Zaroc Stone
2008-08-11 01:48:36 UTC
Big Business Is Making Sure It Wins the Presidency
By Matt Taibbi, RollingStone.com. Posted August 9, 2008.
It's the same old story: Money talks, and bullshit walks. And don't be
surprised if we're the ones still walking after November.
Remember the total, hideous, inexcusable absence of oversight that has been
the great hallmark of George Bush's America for almost eight years now?
Well, now we're getting to see that same regulatory malfeasance applied to
yet another cornerstone of our political system. The Federal Election
Commission -- the body that supposedly enforces campaign-finance laws in
this country -- has been out of business for more than six months. That's
because Congress was dragging its feet over confirmation hearings for new
FEC commissioners, leaving the agency without a quorum. The commission just
started work again for the first time on July 10th under its new chairman,
Donald McGahn, a classic Republican Party yahoo whose chief qualifications
include representing Tom DeLay, the corrupt ex-speaker of the House, in
matters of campaign finance.
Apart from the obvious absurdity of not having a functioning
election-policing mechanism in an election year in the world's richest
democracy, the late start by the FEC makes it almost impossible for the
agency to do its job. The commission has a long-standing reluctance to take
action in the last months before a vote, a policy designed to help prevent
federal regulators from influencing election outcomes. Normally, the FEC
tries to root out infractions and loopholes -- fining campaigns for
incomplete reporting, or for taking shortcuts around spending limits -- in
the early months of a campaign season. But that ship sailed way too long ago
to take the stink off the 2008 race.
"The time for setting the ground rules was earlier," says Craig Holman, a
lobbyist with the watchdog group Public Citizen. "There isn't time to do
much now."
That's especially true given the magnitude of what we're dealing with here:
the biggest pile of political contributions in the history of free
elections, nearly a billion dollars given to presidential candidates in this
season alone. Because the FEC has been dead in the water for so long, it's
likely that we'll still be in the dark about a large chunk of this record
manure pile of campaign contributions when we go to vote in November.
But that doesn't mean that a little sifting through campaign records doesn't
tell us quite a lot about who's backing whom in these races. The truth is
that the campaigns of both Barack Obama and John McCain are being inundated
with cash from more or less exactly the same gorgons of the corporate scene.
From Wall Street to the Big Oil powerhouses to the military-industrial
complex, America's fat-cat business leaders know that the Animal House-style
party of the last eight years that made almost all of them rich with
bonuses, government contracts and bubble profits is about to come to an end,
and someone is going to have to pay to clean up the mess. They want that
someone to be you, not them, and they've spared no expense to make sure both
presidential candidates will be there to bail them out next year.
They're succeeding. Both would-be presidents have already sold us out.
They've taken the money and run -- completing the cyclical transformation of
the American political narrative from one of monopolistic Republican
iniquity to an even more depressing tale about the overweening power of
corporate money and the essentially fictitious nature of our two-party
system.
In layman's terms, we've gone from being screwed to being fucked. Who knows
-- maybe Barack Obama will surprise us if he wins the election. But if you
look at the money, it doesn't look good.
Thanks in part to the dormant FEC, corporate America has had even easier
access to the candidates than usual in its effort to buy off the next
government before the crash. In fact, this election has seen some excellent
new innovations in the area of campaign-fundraising atrocities. Chief among
them is the rise of so-called "joint committees."
It used to be that campaigns could raise a maximum of $2,300 from each
individual. Now, both candidates -- but especially McCain, who far outstrips
Obama in this area -- routinely hold fundraisers in which individuals can
give far more to a joint committee. Technically, the candidate still pockets
only $2,300 in contributions. The bulk of the money raised -- in McCain's
case, a whopping $70,100, or 30 times the previous limit -- goes to the
state and national arms of the candidate's party, which can then spend the
unprecedented haul on behalf of the candidate. "This allows CEOs to walk in
the door and drop $70,100," says Holman. "It basically allows campaigns to
exceed the spending limits."
McCain has raised more than $63 million via these joint committees, thanks
to more than 1,000 "megadonors" who have each given at least $25,000 to his
campaign effort. Obama, by contrast, has some 471 megadonors -- and a close
examination of their backgrounds underscores some of the differences in
corporate America's attitudes toward the two candidates.
One of McCain's chief sources of corporate money is the private-equity firm
Kohlberg Kravis Roberts, memorialized for its takeover of RJR Nabisco in the
movie Barbarians at the Gate. Through the pretext of joint committees, 10
KKR executives have given McCain $285,000, and it's not hard to figure out
why. Two of McCain's key campaign proposals -- lowering the corporate tax
rate to 25 percent and making purchases of industrial equipment fully
deductible -- would save a single KKR subsidiary, Energy Future Holdings,
$49 million.
"Just in his tax policies alone, McCain is saving corporate America $175
billion a year," says James Kvaal, who analyzed McCain's tax policy for the
nonprofit Center for American Progress.
McCain has also raked in big contributions from two other giants of the
buyout world: the Carlyle Group (famous for its close ties to the Bush
administration) and the Blackstone Group (whose co-founder, Pete Peterson,
wrote a $28,500 check to McCain after he took home almost $1.8 billion from
a public offering last year). McCain has also received monstrous sums from
hedge-fund managers, attracted by his pledge to keep the tax rate on their
earnings at only 15 percent. Executives and family members in a single hedge
fund, Knott Partners, have contributed some $225,700 to McCain's campaign.
Then there's the predictable influx of cash from would-be military
contractors. John Lehman, a former secretary of the Navy whose firm builds
the Superferry transport vessel, not only donated $28,500 of his own money,
but bundled at least $250,000 for McCain from other donors. Donald
Bollinger, who is a contractor on the controversial Littoral Combat Ship,
gave $27,300 and bundled a whopping $500,000. Anyone want to bet on a
decrease in Naval appropriations in a McCain presidency?
McCain has also received big money from telecommunications magnates. The
senator has always been a friend to the industry: Back in 2003, just four
days after AT&T sent him a check for $10,500, he sponsored a bill to ban
state and local taxes on Internet service. Since 2007, McCain has taken in
some $1.3 million from the communications industry. Just four members of the
McCaw family, which owns the telecommunications firm Eagle River, have
kicked in $123,200. McCain's campaign manager, Rick Davis, was a former
lobbyist for BellSouth, Verizon and SBC Communications. His deputy campaign
manager, Christian Ferry, was a partner to Davis at Verizon. One of his
chief advisers, Charlie Black, is the head of the lobbying firm BKSH and
Associates, which represents AT&T. His Senate chief of staff, Mark Buse,
worked for AT&T Wireless. All told, of 66 current and former lobbyists
working for McCain, some 23 come from the telecommunications industry.
Given McCain's telecom backing, it's not surprising that the senator has had
one of his characteristic changes of heart. As recently as last November,
McCain was staunchly opposed to retroactive immunity for telecommunication
companies that took part in Bush's illegal spying on American consumers,
saying their actions "undermine our respect for the law." Now, jammed to the
gills with telecom cash, McCain calls himself an "unqualified" supporter of
immunity, praising the telecom industry's warrantless wiretapping as
"constitutional and appropriate."
All the same, plenty of other evidence suggests that much of Wall Street is
betting on an Obama win. In fact, some observers believe that KKR announced
a multibillion-dollar public offering this summer because it expects McCain
to lose. "They're doing the public offering now so that the compensation can
be taxed at the lower rate while Bush is still in office," says a strategist
for a major labor union. "They're betting Obama is going to win, and they're
getting their money while they can."
Other companies are getting in on the ground floor with the new chief by
stuffing money in his ears. Overall, Obama is flat-out kicking McCain's ass
when it comes to Wall Street contributions, raking in nearly $9 million from
securities and investment executives, compared to $6.2 million for McCain.
Obama has received more contributions from Goldman Sachs than from any other
employer -- more than $627,000 at this writing -- not to mention $398,021
from JP Morgan Chase, $353,922 from Lehman Brothers and $291,388 from Morgan
Stanley. Even among hedge-fund executives, who have an unequivocal interest
in electing McCain, Obama is whipping the Republican, collecting $500,000
more than McCain. All of which begs the question: Why would corporate giants
like these throw so much weight behind a man who promises to strip them of
billions in tax breaks?
Sadly, the answer to that question increasingly appears to be that Obama is,
well, full of shit. He has made no bones about his plans to raise income by
soaking the rich, promising to roll back the Bush tax cuts for people making
over $250,000, increase the top tax rate on capital gains to 25 percent and
raise the top rate on qualified dividends. He has also pledged to deliver a
real stomach punch to hedge-fund managers, raising the tax rate on most of
their income from 15 percent to 35 percent.
These populist pledges sound good, but many business moguls appear to be
betting that the tax policies, like Obama himself, are only that: something
that sounds good. "I think we don't want to make too much of his promises on
taxes," says Robert Pollin, professor of economics at the University of
Massachusetts. "Not all of these things will happen." Noting the
overwhelming amount of Wall Street money pouring into Obama's campaign, even
elitist fuckwad David Brooks was recently moved to write, "Once the
Republicans are vanquished, I wouldn't hold your breath waiting for that
capital-gains tax hike."
Those worried that Obama might be all talk when it comes to needed reform
had a real scare in July, when the senator failed to show up to vote for the
Stop Excessive Speculation Act, a bill designed to curb rampant oil
speculation. Oil speculators provide the perfect microcosm of what happened
to the economy under Bush. Back in 2001, investment banks like Goldman Sachs
and JP Morgan got together and created an online exchange called the ICE for
trading energy commodities. The ICE ended up buying the British-regulated
International Petroleum Exchange; it then opened trading windows in the
U.S., allowing Wall Street investment banks to make oil-futures trades on
American soil, on their very own commodities exchange, without any federal
regulation whatsoever.
"In financial terms, they were playing blackjack at tables where they
themselves were the dealers, in casinos they themselves owned," says Warren
Gunnels, a senior policy adviser to Sen. Bernie Sanders. "It was crazy."
Trading on the ICE had a massive impact on U.S. gasoline prices, and more
than one legislator wondered if energy speculators were manipulating the
market, as energy traders like Enron had been before. The speculation bill
was designed to regulate the ICE and place limits on trades. But on the day
before Obama returned from his eight-day, eight-country, megadazzling
international photo op, Democrats failed by a vote of 50-43 to force a vote
on the bill, as heavy lobbying by investment banks like Goldman Sachs
torpedoed the effort.
Not only did Obama not show up to vote, he appeared at a public forum three
days later flanked by Jon Corzine and Robert Rubin, two former Goldman
executives, to discuss how to revive the economy. Here you have the basic
formula of campaign contributions in a nutshell: Powerful investment bank
gives big money to candidate, needed reform requires candidate to cross said
investment bank, candidate pussies out and finds way to be gone at the
moment of truth, candidate resurfaces later in arms of aforementioned
investment bankers.
Obama's absence on oil speculation was eerily reminiscent of his previous
decision to change his mind about giving retroactive immunity to telecom
companies for spying on Americans. Obama withdrew his pledge to filibuster
the immunity bill right around the time the Democrats announced that AT&T
would be sponsoring the Democratic convention. So no filibuster on
retroactive immunity from the top Democrat -- but conventiongoers in Denver
will get tote bags emblazoned with the AT&T logo. So that's something.
Look, we all knew this was coming. Once Obama vanquished Hillary Clinton, it
was inevitable that his campaign would start roping in the Clinton moneymen
for the fall confrontation with McCain. Among those snagged by Obama were
Iranian millionaire and former Democratic Senatorial Campaign Committee
chairman Hassan Nemazee, venture capitalist Alan Patricof and the touchingly
plugged-in Wall Street power couple Maureen White (First Boston) and Steven
Rattner (Morgan Stanley). Rattner and White, the former chief fundraiser for
the DNC, are longtime friends of the Clintons; she quit the DNC in 2006 to
build Hillary's war chest, while he backed Joe Lieberman against Ned Lamont
and flirted with a Mike Bloomberg presidential run. Such are the people who
are now whispering in Obama's ear.
Over the summer, the Obama camp has relentlessly pushed the notion that its
record fundraising is mainly the result of small online donations. The first
presidential candidate to raise so much money that he could afford to eschew
the spending limits that would be imposed if he accepted federal matching
funds, Obama claims that he opted out of public funding so that he could
have a campaign "truly funded by the American people." And indeed, he has a
record number of small donors, with some 45 percent of his campaign cash
coming from contributions smaller than $200.
Which is a great percentage -- but it's only eight points better than John
Kerry in 2004 and only 14 points better than George Bush that same year. In
truth, Obama is still raising tons of money from big corporate donors. In
June alone, as Obama was raking in more than $30 million from small donors,
he also bagged $6 million in a single fundraiser at Ethel Kennedy's home in
Virginia and another $5 million at an event in Hollywood. But time and time
again, you see Obama aides boasting about how the day of the big-dollar
donor is over. "More people are involved, and I think that necessarily
dilutes the impact of any individual -- which is probably a good thing," one
prominent Obama supporter recently declared. This staunch champion of the
small donor happened to be none other than James Rubin, son of former
Goldman Sachs co-chairman Bob Rubin.
Obama's decision to embrace Clinton's moneymen coincided with his decision
to attend a public forum on economic policy with an A list of Clinton-era
economic advisors, including Rubin and Corzine. "The message is that he's
going to be a friend to Wall Street, just as Bill Clinton was a friend to
Wall Street," says Pollin. "Wall Street will want to be at the head of the
table."
By now it should be clear what type of service Wall Street will demand. The
financial disaster dumped on us by eight years of Bush's mismanagement has
left America with the prospect of short-term solutions in the form of
massive government bailouts, and long-term solutions in the form of reform
and regulation. A big chunk of the $1 billion in cash that will be spent on
the presidential race this year represents Wall Street's desire to make sure
that both candidates can be counted on to make the short-term bailouts large
and passionate, and the reforms gentle and halfhearted. "They want to make
sure there's socialism when they need it -- bailouts -- and capitalism when
they need that," says Pollin.
Both candidates are already falling all over themselves to signal their
business-friendly approach to the economy. McCain entered this election with
a reputation as a strict Goldwater conservative. "I have always been
committed to the principle that it is not the duty of government to bail out
and reward those who act irresponsibly," he declared. McCain also sounded
off in the past about troubled quasi-governmental lenders Freddie Mac and
Fannie Mae, pledging to "make them go away" and to strip them of their right
to lobby.
But this year, McCain -- perhaps emboldened by the $238,100 he got from
seven JP Morgan Chase executives or the $500,000 bundled for him by Chase
executive James Lee Jr. -- caved in and supported Chase's outrageous
government-backed acquisition of Bear Stearns. He also backed the recent
bailout of Freddie Mac and Fannie Mae -- no surprise given that former
Fannie Mae lobbyists are serving as his chief of staff and the head of his
vice presidential vetting panel.
Obama also supported the Freddie Mac-Fannie Mae rescue, and that, too, is no
surprise, given that he hired one former chairman of Fannie Mae to chair his
vice presidential vetting panel and hired another former Fannie Mae chairman
to serve as his consultant on housing issues. Most of us will never get
within a hundred miles of a single Fannie Mae chairman, but Obama has
already hired two -- and he isn't even president yet.
This, folks, is the way of the world. Forget all the promises to make the
rich pay their fair share. As the candidates get closer to office, the
actual paying customers move to the front of the line.
Sadly, both candidates have an extensive history of being dependable pals of
campaign contributors. Back in 2000, when Obama was a state senator in
Illinois, an entrepreneur named Robert Blackwell Jr. hired him to be his
lawyer, paying him a monthly retainer of $8,000 -- big money for a part-time
legislator with an annual salary of just $58,000. A few months later, Obama
sent a letter urging state tourism officials to give a grant to one of
Blackwell's companies, the amusingly named Killerspin, to fund a
table-tennis tournament. Killerspin received $320,000 in public funds; Obama
pocketed $112,000 in fees from Blackwell.
So far this year, Blackwell has bundled more than $100,000 for Obama's
campaign. Looks like there's going to be a shitload of table-tennis
tournaments all across America next year.
McCain also likes to write letters for big contributors. In 1998, four
months after BellSouth contributed $16,750 to the senator, he sent a letter
to the FCC asking it to give "serious consideration" to the company's
request to enter the long-distance market. He later wrote letters on behalf
of Paxson Communications, which donated $20,000 and let him use their
company jet, as well as Ameritech and SBC Communications, which raised
$120,000 for McCain at a time when they were seeking permission to merge.
McCain's still sticking by that gang. Former Ameritech chairman Richard
Notebaert bundled more than $100,000 for him this year, and two of McCain's
key fundraisers, Peter Madigan and Tim McKone, hail from SBC. The point is
that politicians are intensely loyal to the people who give them money --
and not anywhere near as loyal to the promises they've made to suckers like
us. No matter who's in the White House, the direction of the government has
remained remarkably stable. Clinton's treasury secretary, Rubin, was a
Goldman Sachs man; Henry Paulson, the current secretary under Bush, is also
a Goldman Sachs man. It'll probably be a Goldman man again next year. Meet
the new boss, same as the old boss. In sickness or in health, the faces may
change, but the money remains. "It's not an accident that both
administrations picked for leading economic advisers people from Goldman
Sachs," says Pollin.
The really distressing thing about all of this is the signal it sends to
Americans. Goldman Sachs posted a record profit of $11 billion last year,
much of it from betting against the subprime mortgage market they themselves
helped to fuck up. That little energy exchange Goldman set up, the ICE, made
a profit of $240 million last year, as gas prices skyrocketed. It may suck
to be you right now, but all that pain isn't so bad if you are a big oil
speculator.
When you live in million-dollar Manhattan townhouses and make billions in
profits betting on the pain of the ordinary foreclosed homeowner, you
shouldn't get to run around on TV with the prospective president on your
arm. You should be hung by your balls. But that's not the way it works, and
despite what you might have heard about "change," it probably never will be.
For all the excitement that Barack Obama has garnered, and all the talk
about a new day in Washington, it would be tragic if the real legacy of his
election victory was to finally expose the essentially unchanging,
oligarchic nature of our political system. It's the same old story: Money
talks, and bullshit walks. And don't be surprised if we're the ones still
walking after November.
By Matt Taibbi, RollingStone.com. Posted August 9, 2008.
It's the same old story: Money talks, and bullshit walks. And don't be
surprised if we're the ones still walking after November.
Remember the total, hideous, inexcusable absence of oversight that has been
the great hallmark of George Bush's America for almost eight years now?
Well, now we're getting to see that same regulatory malfeasance applied to
yet another cornerstone of our political system. The Federal Election
Commission -- the body that supposedly enforces campaign-finance laws in
this country -- has been out of business for more than six months. That's
because Congress was dragging its feet over confirmation hearings for new
FEC commissioners, leaving the agency without a quorum. The commission just
started work again for the first time on July 10th under its new chairman,
Donald McGahn, a classic Republican Party yahoo whose chief qualifications
include representing Tom DeLay, the corrupt ex-speaker of the House, in
matters of campaign finance.
Apart from the obvious absurdity of not having a functioning
election-policing mechanism in an election year in the world's richest
democracy, the late start by the FEC makes it almost impossible for the
agency to do its job. The commission has a long-standing reluctance to take
action in the last months before a vote, a policy designed to help prevent
federal regulators from influencing election outcomes. Normally, the FEC
tries to root out infractions and loopholes -- fining campaigns for
incomplete reporting, or for taking shortcuts around spending limits -- in
the early months of a campaign season. But that ship sailed way too long ago
to take the stink off the 2008 race.
"The time for setting the ground rules was earlier," says Craig Holman, a
lobbyist with the watchdog group Public Citizen. "There isn't time to do
much now."
That's especially true given the magnitude of what we're dealing with here:
the biggest pile of political contributions in the history of free
elections, nearly a billion dollars given to presidential candidates in this
season alone. Because the FEC has been dead in the water for so long, it's
likely that we'll still be in the dark about a large chunk of this record
manure pile of campaign contributions when we go to vote in November.
But that doesn't mean that a little sifting through campaign records doesn't
tell us quite a lot about who's backing whom in these races. The truth is
that the campaigns of both Barack Obama and John McCain are being inundated
with cash from more or less exactly the same gorgons of the corporate scene.
From Wall Street to the Big Oil powerhouses to the military-industrial
complex, America's fat-cat business leaders know that the Animal House-style
party of the last eight years that made almost all of them rich with
bonuses, government contracts and bubble profits is about to come to an end,
and someone is going to have to pay to clean up the mess. They want that
someone to be you, not them, and they've spared no expense to make sure both
presidential candidates will be there to bail them out next year.
They're succeeding. Both would-be presidents have already sold us out.
They've taken the money and run -- completing the cyclical transformation of
the American political narrative from one of monopolistic Republican
iniquity to an even more depressing tale about the overweening power of
corporate money and the essentially fictitious nature of our two-party
system.
In layman's terms, we've gone from being screwed to being fucked. Who knows
-- maybe Barack Obama will surprise us if he wins the election. But if you
look at the money, it doesn't look good.
Thanks in part to the dormant FEC, corporate America has had even easier
access to the candidates than usual in its effort to buy off the next
government before the crash. In fact, this election has seen some excellent
new innovations in the area of campaign-fundraising atrocities. Chief among
them is the rise of so-called "joint committees."
It used to be that campaigns could raise a maximum of $2,300 from each
individual. Now, both candidates -- but especially McCain, who far outstrips
Obama in this area -- routinely hold fundraisers in which individuals can
give far more to a joint committee. Technically, the candidate still pockets
only $2,300 in contributions. The bulk of the money raised -- in McCain's
case, a whopping $70,100, or 30 times the previous limit -- goes to the
state and national arms of the candidate's party, which can then spend the
unprecedented haul on behalf of the candidate. "This allows CEOs to walk in
the door and drop $70,100," says Holman. "It basically allows campaigns to
exceed the spending limits."
McCain has raised more than $63 million via these joint committees, thanks
to more than 1,000 "megadonors" who have each given at least $25,000 to his
campaign effort. Obama, by contrast, has some 471 megadonors -- and a close
examination of their backgrounds underscores some of the differences in
corporate America's attitudes toward the two candidates.
One of McCain's chief sources of corporate money is the private-equity firm
Kohlberg Kravis Roberts, memorialized for its takeover of RJR Nabisco in the
movie Barbarians at the Gate. Through the pretext of joint committees, 10
KKR executives have given McCain $285,000, and it's not hard to figure out
why. Two of McCain's key campaign proposals -- lowering the corporate tax
rate to 25 percent and making purchases of industrial equipment fully
deductible -- would save a single KKR subsidiary, Energy Future Holdings,
$49 million.
"Just in his tax policies alone, McCain is saving corporate America $175
billion a year," says James Kvaal, who analyzed McCain's tax policy for the
nonprofit Center for American Progress.
McCain has also raked in big contributions from two other giants of the
buyout world: the Carlyle Group (famous for its close ties to the Bush
administration) and the Blackstone Group (whose co-founder, Pete Peterson,
wrote a $28,500 check to McCain after he took home almost $1.8 billion from
a public offering last year). McCain has also received monstrous sums from
hedge-fund managers, attracted by his pledge to keep the tax rate on their
earnings at only 15 percent. Executives and family members in a single hedge
fund, Knott Partners, have contributed some $225,700 to McCain's campaign.
Then there's the predictable influx of cash from would-be military
contractors. John Lehman, a former secretary of the Navy whose firm builds
the Superferry transport vessel, not only donated $28,500 of his own money,
but bundled at least $250,000 for McCain from other donors. Donald
Bollinger, who is a contractor on the controversial Littoral Combat Ship,
gave $27,300 and bundled a whopping $500,000. Anyone want to bet on a
decrease in Naval appropriations in a McCain presidency?
McCain has also received big money from telecommunications magnates. The
senator has always been a friend to the industry: Back in 2003, just four
days after AT&T sent him a check for $10,500, he sponsored a bill to ban
state and local taxes on Internet service. Since 2007, McCain has taken in
some $1.3 million from the communications industry. Just four members of the
McCaw family, which owns the telecommunications firm Eagle River, have
kicked in $123,200. McCain's campaign manager, Rick Davis, was a former
lobbyist for BellSouth, Verizon and SBC Communications. His deputy campaign
manager, Christian Ferry, was a partner to Davis at Verizon. One of his
chief advisers, Charlie Black, is the head of the lobbying firm BKSH and
Associates, which represents AT&T. His Senate chief of staff, Mark Buse,
worked for AT&T Wireless. All told, of 66 current and former lobbyists
working for McCain, some 23 come from the telecommunications industry.
Given McCain's telecom backing, it's not surprising that the senator has had
one of his characteristic changes of heart. As recently as last November,
McCain was staunchly opposed to retroactive immunity for telecommunication
companies that took part in Bush's illegal spying on American consumers,
saying their actions "undermine our respect for the law." Now, jammed to the
gills with telecom cash, McCain calls himself an "unqualified" supporter of
immunity, praising the telecom industry's warrantless wiretapping as
"constitutional and appropriate."
All the same, plenty of other evidence suggests that much of Wall Street is
betting on an Obama win. In fact, some observers believe that KKR announced
a multibillion-dollar public offering this summer because it expects McCain
to lose. "They're doing the public offering now so that the compensation can
be taxed at the lower rate while Bush is still in office," says a strategist
for a major labor union. "They're betting Obama is going to win, and they're
getting their money while they can."
Other companies are getting in on the ground floor with the new chief by
stuffing money in his ears. Overall, Obama is flat-out kicking McCain's ass
when it comes to Wall Street contributions, raking in nearly $9 million from
securities and investment executives, compared to $6.2 million for McCain.
Obama has received more contributions from Goldman Sachs than from any other
employer -- more than $627,000 at this writing -- not to mention $398,021
from JP Morgan Chase, $353,922 from Lehman Brothers and $291,388 from Morgan
Stanley. Even among hedge-fund executives, who have an unequivocal interest
in electing McCain, Obama is whipping the Republican, collecting $500,000
more than McCain. All of which begs the question: Why would corporate giants
like these throw so much weight behind a man who promises to strip them of
billions in tax breaks?
Sadly, the answer to that question increasingly appears to be that Obama is,
well, full of shit. He has made no bones about his plans to raise income by
soaking the rich, promising to roll back the Bush tax cuts for people making
over $250,000, increase the top tax rate on capital gains to 25 percent and
raise the top rate on qualified dividends. He has also pledged to deliver a
real stomach punch to hedge-fund managers, raising the tax rate on most of
their income from 15 percent to 35 percent.
These populist pledges sound good, but many business moguls appear to be
betting that the tax policies, like Obama himself, are only that: something
that sounds good. "I think we don't want to make too much of his promises on
taxes," says Robert Pollin, professor of economics at the University of
Massachusetts. "Not all of these things will happen." Noting the
overwhelming amount of Wall Street money pouring into Obama's campaign, even
elitist fuckwad David Brooks was recently moved to write, "Once the
Republicans are vanquished, I wouldn't hold your breath waiting for that
capital-gains tax hike."
Those worried that Obama might be all talk when it comes to needed reform
had a real scare in July, when the senator failed to show up to vote for the
Stop Excessive Speculation Act, a bill designed to curb rampant oil
speculation. Oil speculators provide the perfect microcosm of what happened
to the economy under Bush. Back in 2001, investment banks like Goldman Sachs
and JP Morgan got together and created an online exchange called the ICE for
trading energy commodities. The ICE ended up buying the British-regulated
International Petroleum Exchange; it then opened trading windows in the
U.S., allowing Wall Street investment banks to make oil-futures trades on
American soil, on their very own commodities exchange, without any federal
regulation whatsoever.
"In financial terms, they were playing blackjack at tables where they
themselves were the dealers, in casinos they themselves owned," says Warren
Gunnels, a senior policy adviser to Sen. Bernie Sanders. "It was crazy."
Trading on the ICE had a massive impact on U.S. gasoline prices, and more
than one legislator wondered if energy speculators were manipulating the
market, as energy traders like Enron had been before. The speculation bill
was designed to regulate the ICE and place limits on trades. But on the day
before Obama returned from his eight-day, eight-country, megadazzling
international photo op, Democrats failed by a vote of 50-43 to force a vote
on the bill, as heavy lobbying by investment banks like Goldman Sachs
torpedoed the effort.
Not only did Obama not show up to vote, he appeared at a public forum three
days later flanked by Jon Corzine and Robert Rubin, two former Goldman
executives, to discuss how to revive the economy. Here you have the basic
formula of campaign contributions in a nutshell: Powerful investment bank
gives big money to candidate, needed reform requires candidate to cross said
investment bank, candidate pussies out and finds way to be gone at the
moment of truth, candidate resurfaces later in arms of aforementioned
investment bankers.
Obama's absence on oil speculation was eerily reminiscent of his previous
decision to change his mind about giving retroactive immunity to telecom
companies for spying on Americans. Obama withdrew his pledge to filibuster
the immunity bill right around the time the Democrats announced that AT&T
would be sponsoring the Democratic convention. So no filibuster on
retroactive immunity from the top Democrat -- but conventiongoers in Denver
will get tote bags emblazoned with the AT&T logo. So that's something.
Look, we all knew this was coming. Once Obama vanquished Hillary Clinton, it
was inevitable that his campaign would start roping in the Clinton moneymen
for the fall confrontation with McCain. Among those snagged by Obama were
Iranian millionaire and former Democratic Senatorial Campaign Committee
chairman Hassan Nemazee, venture capitalist Alan Patricof and the touchingly
plugged-in Wall Street power couple Maureen White (First Boston) and Steven
Rattner (Morgan Stanley). Rattner and White, the former chief fundraiser for
the DNC, are longtime friends of the Clintons; she quit the DNC in 2006 to
build Hillary's war chest, while he backed Joe Lieberman against Ned Lamont
and flirted with a Mike Bloomberg presidential run. Such are the people who
are now whispering in Obama's ear.
Over the summer, the Obama camp has relentlessly pushed the notion that its
record fundraising is mainly the result of small online donations. The first
presidential candidate to raise so much money that he could afford to eschew
the spending limits that would be imposed if he accepted federal matching
funds, Obama claims that he opted out of public funding so that he could
have a campaign "truly funded by the American people." And indeed, he has a
record number of small donors, with some 45 percent of his campaign cash
coming from contributions smaller than $200.
Which is a great percentage -- but it's only eight points better than John
Kerry in 2004 and only 14 points better than George Bush that same year. In
truth, Obama is still raising tons of money from big corporate donors. In
June alone, as Obama was raking in more than $30 million from small donors,
he also bagged $6 million in a single fundraiser at Ethel Kennedy's home in
Virginia and another $5 million at an event in Hollywood. But time and time
again, you see Obama aides boasting about how the day of the big-dollar
donor is over. "More people are involved, and I think that necessarily
dilutes the impact of any individual -- which is probably a good thing," one
prominent Obama supporter recently declared. This staunch champion of the
small donor happened to be none other than James Rubin, son of former
Goldman Sachs co-chairman Bob Rubin.
Obama's decision to embrace Clinton's moneymen coincided with his decision
to attend a public forum on economic policy with an A list of Clinton-era
economic advisors, including Rubin and Corzine. "The message is that he's
going to be a friend to Wall Street, just as Bill Clinton was a friend to
Wall Street," says Pollin. "Wall Street will want to be at the head of the
table."
By now it should be clear what type of service Wall Street will demand. The
financial disaster dumped on us by eight years of Bush's mismanagement has
left America with the prospect of short-term solutions in the form of
massive government bailouts, and long-term solutions in the form of reform
and regulation. A big chunk of the $1 billion in cash that will be spent on
the presidential race this year represents Wall Street's desire to make sure
that both candidates can be counted on to make the short-term bailouts large
and passionate, and the reforms gentle and halfhearted. "They want to make
sure there's socialism when they need it -- bailouts -- and capitalism when
they need that," says Pollin.
Both candidates are already falling all over themselves to signal their
business-friendly approach to the economy. McCain entered this election with
a reputation as a strict Goldwater conservative. "I have always been
committed to the principle that it is not the duty of government to bail out
and reward those who act irresponsibly," he declared. McCain also sounded
off in the past about troubled quasi-governmental lenders Freddie Mac and
Fannie Mae, pledging to "make them go away" and to strip them of their right
to lobby.
But this year, McCain -- perhaps emboldened by the $238,100 he got from
seven JP Morgan Chase executives or the $500,000 bundled for him by Chase
executive James Lee Jr. -- caved in and supported Chase's outrageous
government-backed acquisition of Bear Stearns. He also backed the recent
bailout of Freddie Mac and Fannie Mae -- no surprise given that former
Fannie Mae lobbyists are serving as his chief of staff and the head of his
vice presidential vetting panel.
Obama also supported the Freddie Mac-Fannie Mae rescue, and that, too, is no
surprise, given that he hired one former chairman of Fannie Mae to chair his
vice presidential vetting panel and hired another former Fannie Mae chairman
to serve as his consultant on housing issues. Most of us will never get
within a hundred miles of a single Fannie Mae chairman, but Obama has
already hired two -- and he isn't even president yet.
This, folks, is the way of the world. Forget all the promises to make the
rich pay their fair share. As the candidates get closer to office, the
actual paying customers move to the front of the line.
Sadly, both candidates have an extensive history of being dependable pals of
campaign contributors. Back in 2000, when Obama was a state senator in
Illinois, an entrepreneur named Robert Blackwell Jr. hired him to be his
lawyer, paying him a monthly retainer of $8,000 -- big money for a part-time
legislator with an annual salary of just $58,000. A few months later, Obama
sent a letter urging state tourism officials to give a grant to one of
Blackwell's companies, the amusingly named Killerspin, to fund a
table-tennis tournament. Killerspin received $320,000 in public funds; Obama
pocketed $112,000 in fees from Blackwell.
So far this year, Blackwell has bundled more than $100,000 for Obama's
campaign. Looks like there's going to be a shitload of table-tennis
tournaments all across America next year.
McCain also likes to write letters for big contributors. In 1998, four
months after BellSouth contributed $16,750 to the senator, he sent a letter
to the FCC asking it to give "serious consideration" to the company's
request to enter the long-distance market. He later wrote letters on behalf
of Paxson Communications, which donated $20,000 and let him use their
company jet, as well as Ameritech and SBC Communications, which raised
$120,000 for McCain at a time when they were seeking permission to merge.
McCain's still sticking by that gang. Former Ameritech chairman Richard
Notebaert bundled more than $100,000 for him this year, and two of McCain's
key fundraisers, Peter Madigan and Tim McKone, hail from SBC. The point is
that politicians are intensely loyal to the people who give them money --
and not anywhere near as loyal to the promises they've made to suckers like
us. No matter who's in the White House, the direction of the government has
remained remarkably stable. Clinton's treasury secretary, Rubin, was a
Goldman Sachs man; Henry Paulson, the current secretary under Bush, is also
a Goldman Sachs man. It'll probably be a Goldman man again next year. Meet
the new boss, same as the old boss. In sickness or in health, the faces may
change, but the money remains. "It's not an accident that both
administrations picked for leading economic advisers people from Goldman
Sachs," says Pollin.
The really distressing thing about all of this is the signal it sends to
Americans. Goldman Sachs posted a record profit of $11 billion last year,
much of it from betting against the subprime mortgage market they themselves
helped to fuck up. That little energy exchange Goldman set up, the ICE, made
a profit of $240 million last year, as gas prices skyrocketed. It may suck
to be you right now, but all that pain isn't so bad if you are a big oil
speculator.
When you live in million-dollar Manhattan townhouses and make billions in
profits betting on the pain of the ordinary foreclosed homeowner, you
shouldn't get to run around on TV with the prospective president on your
arm. You should be hung by your balls. But that's not the way it works, and
despite what you might have heard about "change," it probably never will be.
For all the excitement that Barack Obama has garnered, and all the talk
about a new day in Washington, it would be tragic if the real legacy of his
election victory was to finally expose the essentially unchanging,
oligarchic nature of our political system. It's the same old story: Money
talks, and bullshit walks. And don't be surprised if we're the ones still
walking after November.