Is there a government anywhere that less represents its citizens than the US government? Paul Craig Roberts asks ...and answers.

Original article in CounterPunch.
August 19, 2009

Americans: Serfs Ruled by Oligarchs

By PAUL CRAIG ROBERTS

“In a little time [there will be] no middling sort. We shall have a few, and but a very few Lords, and all the rest beggars.” R.L. Bushman

“Rapidly you are dividing into two classes--extreme rich and extreme poor.” “Brutus”

Americans think that they have “freedom and democracy” and that politicians are held accountable by elections. The fact of the matter is that the US is ruled by powerful interest groups who control politicians with campaign contributions. Our real rulers are an oligarchy of financial and military/security interests and AIPAC, which influences US foreign policy for the benefit of Israel.

Have a look at economic policy. It is being run for the benefit of large financial concerns, such as Goldman Sachs.

It was the banks, not the millions of Americans who have lost homes, jobs, health insurance, and pensions, that received $700 billion in TARP funds. The banks used this gift of capital to make more profits. In the middle of the worst economic downturn since the Great Depression, Goldman Sachs announced record second quarter profits and large six-figure bonuses for every employee.

The Federal Reserve’s low interest rate policy is another gift to the banks. It lowers their cost of funds and increases their profits. With the repeal of the Glass-Steagall Act in 1999, banks became high-risk investment houses that trade financial instruments such as interest rate derivatives and mortgage backed securities. With abundant funds supplied virtually free by the Federal Reserve, banks are paying depositors virtually nothing on their savings.

Despite the Federal Reserve’s low interest rate policy, beginning October 1 banks are raising the annual percentage rate (APR) on credit card purchases and cash advances and on balances that have a penalty rate because of late payment. Banks are also raising the late fee. In the midst of the worst economy since the 1930s, heavily indebted Americans, who are losing their jobs and their homes, are to be bled into bankruptcy by the very banks that are being subsidized with TARP funds and low interest rates.

Moreover, it is the American public that is on the hook for the TARP money and the low interest rates. As the US government’s budget is 50 per cent or more in the red, the TARP money has to be borrowed from abroad or monetized by the Fed. This means more pressure on the US dollar’s exchange value and a rise in import prices and also domestic inflation.

Americans will thus pay for the TARP and low interest rate subsidies to their financial rulers with erosion in the purchasing power of the dollar. What we are experiencing is a massive redistribution of income from the American public to the financial sector.

And this is occurring during a Democratic administration headed by America’s first black president, with a Democratic majority in the House and Senate.

Is there a government anywhere that less represents its citizens than the US government?

Consider America’s wars. As of the moment of writing, the out-of-pocket cost of America’s wars in Iraq and Afghanistan is $900,000,000,000. When you add in the already incurred future costs of veterans benefits, interest on the debt, the forgone use of the resources for productive purposes, and such other costs as computed by Nobel economist Joseph Stiglitz and Harvard University budget expert Linda Bilmes, “our” government has wasted $3,000,000,000,000--three thousand billion dollars--on two wars that have no benefit whatsoever for any American whose income does not derive from the military/security complex, about which five-star general President Eisenhower warned us.

It is now a proven fact that the US invasion of Iraq was based on lies and deception of the American public. The only beneficiaries were the armaments industries, Blackwater, Halliburton, military officers who enjoy higher rates of promotion during war, and Muslim extremists whose case the US government proved by its unprovoked aggression against Muslims. No one else benefitted. Iraq was a threat to no one, and finding Saddam Hussein and executing him after a kangaroo trial had no effect whatsoever on ending the war or preventing the start of others.

The cost of America’s wars is a huge burden on a bankrupt country, but the cost incurred by veterans might be even higher. Homelessness is a prevalent condition of veterans, as is post-traumatic stress. American soldiers, who naively fought for the munitions industry’s wars, for high compensation for the munitions CEOs, and for dividends and capital gains for the munitions shareholders, paid not only with lives and lost limbs, but also with broken marriages, ruined careers, psychiatric disorders, and prison sentences for failing to make child support payments.

What did Americans gain from an unaffordable war in Iraq that lasted far longer than World War II and that put into power Shi’ites allied with Iran?

The answer is obvious: nothing whatsoever.

What did the armaments industry gain? Billions of dollars in profits.

Obama is the presidential candidate who promised to end the war in Iraq. He hasn’t. But he has escalated the war in Afghanistan, started a new war in Pakistan, intends to repeat the Yugoslav scenario in the Caucasus, and appears determined to start a war in South America. In response to the acceptance by US puppet president of Columbia, Alvaro Uribe, of seven US military bases in Columbia, Venezuela warned South American countries that the “winds or war are beginning to blow.”

Here we have the US government, totally dependent on the generosity of foreigners to finance its red ink, which extends in large quantities as far as the eye can see, completely under the thumb of the military/security complex, which will destroy us all in order to meet Wall Street share price expectations.

Why does any American care who rules Afghanistan? The country has nothing to do with us.

Did the armed services committees of the House and Senate calculate the risk of destabilizing nuclear armed Pakistan when they acquiesced to Obama’s new war there, a war that has already displaced two million Pakistanis?

No, of course not. The whores took their orders from the same military/security oligarchy that instructed Obama.

The great American superpower and its 300 million people are being driven straight into the ground by the narrow interest of the big banks and the munitions industry. People, and not only Americans, are losing their sons, husbands, brothers, and fathers for no other reason than the profits of US armaments corporations, and the gullible American people seem proud of it. Those ribbon decals on their cars, SUVs and monster trucks proclaim their naive loyalty to the armaments industries and to the whores in Washington who promote wars.

Will Americans, smashed and destroyed by “their” government’s policy, which always puts Americans last, ever understand who their real enemies are?

Will Americans realize that they are not ruled by elected representatives but by an oligarchy that owns the Washington whorehouse?

Will Americans ever understand that they are impotent serfs?

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions. This fall CounterPunch/AK Press will publish Robert's War of the Worlds: How the Economy Was Lost. He can be reached at: PaulCraigRoberts@yahoo.com

Develop a Thug Caste: No. 3 in the Ten Steps to Fascism

Naomi Wolf writes in her 24 April 2007 article in The Huffington Post “Ten Steps To Close Down an Open Society”:

3 Develop a thug caste

When leaders who seek what I call a "fascist shift" want to close down an open society, they send paramilitary groups of scary young men out to terrorise citizens. The Blackshirts roamed the Italian countryside beating up communists; the Brownshirts staged violent rallies throughout Germany. This paramilitary force is especially important in a democracy: you need citizens to fear thug violence and so you need thugs who are free from prosecution.

[…]

The following is part of an article that appeared very recently on CNN Politics.com (from which the photo above was taken and which also contains a video):

Interview with gun-toting protester at Obama rally was staged

updated 7:08 p.m. EDT, Tue August 18, 2009

PHOENIX, Arizona (CNN) -- He was to demonstrating his right to bear arms -- and he wanted you to know it.

A man is shown legally carrying a rifle at a protest against President Obama on Monday in Phoenix, Arizona.

Video of the unidentified man toting an assault rifle outside President Obama's speech to veterans Monday was aired all over the country, causing a buzz about weapons popping up -- legally -- around recent presidential events.

The protester, who refused to give his name, was interviewed by a man carrying a microphone and said, "I am almost always armed."

The interview, done by Libertarian radio talk show host Ernest Hancock, was staged.

"Absolutely," Hancock told CNN's Rick Sanchez Tuesday. "You guys are so easy. What we wanted to do was make sure that people around the country knew that law enforcement in Phoenix, Arizona, protects our rights."

[…]

This incident was heavily debated on MSNBC’s Hardball with Chris Matthews, whose guests were Ron Reagan (whose dad was nearly killed by a pistol-packing mental case) and Alan Gottlieb of the Second Amendment Foundation (who defends the right of anyone deciding to carry a weapon in the vicinity of a sitting U.S. president). Watch it here.

Control of the Press: No. 8 in the Ten Steps to Fascism

Naomi Wolf writes in her 24 April 2007 article in The Huffington Post “Ten Steps To Close Down an Open Society”:

[...] You won't have a shutdown of news in modern America - it is not possible. But you can have, as Frank Rich and Sidney Blumenthal have pointed out, a steady stream of lies polluting the news well. What you already have is a White House directing a stream of false information that is so relentless that it is increasingly hard to sort out truth from untruth. In a fascist system, it's not the lies that count but the muddying. When citizens can't tell real news from fake, they give up their demands for accountability bit by bit.

Here below, Dean Baker writing two days ago for truthout comments on the latest complicity by the Washington Post:

Governor Palin's Crazed Health Care Rant: Blame The Washington Post

Monday 10 August 2009

by Dean Baker, truthout|Perspective

As a basic rule, politicians will say anything they can get away with. If an effective politician thinks that he can call his opponent a drug-dealing, serial-murdering gangster, and have the charge taken seriously by the media, then he will do it, even if there is no reality whatsoever to the allegation. The reason that most politicians don't describe their opponents this way is because the media will denounce them as liars, who are unfit for responsible public office.

This basic truth must be kept in mind in understanding the health care debate. The debate has trailed off into loon tune land, and it's the media's fault.

The lunacy was most clearly in evidence in former Gov. Sarah Palin's claim that President Obama's plan would force her to stand in front of a "death panel" to argue for the life of her baby with Down Syndrome. This "death panel" is a complete invention by Governor Palin. There is no twist or turn or contorted permutation of President Obama's plan that would prevent Ms. Palin from providing as much health care as she wants to her baby.

It would have made as much sense to claim that the transportation bill will deny medical care to her baby. After all, if the roads in front of her home are not properly maintained, and her baby has a medical emergency, then the transportation bill would have effectively sentenced her baby to death because she won't be able to get medical attention in a timely manner.

The reason that Governor Palin thought she could make up stories about President Obama's death panels is that the media have treated all sorts of other absurd inventions about his health care plan with respect. At the most basic level, opponents have repeatedly said that President Obama's plan will lead to rationing of health care.

Of course, there is absolutely nothing in President Obama's plan that resembles rationing. He certainly intends to limit the type of medical procedures that the government would fund, but opponents of the plan don't want the government to fund any procedures. So, how is restricting the procedures funded through a government plan rationing? Anyone who wants to is entirely free to buy as much health care as they want outside of the government-subsidized plan. Where is the rationing?

Using Governor Palin's story, there may be mothers who are less wealthy than her who will be able to care for a baby with Down Syndrome or other serious affliction as a result of President Obama's plan. These mothers might not otherwise have this option because they could not afford the health care. It is easy to see how President Obama's plan can lead to life compared with the current situation. It's virtually impossible to see how it leads to death.

The media have allowed the politicians to turn life into death and night into day when it comes to the health care debate because they decided that anything said against President Obama's plan should be treated with respect, no matter how absurd it might be.

The line about rationing isn't the only place where the media have fallen down on the job in the health care debate. Instead of telling us that the cost of the plan was "huge," as the have often done, the media could have put the cost in a context that would make it understandable to people who are not policy wonks. They could have told us that the projected $1 trillion cost over the next decade is equal to about 0.5 percent of GDP, less than half of the cost of Iraq-Afghanistan wars at their peak.

The $250 billion ten-year shortfall that Congress is struggling to fill is a bit more than 0.1 percent of GDP, rounding error in the total budget. But the media only assured the public that this gap was a big hole in the budget; they didn't try to tell us how big.

The media have the job of informing the public. They have the time and the resources to know that when opponents of President Obama's plan talk about rationing, they are not telling the truth (i.e. they are lying). If the media just pass these assertions on to the public without comment, then they are giving them credibility.

And if the opponents of health reform think they can get away with one really big lie, then why shouldn't they start moving forward with even bigger ones. It was only a matter of time before someone came up with Governor Palin's death panel line. For this we owe our thanks to The Washington Post and the rest of the mainstream media.

Dean Baker is the Co-director of the Center for Economic and Policy Research. CEPR's Jobs Byte is published each month upon release of the Bureau of Labor Statistics' employment report.

Obama’s Stimulus Plan Is Failing, Not because the Solution Is More Tax Cuts (as Claimed by Republicans), but because the Stimulus Is Way INSUFFICIENT!

The American Recovery and Reinvestment Act of 2009 (ARRA), based largely on proposals by President Obama (but weakened by the centrists), was passed by Congress in its conference version on February 13, 2009 and signed into law by the President on February 17, 2009.

Paul Krugman, 2008 Nobel Prize winner in Economic Sciences, wrote on February 8th:

Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years.

Yet the centrists did their best to make the plan weaker and worse.

One of the best features of the original plan was aid to cash-strapped state governments, which would have provided a quick boost to the economy while preserving essential services. But the centrists insisted on a $40 billion cut in that spending.

On the eve of the House passing the conference version, Krugman summarized ARRA this way:

...In both the House and the Senate, the vast majority of Republicans rallied behind the idea that the appropriate response to the abject failure of the Bush administration’s tax cuts is more Bush-style tax cuts.

And the rhetorical response of conservatives to the stimulus plan — which will, it’s worth bearing in mind, cost substantially less than either the Bush administration’s $2 trillion in tax cuts or the $1 trillion and counting spent in Iraq — has bordered on the deranged.

It’s “generational theft,” said Senator John McCain, just a few days after voting for tax cuts that would, over the next decade, have cost about four times as much.

It’s “destroying my daughters’ future. It is like sitting there watching my house ransacked by a gang of thugs,” said Arnold Kling of the Cato Institute.

And the ugliness of the political debate matters because it raises doubts about the Obama administration’s ability to come back for more if, as seems likely, the stimulus bill proves inadequate.

For while Mr. Obama got more or less what he asked for, he almost certainly didn’t ask for enough. We’re probably facing the worst slump since the Great Depression. The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm.

Officially, the administration insists that the plan is adequate to the economy’s need. But few economists agree...

It is becoming more and more apparent every day that the stimulus provided by ARRA is, as Krugman has long predicted, frightfully inadequate. Today’s news that the unemployment rate came down a tic last month doesn’t begin to tell the full story. The graph at the top of this post (taken from the 19 June 2009 issue of Science magazine and modified to show today’s data) shows that since the passage of ARRA the unemployment rate has gotten WORSE relative to the “Projected Without Recovery Plan” ...and worst still when compared with Obama’s “Predicted With Recovery Plan.”

But the unemployment rate is only part of the picture. The other part has to do with the production and spending that comprise the Gross Domestic Product (G.D.P.). Two days ago, a column in the New York Times explained the situation with reference to the second graph at the top of this post:

Chump Change in the Latest G.D.P. Report
by Casey B. Mulligan

On Friday, the Bureau of Economic Analysis released its advance estimate of real G.D.P. for the second quarter of 2009. Although some say it provides some of the first evidence of the stimulus law’s efficacy, a close inspection of the results shows that the government sector’s contribution to real G.D.P. growth so far has been trivial at best.

G.D.P. measures the total amount produced and spent in the nation during a particular time frame, like a year or a quarter of a year, indicating the country’s economic fitness. Real G.D.P. for the first quarter of 2009 was sharply lower than it was in 2008’s last quarter, which was itself sharply lower than the quarter before that. Thus, it came as a bit of a surprise that second-quarter real G.D.P. was not also sharply lower, but rather was pretty close to what it was in the first quarter.

Some advocates were quick to congratulate the stimulus law that was passed in February, claiming that “The marked improvement in this quarter relative to last is largely due to the American Recovery and Reinvestment Act (ARRA).”

A closer inspection of the B.E.A.’s estimates gives no support for this claim. The chart [above] shows the change in the United States’ real G.D.P. from the first to the second quarter, broken into five expenditure categories: private domestic purchases, net exports, defense, federal nondefense purchases and state and local government purchases.

We were told that the stimulus law would invigorate the economy by spending on federal nondefense programs and helping state and local governments maintain and grow their public services. Stimulus advocates point to the fact that these spending categories indeed grew from the first to the second quarter, as shown in the chart by the fact that those two bars point upward. (Perhaps they believe that tax cuts and unemployment insurance have important effects, but these are not separate G.D.P. categories — they are included in whatever category the recipient spends them).

However, the chart also shows that these types of purchases were trivial. Real federal nondefense purchases increased by a mere $4 per American, while state and local government purchases increased by a mere $8 per person. Real defense purchases increased by $17 per person, which seems large when compared to the other government purchase categories, but is trivial by any other measure.

Another reason that we know that the stimulus bill had not yet delivered on its promise: employment plummeted from the first to the second quarter. We can continue to grade the stimulus law as the economy further evolves, but it finds no congratulations in the second quarter’s economic performance as measured.

--- Casey B. Mulligan is an economics professor at the University of Chicago.