The Real Criminals are Neither Lynndie England nor the AIG Traders
Whenever a politician or commentator bloviates about the brokers at AIG who are getting bonuses, we should all be remembering Lynndie England and Charles Granger. AIG brokers are to the financial meltdown what England was to the Iraq war.
Certainly she did things that were deplorable. But she thought they were legal (England, operating under orders to "soften up terrorists," even thought she was helping defend our nation). And to the extent that John Yoo's memos were law, arguably her actions were legal (although the Bushies never wanted it tested, so threw them to the wolves).
But the important point is that the real criminals of the Iraq War were not those like Lynndie England: they were George W. Bush, Dick Cheney, and Donald Rumsfeld (and their neocon buddies).
Like Lynndie England, the brokers at AIG are the small fish. Sure they shouldn't have been doing what they did, and it's insane that they were compensated the way they were. And even worse is the fact that those compensation packages were worked out in September and October of last year by the Bush administration, and that that convenient little fact is almost always ignored by politicians and commentators in their faux populist outrage.
But the real criminals of the AIG mess - and the entire financial meltdown that was set up between 1999 and 2006 and crashed starting in 2007 - were Grover Norquist, Phil and Wendy Graham, Tom Delay, and, sadly, Bill Clinton.
The philosophy that it's possible to bomb people into democracy and torture them into being on our side drove the Bushies. It was wrong, flawed, and frankly insane, and we're paying a huge price for it.
Similarly, the philosophy that playing the game of business and investment without rules (the technical term is Laissez-faire Capitalism) has driven our government since the election of Ronald Reagan, and went on steroids during the last two years of the Clinton administration and throughout the Bush administration. It's equally wrong, flawed, and insane, and we're paying a multi-trillion dollar price for it not unlike we are for the war.
The intellectual forefathers and mothers of the insane conservative economic policies that have brought us to where we are include Ludwig Von Mises, Freidrich Von Hayeck, Milton Friedman, Alan Greenspan, Tom Freidman, Robert Rubin, Larry Summers, and Ayn Rand. Phil and Wendy Gramm pushed through the Gramm/Leach/Bliley Act (which allowed banks to get into the gambling business) and the Commodity Futures Moderinization Act (also known as "the Enron Loophole"), and Bill Clinton merrily signed them into law.
But just as it's inconvenient to hold the defense contractors and the senior politicians responsible for the Iraq debacle, and instead blame it on Lynndie England, our sound-bite corporate media prefer to focus on a few IAG traders, instead of the people who made what they did both possible and legal.
Instead of passing a 90 percent tax that is limited to the traders, let's be realistic. Ever since Ronald Reagan rolled back the top marginal income tax rate on millionaires and billionaires from 74 percent to 29 percent, our government has been disastrously in debt, sliding deeper each and every year (the so-called "Clinton surplus" was a mirage created with phony numbers, although it was still a hell of a lot better than what we have now).
David Stockman bragged, back during the Reagan administration, that the goal of Republicans was to rack up such a huge federal debt that Democrats would never be able to push forward the "socialist" programs that Americans want, like stable Social Security and single-payer national health care. He called it "starving the beast." Grover Norquist suggested it would force government to become so small it could be "drowned in a bathtub," leaving the corporations in charge. George W. Bush actually, finally, made it happen.
Thus here we are, ten-plus trillion dollars in debt, and trying to blame our problems on Lynndie England and a few traders at AIG.
Let's call out and name the real criminals, and get about the simple and straightforward solutions of putting our country back together.
Roll back the Reagan tax cuts that have done so much damage over the past 28 years. Pull out of insane trade agreements. Re-regulate banks so they're functionally public utilities again. Give oversight to the SEC on all forms of speculative investment and bring back the .25 percent STET tax on each unit of investment vehicle traded.
None of this is rocket science. From 1937 until Ronald Reagan began his wrecking-ball efforts at the stability and solidity of our nation's economy, we didn't have a single bank panic. Reagan dropped income tax rates and the almost immediate result was a bubble and crash in the stock market followed by the S&L crisis, which has been repeated over and over again with startling regularity ever since (just as they were during the 150 years preceding Roosevelt putting into place the regulatory structures and high marginal income tax rates of the New Deal that stabilized us).
Republican President Dwight D. Eisenhower embraced a 91 percent top marginal tax rate on millionaires and billionaires and strong regulation of banks, including the STET tax, and the nation prospered.
It's time to return to sanity and quit swatting at the little guys, while the real criminals and thieves walk away with our nation and our wealth.
A more comprehensive of how marginal tax rates work would be very beneficial. Most average people don't know they work and panic at the thought of paying such enormous taxes. 90% tax on my income would leave me with less than 5 grand a year to live on and that's the sense that average seems to get and that's the emotion that the corporate media plays upon. Call it the "lottery mentality". Every person I know tries to win the big one and then, even before they start fantasizing about being rich, they start complaining that they'd lose over half the winnings in taxes. Not true, but most people don't know that. and it automatically makes a king's ransom in cash look not so rewarding. 90% tax on a million dollars leaves you with about a hundred grand -- nice money, but not the yacht buying kind, so people have a knee jerk reaction to that thought. But, of course, that's NOT how a marginal tax rate works. Average Joe does not know that.
Fact. All the high taxes on the wealthy during the FDR years did NOT keep anyone from becoming wealthy. It did however keep a lot of people from becoming fuedalistically rich. That egalitarian principle, De Touceville would agree, kept Democracy alive and well those decades. Capitalism is an economic system -- a potentially nice one --, but it's NOT a political system. America comes first.
I was blown away when I heard what you said today as to where the blame correctly belongs. At least I now know that I am not crazy in believing the same thing. I have a degree in Economics, but it doesn't take a degree to realize where all of this came from. One only needs to remember history. And those who lambst Keynes are foolhardy. Now, my one other wish is that, for a time, President Obama becomes a sort of benevolent dictator.
On a personal note, I remember, when I was much younger, that my grandfather made an odd comment at the time. He said he was proud of being an American and also proud to have to pay the 70% marginal tax rate. He was an orphan immingrant from Poland. He eventually built his own company and became very successful. He was a wise, self taught man.
Funny how people view this country today.
Of course no one ever paid the 90 percent rate, either. However, the public benefit was that to avoid the 90 percent tax required reducing income. That meant putting the earnings back into the business. Reinvestment in US companies could not have been bad for the country's strongest period of sustained economic growth in its history.
EXACTLY. The whole point is to incentivize people to avoid paying the tax. It's the exact opposite of what "conservatives" do -- million dollar handouts in tax breaks with the "hopes" that people will do good things. Instead, you don't have to give them anything, and you don't have to take anything -- just give them a damned good reason to do it on their own.
Conservative Ideology: "Reverse Robinhood"
When are we going to be as pissed off as the French masses were in the late 1700s? (too many similarities)
I didn't know where to make this comment. Thom said he didn't know that he was not on air america any more. someone should let him know!! and put him back.
Thanks a lot for identifying the Conservative World View!
This 'ponzi scheme' may have been: 1/3 irresponsible sound bites, plus 1/3 irresponsible spending, plus 1/3 irresponsible promises, all 'fluff' and no substance! Good on you!!
Haha, this is such a fantasy. Liberals think that taxes will solve their problems. This country existed for over 135 years without any income tax. Why do we need them now?
No less, every single tax cut has produced more money in the long term. We went from 90% to 35% and we have more money flowing into the coffers than ever before. Look at the Bush cuts. He cut the taxes and more money flew into the treasury than ever before. Hate Bush Jr., Clinton did the same thing. Hate Clinton, Raegen did the same thing. All of them had the same results. More money to the Government.
If you hate the US, then look at Europe. It is less productive and less influential than the US is in any financial measurement. Hate Europe, Russia failed. Hate Russia, China is turning capitalist and they are growing so fast is incomprehensible. Hate China, look at Mexico and its reduction in income taxes. It was growing quite quickly until this recession hit us.
Don't believe me, try Wikipedia. Andrew Mellon, Treasury Secretary from 1921 to 1932 argued that a cut in taxes would actually increase revenue. It worked. He cut the marginal tax rate from 77 percent to 25 percent. He even believed in progressive income taxes. And I quote "Mellon's policy reduced the public debt (largely inherited from World War I obligations) from almost $26 billion in 1921 to about $16 billion in 1930, ..." Read the information yourself. http://en.wikipedia.org/wiki/Andrew_William_Mellon
Oh, I forgot about Bush senior. He raised taxes, against his wish, and we had the 91-92 recession.
Do your research people. Pull the numbers from the IRS Website or history. Show me where more taxes has ever increased GDP or put more money in the Treasury over the long run. The facts go 100% contrary to any argument made yet.
This 90% meme is vital. Keep saying it, and saying it and saying it, Thom.
The hope is that at some point some bloviating blowhard on MSNBC will ask a guest, "What about this thing that's going around saying that we need a 90% tax rate? Is that INSANE, or what?" Then by the next day, six more conservatives will be trumpeting, "OBAMA WANTS A 90% TAX RATE!" Then somebody like Olbermann or Stewart will feel the need to debunk and defend it, and hopefully they'll do so by saying, "No, Obama never said that, but if you look back, it is true that we had a 90% tax rate for 20 years, and steady growth the whole time ..." And THEN the real discussion can start.
There are tens of millions of middle-aged and younger Americans who have only known the top tax rate to be around 35%. 39% even seems outrageous. They don't even know that it can be higher -- much less that it was around 70% or above for the majority of the 20th century. If you say "raise it to 40%," they'll absolutely freak and talk it down to 36%. We can't do that. Start the debate at 90% and settle for 68% or 55%.