Obama: Managing a Wounded Empire

The following is an excellent excerpt from the book “THE UNTOLD HISTORY OF THE UNITED STATES” by Oliver Stone and Peter Kuznick from Chapter 14 “OBAMA: Managing a Wounded Empire” on page 549 and I quote: “”We are an attractive empire, the one everyone wants to join,” crowed neocon Max Boot in the aftermath of 9/11. But now, after two long and disastrous wars, trillions of dollars in military spending, a network of more than 1,000 foreign military bases, torture and abuse of prisoners on several continents, assault on both international law and the U.S. Constitution, a near economic collapse, drone attacks killing alleged terrorists and civilians alike, disparities between rich and poor unheard of in an advanced industrial country, appallingly low test scores for students, government surveillance on an unprecedented scale, collapsing infrastructure, domestic uprisings on both the Left and the Right, and an international reputation left in tatters, the U.S. empire does not look all that attractive.
George W. Bush, who canceled his 2011 speaking engagement in Switzerland to avoid massive protests and the risk of being indicted as a war criminal, and his empire-friendly advisors bear a lot of responsibility for this sorry state of affairs. They saddled Barack Obama and the American people with an incredible mess. Obama confided to one of his closest aides: “I’m inheriting a world that could blow up any minute in a half dozen ways. . .”
The country Obama inherited was indeed in shambles, but Obama took a bad situation and, in certain ways, made it worse. Swept into office on a wave of popular euphoria, he mesmerized supporters throughout the campaign with his exhilarating rhetoric, surpassing intelligence, inspiring biography, commitment to defending civil liberties, rejection of unilateralism, and strong opposition to the Iraq War—qualities that made him seem the antithesis of Bush. The election of Barack Hussein Obama, the child of a black Kenyan father and a white Kansan mother, who was raised in Indonesia as well as Hawaii and went on to graduate from Columbia and become president of the Harvard Law Review, felt like a kind of expiation for the sins of a nation whose reputation had been sullied, as we have shown throughout this book, by racism, imperialism, militarism, nuclearism, environmental degradation, and unbridled avarice. The suffering caused by misguided U.S. policies had been immense. For many, Obama’s election offered redemption. It attested to the other side of America and its place in history, a side marked by idealism, egalitarianism, constitutionalism, republicanism, humanism, environmentalism, and the embrace of freedom and democracy as universal principles. Progressives hoped Obama would become the heir to a tradition represented by Franklin Roosevelt and Henry Wallace and by the post-Cuban Missile Crisis John F. Kennedy.
Yet rather than repudiating the policies of Bush and his predecessors, Obama has perpetuated them. Rather than diminishing the influence of Wall Street and the major corporations in U.S. life, Obama has given them latitude to continue most of their predatory practices. Rather than restoring the civil liberties that Bush had eviscerated and limiting the executive powers that Bush usurped after 9/11, Obama, with few exceptions, has tightened the grip of the domestic security/surveillance apparatus, stifling civil liberties and the right to dissent.
In the brilliant 1939 film Mr. Smith Goes to Washington, director Frank Capra spends the first eleven minutes exposing a nefarious web of power, intrigue, and clandestine deal making to reveal the hidden world that the naïve and idealistic Jefferson Smith will encounter when he tries to change the ways of Washington. But Obama was much more savvy and, apparently, more cynical than Smith. By knowingly surrounding himself with establishment insiders as domestic and foreign policy advisors, he preemptively closed the door on the kind of bold innovations and breaks with the past that his campaign had promised.
Having betrayed his earlier promises and become the first presidential candidate to turn down public campaign financing in the general election, Obama turned to Wall Street funders with deep pockets, like Goldman Sachs, Citigroup, JPMorgan Chase, Skadden Arps, and Morgan Stanley. Also high on the list of Obama contributors were General Electric and other defense contractors. And the pharmaceuticals industry—Big Pharma—reversed years of supporting Republicans, contributing more than three times as much to Obama as to McCain.
Obama’s grassroots supporters largely overlooked these disturbing facts. Progressives projected onto him their own hopes and expectations, conservatives their worst fears. Both were mistaken. He ran a centrist campaign, advancing safely pragmatic policy initiatives. He consistently championed the middle class. The working class and the poor—black, Hispanic, Asian, Native American and white—seemed an afterthought as Obama battled Hillary Clinton and then John McCain. Instead of seizing the opportunity to explain how the decline of manufacturing and other structural factors at the heart of a dysfunctional corporate- and Wall Street-dominated system had exacerbated the problems for all poor people and especially African Americans, he hectored poor blacks for not taking more “personal responsibility.” He positioned himself to the left of Clinton by trumpeting his opposition to the Iraq War, which she had voted to support, but to the right of George Bush on Afghanistan, a position his supporters conveniently ignored. And his Senate vote for the Foreign Intelligence Surveillance Act, which gave legal immunity to telecommunications companies complicit in Bush’s wiretapping, should have signaled that he might be unwilling to relinquish some of the powers that Bush and Cheney had appropriated.
The biggest winner under Obama was Wall Street. After wrecking the economy with speculative innovations, including credit-default swaps and collateralized debt obligations, bankers came begging for bailouts. Not surprisingly, Obama’s economic advisors—almost all disciples of Bill Clinton’s Treasury secretary Robert Rubin—were more than happy to assist with a $700 billion financial bailout program. Rubin, who had been systematically cultivating Obama since 2005, had cochaired Goldman Sachs prior to his stint at Treasury, where he had masterminded two of the policies that helped precipitate the financial crisis his proteges would now handle: the deregulation of the derivatives market and the 1999 repeal of the Glass-Steagall Act, which had separated investment banking from commercial banking. Having done Wall Street’s dirty work at Treasury, he was rewarded with a top job at Citigroup, where he received $126 million over the next eight years. The New York Times reported in late November 2008, “as Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape. Rubin’s Treasury chief of staff and fellow Citigroup exec Michael Froman was in charge of putting this team together. The two top positions went to Rubin proteges Timothy Geithner, the New York Fed chief, whom Obama named as Treasury Secretary, and Lawrence Summers, whom he named senior White house economic advisor. Geithner had worked under Rubin at Treasury and Summers had been Treasury Secretary at the time Glass-Steagall was repealed. Like Rubin, Summers, an avowed deregulator, had also cashed in on his service to Wall Street, earning $5.2 million working one day a week for the D.E. Shaw hedge fund in 2008, while raking in another $2.7 million in speaking fees, much coming from Wall Street firms. Goldman Sachs paid him $135,000 for one speech alone, which investigative journalist Glenn Greenwald aptly called an “advanced bribe.” In light of how much Wall Street was going to profit from the Geithner-Summers stewardship of the economy, Goldman Sachs and the other “banksters” got off cheap. Obama tapped Rubin protege Peter Orszag as budget director. According to the Times, “Geithner, Summers and Orszag have all been followers of the economic formula that came to be called Rubinomics: balanced budgets, free trade and financial deregulation.” The lower echelons of economic decision making were also populated by Rubin allies. The glaring exceptions were Christine Romer, chair of the Council of Economic Advisors, and Jared Bernstein, Biden’s chief economic policy advisor. The two of them fought unsuccessfully, during their brief tenures, against some of the Rubinites’ neoliberal initiatives.
Former Democratic strategist David Sirota aptly identified the ways Rubin’s people would mold Obama’s economic strategy: “Bob Rubin, these guys, they’re classic limousine liberals. These are basically people who have made shitloads of money in the speculative economy, but they want to call themselves good Democrats because they’re willing to give a little more to the poor. That’s the model for this Democratic Party: Let the rich do their thing, but give a fraction more to everyone else.”
On November 23, 2008, the Bush administration announced a potential $306 billion bailout of Citigroup, which was facing collapse. Citigroup had recently received $2.5 billion under the Troubled Asset Relief Plan, which provided a massive bailout to the financial sector. The Times made clear that Geithner played a “crucial role” in the negotiations and that Bush’s Treasury Secretary, Henry Paulson, had worked very closely with Obama’s transition team. Wall Street was so exuberant over the deal that the Dow posted its biggest two-day jump in over twenty years and Citigroup’s stock, which had tumbled in price from $30 to $3.77 in the past year, shot up 66 percent in one day. “If you had any doubts at all about the primacy of Wall Street over Main Street,” former Labor Secretary Robert Reich exclaimed, “your doubts should be laid to rest.” Abundant proof would be forthcoming. The Washington Post reported in early April 2009 that the Treasury Department was bending the law and defying the will of Congress to avoid limiting executive pay: “The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.”
University of Texas economist James Galbraith lambasted Obama for meekly submitting to the bankers’ demands as if there were no other way to solve the crisis:
“. . . one cannot defend the actions of Team Obama on taking office. Law, policy and politics all pointed in one direction: turn the systemically dangerous banks over to Sheila Bair and the Federal Deposit Insurance Corporation. Insure the depositors, replace the management, fire the lobbyists, audit the books, prosecute the frauds, and restructure and downsize the institutions. The financial system would have been cleaned up. And the big bankers would have been beaten as a political force.
Team Obama did none of these things. Instead they announced “stress tests,” plainly designed so as to obscure the banks’ true condition. They pressured the Federal Accounting Standards Board to permit the banks to ignore the market value of their toxic assets. Management stayed in place. They prosecuted no one. The Fed cut the cost of funds to zero. The president justified all this by repeating, many times, that the goal of policy was “to get credit flowing again.”
The banks threw a party. Reported profits soared, as did bonuses. With free funds, the banks could make money with no risk, by lending back to the Treasury. They could boom the stock market. They could make a mint on proprietary trading. Their losses on mortgages were concealed. . . .”
Former Federal Reserve chairman Paul Volcker advised Obama to take strong action. “Right now, “ he said, “when you have your chance, and their breasts are bared, you need to put a spear through the heart of all these guys on Wall Street that for years have been mostly debt merchants.” But rather than stand up to Wall Street, Obama prostrated himself before the CEOs of the thirteen largest banks in March 2009, telling them, “I want to help. I’m not out there to go after you. I’m protecting you. But if I’m going to shield you from public and congressional anger, you have to give me something to work with on these issues of compensation.” The bankers paid lip service to voluntary restraint and then proceeded with record bonuses. Thus, unlike the Europeans who limited bankers’ compensation, the Obama administration did not even limit compensation to those whose companies were saved by government bailouts. Obscene profits ensued. The Wall Street Journal reported that total compensation and benefits at Wall Street banks, investment banks, hedge funds, money-management firms, and securities exchanges reached record levels of $128 billion in 2009 and $135 billion in 2010. The greatest beneficiaries were the twenty-five top hedge fund managers, whose average earnings jumped from a paltry $570 million in 2006 to a more respectable $1 billion in 2009. In 2010, one New York hedge fund manager, John Paulson, pulled in $4.9 billion.
Journalist Ron Suskind later reported that a more complicated internal negotiation had actually occurred behind the scenes in which Obama agreed with Romer and others that a fundamental restructuring of the banks was necessary, beginning with Citigroup. It was Geithner and Rahm Emanuel who sabotaged this effort. Geithner, Suskind contended, simply refused to come up with the plan that Obama had asked for and eventually convinced the president to go along with his own Wall Street-friendly approach. Emanuel, who had earned over $18 million in two and a half years working for the investment banking firm Wasserstein Perella after leaving he Clinton White House in 1999, insisted they all go along with Geithner. Obama rolled over without a fight.
The financial crisis that began in 2008 did nothing to stanch the corporate bleeding of the middle and working classes. Average total compensation for CEOs of Standard & Poor’s 500 Index companies rose 23 percent in 2010 to $11.4 million. CEO pay, which equaled 343 times that of the median worker in 2010, had risen more than eightfold since 1980, when it stood at a mere 42 times as much. By comparison, CEOs in other industrial countries earned far less. British and Canadian CEOs earned 22 times as much as the average British and Canadian worker, and Japanese only 11. Discovery Communications’ CEO David Zaslav was among those who cashed in. His pay jumped from $7.9 million in 2008 to $11.7 million in 2009 to $42.6 million in 2010.
The rest of the workforce was left largely to fend for itself. Obama’s economic stimulus program was only about half the $1.2 trillion advocated by Christine Romer, whose recommendation was left off the options submitted by Summers. The economic recovery of the early Obama years was not only weak in terms of generating new jobs, its benefits went entirely to the wealthiest Americans. Economist Andrew Sum and his group of researchers at Northeastern University discovered that, from the second quarter of 2009 through the first quarter of 2011, national income grew by $595 billion dollars. Pretax corporate profits grew by $465 billion. Wages and salaries, however, declined by a sobering $22 billion. In the nine months after hitting the nadir of the recession in the second quarter of 2009, they found, corporate profits accounted for 85 percent of the increase in profits and wages. For the same recovery period following the 1981-1982 recession, only 10 percent had gone to corporate profits. In 2010, 93 percent of income growth went to the top 1 percent of households, leaving a scant 7 percent for the other 99 percent to divide up. The top .01 percent, some 15,000 families, did even better, absconding with a stunning 37 percent of new earnings. Meanwhile, benefits continued to tumble. A 2010 survey found that over the previous year, employee health insurance premiums had increased 13.7 percent while employer contributions fell by 0.9 percent.
What Chris Hedges termed “the corporate rape of America” had been under way for decades. While executive pay skyrocketed, pay for the average nonsupervisory worker, according to the Bureau of Labor Statistics, had fallen more than 210 percent since the 1970s. The Congressional Budget Office estimated that between 1979 and 2005 income of the top 1 percent jumped 480 percent.
By 2007, the top1 percent was receiving 25 percent of national income and owned almost 40 percent of American wealth. With unions representing only 7 percent of the private force in 2007, real wages, adjusted for inflation, were actually lower than they had been thirty years earlier. In 2007, the bottom 80 percent owned only 15 percent of all wealth. Overall, by 2011, the Economic Policy Institute reported, the richest 1 percent had more wealth than the bottom 90 percent. Families had, for the most part, managed to maintain standards of living since the 1970s by expanding female participation in the workforce (women with young children working outside the home jumped from 24 percent in 1966 to 60 percent in the late 1990s), sharply increasing the number of hours worked (100 more hours per year for the typical male worker and 200 hours for the typical female over two decades earlier), and borrowing at inordinate, and ultimately unsustainable, rates (squeezing $2.3 trillion from homes between 2002 and 2007).
A stunning measure of how far the United States had fallen came from the October 2011 Bertelmann Stiftung Foundation report “Social Justice in the OECD—How Do the Member States Compare,” which ranked the United States twenty-seventh out of the thirty-one OECD Nations, only beating Greece, Chile, Mexico, and Turkey. The report measured many factors, including poverty prevention, poverty rates for children and senior citizens, income inequalities, expenditures on pre-primary education, health care, and other key metrics. The United States came in twenty-ninth in overall poverty rate and twenty-eighth in child poverty and income inequality. Columbia University’s National Center for Children in Poverty reported that 42 percent of children lived in low-income families, half of them below the poverty line. The Associated Press reported in December 2011 that almost half of all Americans were either in poverty or subsisting on low incomes. The Census Bureau reported that in 2010, 46.2 million Americans were below the poverty line, which was the highest number since it began publishing those figures fifty-two years earlier.
Not only were more Americans falling into poverty, fewer and fewer were able to escape. Mobility studies shattered the myth that the United States was a society with fluid class lines and easy upward mobility. In fact, the United States, with its porous social safety net, failing schools, and low percentage of unionized workers, had considerably less social mobility than any other advanced industrial society.”


OLIVER STONE has won numerous Academy awards for his work on such iconic films as Platoon, Wall Street, JFK, Born on the Fourth of July, Natural Born Killers, Salvador, and W.

PETER KUZNICK is a professor of history and director of the award-winning nuclear Studies Institute at American University and is currently serving his third term as distinguished lecturer with the Organization of American Historians. He has written extensively about science and politics, nuclear history, and Cold War culture.”

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen and AARP Members


About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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