Wall Street Kind Of Lost-- But Not Really, Of Course

Did you help elect Obama? Watch him reward Wall St. for your efforts

Wall Street certainly wanted Romney to win the presidency and, overall, backed a GOP takeover of the Senate and continued, even expanded, GOP dominance of the House of Representatives. Last Tuesday Wall Street was thwarted by the voters. But... no need for anyone there to panic-- or even frown.

The little chart from OpenSecrets.org below shows the top 5 biggest direct donors to the Romney campaign. This doesn't count the tens of millions of dollars Wall Street poured into PACs and SuperPACs supporting his campaign. Wall Street gave Romney's campaign (again, not counting outside groups) $52,108,339 and gave President Obama $18,718,167.

Wall Street, of course, gave heavily to both parties, $155,963,660 to Republicans and about half that much ($78,779,264) to the Democrats. 291 Republican candidates and 246 Democratic candidates took thinly veiled legalistic bribes from Wall Street this cycle. The Wall Street criminal bankster class has friends everywhere. Aside from Romney, Wall Street's biggest bet in Congress-- Scott Brown ($3,770,504)-- also went bust... although among the legislators for whom they forked out at least a million dollars, Brown was the only loser in either House of Congress. These 7 Republicans and 5 Democrats are well-placed to protect Wall Street's interests and further its toxic, anti-family agenda.

If Obama wanted to get "revenge," he would appoint a new Attorney General who would start drawing up indictments for the next two months and start making arrests in January. Imagine Eliot Spitzer, who Wall Street undermined and figured they have gotten out of their hair permanently. It would be a very popular move. And, more to the point, Obama could break with tradition and appoint someone Treasury Secretary who is not a pre-approved Wall Street shill and lackey for the interests who tried to defeat him and destroy his party. Imagine Paul Krugman or Robert Reich in the job-- someone looking out for the interests of America's working families and for this small businesses that are the backbone of the economy, rather than for the bottom lines of a handful of a few criminal mega-banks! What, you wonder, would Robert Reich be like as Secretary of the Treasury? Well, his ideas about a Grand Bargain, don't sound very Obama-like. They sound more like FDR:

First, raise taxes on the rich-- and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in over 80 years.

Why not go back sixty years when Americans earning over $1 million in today’s dollars paid 55.2 percent of it in income taxes, after taking all deductions and credits? If they were taxed at that rate now, they’d pay at least $80 billion more annually-- which would reduce the budget deficit by about $1 trillion over the next decade. That’s a quarter of the $4 trillion in deficit reduction right there.

A 2% surtax on the wealth of the richest one-half of 1 percent would bring in another $750 billion over the decade. A one-half of 1 percent tax on financial transactions would bring in an additional $250 billion.

Add this up and we get $2 trillion over ten years-- half of the deficit-reduction goal.

Raise the capital gains rate to match the rate on ordinary income and cap the mortgage interest deduction at $12,000 a year, and that’s another $1 trillion over ten years. So now we’re up to $3 trillion in additional revenue.

Eliminate special tax preferences for oil and gas, price supports for big agriculture, tax breaks and research subsidies for Big Pharma, unnecessary weapons systems for military contractors, and indirect subsidies to the biggest banks on Wall Street, and we’re nearly there.

End the Bush tax cuts on incomes between $250,000 and $1 million, and-- bingo-- we made it: $4 trillion over 10 years.

And we haven’t had to raise taxes on America’s beleaguered middle class, cut Social Security or Medicare and Medicaid, reduce spending on education or infrastructure, or cut programs for the poor.

Yesterday John Ydstie did a report on NPR about what Obama is likely to do with Treasury now that Geithner is finally leaving. Paul Krugman isn't in the cards. Neither is Joseph Stiglitz or Dean Baker.

A second term means some new Cabinet appointments for President Obama, including at the Treasury. After four pretty grueling years, Secretary Timothy Geithner has made it clear he will be leaving Washington.

White House press secretary Jay Carney said last week that Geithner would be staying on through the inauguration. He's also expected to be a "key participant" in "fiscal cliff" negotiations.

The Treasury secretary was arguably the most important Cabinet post in the first Obama administration. Secretary Geithner had wobbly banks, auto bailouts and the Great Recession on his plate. The next secretary will face big challenges too, beginning with the "fiscal cliff" and working with Republicans to craft a "grand bargain" on deficit reduction.

It's not surprising that there's been a lot of talk about Erskine Bowles as a replacement for Geithner. Bowles chaired the president's deficit reduction panel, the Simpson-Bowles commission. Speaking on Charlie Rose's show last March, Bowles outlined the content of a good budget deal.

"Any of them that don't address defense, any of them that don't address Medicare, Medicaid, Social Security and don't reform the tax code and aren't balanced in some way between that, aren't serious," he said.

Bowles was a chief of staff for President Clinton. He's also a former investment banker and is popular with Republicans and on Wall Street. But he's criticized President Obama's budget publicly while praising Paul Ryan's.

A more likely choice might be Jack Lew, the current White House chief of staff and formerly the president's budget director. In April 2011, he discussed overhauling Social Security:

"It's never really moved the debate forward for one side or another to put a plan out there. It's only really worked well when the parties come together; that's what happened in 1983," he said.

Lew worked on that 1983 Social Security fix as an aide to House Speaker Tip O'Neill. He has Capitol Hill experience and the budget expertise to tackle the big issues that are on the Treasury's plate. And he's got a good working relationship with the president.

Bowles is the Democratic Party frontman for bringing Europe's failed Austerity agenda here. He actively campaigned against progressive Democrats Annie Kuster and David Cicilline and backed hard right Republicans like Charlie Bass (NH) and Brendan Doherty (RI). Kuster and Cicilline won... but if you think that would give Obama a moment's pause, you haven't been paying any attention to Barack Obama. As I've said before, don't worry about Wall Street. They're all set-- and it hardly mattered who won the presidency or which one of the corrupt Beltway party establishments is in charge of Congress. Wall Street calls the shots. Sure, they would have loved to have had one of their own in the White House and to have placed their own little Frankenstein monster in as VP. But Obama hasn't really given them anything serious to worry about and they'll be perfectly fine with a corporate whore and investment bankster like Erskine Boyce Bowles-- currently on the boards of General Motors, Morgan Stanley, Facebook, Norfolk Southern and North Carolina Mutual Life Insurance-- as Secretary of the Treasury. As Ben White and Anna Palmer said, Wall Street might not be getting their "dream candidate," but they certainly know how to work with Obama to further their own interests-- even if he did call them "fat cats" once. Over the weekend William Cohan, who thinks Obama should appoint Bowles, made a good case against Bowles (and Obama):

When U.S. voters elected Barack Obama president in November 2008, many of us were convinced he would make a top priority of reforming Wall Street, which had just almost succeeded in bringing down our way of life through greed and lack of accountability.

Despite the fact that Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) were among Obama’s top 10 financial backers in 2008, we were hopeful we would see a change in the system whereby bankers, traders and executives were rewarded every day to take huge, asynchronous risks with other people’s money.

We also believed that Obama wouldn’t succumb to the backroom maneuverings of the plutocrats and behind-the-scenes money men-- such as former Treasury Secretary Robert Rubin and former Deputy Secretary Roger Altman-- who were busy advocating a quick return to the status quo and looking to move their friends into positions of great importance in Obama’s Cabinet.

It turned out we were either naive or stupid to think that when candidate Obama spoke about “change you can believe in,” he was including Wall Street.

In ways we may never fully understand, Rubin quickly cast his spell on Obama. Before long, Rubin proteges were appointed to the three most important economic positions in the new administration: Timothy Geithner as Treasury secretary, Lawrence Summers as national economic adviser and Peter Orszag as director of the Office of Management and Budget. For good measure, the administration named Mary Schapiro, the head of the Financial Industry Regulatory Authority, Wall Street’s dysfunctional self-regulatory organization, as chairman of the Securities and Exchange Commission.

Summers has gone back to Harvard University, and Orszag is now at Citigroup (and writes a column for Bloomberg View). Geithner and Schapiro will be leaving Washington shortly. Yet other Rubin acolytes-- Gene Sperling, now the national economic adviser; Jack Lew, Obama’s chief of staff; and Michael Froman, the president’s top international economics adviser-- are still very much in residence at the White House.

What did these men and women collectively achieve during Obama’s first term? A remarkably Wall Street-friendly set of policies. To recap, the big banks continued to be bailed out; the weak Dodd-Frank financial reform act continues to get watered down as its specific rules are hammered out; not one Wall Street trader, banker or executive has been held criminally liable for actions leading up to the financial crisis; and the Standard & Poor’s 500 (SPX) has doubled since its nadir in March 2009. The Federal Reserve also did its part: pumping trillions of dollars into the capital markets to keep interest rates at rock-bottom levels (a gift to Wall Street and a tax on savers).

A pretty amazing list of favors, if you think about it. Yet Wall Street clearly thinks it is owed even more. The antipathy between the financial sector and Obama has never been greater. Eight of Republican challenger Mitt Romney’s 10 top donors in the election were Wall Street firms. (Meanwhile, the markets responded to Obama’s re-election with a 400-plus point drop.)

So, President Obama, the time has come for you to do in your second term what many people hoped you would do in the first: Institute meaningful reform on Wall Street. An essential first step is to sweep out the remaining vestiges of the Rubin-Altman nexus. Bring in a new group of people who not only understand how Wall Street really works but also have dedicated much of their lives to changing it.

And then Cohan said Bowles is the right guy for the job. He's wrong-- completely wrong. Bowles is one thing-- another Wall Street shill who would continue Obama's awful Wall Street policies. If you expected anything more, you got played. I live in California and it was not just easy for me to vote against Obama last week, it gave me great pleasure.