One Betrayal Too Many

By Robert Scheer

It’s getting too late to give President Barack Obama a pass on the economy.
Sure, he inherited an enormous mess from George W., who whistled “Dixie” while
the banking system imploded. But it’s time for Democrats to admit that their guy
bears considerable responsibility for not turning things around.

He blindly followed President Bush’s would-be remedy of throwing money at the
banks and getting nothing in return for beleaguered homeowners. Sadly, Obama has
proved to be nothing more than a Bill Clinton clone triangulating with the Wall
Street lobbyists at the expense of ordinary folks.

That fatal arc of betrayal was captured by a headline in Tuesday’s New York
Times: “Soaring Poverty Casts Spotlight on ‘Lost Decade.’ ” The Census Bureau
reported that there are now 46.2 million Americans living below the official
poverty line—the highest number in the 52 years since that statistic was first
measured—and median household income has fallen back to the 1996 level. As
Harvard economist Lawrence Katz summarized this dreary news: “This is truly a
lost decade. We think of America as a place where every generation is doing
better, but we’re looking at a period when the median family is in worse shape
than it was in the late 1990s.”

The late 1990s, it should be noted, is when President Clinton, working with
Phil Gramm, the Republican head of the Senate Banking Committee, pushed through
two critical pieces of legislation ending effective regulation of the banks. The
Gramm-Leach-Bliley Act smashed the wall between high-flying Wall Street
investment firms and the once staid commercial banks entrusted with the deposits
and mortgages of America’s innocent souls. The next year Clinton signed the
Commodity Futures Modernization Act, banning any effective regulation of the
rapidly expanded trade in the collateralized debt obligations and credit default
swaps that have since haunted the world’s economy.

The collapse of those toxic securities led to the housing crisis and resulted
in 15.1 percent of Americans now living in poverty, the same level as when Bill
Clinton took office. But thanks to another one of Clinton’s grand triangulation
strategies, the one he called “welfare reform,” the impoverished are now denied
the safety net that existed before the Clinton presidency. Although 22 percent
of U.S. children are now below the poverty line, the Aid to Families With
Dependent Children program no longer exists.

Some of us who voted for Obama thought he was no Clinton, but he was and is,
as was demonstrated in his first days in office when he appointed two key
veterans of the Clinton Treasury Department, Lawrence Summers and Timothy
Geithner, to head up the Obama economic team. Geithner, as treasury secretary,
is the point man for the administration’s push to pass the so-called American
Jobs Act, which the president hyped in his Sept. 8 speech to Congress and the
nation. It was pure Clinton bull: I feel your pain while I help the superrich
pick your pocket.

Space permits only one example, that of General Electric CEO Jeffrey Immelt,
whom Obama selected to head his “Jobs Council of leaders from different
industries who are developing a wide range of new ideas to help companies grow
and create jobs.” Was that some cruel joke? GE under Immelt has grown and
created jobs, but they are abroad rather than in our own troubled country. As a
result, by the end of last year, only 134,000 of GE’s workforce of 304,000 were
based in the United States; the remainder—and 82 percent of the company’s
profit—were sheltered abroad.

Ironically, GE’s ability to avoid taxes was restricted by President Ronald
Reagan, who had once been a spokesman for GE but was outraged by the company’s
use of tax loopholes. It remained for President Clinton to offer GE some new tax
breaks. As a result of being able to shelter profit abroad last year, GE had
profits of $14.2 billion but claimed a tax benefit of $3.2 billion. Immelt was
the elephant in the room when Obama said in his speech last week: “Our tax code
should not give an advantage to companies that can afford the best-connected
lobbyists. It should give an advantage to companies that invest and create jobs
right here in the United States of America.”

It has been a long time since GE was creating jobs here during its “better
light bulb” days, and the last spurt of GE participation in the U.S. economy
came through its unit GE Capital, which specialized in toxic mortgage lending
that once produced more than half of the company’s profits but ultimately led to
a taxpayer bailout.

Someone who knows a great deal about that sort of scam is Elizabeth Warren,
the consumer advocate and Harvard law professor pushed out of Obama’s inner
circle. In launching her campaign for the U.S. Senate in Massachusetts this
week, Warren posted a video that clearly defined the enemy:

“Washington is rigged for big corporations. A big company, like GE, pays
nothing in taxes, and we’re asking college students to take on even more debt to
get an education?”

Obama in appointing Immelt last January praised him as a business leader who
“understands what it takes for America to compete in the global economy.”
Apparently, what Immelt understands is that what it takes to satisfy corporate
interests instead of national needs is conning a president into looking the
other way while you send jobs abroad.