Fiscal Cliff: Wall Street’s Latest Scam

Fiscal Cliff Wall Street ScamIt’s like a Woodstock for plutocrats, or an Avengers for the avaricious: The CEOs of America’s largest corporations have banded together to lecture us on the importance of debt reduction. And despite their lack of qualifications and their very obvious self-interest, the media can’t get enough of them.

Why? They’re not experts in economic policy. Quite the opposite, in fact. Many of them got where they are by persuading people to buy overpriced crap that’s bad for them. So a better way to look at this seemingly endless PR campaign would be to say: There they go again.

And yet their cynical campaign continues to capture national venues like 60 Minutes and conduct local blitzes in areas like Raleigh-Durham, North Carolina. Reporters are even hounding Warren Buffett – a CEO with much deeper economic knowledge – with the words of a less-informed and more self-interested colleague.

Think of it as Wall Street’s latest scam. If you liked toxic investments and the 2008 financial crisis, you’ll love their deficit deal.

The Economy’s Most Wanted

The list of “Fix the Debt” CEOs includes executives from Wall Street’s largest and most notorious bad actors. These banks have committed serial fraud and gotten away with no criminal penalties and only nominal fines – fines paid by shareholders, and not the misbehaving bankers themselves.

GE’s Jeffrey Immelt is there, seemingly unashamed of GE Capital’s fiscal and legal record. So’s the CEO of Morgan Stanley, where bankers would boastfully shout “I ripped his face off!” after selling a worthless investment – to their own clients. Erskine Bowles, co-author of the “Simpson Bowles” plan the CEOs are promoting, is on the Morgan Stanley Board.

The gang’s all there: JPMorgan Chase CEO Jamie Dimon? Check. Bank of America CEO Brian Moynihan? Check. Goldman Sachs CEO Lloyd Blankfein? Check.

In fact Blankfein’s become something of a spokesperson for the group, working to sell the public on a package of cuts to Medicare, Medicaid and Social Security, combined with nominal tax increases that would primarily target the middle class.

Returning to the Scene of the Crime

Some spokesman. Blankfein’s institution paid the largest SEC fine in history for fraudulently deceiving investors about mortgage-backed securities which it sold while knowing full well that these securities were toxic – a fact it concealed from its clients.

The list of deceived investors includes many of the large pension funds that provide financial security to working Americans when they retire. Now that Wall Street’s struck these private-sector funds, they’re targeting public retirement programs too.

“Deficit reduction” and the “fiscal cliff”: They’re this year’s mortgage-backed securities.

Their Real Business

Most of these CEOs aren’t bankers. But today, in a very real way, everyone who runs a giant US corporation is a “Wall Street CEO.” As Warren Buffett and others have rightfully observed, modern corporate leaders no longer care about long-term value. They only care about making their quarterly numbers – by any means necessary – so they can get their promised bonuses and options. That won’t change until we change the way we pay CEOs.

Whatever industries they represent, these CEOs are primarily in the relationship business. And some of their most valuable relationships are political. That’s why the companies on this list paid nearly one billion dollars in lobbying and campaign contributions in the last four years alone.

It has a Dr. Evil ring to it: One billion dollars. The lion’s share (57 percent) went to Republicans, but the remainder went to friendly Democrats, which undoubtedly helps lend a “bipartisan” gloss to all this “deficit” talk. And a lot of it was your money, especially the lordly sums that Blankfein and his pals threw around after we bailed them out.

Seeing Scorpions

Don’t be angry. It’s like that old fable about the scorpion and the frog: They’re doing this because it’s their nature.

But let’s be clear: These CEOs don’t really care about the deficit. If they did they’d propose much higher taxes for themselves, a major jobs program to get our economy moving again, investment in our crumbling infrastructure, and expanded education funding to build the middle class of the future. And they’d be demanding that we do it now, while international bond markets are essentially paying our government to lend it money rather than the other way around.

They’d also focus on health care costs — not by proposing to cut Medicare and Medicaid benefits, but by removing the greed factor which makes our medical costs so much greater than that of any other developed nation. But they’re not likely to do that – not when some of them represent the for-profit health industry and others reap big profits from health care investments.

What these CEOs really care about is bigger tax breaks – for themselves and their corporations. That’s why they’ve come together to use what may be their greatest collective talent: selling crap that’s bad for you.  Let’s hope that this time nobody’s buying.

Richard RJ Eskow

Republished with the author’s permission from Huffington Post.

Wednesday, 28 November 2012


  1. Joseph Maizlish says

    Unfortunately, Pres. Obama has drunk the “kool-aide” about the emergency and helps miseducate the public about it.

    As for the term “deficit,” I’m on a one-person (so far) campaign to get the shortfalls in human health and well-being, and in environmental conditions called “deficits” too — surely more direct and urgent ones than the federal budget deficit which has so far been the only use of the term. Those Mr. Eskow rightly says aren’t really concerned about the deficit they want us, Congress, and the President to be panicked about, are perfectly happy to increase the well-being deficit on the excuse (but not the reality) of reducing the federal government fiscal one.

  2. harry wood says

    please explain the greed factor on health. I have lived in the not-for-profit health care countries of Asia and Europe and felt health care was rationed there by social class.

  3. George says

    Also see, from Forbes’ “token leftie”, “The Great American Retirement Scam: Why The Wealthiest CEO’s In America Want To Take Away Your Social Security”

  4. says

    Thanks for an insightful perspective RJ -while I believe there is a real “fiscal cliff” out there somewhere -we would likely find it if we continued Reagan/Bush economic policies that transfer and consolidate wealth at the top on the backs of the poor and working class Americans. The “crisis” is like the “Constitutional crisis” the Bush team invented in Gore v, Bush when there were still two months to properly count all of the votes in Florida -however the Bush/Cheney team were intent upon stealing the election and thus completely undermining the sanctity of the voting process.

    Issues related to debt and debt ceiling are smoke and mirror magic intended to create fear. Such fear would allow the GOP to consolidate more wealth at the top by attacking vital social programs, education and the dismantling of Medicare, Social Security, the Affordable Care Act while privatizing more programs and the deregulation of others.

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