By Pam Martens: February 21, 2013
President Obama covered so much ground in his February 12 State of the Union address that it’s easy to lose sight of the four words he failed to mention – even once: Wall Street and campaign finance. Nothing is going to materially change in America in terms of restoring fairness, opportunity, income equality and representative government until those two areas are radically reformed. Instead, the President offers platitudes and empty promises.
To confront the malignancy that is shriveling our democracy, Americans must begin to separate the symptoms from the disease. The diseases are Wall Street’s institutionalized wealth transfer system and the use of that unjustly created vast wealth by corporations and individuals to finance political campaigns.
The President can make endless promises about lifting up the middle class, eradicating poverty and leveling the playing field – but these are just the symptoms of the two areas he refuses to tackle for serious reform: Wall Street and campaign finance.
When the President said in his speech that consumers “enjoy stronger protections than ever before,” what immediately came to mind was the fact that after destroying trillions of dollars of middle class wealth in the dot.com bust of 2000 with rigged stock research and pump and dump schemes, then crashing the market and economy in 2008 through 2010 – creating losses that the General Accountability Office estimates could top $22 trillion — there has been no meaningful reform of Wall Street and no prosecutions of a multitude of criminal acts involved in the meltdown.
And yet, the President has made no mention of replacing Eric Holder, the U.S. Attorney General in charge of criminal prosecutions of Wall Street. As we have previously reported, the high posts held at the U.S. Department of Justice by former law partners from Covington and Burling, a firm deeply rooted in representation of Wall Street firms, strongly suggests the President is not serious about rooting out corruption and creating a fair deal for investors and the middle class.
On January 22 of this year, PBS aired a program titled The Untouchables, an in-depth investigation of why the U.S. Justice Department had failed to prosecute any top Wall Street executive for criminal acts leading to the banking collapse. A quote from that program tells you all you need to know about the President’s sincerity about rooting out corruption and making America a level playing field: “We spoke to a couple of sources from within the Criminal Division, and they reported that when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.”
Instead of indicting Wall Street’s worst criminals, this is a stunning indictment of the highest law enforcement office in our land. Since 2008, the Federal government has been aware of major Wall Street firms engaging in the rigging of Libor interest rates – a benchmark rate used in a multitude of financial products impacting the middle class and local government finances. How does a serious Justice Department investigate an international banking cartel without issuing subpoenas? Are we to assume that the monetary Libor settlements that have thus far been made by the Justice Department with major banking institutions were conducted on the basis of self reviews or the review of outside counsel. Wall Street has long been known for abysmal self regulation; is it now being allowed to investigate itself as well?
The middle class is unfortunately tethered to Wall Street, thanks to the gutting of defined benefit pensions for the majority of workers, making financial security in retirement dependent on 401(k) plans invested in the stock market. Sadly, that stock market is one that Wall Street continues to rig unabated through dark pools, high frequency trading, internalization, insider/proprietary trading and a host of other artifices.
According to a Gallup poll conducted in April 2011, the number of Americans who say they will not have enough money to live comfortably in retirement reached a new high of 53 percent in 2011. And the anxiety is not limited to those nearing retirement. According to a Pew Research survey conducted in 2012, 53 percent of adults between the ages of 36 and 40 said they are either “not too” or “not at all” confident that their income and assets will last through retirement.
According to Professor Kenneth Thomas of the University of Missouri-St. Louis, “the United States has the highest elder poverty rate, 25% (measured as 50% of median income), of any industrialized nation bigger than Ireland. An estimated $6.6 trillion shortfall in retirement savings shows how the shift from traditional pensions to 401(k) plans has been totally inadequate to meet people’s future needs.”
Why is the average American losing so much ground in a so-called democracy — because their representative government now represents the billionaires and millionaires who can fund high-priced political campaigns. According to CNN, as of November 5, 2012, $4.2 billion had been raised just for races for the White House and Congress. As of that date, President Obama had spent $931 million versus over $1 billion by Mitt Romney, according to the Center for Responsive Politics.
But equally alarming, according to the Center for Responsive Politics and the Center for Public Integrity, 149 super-rich donors were able to funnel $500,000 or more into these campaigns.
With 46.2 million Americans living below the poverty rate, defined by the government as $23,021 annual income for a family of four, how can their voice or that of the middle class be heard in Washington over that of the super rich donor base?
The final phase of the buyout of Washington comes courtesy of the 2010 U.S. Supreme Court decision, Citizens United v. Federal Election Commission. That decision opened the spigots to unlimited spending by corporations and wealthy front groups called Super PACS.
The President said in his State of the Union address: “It is our unfinished task to make sure that this government works on behalf of the many, and not just the few…The American people have worked too hard, for too long, rebuilding from one crisis to see their elected officials cause another.”
By failing to include in his mandate the restoration of the Glass-Steagall Act – the only serious reform that can rein in Wall Street’s looting machine – and pushing for the rewriting of campaign finance laws, the President will spend the next four years tinkering with symptoms while allowing the disease to eat further away at American democracy.