If You’re Not a Big Bank, Don’t Expect Bush to Help

by Tula Connell, Feb 29, 2008

With so much bad economic news piling up, it’s hard not to list a few of the more recent indicators that the U.S. economy is in trouble. Just in recent days, we’ve learned the following.

• Paychecks have been shrinking for 80 percent of the U.S. workforce since October. Wage earners aren’t seeing just skimpier raises and higher prices. Real weekly earnings are falling faster than hourly earnings because the length of the work week is being cut as the job market weakens.

• 1.4 million people have exhausted their 26 weeks of unemployment compensation, but are still actively trying to find work. As Elizabeth Schulte says at Counterpunch: That’s the population of San Francisco—times two.

• Only one in five people in working families attains middle class, according to a new report by the Center for Economic and Policy Research (CEPR).

• The cost of family health insurance has skyrocketed 78 percent since 2001.
  Meanwhile, the number of uninsured Americans has increased every year since President Bush took office, from 39.8 million in 2000 to a record high of 47 million in 2006.

• Some 8.8 million home owners—10.3 percent of all home owners—owe more on their homes than the homes are worth, according to Moody’s Economy.com. That’s the worst rate since the Depression.

• In December, revolving debt—an estimated 95 percent from credit cards—reached a record high of $943.5 billion, according to the Federal Reserve.

• Economic hard times fall hardest on African American and Latino workers. One in five African Americans and more than one-fourth of Hispanics don’t seek medical treatment because of the expense, and equal numbers are “very worried” about losing all health insurance coverage. For non-Hispanic whites, the numbers are 17 percent and 13 percent, respectively.

• Oil prices hit an all-time high this week, up to nearly barrel. The price of a gallon of gas is more than 110 percent higher than when Bush took office. (This is not an issue Bush worries about. As the Center for American Progress notes today, Bush has no clue about gas prices.)

• In 2007, the U.S. trade deficit with China worsened to a new record of $256 billion, clear evidence that China is reaping the benefits of unfair global trade at the expense of America’s working families.

Wow. And there’s still so much more to go….

The worsening economic data that are churning out nearly every day are not random occurrences isolated from each other, or even an unfortunate collision of events. They are the result of years of an extremist Republican ideology combined with 30+ years of mis-guided policies that have produced fundamental imbalances in our economy.

One of the tenets of that skewed vision involves removing government regulation necessary to prevent corporate excess. As economic blogger guru and self-described pro-capitalist Bonddad puts it:

There will always be a debate about the need and extent of regulation. This debate is healthy; it should prevent one side from pushing too far against the other. However, as the financial system continues to experience a high amount of turmoil, it is clear that deregulation has exceeded the “too much of a burden on business” argument. Instead, too little regulation has broken the economy.

In his series, “The Society of the Owned,” blogger Terrance Heath points out how the Bush administration blocked states’ efforts to help subprime borrowers. Heath quotes from an op-ed by New York Gov. Eliot Spitzer who describes how officials in 49 other states stepped in to stop predatory lending practices, the Bush administration stepped in to stop states from taking any such action. According to Spitzer:

In 2003, during the height of the predatory lending crisis, the OCC [Office of the Comptroller of the Country] invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But as Bonddad points out, when you give Big Business what it wants—less regulation—corporations “screw up and come to the government hat in hand.” Per the The New York Times:

Over the last two decades, few industries have lobbied more ferociously or effectively than banks to get the government out of its business and to obtain freer rein for “financial innovation.” But as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives for an epic government rescue plan is suddenly coming into fashion.

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government—now that it is in trouble.

But don’t expect the same for consumers. This week Bush, Fed Chairman Ben Bernanke and others in the administration acknowledged the economy isn’t too hot, but stressed again how they opposed taking actions to help homeowners and consumers.

We’re not big banks, after all.

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