Watch: Tom Ferguson Explains Why New Financial Fraud Commission Might Slow Investigations
Tom Ferguson, an American political scientist and researcher of how politics and the economy are intertwined, explains to the Real News Network why the new financial fraud commission might not be helpful, and could actually slow down investigations. (Transcript is below).
From the Real News Network:
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Washington.
On Tuesday night, President Obama delivered his State of the Union. And now joining us to give us his take on it is Tom Ferguson. Tom is a senior fellow at the Roosevelt Institute. He teaches at the University of Massachusetts in Boston. Thanks for joining us, Tom.
THOMAS FERGUSON, SENIOR FELLOW, ROOSEVELT INSTITUTE: Hi, there.
JAY: So what's your first big-picture take on this speech?
FERGUSON: Well, it's—I'm sort of underwhelmed, intrigued in some cases. But look, you know, a lot of crucial stuff is just quickly sketched, and, you know, one has to ask how seriously you should take this. In particular, you know, if he were to do a seriously big mortgage refinancing program—which he briefly alluded to, just flew past it—that would be, I think, a really striking thing, and it would likely have a huge effect on the economy. You know, their record is, however, in the last three years they keep announcing programs, and then they all fail. I would like to—you know, we'll just have to look and see on this.
On some other aspects of this I'm really troubled. There's—the language justification is in terms of jobs, but if you look closely, most of what he's proposing is really one form or another of subsidy to a business—big promotion of exports, you know, accelerated tax write-offs to sort of get them to change plants and things like that.
You know, I have to tell you that what was missing here is any serious effort to put this in the context of all the other things he's been pushing, by which I mean macroeconomic austerity, this sort of endless focus on the deficit. Now, you know, he's trying to get reelected, so we're not going to hear too much about the deficit. But my best guess is is that these folks are not planning to seriously change course on the economy. Instead, they're proposing a whole set of myriad breaks—tax breaks and special subsidies. I think you'd be much better off by, frankly, dropping lots of that stuff and just go back to a sort of reasonable macroeconomic policy that would try to actually put enough demand in the economy to add jobs.
JAY: Well, one of the things he's bragging about in the speech is that all of his job measures, all of the economic measures are done through the private market, through subsidies or something, to make it easier for private business, as you said. He talked about health care was about reforming the private market, not a government plan. And all—so far, most of the stimulus spending that's had any effect at all has actually been stimulus money that wound up going to states and municipalities so they didn't lay off too many people.
JAY: And any other kind of stimulus that was supposed to be met through the private sector hasn't had that much effect.
FERGUSON: No, that's right. And, you know, you can—I mean, there is an inherent self-contradiction in what he professes to be trying to do, exactly along those lines. I'm thinking in particular of the stuff on education. I don't think there's much doubt that a lot of people could benefit from a great deal more education. But, you know, he's not going to be able to sort of—I mean, the main avenue for education in the United States are the states. Federal government programs work mostly through those. And the states are pretty well bust at this point, they're really strained in their budgets, and you're not going to be able to get around that. I mean, in particular, [incompr.] mentioned higher ed budgets. Well, you know, most higher ed budgets have been crimped to the point where public higher education is really almost ceasing to exist in slow stages, and, you know, it's being crowded out by, actually, more—in most cases, more expenditures for medical care of one type or another. And the president hasn't got any real serious proposals along those lines to do much other than, you know, the stuff he alluded to back when he was [incompr.] health care.
JAY: Well, probably 10, 15 percent of this speech has to do with some real policy initiative, and 80, 85 percent is about political theater and positioning himself. And I—to my mind, he accomplished something. He certainly looked presidential. He looked like he had some ideas. And you compare that to the clown show that's been going on in the Republican Party—at least has some effect now. But the one thing I thought that maybe is meaningful in this, because most of what he proposed won't get passed through Congress, so it really is just electioneering, but he seemed to suggest he's going to use an executive order to use public lands, and something—I didn't quite get it, exactly—something that the Armed Forces are going to buy clean energy, he's going to use an executive order to develop a clean energy on federally owned lands. So what—I don't know if you had any time to digest that.
FERGUSON: I did. Well, I mean, I'm familiar. I mean, that's to sort of just push forward some ideas that have been around for a while. It's simply another form of energy subsidy. It might make sense or might not. I mean, this is one of these cases where, you know, it's all going to depend on the details. I mean, I certainly think that the real costs of oil and gas, especially oil, are, you know, a good deal higher than just in the price of the thing at the tank. So, you know, I think the clean energy thing makes social sense. But, you know, I—it's impossible to tell what he's talking about from the speech, and there's no point in there—.
Let me make just a couple of comments. I have real problems with that suggestion of the task force on housing that he was—pardon me—on mortgages abuses. I mean, in particular, you know, you got to ask: what's the matter with Holder (the attorney general) and the rest of the people in the administration? Why does he have to have sort of state attorney generals joining him? Up till now it's been the state attorney generals that have been actually successfully pushing the containment [crosstalk]
JAY: Yeah, for people that didn't see the whole speech, let me just say that this is about one of the moments in the speech. President Obama says he's going to have a task force to investigate fraud and abuses that took place during the mortgage crisis.
FERGUSON: Yeah. And I have to tell you, Paul, it looks to me like an effort to rein in the attorneys general. And I rather doubt that Mr. Schneiderman is serving the public interest by going along with that, though I understand the incentives there. And this looks like an effort to rein in those attorneys general [in favor of the] banks.
JAY: And, Tom, there's been a lot of talk recently about a deal being reached between the White House and the banks which included some sort of immunity for people, at least the big banks, and he didn't talk about this deal tonight at all.
FERGUSON: Well, I believe it's actually with some other members, some other attorneys general, and it's not a deal with the White House. But the White House, I think, was hoping to have that arrangement completed by tonight. They didn't get it. And most everybody that has heard—I mean, we only know what's leaked. What's leaked is not particularly reassuring. It's the suggestion that the banks are basically going to commit crimes and get away with it. I mean—.
JAY: Anyway, your point here is he doesn't need a new commission. They could just be going after people that broke the law, and by creating the new commission he may be actually holding back state attorney generals that are actually trying to do something.
FERGUSON: That's right. I think I—here, this one, I think, is not great. I'd also comment on the utter tameness of his proposals on money in politics. You know, stopping insider trading in Congress is—it's a good idea. You need a broadly drawn bill that also hits the staff, and probably maybe spouses, too. But that's not much of a reform, and, you know, he's not really touching the essence of the money in politics problem. He's just basically punted on that one. And, you know, just telling your bundlers that they can't lobby Congress, you know, if you pay attention to the details—I mean, this is why I have a feeling that this actually is a good metaphor for the whole speech. When you start to look at the details, that's almost meaningless. I mean, in effect, your bundlers, who are, after all, electing—when they're doing it for a president, electing a president, just lobbying Congress, you know, banning them from that, tell them they can't talk to the White House and I'd be a little more impressed.
I mean, in general he's passing up—you know, he—you could do a lot by simply making the Federal Election Commission a serious part of the civil service to get it out from under its ridiculous domination by Congress. I mean, it's not true that just Citizens United is wrecking efforts to contain campaign finance abuses; it's also very much from the enforcement of the FEC, in particular on the sort of secret aspects of money. Those folks could take a much more aggressive position. They have, however, a very special relationship with Congress, and they do, basically, exactly what their congressional leadership in both parties wants. And now we can add the president. You know, he just punted on that one.
I mean, my summary—you know, there's two—. Paul, I have to tell you, you know, when a guy starts talking about we're going to export American cars in Seoul, well, you know, the car of the year, I was looking in—just happens to be, you know, Hyundai, a Korean car. I mean, I'm glad to see the American motor industry making something of a comeback, but, I mean, I think much of the export promotion stuff is, frankly, delusional and it's not going to happen. And I would fear it's not—I mean, a bunch of—I mean, more than one time in world history, countries that have basically a problem of effective demand, that is to say, they haven't got enough of it—
JAY: Which means wages are too low and not enough people are working.
FERGUSON: —yeah, that—yeah, will then instead do a raft of special government programs that has everybody killing each other to get into the special program while they ignore the basic problem. I have a feeling that that's where we're headed here. So, you know, it's—I'm intrigued by some of this, but frankly, I'm underwhelmed.
JAY: Alright. Thanks very much for joining us, Tom.
FERGUSON: Only against the Republicans would this look impressive.
JAY: Yeah, the one-eyed king. Thanks very much for joining us. Thank you for joining us on The Real News Network.