing a betrayed Third Way executive pissed that business had not done more; describing two centrist Dems and Obama’s Chief of Staff imploring the business community to do more.

With the U.S. government on the verge of a historic default, the country’s largest business lobbying group took to the halls of Congress last week to press lawmakers to support the Panama Free-Trade Agreement.

The U.S. Chamber of Commerce sponsored a “door knock,” with 80 members handing out Panama hats to tout a trade deal with a country that has a smaller economy than Akron, Ohio. To critics, the Chamber event illustrates what has been a deafening silence from U.S. executive suites on the gridlock in Washington over raising the country’s $14.3 trillion debt ceiling.

“They haven’t done nearly enough to sound the alarm,” said Jim Kessler, vice president for policy at Third Way, a Washington research group that describes itself as advocating “moderate policy” and has executives from Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) on its board. Executives “think this is all Washington theater, and it will all get done in the end.”

[snip]

At a closed-door meeting with Chamber lobbyist Bruce Josten last month, Democratic Senators Mark Begich of Alaska and Mark Warner of Virginia upbraided the group and its member companies for not twisting arms hard enough to get a compromise package worked out, according to two people familiar with the discussion whospoke on condition of anonymity because the meeting was private.

[snip]

“It’s unfortunate that the business interests have not stepped forward as loudly as they should have,” Bill Daley, the White House chief of staff, said in an interview with Bloomberg Television July 26. “You’ve had a silence from the business community to the political establishment over the last number of years that’s been unfortunate.”

The article later offers the opinion of just one business professor, which attributed the inaction of businessmen to embarrassment that their party, the Republicans, were doing what they were doing, to explain the business community’s inaction on the debt ceiling.

“They’re caught,” [business professor Warren] Bennis said in an interview July 29. “They tend to be Republican and they are embarrassed by what they see from Republicans,” Bennis said. “It’s a real stalemate and CEOs want to stay clear of it.”

Yet nowhere does the article–or people like Kessler, Begich, Warner, or Daley–consider the possibility that the business community got just what it wanted with this debt fiasco.
They never consider the possibility that the business community might be thrilled with inane cuts to the federal government–probably, ultimately, targeted at the social safety net. They never consider the possibility that they business community might benefit from the chaos and uncertainty that this debate generated. They never consider the possibility that the business community might like how this legislative fight made our country even more of a banana republic.

I’d suggest it’s worth considering more seriously. After all, the business community has embraced (you could say, returned to) a model that relies on the insecurity of workers to demand compliance and cheap labor. The cuts this deal will ultimately bring about add to worker insecurity.

And just as importantly, most of these multinationals don’t much care for the US, except insofar as it has a big military to defend “US” business interests overseas. The ones describes that did lobby for a debt ceiling–banksters like JP Morgan or health care companies like Blue Cross or Pfizer–have been beneficiaries of big help from the federal government in recent years. They’re not done looting it yet! But the others are multinational companies; the US is just a convenient place to incorporate.

Moreover, businesses have been pushing an ideology for the last 30 years that the government is dysfunctional and therefore society must cede more control to businesses. Even as businessmen like Rick Snyder and Rick Scott prove failures at governance, the follies in DC still, at least, provide evidence that government is worse.

Of course these businessmen didn’t lobby for a reasonable solution to this false crisis. They liked the false crisis.

The Chief of Staff from JP Morgan

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Joe Subday has a post focusing on Bill Daley’s role in the serial capitulation Obama is making to the debt hostage-takers.

Politico’s David Rogers and Carrie Budoff Brown report on the $3 trillion deal under discussion between Obama and Boehner. And, despite denials, it appears that Obama and Boehner are negotiating and the number is $3 trillion, mostly in spending cuts. Towards the end of the article is this nugget:

At the same time, the White House’s tactics in this situation most infuriate Senate Democrats, who complain that the president’s chief of staff, Bill Daley, is too quick to make concessions to Boehner, even at the party’s expense.

Yes, they are quick to make concessions at the White House. Like everyone, I’ve been trying to figure out what’s really going on. One trusted source told me that one problem is definitely Daley:

Bill Daley is behind the White House’s capitulation. He’s the Democrat’s Neville Chamberlain. It’s dominoes of caving — one cave leads to another. They are so desperate for a deal that they’ll take anything at any price. They won’t fight for anything.

Now, of course, Daley works for Obama. He hired Daley, who used to be on the Board of Third Way, the group always willing to sell out on Democratic principle. And, that’s what Daley is doing on Obama’s behalf.

Now, Joe’s right: Daley ostensibly works for Obama, and so Obama is ultimately responsible for those capitulations.

But is Obama the only one Daley’s working for?

Daley was hired, after all, because the banksters had convinced Obama that seemingly endless supplies of free money wasn’t enough for them; they also needed a bankster in the White House.

And so here we have an unelected bankster in a key role at a moment of crisis. And every time Boehner asks, Daley reportedly offers up yet more austerity in the hopes that he can prevent uncertainty in Jamie Dimon’s world.

It’s funny. Unlike Obama, Daley men aren’t exactly known for their poor negotiating skills. But this one sure seems to be acting helpless in the face of a bunch of demands for more. And ultimately, it won’t be the TeaPartiers who benefit from that process. It will be Jamie Dimon.

The Brothers Daley Cover Up Abuse of Suspects Again

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You may have noticed I snuck away for the weekend. Mr. EW and I decided to take the opportunity of Athenae’s book party to head to Chicago for a weekend. In spite of the fact that Athenae’s book was obviously timed to St. Paddy’s Day, in spite of the fact that I’ve been to Chicago for St. Paddy’s Day before, I somehow forgot there’d be thousands of drunk fake Irishmen in the streets from dawn to dusk.

Gaping at the green river is about as close as my Irish husband wanted to get to one of the legendary St. Patrick’s Day celebrations on earth. (He’s just jealous because Dublin’s celebration sucks shamrock by comparison.)

But I wasn’t entirely ignoring current events. One of the women in my hotel, up from Indiana for the weekend, told me she came up to see “our Mayor Daley” in the parade. “For the last time,” I thought, as I realized how this holiday is a bit of a send-off to the Mayor.

And so I was already thinking about the Daley empire when I read of brother Bill’s reasoned reflection before he determined State Department spokesperson PJ Crowley had to go.

While some White House officials knew of Crowley’s comments, White House chief of staff Bill Daley learned of them when ABC News asked that question of the president. Daley told White House officials of Crowley, “he’s done.”

Another Daley covers up abuse of suspects, I thought.

I was thinking of Richard M’s role in covering up the torture committed by Jon Burge and other Chicago cops.

Last Wednesday, IL Governor Pat Quinn signed a law outlawing the death penalty in Illinois. Next Wednesday, former Chicago Police Commander Jon Burge reports for a four and a half year prison sentence for lying about torturing one suspect–though credible evidence suggests he tortured at least 50 and possibly as many as 200 police suspects. Those are the latest chapters in the long exposure of the systematic torture of black suspects by Burge’s South Chicago detective team, and the wrongful conviction of many of those suspects based on tortured confessions.

And Richard M is in the middle of the scandal, largely because as Cook County’s State’s Attorney he pawned off evidence of torture rather than investigate and prosecute.

Daley was Cook County’s state’s attorney for seven years during the 1980s, and his office approved at least 55 felony murder charges against black males who claim they confessed only after they were beaten, suffocated, burned and electro-shocked by Burge and his detectives.”Many of our men, or sons, fathers, brothers are behind bars for crimes they did not commit,” said one demonstrator Friday.

As demonstrators protested outside City Hall, the mayor attempted to explain this 1982 letter from then-police superintendent Richard Brzeczek expressing concern about torture allegations to then state’s attorney Daley. The mayor said he read it and referred it to subordinates believing the police department had the ultimate responsibility to investigate office misconduct.

“It’s up to the Chicago Police Department. That responsibility lies within them,” Daley said.

“What did Daley do about it? Absolutely nothing. And what does the report say about that? Nothing,” Read more →

A Modest Proposal: Indefinitely Detain the Banksters

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Obama has declared that he has the authority under the 2001 AUMF to indefinitely hold anyone “if it is necessary to protect against a significant threat to the security of the United States.”

He doesn’t say that person has to be a terrorist, much less part of al Qaeda. He doesn’t say that person has to have any tie to the enemy as defined by the 2001 AUMF, that is, “those nations, organizations, or persons [the President] determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons.” He doesn’t even say that person has to have been rounded up on a battle field, however you define that.

If detaining someone indefinitely is “necessary to protect against a significant threat to the security of the United States,” Obama says, he can do it.

So I say, fine! Let’s indefinitely detain the banksters that crashed our entire economy. They fairly routinely hold the workers and taxpayers of this country hostage these days, just like terrorists do. And when you account for the number of people they’ve left homeless and hungry, the damage they have done may well surpass that of the attack on 9/11. Clearly, the banksters are a “significant threat to the security of the United States”–they’re the biggest threat to the security of the US. And the genius of Obama’s EO is it doesn’t even require the detainees, themselves, represent a threat. Rather, if their detention is necessitated by the security threat, we can detain them. We don’t have to trouble with sorting the good banksters, like Jamie Dimon, from the bad banksters, like Dick Fuld. We can detain them all, just to make sure we don’t accidentally miss any. (Sorry Bill, we can’t take any risks, so this includes you too!)

Simple as that. Our biggest security threat solved!

Mind you, Obama’s Executive Order laying out this amazing limitless standard specifies that the EO only applies to “those detainees held at Guantanamo on the date of this order.”

But we all know that EOs don’t have to say what they mean. We know OLC ruled back in 2001 that, “There is no constitutional requirement for a President to issue a new executive order whenever he wishes to depart from the terms of a previous executive order. Rather than violate an executive order, the President has instead modified or waived it.” We know Bush did just that–change the terms of an EO without changing the text, so none of us had warning we were being spied on. But when national security is threatened–our government has decided–it’s okay to change EOs with no warning.

So all Obama has to do to authorize the indefinite detention of the banksters that represent the biggest threat to our security right now is simply pixie dust his EO, and voila! He can round up the banksters, put them on some tropical island somewhere (I suspect they’ll feel right at home in the Cayman Islands).

It’s as easy as that, vanquishing a security threat, arbitrarily detaining people in the name of security forever.

Right?

Or Maybe Your Profit Levels and Bonuses Are Simply Obscene?

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Jamie Dimon says they’re going to have to chase 5% of their customers away in response to limits Dodd-Frank put on the usurious rates banks charge merchants for each debit card transaction.

Federal limits on debit card processing fees will force banks to charge customers more for services, making accounts too expensive for as many as 5 percent of customers, JPMorgan Chase’s chief executive Jamie Dimon said Friday.

The rules, proposed as part of the Dodd-Frank financial reform law, would cap the fees that merchants pay banks for processing debit card transactions at 12 cents each.

That is almost 75 percent less than the average 44 cents per transaction that banks get now.

U.S. banks could lose about $13 billion of their annual industry debit processing revenues because of the rules, which the Federal Reserve proposed last month.

Dimon also announced today that their profit was up 47% last quarter. And that’s after the $10 billion in bonuses Dimon’s banksters will share.

In other words, JP Morgan could easily afford to keep serving its poorest customers, just by accepting reasonable profit and bonus levels instead of the positively immoral ones they’re now getting. But it has chosen, instead, to push millions into “unbanked” status, I guess because those people aren’t as worthwhile as people as JPM’s MOTUs are.

Note, too, that Chase is one of the national leaders in contracting with states to provide debit cards for state unemployment benefits. I wonder if JPM will forgo these big state contracts and captive consumers as part of its “unbanking” plans?

Third Way “Solution” to Foreclosure Fraud? Limits on Rule of Law

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The Third Way has just released a response to the US Bank v. Ibanez decision that purports to offer a solution to the foreclosure problem.

I’m sure others will point out other problems with this document: its embrace of the “strategic default” myth, its focus on the Uniform Commercial Code rather than the Pooling and Servicing Agreements that govern securitization, its confusion of the dual track problem with the robo-signer problem, its apparent ignorance of other problems in foreclosure fraud, such as insufficient notice to homeowners, even though that, too was an issue in Ibanez.

But I wanted to point out something about the first step in its purported remedy, in which it describes how to protect injured homeowners. It includes among its injured homeowners:

  • Those who were current on their mortgage payments but who were foreclosed on anyway
  • Those who were robo-signer foreclosed via on while awaiting a modification decision
  • Those who were robo-signer foreclosed while in the process of short-selling their home
  • Those who had made a payment on delinquent mortgage but were foreclosed “because of a faulty process that failed to take that payment into account”

Note how carefully this paper avoids admitting the improper payments that servicers often use to force people into foreclosure, which are a separate problem from robo-signing?

In any case, here’s the remedy the Third Way advocates:

These aggrieved borrowers should be entitled to four things: (1) the immediate suspension of foreclosure proceedings; (2) the right to sue for actual damages caused by a wrongful signed foreclosure; (3) access to a 30-day expedited application process for loan modification if they have an application pending (but without a guarantee the modification will be granted); and (4) a refund of any fees and charges assessed by the bank, as well as protection from any deficiency judgments (if a borrowers was seeking a modification or short sale). [my emphasis]

It goes on to suggest that banks should be in charge of points 1, 3, and 4. That is, while elsewhere it espouses putting the Consumer Finance Protection Board in charge of standardizing servicing, it does not want the government involved in the process of “protecting injured homeowners.” Maybe that’s so it can retain for the banks–as it does later in the paper–sole discretion whether or how to modify loans. That is, even while the paper admits Ibanez shows that the banks still have a shitpile problem, it doesn’t want banks to take the hit for the fact that they don’t have legal standing to foreclose on the loans they’re foreclosing on. Nor does it really provide a solution for what to do with truly delinquent loans on which banks do not have legal standing to foreclose. Nor does it say what happens when people are denied a modification by a bank that doesn’t have the legal right to foreclose.

Meanwhile, the paper remains silent on who should be in charge of point 2.

You know, the right to sue, that right protected by the Constitution?

But of course, point 2 is not actually a protection. Rather, it is a limitation on their protection. Rather than admit that property owners have the right to sue in this country, the Third Way thinks that we can best protect them by limiting their right to sue to actual damages.

And the Third Way supported limit to rule of law goes further. It calls for Congress to bail out the banks holding shitpile by:

  • Eliminating foreclosure challenges on vacant or abandoned homes
  • Eliminating foreclosure challenges on borrowers who defaulted 18 months ago who have not cured the default
  • Instituting 12-month statutes of limitation on “paperwork-related” lawsuits

To begin with, their envisioned bailout doesn’t account for many realities: homeowners who were harassed into leaving their home, homeowners who are only in default because of the often-undisclosed and exorbitant fees banks slap onto late payments, and homeowners who did not get proper notice of the foreclosure. The Third Way wants to take away the right to sue of all these people, even though they have a legitimate grievance.

But don’t worry, Third Way says, this does not amount to letting banksters avoid any consequences for their actions:

What it emphatically does not do is shield bad actors from the consequences of their behavior. A safe harbor and statute of limitations will do nothing to protect banks and their lawyers from the investigations currently underway by state attorneys’ general across the country.15 Nor will it prevent disbarment and other consequences that are likely to be suffered by lawyers at the “foreclosure mills” at the heart of the robo-signing scandal. The now infamous firm headed by David J. Stern in Florida, for example, “has seen its fortunes plummet, with major clients, like Fannie Mae, Freddie Mac, and Citigroup, cutting ties to Stern. Stern’s operation has also laid off hundreds of employees in recent weeks.”

The consequences the Third Way believes are adequate for bankster trying to take property they don’t have legal standing to take, resorting to legal fraud to do so, involves an Attorney Generals’ investigation that itself says will include no criminal charges, disbarment no one expects to happen, and the loss of business.

But nowhere does the Third Way envision the banksters will have to take a financial hit on the value of these loans, much less any legal consequences for fraud. Now, ultimately, the former may well be negotiated by the Attorneys General. But the Bill Daley-connected Third Way seems to see the Ibanez decision as a moment to offer pseudo-solutions that are not only inadequate, but stop short of what would otherwise come out of the Attorneys General “investigation.”

In short, this seems like an admission by the Third Way that the shitpile remains a serious problem. But also an attempt to preempt processes already underway to solve the shitpile. Not to mention eliminate legal recourse for many of the people who have been wronged here.

Update: The more I think about this paper, the more it seems like Third Way is saying, “Congress, we’ve had a major setback in the courts. Can you please make sure to 1) limit access to the courts and 2) preventing any more of these judgments that will reveal just how deep the shitpile really is?”

On Gate-Keepers and Pragmatists

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At the beginning of Obama’s term, when he talked about governing as a pragmatist, I perhaps foolishly believed he meant not pragmatism as DC understands it–as a principle-less squishy middle–but as the Pragmatist school of philosophers would mean it–as someone fundamentally open to and respectful of the ideas and viewpoints of all. Mind you, it was clear that his top advisors–especially David Axelrod–used the word pragmatist in the tired old DC way. But out of whatever idealism or naivete, I believed a smart guy from Hyde Park like Obama, who fancied himself an education reformer, couldn’t help but to have internalized the tradition of Dewey.

Thus far in Obama’s term, it hasn’t worked out that way.

That’s because, regardless of what Obama believes or has internalized, Big-P Pragmatism requires a certain kind of process–an openness to multiple viewpoints–and such process has not existed because of the gate-keepers at Obama’s White House thus far.

Now, to Obama’s credit, every single account of Obama’s decision-making includes some description of what a good listener he is. There’s always the scene where Obama listens intently to the disparate viewpoints on a subject, makes those people believe he has heard them with respect, and then makes his decision.

There are the multiple stories that relate events that take place before such sessions, wherein someone–most often Larry Summars but also Rahm–instructs a person in no uncertain terms that they will not be able to present their viewpoint to the President. There are even stories about minor progressive successes–such as Elizabeth Warren getting Obama’s support for the Consumer Finance Protection Board–that include a person finding a clever way around Summers or Rahm.

Now there’s always the very real possibility that for all that Obama fancies himself a Pragmatist, his unacknowledged very real ideological stances won the day. It may well be that Obama will never succeed in behaving as a Pragmatist because he’s just a lot more ideologically centrist than he thinks he is.

But a significant part of the problem is that for most of his term (I suspect, but don’t know, that Pete Rouse was much better on this point), he has had gate-keepers who either are fundamentally ideological beings (Summers) or are the squishy DC kind of pragmatist (Rahm), who prevented him from pursuing a process that allows real pragmatism.

Which brings us to Bill Daley.

I oppose Bill Daley because he has been, ideologically, on the wrong side of just about every issue. I oppose him because the last thing Obama needs is another bankster in the White House. I oppose him because the optics are horrible. I oppose him because when the next JPMorgan scandal hits–there are a number brewing–it will taint the White House by association.

But given my understanding of Obama’s failed pragmatism, I do take Howard Dean’s comments on Daley seriously.

The core issue is the contempt that not just the progressives were treated by–a lot of people were treated by–a bunch of senior advisors around the President who’ve been here for 20 years and thought they knew everything and we knew nothing.

[snip]

It was more than just Gibbs or Rahm, it was the whole mindset that was going on there. That will change dramatically especially if Bill Daley comes in, who I don’t agree with a lot of stuff politically but I do think a) he’s a grown-up and b) he gets that you don’t treat people like you know everything and they don’t.

Now, Dean is a pragmatist (though with none of the intellectual conceit about being one that Obama has). And so while I disagree with Dean’s characterization that Daley qualifies as someone from outside of Washington, I am very struck by Dean’s description of contempt being the key issue here.

The Chief of Staff’s job is to serve as a gate-keeper. Any Chief of Staff (or Economic Advisor in Summers’ case or Vice President in Cheney’s) can use that position to ensure that only their ideologically-favored choices are presented to the President. Or he (always he, it seems) can make an effort to serve the President’s claim to real pragmatism.

I’m not all that optimistic about Daley. All the myth-making about Obama’s bad relationship with the business community and the seeming certainty that hiring a bankster like Daley will fix that suggests that the whole point of this is about even further narrowing the ideological gate through which ideas and people get presented to the President.

But it is true that Obama’s real skill at listening isn’t worth a damn thing if Rahm or Summers are guarding his door. Let’s hope Daley will change that.