OldBlackDog
Well-Known Member
WASHINGTON – The U.S. congress debate over a budget bill morphed into a class struggle this past weekend becoming a bleak reminder of how a political sausage machine makes laws and who chooses the ingredients.
This latest Capitol Hill skirmish began last week with a budget appropriations bill that had to be approved before lawmakers went on holiday. Defeat would lead to a government shutdown.
The vote deadline was Thursday. So the pressure was on.
The bill originally was pretty straightforward. It approved $1.1 trillion US in spending for the federal government until the end of the current fiscal year in September 2015.
Nobody wanted another shutdown. Not President Barack Obama, who is entering the twilight of his presidency, and not the two major political parties who, with a presidential election in 2016, want to show leadership.
But urgency created opportunity and the corporate world seized it. At the 11th hour, it put forth three amendments that it knew congress would have no time to fully debate.
The most controversial came from American’s third largest bank, Citigroup. Its lobbyists wrote an amendment that essentially allows Wall Street banks to use depositors’ money to make risky investments in credit default swaps and then get bailed out by the taxpayer if the investments go bad.
CDS’s (credit default swaps) are the same financial instruments a congressional investigation concluded caused the bank collapse of 2008 that almost sunk the global economy.
Many lawmakers saw the amendment as the beginning of an all-out assault on the Dodd-Frank law of 2010 that imposed financial regulations designed to avoid bank collapses and massive bailouts.
Some lawmakers were so angry that they threatened to kill the entire budget bill unless the Citibank amendment was removed.
Elizabeth Warren of Massachusetts led the charge in the Senate.
“Republicans slipped in a provision at the last minute that would let derivatives traders on Wall Street gamble with taxpayer money and then get bailed out by the government when their risky bets threaten to blow up our financial system,” she said.
She later added, “If a financial institution has become so big and so powerful that it can hold the entire country hostage then that alone is reason enough to break them up.”
Enough lawmakers began to grumble about the amendment that it looked like the budget bill would fail. That’s when Jamie Dimon, the so-called “charismatic” CEO of America’s biggest bank, JP Morgan Chase, swung into action.
From a seat in the White House no less, he joined Obama as he phoned wavering lawmakers to convince them to pass the budget. (Dimon no doubt demanded payback for the $2.6 million JP Morgan spent on politicians during the recent midterm elections.)
Enough buckled to get the bill through both houses. By Monday morning Wall Street banks could once again trade swaps using depositors money knowing that the government would bail them out when their bets went south.
Congress, however, did not give the same treatment to pensioners.
A second amendment targeted the million or so Americans who are miners or construction workers covered under multi-company pension plans.
Because of the 2008 bank collapse and subsequent recession, many of these companies suffered substantial lose or went bankrupt. Their pension contributions sunk along with their fortunes.
So these companies successfully lobbied to insert an amendment into the budget bill that would allow them to greatly reduce – some claimed by at least half – their pension payouts. No bailout for the pensioners.
A third amendment allowed wealthy individual Americans to increase their political contributions by a factor of 10.
The package, House Democrat leader Nancy Pelosi said, “includes a provision that would work to drown out the voices of the American people and massively expand the role of big money in our elections.”
Combined, the three amendments allow wealthy banks to use depositor money in high-risk investments and get bailed out by the government while a small amount of pensioners, whose pensions collapse because of bankers’ unregulated investments, get no bailout. Then, to top it off, the rich expand their future financial influence over lawmakers through increased political contributions. And they get a tax deduction for to boot.
The bill with the three amendments squeaked through congress.
As billionaire investor Warren Buffett once said, in the battle between the rich and everybody else, “I won.”
This latest Capitol Hill skirmish began last week with a budget appropriations bill that had to be approved before lawmakers went on holiday. Defeat would lead to a government shutdown.
The vote deadline was Thursday. So the pressure was on.
The bill originally was pretty straightforward. It approved $1.1 trillion US in spending for the federal government until the end of the current fiscal year in September 2015.
Nobody wanted another shutdown. Not President Barack Obama, who is entering the twilight of his presidency, and not the two major political parties who, with a presidential election in 2016, want to show leadership.
But urgency created opportunity and the corporate world seized it. At the 11th hour, it put forth three amendments that it knew congress would have no time to fully debate.
The most controversial came from American’s third largest bank, Citigroup. Its lobbyists wrote an amendment that essentially allows Wall Street banks to use depositors’ money to make risky investments in credit default swaps and then get bailed out by the taxpayer if the investments go bad.
CDS’s (credit default swaps) are the same financial instruments a congressional investigation concluded caused the bank collapse of 2008 that almost sunk the global economy.
Many lawmakers saw the amendment as the beginning of an all-out assault on the Dodd-Frank law of 2010 that imposed financial regulations designed to avoid bank collapses and massive bailouts.
Some lawmakers were so angry that they threatened to kill the entire budget bill unless the Citibank amendment was removed.
Elizabeth Warren of Massachusetts led the charge in the Senate.
“Republicans slipped in a provision at the last minute that would let derivatives traders on Wall Street gamble with taxpayer money and then get bailed out by the government when their risky bets threaten to blow up our financial system,” she said.
She later added, “If a financial institution has become so big and so powerful that it can hold the entire country hostage then that alone is reason enough to break them up.”
Enough lawmakers began to grumble about the amendment that it looked like the budget bill would fail. That’s when Jamie Dimon, the so-called “charismatic” CEO of America’s biggest bank, JP Morgan Chase, swung into action.
From a seat in the White House no less, he joined Obama as he phoned wavering lawmakers to convince them to pass the budget. (Dimon no doubt demanded payback for the $2.6 million JP Morgan spent on politicians during the recent midterm elections.)
Enough buckled to get the bill through both houses. By Monday morning Wall Street banks could once again trade swaps using depositors money knowing that the government would bail them out when their bets went south.
Congress, however, did not give the same treatment to pensioners.
A second amendment targeted the million or so Americans who are miners or construction workers covered under multi-company pension plans.
Because of the 2008 bank collapse and subsequent recession, many of these companies suffered substantial lose or went bankrupt. Their pension contributions sunk along with their fortunes.
So these companies successfully lobbied to insert an amendment into the budget bill that would allow them to greatly reduce – some claimed by at least half – their pension payouts. No bailout for the pensioners.
A third amendment allowed wealthy individual Americans to increase their political contributions by a factor of 10.
The package, House Democrat leader Nancy Pelosi said, “includes a provision that would work to drown out the voices of the American people and massively expand the role of big money in our elections.”
Combined, the three amendments allow wealthy banks to use depositor money in high-risk investments and get bailed out by the government while a small amount of pensioners, whose pensions collapse because of bankers’ unregulated investments, get no bailout. Then, to top it off, the rich expand their future financial influence over lawmakers through increased political contributions. And they get a tax deduction for to boot.
The bill with the three amendments squeaked through congress.
As billionaire investor Warren Buffett once said, in the battle between the rich and everybody else, “I won.”
