Fool Me Twice (18 page)

(But the United States no longer holds an AAA credit rating, which now makes it more expensive for us to raise capital. On August 5, 2011, the Standard and Poor's downgraded Washington's credit for the first time in history (to AA+), in what was described as a “sharply worded critique of the American political system.” S&P found that the Obama administration's proposed $2.1 trillion in budget savings, following its virtually unrestrained spending spree, “fell short of what was necessary to tame the nation's debt over time and predicted that leaders would not be likely to achieve more savings in the future.” S&P determined Obama's mounting national debt had “made the U.S. government's ability to manage its finances ‘less stable, less effective and less predictable.'”
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Since his original proposal for a national infrastructure bank had not sold, by mid-March, 2011, Kerry simply re-branded it.
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(Kerry had tried to call his earlier infrastructure bank bill “bipartisan,” although it had the backing of but a single Republican, Sen. John Thune of South Dakota.) Kerry introduced his new legislation, dubbed the BUILD Act, at a March 15 press conference, with a supporting cast including Sen. Kay Bailey Hutchison (R-TX) (ranking member of the Commerce, Science, and Transportation Committee), and Thomas J. Donohue (president and CEO, U.S. Chamber of Commerce). Also present was AFL-CIO president Richard Trumka.
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Besides the better bipartisan atmospherics, Kerry was now saying he wanted to establish an American Infrastructure Financing Authority (AIFA). Replete with rhetorical boosterism about his “bold solution,” the American Infrastructure Financing Authority to be set up by Kerry's BUILD Act was nothing more than a national infrastructure bank by another name.
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According to
The Hill
, citing Obama's transportation secretary, Ray LaHood, Kerry's newly branded national infrastructure bank would “receive $30 billion over six years as part of a proposed comprehensive six-year, $556 billion plan.”
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This half-a-trillion-dollar scheme, according to Kerry, would also be “independent of the political process.” AIFA would “fund the most important and most economically viable projects across the country, our states, and our communities.” It would also be “fiscally responsible,” after receiving its initial funding from the government. Later, Kerry's team claimed, AIFA would become self-sustaining. It would be able to rely on the private sector, as AIFA could never provide more than 50 percent of a project's costs, “and in many cases would provide much less, just enough to bring in private investment.”
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Kerry claimed his plan for AIFA would closely follow the Export-Import Bank model. The Export-Import Bank of the United States finances and insures purchases of U.S. goods by foreign customers who are either unable or unwilling to accept credit risk. The purpose is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers.
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But Timothy P. Carney, author of
Obamanomics
and
The Big Ripoff
, labeled Kerry's AIFA a “corporate welfare slush fund” and a “prime example of unaccountability.” As to parallels with the Ex-Im Bank:

The agency is independent of any cabinet department, and it hands out loans and loan guarantees basically at its own discretion. Congress typically gives [the Export-Import Bank] lengthy reauthorizations, thus minimizing congressional oversight. In recent years, Ex-Im was moved off-budget, meaning it funds itself with the repayments from old loans and the fees from new ones. So it's kind of like Fannie Mae was, before its exposure became real and the taxpayers had to come in and bail it out.
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A meeting between U.S. Treasury officials, bankers, pension funds, and hedge fund managers was convened on June 28, 2011, by NYU professor Michael Likosky “to discuss how such a bank [i.e., NIB] might work.”
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As a program on National Public Radio put it, the group discussed how greedy Wall Street capitalists “can help the government launch a national infrastructure bank.”
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Likosky—who calls the plan “Obama's bank”—is a leading academic cheerleader for the Kerry plan, an “expert on public-private partnerships,” and the author of
Obama's Bank: Financing a Durable New Deal
.
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An opposite take on the virtues of the scheme (September 2010) comes from Glen Ford of
The Black Agenda Report
:

The so-called infrastructure bank masquerades as the beginning of an industrial policy to reverse the export of jobs from the United States. Obama is spinning the scheme as his variation on Franklin Roosevelt's New Deal, when the federal government directly created millions of jobs and invested public monies in a vast, new infrastructure, much of which we are still using, today.

But in reality, the president's proposed bank bears no resemblance to the New Deal of the 1930s. Rather, it is yet another ploy to create a new windfall for the private bankers on Wall Street—a public-private scam. The scheme would transfer billions in public funds to a new banking entity, to attract the mega-bankers, whose investments would
be guaranteed by the U.S. government. The Obama bank would then lend these monies to selected projects, overseen by a board heavily weighted with representatives of those same Wall Street firms and their corporate allies.

[ … ]

Essentially, the same Wall Street players that have relentlessly and methodically de-industrialized the United States for the past 30 years would direct the economic makeover of the country, all the while earning interest on the borrowed funds. That's not a New Deal, that's a license for yet more no-risk self-dealing by Wall Street, guaranteed by the full faith and credit of the United States. It is a travesty and a swindle.
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In order to sell this grand new crony capitalism scheme, Obama and the progressives touted it as the solution to an emergency (the jobs emergency) just as they had “never let a good crisis go to waste”—in Rahm Emanuel's memorable turn of phrase—in ramming through the “stimulus” package, and then ObamaCare. Obama's flim flam was already in full swing at the September 2010 Laborfest in Milwaukee, when he pitched his bank scheme as a jobs plan to union workers and their families. Obama “called for a push to build or repair 150,000 miles of roads, 4,000 miles of railway and 150 miles of runway—and an update to the air traffic control systems,” ABC News' Jake Tapper reported.
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Obama told several thousand union members:

“We used to have the best infrastructure in the world and we can have it again. We want to change the way Washington spends your tax dollars; we want to reform the way we fund and maintain our infrastructure to focus less on wasteful earmarks and outdated formulas, and we want competition and innovation that gives us the best bang for the buck,” he said, adding “this is a plan that will be fully paid for, it will not add to the deficit over time—we're going to work with Congress to see to that.”
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Progressives in Congress were soon on board this monumental “change [in] the way Washington spends your tax dollars.” Congressional Progressive
Caucus co-chairs, Reps. Raúl Grijalva (D-AZ) and Keith Ellison (D-MI), pushed Obama to “champion sweeping investments in the nation's crumbling infrastructure as a way to create jobs and jolt the sluggish economy.” In September 2011, they wrote to Obama with a plea for “bold action” that required “federal emergency jobs legislation.” In particular, Grijalva and Ellison urged Obama to promote an estimated $2.2 trillion “investment” in a national infrastructure bank, which they described as a “public-private partnership designed to fund the nation's aging roads, bridges, railways and other vital structures.” The proposal was included in the Make It in America agenda progressive Democrats had pushed all year.
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In fact, a whole host of infrastructure bank bills was introduced in Congress that year (2011). In addition to the aforementioned acts, Obama's defeated American Jobs Act had called for the creation of an American Infrastructure Financing Authority.
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The Rebuild America Jobs Act, introduced October 31 by Sen. Amy Klobuchar (D-MN), included plans for an AIFA.
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The Act for the 99% (discussed in our chapter on the New WPA) would create the National Infrastructure Development Bank Act of 2011, intended to provide “$25 billion in seed money in the next five years.”
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Sen. Sherrod Brown (D-OH) introduced the National Infrastructure Bank Act of 2011 on September 13, and Rep. Marcia L. Fudge (D-OH) introduced a bill by the same name on October 25.

In his September 8, 2011, jobs speech, Obama gave Kerry and Hutchinson credit for their contribution in respect of the infrastructure bank contained in his proposed American Jobs Act.
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In his pitch for the act, Obama called for $80 billion in spending on “new building projects, from school modernization to roads and bridges.”
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Notably missing from Obama's speech was any reference to “green energy” or the environment, one of the main pillars of the Progressive agenda. But, as Sen. Barbara Mikulski (D-MD) put it, though the president's speech had neglected “the bipartisan topic of energy efficiency,” the infrastructure bank in Obama's plan could well be used to finance green projects. Mikulski claimed it would be “a major step forward in improving the environment.”
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For the record, the details of the newly branded American Infrastructure Financing Authority creation are fairly straightforward: It would be incorporated at the first meeting of a seven-member board of directors
appointed by the president. No more than four members would come from one political party. The chairman and three voting members would serve four-year terms; the other three members would serve two-year terms. The president would also appoint a non-voting chief executive officer to run the AIFA for a term of six years.
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Capitalized with an initial $10 billion, AIFA would provide direct loans and loan guarantees to “facilitate infrastructure projects,” as well as to “leverage private and public capital and to invest in a broad range of infrastructure projects of national and regional significance, without earmarks or political influence.”
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There would also be ample opportunities for “back-room deals” and abuse. For example, a meeting quorum would be five voting board members, and, by a majority vote, could be closed to the public “if, during the meeting to be closed, there is likely to be disclosed proprietary or sensitive information regarding an infrastructure project under consideration for assistance.” So it would be fairly easy to avoid transparency and/or a situation could easily arise where the “bi-partisan” quorum could be, say, four Democrats and one Republican. And while minutes of each meeting would be prepared, in some circumstances said minutes would not be made available for up to one full year from the date of the meeting, “with any necessary redactions to protect any proprietary or sensitive information.” So any discussions and decisions made at such meetings would remain secret long after votes were cast and funds were allocated.

In short, we would have an un-transparent, Big Government–Big Finance
star chamber
allocating tens of billions of dollars (of taxpayers' money the U.S. does not have and cannot afford). Such a national infrastructure bank, by any name, would “effectively centralize another key area of our economy, namely infrastructure, into a government-run enterprise that mostly benefits the private capital of the global elite,” Patrick Wood wrote in the August Corporation's
Forecast and Review
(September 2010).
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Can you say
crony-capitalism
? No wonder Obama and the progressives are working overtime to get some kind of New Deal scheme for a national infrastructure bank enacted.

Another “progressive” agenda item of the Obama team is the establishment of a Financial Crimes Unit under the Justice Department. This would serve a number of purposes in the expansion of executive power, by:

• centralizing and greatly intensifying prosecution of the financial industry at the federal level;

• allowing the president's surrogates to select who would be targeted for investigation (as well as who not); and,

• keeping the public and government focused on business fraud rather than on government corruption.

Thus did Obama, in his 2012 State of the Union address, admonish Congress to enact legislation to “makes the penalties for fraud count,” while announcing his establishment of a Financial Crimes Unit of “highly trained investigators to crack down on large-scale fraud and protect people's investments.”
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Obama tasked attorney general Eric Holder to “create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit,” he said, “will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.”

Not mentioned by the president was that the U.S. Treasury Department has operated a Financial Crimes Enforcement Network, known as FinCEN, for a number of years to track and prosecute terrorism and drug dealer financing and both domestic and international money laundering. It involves at least thirty law enforcement agencies, including the FBI, CIA, and Border Patrol. It is also linked with more than fifty countries to act as a Financial Intelligence Unit.
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In addition, many states and cities have their own Financial Crimes units.