“State-wrecked: the corruption of capitalism in America”

That’s the title of David A. Stockman’s March 31 opinion piece in the New York Times. Stockman is a Republican and former budget director for the Reagan administration (1981 to 1985). His most accurate claim is that the bailouts and the “quantitative easing” that saved Wall Street, and subsequently pumped up the stock market, are evidence of class warfare. Thanks to the ongoing taxpayer-funded welfare for Wall Street banks and the CEO class, the wealthy are doing very well while the vast majority of Americans are losing, and losing badly. This is how he describes where we are today:

Since the S&P 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the ‘bottom’ 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.

Stockman says the money and bank subsidies, (estimated elsewhere by bank analyst Chris Whalen to be $780 billion per year) have not spurred banks to lend and corporations to spend, but have stayed “trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.” He predicts that the Fed-fueled bubble will burst only this time there will be no bailouts like the ones the banks got in 2008. “Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.” A scary prospect, indeed.

We need to pause here a moment to remember that it was a Democrat, Bill Clinton, along with Alan Greenspan, Robert Rubin and Lawrence Summers, who deregulated the too-big-to-fail banks, leading to their meltdown in 2008; and it was Republican George W. Bush and Democrat Barack Obama who bailed them out. When it comes to economic policy, both parties are bought and paid for by financial cartels.

Senator Dick Durbin, himself a beneficiary of the finance industry’s deep pockets, said in a 2009 radio interview:

And the banks—hard to believe in a time when we’re facing a banking crisis that many of the banks created—are still the most powerful lobby on Capitol Hill. And they frankly own the place.

Stockman, refreshingly, speaks the truth about the “corruption of capitalism in America,” and the bi-partisan economic policies that have brought America to what he calls an “end-stage metastasis.” But, his naïve libertarian viewpoint and ideas about what to do about it would not solve the systemic problems of free market capitalism that brought us here in the first place. He has some solutions I support, such as 100 percent public financing for candidates for public office, limiting the duration of campaigns to eight weeks, and cutting off taxpayer subsidies to Wall Street banks. But even he thinks these, and his other ideas, could never be implemented given the current stranglehold of big money on government.

I don’t agree with everything in Stockman’s assessment about how we got here, but the value of his opinion piece is that an old school Republican from the Reagan administration has written a powerful condemnation of corporate/government corruption in The New York Times. The response to his high profile article, of course, has been frenzied. The punditry in both parties, who are comfortable with, and make their money off of, the status quo are freaking out—and that’s a good thing. It’s time someone spoke the truth.