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William Black

William K. Black was a federal regulator during the Savings and Loan crisis and appears in Michael Moore's 'Capitalism: A Love Story'

December 10th, 2010 3:50 PM

The Effort to Claim That Economists Support Obama's Capitulation on Tax Cuts for the Wealthy

You know the administration is desperate when it creates a web page citing economists who support its capitulation on taxes.

The web page cites the support of five economists. Peter Cardillo, the Bank of America, Greg Mankiw, and Wells Fargo (are the second through fifth economists on Obama's list). Who are these supporters and why is the administration proud of their support? Cardillo is an economist for an investment firm, Avalon Partners. Avalon's web site states that it specializes in "wealth management" for "affluent investors...to meet the unique needs of high net worth individuals...." Yes, the wealthiest one-hundredth of one percent of Americans -- the truly, uniquely needy.

The administration's web site gives pride of placement to Avalon Partners' support of Obama's decision to support the extension of Bush's dramatic reduction in the taxes its ultra-wealthy clients will pay. That tax reduction will make Cardillo and his senior colleagues at Avalon Partners, themselves among the wealthiest Americans. Obama's capitulation on tax breaks for the richest one percent of Americans is worth tens of thousands of dollars personally to Cardillo and hundreds of millions of dollars to Avalon's clients. Mr. Cardillo does not support Obama's capitulation -- he rejoices in it.

Indeed, he has said in a recent interview that the reduction in taxes for the elites has helped fuel a "Santa Claus" rally in stocks. Obama played St. Nick for the wealthiest of Americans to the tune of tens of billions of dollars. The reasons that Cardillo supports the bill are obvious. The mystery is why Obama fails to realize that his support demonstrates why Obama's capitulation is so harmful to the nation. At a time when income inequality has reached record levels in modern America and crippled our democracy Obama has given in to bullies who made increased inequality their central goal.

Obama claims that he capitulated to the Republicans on taxes for the wealthiest in order to reduce unemployment. Here's what Cardillo said about Obama and unemployment just before the midterm elections:

"As far as corporate America hiring again it's basically dependent on what happens in Washington," says Peter Cardillo, chief economist at Avalon Partners in New York. "If the opposition party should gain enough seats to perhaps reverse the present administration's policies somewhat, then I think you'll see a big pickup in employment."

Obama has promoted the views of one of his most virulent opponents, who gloried in and profited from his and the Democrats' recent electoral and legislative defeats. Simultaneously, Obama launched another petulant attack on his strongest supporters. The administration's daily floggings will continue until morale improves among progressives. Generations of political scientists will marvel at this administration's self-destructive reflexes.

The Bank of America (BoA) is next on the administration's list of supporters. BoA's senior leadership will personally save millions of dollars in taxes and its wealthy clients will save billions of dollars in taxes because of Obama's decision to support the continuation of the Bush tax cuts for the wealthiest Americans. Their support for Obama's agreement to support extended tax cuts for the wealth should have warned Obama that he was making a mistake.

The Bank of America is one on the major funders of the Chamber of Commerce's war on financial regulation, the administration, and Democrats. The Bank of America is a perfect example of why the "three strikes" laws never apply to corporations. The Bank of America has run a massively unlawful foreclosure system based on perjured affidavits. It purchased two notorious financial institutions (Countrywide and Merrill Lynch) that were destroyed by policies of deliberately making and purchasing fraudulent "liar's" loans. The Bank of America has recently admitted to a widespread policy of defrauding states and localities. It even has an openly racist senior advisor in Germany who claims that the U.S. mortgage crisis was caused by outlawing "red lining" -- refusing to loan to blacks. It's not often that senior bank officials openly stress their nostalgia for the good ole' days of open racism. I've repeatedly brought this racist to the attention of the administration and BoA in the U.S. and in Germany without ever prompting even a response. My colleague Randy Wray and I have explained why BoA should be placed in receivership for its serial crimes and unsafe and unsound practices. Instead, the Obama administration prominently displays its endorsement.

Professor Mankiw, Chairman of George W. Bush's Council of Economic Advisors, is the next supporter that the Obama administration highlights. Mankiw was a leading apologist for the Bush tax cuts for the wealthy. He even defends the wealthy when they become wealthy through fraud. He infamously responded to George Akerlof and Paul Romer's paper demonstrating the dominant role that "looting" by S&L CEOs (accounting control fraud) played in causing the debacle, by opining that "it would be irrational for operators of the savings and loans not to loot." Mankiw blamed the S&L debacle on excessive regulation and was one of the architects of the de-supervision that permitted the current crisis to occur.

The administration thinks it says good things that the Bush administration's principal apologist for its tax cuts for the wealthy supports Obama's agreement to extend those tax cuts. The mind boggles.

Wells Fargo is next on Obama's roll of honor. Wells Fargo's senior leaders, like BoA and Avalon Partners' senior leaders, have personal and professional interests in supporting tax cuts for the wealthy. Wells Fargo is overjoyed by Obama's agreement to extend tax cuts for the wealthy. All of these endorsements simply emphasize the extent to which Obama was taken to the cleaners. It's bad to be bullied, but it's pathetic to cite the testimonials of those that got even wealthier through the bullies' triumph as evidence of your success.

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