25 February 2012

How Wall Street buys Washington

Oh, those fickle Wall Street bankers. In 2008, Barack Obama was their man for president. They lavished $71-million on the Democratic candidate, $10-million more than on his Republican rival. Goldman Sachs was Obama's major contributor. In the current campaign, they are laying out the largesse again, outspending all other special interest groups. So far, however, they have switched horses, investing twice as much in Mitt Romney's campaign as Obama's.

Romney holds a certain attraction for the bankers, of course. He is from their ranks, and he has promised to return Wall Street to the good old days of untrammeled greed. But, not to worry, Obama will get his share. That's how the bankers play it. They really aren't that concerned with who wins; their goal is to control the agenda and frame the debates. This means that, while they have their favourites, they are generous to both sides. No matter who wins, the winner is obligated to the bankers.

After all, they have little reason to be unhappy with Obama. Oh yes, he spoke out disapprovingly about the "fat cat" bankers and promised legislation to rein them in, but that was rhetoric for the rabble, designed to allay the righteous anger of the masses. The bankers understand that politicians have to display their populist side from time to time. All the while Obama was railing about fat cats, he was bailing out the banks with bundles of boodle and hiring the guys who had caused the problem as his economic advisers and chiefs of staff. Legislatively, all his administration has produced to control the excesses of Wall Street is the anemic Dodd-Frank Act (which Mitt Romney has pledged to repeal).

And then there's the tax issue. Back in the 50s and early 60s, The top marginal tax rate in the U.S. was 91 per cent. Today it's 35 per cent. Yet unemployment today is much higher and economic growth slower—pandering to the "job creators" clearly isn't an economically productive strategy. Nonetheless, seriously raising taxes is off the table, just where the bankers want it, even though the country is running massive deficits. Americans are, it seems, getting the government Wall Street pays for.

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