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In a speech yesterday, House Budget Committee Chairman Paul Ryan (R-WI) claimed that President Obama created “class resentment” by calling for slightly higher taxes on the wealthiest Americans. At the same time, Occupy Wall Street protesters continue to speak out in favor of an economy that works for everyone, not just those at the top of the income scale.
Could their frustration be a product of the increasing inequality rather than Obama’s “divisive rhetoric?”Absolutely. In fact, a New York Times/CBS News poll released yesterday found that two-thirds of Americans believe “that wealth should be distributed more evenly in the country.”
As noted by the Half in Ten Campaign’s new report, “Restoring Shared Prosperity: Strategies to Cut Poverty and Expand Economic Growth,” the hourly wage of a typical worker grew from $14.73 in 1973 to $15.96 in 2009, for a raise in real terms (after accounting for inflation) of $1.23 over 36 years. Yes, you read that right. Only $1.23, an 8.4 percent increase over the last 36 years.
Top earners, meanwhile, saw a gain of $12.70 per hour gain (30 percent) over the same time frame. The growing gaps between the wealthy and everyone else could not be more stark.
The Pew Charitable Trust has released an interesting map on the “unbanked”: American households that eschew the formal banking system. It shows some pretty big geographic variation. Take a look (and click through at original site for an interactive version):
The standout here is Mississippi, where more than 16 percent of the residents don’t use banks, the highest rate in the nation. What factors increase “unbanked” rates? Pew’s researchers told me their study didn’t dig that deep, but they did point me to other research suggesting that banking fees are often a culprit. FDIC data have shown that 31 percent of households that dropped a bank account did so because of service charges. And Pew’s own research, on a small population in Los Angeles, showed that about a third of those who dropped bank accounts did so because of fees.
With income inequality on everyone’s radar today, the Center on Budget and Policy Priorities tweets this:
This gives me an excuse to repost one of my favorite tables. It compares how much income various groups make today vs. how much they would be making if everyone’s incomes, rich and poor alike, had grown at similar rates since 1979. As you can see, by 2005 the bottom 80% were collectively earning about $743 billion less per year while the top 1% were earning about $673 billion more. It’s sort of uncanny how close those numbers are. For all practical purposes, every year about $700 billion in income is being sucked directly out of the hands of the poor and the middle class and shoveled into the hands of the rich.
One of the points this drives home is just how much the story of growing income inequality really is a story of the top 1%. Inequality has increased within the bottom 99%, but not all that dramatically. It’s really the top 1% and the top 0.1% where all the action is. So if the Occupy Wall Street folks are ever looking for an alternate slogan, they might consider “Give us back our $700 billion.” […]
To bring this home a little more vividly, take a look at the row labeled “41-60.” That’s the dead middle of the income distribution. If all income groups had grown at the same rate over the past 30 years, that median household would today be making about $10,000 more than they are. That’s the price we pay for our growing plutocracy.
Want more charts? This one comes from the chart pack we did for my article earlier this year, “Plutocracy Now.” Click the link if you want to read it, or else click here if you just want to browse the charts.
The economy grew at its fastest pace in a year in the third quarter as consumers and businesses stepped up spending, creating momentum that could carry into the final three months of the year.
However, part of the increase in output came from the reversal of temporary factors that had restrained growth and some analysts worry the economy could stumble badly in the new year. Still, the expansion was a welcome relief for an economy that looked on the brink of recession just weeks ago.
House Republicans took the government to the brink of shutdown last spring by demanding across-the-board budget cuts to many vital programs. Instead of focusing on job creation, as Americans wanted them to, the GOP turned its attention to slashing funds for programsthat funded assistance for women and children, local law enforcement, the social safety net, environmental protections, and many other programs they deemed as either too expensive or unnecessary. Worse, when challenged on why they hadn’t made the effort to tackle high unemployment, Republicans insisted that their slash-and-burn budget cuts were meant to create jobs.
Not all of those cuts made it through, but the GOP succeeded in passing massive spending reductions as part of a continuing resolution that kept the government operating. According to a new report from the Center for American Progress’ Scott Lilly, those cuts didn’t result in the job creating boon Republicans insisted would follow. Instead, it has done just the opposite, as those cuts will result in the destruction of roughly 370,000 jobs.
Lilly’s report focuses on three major areas where Republicans insisted on spending cuts: funding for local law enforcement, environmental cleanup of sites where nuclear weapons were disabled and destroyed, and investments into construction, repair, and maintenance of government buildings. Cuts to just those three areas will result in the loss of 90,000 jobs, the report found — 60,000 from direct cuts, and 30,000 additional jobs lost from the secondary impacts of job losses in each community.
And according to Lilly, those three areas weren’t among the worst budget cuts forced through by the Republican House:
“Similar stories could be told about many other budget cuts made in this bill—cuts that resulted in further job losses,” said Scott Lilly, author of the report and Senior Fellow at the Center for American Progress. “All of the various 250 program reductions in the fiscal year 2011 Continuing Resolution probably eliminated more than 370,000 American jobs. The three areas selected for discussion in this paper are in my judgment neither the worst cuts made by the committee from a policy standpoint nor the best. But without a doubt they demonstrate the consequences of slashing government spending in a weak economy.”
According to the report, the $2.5 billion cut to local law enforcement funding could have prevented 36,000 police layoffs nationwide, and similar cuts made to grant programs could have prevented the loss of other state and local government jobs. Crunched by the recession and budget cuts, state and local governments shed more than 200,000 jobs in 2010 alone. Republicans not only cut such funding this spring but have now opposed the American Jobs Act — which included grants to state and local governments for the hiring of teachers, police officers, and firefighters.
The American Prospect:
Here are two things worth reading together: On his blog, Ta-Nehisi Coates writes about growing up surrounded by the specter of violence, and in The New York Times Joe Nocera writes about the limits of education reform. Here’s Nocera:
Going back to the famous Coleman report in the 1960s, social scientists have contended — and unquestionably proved — that students’ socioeconomic backgrounds vastly outweigh what goes on in the school as factors in determining how much they learn. Richard Rothstein of the Economic Policy Institute lists dozens of reasons why this is so, from the more frequent illness and stress poor students suffer, to the fact that they don’t hear the large vocabularies that middle-class children hear at home. […]
Over the long term, fixing our schools is going to involve a lot more than, well, just fixing our schools. In the short term, however, the reform movement could use something else: a dose of humility about what it can accomplish — and what it can’t.
And here is Coates:
[I]n my experience, in distressed neighborhoods throughout our cities, these sorts of scenes are so common as to be unremarkable. Having caught one in my own time, having lived as a child who structured his day around violence, I can tell you that it’s scary how quickly violence becomes normal to you. So much so that when I talk about my own victimhood I tend to couch it in euphemisms like, “Yeah, I caught one on Liberty” as opposed to what actually happened “I got my head stomped by six dudes, while a bunch of adults walked past and did nothing.” (Liberty is a major street, by the way.)
At a gathering this Easter, I spoke with someone with experience in the juvenile justice system, and he made this excellent point: The net effect of living in an economically depressed area (unemployment among blacks and Latinos has yet to dip below 10 percent) — devoid of meaningful opportunities and consumed with casual violence — is to create kids completely disconnected from the world as we (middle-class Americans) understand it.
To play Captain Obvious for a moment, this is a huge problem for educators. It’s not just that the most at-risk kids are unprepared for educational success; it’s that the most at-risk kids live in environments which leave them completely unable to grok the social contract. How are children supposed to do well in school when they’re preoccupied with avoiding physical harm? Likewise, how do you persuade children to value education, when they have yet to grok the connection between school and success. Hell, how are kids supposed to trust adults for their education when — at home at least — they can’t trust them with their safety?
Again, none of this is particularly original, but — in this current age of the school reformer — it’s something to think about.
Earlier this week, the College Board released its data on the rising cost of college. The numbers were striking. In the past year alone, tuition for four-year public universities rose 8.3 percent for in-state students and 5.7 percent for out-of-state students. Some of those hikes are likely due to state budget cutbacks, but the same thing occurred with private colleges — a 4.5 percent tuition increase in the past year.
Those figures are stunning. But what’s especially mind-boggling is this chart from Matthew Philips over at Freakonomics. You’ve all heard about the high-octane rise in health care costs, right? Well, since 1978, college tuition and fees have been getting expensive at a much, muchfaster rate than even medical care:
So what gives? As far back as 1993, experts were observing that tuition was rising so fast because parents were willing to swallow the cost. More recently, a U.S. News & World Report story from 2009 argued that prices were ballooning at elite universities because they’re all in a bidding war for top faculty and better services for students. That competition for students has also forced schools to hand out bigger and bigger scholarships, raising the sticker price of education. Meanwhile, Ronald Ehrenberg, a labor economist at Cornell, has blamed “the shared system of governance between trustees, administrators, and faculty” at many private universities, which “guarantees that selective private institutions will be slow to react to cost pressures.” Whatever the reason, those tuition trends don’t seem to be slowing anytime soon.
[…] This is where government needs to firmly step in. The federal government contributes billions of dollars to research and development on campus and allows universities to function as tax-exempt institutions. Self-policing of college costs has not worked; government needs to tie its support of higher education to college costs.
If universities raise tuition more than the Consumer Price Index, they should be required by Congress to take money from their endowments to fully fund grants for the corresponding increase in need for students on financial aid. The 20 wealthiest universities alone are sitting on endowment funds worth $200 billion. Three-hundred and sixty-seven colleges and universities control tax-exempt endowments worth over $100 million.
To enforce the new guidelines, Congress and the Department of Education should create a commission that includes representatives of universities, Fortune 500 employers, consumer advocates and economists. Perhaps this could be a more expansive version of the 2005-06 Spellings Commission, which charted the future of higher education and suggested — but didn’t mandate — ways to better prepare students for the workplace. If universities don’t comply with the new guidelines, they will lose their 501(c)(3) status — a great incentive to control tuition costs rather than pay taxes on donations and endowment earnings and lose the ability to qualify for tax-exempt financing of infrastructure projects.
Admittedly, we need to strike a careful balance. We want to respect academic freedom and the ability of educational institutions to plan their own futures, but we can’t allow universities to continue offloading rising costs on to the backs of the vast majority of students and families. Congress urgently needs to pass legislation that will prevent university costs from bankrupting the next generation of today’s youth.
Center for Budget Priorities:
[…] Higher education is suffering the same fate as other state services essential to building a strong economy. In almost every state, the economic downturn opened up gaps between public needs and the resources available to meet them. Unfortunately, far too many states chose to rely on budget cuts alone to address their shortfalls this past year, resulting in much larger cuts to services than would otherwise occur.
Projections are that an increasing share of future jobs will require at least some higher education. Making college less affordable not only limits young people’s opportunities for professional advancement, but also makes it harder to develop the highly skilled workforce that states need to attract businesses and compete globally.
This is an edited version of a commentary given by Stan Karp , a teacher of English and journalism in Paterson, N.J., for 30 years. Karp spoke on Oct. 1 at the fourth annual Northwest Teachers for Justice conference in Seattle. He is now the director of the Secondary Reform Project for New Jersey’s Education Law Center and an editor of the 25-year-old Rethinking Schools magazine. A video and fuller version of the commentary can be found here.
[…] “Corporate education reform” refers to a specific set of policy proposals currently driving education policy at the state and federal level. These proposals include:
*increased test-based evaluation of students, teachers, and schools of education
*elimination or weakening of tenure and seniority rights
*an end to pay for experience or advanced degrees
*closing schools deemed low performing and their replacement by publicly funded, but privately run charters
*replacing governance by local school boards with various forms of mayoral and state takeover or private management
*vouchers and tax credit subsidies for private school tuition
*increases in class size, sometimes tied to the firing of 5-10% of the teaching staff
*implementation of Common Core standards and something called “college and career readiness” as a standard for high school graduation:
These proposals are being promoted by reams of foundation reports, well-funded think tanks, a proliferation of astroturf political groups, and canned legislation from the right-wing American Legislative Exchange Counsel (ALEC).
Together these strategies use the testing regime that is the main engine of corporate reform to extend the narrow standardization of curricula and scripted classroom practice that we’ve seen under No Child Left Behind, and to drill down even further into the fabric of schooling to transform the teaching profession and create a less experienced, less secure, less stable and less expensive professional staff. Where NCLB used test scores to impose sanctions on schools and sometimes students (e.g., grade retention, diploma denial), test-based sanctions are increasingly targeted at teachers.
A larger corporate reform goal, in addition to changing the way schools and classrooms function, is reflected in the attacks on collective bargaining and teacher unions and in the permanent crisis of school funding across the country. These policies undermine public education and facilitate its replacement by a market-based system that would do for schooling what the market has done for health care, housing, and employment: produce fabulous profits and opportunities for a few and unequal outcomes and access for the many….
Some 35 million Medicare recipients will have to dig a little deeper into their pockets when they go to the doctor next year.
Premiums for office visits and outpatient hospital services will go up by $3.50 a month, the Obama administration announced Thursday.
At the same time, 12 million recipients who had been paying higher premiums because they are recent enrollees or have higher incomes will see their monthly payments decrease by an average of $15.50 a month.
Officials with the Department of Health and Human Services were quick to note that the $3.50 increase for most seniors — to $99.90 a month — was “far less” than the $10 hike originally forecast for those who get the so-called Medicare Part B, which also covers home health services.
“In 2012, people will find more meaningful choices and overall lower cost,” said Donald Berwick, administrator for the Centers for Medicare and Medicaid Services.
However, Medicare beneficiaries could be out a bit more if they end up in a hospital or nursing home next year. Medicare Part A — which nearly all Medicare beneficiaries buy — is getting a $24 annual hike in the deductible to $1,156.
The changes announced Thursday will have the biggest impact on Medicare Part B enrollees with higher incomes or who turned 65 in 2008 or later. They’ve been paying an average of $115.40 a month but will now pay $99.90 a month.
In addition, all Medicare Part B enrollees will see their annual deductibles fall by $22 to $140.
The reason for the divergence in premiums has to do with the Social Security cost-of-living allowance increase announced earlier this month.
Over the past few years, there has been no COLA boost, and Medicare premiums in those years have been capped at $96.40 for most seniors. The $3.50-a-month increase for earlier enrollees helps bring down the rates for those who enrolled more recently.
AARP, the lobbying group for seniors, applauded the changes.
Kaiser Health News:
The end of federal stimulus spending is going to mean nothing but pain for state Medicaid programs in fiscal 2012.
State Medicaid spending is projected to grow by an average of 29 percent in the budget year that began July 1, the biggest increase in the history of the federal-state health insurance program for the poor and disabled, according to a report released Thursday. […]
The recession drove up Medicaid enrollment sharply, but the federal government stepped in with extra funds beyond its usual share to help states cover the costs. Now, states are scrambling to make up for the end of billions of dollars in federal stimulus funding that helped sustain the program from March 2009 through June 2011. The huge jump in their Medicaid costs should prove temporary, assuming that the economy continues to improve. Typically, state Medicaid spending rises 5 percent to 10 percent annually.
Both the 2009 economic stimulus law, which provided an additional $87 billion in federal funding for Medicaid, and the 2010 federal health overhaul prohibited states from tightening eligibility requirements. So states have had to look elsewhere for cuts to make up for the loss of the extra federal funds.
“On a bad day a Medicaid director can feel like a Sherpa climbing Mount Everest,” said Valerie Harr, New Jersey’s Medicaid director.
To counter the cost surge in Medicaid, which covers 60 million people and typically accounts for a quarter of state budgets, nearly every state is either reducing benefits, cutting fees to doctors and hospitals, or both, according to the report by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured. (KHN is an editorially independent program of the foundation).
Kaiser Health News:
If one thing is certain about the 2010 health law, it’s that almost nothing about it is certain. And according to a newly released report, one of the major unknowns involves the law’s expansion of Medicaid, the federal-state health insurance program for the poor.
n a Health Affairs article released Wednesday, researchers at the Harvard School of Public Health say the expansion of Medicaid under the Affordable Care Act (ACA) could add between 8.5 million and 22.4 million people to the rolls by 2019. It could also drive up annual federal spending on the program by anywhere from $34 billion to $98 billion.
Medicaid expansion begins in 2014, when the threshold for eligibility will be raised nationwide to 133 percent of the federal poverty level. Currently, eligibility varies widely among the states once certain federal minimums have been met.
In 2010, 69 million Americans were enrolled in Medicaid, which provides health insurance to low-income children and adults, including 9 million people who also qualify for Medicare.
In the Harvard study, the researchers’ best estimate is that 13.4 million more people will enroll in Medicaid by 2019 as a result of the law’s expanded eligibility, with annual federal spending going up $58 billion as a result. In March, the Congressional Budget Office estimated that 16 million will enroll by 2019 if the health law is implemented. The CBO did not offer a range for its enrollment estimate, nor did it estimate the increase in annual federal spending in its most recent analysis.
The CBO has not published a full explanation of how it reached its estimates. The new study authors used data from two Census Bureau surveys of income – one that was used by the CBO, and another that was not. The Harvard researchers used the latter survey for their best estimate because it had a larger sample size.
“Our intention was to show that an estimate is an estimate; all estimates have ranges,” said Katherine Swartz, one of the authors and a professor of health economics and policy at Harvard. “Policy-making would be better served by acknowledging that there’s an ‘as high as’ and an ‘as low as.’”
Using one Census Bureau survey over the other had the largest effect on the estimates. The second most important factor in the researchers’ simulations was how they determined eligibility. While the surveys aggregated income among extended family, Medicaid eligibility is determined by household income and other factors, which the authors adjusted for.
Third most important was the expected enrollment rate among currently uninsured adults. The 13.4 million enrollment estimate assumes a 62 percent uptake by adults who will be newly eligible for Medicaid. The CBO has not released its estimated uptake rate, but the researchers believe the CBO assumed 55 percent in its analysis.
Swartz emphasized that the study’s enrollment and spending ranges should not be used to cast doubt on the new law’s effectiveness. Rather, she said, the analysis should be used to inform further policy development that supports the health law goal of decreasing the number of uninsured.
Widespread demonstrations in support of Occupy Wall Street have put the financial crisis back into the national spotlight lately.
So here’s a quick refresher on what’s happened to some of the main players, whose behavior, whether merely reckless or downright deliberate, helped cause or worsen the meltdown. This list isn’t exhaustive — feel welcome to add to it.
Mortgage lenders contributed to the financial crisis by issuing or underwriting loans to people who would have a difficult time paying them back, inflating a housing bubble that was bound to pop. Lax regulation allowed banks to stretch their mortgage lending standards and use aggressive tactics to rope borrowers into complex mortgages that were more expensive than they first appeared. Evidence has also surfaced that lenders were filing fraudulent documents to push some of these mortgages through, and, in some cases, had been doing so as early as the 1990s. A 2005 Los Angeles Times investigation ofAmeriquest – then the nation’s largest subprime lender – found that “they forged documents, hyped customers’ creditworthiness and ‘juiced’ mortgages with hidden rates and fees.” This behavior was reportedly typical for the subprime mortgage industry. A similar culture existed at Washington Mutual, which went under in 2008 in thebiggest bank collapse in U.S. history.
Countrywide, once the nation’s largest mortgage lender, also pushed customers to sign on for complex and costly mortgages that boosted the company’s profits. Countrywide CEO Angelo Mozilo was accused of misleading investors about the company’s mortgage lending practices, a charge he denies. Merrill Lynch and Deutsche Bank bothpurchased subprime mortgage lending outfits in 2006 to get in on the lucrative business. Deutsche Bank has also been accused of failing to adequately check on borrowers’ financial status before issuing loans backed by government insurance. A lawsuit filed by U.S. Attorney Preet Bharara claimed that, when employees at Deutsche Bank’s mortgage received audits on the quality of their mortgages from an outside firm, they stuffed them in a closet without reading them. A Deutsche Bank spokeswoman said the claims being made against the company are “unreasonable and unfair,” and that most of the problems occurred before the mortgage unit was bought by Deutsche Bank.
Where they are now: Few prosecutions have been brought against subprime mortgage lenders. Ameriquest went out of business in 2007, and Citigroup bought its mortgage lending unit. Washington Mutual was bought by JP Morgan in 2008. A Department of Justice investigation into alleged fraud at WaMu closed with no charges this summer. WaMu also recently settled a class action lawsuit brought by shareholders for $208.5 million. In an ongoing lawsuit, the FDIC is accusing former Washington Mutual executives Kerry Killinger, Stephen Rotella and David Schneider of going on a “lending spree, knowing that the real-estate market was in a ‘bubble.’” They deny the allegations.
Bank of America purchased Countrywide in January of 2008, as delinquencies on the company’s mortgages soared and investors began pulling out. Mozilo left the company after the sale. Mozilo settled an SEC lawsuit for $67.5 million with no admission of wrongdoing, though he is now banned from serving as a top executive at a public company. A criminal investigation into his activities fizzled out earlier this year. Bank of America invited several senior Countrywide executives to stay on and run its mortgage unit. Bank of America Home Loans does not make subprime mortgage loans. Deutsche Bank is still under investigation by the Justice Department.
In the years before the crash, banks took subprime mortgages, bundled them together with prime mortgages and turned them into collateral for bonds or securities, helping to seed the bad mortgages throughout the financial system. Washington Mutual, Bank of America, Morgan Stanley and others were securitizing mortgages as well as originating them. Other companies, such as Bear Stearns, Lehman Brothers, andGoldman Sachs, bought mortgages straight from subprime lenders, bundled them into securities and sold them to investors including pension funds and insurance companies.
Where they are now: This spring, New York’s Attorney General launched a probe into mortgage securitization at Bank of America, JP Morgan, UBS, Deutsche Bank, Goldman Sachs and Morgan Stanley during the housing boom. Morgan Stanley settled with Nevada’s Attorney General last month following an investigation into problems with the securitization process.
As part of a proposed settlement with the 50 state attorneys general over foreclosure abuses, several big banks were offered immunity from charges related to improper mortgage origination and securitization. California and New York have withdrawn from those talks.
The people who created and dealt CDOs
Once mortgages had been bundled into mortgage-backed securities, other bankers took groups of them and bundled them together into new financial products called Collateralized Debt Obligations. CDOs are composed of tiers with different levels of risk. As we’ve reported, a hedge fund named Magnetar worked with banks to fill CDOs with the riskiest possible materials, then used credit default swaps to bet that they would fail. Magnetar says that the majority of its short positions were against CDOs it didn’t own. Magnetar also says it didn’t choose what went its own CDOs, though people involved in the deals who spoke to ProPublica contradict this account.
American International Group’s London-based financial products unit was among the entities that provided credit default swaps on CDOs. Though the business of insuring the risky securities made AIG large short-term profits, it eventually brought the company to the brink of collapse, prompting an $85 billion government bailout.
Merrill Lynch, Citigroup, UBS, Deutsche Bank, Lehman Brothers andJPMorgan all made CDO deals with Magnetar. The hedge fund invested in 30 CDOs from the spring of 2006 to the summer of 2007. The bankers who worked on these deals almost always reaped hefty bonuses. From our story:
Even today, bankers and managers speak with awe at the elegance of the Magnetar Trade. Others have become famous for betting big against the housing market. But they had taken enormous risks. Meanwhile, Magnetar had created a largely self-funding bet against the market.
When banks found CDOs hard to sell, some of them, notably Merrill Lynch andCitibank, bought each other’s CDOs, creating the illusion of true investors when there were almost none. That was one way they kept the market for CDOs going longer than it otherwise would have. Eventually CDOs began purchasing risky parts of other CDOs created by the same bank. Take a look at our comic strip explaining self-dealing, and our chart detailing which banks bought their own CDOs.
Where they are now: Overall, the banks and individuals involved in CDO deals haven’t been convicted on criminal charges. The civil suits against them have produced fines that aren’t very big compared to the profits they made in the leadup to the financial crisis. JP Morgan paid $153.6 million to settle an SEC suit alleging they hadn’t disclosed to investors that Magnetar was betting against Morgan’s CDO. Citigroup just agreed to paya $285 million fine to the SEC for betting against one of its mortgage-related CDOs. The lawsuit doesn’t mention dozens of similar deals made by Citi.
Magnetar is still thriving (the deals they made weren’t illegal according to the rules at the time). In 2007, Magnetar’s founder took home $280 million, and the fund had $7.6 billion under management. The SEC is considering banning hedge funds and banks from betting against securities of their own creation. As of May 2010, federal prosecutors were investigating Morgan Stanley over their CDO deals, and Goldman Sachs paid $550 millionlast year to settle a lawsuit related to one of theirs. Only one Goldman employee, Fabrice Tourre, has been charged criminally in connection to the deals.
Though recorded phone calls suggest that former AIG CEO Joseph Cassano misled investors about the credit default swaps that contributed to his company’s troubles, the evidence wasn’t airtight, and federal probes against him fell apart in 2010. Cassano’s lawyers deny any wrongdoing.
The ratings agencies
Standard and Poor’s, Moody’s and Fitch gave their highest rating to investments based on risky mortgages in the years leading up to the financial crisis. A Senate investigations panel found that S&P and Moody’s continued doing so even as the housing market was collapsing. An SEC report also found failures at 10 credit rating agencies.
Where they are now: The SEC is considering suing Standard and Poor’s over one particular CDO deal linked to the hedge fund Magnetar. The agency had previouslyconsidered suing Moody’s, but instead issued a report criticizing all of the rating agenciesgenerally. Dodd-Frank created a regulatory body to oversee the credit rating agencies, but its development has been stalled by budgetary constraints.
The Financial Crisis Inquiry Commission [PDF] concluded that the Securities and Exchange Commission failed to crack down on risky lending practices at banks and make them keep more substantial capital reserves as a buffer against losses. They also found that the Federal Reserve failed to stop the housing bubble by setting prudent mortgage lending standards, though it was the one regulator that had the power to do so.
An internal SEC audit faulted the agency for missing warning signs about the poor financial health of some of the banks it monitored, particularly Bear Stearns. [PDF] Overall, SEC enforcement actions went down under the leadership of Christopher Cox,and a 2009 GAO report found that he increased barriers to launching probes and levying fines.
Cox wasn’t the only regulator who resisted using his power to rein in the financial industry. The former head of the Federal Reserve, Alan Greenspan, reportedlyrefused to heighten scrutiny of the subprime mortgage market. Greenspan later said before Congress that it was a mistake to presume that financial firms’ own rational self-interest would serve as an adequate regulator. He has also said he doubts the financial crisis could have been prevented.
The Office of Thrift Supervision, which was tasked with overseeing savings and loan banks, also helped to scale back their own regulatory powers in the years before the financial crisis. In 2003 James Gilleran and John Reich, then heads of the OTS andFederal Deposit Insurance Corporation respectively, brought a chainsaw to a press conference as an indication of how they planned to cut back on regulation. The OTS was known for being so friendly with the banks — which it referred to as its “clients” — that Countrywide reorganized its operations so it could be regulated by OTS. As we’ve reported, the regulator failed to recognize serious signs of trouble at AIG, and didn’t disclose key information about IndyMac’s finances in the years before the crisis. TheOffice of the Comptroller of the Currency, which oversaw the biggest commercial banks, also went easy on the banks.
Where they are now: Christopher Cox stepped down in 2009 under public pressure. The OTS was dissolved this summer and its duties assumed by the OCC. As we’ve noted, the head of the OCC has been advocating to weaken rules set out by the Dodd Frank financial reform law. The Dodd Frank law gives the SEC new regulatory powers, including the ability to bring lawsuits in administrative courts, where the rules are more favorable to them.
Two bills supported by Phil Gramm and signed into law by Bill Clinton created many of the conditions for the financial crisis to take place. The Gramm-Leach-Bliley Act of 1999 repealed all the remaining parts of Glass-Steagall, allowing firms to participate in traditional banking, investment banking, and insurance at the same time. The Commodity Futures Modernization Act, passed the year after, deregulated over-the-counter derivatives – securities like CDOs and credit default swaps, that derive their value from underlying assets and are traded directly between two parties rather than through a stock exchange. Greenspan and Robert Rubin, Treasury Secretary from 1995 to 1999, had both opposed regulating derivatives. Lawrence Summers, who went on to succeed Rubin as Treasury Secretary, also testified before the Senate that derivatives shouldn’t be regulated.
It’s worth noting the substantial lobbying efforts that accompanied the deregulation process. According to the FCIC [PDF], between 1999 and 2008 the financial industry spent $2.7 billion lobbying the federal government, and donated more than $1 billion to political campaigns. While deregulation took place mainly under Clinton’s watch, George W. Bush is faulted for not doing more to catch the out-of-control housing market.
As president of the New York Fed from 2003 to 2009, Timothy Geithner also missed opportunities to prevent major financial firms from self-destructing. As we reported in 2009:
Although Geithner repeatedly raised concerns about the failure of banks to understand their risks, including those taken through derivatives, he and the Federal Reserve system did not act with enough force to blunt the troubles that ensued. That was largely because he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound.
Henry Paulson, Treasury Secretary from 2006 to 2009, has been criticized for being slow to respond to the crisis, and introducing greater uncertainty into the financial markets by letting Lehman Brothers fail. In a 2008 New York Times interview, Paulson said he had no choice.
Where they are now: Gramm has been a vice chairman at UBS since he left Congress in 2002. Greenspan is retired. Summers served as a top economic advisor to Barack Obama until November 2010; since then, he’s been teaching at Harvard. Geithner is currently serving as Treasury Secretary under the Obama administration.
Executives of big investment banks
Executives at the big banks also took actions that contributed to the destruction of their own firms. According to the Financial Crisis Inquiry Commission report [PDF], the executives of the country’s five major investment banks — Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley – kept such small cushions of capital at the banks that they were extremely vulnerable to losses. A report compiled by an outside examiner for Lehman Brothers found that the company washiding its bad investments off the books, and Lehman’s former CEO Richard S. Fuld Jr. signed off on the false balance sheets. Fuld had testified before Congress two years before that the actions he took prior to Lehman Brothers’ collapse “were both prudent and appropriate” based on what he knew at the time. Other banks also kept billions in potential liabilities off their balance sheets, including Citigroup, headed by Vikram Pandit.
In 2010, we detailed how a group of Merrill Lynch executives helped blow up their own company by retaining supposedly safe – but actually extremely risky – portions of the CDOs they created, paying a unit within the firm to buy them when almost no one else would.
The New York Times’ Gretchen Morgenson described how the administrative decisions of some top Merrill executives helped put the company in a precarious position, based on interviews with former employees.
Where they are now: In 2009, two Bear Stearns hedge fund managers were cleared of fraud charges over allegedly lying to investors. A probe of Lehman Brothers stalled this spring. Merrill Lynch was sold to Bank of America in the fall of 2008. As for the executives who helped crash the firm, as we reported in 2010, “they walked away with millions. Some still hold senior positions at prominent financial firms.” Dick Fuld is still working on Wall Street, at an investment banking firm. Vikram Pandit remains the CEO of Citigroup.
Fannie Mae and Freddie Mac
The government-sponsored mortgage financing companies Fannie Mae and Freddie Mac bought risky mortgages and guaranteed them. In 2007, 28 percent of Fannie Mae’s loans were bought from Countrywide. The FCIC found [PDF] that Fannie and Freddie entered the subprime game too late and on too limited a scale to have caused the financial crisis. Non-agency-securitized loans had an increased share of the market in the years immediately preceding the crisis.
Many believe that The Community Reinvestment Act, a government policy promoting homeownership for low-income people, was responsible for the growth of the subprime mortgage industry. This idea has largely been discredited, since most subprime loans were made by companies that weren’t subject to the act.
Still, Fannie and Freddie engaged in reckless behavior and sustained heavy losses as a result. The SEC slammed Fannie Mae for improper accounting under the leadership ofFrank Raines in the years preceding the financial crisis. A report by the Office of Federal Housing Enterprise Oversight found that Fannie and Freddie didn’t accurately disclose the risks they were taking and “deliberately and intentionally manipulat[ed] accounting to hit earnings targets.” [PDF]
Richard Syron and Daniel Mudd were at the helm of Freddie and Fannie, respectively, when they began to buy large numbers of subprime loans. Current and former Freddie Mac employees have accused Syron of ignoring warnings about the health of the loans the company was buying. Syron and Mudd maintain they could not have foreseen the rapid decline in the housing market.
Where they are now: As borrowers defaulted on mortgages they’d insured, Fannie and Freddie received a nearly $200 billion federal government bailout, and the government took over their operations. They are close to a settlement in an SEC lawsuit, and will neither admit nor deny that they failed to inform investors about risks of exposure to subprime mortgages. The Dodd Frank financial reform law stated that serious reforms of Fannie and Freddie are needed, but didn’t address how they should be carried out. A report from Treasury Secretary Geithner called for the government to “ultimately wind down” the two mortgage giants. [PDF] In the meantime, taxpayers have beenshouldering their legal fees. Former Freddie and Fannie executives Richard Syron andDaniel Mudd received Wells notices this spring, a sign that the SEC is considering legal action against them.
Merscorp Inc., the operator of a national mortgage registry used by banks, was sued by Delaware’s attorney general for allegedly using deceptive practices that hide information from borrowers.
The MERS database, which tracks ownership interests in mortgages, impeded the ability of homeowners to fight foreclosures and obscures its data, Delaware Attorney General Beau Biden said in a complaint filed today.
“MERS engaged and continues to engage in a range of deceptive trade practices that sow confusion among consumers, investors and other stakeholders in the mortgage finance system, damage the integrity of Delaware’s land records, and lead to unlawful foreclosure practices,” Biden said.
MERS tracks servicing rights and ownership interests in mortgage loans on its electronic registry, allowing banks to buy and sell loans without recording transfers with individual counties. MERS acts as the lender’s nominee, remaining the mortgagee of record as long as the note promising repayment is owned by a MERS member.
Banks and investors have the true economic interests in the loans, and Biden described MERS as “a front organization” at a news conference today in Delaware.
“The unreliability of the MERS System, when compounded with MERS’s reliance on the records in the MERS System, is deceptive and harms consumers by permitting and encouraging foreclosures for which the authority has not been fully determined and may not be legitimate,” the attorney general said.
Janis Smith, a spokeswoman for Merscorp, said the allegations in the suit have no merit.
“MERS’s business practices are transparent,” she said in a phone interview. “There is no confusion.”
In an e-mailed statement, Smith said the company refutes claims that the MERS system confused borrowers. Homeowners have access to their loan-servicer information on the system at all times, she said.
“Merscorp has cooperated in good faith with the Delaware attorney general’s office and complied with their requests for information under a subpoena issued earlier this year,” Smith said. “The lawsuit they filed was unexpected, and we disagree with the allegations made in their complaint.”
New York Subpoena
Separately, New York Attorney General Eric Schneiderman subpoenaed Merscorp for information about how mortgage servicers including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. use the system, according to a person familiar with the matter. The subpoena is part of an existing investigation with Delaware about mortgage operations of banks, according to the person, who declined to be identified because the investigation isn’t public.
MERS faces multiple unrelated lawsuits by counties over allegations that the company cheated them out of mortgage filing fees.
Dallas County, Texas, which sued last month, claims the system allows banks that own stakes in MERS to buy and sell loans without properly recording transfers with counties and paying the fee. Dallas County District Attorney Craig Watkins, who also sued Bank of America, said his county may be owed as much as $100 million.
MERS’s shareholders include Bank of America, CitiGroup Inc., Wells Fargo, Fannie Mae and the Mortgage Bankers Association, according to its website.
Inaccessible to Public
In his complaint, Biden said as loans are transferred, the changes are only recorded in MERS’ database, and the records of the transfer aren’t generally accessible to the public. MERS doesn’t have safeguards in place to ensure that transfers on its system accurately reflect actual transfer of ownership of the loan, according to the complaint.
The MERS system is “frequently inaccurate,” Biden said in court papers. When the MERS system doesn’t reflect the true owner of a mortgage loan, any action MERS takes on behalf of the purported owner is without authority, according to the attorney general.
“The MERS system has raised serious questions about who owns what in America,” Biden said at the press conference.
Biden asked the court to bar MERS from initiating any foreclosure actions in the company’s name, from acting as a nominal mortgage lender when it didn’t have a “beneficial interest” in the property and from recording such mortgages in the company’s name.
Biden also asked the court to stop MERS from assigning or taking any other actions on Delaware mortgages until the company’s system has been “audited and corrected,” according to the complaint. The court should order MERS to correct the chain of title on Delaware mortgages that were recorded in county offices, Biden said.
Follow up to yesterday’s story of the Washington Post’s front page fiasco
Google turns out a curiously partisan result when users type “Romney can win” into the site’s search bar. The search engine provides an ordinary-looking set of (more than 50 million) results—but also, at the top of the page, includes a suggestion:
“Did you mean: ‘Romney can’t win?”
Romney has maintained a tenuous position at or near the top of the Republican field for months, but he has struggled to gain broad support among the party’s base. (Herman Cain, the former CEO of Godfather’s Pizza, is ahead of him in the latest CBS News poll.)
Is Romney’s lackluster support the reason behind Google’s not-so-subtle suggestion? It’s tough to tell without unpacking the complicated algorithms the site uses to rank search results. But so far, Romney is the only presidential candidate for whom the Google glitchapplies. (And yes, we even checked Huntsman.)
It’s not the first time Google search results have provided Internet users with a taste of conventional political wisdom. From 2003 until 2007, users who typed in the term “miserable failure” into the Google search bar were greeted by the official White House biography of George W. Bush. That result—like other so-called “Google bombs”—was the handiwork of users who gamed the site’s search rankings by setting up large numbers of outside links to a certain page.
In this case, however, it appears that Google’s less-than-charitable correction concerning Mitt Romney’s chances for victory is only incidentally partisan, and not a clever trick by political pranksters. Not human ones, anyway.
Back in June the inspector general for Iraq announced that $6.6 billion of Iraqi reconstruction money had gone missing — a large amount to misplace.
Today the inspector general announced that he found the money.
“SIGIR was able to account for the unexpended DFI funds remaining in DFI accounts when the CPA (Coalitional Provisional Authority) dissolved in June 2004. Sufficient evidence exists showing that almost all of the remaining $6.6 billion remaining was transferred to actual and legal CBI (Central Bank of Iraq) control.”
Kevin Drum, MoJo:
This chart from the Pew Economic Mobility Project is actually a few months old, but it seems newly relevant in light of the Occupy Wall Street protests. If you want to know why people are angry, this tells the story. If you want to know why people don’t think much of government, this tells the story. If you want to know why people are overwhelmingly in favor of increasing taxes on the rich, this tells the story. Basically, this chart tells a lot of stories
[ Question: Do you think this could be why so many distrust the government?]
Danny Schecter, AlJazeera:
In the days of the civil rights movement, there was a phrase that became a song and then a popular documentary series:
“Keep Your Eyes On The Prize.”
The idea was simple: Keep focus, don’t be distracted, don’t dissipate your energies.
The Occupy Movement that is spreading like a prairie fire worldwide is attracting critics who want it to take on every issue on every agenda: healthcare, campaign financial reform, environmental concerns and the like.
All are important and all are, on some level, interconnected – but when you try to do everything, you can easily end up doing nothing. Instead of sending out a clear message, you diffuse it, losing clarity and confusing the public.
Lacking an agenda
Occupy Wall Street has been criticised for not having a programme or a blueprint for change. Yet, that perceived weakness might be its greatest strength.
When you enunciate a complicated charter, you lose supporters and give others issues to disagree on. You end up having your own supporters debating the fine points of each issue and risk becoming factionalised.
Occupy Wall Street has spoken out clearly against economic inequality – rule by the one per cent over the 99 per cent. It has protested the banks and the billionaires and millionaires that dominate the economy. The slogans are simple and quite understandable.
And that’s precisely why so many have rallied behind it, and why it inspired copycat actions and acts of solidarity in as many as 1,000 cities. I can’t think of another time in history when a relatively small group of people managed to touch a global nerve so quickly.
Occupy Wall Street was not even 30 days old when a global day of action showed how widely their message was resonating.
At the same time, police abuse of the demonstrators has both won sympathy for the protests and galvanised marches in protest. If the police become the issue, there could be an escalation of tension and less of a focus on Wall Street and the economy.
New York’s police know that, and have the capacity to deploy agents provocateur to exacerbate confrontations. They are already using state-of-the-art surveillance trucks to monitor the protest around the clock, a potentially dangerous intelligence operation that could lead to targeted crackdowns of people they consider “key troublemakers”. The CIA has a reportedly close working relationship with the NYPD.
This 24-hour-a-day spying by special units is questionable from a constitutional point of view, but will continue unless and until a court stops it.
Recent surveys in New York show support of the protest by a 3-1 margin among residents. Even more respondents say demonstrators have a right to protest and that they don’t support heavy-handed police tactics. A national poll showed more support for Occupy Wall Street than the right-wing Tea Party.
Their own internet stream, websites, YouTube videos, tweets and messages were initially targeted at their own activists, but others started paying attention when the mainstream media machine worldwide started tuning in and taking the movement seriously.
That in turn has had an impact on the national and international conversation. Suddenly, issues that had been ignored or downplayed were making news, and not just in the business press – soon, labour unions and civic groups started checking it out and endorsing it.
Missing a leader
There was momentum of a kind that makes other social movements jealous. Perhaps it was the absence of leaders and conventional protests. Perhaps it was the building of a community open to participation by all.
Something was working, and working well.
Some of the activists feel that their key challenge now is to build their movement as widely and deeply as possible, and not posture as a lobbying force with a laundry list of demands they can’t promote effectively.
Their movement orientation seems to drive politicians and media pundits crazy.
On Wall Street, insiders dismiss the protest as “unsophisticated” as if all their purportedly “sophisticated” strategies are working to promote economic recovery or create jobs. They are not.
That’s why some of the Occupy activists think it would be a mistake now to ask a dysfunctional and broken system for anything. They don’t think it is capable of redressing grievances that raise structural issues beyond the power of politicians to fix.
They also think that asking the system for anything validates the system.
At the same time, there are activists who want to see an organisation emerge. There has been talk of a national convention in 2012 to bring together all the local occupy groups. This seems to be at the talking stage, not the organising phase.
The Democrats don’t have a consistent stance towards the activists – who are far more anarchistic and anti-system than they are. The Obama campaign is spending a lot of money to organise supporters, but many in the movement fear co-option. They are unlikely to take donations from political parties or well known political party funders. Decision on issues such as this are made by a participatory General Assembly that functions in a transparent and consensus-based manner.
The Move On organisation that backed Obama in 2008 and had raised millions for Democratic candidates was accused by some of trying to take over the movement. They just issued a statement denying that intent, and say they want to be supportive, but not trying to speak for the grassroots-based activists.
The Occupy Movement is raising money, a $300,000 figure was cited last week, but their coffers are swelling thanks to donations of money and in kind contributions. The question now is how that money will be spent.
So far, there are no paid staff, only dedicated volunteers.
The weather in New York is getting colder. The authorities hope that the coming of winter-like conditions will drive them out of the park. The activists respond by getting better sleeping bags and seeking nearby places to stay.
The conditions have never been easy. The park they have occupied is all granite, with no grass or toilet facilities. The city does not allow tents or structures. The mayor still may be bent on shutting the encampment down.
So far, Occupy Wall Street has survived everything that authorities have thrown at them, but it’s hard to predict what incidents might occur, or be instigated, to turn public opinion against them. That danger is real.
Occupy protesters and followers are questioning whether or not Los Angeles will face similar rioting as theOccupy Wall Street and Occupy Oakland movements.
Mayor Antonio Villaraigosa, who has supported the movement from day one, and at least one other councilman – Bill Rosendahl – are losing patience and feel that the time has come for occupiers to pack up camp and create a new tent city elsewhere. Will occupiers disperse? Survey says: Not likely.
CBS LA’s Serene Branson visited Occupy L.A. on Wednesday to investigate the possibility of an early end to the campground at City Hall, which protesters have said will last through December. Branson reported that the crowd is on high alert and that “tensions ran high.” Judging from her interviews with protesters, they’re not going anywhere anytime soon.
One protester said, “They can try to shut us down until the cows come home. We’re just going to come back stronger.”
Another occupier proclaimed, “We won’t be daunted. We’re just going to keep coming back and coming back…like Chinese water torture.”
City officials are concerned about the condition of the City Hall lawn. Villaraigosa said in a statement, “The lawn is dead, our sprinklers aren’t working…our trees are without water. The protesters must respect city laws and regulations, and while they have been allowed to camp on City Hall lawns, that cannot continue indefinitely.”
But organizers reiterated that the City Hall lawn has little to do with their fight. “We’ve had enough, and we are tired of what is being done from the top down,” said a protestor.
Alex Everett, a 26-year-old protester who has been camped out at City Hall for two weeks, believes many protesters will not leave without a fight. He noted that, should police intervene, “it will be violent,” reports L.A. Now.
As the protest continued late into the night both sides appeared afraid of engaging the other. Many marchers wore scarves over their noses and mouths in anticipation of teargas. Some had gas masks.
When officers wanted the crowd to move out of a traffic intersection they sent an ambulance in with its siren blaring, not a police vehicle.
One sign taped to a lamppost delivered this message to the police: “You’ve fuelled our fire.”
Speaker after speaker demanded the resignation or recall of the city’s mayor, Jean Quan, who had initially voiced her support of the protesters. “Mayor Quan you did more damage to Oakland in one evening than Occupy Oakland did in two weeks,” said one slogan scrawled near the entrance to her offices.
In an afternoon news conference Quan had struggled to explain the decision to clear the square in the early hours of Tuesday morning and again when protesters returned that evening.
She gave the impression she had been as blindsided as anyone by the decision to close down Occupy Oakland. She had been in Washington at the time and said that although she knew there were hygiene and public safety issues that needed to be addressed, she did not expect that to happen while she was on the other side of the country.
“I only asked the chief to do one thing: to do it when it was the safest for both the police and the demonstrators,” she said, pinning responsibility for the decision on her police chief and the top city administrator. When pressed for more details, Quan said: “I don’t know everything.” […]
The Oakland crowd was a mixture of eco-activists, families with young children, nurses and teachers, as well as a handful of young men with bandanas or Palestinian keffiyehs covering part of their faces. Many said they were shocked by what happened on Tuesday and were bracing themselves for further confrontations with the police.
“Quan let the [county] sheriffs in to do her dirty work and then said she didn’t know who was responsible for the decision. She’s got to go,” said Robijn Vangiesen, a local activist and organiser. […]
Many of Wednesday night’s protesters expressed anger. “When the rich steal from the poor it’s called business. When the poor fight back it’s called violence,” a 25-year-old solar energy company executive, Cory Rae Shaw, wrote on a banner.
“Who’s really the bandits here?” said Demarion English, a 23-year-old security guard. “I called them bitches. I call the police bitches to their face. We’re all fighting for a real cause… and we got teargassed.”
Greg Sargent, WaPo:
Beyond whatever fate awaits Occupy Wall Street, one thing is now clear: Efforts to marginalize the critique of the current system that the protests embody — and the larger arguments about inequality and economic fairness that they have set in motion — as radical or extreme are proving a complete failure.
Polls are showing that pluralities or majorities agree with the protests — including the moderate voters who are supposed to be culturally alienated by outsized protest tactics. New Yorkers continue to embrace the protests. Dem candidates, refreshingly, are refusing to be frightened away by GOP efforts to tie them to the protesters’ excesses. Top shelf columnists are earnestly discussing the protests as an important phenomenon, regardless of their durability, and concluding that it’s time for a serious national conversation about inequality, economic justice, and what our failure to address these issues portends for the future. Obama advisers are claiming that they will be central to Campaign 2012.
And perhaps most tellingly, the “class warfare” shrieks from the right are growing louder.
* Conservative effort to smear Occupy Wall Street going bust:Indeed, no matter how hard the right tries to smear the protesters (they’re deficating on doorsteps! Doing drugs!! Sex!!!), New Yorkers continue to be fine with the protests. In today’s Quinnipiac poll, they say this by an overwhelming margin of 82-13. And New Yorkers overwhelmingly agree with the movement’s message, 58-28. Crucially, even upstaters and independents agree with it.
* Obama channeling anger at corporations: The President last night framed the 2012 campaign as a referendum on whether corporations will be allowed to run roughshod over ordinary Americans:
“If you get sick, you’re on your own. If you can’t afford college, you’re on your own. If you don’t like that some corporation is polluting your air or the air that your child breathes, then you’re on your own,” he said. “That’s not the America I believe in. It’s not the America you believe in.”…
“I reject an argument that says we’ve got to roll back protections that ban hidden fees by credit card companies, or rules that keep our kids from being exposed to mercury, or laws that prevent the health insurance industry from exploiting people who are sick,” Obama said.
Obama has been signaling that he hopes the coming campaign is seen as a clash of values, and the efffort to speak directly to anti-corporate anger in service of that goal is another sign of the degree to which the protests are shifting the political landscape.
* Robert Gibbs on inequality: Indeed, here’s Obama adviser Robert Gibbs, arguing that the rising “anxiety and frustration” created by “income inequality” means the contrast between the parties will play in Obama’s favor: “Every one of the Republican candidates wants to roll back Wall Street reform, wants to put Wall Street back in charge of writing the rules that quite frankly got us into a lot of this current mess.”
- Elizabeth Warren stands firm. Will it work? A very nice Steve Kornacki piece on the meaning of Elizabeth Warren’s willingness to embrace the protests, and on why the GOP is doubling down against them. Also note Kornacki’s point that we can’t be too sure that this won’t damage Warren in the long run.
President Obama sat down with ABC’s George Stephanopoulos a few weeks ago, and acknowledged “the relations between myself and the Republican Congress have not been good over the last several months, but it’s not for lack of effort.” The problem, Obama added, is that “they’ve made a decision to follow what is a pretty extreme approach to governance.”
The reference to “the Republican Congress” didn’t make waves at the time, but the president’s phrase was technically wrong — there’s a Republican House, but Congress is divided thanks to a narrow Democratic majority in the Senate.
But the dubious phrase is probably worth keeping an eye on.
President Obama and Democrats on Capitol Hill are increasingly referring to the Congress as “Republican” even though their party controls one-half of the unpopular institution.
Obama and his allies have started to deploy the phrase “Republican Congress” in what some experts see as a clear attempt to gain a political advantage. […]
“I’m sure the president would like it to be creating jobs more quickly. And if the members of the do-nothing Republican Congress would actually put a couple of oars in the water and help us, [we could] do these things like [Mississippi] Gov. [Haley] Barbour mentioned that make so much sense,” Maryland Gov. Martin O’Malley (D) said on CBS’s “Face the Nation” earlier this month.
I have no idea if this is part of a deliberate strategy, but if it is, it’s a pretty smart one.
Public revulsion towards Congress has reached levels unseen since the dawn of modern polling. Of course the parties are going to want voters to think the other side is in charge. It’s exactly why Republican John Boehner has said — several thousand times (literally) — that Democrats “run Washington,” even though he’s the Speaker of the House.
But in the case of the “Republican Congress,” Dems have at least have a plausible case to make. There’s obviously a large GOP majority in the House, and thanks to Republican obstructionism and abuses, the Senate has effectively become a 60-vote chamber — and the Democratic caucus has 53 members.
Dems are in the majority only to the extent that they have the luxury of picking which bills Republicans will kill and which nominees Republicans will block.
It’s why Sen. Tom Harkin (D-Iowa) had no qualms the other day saying about Congress, “Democrats aren’t in charge.”
The message to voters isn’t subtle: if you’re not happy with Capitol Hill, vote Democratic because it’s a Republican Congress. In fact, I’d expect to hear this quite a bit.
Paul Krugman wrote a marvelous post yesterdayhitting on a theme that has been a pet peeve of mine for years: that a political attack is no less true for being “harsh” or “divisive”, as the pearl-clutcher brigade would say.
Greg Sargent takes us to Paul Ryan’s latest speech, in which Ryan expresses outrage over what President Obama is saying:
Just last week, the President told a crowd in North Carolina that Republicans are i favor of, quote, “dirtier air, dirtier water, and less people with health insurance.” Can you think of a pettier way to describe sincere disagreements between the two parties on regulation and health care?
Just for the record: why is this petty? Why is it anything but a literal description of GOP proposals to weaken environmental regulation and repeal the Affordable Care Act?
After briefly explaining that weaker environmental regulations would in fact mean dirtier air and water, and that ACA repeal would in fact mean more uninsured Americans, Krugman closes thus:
So Ryan is outraged,outraged, that Obama is offering a wholly accurate description of his party’s platform.
Let me add that this illustrates a point that many commenters here don’t seem to get: criticism of policy proposals is not the same thing as ad hominem attacks. If I say that Paul Ryan’s mother was a hamster and his father smelt of elderberries, that’s ad hominem. If I say that his plan would hurt millions of people and that he’s not being honest about the numbers, that’s harsh, but not ad hominem.
And you really have to be somewhat awed when people who routinely accuse Obama of being a socialist get all weepy over him saying that eliminating protections against pollution would lead to more pollution.
Honestly, the only things keeping Republicans politically afloat nationwide (outside of the gobs of money they’re able to spend on propaganda) are 1) their ability play victim and bully almost simultaneously without shame, and 2) the fact that a large number of self-professed liberals and left-of-center types go weak in the knees the first time anyone actually calls out Republicans for the actual consequences of their policies. Republicans can cheer the death of an uninsured man during debates, but the entire nation clucks in disapproval if Alan Grayson suggests that the Republicans want sick people without insurance to die quickly.
After trying to take the bread off the tables of America’s seniors while doling out big tax breaks to billionaires, Paul Ryan is whining about President Obama’s harsh rhetoric. And sadly, his whine will register with a lot of comfortable “moderates” who value “civility of discourse” over actually telling the truth or getting anything done.
Digby said it well yesterday:
And Lord help the poor Democrat who even timidly attempts to speak to those grievances — he or she is instantly attacked for “dividing the American people,” (unlike that congressman who giggled and smirked about “driving the liberals crazy.”) It’s an extremely successful gambit that’s deployed over and over again because liberals and establishment types invariably take the bait. For reasons best left to sociologists and psychologists, the mere hint from a right winger that a liberal might be divisive makes them run for cover.
[…] But it gets worse. Under this bill, service providers (including hosting services) would be under new pressure to monitor and police their users’ activities. Websites that simply don’t do enough to police infringement (and it is not at all clear what would qualify as “enough”) are now under threat, even though the DMCA expressly does not require affirmative policing. It creates new enforcement tools against folks who dare to help users access sites that may have been “blacklisted,” even without any kind of court hearing. The bill also requires that search engines, payment providers (such as credit card companies and PayPal), and advertising services join in the fun in shutting down entire websites. In fact, the bill seems mainly aimed at creating an end-run around the DMCA safe harbors. Instead of complying with the DMCA, a copyright owner may now be able to use these new provisions to effectively shut down a site by cutting off access to its domain name, its search engine hits, its ads, and its other financing even if the safe harbors would apply.
Conservative filmmaker Evan Coyne Maloney was spotted at Occupy Wall Street allegedly passing out bongs and Che Guevara rolling papers to demonstrators.
Video blogger Joey Boots caught Maloney purportedly distributing the drug paraphernalia at the demonstration and interrogated him about what he was doing with the items. “Do you have bongs and marijuana leaf pictures and stickers and Che Guevara?” Boots grilled Maloney, as transcribed byRaw Story‘s David Edwards. “Are you giving it out? Do you have it in that backpack?”
“Over there they gave out bongs,” exclaimed an Occupy Wall Street protester. “He’s like, ‘You answer, here’s a bong.’ Trying to get that one shot. All they had was bongs, peace signs with marijuana and Che Guevara rolling papers. Three things when Fox News gets it, they’ll just clip that then it’s just like protesters accept it.”
“Are we going to expect to see those pictures on Fox News?” Boots yelled out.
“I don’t know if they’ll pick it up, maybe you’ll see it on CNN,” responded the rabble-rousing conservative filmmaker. “I’m giving them away because I’m a nice guy and I like giving stuff away.”
Maloney is most notable for producing the James O’Keefe-esque documentary Indoctrinate U about political correctness at American universities.
Watch Maloney get caught on tape apparently trying to punk protesters below, via JoeyBoots.com:
The president must be doing something right. He’s now getting advice (from all the wrong quarters) that he ought to stop standing up for the people, not the privileged. Of course, such arguments largely rest on pre-cast assumptions and self-serving calculations.
First out of the triangulating box was Clinton pollster Mark Penn, who wrote a remarkably data-free piece urging the president to draw back from dividing lines and retreat to formulaic centrism. […]
Now come the real Republicans to second and amplify Penn’s message to Obama.
In a speech at the Heritage Foundation, the Medicare-shredding Rep. Paul Ryan (R-Wis.) denounced the president’s “divisive message that pits one group against another” with “fear, envy, and the politics of division.” Predictably, Ryan railed against “class warfare” — the tired phrase ritually trotted out from the right wing’s Orwellian dictionary to smear any call for economic justice and tax fairness.
Ryan knows a thing or two about class warfare. His proposed budget, supported by almost every Republican in the House, would wage war against the poor, against the education and health care of the middle class, and against the security of seniors, with Medicare voucherized and recipients forced to pay an additional $6,000 a year. The wealthy, and this is no surprise, would benefit from huge tax cuts paid for by the sacrifices of everyone else. No wonder Ryan doesn’t want the president to confront this by campaigning for ideals of equity and the interests of hard-working and out-of-work Americans.
No matter who emerges from the substandard ranks of GOP presidential candidates — the choice ranges narrowly from the inauthentic to the incredible — is Obama supposed to forswear telling the truth on tax plans that would cosset the comfortable and slam the vast majority, even as budget cuts shred everything from college aid to workplace safety? To Republicans, drawing the contrast is class warfare. Thus they revile Occupy Wall Street — because they’re eager to roll back financial regulation and reopen the casino of unbridled Wall Street speculation.
The president increasingly seems to understand that the differences here must be stated and debated and resolved — that here is a fundamental dividing line in our politics and 2012 is the time for Americans to decide.
Brooks argues that the president can’t prevail as the candidate of “income redistribution” and “big government.” But that’s a straw man, a caricature of the case Obama is making. He’s not offering paeans to government. He’s fighting for Medicare and for the Social Security that Rick Perry calls a Ponzi scheme and Mitt Romney would privatize. Obama’s not demanding income redistribution. Have we ever heard that phrase from him? He’s simply asking the wealthy to pay their share.
Brooks selectively cites polling data showing that voters don’t like big government or redistribution — abstractions which obscure the findings of survey after survey that Americans overwhelmingly agree with the president when the abstract becomes the concrete. In the latest New York Times poll, a decisive majority supports higher taxes on the highest incomes — by 65 percent to 30 percent. Thereis similar support for most elements of the Obama jobs bill — for example, over 60 percent favor federal action to save the jobs of police officers, firefighters, and teachers.
This reflects a perennial paradox of our politics: Doubtful and sometimes hostile to government, people honor and fiercely defend much of what it actually does. Indeed, the GOP is on the shakiest ground — and the president on the strongest — on Social Security and Medicare. That was the blunt message in an NBC/WSJ poll: “Republicans might want to talk about revamping” these programs but Americans say “hands off.”
Brooks contends that instead of fighting such battles, Obama should “champion a Grand Bargain strategy.” When he did just that this summer during the debt-ceiling fight, the Republicans wouldn’t meet the president even a quarter of the way. And he wasn’t going to surrender to a bargain that would go down in history as the Unfair Deal. As John Kennedy once observed, it’s impossible to reach agreement with those who insist “what’s mine is mine, and what’s yours is negotiable.”
Elections are a moment of choosing — and some elections redefine the character of the nation and reset its direction for decades to come. And much as Brooks and many like him might prefer it, the fight can’t be made, and for Obama certainly can’t be won, on the pallid field of unrequited conciliation. Brooks complains that a real fight will be “viciously negative,” presumably toward Mitt Romney. Why isn’t Romney’s record as a job-destroying take-over artist relevant? What’s vicious here is how he made so much of his vast fortune. Why shouldn’t he be judged by his patent lack of conviction? Conservatives are right to wonder what Romney believes in other than himself. And that’s a negative he himself has created.
So fight on, Mr. President. You’re renewing your voice and your vision, and America is beginning to hear you again as it did in 2008. Don’t forget how FDR fought back in 1936 against the “forces of greed and privilege.” Don’t forget that in the late summer of 2000, Al Gore achieved a 16- to 22-point turnaround in the polls as he spoke the populism he truly felt, culminating in his acceptance address at the Democratic convention.
Brooks doesn’t want you to “sound… a bit like Al Gore.” I do. A populist appeal is not just your path to victory, but now, as it often was in the past, the path to a better, fairer, and more prosperous country for all Americans.
As long as you keep fighting, the critics will keep complaining. Every time they do, think of Harry Truman in 1948, written off, facing a “do-nothing Congress,” assailed for class warfare, but clear in purpose and in principle. And think of what he promised as he came to the podium of a weary and worried Democratic convention: We “will win this election and make these Republicans like it — don’t you forget that…The reason is the Democratic Party is the people’s party, and the Republican Party is the party of special interest, and it always has been and always will be.”
The Republicans didn’t like it then. They won’t like it now — and neither will the triangulators and a lot of the commentators. But in Truman’s words, it’s your time to “fight…for the ordinary people of this land and not…the favored classes with a powerful few.”
Milt Shook, Please Cut the Crap:
[…] In reality, we should all be less concerned as to how we get there, and more concerned that we simply get there. In my humble opinion, if we stated these as our goals for our country, very few average voters would not be on our side, and we would be able to drown out the negative naysayers on the right.
Wouldn’t that be nice?
- Everyone should be entitled to at least basic shelter, meaning a heated, comfortable space that is as safe as possible.
- Everyone should be entitled to clean and safe drinking water, free of dangerous chemicals.
- Everyone should be entitled to enough basic, nutritious food for themselves and their families to keep them healthy.
- Everyone should be entitled to the cleanest possible air to breathe.
- Every attempt should be made to make all communities safe and secure, not just from crime, but also from the effects of past activities and pollution.
- Everyone should have access to any health care that meets their needs. No American should ever die or lose everything they have worked for because they happen to get sick or injured.
- Everyone should have a reasonable expectation that all products sold in the marketplace meet minimal reasonable safety requirements.
- In order to compete in the global marketplace, we need more people capable of doing great things. Therefore, our first economic goal should be a highly skilled workforce.
- Everyone should be entitled to a free, quality education that meets their needs to become a contributing member of society.
- No student should ever have to incur high debt in order to become a productive, taxpaying citizen. The cost of obtaining an education should be as close to free as possible.
- All teachers should be supported in their efforts to create good citizens to the extent possible. No teacher should ever have to pay for materials necessary to teach their students properly using their own personal funds.
- Every working person in the country should make at least enough money so that his or her family can live reasonably comfortably.
- No executive of any company that employs anyone who is not making enough money to provide for a family should be compensated at a rate more than 100 times that of their lowest-paid employee.
- Corporations are fictional persons for purposes of protecting individual assets. They are not people any more than zoos are animals.
- Everyone should have equal opportunity, regardless of any subjective criteria, including skin color, gender, sexual orientation, or even disability. If they can do the job, they should be entitled to an equal opportunity to get the job.
- People should be encouraged to work, by providing them with the means to work, such as accessible public transportation systems and free or affordable quality child care.
- Every working person should have the right and the support to unionize and collectively bargain with their employer in every state in the union.
- “Right to work” laws should actually feature the right to work, not the right to drive down wages by coercing workers into shunning unions.
- Every worker has a right to expect a workplace that complies with all laws and rules regarding safety, and which puts worker safety above profit.
- Every worker should expect to work a fair number of hours, be entitled to adequate medical and family leave to meet their needs, and a reasonable amount of paid time off every year.
- Every worker should feel free to report issues to authorities without fear of termination or harassment.
- Everyone should have complete control over their own bodies; the government should never be allowed to insert itself into any medical decision between a doctor and patient.
- Marriage is between two unrelated consenting adults, and should not be defined by the government. If two unrelated men or two unrelated women wish to marry, it is no one else’s business.
- No one should be denied any of their basic civil rights due to any arbitrary factor, such as skin color, gender assignment or sexual orientation..
- All people should be equal in the eyes of the law. Period.
- Though capitalism is currently our chosen economic system, the goal of any economic system should be to benefit the most people, not to benefit the richest capitalists.
- Truly free markets are markets in which anyone with an idea of a product or service can enter, and everything should be done to keep markets open to all.
- Because access to broadcast spectrum and cable bandwidth is limited in nature, licensees should be regulated so as to provide the people with fair access to all points of view.
- Broadcast spectrum and cable access rights are owned by the people in those communities.
- The rules for those who hold broadcast licenses should be enforced, and emphasize “the public good.” No single group or point of view should dominate any broadcast frequency, with the effect of blocking out other voices.
- Taxes should be progressive, based on ability to pay. A 20% tax on $2 million per year does not have the same effect on quality of life as 20% on $20,000 per year.
- Every commercial enterprise should be evaluated based on its effect on quality of life, not its ability to make a profit.
- No corporation that makes a profit should be able to get away with not paying taxes.
- Improvements to society should be based on necessity and benefit the “general welfare” of the country. They should never be dependent on whether or not an individual or corporation can profit from them.
- We should build out a high-functioning, reliable energy grid that uses renewable energy sources to the extent possible, regardless of whether or not it’s profitable. Since the current grid, produced through the “free market” over the course of nearly a century, is wholly inadequate, we should at least consider other possible ways to build it out.
- We should encourage energy conservation wherever possible, and begin a transition away from burning things for energy, especially fossil fuels.
- We should make every effort to maximize energy production using any combination of solar, wind, geothermal and tidal power.
- We should make energy conservation a key component of our energy system.
- We need fully functional, clean and reliable public transportation systems in every urban area in the country, as well as between urban areas, through an affordable, reliable high-speed rail system.
- Everyone should have free or cheap high-speed access to the Internet, to maximize educational opportunities.
- Everyone should have free or cheap access to a telephone line.
- We should understand that not everything is a “free market” and we should nationalize those industries that have become necessary elements to maintaining quality of life, but which have ceased to act as a “free market.”
- Everything we manufacture and/or consume should be made from sustainable and/or renewable materials whenever possible.
- All commerce should be conducted with an eye on maximum environmental benefit.
- All companies whose business conduct results in environmental damage should be responsible for all costs associated with the cleanup.
- Consumers should receive at least as much protection from businesses as businesses receive from consumers.
- The government is mandated by the Constitution to regulate commerce to make it fair for all players within that system, from large corporations to small corporations to sole proprietors and, especially, consumers.
- All corporations, large and small, should be required to comport to strict ethical requirements that put the public interest at a level equal to or above their stockholders’ interests or their own.
- The government should invest, not spend, meaning that every dollar used by government should be evaluated for its benefit to society as a whole, not to the profits of a few.
- Our approach to all drugs, both illegal and legal, should maximize access to treatment and minimize the negative effects on individuals and families.
- All politicians should understand that it is OUR government, not theirs, and that they have to act honorably in the conduct of their office.
- Campaign finance laws should allow every individual to express support for his or her favorite candidate or issue, but that support should never be marginalized by any other entity.
- No one person or group has more rights than any other person or group, regardless of the size of their bank account.
- No one person or group should have more influence over the electoral system, regardless of the size of their bank account.
- All parties in all political campaigns should be required to maintain the highest ethical standards at all times, from the moment they decide to run, until they leave public service..
- All lobbyists should be held to the highest possible ethical standards and everything they do should be overseen by an impartial third party representing the people.
- Everyone is entitled to a presumption of innocence and a public trial.
- The government always has to prove guilt; no individual should ever have to prove innocence.
- The United States should never, ever start a war.
- The United States should never mistreat anyone in its care, including prisoners of war.
- The United States should promote peace and democracy everywhere, but it shouldn’t dictate terms to any other country.
Again, if we could adopt these universally, we would have just about every reasonable American on our side all of the time, which means we could dominate politically. And that has to be our goal, don’t you think?
Who or what is American Elect and who (or what, snark snark) is on their board? I answered that back in July here.
Can they draw votes from Dems or Republicans? Both. Or neither. Or one. Or the other. Americans Elect says that by June, they’ll choose a presidential and vice presidential nominee who, by the way, can’t come from the same party.
And guess what? They don’t have to tell us who their donors are.
But there’s likely to also be a wild card in this election. Americans Elect, a well-funded “virtual third party,” plans to put a centrist presidential candidate on the ballot in all 50 states, and while he or she is unlikely to win the presidential election, the presence of a third candidate could still have a major impact on the outcome. […]
The group plans to hold a national primary election on the Internet — a mass-participation exercise that anyone can join. Candidates can nominate themselves, and voters can form committees to “draft” candidates, including politicians drawn from the major parties… Meanwhile, the group is collecting signatures to put itself on every state’s ballot; it says it has collected 1.6 million signatures in California, which should enable it to qualify. […]
One potential pitfall for this well-intended effort is the opportunity for mischief. Americans Elect, because of recent court rulings,doesn’t have to report who its donors are. Its organizers don’t intend it to become a spoiler, but Republicans or Democrats could flood it with money to try to make it one.
Another is that the group is aiming at the wrong target. Presidential elections aren’t the main source of polarization in American politics
No, that would be Congress with their whopping 9% approval rating.
So to recap, Americans Elect can accept all kinds of secret donations and pull votes from candidates.
Gee, they sound a lot like Karl Rove’s American Crossroads.
Here’s an idea: How about we address campaign finance reform to deal with all this mysterious money from mysterious donors and corporate sugar daddies?
In the face of Elizabeth Warren’s growing popularity in the race for Ted Kennedy’s senate seat which is currently occupied by Senator Scott Brown, The Massachusetts Republican Party is turning to desperate measures in an attempt to smear Warren and regain the initiative.
The Massachusetts Republican Party has produced another web video targeting Elizabeth Warren, tying her in unseemly fashion to the Occupy Wall Street protests — and titling the video “Matriarch of Mayhem.”
This follows a previous state GOP video, in which they went after Warren for a past statement about financial reform in which she figuratively said she had “thrown rocks” in the debate. And like the “Throw Rocks” video, the new “Matriarch of Mayhem” video uses a lot of blur effects, to create that special scary atmosphere.
If I were in charge of the Warren campaign, I would take this supposedly-unfortunate notion that she was the inspiration for the Occupy Wall Street protests and run with it. Being tied to the movement in such a way is not a bad thing, and only the Republicans are deluded enough think so.
By the way, the “Democratic pollster” which the video quotes, Doug Schoen, is a Fox News contributor and the man who recently misrepresented the results of his own poll to paint the protesters as raging anarchists.
Matriarch of Mayhem is a great name for a metal band though. I trust some aspiring artists in the region are trademarking the name right now.
[Yes, the poll used the term “scared.”]
Earlier this year, newly-elected Republican Gov. John Kasichsigned Senate Bill 5, arguing that limiting state employee unions’ ability to collectively bargain was part of the answer to state budget woes.
A similar effort in Wisconsin led to recall attempts against a slate of Republican state senators, only several of which succeeded.
Union leaders in Ohio put a repeal initiative on the November ballot, called Issue 2. A no vote would undo the law.
The issue tripped up Republican presidential candidate Mitt Romney this week. He dodged questions about whether he supported Republican efforts to sustain the law, even after visiting with volunteers driving the “yes” vote. On Wednesday he said he supported the legislation “110%.”
Asked about the matter Thursday, White House press secretary Jay Carney initially said only that Obama “strongly supports collective bargaining rights,” but that he did not “have a specific response” as to whether he supported a repeal of this initiative.
A White House spokesman later told the Huffington Post that the president “doesn’t support [a vote on] the ballot initiative in Ohio that would strip away fundamental collective bargaining rights.”
Mississippi anti-abortion activists want to define personhood as starting when a sperm fertilizes an egg. In that case, it would likely makeintrauterine devices (IUDs), which can prevent pregnancy by blocking the implantation of a fertilized egg in the uterus, illegal. (IUDs can also prevent sperm from fertilizing the egg in the first place, and IUDs with hormones also operate much like regular old birth control pills, but that doesn’t seem to matter to anti-abortion activists.)
The measure would also almost certainly make Plan B, also known as emergency contraception or the “morning after” pill, illegal. This high dose of hormones is used to prevent a woman from ovulating, but anti-abortion groups also insist that it can prevent a fertilized egg from implanting (despite the fact that scientists say there’s no evidence that’s the case). Needless to say, anti-abortion groups don’t like Plan Bvery much, either.
But the law could also introduce the possibility of banning any form of hormonal birth control. Generally, “the pill” (as well as the shot, the patch, and the ring) work by stopping ovulation. But some anti-abortion groups argue that there can be failures on that front, and the doses of hormone could possibly also work by stopping implantation should an egg and sperm still manage to meet up. […]
If this initiative passes, and fertilized eggs on their own have full legal rights, anything that could potentially block that implantation—something a woman’s body does naturally all the time—could be considered murder. Scientists say hormonal birth-control pills and the morning-after pill work primarily by preventing fertilization in the first place, but the outside possibility, never documented, that an egg could be fertilized anyway and blocked is enough for some pro-lifers. Indeed, at least one pro-Personhood doctor in Mississippi, Beverly McMillan, refused to prescribe the pill before retiring last year, writing, “I painfully agree that birth control pills do in fact cause abortions.”
This kind of slippery slope reasoning has long been a favorite rhetorical strategy of anti-abortion groups, and the personhood measure fits intothe strategy they’ve been using around the country for years. And as Carmon highlights, this isn’t an “unintended consequence” of a vague ballot measure—it’s part of the goal of extreme anti-abortion activists in the state.
AND IN OTHER NEWS…
Odds are you know some narcissists. Odds are they’re smart, confident and articulate. They make you laugh, they make you think; the first time you met, they probably charmed the pants off of you — perhaps even literally. The odds are also that that spell didn’t last.
It’s a deep and all but certain truth about narcissistic personalities that to meet them is to love them, but to know them well is to find them unbearable. Confidence quickly curdles into arrogance; smarts turn to smugness, charm turns to smarm. They will talk endlessly about themselves, but when they ask about you — well, never mind, because they never do.
Narcissism falls along the axis of what psychologists call personality disorders, one of a group that includes antisocial, dependent, histrionic, avoidant and borderline personalities. But by most measures, narcissism is one of the worst, if only because the narcissists themselves are so clueless.
Their coworkers dislike them — but it must be because they’re jealous. Their spouses divorce them — but it’s because they don’t understand them. Their friends abandon them — but only because they can’t keep up with them. It’s this obtuseness that makes narcissists so hard to treat. How, after all, can you address a problem if you have no idea that it even exists?
That, anyway, has always been the theory. But a recent study published in the Journal of Personality and Social Psychology (and wonderfully titled “You Probably Think This Paper’s About You”), is casting doubt on all that. According to the investigators, narcissists do think extraordinarily highly of themselves but, over time, realize that their friends — or former friends — don’t share that view. They know they’re seen as cocky, as conceited; they know, in short, that they’re obnoxious.
That’s both a hopeful sign (They get it!) and a hopeless one, since what insight narcissists do have fails to motivate them. All the same, the new study does provide a new perspective on this most intractable of conditions and offers some possible avenues for treatment too.
The research was conducted by a team of investigators headed by psychologist Erika Carlson at Washington University in St. Louis. She and her colleagues sought to understand three aspects of narcissism: self-perception, the perception of others and the the narcissists’ meta-perceptions — what they think others think about them.
The first part of the work explored the first impressions narcissists make on other people compared with the impressions of friends who know them well. The investigators recruited 201 student volunteers who did not know one another and had each of them fill out a questionnaire about what they thought the strong and weak parts of their personalities were, as well as a 40-item test called the Narcissistic Personality Inventory that asks them to agree or disagree with such paired statements as “I am a born leader” or “Leadership is a quality that takes a long time to develop” and “Sometimes I tell good stories” or “Everybody likes to hear my stories.”
The volunteers were then broken into pairs and set to chatting for several minutes, after which they filled out still more questionnaires about what they thought of their partner’s personality and what they believed their partner thought of theirs. Finally, all of the subjects gave the names of three friends who had known them for a long time; those people were contacted and answered other questions about the subjects’ personalities.
That produced an awful lot of data, but it yielded an awful lot of insights. In general, the people who ranked the highest on narcissistic traits (viewing themselves as especially intelligent, attractive and extroverted) also believed that new acquaintances saw them that way — and they were generally right.
More striking — and more surprising — they were aware that people who knew them well did not have quite the same high opinion of them. They acknowledged that those people would indeed see them as self-absorbed and disagreeable. But they also believed that their close friends continued to see them as funny, attractive, conscientious and intelligent, when in fact those friends — while they might once have had those impressions — no longer did.
“Narcissists were aware that close others saw them in more negative ways than new acquaintances,” the researchers wrote, “[but they] seemed to have limited insight into the ways their reputations differed.”
In the second part of the study, 110 students who had never met before and had enrolled in a personality class were broken into three-to-five-person study groups and, in addition to doing their coursework, also filled out similar questionnaires that gauged their narcissism, self-perception, meta-perception and their impressions of other group members. This was done on several occasions over the course of the semester.
Once again, the people who ranked highest in narcissism made sparkling first impressions and knew that they had. But by the end of the semester, they had lost a lot of their appeal in the eyes of others, and to an extent they knew that too. They correctly guessed that their classmates saw them as more arrogant, less agreeable and inclined to boast about or exaggerate their abilities. At the same time, their high opinion of themselves didn’t change — even as others’ opinion of them did.
“When asked to guess how they were seen,” the researchers wrote, “narcissists’ meta-perceptions were closer to social reality than were their self-perceptions.”
All of the narcissists in the first two parts of the research suffered from what is known as subclinical narcissism — or narcissism with a lowercase n. To study the capital-N cases, the investigators chose slightly older volunteers, doing their recruiting on an Air Force base, where they assembled a sample group of 154 men and 120 women and administered a more exhaustive 101-question survey that practicing psychologists use to diagnose clinical narcissistic conditions. The volunteers also filled out a computer survey, nominating other members of the sample group for specific narcissistic traits.
Yet again, the narcissists seemed aware that the other members of their peer group viewed them as arrogant or otherwise flawed, and yet again, that took them only so far. For example, non-narcissistic volunteers correctly perceived that the narcissists believe they “deserve special favors or treatment” and the narcissists knew that their peers felt that way about them. But they also tended to believe that they do deserve such deference. “These results revealed that some of the strongest correlations between narcissism scores and others’ perceptions were also the strongest correlations between narcissism scores and meta-perceptions,” the investigators wrote.
uch limited insight into their overweening self-regard does not portend great things for narcissists, even if it is a bit more self-awareness than scientists gave them credit for in the past. But Carlson and her colleagues do suggest some therapeutic routes. Since narcissism is fueled by a greater need to be admired than to be liked, psychologists might use that fact as a therapeutic lever — stressing to patients that being known as a narcissist will actually cause them to lose the respect and social status they crave.
That may or may not work, but if it doesn’t, it’s worth remembering what the psychologists are up against. The new paper opens with a quote from Frank Lloyd Wright, who famously said: “Early in life, I had to choose between honest arrogance and hypocritical humility. I chose honest arrogance and have seen no reason to change.” Such self-adoration may be forgivable in Wright, whose buildings have long since outlived his personal failings. Most of us — narcissists or not — will never achieve such fame. For us, it pays to take better care of our personal relationships, since those may be the greatest monuments we’ll leave behind.
This may come in handy, occasionally
QUOTE OF THE DAY:
Moral indignation is jealousy with a halo. ~H.G. Wells