Tea Party brews up a political crisis

Only in America could a woman like Christine O’Donnell become, in the words of New York Times columnist Frank Rich, “the brightest all-American media meteor since Balloon Boy”.

Rich views “I am not a witch” O’Donnell as a possible godsend for the Republican party as the US mid-term elections loom on November 2. He could not resist adding that the 41-year-old senatorial candidate for the state of Delaware, who is an evangelical Christian, is perhaps best known “for taking a fearless stand against masturbation, the one national pastime with more fans than baseball”.

Laughable as people like O’Donnell and their primitive right wing views might appear, her meteoric rise, like that of Sarah Palin before her, is an indication of the growing hold of the anti-state, anti-government Tea Party movement within the Republican Party (GOP).

O’Donnell provides the GOP with a symbolic figure – a small-town struggler on low-pay with “proletarian cred”. The reality about the Tea Party, though, is that it is bankrolled by the billionaire Koch family who first made their fortune in dealings with the dictator Joseph Stalin. It is making political capital out of the pain being suffered by millions of Americans as unemployment stands at 10% and repossessions leave whole areas of US towns and cities lifeless.

Behind its populist façade, the Tea Party is actually a plaything of massive corporate interests. Amongst its backers are many from the Forbes list of the super-rich. They include oil barons Robert Rowling and Trevor Rees-Jones, and not least, Rupert Murdoch and his News Corporation. Through Fox television, Murdoch provides constant favourable news coverage for the Tea Party. Clearly the interests of these super-rich are nothing to do with the Tea Party’s supposed support for small town and impoverished Americans.

The new breed of Republican leaders also include people such as Nevada candidate Sharron Angle. Angle is another Christian fundamentalist who opposes abortion, no matter what, even for incest and rape. She wants to abolish the following: the Department of Education, Social Security, the Department of Energy, Environmental Protection Agency, National Endowment of the Arts, housing agencies Freddie Mac and Fannie Mae and Planned Parenthood funding. Perhaps surprisingly, Angle is standing against a Tea Party backed candidate.

So where does this leave President Barack Obama and the Democratic Party? Despite their success in passing healthcare, financial legislation and the Recovery Act, the administration’s “Big State” efforts to rescue the economy from meltdown have not stopped the jobs and homes haemorrhage.

While things have taken a slight turn for the better in the latest popularity ratings, the administration confronts a massive melt-down of confidence in a presidency. It began with the highest of hopes and tears of joy when the first-ever African-American was elected only two years ago.

But as the recession turns towards another Great Depression, that euphoria has turned into disappointment and shock. Obama admitted in a recent interview with Rolling Stone magazine: “We've seen an increase in poverty, and an increase in unemployment, and people's wages and incomes have stagnated.”

Not only is there a distinct possibility that the Republicans will gain control over both Senate and House of Representatives on November 2. Obama is also weathering a major changeover of White House staff.

Behind these harsh realities facing a president hailed for his skills as the great communicator is the historic weakness of the US economy in the face of ruthless competition from China. What we are seeing is a crisis not only for the Democrats but America’s political system as a whole. Some suggest that America is already “ungovernable” and that is likely to be even more the case after the mid-term elections.

Washington Post journalist Bob Woodward has revealed that last November Obama was virtually threatened with mutiny when he tried to overrule the military brass on withdrawal from Afghanistan. A disgruntled military, a possibly lame-duck president and a populist Tea Party working with big business, is a heady cocktail with unpredictable side-effects.

Corinna Lotz
A World to Win secretary

Regulators dance to the banks' tune

That Goldman Sachs, the world’s largest investment bank, is set to pay record bonuses that even exceed those made before the credit crunch, is only one sign that nothing has changed in the world of global finance. This comes hard on the heels of decisions by Alistair Darling and the European Union to leave the banking system more or less as it was before it collapsed gratefully into the arms of taxpayers.

Sachs, whose former executives include the US treasury secretary Timothy Geithner and his predecessor Henry Paulson – joint architects of the bail-outs – has reported record earnings for the second quarter and if it maintains these profit levels, bonus payouts for the year could reach a staggering $22 billion.

As Matt Taibbi, the fearsome US journalist, writes in a powerful article for Rolling Stone: “The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

All of which goes to show two things: how powerful banks like Goldman Sachs remain and how powerless governments and states are in relation to global financiers. Remember the pledges at the G20 summit in London in April? Obama and Brown et al committed themselves to regulate the banks so that the financial meltdown could not happen again. You would do well to remember that the summit began gathering on April Fool’s Day.

The joke, made at our expense, is that the state will use taxpayers’ money to keep the banks afloat – Goldman, for example, got billions from the US government to cover losses incurred when insurance giant AIG went belly up – while only the most cosmetic regulatory changes will be introduced.

Last week, Alistair Darling, the chancellor, published a white paper on the future of banking. While acknowledging that any significant changes would have to be agreed globally, the white paper remains in favour of preserving what many see as a major cause of the collapse – the use by banks of arms-length “special vehicles” for the purposes of speculation.

Although the report is supposed to be dedicated to regulation, it adds that “the government is clear that the financial crisis was not caused by a lack of powers within the UK’s regulatory regime”. Not only that, but “the prime cause of the problem was the action (or, in many cases, inaction) of market participants”. A similar view is being taken by the European Union and by the Bank for International Settlements, leaving one commentator to suggest:

The message, then, is speculative business as usual, though at a higher capital cost. So the crazy habit of running the banking system as an off-balance sheet vehicle of the public sector may still be intact. To put it in the language of former Citigroup chief Chuck Prince, the regulators are still dancing. The taxpayer is still at risk.

What actually exists is an unholy alliance between regulators – aka the state – and the banking behemoths, which politicians like Brown and Obama orchestrate. The objective is to maintain and sustain capitalism at all costs, one of which is years of cuts in spending on essential public services to pay for the banking bail-outs. The moral of this story is there is not going to be a kinder, better regulated, fairer kind of global capitalism at the end of this crisis and the sooner that is understood and acted upon, the better.


Paul Feldman
Communications editor