Apr 17, 2008

More on Bernanke, Paulson Bonbons

Reconsidering the bonbons Bernanke and Paulson delivered in their testimony to the the Senate Committee on Banking, Housing, and Urban Affairs: Bernanke, Paulson and Christopher Cox, Chairman of the U.S. Securities and Exchange Commission all testified at the Valentine's Day meeting. Senator Christopher J. Dodd (D-CT) chairs that Committee. In his opening remarks, he lauded Bernanke:
I commend Fed Chairman Bernanke for taking an active role in addressing the weakness in our economy through injecting much-needed liquidity and cutting interest rates. I also am pleased that the Administration and the Congress were able to reach agreement on a stimulus package that provides some support for working families who are bearing the brunt of these difficult times.
As for Cox, Dodd said:
As for the SEC, I commend Chairman Cox for his oversight of the credit rating agencies and for enforcement efforts related to subprime-related cases.
To be fair, Dodd also said that
...more needs to be done to address the root cause of our economic problems. And, I say respectfully, that includes by the three agencies led by our witnesses today.
Aw, shucks, Chairman Dodd. Don't be so hard on these guys! Who thinks that Bernanke, Paulson or Cox would say that their work is finished? That the mess they made in banking, real estate and credit liquidity and corporate transparency has been cleaned up? With there now being a growing consensus that the steps they took to deal with the banking and recession crises are fundamentally flawed, we might all be better off if they decided their work was finished. They wouldn't do anything more to foul things up! But, I digress. The main topic of this post is dot connection, not ranting. Let's connect. No matter how you cut it, Connecticut is a rich state. According to the Census Bureau, it was in the top three in terms of median household incomes in 2006. By other criteria, it might be the richest state period. Incidentally, George Walker Bush (our 43rd US President) was born in New Haven on July 6, 1946. Parts of Connecticut are bedroom communities for mega-rich elites from Wall Street. The state also is home for a number of large corporations. Especially corporations in the finance industry. The major industries in Connecticut are insurance companies, along with helicopter and also submarine manufacturing. Naturally, the state is a site for class warfare, which the rich generally win:
Connecticut’s Tax Code: Tax the Poor & Middle Class More Than the Wealthy When all Connecticut taxes are totaled up, the study found that:
  • The state and local tax rate on the best off one percent of Connecticut families—with average incomes of $2.4 million—is 6.4% before accounting for the tax savings from federal itemized deductions. After the federal offset, the effective tax rate is only 4.4%.
  • The average tax rate on families in the middle of the income distribution—those earning between $37,000 and $60,000—is 10.4% before the federal offset and 9.5% after, more than double the effective rate the richest pay.
  • But the tax rate on the poorest Connecticut families—those earning less than $21,000—is the highest of all. At 10.3% it is nearly two and a half times the effective rate on the very wealthy.
This being the case, whom do you think the state's Senators are most likely to serve? Connecticut's Senators are Dodd and Joe Lieberman. The two of them have worked hand in glove with each other to deliver the pork in regard to industries like defense or insurance. Later we will be looking at some courageous journalism that might lead you to believe Lieberman is owned by the financial industry. For many years he has sponsored or surreptitiously amended legislation whose effect has been to decrease the transparency of corporate accounting. You might even be able to argue that legislation crafted and guided to fruition by him was largely responsible for debacles like Enron. That being so, one could further argue that he might have more responsibility for the destruction of middle class wealth than any other single government official in the last 60 years. But again, I am digressing. We'll get to Lieberman eventually. (Those of you who can't wait might Google: Lieberman Hillary Clinton sponsor. Lo and behold, bedfellows? Want weirder insight into these two, such as who is related to Angela Jolie? Check the Muckety.) Senator Dodd's committee has a broad jurisdiction over the operation of our nation's financial institutions, housing and mass transit programs. Whether it does its work well or badly, its activities have immense national significance. Unfortunately, Dodd and his committee have been sleeping through the real estate crisis, the banking crisis and the recession. The flattering Wikepedia article on Dodd's presidential bid is remarkable mostly for what is absent about his interests: Among descriptions of his passions for the usual political claptrap, there is no significant mention of his activities on the Banking Committee! The same is true on his website. Whoa! Senate Committee Chair leaves Committee accomplishments off resume? Even Mary Poppins would recognize this omission to be a red flag. Frugal Ben says, Connect the Dots! Dodd's committee is just as responsible for the destruction of middle class wealth as the industries it watches and the administration hacks who doze through their duties when they are not putting a fake face on things. So we have to ask why Dodd is so enamored of administration officials whose behavior has been so ineffective in regard to middle-class interests? Why doesn't he aggressively publicize his Banking Committee activities instead of relegating them to a shadow existence? What ties do the other members of his committee have to the industries they supposedly regulate? Above all, why did the established media give him a pass on his committee's actions when he ran for President and continue to give him a pass after he dropped from the campaign? Citizen journalists, are you out there? The country needs a spotlight on the Senate Banking Committee. What's the real story? Are they protecting us or the elites they claim to be regulating?

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