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Robert Scheer: The Battle for Obama’s Economic Soul

Who will prevail when President Obama sets his economic policies?

The battle for Sen. Barack Obama’s economic soul is on in earnest, and it has nothing to do with the “European socialism” that Sen. John McCain attempted to use as an epithet against him. The Republican quickly dropped that line of attack, perhaps because the European Union’s brand of democratic socialism has proved more effective in regulating the rapacious financial markets at the heart of the economic meltdown. Besides, the socialist British Labor Party has been President Bush’s most loyal supporter of the Iraq occupation that McCain has made the test of true patriotism.

Robert Scheer
Robert Scheer
It would be encouraging if the Democratic presidential candidate did indeed attempt to learn something from Europe’s democratic, and barely socialist, governing left concerning the welfare of those who are not super-rich, i.e., how to provide quality health care and education for all — but that is not what is happening. Instead, Obama has turned to the same American “free market” elite that views government as merely a corporate subsidiary. Even within that crowd, however, there are serious splits, and the more enlightened side seems to be winning.

Key among the good guys is former Federal Reserve Board Chairman Paul Volcker, who consistently challenged the radical anti-deregulatory crusade of former Fed Chairman Alan Greenspan, his immediate successor. Greenspan’s all-too-successful effort to give the banking lobby everything it had ever dreamed of was abetted by two Clinton-era secretaries of the treasury, Robert Rubin and Lawrence Summers. Unfortunately, the two, who should have mustered the grace to depart public life in deep contrition over their failed policies, are prominent in the Obama campaign.

Rubin, who pocketed tens of millions of dollars running Goldman Sachs before becoming treasury secretary, is the man who got President Clinton to back legislation by then-Sen. Phil Gramm, R-Texas, to unleash banking greed on an unprecedented scale. What followed, thanks to a rare display of bipartisan teamwork, was a total dismantling of the regulatory regime that President Franklin Delano Roosevelt had put in place during the New Deal, thus undermining the finest legacy of the Democratic Party. Under the guidance of Rubin and Summers, Clinton signed off on the Gramm-Leach-Bliley Act and the Commodity Futures Modernization Act, Gramm’s two key pieces of legislation, during his final two years in the White House.

The first beneficiary of that legislation was Citigroup, which was allowed to merge with Travelers Insurance, where Rubin became a director after leaving the government. In his position on the executive committee of a floundering Citigroup, Rubin insisted as late as January that a serious crisis was not forming. In a Jan. 31 article in Fortune headlined “Robert Rubin: What meltdown?” the subheading states: “In a talk on Wednesday (Jan. 30), the Citigroup director said the current financial upheaval is just cyclical. And none of the blame that there was to assign went to Wall Street.” The article’s author, Katie Benner, quoted Rubin as saying that the problems were “all part of a cycle of periodic excess leading to periodic disruption,” neatly exonerating his own bank of any responsibility, even though Citigroup had already written down more than $24 billion in bad mortgage losses.

At that time, Rubin was advising Sen. Hillary Clinton, D-N.Y., while Obama, listening to Volcker, took the opposite tack, issuing a warning in a major address two months after Rubin’s talk that the United States was experiencing the most profound economic crisis since the Great Depression. Obama specifically cited the legislation that Rubin had supported and cautioned, “Our free market was never meant to be a free license to take whatever you can get, however you can get it.”

Although Rubin came over to the Obama campaign after Clinton’s defeat in the primaries, it does seem that Volcker and legendary investor Warren Buffett, another fierce critic of Clinton-era deregulation, are holding the floor for the time being. Buffett has been increasingly visible in the Obama campaign. More than five years ago, Buffett charged that the new investment devices, the “hybrid instruments” and “credit swaps” with which taxpayers are now stuck, were “financial weapons of mass destruction.”

Let’s hope that a President Obama will keep Buffett and Volcker close. They are certainly not the European socialists conjured up in yet another mean-spirited and irrational outburst of the McCain campaign, and their vision for the country seems to extend beyond their own bank accounts. editor in chief Robert Scheer‘s new book is The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America. Click here for more information. He can be reached at [email protected]

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» on 10.25.08 @ 12:59 PM

Who will prevail when President Obama sets his economic policies? GOOD QUESTION! NOTHING MATTERS MORE THAN THIS: Hamas Praises Obama Again—and Biden, Too.
FABULOUS! Ahmed Yousef says that the terrorist group would send Obama a congratulation letter “the moment he will win the election.”
Please visit: & see VOTER GUIDE.
ACT! for America is dedicated to educating millions of uninformed citizens about the threat of radical Islam. Founded by Brigitte Gabriel, former news anchor for “World News”, the Arabic evening news. Ms. Gabriel is a member of the Board of Advisors of the Intelligence Summit and has addressed Members of the U.S. Congress, The Joint Forces Staff College, The U.S. Special Operations Command, the FBI, etc. Ms. Gabriel immigrated to the U. S. in 1989. Her clients include Good Morning America, 20/20, The Today Show, Oprah, Dr. Phil, CNN, Fox, etc.

» on 10.26.08 @ 02:40 PM

Scheer’s view from the far left says Obama is not eliciting European style socialism, and that Europe is not really all that socialist. Well of course Robert, if I was a lefty loonie like you my perspective might be as skewed as yours! It is simply amazing how no one on the left can take an objective view particularly of their own political philosophy. I guess it takes those of us who have been on both sides to look at things with a broader intellect. As for you Obamamaniacs, when the party’s over and you shake off your hangover, Obama’s radicalized, socialist roots will come home to roost. You’ll then find out what miserable useful idiots you’ve been.
There will always be those who point out the weakness and failings of capitalist, free markets as reason to run to the left. What the socialist cheerleaders will not tell you is that the failings of capitalism and free markets is a failing of we as human beings to understand and deal with our own shortcomings and those same shortcomings are actually amplified by, not accounted for by socialism. Socialism liberates individuals from their responsibility to one another and from life itself. It leaves in its place a demoralized, dependant, goalless society of adult children content with entertaining themselves with crass consumerism. Just look at the pathetic state of Europe’s adult population, so uninterested in a real life, they can’t even be bothered with ensuring their own procreation.
Yep, let’s all have the ultimate state sponsored health care so we can live a long healthy life of utter uselessness. Let’s ensure that there are no poor or rich, no hate or love, no cataclysms of nature or the heroics in rescuing ourselves from them. No let us drink from the pool of socialist mediocrity, safe, same, lifeless.

» on 10.27.08 @ 09:43 AM

With comments like the other two I need to add no more. They both clearly illustrate why this country is in trouble. Note the ignorant description by Anso regarding Europe and their lifestyle. I have been there numerous times and never observed any of what he is describing. Meanwhile, SBNative lives in the scared world of looking over his shoulder for radical muslims and leveraging this belief to try to frighten everyone into taking extreme steps that destroy America. Bin Laden and Iran would like nothing better than have McCain continue the Bush ways so they could dominate the Middle East agenda. We are less save now.

It is funny how when the free market fails it always turns to the government to bail them out. The past 8 years have been a disaster across the board. The hope is that others such as Anso and SBNative will wake-up and admit that serious reform is needed and to not waive the socialism flag every time there is an attempt to do the right thing.

» on 10.28.08 @ 02:43 PM

Dear Ignorance: IGNORANCE will not be BLISS—but they’re counting on the likes of you…HOW’S THIS: Incredibly, we have no definitive explanation of why a global financial crisis suddenly materialized just six weeks before U.S. elections. IF SUBPRIME loans hadn’t happened in the FIRST place there wouldn’t have been PRODUCT to bundle, sell and mutilate. DEMOCRATS headed the FINANCE committees that fought reform. The CRA was “revised” during Clinton’s reign leading to SubPrime abuses—which ultimately ABUSED low-income people, esp. Hispanics here in the West. (Ask Tony Rezko about his “affordable Chicago slums while you’re at it—and talk to his lawyer, Obama!)
Then left-leaning hedge fund operators who profited off Mortgage-Backed-Securities (i.e., THIEVES with offshore accounts to avoid taxes) poured their profits into Obama & the Democrats—who want more government because THEY need jobs!
Beyond the Dems, Who Is the Economic Meltdown REALLY benefiting?
HAMAS PRAISES OBAMA AGAIN—and Biden, Too. Ahmed Yousef says that the terrorist group would send Obama a congratulation letter “the moment he will win the election.” HOW’S THIS: AL-JAZEERA FOR OBAMA
From The Audacity of Hope: “I will stand with the MUSLIMS should the political winds shift in an ugly direction.”
Before you VOTE please visit: & see VOTER GUIDE.  Act for America is dedicated to educating the West about the spread of radical Islam.

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