America for sale
Let's review some news from the first half of the week.
Monday: The trial of President Trump's former campaign chairman Paul Manafort revealed jaw-dropping crimes, and continues to do so. His key lieutenant in his former lobbying business, Rick Gates, testified that they committed multiple instances of bank and tax fraud together.
Also on Monday, The Associated Press reported that as part of a quasi-genocidal, U.S.-supported war in Yemen, Saudi Arabia is providing quiet assistance to al Qaeda, including funding, arming, and straight-up recruiting jihadis into their coalition. What's more, America was in on it: "Key participants in the pacts said the U.S. was aware of the arrangements and held off on any drone strikes."
Tuesday: Former business partners of Secretary of Commerce Wilbur Ross (who has been overtly profiting from his office) filed suit alleging he stole $123 million from the business he used to run. Later, ProPublica published an astounding report detailing how the Department of Veterans Affairs is being run by a cabal of Mar-a-Lago members, bizarrely including Marvel Entertainment CEO Ike Perlmutter, none of whom are public officials of any kind or even veterans.
Wednesday: Rep. Chris Collins (R-N.Y.) was arrested by the FBI for insider trading — which was allegedly so blatant reporters overheard him boasting about it in the Capitol itself. Meanwhile it turns out New York Gov. Andrew Cuomo (D) is turning his regulatory powers seemingly only on local news outlets that ask him tough questions.
This is modern American politics, folks: rotten to its very marrow. Corruption is eating the United States alive. As the Numidian King Jugurtha supposedly said of the Roman Republic: "Yonder lies a city put up for sale, and its days are numbered if it finds a buyer."
Let's walk through a few of the major sellers.
The foreign policy "Blob"
In Ben Rhodes' famous phrase, the "Blob" refers to the D.C. foreign policy establishment and its mystifying habit of constantly arguing for the use of military force, usually in the Middle East, and often before the charred pile of corpses from their last failed war of aggression have even stopped smoldering.
The Saudi example, which might seem like an outlier on the above list, is actually quite instructive in how money fuels the Blob. As John R. MacArthur wrote back in 2007, America had long tolerated the brutal and repressive Saudi monarchy — and sold it enormous quantities of weapons — in return for its toleration of American military hegemony and, more importantly, its oil sales. Cheap gas was regarded as necessary for the American way of life, and therefore we could look past just about anything.
Yet from about the 1980s onward, the Saudi alliance has made less and less sense. For one, oil-based energy has become a large and increasing liability for any possible conception of the American national interest. Climate change is a clear and present danger to American security — a fact broadly recognized even within the U.S. military. And with the rise of fracking technology starting around 2010, Saudi oil imports have become less and less necessary to maintain current supplies in any case. And now the Saudis are supporting literally al Qaeda. What gives?
The truth is that today, American foreign policy is to a great degree dictated by who can offer the largest bribes.
The Saudis have spent billions of dollars of their vast cash hoard hiring various well-connected lobbying firms with ties to both parties. This effort was dramatically scaled up last year, in concert with the rise of the new Saudi crown prince, Mohammed bin Salman. He ruthlessly consolidated his power in a sort of thinly-disguised palace coup in late 2017, eliminating most contenders for power while claiming to be simply rooting out corruption (somehow his $500 million personal yacht escaped notice). He then undertook some token liberal reforms, allowing women to drive, opening some movie theaters, and holding a couple of concerts. In the background, of course, violent repression of human rights activists continued or even accelerated.
Then bin Salman went on a grand tour of the United States, trying to sell his liberal reformer shtick.
The awesome rottenness of the American elite was well demonstrated by their response to this transparent fraud. A veritable parade of politicians, bigshot media figures, and various businessmen swallowed bin Salman's story hook, line, and sinker. It wasn't just President Trump and various other Republicans — though the president has been a loyal Saudi stooge ever since they put his face up on a fancy hotel — but also many centrists and liberals. Bin Salman got cordial meetings with Bill and Hillary Clinton, Mike Bloomberg, Bill Gates, Jeff Bezos, Elon Musk, and sundry other Big Tech CEOs. David Ignatius in The Washington Post, Thomas Friedman in The New York Times, and Jeffrey Goldberg in The Atlantic all gave him extensive and credulous coverage.
Of course, that is only one of many examples of the Blob's corruption. Qatar, Israel, Morocco, the U.A.E., Kazakhstan, and many other countries have purchased American influence or toleration by spreading money around Washington, D.C. Corrupt Investor-State Dispute Settlement trade deals have led the U.S. to sign away a huge chunk of its economic sovereignty to international corporations. Defense contractors create an enormous bias in favor of imperial aggression overseas, benefiting themselves while costing the nation as a whole trillions in war spending. And so on.
The Republican Party
The Trump administration is so saturated with corruption that it would take several books to describe it all in detail. Aside from Ross, there's Treasury Secretary Steven Mnuchin, former Health and Human Services Secretary Tom Price, and former EPA Administrator Scott Pruitt wildly abusing their powers of office for personal gain, including millions of dollars in government-funded flights. And Trump himself is directly using the presidency to enrich his vast business empire.
Then there is the recent Republican tax bill, which not only stuffed hundreds of billions of dollars directly into the Sarlacc maw of the top 1 percent as a direct payoff for campaign donations, but also personally benefited most members of Congress who voted for it. Sen. Bob Corker (R-Tenn.) seemingly got a personal kickback in the form of tax benefits for real estate (one of his major assets) for his vote.
But there is also Russiagate, the unfolding drama over the extent of the Trump campaign's admitted collaboration with Russian electoral espionage in 2016 (which is a crime) — and the possibility that Vladimir Putin has compromising information on the president.
Russia is the proximate main actor here. But at bottom, this is a story about American corruption. The Russians learned it's trivially easy to buy or suborn the American political establishment, particularly on the right, and perhaps even turn the vast power of the American state to their own devices. In a democracy, authority should be derived from the consent of the governed, but it turns out the Republican Party — in between purple-faced shrieks about defending the Constitution from liberal tyranny — will absolutely forsake the most elementary American political principles in a heartbeat for partisan advantage.
Russiagate is a story about a criminal-riddled presidential campaign that was positively eager to trade foreign policy favors for hacked oppo research from a foreign power; a story of a political party leadership that laughed over the idea behind closed doors and successfully intimidated the incumbent government from discussing the story fully; and a story of a party electorate that has fed on bilious hatred for liberals and nutball conspiracy theories for so long they have completely lost sight of basic democratic values.
This about sums up the Republican party right now. pic.twitter.com/Kh1G3QocZD
— Noah Smith (@Noahpinion) August 5, 2018
The Democratic Party
Before Democrats get too self-righteous about Trump and his cronies, let's consider the Great Recession and the ensuing weak recovery, which has left the United States something like $3 trillion below the 1945-2007 growth trend (and fueled the rise of right-wing extremism around the globe). As Frank Rich writes, we are still living today with the devastating consequence of this crisis — an economic anchor chain that has inaugurated an age of anxiety, hopelessness, and despair.
Now, Republicans refusing any kind of stimulus or investment package after they took the House in 2010 — indeed, actually demanding economy-crushing austerity — is one major culprit here.
But there were three gigantic and totally avoidable policy disasters committed by Democrats and the Obama administration when they had big congressional majorities in 2009-10, which helped lock in our current economy of weak growth, stagnant wages, and enormous corporate profits. The first was lowballing the Recovery Act stimulus package, and making it about one-third tax cuts in a moronic attempt to get Republican votes. To be fair, that was mainly an error of political judgment.
But the second two disasters were more or less straight-up corruption.
First was failing to use the tremendous leverage granted by the bank bailout to help the American citizenry. Remember, at this time the government owned multiple important financial institutions, like the world's largest insurer AIG. For years, the rest of the financial system was utterly dependent on government assistance (especially a hodgepodge of Federal Reserve programs that jammed trillions in credit into the financial system). But instead of using that leverage to, say, force the largest banks to break themselves up, or accept an aggressive financial reform package (instead of the milquetoast one they actually passed), or some other reform, the Obama administration just sold those companies back into the private market as soon as they possibly could. They didn't even prevent AIG employees from paying themselves outrageous bonuses after their epic management failure required a $184 billion bailout.
The third disaster was even worse: the foreclosure crisis. A big part of the bank bailout granted sweeping powers to help struggling homeowners caught in the financial storm. But the Obama administration used its homeowner assistance program to help the banks even more, by simply slowing the rate of foreclosures — to "foam the runway" for the banks, in then-Treasury Secretary Tim Geithner's infamous phrase. From 2010-11, it probably enabled foreclosures on net rather than stopping them.
And then, when it came to light that these foreclosures had been conducted mostly with forged papers, and the banks had whole floors of entry-level employees committing document fraud hundreds of times per day, Obama did not seize the opportunity to force them to help homeowners, as suggested by then-FDIC chief Sheila Bair. Instead this administration pushed through a wrist-slap fine whose headline figure was heavily inflated by including mortgage relief that would have been illegal to collect anyway. In the midst of perhaps the worst corporate crime spree in a century, the rate of white-collar prosecutions fell steadily to less than two-thirds of what it had been in the early Bush II years:
The foreclosure machine grinds on to this day, forgeries and all.
The banks were restored to health (and enormous profitability), while homeowners were left to drown. The result was that between 2007 and 2016, the average wealth of the bottom 99 percent decreased by $4,500, while the average wealth of the top 1 percent increased by $4.9 million.
This undoubtedly sharply worsened the Democrats' political carnage in the 2010 midterms. So why on Earth did they bend over backward to help the people who had caused the worst economic crisis in 80 years?
By far the most convincing answer can be found in the post-administration careers of key Obama officials. Former Federal Reserve Chairman Ben Bernanke (a Republican, but reappointed by Obama) is working for a hedge fund. Geithner is working for the absolutely odious private equity firm Warburg Pincus which makes its money by, among other things, tricking poor people into taking hugely high-interest loans.
Former chief of the Department of Justice's Criminal Division Lanny Breuer (who was instrumental in quashing proposed bank prosecutions) is back at law firm Covington & Burling, which specializes in corporate defense. So is former Attorney General Eric Holder (who testified before a congressional committee that banks had become too big to prosecute) — and they even held his office open for him while he was in public service, how nice. Other former Obama staffers are cashing out shilling for defense contractors, Uber, or Amazon. And Obama himself is giving buckraking speeches to financial firms for $400,000 a pop.
Now, Democratic Party corruption is not so blatant or egregious as the Republican variety. It tends to be more about cultural and social capture (and the associated head-spinning doublethink) than it is about sacks of cash being exchanged in a cynical quid pro quo. But at bottom, it is simply impossible to avoid drawing a straight line between Democrats failing to rein in a Black Death-level plague of corporate crime and later falling into the warm and lucrative embrace of that same corporate elite.
One way to summarize the various severe problems afflicting American society is that the government is barely even pretending to function on behalf of the voting public anymore. Part of that is ideological. But another large and growing part is corruption. Today's American elite by and large line their own pockets, or those of their ruling class cohort, instead of attempting to serve virtuously as representatives of the citizenry and the nation. It's an age of moral bankruptcy.
A country simply can't survive this level of corruption forever. The results in terms of citizen welfare speak for themselves. As the Ottoman Empire or Ancien Régime France discovered long ago, a nation which cannot clean up a thoroughly corrupt self-dealing elite will eventually fail. America needs fresh, virtuous leaders, and a great many people need to go to jail.