MUST READ: How the Oligarchs Took America by Andy Kroll

http://wammtoday.wordpress.com/2011/07/15/how-the-oligarchs-took-america-by-andy-kroll/

Tomgram: Andy Kroll, How the Oligarchs Took America

Posted by Andy Kroll    December 2, 2010.  (Editor’s note:  An older article, but still applicable now.)

Tomgram:  We already know that it’s party time for the financial elite who gave real meaning to the phrase “economic meltdown” in 2008, that bonuses are soaring, that corporate profits for the third quarter of 2010 are beyond the stratosphere, and that the corporate chieftains and Wall Street titans of our new gilded age have, as New York Times columnist Bob Herbert wrote recently, “waged economic warfare against everybody else and are winning big time.”

What we know far less about is the degree of the catastrophe they inflicted on the rest of us.  Here’s just one story that should be front-paged in our major newspapers, but for which, at the moment, you have to turn to Dollars and Sense, a modest if intriguing economic publication.  There, Jim Campen, professor emeritus of economics at the University of Massachusetts-Boston and an expert on racial discrimination in mortgage lending, has written a piece entitled, “Update on Mortgage Lending Discrimination: After a Disastrous Detour, We’re Back Where We Started.”

It may not sound like much, but what a horror story it tells.  If you were black or Latino in the 1980s or early 1990s and wanted to buy a home, the odds were that the banks had “redlined” your neighborhood and were denying you mortgage applications at “disproportionately high rates” compared to whites in similar economic circumstances.  In other words, you would have a tough time becoming a homeowner.  Then came those high-cost subprime loans whose fine print ensured that you would never be able to pay them back.  In a case of “reverse redlining,” they were aggressively targeted at black and Latino neighborhoods in numbers strikingly disproportionate to white neighborhoods.  Not surprisingly, when the housing bubble burst, the financial world shuddered, the economy went south, and wave after wave of foreclosures began to sweep across the country, it was black and Latino homeowners suffered the most.

In Boston in 2006, the peak year of the subprime lending boom, Campen discovered that “49% of all home-purchase loans to blacks, and 48% of all home-purchase loans to Latinos, were high-cost loans, compared to just 11% of all loans to whites.”  In the carnage that followed, he informs us, nearly 8% of black and Latino homeowners were foreclosed on, compared to 4.5% of whites.  In other words, while the people TomDispatch Associate Editor Andy Kroll calls “the New Oligarchs” bought Dom Pérignon and celebrated, they had let loose the financial equivalent of a neutron bomb on nonwhite neighborhoods in America.  It’s a scandal that should be at the top of the news, not in obscure magazines or at websites like this one, and it’s just a small part of the larger, distinctly un-American scandal that Kroll lays out below.  Tom   

The New American Oligarchy
Creating a Country of the Rich, by the Rich, and for the Rich

By Andy Kroll

There is a war underway. I’m not talking about Washington’s bloody misadventures in Afghanistan and Iraq, but a war within our own borders. It’s a war fought on the airwaves, on television and radio and over the Internet, a war of words and images, of half-truth, innuendo, and raging lies. I’m talking about a political war, pitting liberals against conservatives, Democrats against Republicans. I’m talking about a spending war, fueled by stealthy front groups and deep-pocketed anonymous donors. It’s a war that’s poised to topple what’s left of American democracy.

The right wing won the opening battle. In the 2010 midterm elections, shadowy outside organizations (who didn’t have to disclose their donors until well after Election Day, if at all) backing Republican candidates doled out $190 million, outspending their adversaries by a more than two-to-one margin, according to the Center for Responsive Politics. American Action Network, operated by Republican consultant Fred Malek and former Republican Senator Norm Coleman, spent $26 million; the U.S. Chamber of Commerce plunked down $33 million; and Karl Rove’s American Crossroads and Crossroads GPS shelled out a combined $38.6 million. Their investments in conservative candidates across the country paid off: the 62 House seats and six Senate seats claimed by Republicans were the most in the postwar era — literally, a historic victory.

Knocked out of their complacency, no longer basking in the glow of Barack Obama’s 2008 victory, wealthy Democrats are now plotting their response. Left-wing media mogul David Brock plans to create an outside group dubbed American Bridge in response to Rove’s Crossroads outfits that will fight in the trenches of 2012 campaign spending. Many more outfits like Brock’s will surely follow, as liberal and centrist Democrats brace for a promised $500 million onslaught by the Chamber of Commerce and others of its ilk.

Even the Obama administration, which shunned outside groups in 2008, has opened the door to a covert spending war. The Democrats will now fight fire with fire.  “Is small money better? You bet. But we’re in a fucking fight,” Democratic strategist and fundraiser Harold Ickes told me recently. “And if you’re in a fistfight, then you’re in a fistfight, and you use all legal means available.”

The endgame here, of course, is non-stop war. No longer will outside groups come and go every two years.  Now, such groups will be running attack ads, sending out mailers, and deploying robo-calls year-round in what is going to become a perpetual campaign to sway voters and elect friendly lawmakers. “We’re definitely building a foundation,” was how American Crossroads president StevenLaw put it.

This is what nowadays passes for the heart and soul of American democracy. It used to be that citizens in large numbers, mobilized by labor unions or political parties or a single uniting cause, determined the course of American politics. After World War II, a swelling middle class was the most powerful voting bloc, while, in those same decades, the working and middle classes enjoyed comparatively greater economic prosperity than their wealthy counterparts. Kiss all that goodbye. We’re now a country run by rich people.

Not surprisingly, political power has a way of following wealth.  What that means is: you can’t understand how the rich seized control of American politics, and arguably American society, without understanding how a small group of Americans got so much money in the first place.

That story begins in the late 1970s and continues through the Obama years, a period in which American policy has been so skewed toward the rich that we’re now living through the worst period of income inequality in modern history. Consider the statistics: 50 years ago, the wealthiest 1% of Americans accounted for one of every 10 dollars of the nation’s income; today, it’s nearly one in every four. Between 1979 and 2006, the average post-tax household income (including benefits) of the wealthiest 1% increased by 256%; the poorest households saw an increase of 11%; middle class homes, 21%, much of which was due to the arrival of two-job families.

Tax guru David Cay Johnston recently crunched new Social Security Administration data and discovered an even starker divide. On the one hand, the number of Americans earning a steady income declined by 4.5 million between 2008 and 2009, and the average wage in the U.S. dipped by 1.2%, to $39,055. On the other hand, the average wage among Americans earning more than $50 million per year was $91 million in 2008 and $84 million in 2009.

Harvard University economist Lawrence Katz put the situation Americans now find themselves in this way:

“Think of the American economy as a large apartment block. A century ago — even 30 years ago — it was the object of envy. But in the last generation its character has changed. The penthouses at the top keep getting larger and larger. The apartments in the middle are feeling more and more squeezed and the basement has flooded. To round it off, the elevator is no longer working. That broken elevator is what gets people down the most.”

Let’s call those select few in the penthouse the New Oligarchy, an awesomely rich sliver of Americans raking in an outsized share of the nation’s wealth. They’re oil magnates and media tycoons, corporate executives and hedge-fund traders, philanthropists and entertainers. Depending on where you want to draw the line, they’re the top 1%, or the top 0.1%, or even the top 0.01% of the population. And when the Supreme Court handed down its controversial Citizens United decision in January, it broke the floodgates so that a torrent of anonymous donations from this oligarchic class could flood back down from the heights and inundate the political lands below.

“The Thirty-Year War”

How did we get here? How did a middle-class-heavy nation transform itself into an oligarchy? You’ll find answers to these questions in Winner-Take-All Politics, a revelatory new book by political scientists Jacob Hacker and Paul Pierson. The authors treat the present figures we have on American wealth and poverty as a crime scene littered with clues and suspects, dead-ends and alibis.

Unlike so many pundits, politicians, and academics, Hacker and Pierson resist blaming the usual suspects: globalization, the rise of an information-based economy, and the demise of manufacturing. The culprit in their crime drama is American   politics itself over the last three decades. The clues to understanding the rise of an American oligarchy, they believe, won’t be found inNew York or New Delhi, but on Capitol Hill, along Pennsylvania Avenue, and around K Street, that haven in a heartless world for Washington’s lobbyists.

“Step by step and debate by debate,” they write, “America’s public officials have rewritten the rules of American politics and the American economy in ways that have benefitted the few at the expense of the many.”

Most accounts of American income inequality begin in the 1980s with the reign of President Ronald Reagan, the anti-government icon whose “Reaganomics” are commonly fingered as the catalyst for today’s problems. Wrong, say Hacker and Pierson. The origins of oligarchy lay in the late 1970s and in the unlikely figure of Jimmy Carter, a Democratic president presiding over a Congress controlled by Democrats. It was Carter’s successes and failures, they argue, that kicked off what economist Paul Krugmanhas labeled “the Great Divergence.”

In 1978, the Carter administration and Congress took a red pen to the tax code, slashing the top rate of the capital gains tax from 48% to 28% — an enormous boon for wealthy Americans. At the same time, the most ambitious effort in decades to reform American labor law in order to make it easer to unionize died in the Senate, despite a 61-vote Democratic supermajority.  Likewise, a proposed Office of Consumer Representation, a $15 million advocacy agency that was to work on behalf of average Americans, was defeated by an increasingly powerful business lobby.

Ronald Reagan, you could say, simply took the baton passed to him by Carter. His 1981 Economic Recovery and Tax Act (ERTA) bundled a medley of goodies any oligarch would love, including tax cuts for corporations, ample reductions in the capital gains and estate taxes, and a 10% income tax exclusion for married couples in two-earner families. “ERTA was Ronald Reagan’s greatest legislative triumph, a fundamental rewriting of the nation’s tax laws in favor of winner-take-all outcomes,” Hacker and Pierson conclude.

The groundwork had by then been laid for the rich to pull definitively and staggering ahead of everyone else. The momentum of the tax-cut fervor carried through the presidencies of George H.W. Bush and BillClinton, and in 2000 became the campaign trail rallying cry of GeorgeW.Bush. It was Bush II, after all, who told a room full of wealthy donors at an $800-a-plate dinner, “Some people call you the elites; I call you my base,” and who pledged that his 2001 tax cuts would be a boon for all Americans. They weren’t: according to Hacker and Pierson, 51% of their benefits go to the top 1% of earners.

Those cuts will be around a lot longer if the GOP has its way. Take Republican Congressman Dave Camp’s word for it. On November 16th, Camp, a Republican from Michigan, said the only acceptable solution when it came to the Bush-era tax cuts was not just upholding them for all earners, rich and poor, but passing more such cuts. Anything in between, any form of compromise, including President Obama’s proposal to extend the Bush cuts for the working and middle classes but not the wealthy, was ”a terrible idea and a total non-starter.”

Why should you care what Dave Camp says? Here’s the answer: in January, he’s set to inherit the chairman’s gavel on the powerful House Ways and Means Committee, the body tasked with writing the nation’s tax laws. And though most Americans wouldn’t even recognize his name, Camp’s message surely left America’s wealthy elites breathing a long sigh of relief. You could sum it up like this: Fear not, wealthy Americans, your money is safe. The policies that made you rich aren’t going anywhere.

Tear Down This Law

Where rewriting the tax code proved too politically difficult, demolishing regulations worked almost as well. This has been especially true in the world of finance.  There, a legacy of deregulation transformed banking from a relatively staid industry into a casino culture, ushering in an era of eye-popping profits, lavish bonuses, and the “financialization” of the American economy.

April 6, 1998: it’s a useful starting point in the story of financial deregulation. On that day, two well-known Wall Street denizens, Citicorp and Travelers Group, agreed to a historic $140 billion merger. The deal required much lobbying, but eventually the chiefs of these banks won an exemption from the Glass-Steagall Act, the New Deal-era law walling off commercial banks from riskier investment houses. The resulting institution, dubbed Citigroup, would be the largest supermarket bank in history, a marriage of teller windows and trading desks, customer banking and high-stakes investing — all suddenly under one deregulated roof.  It would prove an explosive, if not disastrous, mix.

The merger stirred visions of a future in which the U.S. would dominate the planet financially. All that stood in the way was undue regulatory red tape. At least that’s the way free marketeers like then-Republican Senator Phil Gramm of Texas saw it. Gramm, who as an aide to presidential candidate John McCain infamously called America a “nation of whiners,” was, in fact, the driving force behind two of the most influential pieces of deregulation in recent history.

In 1999, President Clintonsigned the Gramm-Leach-Bliley Act, a bevy of deregulatory measures that obliterated Glass-Steagall. In December of the following year, Gramm quietly snuck the 262-page Commodity Futures Modernization Act into a massive $384-billion spending bill. Gramm’s bill blocked regulators like the Securities and Exchange Commission (SEC) from cracking down on the shadowy “over-the-counter derivatives” market, home to billions of dollars of opaque financial instruments that would, years later, nearly demolish the American economy.

As presidents, both Bill Clinton and George W. Bush wrapped their arms around financial deregulation. As a result, in a binge of financial gluttony, Wall Street grew fat in ways never previously seen. Between 1929, the year the Great Depression began, and 1988, Wall Street’s profits averaged 1.2% of the nation’s gross domestic product; in 2005, that figure peaked at 3.3% as industry bonuses soared ever-higher.  In 2009, bad times for most Americans, bonuses hit $20 billion. So much wealth in so few hands.  Nothing explains the rise of the new American oligarchy more starkly.

Of course, it’s not just what politicians did that helped create today’s oligarchy, but what they failed to do. A classic example: in the 1990s, the Financial Accounting Standards Board (FASB), a private American accounting regulator, set its sights on a loophole big enough to drive a financial Mack truck through. Until then, stock options included in executives’ skyrocketing pay packages — potentially worth tens of millions of dollars when exercised — were valued at zero when issued.  That’s right: zero, zilch, nada.  When FASB and the SEC tried to close the loophole, however, big business leapt to its defense. An avalanche of money went into the pockets of an army of K Street lobbyists and leviathan business trade associations. In the end, nothing happened. Or rather, everything continued happening. The loophole remained.     

Citizens United‘s Brave New World

Hacker and Pierson ably guide us through 30 years of “winner-take-all” policymaking, politicking, and — from the point of view of the wealthy — judicious inaction. They offer an eye-opening journey across the landscape that helped foster the New Oligarchs, but one crucial vista appeared too late for the authors to include.

No understanding of the rise of our New Oligarchs could be complete without exploring the effects of the Supreme Court’s January Citizens United decision, which set their power in cement more effectively than any tax cut ever could. Before Citizens United, the rich used their wealth to subtly shape policy, woo politicians, and influence elections. Now, with so much money flowing into their hands and the contribution faucets wide open, they can simply buy American politics so long as the price is right.

There’s no mistaking how, in less than a year, Citizens United has radically tilted the political playing field. Along with several other major court rulings, it ushered in American Crossroads, American Action Network, and many similar groups that now can reel in unlimited donations with pathetically few requirements to disclose their funders.

What the present Supreme Court, itself the fruit of successive tax-cutting and deregulating administrations, has ensured is this: that in an American “democracy,” only the public will remain in the dark. Even for dedicated reporters, tracking down these groups is like chasing shadows: official addresses lead to P.O. boxes; phone calls go unreturned; doors are shut in your face.

The limited glimpse we have of the people bankrolling these shadowy outfits is a who’s-who of the New Oligarchy: the billionaire Koch Brothers ($21.5 billion); financier George Soros ($11 billion); hedge-fund CEO Paul Singer (his fund, Elliott Management, is worth $17 billion); investor Harold Simmons (net worth: $4.5 billion); New York venture capitalist Kenneth Langone ($1.1 billion); and real estate tycoon Bob Perry ($600 million).

Then there’s the roster of corporations who have used their largesse to influence American politics. Health insurance companies, including UnitedHealth Group and Cigna, gave a whopping $86.2 million to the U.S. Chamber to kill the public option, funneling the money through the industry trade group America’s Health Insurance Plans. And corporate titans like Goldman Sachs, Prudential Financial, and Dow Chemical have given millions more to the Chamber to lobby against new financial and chemical regulations.

As a result, the central story of the 2010 midterm elections isn’t Republican victory or Democratic defeat or Tea Party anger; it’s this blitzkrieg of outside spending, most of which came from right-leaning groups like Rove’s American Crossroads and the U.S. Chamber of Commerce. It’s a grim illustration of what happens when so much money ends up in the hands of so few. And with campaign finance reforms soundly defeated for years to come, the spending wars will only get worse.

Indeed, pundits predict that spending in the 2012 elections will smash all records. Think of it this way: in 2008, total election spending reached $5.3 billion, while the $1.8 billion spent on the presidential race alone more than doubled 2004′s total. How high could we go in 2012? $7 billion? $10 billion?  It looks like the sky’s the limit.

We don’t need to wait for 2012 to arrive, however, to know that the sheer amount of money being pumped into American politics makes a mockery out of our democracy (or what’s left of it). Worse yet, few solutions exist to staunch the cash flow: the DISCLOSE Act, intended to counter the effects of Citizens United, twice failed in the Senate this year; and the best option, public financing of elections, can’t even get a hearing in Washington.

Until lawmakers cap the amount of money in politics, while forcing donors to reveal their identities and not hide in the shadows, the New Oligarchy will only grow in stature and influence. Left unchecked, this ultimate elite will continue to root out the few members of Congress not beholden to them and their “contributions” (see: Wisconsin’s Russ Feingold) and will replace them with lawmakers eager to do their bidding, a Congress full of obedient placeholders ready to give their donors what they want.

Never before has the United States looked so much like a country of the rich, by the rich, and for the rich.

Andy Kroll is a reporter in the D.C. Bureau of  Mother Jones and an associate editor at TomDispatch.com. You can email him at akroll (at) motherjones (dot) com.

Copyright 2010 Andy Kroll.   Used with permission.

[Note for TomDispatch readers: Here’s a reminder that, in return for an always needed contribution to TomDispatch, you can get a copy of Andrew Bacevich's latest bestseller, Washington Rules, Adam Hochschild's stirring King Leopold's Ghost, or my own The American Way of War signed to you (or to any friend you might want to give a holiday gift to).  To check out the full offer as described in the last TomDispatch post, click here, or simply go to the TD donation page where the offer is available by clicking here.

In addition, those of you interested in reading the obit I did for Chalmers Johnson, who died on November 20th and whose work at TomDispatch remains a monument to his power as a critic of American militarism and its empire of bases, check out the new issue of the Nation magazine.  The piece can be read online by clicking here.  For those who want to see a talk of mine on my book, The American Way of War: How Bush’s Wars Became Obama’s, on CSPAN2 Book TV this Saturday, click here for more information.]

Turn your speakers up! FIGHT BACK!

Wealth didn't trickle down, everybody's screwed now
Free ride, only for the biggest of the banks
They've made it well known, they don't want to pay for roads
Let me tell ya something bout' our friends B of A...

Dead beats, tax cheats, hiding money overseas
Take this piece of shit loan, rate it "Triple A" please
Tape off Wall Street, white collar crime scene
Shut down, marked out of business temporarily

We didn't start the fire
It was always burning, since the world's been turning
We didn't start the fire
No we didn't light it but we gotta fight it

Always jackin' up the rate, never give a man a break
Make the poor pay for the rich man's mistakes
Hedge fund fat cats, I propose a new tax
70 percent for being such huge douchebags

Next crisis that you face, don't ya come to us and beg
We ain't gonna bail you out, you can go to hell

And next time, by the way, people try to rob your bank
Don't you call on our cops, you can fuck yourself

And we ain't puttin out your fires
Cuz your greedy asses never paid your taxes
If companies didn't cheat, we could pave our streets
We could educate our kids, that's just what the fact is

Politicians want to cut pensions they should leave alone,
Privatize the profits, let the losses hit the old folks
When the stocks crash, what you saved gets bled dry
Funneled up to Wall Street & you ain't got a life line

Make em chop from the top, don't you cut another cop
Go to where the money is, don't you cut our services
Government we used to know, picked clean to the bone
Business big wigs aren't paying what they owe

"OUR EDUCATION IS UNDER ATTACK,
WHAT DO WE DO?
FIGHT BACK."


Lyrics by Chris Priest (except the first chorus)

The Rich Are Destroying the Economy

Published on Sunday, June 12, 2011 by CommonDreams.org

by Shamus Cooke

Ever since the Great Recession shook the foundations of the U.S. economy, President Obama has been promising recovery. Evidence of this recovery, we were told, was manifested in the massive post-bailout profits corporations made. Soon enough, the President assured us, these corporations would tire of hoarding mountains of cash and start a hiring bonanza, followed by raising wages and benefits. It was either wishful thinking or conscious deception. The recent stock market meltdown has squashed any hope of a corporate-led recovery.

The Democrats fought the recession by the same methods the Republicans used to create it: allowing the super rich to recklessly dominate the economy while giving them massive handouts. This strategy, commonly referred to as Reaganomics or Trickle Down Economics, is now religion to both Democrats and Republicans; never mind the staged in-fighting for the gullible or complicit media.

When it becomes obvious to even the President that the economic recovery never existed beyond the bank accounts of the rich, questions will have to be answered. Why, for example, did nobody in either political party foresee the disastrous consequences of the bailouts? Not only did the U.S. deficit drastically increase but the same U.S. corporations that caused the recession were given reinforcement for their destructive actions, ensuring that it would continue unabated.

In his book, Crisis Economics, Nouriel Roubini outlines the insane response to the recession by Republicans and Democrats. Because both parties simply threw money at the banks and hedge funds instead of punishing them, a condition of "moral hazard" was created, meaning, that banks would assume another bailout would come their way if they destroyed the economy again -- too big too fail, remember? Roubini explains how the Democrats allowed the "too big" banks to get even bigger; how Wall Street salaries based on short-term profits went unregulated; how the regulations that were put into place were inadequate and filled with loopholes; how nothing of any significance changed.

Roubini has also written extensively about how the post-bailout Federal Reserve policies were fueling a commodity bubble that may be in the midst of bursting, possibly triggering a double dip recession. Essentially the big banks and rich investors were borrowing cheap dollars from the Fed and investing abroad in commodities with the hopes of higher returns. Roubini states:

“The risk is that we are planting the seeds of the next financial crisis...this asset bubble is totally inconsistent with a weaker recovery of economic and financial fundamentals." (October 27, 2009).

This investor-created commodity bubble pushed up prices in oil, food, and other basic products, causing further pain for working families and the economy as a whole. This speculative bubble was easily predictable but ignored by both political parties, since they claimed the bubble was a sign of recovery.

Another mainstream economist, Paul Krugman, also admits that the rich's death-grip on the U.S. political and economic system is causing pain for everybody else:

"Far from being ready to spend more on job creation, both parties agree that it's time to slash spending - destroying jobs in the process - with the only difference being one of degree...policy makers are catering almost exclusively to the interests of rentiers [rich investors] - those who derive lots of income from assets, who lent large sums of money in the past, often unwisely, but are now being protected from loss at everyone else's expense." (June 10, 2011)

Krugman explains that this process continues because the rich dominate the political system through campaign contributions, "access to policy makers,” promises of high paying corporate jobs after their congressional term is over, and good o'l fashion corruption. Because he's a true blue Democrat at heart, Krugman nevertheless focuses most of his rage on Republicans.

Krugman's repeated calls to Democrats and Republicans to create jobs have fallen on deaf ears. Both parties agree that the "private sector" [corporations] should create jobs; until they decide to hire, nothing will happen. This is not merely "bad policy,” as liberals like Krugman like to fret about, but the conscious agenda of the rich. Corporations and rich investors love high unemployment. The Kansas City Star explains why:

"Last year [2010], for the second year in a row, U.S. companies got more work out of their employees while spending less on overall labor costs." (February 3, 2011)

It really is that simple. High unemployment creates a downward pressure on wages, allowing employers to work the remaining employees harder and thus to increase profits. This dynamic, combined with the above commodity speculation, has been the entire basis for the corporate recovery, while working people have literally seen nothing beneficial.

This process is an extension of the bailouts, in the sense that more wealth is being transferred from working people to the corporations. Since consumer spending accounts for 70 percent of the U.S. economy, policies like these ensure that another crisis is inevitable.

Further complicating matters is the ending of the Federal Reserve's Quantitative Easing program (printing money), which amounted to the Fed buying $600 billion in U.S. Treasury bonds since last fall, essentially funding the U.S. debt and driving down interest rates.

Since the Fed was buying 60 percent of the bonds, a new creditor will need to be found; and this lender will likely require higher interest rates before loaning to the U.S. government, to make sure the loan is profitable. And although different nations buy U.S. debt for different reasons, much of this debt is bought by rich U.S. citizens, who will put the squeeze on the rest of us that have to pay back this debt. The Washington Times explains:

"...Bill Gross, the head of America's own Pimco bond fund, the largest buyer of bonds worldwide, recently reduced Pimco's holdings of Treasuries to zero out of concern that they weren't yielding enough given the risks of inflation and deficit spending." (June 7, 2011)

When the Federal Reserve raises interest rates to satisfy these rich investors, the economy will likely take a further nosedive. It appears, then, that the rich have a win-win situation: they got free bailout money, which increased the deficit; and because the deficit is too high, the rich want higher interest rates for investing in U.S. Treasury Bonds. In both instances working people pay the bills.

This insanity cannot be stopped by conventional measures, since politicians are tone deaf to anything that doesn't ring of corporate cash. The jobs crisis continues as a result of the policy agreed to by both Democrats and Republicans. The labor movement has a special role to play in reversing the above policies.

The corporate-led discussion around cutting social programs to fix the deficits -- on a state and national level -- can be challenged by a nationally coordinated campaign of unions and community allies demanding: Tax the Rich! This demand is significant because it can address both the deficits and the jobs crisis: a massive public works program can be funded by taxing the corporations and the wealthy to pre-Reagan levels. And it makes complete sense because the growing inequalities in wealth over the past three decades has meant a spectacular concentration of wealth at the top. The rich have plenty of money to spare.Organized labor needs to bring masses of people in the street all over the country in order to get attention and pressure the government to respond to these demands. And it can succeed, especially if it organizes a serious, protracted campaign and especially if this campaign does not get funneled into supporting Democratic candidates, the surest way to kill campaign momentum.

AFL-CIO President Richard Trumka recently spoke in favor of a strong, independent labor movement. This is the direction it must take, rather than relying on the Democrats. The labor movement must get its act together, unite to put up a fight and demand specific policies that can concretely address the crisis faced by millions of working people.

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org).  He can be reached at shamuscook@gmail.com