John Heilemann is a thoroughly entrenched member of the Beltway mentality. Judging by his and political hack Mark Halperin’s book “Game Change” anonymous and unverifiable quotes and gossip pass for journalism. We’re all more or less forced to pay attention to Halperin and Heilemann because their respective employers – Time and New York Magazine, in addition to their frequent appearances on TV – provide them with a huge megaphone. Thus Heilmann’s piece on Wall St and Obama ( including Democrats) is a bit of a surprise in its portrait of the people who knee capped the economy sending over 10% of the work force into unemployment and millions into foreclosure. That Heilmann doesn’t blame the all powerful low-income Americans is a surprise after the Game Change debacle. Obama Is From Mars, Wall Street Is From Venus – Psychoanalyzing one of America’s most dysfunctional relationships
The speed and severity of the swing from enchantment to enmity would be difficult to overstate. When Obama was sworn into office, Democrats on Wall Street rejoiced at the ascension of a president in whom they saw many qualities to admire: brains, composure, bi-partisan instincts, an aversion to class-based combat. And many Wall Street Republicans—after witnessing the horror show that constituted John McCain’s response to the financial crisis—quietly admitted relief that the other guy had prevailed.
Today, it’s hard to find anyone on Wall Street who doesn’t speak of Obama as if he were an unholy hybrid of Bernie Sanders and Eldridge Cleaver. One night not long ago, over dinner with ten executives in the finance industry, I heard the president described as “hostile to business,” “anti-wealth,” and “anti-capitalism”; as a “redistributionist,” a “vilifier,” and a “thug.” A few days later, I recounted this experience to the same Wall Street CEO who’d called the Volcker Rule a testicular blow, and mentioned I’d been told that one of the most prominent megabank chiefs, who once boasted to friends of voting for Obama, now refers to him privately as a “Chicago mob guy.” Do all your brethren feel this way? I asked. “Oh, not everybody—just most of them,” he replied. “Jamie [Dimon]? Lloyd [Blankfein]? They might not say Obama’s a socialist, but they come pretty close.”
[ ]…Another, not inconsistent, theory is that the money changers aren’t merely forgetful but mildly deluded. “They’ve created a narrative where irrational actions by a few people plus the nature of government intervention forced them to do things inconsistent with their free-market philosophy and regular way of handling their business,” offers a Democratic financier. “So, yes, they took the TARP money, but only because they had to. None of them are sitting there saying to themselves, ‘You know, I was responsible for this crisis. Therefore, I’m really grateful to the government that it stepped in.’ This is not the narrative they have in their heads.”
But one of the city’s most successful hedge-fund hotshots offers a different surmise: “The majority of Wall Street thinks, ‘Hey, you lent us money. We did a trade. We paid you back. When you had me down, you could have crushed me, you could have done whatever you wanted. You didn’t do it! So stop your bitching and stop telling me I owe you, because I already paid you everything! The fact that I’m making money now is because I’m smarter than you!’ I think that’s where you’ve got this massive disconnect. In simple human terms, the government is saying, ‘I saved your life, and all you did was thank me once. You should be calling me every day: Thank you. Thank you.’ The guy who saved the life expects more. And the guy whose life is saved says, ‘I already thanked you!’ ”
Heilmann says that the Obama administration could well claim to have not just thrown Wall St a life jacket, but kept the world’s financial system from failing. An event that would have many of those Wall St whiners looking for jobs with real world compensation. Ironic that Heilmann is saying it, because no one n this administration seems to know how to highlight its successes to the public. I can understand some, though not all progressive complaints about how disappointing the administration’s economic policies have been, but I can’t understand how the Right can call Obama a socialist when he in fact saved capitalism. Except for what appears to be some mild financial reform, Democrats have rebuilt the economic house that Republicans burned down. Maybe that’s the reason for the Right’s outrage, at the psychological level they resent the hell out of having their fat pulled from the fire by a Democrat. Conservatives have never been big on humility or gathering wisdom from experience so they’ve dived head long into denial mode. That and they just enjoy the politics of character assassination. I’ll give Heilmann the last word,
Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system’s stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn’t need to be rebooted or downsized, merely better supervised.
The Right has already conveniently forgotten that Bush and Republicans were the ones that started the bail-outs of Wall St and Detroit. Actions now portrayed as a socialist grab for power over private enterprise. Now Republicans drenched in flop sweat hoping the public doesn’t tie all the pieces together and see the glowing neon moderation where the extreme Right see a war on free enterprise. That and they hope the economy doesn’t continue it’s recovery, no matter how slowly. Paul Krugman’s latest column is on the same article, The Old Enemies
And oil and gas companies, always Republican-leaning, have gone all out, bestowing 76 percent of their largess on the G.O.P.
These are extraordinary numbers given the normal tendency of corporate money to flow to the party in power. Corporate America, however, really, truly hates the current administration. Wall Street, for example, is in “a state of bitter, seething, hysterical fury” toward the president, writes John Heilemann of New York magazine. What’s going on?
One answer is taxes — not so much on corporations themselves as on the people who run them. The Obama administration plans to raise tax rates on upper brackets back to Clinton-era levels. Furthermore, health reform will in part be paid for with surtaxes on high-income individuals. All this will amount to a significant financial hit to C.E.O.’s, investment bankers and other masters of the universe.
Now, don’t cry for these people: they’ll still be doing extremely well, and by and large they’ll be paying little more as a percentage of their income than they did in the 1990s. Yet the fact that the tax increases they’re facing are reasonable doesn’t stop them from being very, very angry.
[ ]…From the outside, this rage against regulation seems bizarre. I mean, what did they expect? The financial industry, in particular, ran wild under deregulation, eventually bringing on a crisis that has left 15 million Americans unemployed, and required large-scale taxpayer-financed bailouts to avoid an even worse outcome. Did Wall Street expect to emerge from all that without facing some new restrictions? Apparently it did.
Goodness forbid people who get bonuses in the millions have to pay Clinton, or Reagan era tax rates. Grab the pitchforks. But wait Republicans bellyache, these poor beleaguered soldiers of capitalism add so much value to the economy, Earned Success?
It’s very hard to make a serious argument that the top 1%’s skyrocketing income has been due to the “creation of value in our lives or in the lives of others” and that they have been creating so much more value in the 00s than they were 30 years ago. This point becomes stronger when you realize that many of the top 1% or the top .1% are in finance, a field whose exploding profits seem to be closely linked to the subsequent destruction of so much value in the national and world economy. And, to lay it on a bit thicker, there’s interesting research from Robert Gordon — who, full disclosure, was my intro macroeconomics professor earlier this year — that a good portion of increasing income inequality within the top decile has been due to increases in CEO pay which have very little relationship to the creation of value in the sense Brooks is talking about:
There is a handy-dandy chart at the link. Let’s acknowledge that some modern labor could be defined as brain power, at least to the degree one has an aptitude and ability to be trained in complex financial transaction – we’re not talking physics and differential equations here. Even than it is ludicrous to think 1% of the working population creates the bulk of the nation’s wealth. The Great Recession should have taught even the most hard-headed Wall St worshiper that Citibank, Goldman and AIG’s financial division among others, were not making these bizarre derivative bets with their money (assets) they were making them with the average working American’s money and the supreme confidence they would never have to pay off if their bets went south.