"A Departure to Be Welcomed":
An Interview with Robert Scheer
Democracy Now: September 22, 2010
Well, to talk more about Larry Summers, we're joined from Los Angeles by the
veteran journalist Robert Scheer. He is the editor-in-chief of Truthdig.com.
He worked for the Los Angeles Times for more than three decades. His new
book is called The Great American Stickup: How Reagan Republicans and
Clinton Democrats Enriched Wall Street While Mugging Main Street.
Bob, welcome back to Democracy Now!
ROBERT SCHEER: Hi.
AMY GOODMAN: So, President Obama has lost three of his four top economic
advisers. Only left is Timothy Geithner.
ROBERT SCHEER: Well, I don't think "lost" is the right word. I think "fired"
is better. I think Summers-anyway, his departure is certainly to be welcome.
My book is largely about the follies of Lawrence Summers, beginning in the
Clinton administration, when he pushed through the Commodity Futures
Modernization Act, which opened the floodgates to all of these toxic
derivatives that he, as much as anyone in the country, bears responsibility
for the economic debacle. And then Obama brought him back. And I think what
he has done is basically throw money at Wall Street, continue the Bush
policy, and get nothing in return, particularly in the way of relief for
homeowners-you know, mortgage foreclosure, a moratorium on foreclosures. And
so, I think this is really good news. And, you know, I hope he's not
replaced with someone worse, but it's hard to imagine someone worse.
AMY GOODMAN: You wrote a piece, among others, since you've written
extensively about Larry Summers, Bob, called "Living Large and in Charge."
Give us the history of Larry Summers.
ROBERT SCHEER: Well, every-you know, once again, the New York Times today,
Barack Obama, President Obama yesterday, referred to this guy as
"brilliant." And I don't know how many times you have to fail before you're
considered to be something less than brilliant. And this guy has been a
disaster at every position he has held. He was the Treasury Secretary under
Clinton who presided over the radical deregulation of that administration,
fulfilling the fantasy of the Reagan Revolution. The Republicans couldn't
pull it off. Summers and Robert Rubin, his mentor, did pull it off. And it's
been-this is the basic root cause of this meltdown. Then he goes to Harvard,
where he was a disaster as president, divisive, mysogynist, demeaning of
women and so forth.
And meanwhile, he's being paid not only close to $600,000 by Harvard, but
then he goes and consults on Wall Street. He was paid $4 million by D.E.
Shaw, a hedge fund, and you'll notice the Obama administration has not
reined in hedge funds at all. And he received almost another $4 million in
speaking fees. He got $135,000 from Goldman Sachs for one short speech. He
got that much from Citigroup for two speeches. You know, so this guy, while
he was advising Obama, he was raking it in, eight million bucks, while he's
an adviser to the candidate.
And then, for reasons that Obama will someday have to explain, he's brought
in as the key guy. It's not Geithner. Geithner is a water carrier and was
very much a subordinate in the Clinton administration to both Summers and
Rubin. And they bring in Summers, and what he did is, again, follow that
strategy, reassure Wall Street, don't spook the markets, give them what they
want, submit to their blackmail, and make them whole. And they continued the
Bush policy with a vengeance, throwing money at Wall Street. The Fed now
holds $2 trillion worth of toxic assets taken off the books of the banks.
The banks still hold a massive amount. And every time the housing market
looks like it might get better, they dump this stuff. The Fed announced
yesterday that the economy is not getting better. They're very troubled.
So what is the legacy? You know, it's like Vietnam. Vietnam, as David
Halberstam once wrote, was brought to us by the best and brightest, people
who presumably have the best education and, you know, are sincere and smart
and so forth. And the economic meltdown reminds one of that and Vietnam. I
mean, if this is what brilliance means, let's have a sort of ordinary common
sense for a while. And common sense will tell you, help the homeowners now.
You've done enough for the banks. Get something back from the banks. Make
them, you know, readjust those mortgages. Don't have it be voluntary.
Empower the bankruptcy courts to help the people who are struggling, the 40
to 50 million people who are already underwater on their mortgages, but
everybody else. And if you don't do that, you're not going to fix this
economy. And I don't care whether he brings in a businessman or a labor
leader or brings in Stiglitz or makes Paul Krugman his adviser, whoever he
brings in has got to tell him that, or we're not going to see progress.
AMY GOODMAN: Now, of course, it's not just Lawrence Summers. He's not in
charge of the policy. Ultimately, President Obama is. What is his
responsibility here? Why did he surround himself with, well, among others,
Larry Summers?
ROBERT SCHEER: Well, I'm not his shrink, you know. He mystifies me. I was
very enthusiastic about the Obama candidacy. He gave an incredible speech in
April of '08, laying out the source of our problem in the radical
deregulation, saying we ignored the consumer, the ordinary worker and so
forth, that he specifically criticized the priorities of the Clinton
administration. But then again, he was running against Hillary Clinton. How
you give that speech and then turn to one of the architects of Clinton's
policy to run your own economy is beyond me.
I have to stock it up to opportunism and maybe his own insecurity in trying
to grasp economics. After all, these toxic packages were designed to be
opaque. This whole-all these financial finagling devices and so forth were
built by people who were supposed to be mathematical geniuses. When
long-term capital management collapsed, there were two Nobel Prize winners
on the board. You know, so these things are-can be very tricky. There's a
legion of lawyers and PR people and everything else to all make them seem
very reasonable, and maybe Obama was intimidated. And he seems to also get a
lot of advice from the University of Chicago economists, one of whom is
rumored to be the key player in this administration, and those people have a
very old-fashioned notion of the free market that really does not apply to
corporate America. I mean, it might have applied to Adam Smith's America,
but corporate America is a political animal, and their lobbyists control
Washington on anything that has to do with their interests. That's why we
got the radical deregulation. And you've got to bring somebody in who
understands that if you don't check the Wall Street lobbyists and you don't
check their power, you're not going to serve the American people. I mean,
that's really what this is all about.
And right now the tea party has seized the populist ground. They claim to be
worried about the people who are hurting. We have a lot of people hurting in
this country, a lot of people. We have the highest level-highest number of
people in poverty. Forty-three million Americans are in poverty. And poverty
is defined by a family of four living on less than $22,000 a year. Try
living in America, family of four, under less than that. We have 43 million
people in that, the highest number. We have the highest level of poverty
among the able-bodied, of eighteen to sixty-five, that we've had since '94,
thus wiping out all the claimed gains of the Clinton administration and
everything that came after. You know, we have-we've lost $11 trillion of
family income and worth. That was the latest report. We lost $1.3 trillion
just in the second quarter alone. We have this enormous debt that's going to
prevent us from doing things in the future that have to be done in terms of
improving our lives. And so, who's addressing that? These tea party people.
And the tea party people are frauds, in the main, because they won't attack
corporate power. They're basically, you know, still singing the song of
deregulation, keep government out of it.
And the fact is that as long as Wall Street can use government for its
purposes, you know, then you've got to address that problem. And we do not
have a progressive political alternative at this time. And unfortunately,
Russ Feingold, who's like one of the few around, seems to be in trouble in
Wisconsin. And if your listeners can do anything in this election, they
should try to help him, because if we lose his voice, we really lose the
conscience of the Senate. But there are very few voices on the progressive
side of things. Obama had promised to be such a voice, but he's now
basically a silken glove for corporate power, unfortunately. Now maybe that
will change. I'm always hopeful. And maybe the departure of Summers is the
beginning of a new day in America. We'll see.
AMY GOODMAN: We're talking to Robert Scheer. His book, just out in
paperback, is called The Great American Stickup. This issue of-well, the
question of, is President Obama really responsible for-and maybe the media,
as well-the whole tea party phenomenon, the issue of people across this
country suffering terribly economically and seeing the power elite in
Washington bailing out the banks, and yet people on the bottom are losing
their homes by the very banks that have been bailed out? Is-
ROBERT SCHEER: Yeah, look, you know, I actually wrote a column saying that I
wasn't upset that Rand Paul won the Republican nomination in Kentucky, I
wasn't that upset that the tea party candidate won in Alaska, because both
of them at least challenged the power of the Federal Reserve. At least both
of them demanded an audit of the Federal Reserve. The Federal Reserve, you
might recall, when Timothy Geithner was head of the New York Fed, that's
where they made those deals on the weekend where they decided to bail out
AIG. And we still don't know what happened then and how those deals were
made. So, you know, there are some voices on the right that, to my mind, are
reasonable and are making important points. And I think it would be fine to
have a Rand Paul in the Senate. You know, yes, an honest Libertarian voice
would be helpful. But they're not going to solve the problems of this
country, because this country is going to remain a mixed economy. And a
mixed economy, to this day, it means basically a Wall Street-driven economy.
I can't stress that enough. Everybody thinks, well, you're putting up a
straw man or something. It's nonsense. Two-thirds of the profit that was
made in this country during the Bush years was made by the financial
community. They were also the main backers of Obama's campaign. I mean, you
know, you can't underestimate the power of Wall Street in our society at
this time. And they can control our politics, certainly when it comes to
anything they care about.
And take the case of Elizabeth Warren, for example. I mean, here was a
perfectly reasonable, highly educated woman who dared speak for the
consumer. I mean, there's nothing radical about Elizabeth Warren. All she's
saying is, "Hey, let's look out for the people signing these contracts." You
know, she's not even raising the prospect of controlling interest rates,
which, by the way, used to be in not only the California state constitution,
but quite a few in this country. It was preempted by federal legislation,
which Wall Street sought, saying the states no longer have power to regulate
the interest rate of any institution that has any kind of federal banking
connection, which is just about all of them. So, you know, something that
the Bible scripture calls for, whether you're Hebraic, Christian or a Muslim
tradition, usury is condemned. It's condemned far more than anything else in
the Bible. And yet, you know, if you dare suggest we not charge 35 percent
interest to somebody on their credit card, my God, no, that can't be. So
Elizabeth Warren hasn't even raised that issue of controlling interest
rates. All she's talking about is transparency, make sure the language is
clear, make sure people understand, it's in print that they can read when
they sign a home mortgage, and so forth. And she's considered too radical,
and Obama chickened out totally. He should have taken the fight for
Elizabeth Warren being head of this new agency, which is really the only
important thing to come out of his financial regulation, was the creation of
this agency. Unfortunately, it's tucked away in the Federal Reserve, so, you
know, that's controlled by the banks. She will have to now report to the
Treasury Department, because of the way now she's an adviser. And he ducked
that fight. And that was an important fight for him to have. And if the
Senate wanted to turn this down, let's find out why and let's get the public
involved. Do they want a vigorous consumer representative in there?
And let me just say one point also about these so-called brilliant people
and the problems we're in and everything. On the first page in my book, I
quote an exchange between George W. Bush and Henry Paulson. Paulson is
another supposedly brilliant person. He was head of Goldman Sachs. George
Bush brought him in as Treasury Secretary, one of those corporate people
that they're saying Obama might bring in and so forth. And Paulson at least
had the honesty in his memoir, which I quote on my first page, where George
W. Bush asked him, "How did this happen?" Here's the President of the United
States asking his new Treasury Secretary, former head of Goldman Sachs,
"What is this we're in, this economic meltdown? How did this happen?" And
Paulson answers, "It was a tough question for somebody from the financial
community to ask, because we were responsible." However, when you read-and
that's an honest statement, a good one. However, when you read further in
the book, Paulson admits he did not know these toxic mortgage derivative
packages and credit default swaps were at the basis of these toxic
securities. He did not understand at that time, as he was advising the
president. He only found out later. So when these people present themselves
as very knowledgeable and on top of things, most of the time they're not. As
long as the money is coming in, as long as the profits are increasing, as
long as they're getting, as Robert Rubin did, $15 million a year, or a
Lawrence Summers can make $8 million just consulting and speaking for Wall
Street, they don't want to look a gift horse in the mouth, and they'll go
along. And they don't really care whether it explodes after they've gotten
theirs and hurts the rest of us.
AMY GOODMAN: Robert Scheer, thanks so much for coming in. His book is just
out in paperback; it's called The Great American Stickup: How Reagan
Republicans and Clinton Democrats Enriched Wall Street While Mugging Main
Street. Was a reporter with the Los Angeles Times, a columnist for more than
thirty years, and is the editor-in-chief of Truthdig.com.
No comments:
Post a Comment