[Marxism] Public Sees A Tilted Playing Field

Louis Proyect lnp3 at panix.com
Thu Oct 29 07:15:43 MDT 2009

(The article cites Brad Delong, a formerly ubiquitous figure on 
left-leaning listservs, as an apologist for Obamanomics. Go to 
link below to see table with voter breakdown.)

Public Sees A Tilted Playing Field
by Thomas B. Edsall

When Peter Hart Associates asked registered voters recently who 
they felt was benefiting from the government's economic policies, 
the resounding answer was that the hundreds of billions poured 
into the economy have done far more to help those at the top of 
the economic food chain than those on the bottom.

A paltry 13 percent of those interviewed for the September 2009 
survey said that the average Joe and Jill have been "helped a lot 
or a fair amount" -- compared to 65 percent who think regular 
folks have gotten little or no assistance from the government. 
Fully 54 percent of respondents said Wall Street investment 
companies have been helped - and nearly two-thirds said the large 
banks have been taken care of.

The voters seem to have gotten it about right.

"In relative terms, the perceptions are dead-on: the big winners 
so far are the bailed-out bankers. Meanwhile on the jobs and 
housing front, things get worse," says University of Texas 
economist James Galbraith. "You can make an argument that everyone 
has been helped by the fact that the economy hasn't collapsed even 
more completely," Galbraith added, but that does not "cut any ice 
with the population at the moment. What they see is that a 
top-down bailout works on the top and doesn't go very far down. 
And they are right."

The stimulus has not kept the unemployment rate at or under 8 
percent, as Obama officials originally claimed it would. Instead, 
last month it reached 9.8 percent, and would have broken 10 
percent except for the fact that hundreds of thousands of 
unemployed workers -- 571,000 in September alone -- have given up 
looking for jobs altogether. Applications for Social Security were 
23 percent higher last month than a year ago, suggesting growing 
numbers of workers are taking early retirement. Disability claims 
have risen by roughly 20 percent.

And there are reports that some key programs to help struggling 
working and middle class Americans are not working out as well as 
expected. The Washington Post on October 24 reported that the 
federal program to help homeowners whose property is substantially 
"underwater" - worth less than the mortgage - refinance under more 
favorable terms "has so far reached fewer than 3 percent of those 
targeted, with many struggling borrowers deciding that the 
benefits of a new loan aren't worth the closing costs."

The Detroit Free Press on October 8 reported that a near riot 
broke out at Cobo Center in the downtown section of the city when 
an estimated 35,000 people showed up "desperate for help with 
mortgage and utility bills...threats were made, fights broke out 
and people were nearly trampled. The huge crowd that day was part 
of over 65,000 people seeking a portion of the area's $15.2 
million in federal stimulus money intended for individuals to 
avoid foreclosure or for the homeless to get shelter. About 3,500 
men and women, or just over 5 percent of those applying, will get 
any help."

Nationwide, ProPublica, the investigative news website, found that 
stimulus money has been distributed with little or no regard for 
unemployment and poverty concentrations. "Stimulus spending is 
literally all over the map," the authors of the study wrote. "Some 
battered counties are hauling in large amounts, while others that 
are just as hard hit have received little."

While the benefits flowing to the average worker, including those 
down and out of work, have been haphazard, the same cannot be said 
about aid to the nation's large banks and other "too big to fail" 
institutions, along with many smaller banks. (See list of bailout 

Without billions and billions of dollars in backing from the 
Treasury and the Federal Reserve, many of these institutions were 
headed toward bankruptcies that would have wiped out the value of 
their stock and severely reduced, if not eliminated altogether, 
the value of company debt, including bonds.

Most notably, insurance giant AIG has been on the receiving end of 
$134.4 billion in federal cash, according to ProPublica.

On March 6, 2009, AIG's prospects looked grim. The stock, which 
had reached a high of $1,450.80 in mid-2007, collapsed in March to 
$7 a share. If you owned 10,000 shares, their value fell from 
$14.5 million to $70,000 (time to think about exiting an 88th 
floor window). But then all that federal money and guaranteed 
support began to kick in. And by the end of last week, the stock 
was back up to $38.90, nowhere near the $1,400-plus range of days 
past, but still, those 10,000 shares are worth $398,000.

If things are brightening over at AIG, it's a mid-summer's day at 
Goldman Sachs. Just a year ago, on Oct 28, 2008, the firm got $10 
billion in bailout money. A month later, on November 21, 2008, 
Goldman stock, which had been as high as $235.92 in October 2007, 
fell to $53.31. Since then, however, Goldman has become the poster 
child for Wall Street success. At the end of last week, its stock 
stood at $180.36.

More important, the all-important bonus pool for Goldman employees 
had climbed to $16.7 billion by the end of the third quarter, on 
its way to $20 billion for the year - enough to give each of its 
31,700 employees a bonus of roughly $630,000 each, although 
bonuses are given out in the multi-millions for those at the top 
of the corporate pyramid and in markedly smaller amounts to those 
in the middle and bottom ranks.

"For Goldman employees," the New York Times noted, "it is almost 
as if the financial crisis never happened."

President Obama and his aides are acutely aware of the hostile 
public assessment of the recovery efforts. The administration has 
recently begun efforts to publicize the benefits for the general 
public and to criticize the actions of some of the large 
investment banks.

"We acted boldly and we acted swiftly to pass a Recovery Act 
that's made a difference in the lives of families across America," 
Obama told supporters at an October 21 DNC fundraiser in New York. 
Stressing government programs targeted at those struggling to make 
ends meet, the President declared, "We extended unemployment 
insurance, increased unemployment insurance for 12 million 
Americans to help them get through tough times -- that's helped 
millions of New Yorkers. We made COBRA 65 percent cheaper to make 
sure that if you were looking for a job, your family wouldn't go 
without health care. ...We gave relief to states including New 
York to help prevent more teachers and firefighters and police 
officers from being laid off. According to initial reports, 
250,000 jobs in our schools were saved as a consequence of the 
Recovery Act -- a quarter of a million teachers and educational 
specialists. We've supported more than 30,000 loans to small 

In a bid to deflect populist anger at the administration over the 
gains of the major banks, Obama is declaring that "now it's time 
for our banks to stand by creditworthy small businesses and make 
the loans they need to open their doors, grow their operations and 
create new jobs....It's time for those banks to fulfill their 
responsibility to help ensure a wider recovery, a more secure 
system and more broadly shared prosperity."

Meanwhile, some economists say that the benefits of the federal 
programs far outstrip the costs and balance apparent inequities. 
Berkeley economics professor Brad DeLong, who was deputy assistant 
Treasury Secretary during the Clinton administration, argues: "The 
economy fell off a cliff in 2008 and landed with a crash in the 
quarter of Obama's inauguration. Without the [government bailout] 
policies, we would have kept rolling down the hill, and right now 
would have a recession not twice, but about 1.7 times, as deep as 
the one we have."

The benefits of federal actions taken so far, DeLong contends, 
include the following: total: income is $750 billion a year higher 
than it would have been without such action; three out of every 
100 workers has a job because of the policies, and "when the dust 
settles, the U.S. government will have transferred [only] $200 
billion to high finance...that it is not going to get back." In 
sum, DeLong says, "the voters' perceptions are simply flat-out wrong."

Whatever populist anger there is should rightfully be directed at 
the Bush administration and former Treasury Secretary Henry 
Paulson, DeLong says. "Had we wanted policies that transferred 
less taxpayer money to Wall Street, we should have had people 
other than George W. Bush and Henry Paulson sitting in the hot 
seats in the fall of 2008.... For Paulson, the game was to stop 
depressions without risking 'socialism' -- and minimizing the 
transfer from the federal Treasury to high finance was a second or 
a third-order concern for him."

But when it comes to the big picture, the voters in the Hart 
Research survey quite accurately saw the way the world works: When 
everyone from bankers to laid-off assembly line workers line up 
for a hand from the feds, the bankers go to the head of the line. 
The laid-off worker is lucky to get a partial COBRA subsidy and 
avoid getting crushed outside the Cobo Center.

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