AIM REPORT | BY CLIFF KINCAID | OCTOBER 15, 2008
But many conservatives understood that, by capitulating to the political Left, McCain and the Republican Party were ceding unnecessary ground to Barack Obama and his “progressive” Democrats.
In his classic 1932 book, Toward Soviet America, Communist Party boss William Z. Foster wrote about how “The United Soviet States of America” would come about. As a result of various capitalist crises, the national government would assume more and more control over the economy. “In finance,” he wrote, “it will mean the nationalization of the banking system and its concentration around a central State bank…”
It would be an exaggeration to say that we are getting close to anything resembling the Soviet system. But it is also a big mistake to call massive federal intervention in the economy a “rescue” or even a “bailout.”
Over at Political Affairs Magazine, a publication of the Communist Party USA, writer John Case was gloating. His article about the crisis was headlined, “A Dose of Socialism to Forestall Disaster.” He thought that Treasury Secretary Henry Paulson and Federal Reserve Board chairman Ben Bernanke had been reading the works of closet Marxists.
While many of the talking heads and pundits on TV were providing calming words of reassurance about federal intervention in the financial system, analyst Peter Schiff of Euro Pacific Capital had been accurately warning for years about a financial meltdown and says that the worst is yet to come. Asked for comment on media coverage of the financial meltdown, he told Accuracy in Media, “Absent when they have me on, it’s pretty bad.”
Many commentators, Schiff said, were telling people that if the bailout doesn’t go forward, there would be an economic crisis. However, “if we do it, there will be a bigger crisis,” he predicts. “The politicians want to make believe we can avoid paying the piper if we pass these bailouts,” he said. “It’s just not true. It’s going to collapse the currency. It’s going to make a worse economic crisis because the money they’re printing is not going to buy anything.”
While he continues to make a number of media appearances, he says that the CNBC cable network won’t have him on the air. “I predicted all this stuff, and they laughed at me,” he said. “So maybe they’re embarrassed.”
Schiff, who labels the government takeover of the financial sector as socialism and refers to the Federal Reserve Board chairman as “Comrade Bernanke,” told AIM, “The government doesn’t have the authority to do any of this stuff. This whole bailout bill is illegal. They don’t have the authority to buy up mortgages. Nothing in the Constitution says they can do this.” “Who needs Bolsheviks when you have the Fed?” he had written.
The author of “Crash Proof: How to Profit from the Coming Economic Collapse,” Schiff said that “The government doesn’t solve problems. It makes them bigger. So if we’re broke, which is the reality—that’s why these mortgages are not worth much because Americans can’t afford to pay the money back that they borrowed—the bottom line is we’ve borrowed and spent ourselves into bankruptcy following the government’s advice. They’re the ones that encouraged all this reckless borrowing and spending.”
Interviewed by AIM before the House of Representatives had initially voted down the “bailout” scheme, at a time when it looked like the plan would actually pass, Schiff had shocking advice for ordinary Americans.
“The first thing you do if you have a mortgage is you stop making the payments,” he said. “That’s the number one thing for people who have mortgages based on this plan. And use that money to buy gold or stock up on food. You’re going to need it. Meanwhile, no one is going to kick you out of your house. You’re going to be able to live in your house for probably a year or two before the government calls you up to give you a lower mortgage because nobody is going to foreclose on you right now. Why would you foreclose? You sell the loan to the government. This plan is a huge moral hazard and it’s going to lead to a surge in mortgage delinquencies.”
In an article on his website, Schiff had praised House conservatives for trying to preserve American-style capital-ism by resisting the scheme.
But when the House of Representatives, led by conservatives, initially defeated the proposed $700- billion takeover scheme, Michelle Caruso-Cabrera of CNBC brought up the subject of “four ways around Congress,” adding, “I know it’s a flippant title and those who believe in the checks and balances in the Constitution will probably be upset by the title.” One panelist wondered if the Federal Reserve could just intervene on its own.
What they were entertaining was the notion of bypassing Congress and establishing an economic dictatorship in the United States. The exchange between Caruso-Cabrera and her colleagues demonstrated that those who posture as “pro-business” can really be socialists at heart.
On CNBC, news analysts frequently complained that the “ideology” of the House Republicans had gotten in the way of the planned takeover of the financial sector. That “ideology” is free enterprise capitalism.
The Return Of Karl Marx
Libertarian thinker and writer Martin Masse captured public attention with an article insisting that the proposed federal takeover of the financial sector in the U.S. represents a comeback by Karl Marx, the father of communism, who had proposed government control of capital. “If he were to rise from the dead today,” Masse writes, “Marx might be delighted to discover that most economists and financial commentators, including many who claim to favor the free market, agree with him.” He cites commentaries in favor of the “bailout” plan from so-called conservatives at the Heritage Foundation and the Wall Street Journal and other places.
The Heritage Foundation endorsed the takeover, even though it admitted that “constitutional concerns remain” about the plan and the “centralization of power” is worrisome.
Don Lambro of the Washington Times was extremely upset that conservative House Republicans had “cowardly” listened to their constituents and had voted against the plan. “Free-market advocates said that America’s free-enterprise capitalist system rewards success and punishes failure, and government has no business intervening in the marketplace to pick the winners and losers,” he said. “That is unarguable when the economy is working as it should, but when entire economic sectors are failing as a result of a credit collapse or a loss of confidence in the nation’s banking and other financial institutions, then it is sometimes necessary for government to step in to restore them. This is one of those times.”
Indeed, Marx would be pleased.
But many conservatives understood that, by capitulating to the political Left, McCain and the Republican Party were ceding unnecessary ground to Barack Obama and his “progressive” Democrats.
If they had been honest about this debacle, they would have had to admit that, of all the Republicans running for president, only Rep. Ron Paul had predicted the crisis that was coming. But they couldn’t admit this because their proposed “solution,” which amounted to more government, more spending, and more debt, would only make things worse in the long run. And that is why Rep. Paul and so many House conservatives so strongly opposed it. The takeover plan, in their view, will only postpone the inevitable and leave us with a much bigger government.
The “debate” taking place in Washington and the media was being carefully controlled. The Republican Bush Administration supported the plan and Congressional Democrats wanted to take it further. The Democrats wanted even more federal involvement in the firms that are being acquired. In other words, it was a question of how much socialism they want.
“Government bailouts and takeovers are nothing new,” pointed out financial advisor Ric Edelman.
He cited the following: “In 1971, Richard Nixon rescued Lockheed by providing $250 million in loan guarantees. When the Penn Central Rail-road failed in 1971, Nixon created Am-trak. Jimmy Carter gave $1.5 billion in loan guarantees to Chrysler in 1979. Under Ronald Reagan, the FDIC in 1984 spent $4.5 billion to rescue Continental Illinois, which still holds the record as the largest U.S. bank failure. Then, during the S&L crisis of the 1980s, George H. W. Bush approved the bailout of 747 savings and loans at a cost to taxpayers of $124.6 billion. In 1998, under Bill Clinton, the Federal Reserve Bank of New York bailed out Long Term Capital Management at a cost of $3.6 billion. During the Mexican Peso Crisis, Clinton arranged for loans and guarantees to Mexico totaling almost $50 billion. Then, following the September 11, 2001, terrorist attacks, George W. Bush approved $15 billion in subsidies and loan guarantees to aid the faltering airline industry. This year, the Federal Reserve approved a $30 billion credit line to help JP Morgan Chase acquire Bear Stearns and engineered takeovers of Freddie Mac, Fannie Mae and AIG. The names, dates and amounts are different, but that’s about it.” In fact, however, the massive scope and price tag made this plan far different. Many conservative members of Congress called it socialism.
A GLOBAL TAX FOR GLOBAL SOCIALISM
Meeting in New York on the occasion of the 63rd session of the U.N. General Assembly, members of the Socialist International (SI) called for the establishment of a World Financial Organization to provide “global stability” and regulate the financial systems of the nations of the world. This will be the inevitable result of the U.S. Congress passing a socialist-style takeover of the U.S. financial sector. This centralization of power will make it easier to integrate the U.S. into a global socialist system.
The U.N. has long played host to meetings of the SI and former U.N. Secretary-General Boutros Boutros-Ghali was a former vice-president of the SI. This year’s meeting, which was held on September 26, included “invited guests” from the United Nations such as Juan Somavía, Director-General of the International Labor Organization; Kemal Dervis, Administrator of the United Nations Development Program; and Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean.
The proposed World Financial Organization (WFO) would “fill up the gap in the existing structure of the financial system by monitoring and regulating private capital flows,” its proponents say. Those “private flows” represent capitalism.
The WFO, a long-time dream of officials of the United Nations, could lay the groundwork for a global tax to drain away some of that money for government purposes on a global basis. A proposed “World Tax Organization,” which has been on their drawing board for years, would collect and dispense the revenue.
The SI, which shares the same basic economic goals as international Communism, is an association of 170 political parties and organizations from all continents, including the Democratic Socialists of America (DSA), whose Chicago branch has backed Barack Obama’s political career from the start.
Obama’s backers in the Democratic Socialists of America were ecstatic and preparing for a complete government takeover in the U.S. “While recognizing the critical limitations of the Obama candidacy and the American political system,” the organization said in a statement, “DSA believes that the possible election of Senator Obama to the presidency in November represents a potential opening for social and labor movements to generate the critical political momentum necessary to implement a progressive political agenda.”
The DSA cautioned, however, that the Left should not be so involved in the national presidential campaign that it ignores the general election races for the U.S. House and Senate. “We need more progressives in Congress as well as increased Democratic majorities,” it said.
The Socialist International, meanwhile, is preparing for a high-level meeting in Mexico on November 17-18, “to discuss an agenda with the urgent world financial situation at its center, following U.S. elections.”
MORE BAILOUTS ON THE WAY
Two more bailouts are pending before Congress—both of them sponsored by Senator Barack Obama. One is the Jubilee Act, which would cancel as much as $75 billion worth of Third World debt, and the other is the Global Poverty Act, which would cost an estimated $845 billion. Total potential cost: $920 billion.
If they don’t pass Congress this year, they could come back in an Obama Administration.
Citing AIM research on the topic, commentators such as Andrew C. McCarthy pointed out that Obama’s Global Poverty Act (S. 2433) would cost even more than the $700 billion socialist takeover of the U.S. financial sector. Obama’s bill passed the House and Senator Joe Biden’s Foreign Relations Committee and now awaits full Senate action. But the Jubilee Act (S. 2166), which is co-sponsored in the Senate by Barack Obama, has also passed the House and awaits Senate action.
Republican presidential candidate John McCain is not an official sponsor of the Jubilee Act or Obama’s Global Poverty Act. But the pressure was mounting on McCain, as well as running mate Sarah Palin, to endorse the legislation. In fact, McCain recently asked the wealthy rock star Bono, an advocate of more U.S. foreign aid spending, for advice on how to help the rest of the world.
“The ONE Campaign and co-founder Bono spoke by telephone this afternoon with Senator John McCain, Governor Sarah Palin, and members of the McCain campaign policy staff about the issue of extreme poverty, especially in Africa,” a September 24 ONE campaign news release declared. “The call today was part of ongoing conversations between ONE and both the McCain and Obama presidential campaigns.” No details of the conversations were provided.
The ONE campaign organization has been urging Senate passage of the Jubilee Act, which would cancel the debts of 26 foreign countries even while the U.S. suffers through its own financial crisis and Americans are losing their homes and savings. It passed the House in April on a 285-132 vote.
While the Global Poverty Act has started getting more serious attention, the implications of passage of the Jubilee Act have been generally ignored. Yet, a representative of the Treasury Department, Assistant Secretary For International Affairs Clay Lowery, testified at a Senate hearing in April that “The Jubilee Bill represents an unfunded international mandate to fully cancel roughly $75 billion worth of debts owed by the potentially eligible countries to official bilateral and multilateral creditors.” This is on top of the $110 billion in debt reduction already being granted to various countries, he said.
Despite foreign aid having cost the American people $2 trillion since World War II, Bono’s ONE organization believes in “allocating more of the U.S. budget toward providing basic needs” for the rest of the world.
ONE also promotes compliance with the U.N.’s Millennium Development Goals, the same expensive effort set forth legislatively in Obama’s Global Poverty Act.
Bono, the lead singer of the rock band U2, is one of the richest entertainers in the world and gets tremendous access to the media—and politicians—because of his anti-poverty campaign. Less well-known is the fact that his band came in for criticism two years ago when it transferred part of its business empire out of Ireland to avoid high tax rates.
ONE campaign “partner” organizations include the United Nations Association, the pro-U.N. lobbying group, and Ted Turner’s United Nations Foundation, which financially supports the U.N.
While the ONE campaign is generally regarded as a left-wing organization, it claims support from such notables as Pat Robertson of the Christian Broadcasting Network and Purpose Driven Lifeauthor and pastor Rick Warren.
Also bowing to the Left, before he came to Washington, D.C. to work on the $700-billion federal takeover plan for the U.S. financial sector, McCain had taken time to attend and speak at the “Clinton Global Initiative,” a campaign underwritten by big companies and rich individuals to promote the pet causes of the disgraced former president. One of these causes has been an international tax on airline tickets to generate funds to fight HIV/AIDS.
Obama, as well as Bono, also spoke at the Clinton event.
On September 25, after conversing with McCain and Palin, Bono and his collaborators were scheduled to hold a “United Nations emergency summit on the Millennium Development Goals.” Bono’s ONE organization described them as “eight goals” that were “drawn from the targets contained in the Millennium Declaration that was adopted by 189 nations—and signed by 147 heads of state and governments during the UN Millennium Summit in September 2000.”
Similar language is incorporated in Obama’s Global Poverty Act, which has passed the House and Senator Joe Biden’s Foreign Relations Committee, and now awaits full Senate action. As AIM has documented repeatedly, a careful analysis of the legislation, as well as the follow-up 2002 U.N. Financing for Development Conference, which was designed to make the “goals” into a reality, leads to the conclusion that the U.S. will have to provide $845 billion in increased foreign aid spending, generated if necessary by a global tax on the American people.
At the Clinton Global Initiative meeting, Obama reaffirmed a “commitment” to “embracing the Millennium Development Goals, which aim to cut extreme poverty in half by 2015.” He added, “This will take more resources from the United States, and as President I will increase our foreign assistance to provide them.”
DEAR FELLOW MEDIA WATCHDOG October-B 2008
THE COVERAGE OF THE FINANCIAL CRISIS HAS BEEN HELPFUL IN demonstrating that many of the “conservatives” in the media are not so conservative after all. When the going gets tough, they are quick to abandon their principles. Exhibit number one is Fred Barnes of The Weekly Standard, who declared on Fox News on October 2 that conservatives in the House of Representatives opposing the socialist-style bailout scheme were crazy, nuts, and idiots. Barnes went so far as to claim, without citing any evidence at all, that President Reagan would have supported a $700-billion federal takeover of the financial sector in the U.S. Wasn’t it Reagan who said, “Government is not the solution to our problem, government is the problem.” A new Rasmussen poll finds that 59 percent of Americans still agree with Reagan on that. Rasmussen reported, “The fact that most Americans still agree with Reagan helps explain the ongoing public resistance to the bailout bill currently working its way through Congress and the fear of many voters that the federal government will do too much rather than too little to deal with the current economic situation.” Please send the enclosed postcard to Fred Barnes, asking him to apologize to House conservatives. Send another to William Kristol, another bailout backer.
I HAD ALWAYS LAUGHED IN THE PAST WHEN PEOPLE ON THE POLITICAL LEFT HAD REFERRED to Fox News as “Faux News.” I know that Fox News has been successful because of the fact that its programs included conservative viewpoints. But during coverage of the financial crisis, the Fox News “conservatives” sounded like Barney Frank and Maxine Waters. All of the conservative panelists on Brit Hume’s normally excellent “Special Report” show were cheerleaders for the takeover scheme. These included Barnes, Kristol and Charles Krauthammer. Yet, when the takeover plan ultimately passed, most House Republicans stood on principle and opposed it. House Republicans voted against it 108-91. House Democrats voted for it 172-63. Indeed, House conservatives had led the opposition, standing on principles of free enterprise capitalism. Barnes’ vociferous support for the socialist takeover of America’s financial sector seemed to surprise “Special Report” moderator Brit Hume himself. On the October 2 show, Hume said to Barnes: “Let me ask you this question, Fred. You’re not unsympathetic to the conservatives in the House of Representatives, and the noisiest opposition to this measure has come from conservatives in the House. Give me your thoughts on the quality of their arguments.” Barnes replied, “I think their arguments are idiotic and myopic. It is as if they are operating from some ideology that says we cannot interfere with the free market by having the government do more. But, look, Ronald Reagan would do this. Alexander Hamilton did it. When you have an economy, when you have a financial crisis that threatens to blow up the economy and put America in a deep recession or worse, that’s when government is supposed to act. If you’re a libertarian and you don’t believe in government, that’s something. But those Republicans are not libertarians. They’re just nuts.” He went on to say that some of the proposed alternatives offered by conservatives were “crazy.”
BARNES, WHO CLAIMS TO BE AND IS ADVERTISED AS A CONSERVATIVE, WAS EXPRESSING opposition to the “ideology” of conservatism. His idea of having the government “do more” was an unprecedented federal intervention in the economy. It was the socialist “solution” of Barack Obama and most Democrats, and endorsed by Senator John McCain and most Senate Republicans. But House Republicans, the most conservative legislators on Capitol Hill, remained opposed to the measure, even after legions of lobbyists were sent to turn lawmakers around. Of course, despite what Barnes said, there’s absolutely no evidence that Ronald Reagan would ever favor such a scheme. Reagan said big government was the problem, not the solution.
BARNES IS ENTITLED TO HIS OPINION, NO MATTER HOW LIBERAL IT MAY BE. BUT WE SHOULD no longer be under any illusion that he is a “conservative” on fiscal or economic matters. What struck me was the vicious nature of his criticism of House conservatives. Barnes is never this vicious when he comments on liberals and their policies. It was unseemly and wrong to attack the conservatives on Capitol Hill who were leading the effort to save American-style capitalism. Frankly, Barnes should apologize for his outburst. And we should thank the House conservatives for trying to prevent what happened on October 3—the day the bill passed and capitalism died in the United States. Barnes, of course, wasn’t the only one who went over to the other side. The Heritage Foundation is facing strong dissension in the ranks over its decision to support the Wall Street bailout. The situation is similar over at Investor’s Business Daily (IBD), whose conservative editorial page urged swift federal action to finance a financial sector takeover. Its “Time to Act” editorial severely undercut the credibility of its own editorial series highlighting and criticizing the socialist proposals of Barack Obama. Please send the other postcard to IBD about this.
DURING A TIME WHEN MOST OF THE COMMENTARY AND NEWS “ANALYSIS’ WAS IN FAVOR of the Wall Street takeover plan, Rep. Brad Sherman of California was on Larry Kudlow’s CNBC show on September 30 citing evidence that the legislation potentially “provides hundreds of billions of dollars of bailouts to foreign investors,” including in Communist China. The provision was Section 112, “Coordination With Foreign Authorities and Central Banks,” which “Requires the Secretary to coordinate with foreign authorities and central banks to establish programs similar to TARP”—the Troubled Assets Relief Program. Sherman is a Democrat, but the foreign bank bailout provision alarmed Senator Pat Roberts, Republican of Kansas, who said, “The plan permits taxpayer dollars to be used to buy assets of foreign financial institutions that have a presence in the United States. If U.S. taxpayer dollars are going to be put at risk, those dollars should be used to shore up U.S.-based companies.” Senator Elizabeth Dole of North Carolina alluded to this as well, saying in opposition that “It bails out foreign investors before American homeowners struggling to pay their mortgages.”
THOSE SENATORS VOTING AGAINST THE LEGISLATION, KNOWN AS THE EMERGENCY ECONOMIC Stabilization Act, were Allard (R-CO), Barrasso (R-WY), Brownback (R-KS), Bunning (R-KY), Cantwell (D-WA), Cochran (R-MS), Crapo (R-ID), DeMint (R-SC), Dole (R-NC), Dorgan (D-ND), Enzi (R-WY), Feingold (D-WI), Inhofe (R-OK), Johnson (D-SD), Landrieu (D-LA), Nelson (D-FL), Roberts (R-KS), Sanders (I-VT), Sessions (R-AL), Shelby (R-AL), Stabenow (D-MI), Tester (D-MT), Vitter (R-LA), Wicker (R-MS), and Wyden (D-OR). Of the 25 opponents, 15 were Republicans.
IN A STATEMENT TO THE MEDIA, I SAID THAT THE BAILOUT BILL HAD BEEN “THE SUBJECT OF more one-sided media coverage than Barack Obama’s campaign.” Not only does it represent the destruction of America’s free enterprise system, there is no reason to believe it will ultimately succeed because it piles more debt on more debt and more spending on more spending. That is the message of Peter Schiff, who had predicted the crisis. Those in favor of a socialist takeover of the U.S. economy included not only traditional liberal media but “conservative” papers such as Investor’s Business Daily and the Wall Street Journal and Republican blogger Hugh Hewitt. This fiasco demonstrates that we desperately need new conservative voices in the media.