the roof, the roof is on fire

The Roof, The Roof is on Fire
By David Glenn Cox

Fed Chairman Ben Bernanke spoke with Congress today and his message was as precise as it was clear. It was given in his normal demeanor of calm intellectualism but to those of us trying to read the tea leaves while in the cup of the real world the message was one of panic. Again and again Bernanke was asked by the members of Congress wholly partisan questions and again and again his message was, quickly! Now! Quickly! His message was in effect that the Federal reserve is losing or has lost the ability to mend the current situation.

Rate cuts alone won’t cure the illness, it is like the story of the man at the UN standing in front of the elevator door, As it opens before him stands Pol Pot, Adolf Hitler and Dick Chenney. The man reaches for his pistol but only has two bullets in his gun, when asked by the media later what he did in such a situation he replied, “I shot Chenney twice.” Bernanke is in a similar situation, the problems that the economy face are multiple and different in their nature. Bernanke is admitting that he needs help, that rate cuts alone, his only two bullets, won’t save us.

Someday, the textbooks will look at our current situation and ask, did democracy fail capitalism or did capitalism fail democracy? The Congressional battle lines are already being drawn. The Republican’s feel certain that making President Bush’s tax cuts permanent and cutting rates on investment and increasing depreciation for business they can create a utopia. The Democrats to their credit are calling for tax rebates and credits for the middle class. Bernanke has to pretend to be impartial but listening to his message it is clear that he agrees with them, that time is of the essence. Bernanke mentions how long it would take for the treasury to gear up to mail out the checks while the Republicans regale us with the virtues of tax cuts that aren’t due to expire for another three years.

A funny thing happened on the way to the vomitoriam, Hillary proposed a 70 billion-dollar stimulus package that the Republican’s decried as excessive and irresponsible. Obama offers even a bigger stimulus package but when Bernanke suggests some where in the range of one hundred billion the Republican’s counter, “In a fourteen trillion dollar economy isn’t a hundred billion too small to have any real effect?” When George W. Bush suggested the exact same remedy in 2001 the Republican Congress thought it was a great idea!

But today they bemoan that the rebates really didn’t work at all, that a third went to pay credit card debt, a third went into the banks and only a third was actually spent in the economy. They refuse to hear Bernanke’s warning, they refuse to understand that what Hillary plans or Obama plans to do about the economy are moot points. The roof is on fire; we can’t wait for a year for the new fire department to show up. Yet again and again, Bernanke was peppered by the Republican members about long-term growth or the value of tax cuts. They are saying in effect, “We don’t need no water let the motherfucker burn, burn motherfucker burn.”

The President will weigh in later today by a phone conference, so let me prognosticate what he will offer, tax cuts, tax cuts and more tax cuts so says Nostradomus. Both sides promise quick action but election year politics will prevent it. History has shown how quick this President is negotiate with Congress in good faith and even more so how recalcitrant he is to do anything to help the average working American. This will be George Bush’s scorched earth policy; his parting shot towards his enemy’s both real and imagined.

The Democrats are not innocent here and will not be let off the hook by me. They have given this President a free ride for almost his entire second term. Had articles of impeachment been brought forward when they should have been brought forward we would be living in a different country today. Had the President managed to retain his office he would be a different animal, paper-trained and better behaved. But now, it is too late, too late to stop him. Too late to train him and too late to restrain him, ask yourself, what does George Bush gain by working with this Congress?

The Republicans are headed for defeat in November, that’s a given. George W. Bush will be retired from public life, so what does he stand to lose? The Republicans in Congress by their remarks today make it clear they are prepared to defend the Alamo of tax cuts to the last man. They wish to frame the economic issues as cracks or flaws in an otherwise healthy economy. That a tweak here or a bump there will make everything all right, just one more tax cut to achieve nirvana.

But what we face is an economy that is no longer working for the benefit of the American people. So much talk is focused on the sub prime mortgage that we ignore that the problem is the inability to make the payments. Workers wages are in decline, they can’t pay their credit card debts either. The number one item stolen from Wal-Mart the nations largest retailer is food! The media focus on the trivial and ignore the obvious, as long as the Presidential candidates gave policy statements to think tanks and lobbying groups, Iraq was the number one issue. When however the candidates hit the trail and met with the people, what then rapidly became the issue dejure?

Neither a tweak nor a bump is what is called for but an about face. An understanding that the long term health of the economy is wholly dependent on the economic health of the American people. Free trade, so called, has brought only poverty to America. The continuance or expansion of it will bring only more. The uncontrolled printing of money by the treasury to pay for tax cuts, voluntary wars and a bloated military will bring weakness not strength. The addiction to foreign petroleum and the refusal of the American government to face up to it is an abandonment of the people to the mercenary whims of global speculators. What Bernanke said today to Congress is reminiscent, reminectent of what another politician once warned, “Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated.”

“True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.” (FDR 1932)

His suggestion was for a New Deal and I asked my son if he understood what he meant by a New Deal? “Sure, a new start, a chance to start over.”