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Will the Democrats Continue Their Rightward Turn or Start Working for the 99%?

If Elizabeth Warren doesn't make it onto the Senate Banking Committee, that's a pretty clear sign.

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Having been elected with an enormous voter mandate, Mr. Obama could have reversed the sharp polarization between creditors who were pushing the 99%, industry and real estate, cities and states deeper into financial distress. Instead, his policies have enabled the 1% to monopolize 93% of America’s income gains since the 2008 financial crisis.

At a potential turning point in the direction the American economy was taking, rescue and change were averted. We have seen what will stand as a classic example of cynical Orwellian doublethink. Promising hope and change four years ago, President Obama’s role was to hold back the tide and divert voter pressure for change. He rescued the financial sector and the 1%, and sponsored the Republican privatization of health care instead of the public option, and to take $13 trillion onto the government balance sheet in the form of junk mortgages, largely fraudulent loans held by Fannie Mae and Freddie Mac ($5.2 trillion alone) and other casino capitalist gambles gone bad. Mr. Obama was Wall Street’s white knight.

The trick was to get re-elected as a Democrat rather than as a Republican sponsoring a health care plan crafted by the Koch Brothers’ Cato Institute, and putting Wall Street bank lobbyists in charge of the Treasury and (de)regulatory agencies. As a Blue Dog Democrat, how was President Obama made to look better than the alternative?

The answer is clear by looking at the alternatives being offered. The Republicans have played ball. They call him a socialist – not too far fetched when we look at how Europe’s Socialist, Social Democrat and Labour parties are backing austerity and supporting anti-labor policies, privatization sell-offs and other neo-oligarchic policies. That is what socialism seems to mean these days.

While corporate profits are recovering nicely, most peoples’ savings and the net worth of their homes is down. This is not economically sustainable. Something has to give – and voters are afraid that it will be they their wages and savings. As corporate pensions plans are being cut back or wiped out in bankruptcy, their under-funding suggests that debts to retirees will not be honored – only those to Wall Street. Big fish eat little fish, and the 1% are devouring the 99%. And those who describe how this is happening are accused of class war.

It is not the old fashioned class war of industry against employees. It is a war of finance against the entire economy. And as Warren Buffett has noted, the financial class is winning. Instead of breaking up the banks, the five largest “Too Big to Fail” banks have grown even larger. With support from the White House, they used their TARP bailout money to buy smaller banks, turning the financial sector into a vast monopoly that is busy privatizing the election process so as to hold the government hostage.

What is collapsing is the idea of equity and fairness in the economy – and in the politicians that are remaking markets to benefit the 1%. Most voters opposed the bank bailouts of 2008. The Republicans were politically savvy enough not to vote for it, so that they could strike a populist stance. But Mr. Romney has not picked up this line of attack, even though it might have enabled him to defeat a president in whom much of whose constituency has lost confidence.

There is disillusionment and many young people, minorities and the “Democratic wing of the Democratic Party” have been busy writing op-eds and blogs that this time they were going to “vote with their backsides” – by staying home. And that is pretty much what the election returns showed. Their complaint is that President Obama has broken nearly every campaign promise he made to voters – but not a single promise he made to his big campaign contributors!