By Adrianne Appel | Inter-Press Service
BOSTON, Sep 26 – U.S. lawmakers and the George W. Bush administration are continuing their closed-door meetings through the weekend to try and fashion a softer 700-billion-dollar deal for Wall Street that will appeal to citizens angry at the prospect of the mega-corporate bailout.
Treasury Secretary Henry Paulson brought the plan to Congress on Sep. 19 in a three-page outline, and said it was necessary to prevent the collapse of the finance market due to complex trades involving subprime mortgages.
The plan would have allowed Paulson, a former CEO of Goldman Sachs, complete control of the massive payout with no oversight, no auditing and no plan of a payback to the taxpayer.
ACORN president Maude Hurd captured the nation’s sentiment when she hinted at the potential electoral fallout in a speech this week: “There is a palpable populist revolt rolling through towns and cities across the country, and if Main Street doesn’t get any real help with the mortgage out of this deal, the American people only have to wait a few weeks for a constructive outlet for their anger.”
ACORN is the nation’s largest grassroots community organisation of low- and moderate-income people, with over 400,000 member families in 110 cities across the country.
At the Capitol, members of Congress attempted to convince taxpayers — and voters — that they had their best interests in mind, and that meant a big bailout for Wall Street.
“Hundreds of billions of dollars that Americans invested in retirement accounts and mutual funds have evaporated,” and more surely would, warned Democrat Chris Dodd, Senate Banking Committee chairman, while giving the impression that the income security of average people is at stake.
This couldn’t be further from the truth, say those who study stock ownership. The average U.S. citizen owns very little or no stock, and wouldn’t be helped directly by an up-market.
“I think the middle class are not going to be very affected at all by a bailout. It’s something that is going to affect the very wealthy. Changes in the stock market won’t make much difference to the middle class,” Edward Wolff, a New York University economist, told IPS.
“It’s just a political gambit to help the rich recover from the stock market collapse. If you claim that everyone is suffering, it’s easier to get a bailout from Washington,” Wolff said.
In 2001, the richest 10 percent of families owned 85 percent of all outstanding stocks, about 85 percent of all financial securities and 90 percent of all business assets, according to Wolff.
As for the rest of the country, only 32 percent of households owned more than 10,000 dollars of stock, and only 25 percent of households owned more than 25,000 dollars worth of stock, Wolff said.
A 2007 report by the Government Accountability Office found that in 2004, just 36 percent of workers had any savings at all in a retirement account. Most U.S. citizens will depend on Social Security in retirement, the government programme that provides 30-40 percent of what was earned in their lifetimes.
The bad practices of the mortgage lending industry targeted people of colour and the elderly, in particular, according to a report by United for a Fair Economy.
Only 11 percent of subprime loans went to first-time buyers last year. The vast majorities were refinancing that caused borrowers to owe more on their homes under the guise that they were saving money. Many borrowers were talked into refinancing their homes to gain additional cash for things like medical bills, the report says.
African American borrowers will lose between 71 billion and 92 billion dollars, and Latino borrowers will lose between 75 billion and 98 billion dollars as a result of bad subprime loans, according to the report.
“A couple decades of deregulation have allowed people at the top of the financial food chain to benefit from millions of people, through unscrupulous mortgage lending practices,” Michael Lapham of United for a Fair Economy told IPS.
“Who are we most concerned about helping? Homeowners facing foreclosure or people who’ve made millions and billions on subprime lending?” Lapham asked.
The U.S. public seems especially peeved at the idea of helping companies that pay exorbitant salaries to their bosses, at a time when many people have seen a decline in their standard of living.
According to the Institute for Policy Studies, CEOs of large U.S. companies last year made an average of 10.5 million dollars, while the top 50 private equity and hedge fund managers pocketed an average of 588 million dollars each.
The institute notes that draft proposals floated by the chairs of both the House and Senate banking committees would allow Paulson to determine what qualifies as “inappropriate or excessive” executive compensation under the bailout plan.
“Secretary Paulson amassed a personal stock stash worth over three-quarters of a billion dollars as the CEO at Goldman Sachs,” said analyst Sarah Anderson. “He hardly strikes us as the appropriate arbiter of what’s excessive and what’s not.”
In a statement, Anderson said the nation needs clear and strict limits on CEO pay “so that taxpayers won’t have to worry about their money flooding into the pockets of top executives and encouraging another round of reckless behaviour.”
On Thursday, unions, and anti-poverty and peace groups took to the streets, staging large demonstrations on Wall Street and in many cities chanting, “No bailouts for billionaires.”
At the end of the day Thursday, it was hard-line Republicans, including Sen. Richard Shelby and Rep. Spencer Bachus, who stood firm against the bailout. Bachus told reporters that the Republicans do not want the U.S. to buy the bad debts of the companies, but instead to loan the companies money.
Their argument that the market could do more to fix itself was bolstered later Thursday evening, when troubled Washington Mutual bank, riddled with bad mortgages, was bought by J.P. Morgan Chase.
The Democrats want the bailout, one that would meter out the billions in installments and somewhat restrict the pay of CEOs, Dodd said.
“I don’t understand why the Democrats in particular didn’t feel they have the leverage to get more out of this deal. Congress has squandered an opportunity to actually help homeowners facing foreclosure,” Brenda Muniz, legislative director for ACORN, told IPS.
According to an analysis of U.S. Census data by the Centre for Budget and Policy Priorities, 18 percent of U.S. children lived in poverty in 2007.
The willingness of Congress to consider a 700-billion-dollar payout makes clear that Congress could budget other large sums to help end homelessness and hunger, and improve public education.
“When people go to Congress to ask for more affordable housing funds and are told there isn’t money, then along comes Wall Street and they say, ‘Oh sure we have 700 billion dollars for your bailout.’ It definitely makes you question our nation’s priorities,” Lapham said.
Peace and Justice Post 
The world’s greatest democracy?
October 23, 2008Elizabeth Schulte examines the reality behind the rhetoric about the American two-party system.
Socialist Worker, October 23, 2008♦
DURING THE last presidential debate, John McCain fired off a desperate last-minute accusation about forces “on the verge of maybe perpetrating one of the greatest frauds in voter history…maybe destroying the fabric of democracy.”
His claim was that the anti-poverty organization Association of Community Organizations for Reform Now (ACORN) was trying to fix the election for Barack Obama by turning in fraudulent registrations. The charge didn’t seem to have any grounding in fact–since ACORN itself pointed out the questionable registrations to election officials.
The Republican complaints about ACORN make a mockery of the very real stories of disenfranchisement in the U.S.–most notoriously, hundreds of thousands of African American voters in Florida, who were struck from the rolls in 2000, assuring George Bush’s theft of the White House.
The fact that ACORN pays workers to go out and sign people up to vote–mostly in poor and minority neighborhoods–raises another problem. Why, if the right to vote is so important to the fabric of U.S. democracy, doesn’t the government make its own effort to register the disenfranchised?
The truth is that even when no one is stealing a vote or intimidating a voter, American elections are far from democratic.
TAKE THE way the president is actually chosen. The president isn’t elected by popular vote, but by the Electoral College. Each state has electors based on their number of senators and representatives in Congress–which means every state gets at least two electors, no matter how many people live there. Because of this, states with small–and usually rural and overwhelmingly white–populations are overrepresented in the presidential election.
There are only two political parties in the U.S. that get a real hearing at election time. There have been times in U.S. histories when third parties threatened to shake up the two-party system–such as the 1930s, when there was sentiment for a labor party to represent workers–but these initiatives were almost always smothered.
Thus, third parties are kept out of most debates by rules and regulations written by the mainstream establishment, they are forced to jump through often insurmountable hoops to even appear on the ballot, and they are shut out of the media.
The Democrats and the Republicans, while they tout their differences during the election season, fundamentally represent the same interests–those few at the top of society who control the wealth.
So while the majority of people are supposed to believe that they are voting for a certain set of ideas or political positions represented by their party’s candidate, the reality is that the job of politicians, first and foremost, is to make sure that the interests of Corporate America are protected.
The U.S. calls itself the “world greatest democracy.” But there’s no real evidence to back up this claim. As Lance Selfa notes in his book The Democrats: A Critical History:
A case in point, Selfa writes, is the overwhelming Democratic Party victory in 2006 congressional elections–which was mostly the result of voters’ opposition to the Iraq war and their determination to throw out the pro-war Republicans. Despite this, the Democrats didn’t lift a finger to end the war after taking control of Congress; rather, they continued to fund it.
This undemocratic democracy isn’t relegated to the U.S. It exists the world over in different forms. This is because at the heart of bourgeois democracy is the illusion that elected officials make decisions based on the best interests of the people who vote them into office.
It is not simply that politicians are bought and paid for by particular wealthy people or industries–though they are corrupted by the system of campaign contributions. Beyond this, politicians are part of a state machine whose job is to preserve the status quo.
Like the cop and the judge, the elected official ensures that the basic class relationship prevailing in society doesn’t change–that a tiny minority controls all the wealth that is produced by the vast majority, the working class. The state poses as a neutral body, but as Karl Marx and Frederick Engels put it in the Communist Manifesto, “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”
There are also many crucial decisions about the direction of society that aren’t made through the ballot box. Voters don’t decide what is a fair wage, or whether they have health insurance, or whether their working conditions are too dangerous. The majority of the population sure didn’t have a say about the $700 billion bailout for Wall Street or the future of families hit by foreclosure.
But this doesn’t mean we’re powerless to make change. The actions of ordinary people have achieved extraordinary things–the abolition of slavery, the end of Jim Crow segregation, the eight-hour day–because those people organized themselves and fought for what they wanted and needed.
Continued . . .
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Tags:ACORN, democracy, Democratic Party, general strike in Seattle, John McCain, Lance Selfa, two-party system, United States
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