Too Big To Fail: It's Time For The Ultimate Bailout, The Federal Government

By Manifesto Joe

AIG (American International Group Inc.), Americans are being told, must be bailed out because it is too big to fail. Originally the world's biggest insurance company, AIG got into trouble with a vast foray into derivatives trading, insuring the kind of trash that giant financial institutions were bundling after they got into the subprime mortgage quagmire.

It's useful to extend an argument. I pose that the ultimate entity that is too big to fail is the federal government itself. Hell, it now owns 80% of AIG, anyway. Let the ultimate bailout commence.

So, where would the bailout money come from? There used to be, even in this country, the allegedly socialist notion of progressive taxation -- that those with the ability to pay should be taxed more. I understand that we don't want to punish successful people, you know, like those bonus-wealthy executives and derivatives traders at AIG. After all, we've got to keep attracting and retaining "the best and the brightest" to our giant financial institutions.

But one cannot even propose a more progressive income tax in this country without having to endure endless caterwauling from the right-wing attack apparatus. This is from MoveOn.org:

The media has been obsessing about President Obama's plan to roll back the Bush tax cuts for the wealthiest Americans—from 35% to 39.6% -— even asking if that makes him a socialist.

But do you know what tax rate the wealthiest Americans paid on the top portion of their earnings at the end of Ronald Reagan's first term? 50%.

Under Richard Nixon? 70%. Under Dwight Eisenhower? 91%!

Yes, we once had a progressive income tax in this country, and we even took that for granted -- like the right to organize a labor union, among other such quaint New Deal-era notions. There was even once a corporate income tax. It still exists on the books, but there are so many ways to elude it that 60% of American corporations don't pay anything. According to expert tax reporters Barlett and Steele, in 1959, corporations actually provided 39% of all IRS revenue. It's a fraction of that now.

I'm not even radical on this issue. To me, a 91% marginal tax rate on personal income does seem punitive. Even 70% sounds like too much. What sounds right? I'd say 50%, like at the end of Reagan's first term.

Even at 39.6%, the Clinton administration rate, the U.S. saw its last federal budget surplus, and the last we're likely to see for a while. President Barack Obama wants it there again, and he has shown an admirable fighting spirit.

But he's up against something very powerful. Facts and history mean nothing to these people. The objective is to defend the economic status quo, however toxic and indefensible. And they have a history of being able to mobilize armies of wage-enslaved fools who are more than willing to blame the wrong people for their problems. The idea at the core of their mission is not where we will be in 10 years. It is how much profit can be made for the right people in the next 10 minutes.

When we get down to it, the bailouts of financial institutions, all generally undeserving, won't cut it unless we do the ultimate bailout -- our own federal government. It is far too big to fail. Two plus two do not equal five, and if this economy is going to be put back on the tracks any time soon, it's clearly the federal government that's going to have to do it.

Granted, that's a scary thought -- almost as frightening as leaving it in "free-market" hands such as AIG's "best and brightest."

Out Of Commission Again, But Will Be Back Soon

Wednesday night I was felled by an acute but serious illness. I'm recovering at home with the help of antibiotics and other meds. I won't be able to post for a few days, but hope to be back next week. -- MJ

No Ideological Bailout For Right-Wingers

By Manifesto Joe

Hi there, buckeroos. Been away for a while, tendin' to family business.

I have nonetheless been perusing recent doings in the mass media -- my job inevitably brings me into contact with that grotesque modern animal -- and I offer a few comments.

The one they call Michelle Bernard would be a fool.

Michelle is a glamorous-looking Jamaican-American lawyer who somewhat improbably became a right-winger, and then, somewhat more probably, a "conservative" TV political analyst for MSNBC. She flashes a dazzling mechanical smile at the camera the moment she's through with some inane comment. Her looks are enough for her to get by on, most of the time.

Last week, during the postmortem on President Barack Obama's address to a joint session of Congress, one couldn't help but see this person's sheltered, naive foolishness.

During an MSNBC discussion about the role of government in economic matters, Bernard talked about Hurricane Katrina, and its aftermath, as an example of why Americans shouldn't trust government or its proposed solutions. The implication, of course, was that Obama's new proactive role for government is wrongheaded.

That she would even bring up such an example is breathtaking in its stupidity. Let's consider all this:

-- How would the residents of New Orleans have effectively employed an ideology of "self-reliance," other than to just leave the city as the storm approached?

-- Then, unless they were financially independent, they would have to rely on relief services somewhere, from some source, in order to dress, eat and sleep. Where are these things coming from? FEMA? They couldn't rely very much on the agency under Bush, underfunded and led by Republican political hacks. Private sources? A lot of wonderful people pitched in, but the aid wasn't nearly enough for all the victims. There are still a lot of displaced people living in substandard trailers, wondering if they can ever go home.

-- As for those who stayed: What kind of self-reliance would have helped those people, other than to climb up onto the roofs of houses? And after that, who was going to rescue them? Private Blackwater contractors?

-- When the New Orleans levies failed, this was a preventable failure of government. Ask the Army Corps of Engineers about that one. It's no secret that government often fails us. It's in the hands of humans. But I've noticed that when it's in the hands of anti-government Republicans, it tends to fail more often. Could it be that this is because they underfund it, staff it with political hacks, and then predict its failure as a sort of self-fulfilling prophesy?

I've been through four hurricanes, and I can remember when FEMA was an agency that would be on site quickly and with effective help. That was when it was adequately funded, and staffed with professionals, not GOP fundraisers and functionaries.

I think your Michelle Bernard would be a fool, and just one more example of how any right-wing bozo (or bozette) who looks "right," and says the "right" things, can be elevated to the status of national political pundit.

The one they call Rush Limbaugh, once again, would be a fool.

This obese life-support system for a mouth has positioned himself as one of Obama's leading critics, and as a staunch defender of predatory capitalism as American patriotism.

How in the world does this man think the current crisis came about? It was the logical result of policies he's been bombastically pushing for decades -- low (or no) taxes on the wealthy and big corporations, little or no regulatory oversight of financial institutions, prosecution of elective wars without regard for where the financing would come from, sitting around and belching platitudes about the free market while millions of jobs were being exported. ... He was never worried about the deficit for 28 years. And now he is?

Defense Secretary Robert Gates tells Sunday morning talking heads that Obama is more "analytical" than Bush.

Is this a polite way of saying that Bush is stoooooopid?

It's all very unscientific.

(For those unfamiliar, there are allusions here to The King and I.)

Manifesto Joe Is An Underground Writer Living In Texas.