A tsunami – a tidal wave of devastating proportions –begins with a catastrophic event that is often thousands of miles distant. While attention is rooted on the event itself – say, an earthquake – the wave is submerged in the deep ocean so that the surface is barely disturbed… until the tsunami reaches shallower coastal waters. As the ocean bottom rises, the wave becomes visible, then towering, until it comes ashore and obliterates everything in its path.
I believe a political tsunami of vast proportions is heading towards Washington, D.C. You wouldn’t know it from its inhabitants, who seem to be unaware of what is coming their way. But unless they wake up and take action to redirect the energy of the approaching wave, we’re going to see a cataclysmic change in Washington next year.
The initial event was, of course, the implosion of the financial system in September 2008. For awhile, the focus was on the immediate disaster: the Money Industry stopped lending, so a bunch of Wall Street investment firms collapsed, and then those still standing threatened to tank the U.S. economy unless they got their “confidence restored” through a trillion dollar transfusion of taxpayer money. A few months later, the government claimed the worst was over, the Dow climbed back to 10,000 and Wall Street went back to paying billion dollar bonuses.
That was what you’d see if you were only looking at the surface. But beneath, it’s an entirely different story. The real unemployment rate – not the measure the government uses – is estimated at 21%. There just aren’t any jobs now. Sources that might tide some of the unemployed over – credit card companies, for example – are slashing credit and home equity lines and at the same time jacking up interest rates and fees. Some cards are being canceled with little or no notice. Even people with jobs and small businesses with good credit can’t get the resources they need. Many Americans were able to afford the standard of living they were encouraged to aspire to only by virtue of a delicately balanced high-wire combination of work and borrowing. These Americans are trying to avoid falling off the tightrope. Walking down the street, you can sometimes feel and see the desperation and controlled panic. (A colleague suggested a connection with the swine flu epidemic – a combination of man-made and natural disasters has put everyone on edge.)
Our elected representatives have directed all their attention – and an unprecedented amount of resources – to addressing the event last fall by rebuilding Wall Street. But they have done just about nothing to deal with what has happened to everyone else since then. The credit card reform bill does nothing to protect the public against the latest round of rapacious interest rate increases, much less restore that crucial expense lifeline for struggling households, as I said before. Taxpayers effectively own the nation’s biggest banks, but we still can’t get a loan! Lobbyists for the Money Industry also blocked the ability of bankruptcy courts to order modifications of mortgages for those who got swindled into subprime terms. Whatever the stimulus package stimulated, most Americans haven’t seen any concrete benefit –it was too small to matter. Neither President Bush, nor President Obama, nor Congress, thought to impose a single quid pro quo for consumers when they handed the keys to the Treasury over to the fat cats and speculators who ran the economy into the ground. There’s simply been no relief for the rest of the country.
And so, as they fight to stay alive, Americans are getting really, really angry. Every day brings news about the latest excesses on Wall Street as well as a new bill in the mail. “Where’s our bonus?” asks Joe Nocera in the New York Times. Even the relentlessly pro-“free markets” Wall Street Journal printed this analysis by a reporter:
…following news that Goldman Sachs Group has already set aside a $16.7 billion bonus pool for 2009, the case for windfall taxes on banks that pay giant bonuses is becoming unanswerable. This year’s bank profits are windfalls in the purest sense. They aren’t the due rewards for exceptional skill but gifts from taxpayers. Many banks are earning huge, risk-free profits borrowing from central banks at ultralow interest rates and lending back to governments at much-higher rates. If this giant, hidden subsidy was being used to support new lending, fair enough. Instead, it looks destined for bankers’ pockets….. If banks can’t be trusted to do the right thing and exercise self-restraint, governments shouldn’t be afraid to help.
In August, I wrote that the summer’s eruptions at the town hall meetings on health care were at least as much about an angry and fearful electorate as they were exercises in political and industry astroturf. How can Americans be expected to trust the government to deliver an affordable health care system when the government abetted the Money Industry all those years, then bailed them out with our money, but has been strikingly unable to deliver any financial relief to average Americans?
A devilish brew of frustration, fear, and plain old rage, uncongealed and disorganized, is hurtling towards Washington. ETA: the mid-term elections in November, 2010, where a third of the US Senate and all of the House is up for re-election. Obviously, it is the Democrats in the majority who are most at risk. Which in some ways is ironic, given that it was the Corporate Republican ideology of free markets and deregulation that led to the debacle on Wall Street in the first place. But as we have shown (PDF), Washington’s sell-out to Wall Street was always a bipartisan affair.
There is still time for our elected leaders to defy the lobbyists and do something for the rest of America. To prove that government can protect the people, not just the special interests who line the pockets of every public official from the president on down.
If they fail, however, that massive surge of disenchantment will surface with enormous force, easily capable of wiping out the existing political establishment.