Entries in jeb bush (3)


The American Hunger Games:The Six Top GOP Candidates, Economic Policies And Panem 2016 

This piece originally appeared on TomDispatch.

Fact: too many Republican candidates are clogging the political scene. Perhaps what’s needed is an American Hunger Games to cut the field to size. Each candidate could enter the wilderness with one weapon and one undocumented worker and see who wins. Unlike in the fictional Hunger Games for which contestants were plucked from 13 struggling, drab districts in the dystopian country of Panem, in the GOP version, everyone already lives in the Capitol. (Okay, Marco Rubio lives just outside it but is about to enter, and Donald Trump like some gilded President Snow inhabits a universe all his own with accommodations and ego to match.)

The six candidates chosen here (based on composite polling) have remarkably similar, unoriginal, inequality-inducing, trickle-down economic recommendations for the country: reduce taxes (mostly on those who don’t need it), “grow” the economy like a sprouting weed, balance the budget by cutting as yet not-delineated social programs, overthrow Obama’s health-care legacy without breaking up the insurance companies, and (yawn)... well, you get the idea. If these six contenders were indeed Hunger Games tributes, their skills in the American political wilderness would run this way: Ben Carson inspires confusion; Marco Rubio conveys exaggerated humility; Ted Cruz exudes scorn; Jeb Bush can obliterate his personality at a whim; and Carly Fiorina’s sternness could slice granite. This leaves Donald Trump, endowed with the ultimate skill: self-promotion. As a tribute, he claims to believe that all our problems stem from China and Mexico, as well as Muslim terrorists and refugees (more or less the same thing, of course), and at present he’s leading the Games.


When it comes to economic policy, it seems as if none of them will ever make it out of the Capitol and into the actual world of American reality.  Like Hillary Clinton, blessed by Wall Street’s apparently undying gratitude for her 9/11 heroism, none of the Republican contestants have outlined a plan of any sort to deal with, no less break the financial stronghold of the big banks on our world or reduce disproportionate corporate power over the economy, though in a crisis Cruz would “absolutely not” bail them out again.   Stumbling around in the wilderness, Carson at least offered a series of disjointed, semi-incomprehensible financial suggestions during the last Republican “debate,” when asked why he wouldn’t break banks up. "I don't want to go in and tear anybody down,” he said. “I mean that doesn't help us, but what does help us is to stop tinkering around the edges and fix the problem."

Rubio, already in top Hunger Games form, swears that it’s recent regulations (not legacy elite decisions) that did the dirty deed. “The government made [the banks] big by adding thousands and thousands of pages of regulations," he saidof Dodd-Frank legislation (which doesn’t actually alter Wall Street structurally in any way). In fact, in recent decades every major power grab or consolidation in American business, from banks to energy companies, resulted from bipartisan deregulation.

None of these big-money-backed candidates seem particularly concerned that another economic crisis could ever cripple the country, or have evidently even noticed that most Americans have yet to experience the present “recovery.”  None seem to realize that when the Federal Reserve winds down its cheap money policy and banks and companies are left to fend for themselves, more economic hell could break loose in the style of the 2007-2008 meltdown. Jeb Bush recently summed up the general 2016 Republican position on the economy in a single what-me-worry-style sentence: “We shouldn't have another financial crisis.” ‘Nuff said.

In the 2012 presidential election, Mitt Romney’s chances dwindled after hedisparaged 47% of the country as so many leeches. Today’s Hunger Gamers have learned from his experience. Optics spell opportunity, so as a group they’re shuffling the usual Republican-brand tax cuts for corporations and the wealthy in with selective recognition of the broader population and promises to kill all loopholes in some future utopian tax bill. None of them, of course, would consider raising the minimum wage to put more money in the pockets of workers before tax-time hits. Even old Henry Ford knew the power of wages when, early in the last century, he strengthened his car empire by doubling the then-prevailing minimum wage for his workers to $5 a day -- enough for them not only to save up and buy his Model-Ts, but also boost productivity.

The present set of Hunger Gamers could invoke Republican President Teddy Roosevelt’s trust-busting ire, or President Dwight D. Eisenhower’s willingness to fund vast national construction projects, or even (to reach into the distant past) President Herbert Hoover’s initial attempts to pass what became, under Democrat Franklin Delano Roosevelt, the 1933 Glass-Steagall Act that separated deposit-taking from speculation at banks. But to be realistic, none of them belong to the Republican Party as it once existed.  They all live in an American Panem and so feel no compunctions about promoting the idea that corporations contributing ever less to the federal till would Make America Great Again.

Now, let’s send those six candidates into that wilderness, weapons in hand, one at a time, and while we’re at it, examine their minor differences by checking out their campaign websites to see what kind of games we can expect in a coming Republican era of “good times.”

Ben Carson

If you look through the index of Ben Carson's latest bestseller, A More Perfect Union, you won’t even find the words “economy,” “banks,” or “Wall Street.”  Instead, his campaign slogan “Heal, Inspire, Revive,” could headline a yoga retreat. His position as the Republican co-frontrunner or runner-up (depending on which polls you look at) relies on his soft-spoken, non-politician persona, not his vague economic ideas that flash by in a chameleon-like fashion.

Yes, he was a brilliant neurosurgeon, but the tenacity and skills required to become a gifted medical practitioner have not translated well into presidential-style economic policies.  To the extent that he has a policy at all, it’s a shopworn version of the twenty-first-century Republican usuals: ratifying a balanced budget amendment to the Constitution “to restore fiscal responsibility,” introducing a flat tax, not raising the minimum wage, yada, yada, yada.  In a Washington Post op-ed last year, he recounted his mother’s days as a “domestic in the homes of wealthy people who were generous to her” and would slip young Carson and his brother “significant monetary incentives” in return for good grades. One even loaned him a luxury convertible. With such employers -- and the incredibly rich are a well-known generous bunch, at least when it comes to supporting Republican presidential candidates (just 158 families have contributed more than half the money to this election so far, mostly to Republicans) -- who needs a government-declared minimum wage?

Regarding taxes, Carson considers the 74,000-page tax code “an abomination.” And who would argue otherwise? But like his various opponents, he's not about to point out that it was largely crafted by the representatives of mega-corporations, not Wal-Mart workers at meet-ups with senators. He’s for a flat tax of 10% with no exemptions for the poor, based on biblical economics 101. Maybe people who don’t produce bumper crops should just pray for a better lot.

He would conveniently cut the official corporate tax rate from 35% (the average effective tax rate is 27.9% but the biggest, brightest companies don’t even approach that amount) to between 15% and 20%, the definition of corporate manna from heaven.  He would also allow companies to bring their foreign profits back to the U.S. completely tax-free if they would even... pretty, pretty please... consider allocating 10% of them to “finance enterprise zones” in major cities. And so it goes in Carsonland.

Best bet on his campaign website: A $25 bumper sticker that says #IAMACHRISTIAN, proof that he’s eager to channel his inner evangelical Katniss.

Donald Trump

Trump actually brought up President Dwight Eisenhower recently, but only for Operation Wetback, his grim Mexican immigrant deportation program. No I-like-Ike mention was made of his funding of the interstate highway system or the way he strengthened banking regulations.

The Donald lists five core positions on his site, including the two economic pillars of his campaign: “U.S.-China trade reform” and “tax reform,” both of which would, of course, “make America great again.” This may already sound a bit repetitively familiar to you, but he wants to reduce the corporate tax rate to 15% because it “would be 10 percentage points below China’s and 20 points below our current burdensome rate that pushes companies and jobs offshore.”  Given that our biggest companies already pay far less than that “burdensome” rate, can there be any question that lowering it further would produce more generous CEOs and slay dreaded China at the same time?

Like President Snow, Trump would start aggressively and only get more so, economically speaking. He would “attack” the national debt and deficit by eliminating government waste, fraud, and abuse, and “grow” the economy xenophobically by doing in local Mexicans and distant Chinese, and all of this cutting and slashing would, like a Chia Pet, make the economy sprout even as tax revenues were savaged.  Or, even if it isn’t one of his five core positions, he could pull a genuine Snow and get rid of old-fashioned-style government, leaving Americans officially beholden to an oligarch.

In another piece of (black) magic, his campaign website assures readers that cutting the deficit and reducing our debt would also stop China from “blackmail[ing] us with our own Treasury bonds.” No matter that China actually lent us money to run our government and bolster our financial system, and that a thank-you note might be in order (on paper made in China, of course).

When it comes to tax reform, Trump’s “populist” program would remove 75 million households from the income tax rolls and provide them, so he claims, with a simple one-page form to send the IRS, saying “I win.”  Though he would cut the current seven tax brackets to four -- 0%, 10%, 20%, and 25% -- it’s his 15% corporate tax rate that trumps the field. Rubio would only chop it to 25%, Bush to 20%, Cruz to 16%, and Carson... who knows? Various estimates suggest that Trump’s plan would lead to a staggering federal revenue loss (so lucky for us that, in a Trump presidency, the rich would undoubtedly be so grateful that their generosity would soar beyond imagining). The nonpartisan Citizens for Tax Justice computed the cost of his plan at $12 trillion over 10 years.  So don’t expect any Eisenhower-esque national building campaigns (other than that “beautiful” wall on the Mexican border).

Best gimmick on his campaign website: A $15 Trump dog sweater modeled bythe saddest damn wiener dog ever. Perhaps its mother was a deported Chihuahua.

Marco Rubio

Rubio’s slogan “a new American century” couldn’t be grander, perhaps to compensate for the lackluster version of economic policy at his campaign website.  It’s certainly not the sort of thing you’d expect from someone aspiring to be president of the world’s largest economy. Despite that, rest assured that he’s had economics and success on his mind 24/7.  After all, Goldman Sachs is now his top contributor and his super PACs are on a run, too, including the rap-inspired “Baby Got Pac” just launched by multimillionaire John Jordan.

And in true Hunger Games fashion -- when the “odds” head in a tribute’s favor, the patrons and gifts begin rolling in -- Rubio just bagged Republican mega-donor billionaire Frank VanderSloot. Mitt Romney’s former national finance co-chairman, VanderSloot joins a growing roster of Rubio billionaires, including hedge-fund moguls Paul Singer and Cliff Asness.

“Marco Rubio is the brightest and most capable candidate," wrote VanderSloot of his new political buddy. Of the others he and his brain trust considered, headded, "Jeb simply does not have the leadership skills necessary to unite the people behind him"; Carson lacks “the international knowledge or skill set"; Cruz and Trump are “simply not electable in a general election" (no billionaire-envy there); and Fiorina, his second choice, “simply isn’t resonating with the voters.”

Rubio’s tax plan, the “cornerstone” of his economic policy, would -- you won’t be surprised to learn -- reduce the number of tax brackets from seven to three and eliminate taxes in ways particularly beneficial to the billionaire (especially hedge-fund billionaire) class, including the estate tax and taxes on capital gains and dividends. For the broad population, Rubio includes family tax cuts. According to an analysis by the Tax Policy Center, his plan would be a bargain compared to Trump’s, costing federal government coffers a mere $2.4 trillion or more in receipts over the next decade. As a byproduct, his program is essentially guaranteed to spark a new round of financial speculation, but don’t for a second let the 2007-2008 meltdown cross your mind since, as every Republican knows, with a Marco Rubio, Donald Trump, or Ben Carson in the Oval Office that can’t happen.

Best gimmick on his campaign website: You can “fall into campaign season” by ordering a “Marco Polo” made-in-the-USA shirt for $48 in patriotic red, white, or blue naturally! For a mere $500 extra, you can personally have the honor of buying Rubio a “plane ticket” (perhaps to meet and greet his next billionaire).

Ted Cruz

The Cruz campaign website offers a hodge-podge of semi-incoherent economic salesmanship. His tax plan, or what he likes to call (without the slightest justification) the “next American revolution,” promises to “reignite growth in our economy.” His “simple flat tax” (yep, another of those!) would abolish the Internal Revenue Service as well.  Personal income tax brackets would go from seven to... count ‘em!... one at a 10% rate across the board and the corporate income tax would be replaced by a flat tax of 16%. And it should be taken for granted that the American economy would soar into the stratosphere!

Cruz’s tax code would be so “simple with a capital-S” that it would make Donald Trump’s look complicated. A postcard or phone app would suffice for individual and family filings. There would be no tax on profits earned abroad and it almost goes without saying that Obamacare taxes would die a strangulated death. Loopholes for businesses would apparently go, too.

Cruz claims his simple flat tax will elevate the gross domestic product, increase wages by 12.2%, create nearly five million new jobs, and undoubtedly fill the world with unicorns.  It would also wipe out between $768 billion and $3.6 trillion in federal tax receipts over 10 years.

Best gimmick on his campaign website: For $55 you can get a bad-boy posterof Cruz sporting a Sons of Anarchy look (tattoos, cigarette in mouth, etc.) captioned “Blacklisted and Loving It.”

Jeb Bush

Jeb! has by far the sleekest web page. He and his donor entourage took the “presidential concept” seriously with a look that seems to have been stolen directly from “the Capitol” in the Hunger Games.

Its economic section excoriates the tax code for being “rigged with multiple carve-outs for favored industries.” He blasts Obama’s economic policies for leading to “low growth, crony capitalism, and easy debt.” Yet, under Jeb’s governorship, Florida's debt escalated from $15 billion to more than $23 billion. After his term, the housing-bubble that had inflated the state’s coffers burst big time, and Florida's economy under-performed much of the country during the financial crisis. While homeowners statewide went underwater, helanded a multi-million dollar consultancy gig with... gulp!... Lehman Brothers.

By now, you won’t be shocked to learn that Bush’s plan would cut tax brackets from seven to three: 28%, 25% and 10%, and that he would cut the corporate tax rate from 35% to 20%, five points below China’s. (These days, if you’re a Republican, you’ve got to stick it to China.)

While Jeb would not rein in Wall Street (for all the obvious and already well-documented reasons), right now it looks as if he’s not going to have a chance to not rein in anything.  While his PR team maintains “Jeb can fix it,” invigorating his wilting campaign will require more than a bow and arrow and a mockingbird.

Best gimmick on his campaign web page: “The Guaca Bowle” for $75because who doesn’t need one? (Bush family guac recipe not included.)

Carly Fiorina

Fiorina’s web page doesn’t offer a lot of economic anything. It’s more like a personality infomercial. For her official positions, you need to watch video clips of her TV appearances from CBS This Morning to late night talk shows and -- if you’re starting to get bored -- just imagine Stanley Tucci as Hunger Games host of festivities Caesar Flickerman narrating.

Fiorina calls for “zero-based budgeting” because “zero” sounds so much cleverer than “balanced” and touts ad nauseam a three-page tax plan (perhaps the current one in a microscopic font, since we don’t actually know the details). The repetition of simple concepts to the masses seems to be her modus operandi.

Best gimmick on the Carly for America Super PAC website: For only $26 you can get a “Hillary Who?” infant one-piece, the perfect gift for any Republican baby.

How Corporations Really Pay Taxes

Despite the prominence of tax cuts in the policies of the top six Republican candidates, even the venerable Brookings Institution found that they have a minimal effect on economic growth.  In addition, when you consider all the promised corporate cuts, you should know that corporations already don’t contribute much.

According to Citizens for Tax Justice, between 2008 and 2012, 26 of the 288 Fortune 500 firms (consistently profitable in those years) managed to pay nothing, nada, zero in federal income tax.  The 288 firms collectively paid an effective federal income tax rate of 19.4%, and a third of them paid an effective rate of less than 10%. Five companies -- Wells Fargo, AT&T, IBM, General Electric, and Verizon -- also bagged over $77 billion of the $364 billion in tax breaks doled out in those years. Extra jobs didn't follow. Think of this crew as the real winners of the American Hunger Games in this period.

For 2014, for instance, Goldman Sachs avoided forking over federal income taxes on almost half of its $6.8 billion in U.S. profits, paying an effective tax rate of 18.6%. Between 2010 and 2012, due to tax breaks associated with executive pay, Fortune 500 companies saved an extra $27 billion in federal and state taxes. That’s a lot of dosh to use for Super PAC support.

In 2012, the Democrats blasted candidate Mitt Romney’s tax plan as a giveaway to the rich. This time around, our six tributes-cum-candidates are taking no such chances.  They’re making sure to throw crumbs to the middle and working classes, even as they offer more caviar to the wealthy and corporations. Depending on the candidate and plan, the overall loss of national revenue will range from an estimated $1.6 trillion (even factoring in growth that may never happen) to $12 trillion, but will be a stunning amount.

Perhaps with such a field of candidates, the classic Hunger Games line will need to be adapted: “Let the games begin and may the oddity of it all be ever in your favor.” Certainly, there has never been a stranger or more unsettling Republican campaign for the presidential nomination or one more filled with economic balderdash and showmanship.  Of course, at some point in 2016, we’ll be at that moment when President Snow says to Katniss Everdeen, "Make no mistake, the game is coming to its end." One of these candidates or a rival Democrat will actually enter the Oval Office and when that happens, both parties will be left with guilt on their hands and all the promises that will have to be fulfilled to repay their super-rich supporters (Bernie aside). And that, of course, is when the real Hunger Games are likely to begin for most Americans.  Those of us in the outer districts can but hope for revolution.


Jeb! All In! The Bush Dynasty (And Banker Friends) Go For Round Three 

[This piece has been adapted and updated from my book All the Presidents' Bankers: The Hidden Alliances That Drive American Power, now out in paperback. An intro by TomDispatch is here.] 

It’s happening. As expected, dynastic politics is prevailing in campaign 2016. After a tease about as long as Hillary’s, Jeb Bush (aka Jeb!) officially announced his presidential bid last week. Ultimately, the two of them will fight it out for the White House, while the nation’s wealthiest influencers will back their ludicrously expensive gambit.

And here’s a hint: don’t bet on Jeb not to make it through the Republican gauntlet of 12 candidates (so far). After all, the really big money’s behind him. Last December, even though out of public office since 2007, he had captured the support of 73% of the Wall Street Journal’s “richest CEOs.” Though some have as yet sidestepped declarations of fealty, count on one thing: the big guns will fall into line. They know that, given his family connections, Jeb is their best path to the White House and they’re not going to blow that by propping up some Republican lightweight whose father and brother weren’t president, not when Hillary, with all her connections and dynastic power, will be the opponent. That said, in the Bush-Clinton battle to come, no matter who wins, the bankers and billionaires will emerge victorious.

The issue of political blood and family lines in Washington is not new. There have been four instances in our history in which presidents have been bonded by blood. Our second president John Adams and eighth president John Quincy Adams were father and son. Our ninth president William Henry Harrison and our 23rd president Benjamin Harrison were grandfather and grandson. Theodore and Franklin Delano Roosevelt were cousins. And then, of course, there were our 41st and 43rd presidents, George H.W. and George W.

If Jeb becomes the 45th president, it will be the first time that three administrations share the same blood and “dynastic” will have a new meaning in America.

The Bush Legacy

The Bush political-financial legacy began when President Ronald Reagan chose Jeb’s father, George H.W., as his vice president. Reagan was also the first president to choose a Wall Street CEO, Donald Regan, as Treasury secretary. Then-CEO of Merrill Lynch, he happened to be a Bush family friend. And talk about family tradition: once upon a time (in 1900, to be exact), Jeb’s great-grandfather, George Herbert Walker, founded G.W. Walker & Company. It was eventually acquired by -- you guessed it! -- Merrill Lynch, which was consumed by Bank of America at the height of the 2008 financial crisis.

That merger was pressed by, among others, George W. Bush’s Treasury Secretary (and former Goldman Sachs chairman and CEO), Hank Paulson. It helped John Thain, Paulson’s former number two at Goldman Sachs, who was by then Merrill Lynch’s CEO, out of a tight spot. Now chairman and CEO of CIT Group, Thain is also a prominent member of the Republican Party whosponsored high-ticket fundraisers for John McCain during his 2008 campaign. Expect him to be there for Jeb. Paulson endorsed Jeb for president on April 15th. That’s how these loops go.

As vice president, George H.W. co-ran a task force with Donald Regan dedicated to breaking down the constraints of the 1933 Glass-Steagall Act, so that Wall Street banks could become ever bigger and more complex. Once president, Bush promoted deregulation, while reconfirming Alan Greenspan, who did the same, as the chairman of the Federal Reserve. In 1999, after President Bill Clinton (Hillary!) finished the job that Bush had started by overseeing the repeal of Glass-Steagall, banks began merging like mad and engaging in increasingly risky and opaque practices that led to the financial crisis that came to a head in George W.’s presidency.  In other words, it’s a small world at the top.

The meaning of all this: no other GOP candidate has Jeb's kind of legacy political-financial power. Period. To grasp the interconnections between the Bush family and Wall Street that will put heft and piles of money behind his candidacy, however, it’s necessary to step back in time and see just how his family helped lead us to this moment of his.

Bush Wins

By the time George H.W. Bush became president on January 20, 1989, the economy was limping. Federal debt stood at $2.8 trillion. The savings and loan crisis had escalated. Still, his deregulatory financial policies remained in sync with those of the period’s most powerful bankers, notably Citicorp chairman John Reed, Chase (now JPMorgan Chase) Chairman Willard Butcher, JPMorgan chief Dennis Weatherstone, and Bank of America Chairman Tom Clausen.

With the economic odds stacked against him, Bush also remained surrounded by his most loyal, business-friendly companions in Washington, who either had tight relationships with Wall Street or came directly from there. In a preordained arrangement with President Reagan, Bush retained Nicholas Brady, the former chairman of the board of the blue-blood Wall Street investment bank Dillon, Read & Co., as Treasury secretary.

Their ties, first established on a tennis court, extended to Wall Street and back again. In 1977, after Bush had left the directorship of the CIA, Brady even offered him a position at Dillon, Read & Co. Though he didn’t accept, Bush later enlisted Brady to run his 1980 presidential campaign and suggested him as interim senator for New Jersey in 1982. The press dubbed Brady Bush’s “official confidant.”

The new president appointed another of his right-hand men, Richard Breeden (who had drafted a “Blueprint for Reform” of the banking industry as directed by a task force co-headed by Bush), as his assistant for issues analysis and later as head of the Securities and Exchange Commission (SEC). Then, on February 6, 1989, Bush unveiled his plan to rescue the ailing savings and loan (S&L) banks. Initial bailout estimates for 223 firms were put at $40 billion. It only took the Bush administration two weeks to raise that figure to $157 billion. On the offensive, Brady stressed that this proposal wasn’t a bailout. Instead, it represented “the fulfillment of the Federal Government’s commitment to depositors.”

A few months later, under Alan Greenspan’s Fed, JPMorgan Securities, the investment banking subsidiary of JPMorgan Chase, became the first bank subsidiary since the Great Depression to lead a corporate bond underwriting. Over the next decade, commercial banks would issue billions of dollars of corporate debt on behalf of energy and public utility companies as a result of Greenspan’s decision to open that door and Bush’s deregulatory stance in general. A chunk of it would implode in fraud and default after Bush’s son became president in 2001.

The S&L Blowout

The deregulation of the S&L industry between 1980 and 1982 had enabled those smaller banks, or thrifts -- focused on taking deposits and providing mortgages -- to compete with commercial banks for depositors and to invest that money (and money borrowed against it) in more speculative real estate ventures and junk bond securities. When those bets soured, the industry tanked. Between 1986 and 1989, 296 thrifts failed. An additional 747 would shut down between 1989 and 1995.

Among those, Silverado Banking went bankrupt in December 1988, costing taxpayers $1.3 billion. Neil Bush, George H.W.’s son, was on the board of directors at the time. He was accused of giving himself a loan from Silverado, but denied all wrongdoing.

George H.W.'s second son, Jeb Bush, had already been dragged through the headlines in late 1988 for his real estate relationship with Miguel Recarey Jr., a Cuban-American mogul who had been indicted on one charge of fraud and was suspected of racking up to $100 million worth of Medicare-related fraud charges.

Meanwhile, the president was crafting his bailout plan to stop the S&L bloodletting. On August 9, 1989, he signed the Financial Institution Reform, Recovery, and Enforcement Act, which proved a backdoor boon for the big commercial banks. Having helped stuff the S&Ls with toxic real estate products, they could now profit by selling the bonds that were constructed as part of the bailout plan, while the government subsidized the entire project. Within six years, the Resolution Trust Corporation and the Federal Savings and Loan Insurance Corporation had sold $519 billion worth of assets for 1,043 thrifts that had gone belly up. Key Wall Street banks were involved in distributing those assets and so made money on financial destruction once again. Washington left the public on the hook for $124 billion in losses.

The Bush administration and the Fed’s response to the S&L crisis (as well as to a concurrent third-world debt crisis) was to subsidize the banking system with federal and multinational money. In this way, a policy of privatizing bank profits and socializing their losses and risks became embedded in the American political system.

The New Banking Game in Town: “Modernization”

The S&L trouble sparked a broader credit crisis and recession. Congress was, by then, debating the “modernization” of the financial services industry, which in practice meant breaking down remaining barriers within institutions that had separated deposits and loans from securities creation and trading activities. This also meant allowing commercial banks to expand into nontraditional banking activities, including insurance provision and fund management.

The Bush administration aided the bankers by advocating the repeal of key elements of the Glass-Steagall Act. Related bills to dismantle that Depression-era act won the support of the House and Senate banking committees in the fall of 1991, though they were defeated in the House in a full vote.  Still, the writing was on the wall. What a Republican president had started, a Democratic one would soon complete.

In the meantime, the Bush administration was covering all the bases when it came to the repeal of Glass-Steagall, which would be the nail in the coffin of decades of banking constraint. As commercial bankers pushed to enter non-banking businesses, Richard Breeden, Bush’s SEC chairman, began championing the other side of the Glass-Steagall divide -- fighting, that is, for the rights of investment banks to own commercial banks. And little wonder, since such a deregulation of the financial system meant a potential expansion of Breeden’s power: the SEC would be tasked with monitoring the growing number of businesses that banks could enter.

Meanwhile, Wendy Gramm, head of the Commodity Futures Trading Commission (CFTC), promoted another goal the bankers wanted: unconstrained derivatives trading. Gramm had first been appointed chair of the CFTC in 1988 by Reagan (who called her his “favorite economist”) and was then reappointed by Bush. She was determined to push for unregulated commodity futures and swaps -- in part in response to lobbying from a Texas-based energy trading company, Enron, whose name would grow far more familiar to Americans in the years to come. While awaiting legislative approval, bankers started sending their trading exemption requests to Gramm and she began granting them.

9/11 Overshadows Enron

In early 2001, in the fading light of the rosy Clinton economy and an election result validated by the Supreme Court, the second President Bush entered the White House. A combination of Glass-Steagall repeal and the deregulation of the energy and telecom sectors under Clinton catalyzed a slew of mergers that consolidated companies and power in those industries upon fabricated books. The true state of the economy, however, remained well hidden, even as it teetered on a flimsy base of fraud, inflated stocks, and bank-created debt. In those years, the corporate and banking world still appeared glorious amid so many mergers. But the bankers’ efforts to support those transactions would soon give way to a spate of corporate bankruptcies.

It was the Texas-based energy-turned-trading company Enron that would emerge as the poster child for financial fraud in the early 2000s. It had used the unregulated derivatives markets and colluded with bankers to create a slew of colorfully named offshore entities through which the company piled up debt, shirked taxes, and hid losses. The true status of Enron’s fictitious books and those of other corporate fraudsters nonetheless remained unexamined in part because another crisis garnered all the attention. The 9/11 attacks at the World Trade Center, blocks away from where many of Enron’s trading partners were headquartered (including Goldman Sachs, where I was working that day), provided the banking industry with a reprieve from probes. The president instead called on bankers to uphold national stability in the face of terrorism.

On September 16, 2001, George W. famously merged financial and foreign policy. “The markets open tomorrow,” he said. “People go back to work and we’ll show the world.” To assist the bankers in this mission, Bush-appointed SEC chairman Harvey Pitt waived certain regulations, allowing corporate executives to prop up their share prices as part of a plan to demonstrate national strength by elevating market levels.

That worked -- for about a minute. On October 16, 2001, Enron posted a $681 million third-quarter loss and announced a $1.2 billion hit to shareholders' equity. The reason: an imploding pyramid of fraudulent transactions crafted with banks like Merrill Lynch. The bankers were now potentially on the hook for billions of dollars, thanks to Enron, a client that had been bulked up through the years with bipartisan support.

Amid this financial turmoil, Bush was focused on retaliation for 9/11. On January 10, 2002, he signed a $317.2 billion defense bill. In his State of the Union address, he spoke of an “Axis of Evil,” of fighting both the terrorists and a strengthening recession, but not of Enron or the dangers of Wall Street chicanery.

In 2001 and again in 2002, however, corporate bankruptcies would hit new records, with fraud playing a central role in most of them. Telecom giant WorldCom, for instance, was found to have embellished $11 billion worth of earnings. It would soon supplant Enron as America’s biggest fraud of the moment.

Bush Takes Action

On July 9th, George W. finally unveiled a plan to “curb” corporate crime in a speech given in the heart of New York’s financial district. Taking the barest of swipes at his Wall Street friends, he urged bankers to provide honest information to investors. The signals were now clear: bankers had nothing to fear from their commander in chief. That Merrill Lynch, for example, was embroiled in the Enron scandal was something the president would ignore -- hardly a surprise, since the company’s alliances with the Bush family stretched back decades.

Three weeks later, he would sign the Sarbanes-Oxley Act, purportedly ensuring that CEOs and CFOs would confirm that the information in their SEC filings had been presented truthfully. It would prove a toothless and useless deterrent to fraud.

And then the president acted: on March 19, 2003, he launched the invasion of Iraq with a shock-and-awe shower of cruise missiles into the Iraqi night sky. Two days later, by a vote of 215 to 212, the House approved his $2.2 trillion budget, including $726 billion in tax cuts. Shortly thereafter -- a signal to the banking industry if there ever was one -- he appointed former Goldman Sachs Chairman Stephen Friedman director of the National Economic Council, the same role another Goldman Sachs alumnus, former co-Chairman Robert Rubin, had played for Bill Clinton.

By the end of 2003, grateful bankers were already amassing funds for Bush’s 2004 reelection campaign. A bevy of Wall Street Republicans, including Goldman Sachs Chairman and CEO Henry Paulson, Bear Stearns CEO James Cayne, and Goldman Sachs executive George Herbert Walker IV (the president’s second cousin), became Bush “Pioneers” by raising at least $100,000 each.

The top seven financial firms officially raised nearly three million dollars for George W.’s campaign. Merrill Lynch emerged as his second biggest corporate contributor (after Morgan Stanley), providing more than $586,254. The firm’s enthusiasm wasn’t surprising. Donald Regan had been its chairman and the Bush-founded investment bank G.H. Walker and Company, which employed members of the family over the decades, had been absorbed into Merrill in 1978. Merrill Lynch CEO Earnest “Stanley” O’Neal received the distinguished label of “Ranger” for raising more than $200,000 for Bush’s reelection campaign. It was a sign of the times that O’Neal and Cayne hosted Bush’s first New York City reelection fundraiser in July 2003.

Government by Goldman Sachs for Goldman Sachs

The bankers helped tip the scales in Bush’s favor. On November 3, 2004, he won his second term in a tight election. By now, bankers from Goldman Sachs had saturated Washington. New Jersey Democrat Jon Corzine, a former Goldman Sachs chairman and CEO, was on the Senate Banking Committee. Joshua Bolten, a former executive director at the Goldman Sachs office in London, was director of the Office of Management and Budget. Stephen Friedman, former Goldman Sachs chairman, was one of George W.’s chief economic advisers as the director of the National Economic Council. (He would later become chairman of the New York Federal Reserve Board, only to resign in May 2009 amid conflict of interest charges concerning the pile of Goldman Sachs shares he held while using his post to aid the company during the financial crisis.)

Meanwhile, from 2002 to 2007, under George W.’s watch, the biggest U.S. banks would fashion nearly 80% of the approximately $14 trillion worth of global mortgage-backed securities (MBS), asset-backed securities, collateralized debt obligations, and other kinds of packaged assets created in those years. And subprime loan packages would soon become the fastest-growing segment of the MBS market. In other words, the financial products exhibiting the most growth would be the ones containing the most risk.

George W. would also pick Ben Bernanke to replace Alan Greenspan as chairman of the Federal Reserve. Bernanke made it immediately clear where his loyalties lay, stating, “My first priority will be to maintain continuity with the policies and policy strategies during the Greenspan years.”

In 2006, two years after persuading the SEC to adopt rules that enabled many of the “assets” being created to be undercapitalized and underscrutinized, the president selected former Goldman Sachs CEO Henry Paulson to be his third Treasury secretary. Joshua Bolten, who had by then had become White House Chief of Staff, arranged the pivotal White House meeting between the two men that sealed the deal. As Bush wrote in his memoir, Decision Points, “Hank was slow to warm to the idea of joining my cabinet. Josh eventually persuaded Hank to visit with me in the White House. Hank radiated energy and confidence. Hank understood the globalization of finance, and his name commanded respect at home and abroad.”

Under Bush, Paulson, and Bernanke, the banking sector would buckle and take the global economy down with it.

Goldman Trumps AIG

Insurance goliath AIG stood at the epicenter of an increasingly interconnected financial world deluged with junky subprime assets wrapped up with derivatives. When rating agencies Fitch, S&P, and Moody’s downgraded the company’s credit worthiness on September 15, 2008, they catalyzed $85 billion worth of margin calls. If AIG couldn’t find that money, Paulson warned the president, the firm would not only fail, but “bring down major financial institutions and international investors with it.” According to Bush’s memoir , Paulson convinced him. “There was only one way to keep the firm alive,” he wrote. “The federal government would have to step in.”

The main American recipients of AIG’s bailout would, in fact, be legacy Bush-allied firms: Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), and Citigroup ($2.3 billion). Lehman crashed, but Merrill Lynch and AIG were saved. The bankers with the strongest alliances to the Bush family (and the White House in general) needed AIG to survive. And it did. But the bloodletting wasn’t over.

On September 18, 2008, George W. would tell Paulson, “Let’s figure out the right thing to do and do it.” He would later write, “I had made up my mind: the U.S. government was going all in.” And he meant it.  During his last months in office, the Big Six banks (and marginally other institutions) would thus be subsidized by an “all-in” program designed by Bernanke, Paulson, and Geithner -- and later endorsed by President Barack Obama.

The bankers’ unruliness had, however, already crippled the real economy. Over the next few months, Bank of America, Citigroup, and AIG all needed more assistance. And in that year, the Dow Jones Industrial Average would lose nearly half its value. At the height of the bailout period, $19.3 trillion in subsidies were made available to keep (mostly) American bankers going, as well as government-sponsored enterprises like Fannie Mae and Freddie Mac.

As George W. headed back to Texas, the economy and markets went into free fall.

The Money Behind Jeb

Jump seven years ahead and, with the next Bush on the rise and the money once again flowing in, it’s still the age of bankers. Jeb already has three mega super PACs -- Millennials for Jeb, Right to Rise, and Vamos for Jeb 2016 -- under his belt. His Right to Rise Policy Solutions group, which, as a 501(c)(4) nonprofit, is not even required to disclose the names of its donors, no less the size of their contributions, is lifting his contribution tally even higher. None of these groups have to adhere to contribution limits and the elite donors who contribute to them often prove highly influential. After all, that’s where the money really is. In the 2012 presidential election, the top 100 individual contributors to super PACs and their spouses represented just 1% of all donors, but gave a staggering 67% of the money.

Of those, Republican billionaire Sheldon Adelson and his wife, Miriam, donated $92.8 million to conservative groups, largely through “outside donor groups” like super PACs that have no contribution limits. Texas billionaire banker mogul Harold Simmons and his wife, Annette, gave $26.9 million, and Texas billionaire homebuilder Robert Perry coughed up $23.95 million. Nebraska billionaire (and founder of the global discount brokerage TD Ameritrade) John Joe Ricketts dished out $13.05 million. Despite some early posturing around other candidates with fewer legacy ties, these heavy hitters could all end up behind Bush 45. Dynasties, after all, establish the sort of connections that lie in wait for the next moment of opportune mobilization.

“All in for Jeb” is the mantra on Jeb’s official website and in a sense “all in,” especially when it comes to national bankers, has been something of a mantra for the Bush family for decades. With a nod to his two-term record as Florida governor, Jeb put it this way: “We will take command of our future once again in this country. I know we can fix this. Because I've done it.”

Based on Bush family history, by “we” he effectively meant the family’s billionaire and millionaire donors and its cavalcade of friendly bankers. Topping that list, though as yet undeclared -- give him a minute -- sits Adelson, who is personally and ideologically close to George W. In April, the former president was paid a Clintonian speaking fee of $250,00 for a keynote talk before the Republican Jewish Coalition meeting at Adelson’s Las Vegas resort. While Adelson has expressed concerns about Jeb’s lack of hawkishness on Israel when compared to his brother, that in the end is unlikely to prove an impediment. Jeb is making sure of that.  He recently told a gathering of wealthy New York donors that, when it came to Israel, his top adviser is his brother. (“If you want to know who I listen to for advice, it’s him.”)

Let’s be clear.  The Bush family is all in on Jeb and its traditional banking allies are not likely to be far behind.  There is tradition, there are ties, there is a dynasty to protect.  They are not planning to lose this election or leave the family with a mere two presidents to its name.

The Wall Street crowd began rallying behind Jeb well before his candidacy was official.  Private equity titan Henry Kravis hosted a 25-guest $100,000-per-head gathering at his Park Avenue abode in February, one of six events with the same entry fee. In March, Jeb had his first Goldman Sachs $5,000-per-person event at the Ritz Carlton in New York City, organized by Dina Powell, Goldman Sachs Foundation head and George W. Bush appointee for assistant secretary of state.  A more exclusive $50,000 per head event was organized by Goldman Sachs exec, Jim Donovan, a key fundraiser and adviser for Mitt Romney who is now doing the same for Jeb.

And then there’s the list of moneyed financiers with fat wallets still to get behind Jeb. New York hedge fund billionaire Paul Singer, who donated more than any other conservative in the 2014 election, has yet to swoop in.  Given the alignment of his foreign financial policy views and the Bush family’s, however, it’s just a matter of time.

With the latest total super PAC figures still to be disclosed, we do know that Jeb’s Right to Rise super PAC claims to have raised $17 million from the tri-state (New York, New Jersey, and Connecticut) area alone so far. Its head, Mike Murphy, referred to its donors in a call last week as “killers” he was about to “set loose.” He intimated that the July disclosures would give opponents “heart attacks.” Those are fighting words.

Sure, all dynasties end, but don’t count on the Bush-Banker alliance going belly up any time soon. Things happen in this country when mountains of money begin to pile up. This time around, the Bush patriarchy will call in every chip. And know this: Wall Street will be going “all in” for this election, too. Jeb(!) and Hillary(!) will likely split that difference in the primaries, then duke it out in 2016. Along the way, every pretense of mixing it up with the little people will be matched by a million-dollar check to a super PAC. The cash thrown about in this election will be epic. It’s not the fate of two parties but of two dynasties that’s at stake.


Power Inequality Dwarfs Income Inequality