Ferdinand Pecora, where are you?

(Ferdinand Pecora, circa 1933. Photo courtesy of the National Archives and Wikipedia.)

"Legal chicanery and pitch darkness were the banker's stoutest allies." 

--Ferdinand Pecora, commenting on Wall Street's resistance to government oversight after the nation became aware of wide-scale fraud in the early 1930s (link).

Ferdinand Pecora was the chief counsel for the United States Senate Committee on Banking and Currency. In 1933 he led an investigation into the causes of America's financial downfall. His most famous activity during the investigation was the questioning of Wall Street big-wigs. According to the Securities and Exchange Commission Historical Society: 

"Pecora was a pugnacious Sicilian-born New Yorker with a sharp mind and a quick tongue. Pecora made the hearings more than an investigation of the causes of the crash; he sought to discredit big business and Wall Street so much that fundamental reform would be possible. As an ethnic American and an outsider to the gentlemen's club that was American finance, he had no qualms about challenging his 'betters'...the high point of the hearings came when he looked at the House of Morgan. Pecora's investigators turned up a 'preferred list' of highly placed Americans allowed by the beneficence of J.P. Morgan and Company to buy low and sell high on insider information. Pecora succeeded in fanning public outrage, making it politically possible for FDR to make good on his promise of financial reform."

(Offices of J.P. Morgan and Co., circa 1900-1906. The company moved out of this building in 1989. In 1933, Ferdinand Pecora exposed an insider trading racket at the Wall Street behemoth. Photo courtesy of the Library of Congress Prints and Photographs Division.)

Pecora also questioned Charles Mitchell, chairman of National City Bank, the second largest bank in the U.S. at the time: "Under examination, Mitchell admitted that National City Bank gave bonuses to traders based on sales figures; the riskier the security, the higher the bonus. During the hearings, Mitchell also disclosed that National City bank sold off bad loans to Latin American countries by securitizing them and selling them to unsuspecting investors" (Corinne Crawford, "The Repeal of the Glass-Steagall Act and the Current Financial Crisis," Journal of Business & Economics Research, January 2011, Vol. 9 No. 1, p. 128).

Here's an interesting aside: National City Bank is now "Citigroup." Citigroup recently "agreed to pay $7 billion to resolve claims it misled investors about shoddy mortgage-backed securities in the run-up to the financial crisis" ("Citigroup to pay $7 billion to settle U.S. mortgage probe," Reuters, July 14, 2014).  

(Charles Mitchell testifying before Congress in 1939 about a sketchy windfall profit he received. Photo courtesy of the Library of Congress Prints and Photographs Division.)

Thanks to Pecora, and other reform-mind figures of the New Deal era, the American financial system was stabilized and protected fairly well from greed and incompetence for many years. For example, before New Deal reforms, during the years 1921 through 1933, there were 14,807 bank failures. After New Deal reforms, during the years 1934 through 1980, there were 565. This is a reduction from about 1,100 bank failures per year to 12 bank failures per year. Additionally, thanks to the creation of FDIC in 1933, Americans no longer lost their savings when banks went under.

Things, of course, have changed a lot since 1981. Ever since Reagan and his Republican colleagues ushered in distrust of government, de-regulation, and gargantuan tax breaks for the wealthy, banking has veered towards its pre-New Deal way of doing things. For example, during the years 1981 through 2014 there were 2,906 bank failures, or about 85 per year - a 600% increase from the 1934 through 1980 period.

Attitudes have changed as well. During the Pecora hearings the public became incensed at the misdeeds of Corporate America. But today?...outside of a few concerned citizens, groups, and politicians? Neh, not so much. As Jeffrey Sachs, director of Columbia University's Earth Institute observes: "Our society increasingly values people and their behavior according to their wealth, not to their integrity. Many of our leading CEOs preside over companies that have committed massive financial crimes -- fraud, price rigging, insider trading, and more -- and have paid tens of billions of dollars in fines; yet these CEOs are still revered because they are rich, and they remain frequent guests at the White House for the same reason."

Why is the public so complacent? Well, there are an awful lot of reality shows to keep up with, e.g., "Keeping Up with the Kardashians." So that takes up a lot of time. Also, the political right tells us that public school teachers and the unemployed are the real culprits behind our economic woes. Never mind that the middle class has shrunk in every state, and never mind that the Forbes 400 keeps adding billions to their private fortunes. No, the real economic catastrophe is that a public school teacher makes $60,000 and has her summers off. And food stamp recipients, my God, sometimes buy potato chips! The horror...the Horror!

(Richard Whitney, the president of the New York Stock Exchange from 1930 to 1935, in Washington, D.C. to testify before Congress in 1937. Whitney was a fierce opponent of government regulations, but had to stop his anti-regulatory lobbying when he was convicted of embezzlement in 1938. He spent three years in New York's Sing Sing Prison. Photo courtesy of the Library of Congress Prints and Photographs Division.)

And so, while the public's anger is being diverted by right-wing think tanks, advocacy groups, and mass media outlets (diverted to the "evils" practiced by teachers' unions and homeless people) the people wearing the suits in corner offices are getting away with murder. Many Americans, it seems, find a bag of nacho chips and salsa bought with food stamps to be infinitely more damaging to the economy than multi-billion dollar frauds, insider trading, collusion, price-fixing, money laundering for drug cartels, cheating soldiers on loans, cooking the books, tax evasion, predatory & illegal debt collection, etc. (activities, by the way, for which financial institutions have paid nearly $200 billion in fines and settlements in recent years - but don't shed any tears for them just yet, the executives and wealthy investors of these firms are still living in gated communities that you're not allowed in).

Bartlett Naylor, former Chief of Investigations for the U.S. Senate Banking Committee, recently commented on a settlement between U.S. regulators and big banks in the LIBOR interest rate-rigging scandal:

"[Law enforcement] discovered pervasive fraudulent practices where traders gave false information about rates at which they borrowed or loaned money with other banks. That established false benchmarks on which other rates were based. That harms average Americans when they agree to mortgages. Law enforcers also found that Deutsche Bank withheld and even destroyed information about the investigation. Yet, surprisingly, despite the severity of these offenses, the government concluded that these crimes should be punished only through a financial penalty...This settlement, which involves no jail time for any traders, seems out of sync with the problems identified. To make matters worse, many of the traders responsible for the frauds remain employed at Deutsche Bank. The DOJ claims that it may still prosecute individuals, and we hope it will pursue such work. To date, some traders at other firms such as Rabobank have been convicted, but no senior officers of any of the banks involved in the LIBOR case have faced charges."

Naylor has been sounding the alarm bell on financial wrongdoing for many years. In 2012, he noted of the LIBOR scandal: "I think what this scandal shows is that Wall Street is making this money, it's overtaking our economy, any way it can...and that includes cheating." Unfortunately, Naylor's logical analysis of the problem doesn't trump Fox News. And if Fox News says our nation's economic problems stem from a surfer on food stamps, then tens of millions will believe it. Indeed, the suits in the corner offices must be thanking God every day for the diversionary tactics of Fox News and other right-wing media.

U.S. Senator Elizabeth Warren has observed, "Without criminal prosecution, the message to every Wall Street banker is loud and clear. If you break the law, you are not going to jail, but you might end up with a much bigger paycheck." And Warren should know. When she warned Jaime Dimon, CEO of JP Morgan Chase, about possible lawbreaking he smiled and said, "So hit me with a fine. We can afford it." Dimon knows full well that, at least within the realm of financial activities, he's immune from criminal prosecution and that no civil penalty will ever make a dent in his company's profits.

(In the video above, from 2013, Cenk Uygar and Ben Mankiewicz of the Young Turks, analyze Elizabeth Warren's questioning of Wall Street regulators. Warren asks the regulators when the last time they took a big bank to trial for wrongdoing, and also expresses her concern about America's two-tiered justice system, i.e., a lenient system for the rich & powerful and a harsh system for everyone else. YouTube link at https://www.youtube.com/watch?v=dQo9W7sRbKQ.)

At the end of the day, we're kind of stuck with white collar crime and fraud, aren't we? Because whenever we try to reign in Wall Street with common sense regulations, Republican and Tea Party politicians cry "socialism!," and tell us "You can't hinder the work of the Job Creators!" And whenever we ask the executive branch to prosecute white collar crime more harshly, it nods in charming but empty agreement, thereby letting us know that they consider some criminals to be too big to jail.

Thanks to weak leadership, timid regulators, campaign cash from super-wealthy donors, and mass media misinformation & blame-shifting, we are truly living in the "Golden Era of White Collar Crime." I mean, let's be honest here, we've essentially come to the conclusion that, "Hey, if you've made billions of dollars through corporate wrongdoing, it's okay as long as you pay us a certain percentage of that profit, some of the time, through fines." But what kind of cultural message is it, when we essentially say, "Certain kinds of crime are, well, sorta okay."

It's been amazing to witness the rich & powerful treated with kid gloves, after so much criminal and civil wrongdoing while, at the same time, those who lost their jobs because of such wrongdoing have been scolded as lazy good-for-nothings and have faced a relentless attack on their social safety net programs (unemployment benefits, food stamps, expansion of Medicaid, etc.).

This upside-down ethical system we've embraced inspires me to ask, in desperation, "Ferdinand Pecora, where are you?"

Native Americans need a New Deal...more than they need another challenge

(WPA poster, courtesy of the Library of Congress Prints and Photographs Division.)

Native American reservations are experiencing high rates of poverty, high rates of unemployment, and high rates of youth suicide. Also, in 2014, "Tribal leaders testified [before Congress] on the difficult transportation conditions on Indian lands and the budget constraints that endanger safety and hamper economic development" ("Transportation needs drastically underfunded in Indian country by $80 billion," Native News Online, March 16, 2014). 

In light of these problems, I would think that the last thing Native Americans need is another challenge, but that's exactly what the White House has in store for them with "Generation Indigenous Native Youth Challenge." The idea seems to be to engage youth ages 14-24 in volunteerism, brainstorming on issues, making videos of their accomplishments, and sharing stories online.

I wish the participants of Gen-I, as it is called, success. However, I can't help feeling that something more is needed - much more. 

Instead of a challenge, for people already in a very challenging situation, how about more concrete, straightforward action - for example, a direct job creation program along the lines of the Civilian Conservation Corps (CCC), the Works Progress Administration (WPA), or the National Youth Administration (NYA)? Or, better still, all of the above.

During the New Deal, over 85,000 young Native American men enrolled in the CCC, working on agricultural, conservation, and infrastructure projects. The U.S. Office of Indian Affairs (now called the "Bureau of Indian Affairs"), highlighted the value of the program - both to Native Americans and the nation as a whole:

"The work accomplishments were impressive, and have contributed directly to the rebuilding of the reservations and the National Domain...The improved economic condition of the Indians has definitely influenced their morale. They were participants in the planning, they did the work, and they directly benefited by the results. Thousands of enrollees became skilled workers as a direct result of their participation in the Corps and are now contributing to the war effort as members of the armed forces, as skilled workers in war industries, and as producers of food...The program revitalized Indian life; it gave wage work where and when it was needed. It made possible the building up of reservation resources" (from Perry H. Merrill, Roosevelt's Forest Army: A History of the Civilian Conservation Corps, 1933-1942, 1981, pp. 44-45).

("Indian and Soldier," a mural created by artist Maynard Dixon in 1939, located in the Department of the Interior Building in Washington, DC. According to the Living New Deal, Dixon created this mural "with funding from the Section of Fine Arts," a New Deal arts program. Photo by Carol M. Highsmith, provided courtesy of the Library of Congress Prints and Photographs Division.)

According to historians James S. Olson and Raymond Wilson, "Under the Civil Works Administration, thousands of Native Americans were employed during the winter of 1934...The Public Works Administration, the Works Progress Administration, the National Youth Administration, and the Resettlement Administration provided more relief in the form of jobs and improved reservation conditions. The PWA, for example, employed Native Americans in building or improving reservation hospitals, schools, and sewage systems. The WPA hired over ten thousand Native Americans a year to index and file records for the Bureau of Indian Affairs, while the NYA provided six dollars monthly to each student enrolled in day school for clothing, supplies, and lunches [NYA participants worked in part-time jobs]. The Resettlement Administration assisted Native Americans in North and South Dakota by constructing needed water wells. The agency also purchased nearly one million acres of grazing land for the Pueblos and Navajos" (Native Americans in the Twentieth Century, University of Illinois Press, 1986, p. 111). 

Call me silly, but if Native Americans are facing unemployment, poverty, and despair--and there are infrastructure problems on top of this--I would think that the best policy approach would be a jobs program - of the type President Franklin Roosevelt and his colleagues created during the 1930s. In other words, Native Americans need a New Deal...more than they need another challenge. However, with a Republican-led Congress, determined to give tax breaks to the wealthy and punishment to the poor, I guess a challenge is about all they're going to get.

WPA Poster: Port of Philadelphia

(Image courtesy of the Library of Congress Prints and Photographs Division.)

Let's remember New Deal trees on National Arbor Day

(Did you know that "trees prevent wind erosion, save moisture, protect crops" and "contribute to human comfort and happiness"? WPA poster, courtesy of the Library of Congress Prints and Photographs Division.)

How many trees were planted by New Deal programs? Estimates and reports of CCC tree-planting range from 2-3 billion. According to the Final Report on the WPA Program, 1935-43, WPA workers planted about 177 million trees. The Final Report of the National Youth Administration, 1936-1943 lists nearly 19 million trees and shrubs planted. And then there were other New Deal activities related to trees. For example, the Soil Conservation Service managed nurseries.

I'm not aware of any comprehensive report regarding the totality of New Deal tree-planting, but I think 3 billion+ is a safe assumption.

Anyway, today is National Arbor Day. Go out and plant a tree...and remember the 3 billion+ trees of the New Deal.

(P.S. Did you know that when President Nixon--a Republican--created National Arbor Day he said, "...it is not too much to ask that each American assume a large, personal responsibility for renewing and preserving our environmental heritage." You won't catch too many Republicans talking like that today. They're too busy denying climate change, pooh-poohing regulations that promote clean air & water, apologizing to BP for not being allowed to pollute without scrutiny, kissing the feet of the Koch brothers, and so on.)

The Reverse New Deal: Reducing food assistance to those in need, to sate the greed of those without need

(Two bakers on a WPA project in Providence, Road Island, remove bread from an oven for distribution to schools in January of 1943. New Deal policymakers thought that all Americans should have an adequate supply of good food, regardless of income. Photo courtesy of the National Archives and the New Deal Network.)

In 1931, while governor of New York, President Franklin Roosevelt said, "It is clear to me that it is the duty of those who have benefited by our industrial and economic system to come to the front in such a grave emergency [the Great Depression] and assist in relieving those who under the same industrial and economic order are the losers and sufferers. I believe their contribution should be in proportion to the benefits they receive and the prosperity they enjoy" (Joseph J. Thorndike, Their Fair Share: Taxing the Rich in the Age of FDR, Washington, DC: Urban Institute Press, 2013, p. 65). 

As president, a few years later, Roosevelt would usher in such ideas, in the form of New Deal tax policies that targeted the super-wealthy, i.e., those who benefit the most from the physical labor and military service of others. These tax policies, along with policies that broadened the income tax base, set the stage for the greatest expansion of the American middle-class in U.S. history.

Things have changed significantly today... 

When Mitt Romney gave his infamous 47% speech to a group of wealthy Americans, he scoffed at the idea that low-income Americans have a right to food. Romney's attitude was in line with other right-wing politicians, officials, and candidates for office, who have, for example, called food stamp recipients "lazy pigs" and "wild animals," and have warned against feeding the needy because they might breed.

These sentiments are the inevitable product of the right's devotion to the ideas of Ayn Rand. Rand felt that a small group of elite men and women were superior to the masses of people who lived beneath them, in "hopeless ineptitude." Further, she felt that feelings of responsibility and sympathy towards the less fortunate were immoral and irrational. In 2013, Harry Binswanger, a member of the board of directors of the Ayn Rand Institute, wrote (after quoting Rand's "hopeless ineptitude" remarks): "Here’s a modest proposal. Anyone who earns a million dollars or more should be exempt from all income taxes. Yes, it’s too little. And the real issue is not financial, but moral. So to augment the tax-exemption, in an annual public ceremony, the year’s top earner should be awarded the Congressional Medal of Honor."

(A WPA food distribution project in Maryland, circa 1935-1943. During the New Deal, there were large projects to distribute surplus commodities and unwanted items to the less fortunate, e.g., food, clothes, and toys. Photo courtesy of the University of Maryland College Park Archives.)

Rewarding the rich and punishing the poor is the central tenet of the modern conservative movement. They have fully embraced Rand's philosophies; and have placed one of her most strident followers in charge of the House Ways and Means Committee - Paul Ryan, a man who required his staffers read Ayn Rand's "Atlas Shrugged" and credited Rand with his interest in becoming a politician. The Ways and Means Committee is the most important committee in Congress with respect to tax policy. (See, "What Paul Ryan Learned From Ayn Rand," The Daily Beast, August 16, 2012.) 

And now that Rand's philosophies have taken over the U.S. Congress, we are seeing the results: Republicans have recently voted to (a) make major cuts to food assistance programs and (b) eliminate the estate tax - a tax that only affects the wealthiest of the wealthy. And they are voting for these policies at a time when the number of homeless children in the United States has reached a record high and at a time when the super-wealthy are seeing their wealth reach record heights.  

Yes, our Republican "leaders" in Congress want to reduce food assistance to low-income children, so that the children of the super-wealthy can have more billions of dollars in their bank accounts (and when these children grow up they will, of course, give a certain percentage of that money back to Republican politicians--in the form of campaign cash--to keep the aristocratic-plutocratic cycle going). 

And we can be certain that while all this foolishness is going on, these very same Republicans will flaunt their "Christian values" and plead with America to "return to God."

Far from being offended by this behavior, tens of millions Americans continue to vote for right-wing politicians. Our Congress is now controlled by the right, and it's quite possible that the next president will be an Ayn Rand follower too. What kind of country will we have when all three branches of government are controlled by people who subscribe to the idea that American workers and low-income citizens are inferior people? What kind of policies will be generated by a government mesmerized by the Rand ideology of superiority?

Welcome to the Reverse New Deal: Reducing food assistance to those in need, to sate the greed of those without need.

WPA Poster: The five and dime store

(WPA poster, image courtesy of the Library of Congress Prints and Photographs Division.)

A New Deal for Indiana

(Robert Snyder of Fort Wayne, Indiana, has dinner with his wife and three children, in November of 1937 . Thanks to the WPA, Mr. Snyder was able to work, receive a paycheck, and support his family through the hard times of the Great Depression. Photo courtesy of National Archives and the New Deal Network.)

In recent years, Indiana's regressive taxation (i.e., forcing middle-class & low-income residents to pay higher tax rates than the rich) and low revenue have spurred budget cuts (or threats of budget cuts) for the state's libraries, K-12 schools, institutes for higher education, and more. Additionally, in 2013 the American Society of Civil Engineers gave Indiana a "D+" letter grade for its infrastructure, noting that nearly 2,000 of its bridges are "structurally deficient"; 16% of its major roads "are in poor condition"; its system of parks is nearly half-a-billion dollars short of its needs; and the state only has five full-time employees to oversee about a 1,000 dams - a quarter of which are considered "high hazard."

With the assistance of a more helpful federal government, major investments were made in Indiana during the 1930s and 40s - investments which still help the state today. Consider these facts & figures for the Hoosier State...

Civil Works Administration (CWA):

In January of 1934, there were 104,000 Indianans working in the CWA, building or repairing schools, roads, bridges, and more.

(Source: "Analysis of Civil Works Program Statistics," 1939, p. 18)

Federal Emergency Relief Administration (FERA):

In February of 1935, 2,861 college students in Indiana were employed in FERA's College Student Aid Program. This was a program "undertaken in order to enable young persons who would not otherwise have been able to do so to continue their education, and thereby reduce the influx of young workers into the labor market" (recall that during the Great Depression there was a large drop in the demand for labor).

Between 1933 and 1935, FERA granted $52 million to Indiana for relief efforts (about $885 million in today's dollars). FERA funds typically went towards cash relief, rural relief projects, and a wide variety of work programs.

(Source: "Final Statistical Report of the Federal Emergency Relief Administration," 1942, pp. 64, 103, and 232)

(Nursery school furniture made in Indiana, with the assistance of FERA funds, 1935. Photo courtesy of the FDR Presidential Library and Museum and the New Deal Network.) 

Public Works Administration (PWA):

By 1939, the PWA had contributed $44 million in funding towards 477 infrastructure projects in Indiana (not including federal projects). In today's dollars, that's about $749 million.

(Source: "America Builds: The Record of PWA," 1939, p. 284)

Civilian Conservation Corps (CCC):

Between 1933 and 1942, about 64,000 Indiana men were employed in the CCC. This included about 59,000 junior and veteran enrollees and 5,000 staff. Among their many accomplishments were the planting of 24 million trees and the building of of 580 wildlife shelters.

(Source: Perry H. Merrill, "Roosevelt's Forest Army: A History of the Civilian Conservation Corps, 1933-1942," 1981, p. 127)

(A CCC camp sign in Brownstown, Indiana, 1933. Notice the image of what appears to be President Roosevelt in the upper right hand corner of the sign. Photo courtesy of the FDR Presidential Library and Museum.)

Public Works of Art Project (PWAP):

Between 1933 and 1934, in Region 9 of the PWAP (Ohio, Indiana, Kentucky, and Michigan), unemployed artists were paid to create 70 sculptures, 159 water color paintings, 161 murals, 210 oil paintings, and other works of art, for use in public buildings and parks.

(Source: Public Works of Art Project, "Report of the Assistant Secretary of the Treasury to Federal Emergency Relief Administrator, December 8, 1933 - June 30, 1934," 1934, p. 8)

National Youth Administration (NYA):

During academic year 1939-1940, 781 schools and colleges in Indiana were participating in the NYA program, employing about 11,000 students each month.

During any given month of fiscal year 1942, there were about 6,000 young Indiana men & women in the NYA's out-of-school work program.

(Source: Federal Security Agency - War Manpower Commission, "Final Report of the National Youth Administration, Fiscal Years 1936-1943," 1944, pp. 246-247, and 254)

(WPA Children's Theatre in Gary, Indiana. Photo courtesy of the FDR Presidential Library and Museum and the New Deal Network.)

Post Offices:

During the New Deal era, the U.S Treasury built or expanded Post Office buildings in Indiana and commissioned artists to decorate them. See the Living New Deal's Indiana pages for examples.

Works Progress Administration (WPA):

Between 1935 and 1943, WPA workers in Indiana produced 6.8 million articles of clothing; served 13.1 million school lunches; created or improved 24,000 miles of roads; built or improved 3,000 bridges & viaducts; installed or improved 36,000 culverts; engaged in over 950 projects to build, repair, or improve schools; created or improved 361 parks; installed 245 miles of new water lines; constructed 75,000 linear feet of new airport & airfield runway; and more.

(Source: "Final Report on the WPA Program, 1935-43," 1946, pp. 134-136)

(A WPA culvert project in Fort Wayne, Indiana, 1937. Photo courtesy of the National Archives and the New Deal Network.)

The making of a WPA barrel chair

This barrel chair was made by the WPA in West Virginia. All images courtesy of the National Archives and the New Deal Network.

The Reverse New Deal: Eliminating the estate tax and solidifying the American caste system

The Merriam-Webster Dictionary defines "caste" as "a division of society based upon differences of wealth, rank, or occupation."

(Franklin and Eleanor Roosevelt with friends and family, 1942. Photo courtesy of the FDR Presidential Library and Museum.)

Even as income & wealth inequality continues to soar, and even as politicians work feverishly to decimate our already-weak social safety net--screaming, "We can't afford it!"--Republicans are trying to eliminate the estate tax (a tax that only affects the wealthiest of the wealthy), thereby terminating hundreds of billions of dollars of federal revenue.

Republicans want to make sure that the children of the wealthy will never have to struggle for success, or even work for a living, and that these new generations of idle rich citizens will have loads of cash to thank them for it. Make no mistake about it, this is not only a naked display of plutocracy, but it's also a sign that we're heading towards a more rigid caste system where tremendous amounts of wealth are passed down from generation to generation, and within a small number of families. Meanwhile, everyone not born into wealth will be stuck with stagnant wages, rising prices, and rising debt (i.e., more of what's already happening).

President Franklin Roosevelt once said, "The transmission from generation to generation of vast fortunes by will, inheritance, or gift is not consistent with the ideas and sentiments of the American people." And so, with the Revenue Act of 1935, he and his fellow New Deal policymakers raised the top tax rate on estates from 50% to 70%. (See, Joseph J. Thorndike, Their Fair Share: Taxing the Rich in the Age of FDR, Washington, DC: Urban Institute Press, 2013, pp. 162-174).

Today, tens of millions of American voters are electing politicians who are fighting for gargantuan tax cuts for only a few American voters (the 0.1%). Read that again, very carefully. The rest of us? Oh, we might get a $5 tax savings here and there, but we're mainly getting higher (and regressive) taxes, tolls, fees, and fines at the state & local level to make up for the revenue difference. That's right: We're subsidizing tax-cuts-for-the-wealthy by paying more taxes, tolls, fees, and fines, even as we struggle to pay for the basic necessities of life (see my blog posts here and here).

Welcome to the Reverse New Deal: Eliminating the estate tax and solidifying the American caste system.  

(In the video above (full of colorful language, by the way), Bill Maher ponders why the Republican philosophy about the virtue of work doesn't apply to the heirs of the super-wealthy, and why Republicans are trying to get rid of all taxes on inherited wealth. Original YouTube link: https://www.youtube.com/watch?v=arIH19fGP84).

WPA Art: "Forgotten Cow"

("Forgotten Cow," a graphic art by WPA artist Jack Markow. Image courtesy of the National Archives and the New Deal Network.)

WPA Art - "Harlem Musicians"

("Harlem Musicians," a silk screen by WPA artist Elizabeth Olds. Image courtesy of the National Archives and the New Deal Network.)

WPA Art - "Unemployed"

Above: "Unemployed," a lithograph by WPA artist Joland Gross Bettelheim. With the official unemployment rate much improved since the height of the recession, many people might not know that there are still nearly 22 million Americans who would like a full-time job but can't find one. Image courtesy of the National Archives and the New Deal Network.

A New Deal for Wisconsin

(Wisconsin state seal, image courtesy of Wikipedia.)

Trickle-down economics has not been kind to Wisconsin. For example, since 2000 the middle-class in Wisconsin has shrunk faster than in any other state. And Republican Governor Scott Walker's economic record leaves much to be desired: "The state lags in job growth and its budget faces a shortfall."

It doesn't have to be this way of course. Instead of focusing on campaign cash from out-of-state billionaires, pooh-poohing a minimum wage increase, reducing funding for education, and demonizing unions, Wisconsin politicians could learn a thing or two from the New Deal. Here are some New Deal facts & figures for the Badger State...

Federal Emergency Relief Administration (FERA):

In February of 1935, 2,835 college students in Wisconsin were employed in FERA's College Student Aid Program. This was a program "undertaken in order to enable young persons who would not otherwise have been able to do so to continue their education, and thereby reduce the influx of young workers into the labor market" (recall that during the Great Depression there was a large drop in the demand for labor).

Between 1933 and 1935, FERA granted $77 million to Wisconsin for relief efforts (about $1.3 billion in today's dollars). FERA funds typically went towards cash relief, rural relief projects, and a wide variety of work programs.

(Source: "Final Statistical Report of the Federal Emergency Relief Administration," 1942, pp. 64, 103, and 232)

Civil Works Administration (CWA):

In January of 1934, there were 134,000 Wisconsinites working in the CWA, building or repairing schools, roads, bridges, and more.

(Source: "Analysis of Civil Works Program Statistics," 1939, p. 18)

(A CWA work plaque at Breese Stevens Athletic Field, in Madison, Wisconsin. Photo courtesy of James Steakley and Wikipedia. Used here under the CCA-SA 3.0 Unported License.)

Public Works Administration (PWA):

By 1939, the PWA had contributed $35 million in funding towards 462 infrastructure projects in Wisconsin (not including federal projects). In today's dollars, that's about $596 million.

(Source: "America Builds: The Record of PWA," 1939, p. 284)

Civilian Conservation Corps (CCC):

Between 1933 and 1942, over 75,000 Wisconsin men were employed in the CCC. This included about 64,000 junior and veteran enrollees, 2,000 Indians, and 9,000 staff. Among their many accomplishments were the planting of 265 million trees and the stocking of 517 million fish.

(Source: Perry H. Merrill, "Roosevelt's Forest Army: A History of the Civilian Conservation Corps, 1933-1942," 1981, p. 190)

  (Being in the CCC wasn't just about work. Here, a group of enrollees in Menominie, Wisconsin are learning about auto repair. Photo courtesy of the National Archives and the New Deal Network.)

Public Works of Art Project (PWAP):

Between 1933 and 1934, in Region 10 of the PWAP (Illinois, Wisconsin, and Minnesota), unemployed artists were paid to create 4 bas reliefs, 56 sculptures, 513 oil paintings, and other works of art, for use in public buildings and parks.

(Source: Public Works of Art Project, "Report of the Assistant Secretary of the Treasury to Federal Emergency Relief Administrator, December 8, 1933 - June 30, 1934," 1934, p. 8)

National Youth Administration (NYA):

During academic year 1939-1940, 652 schools and colleges in Wisconsin were participating in the NYA program, employing about 12,600 students each month.

During any given month of fiscal year 1942, there were about 5,500 young Wisconsin men & women in the NYA's out-of-school work program.

(Source: Federal Security Agency - War Manpower Commission, "Final Report of the National Youth Administration, Fiscal Years 1936-1943," 1944, pp. 246-247, and 254)

(Young men and women in the NYA could learn trades to help them earn a living. These two NYA workers are training in Two Rivers, Wisconsin. Photo courtesy of the FDR Presidential Library & Museum and the New Deal Network.)

Post Offices:

During the New Deal era, the U.S Treasury built or expanded Post Office buildings in Wisconsin and commissioned artists to decorate them. See the Living New Deal's Wisconsin pages for examples.

Works Progress Administration (WPA):

Between 1935 and 1943, WPA workers in Wisconsin produced 7 million articles of clothing; served 15.4 million school lunches; created or improved 23,000 miles of roads; built or improved 1,000 bridges; installed or improved 19,000 culverts; engaged in 600 projects to build, repair, or improve schools; created or improved 452 parks; installed 400 miles of new water lines; constructed 110,000 linear feet of new airport & airfield runway; and more.

(Source: "Final Report on the WPA Program, 1935-43," 1946, pp. 134-136)

(These WPA musicians performed around the Prentice, Wisconsin area. Photo courtesy of the National Archives and the New Deal Network.)

Ayn Rand and the New Deal

(Ayn Rand. Photo courtesy of Wikipedia.)

The New Deal protected the bank deposits of Americans, provided electric power to rural areas, created or improved thousands of parks that we still use today, modernized our infrastructure, guarded against fraud on Wall Street, gave jobs to workers who had been cast aside by big business, planted trees in areas that had been wiped out by the logging industry, provided food to malnourished children, lessened the hardships of old-age poverty, and much more.

In 1936, Ayn Rand wrote, "My feeling for the New Deal is growing colder and colder. In fact, it's growing so cold that it's coming to the boiling point of hatred" (Jennifer Burns, Goddess of the Market: Ayn Rand and the American Right, New York: Oxford University Press, 2009, p. 38).   

Rand's feelings were more sympathetic towards William Hickman, a man who abducted, murdered, and mutilated a 12-year-old girl in 1927. Rand was dismayed by the public's anger at Hickman: "This case is not moral indignation at a terrible crime. It is the mob's murderous desire to revenge its hurt vanity against the man who dared to be alone" (Ibid. at p. 25). 

Ayn Rand, perhaps more than any other person, is responsible for the political right's philosophy that government should not help the less fortunate. Her books have sold by the millions, have been made into movies, and Rand herself "has been the ultimate gateway drug to life on the right" (Ibid. at p. 4). Is it any wonder, now that they have political power all across the country, that the political right is protecting millionaires & billionaires from increased taxation while, at the same time, they are forcing K-12 schools to shut down, closing homeless shelters, cutting off financial assistance for indigent funerals, denying Medicaid coverage to low-income workers, and calling poor Americans who receive food assistance "lazy pigs" and "wild animals"?

Ultimately, of course, it's up to us to decide who will govern us and who will create the public policies that shape our culture. If we keep voting for politicians who follow the Ayn Rand vision for our nation (or if we don't vote at all), then shame on us. As scientist Neil deGrasse Tyson recently said, "I don’t blame the politicians for a damn thing because we vote for the politicians. I blame the electorate."

I blame both. And I hope that some future generation of Americans will choose the New Deal path over the "Virtue of Selfishness" path - because the latter has unsettled our nation with extreme income & wealth inequality, an enormous national debt, a world-leading prison population, stagnant wages, unrestrained usury, crushing student loan debt, regressive taxation at the state & local level, racial tension, hatred of the poor, and just about every other type of negative cultural phenomenon you can imagine.   

What happened to our New Deal SEC?

(William Douglas (middle) was the longest-serving U.S. Supreme Court Justice in American history, and an avid environmentalist. Many might not know that he was also chair of the Securities & Exchange Commission (SEC) from 1937-1939. In the photo above, Douglas oversees the swearing in of a new SEC member. Photo courtesy of the Library of Congress Prints and Photographs Division.)

     

Yesterday, we learned that, "Senate Democrats are losing patience with the Securities and Exchange Commission over the agency's failure to implement a new CEO pay rule." In 2010, Congress required that the SEC make a rule that "would mandate that companies publicly disclose the ratio of their CEO's pay to the median earnings of workers at the firm." This congressional action was part of the supposed Wall Street reform (if you recall, millionaire CEOs were getting gargantuan bonuses even as the economy around them fell apart, workers lost their jobs, people lost their homes, etc., etc.). Why is the SEC delaying the rule? Well, maybe because "Corporate executives from dozens of different industries have pressured the SEC to delay the rule." (See, "Senate Democrats Are Getting Fed Up With The SEC's Delay On CEO Pay Rule," Huffington Post, April 6, 2015)

This isn't the first sign that the SEC has been commandeered by Wall Street.

When James Kidney, a well-respected lawyer at the SEC, retired he said the SEC had become "an agency that polices the broken windows on the street level and rarely goes to the penthouse floors. On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening" ("SEC Goldman Lawyer Says Agency Too Timid on Wall Street Misdeeds," Bloomberg, April 8, 2014).

When the SEC has gone after big financial institutions for securities fraud, they often reach settlements that allow the institutions to avoid admissions of wrongdoing. This helps to keep things hush-hush, so the public will be kept in the dark as to just how bad the actions of our big financial institutions really are. When the SEC brought such a settlement to U.S. District Court Judge Ned Rakoff in 2011, for review, Rakoff rejected the settlement, writing:

"...in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances."

  (SEC Chairman William Douglas (at the head of the table) holds a press conference in 1937. Photo courtesy of the Library of Congress Prints and Photographs Division.)

When New Deal policymakers created and ran the SEC in 1930s they were in no mood to play footsie with Wall Street. For example, when a big wig lawyer from Wall Street, William Harding Jackson, spoke to SEC Chairman William Douglas, in an attempt to weaken new rules, the following exchange occurred:

Jackson: "Have you read our proposed statement?"

Douglas: "The SEC has read it, and it is not satisfactory. The negotiations are off."

Jackson: "Well, I suppose you'll go ahead with your own program?"

Douglas: "You're damned right I will."

Jackson: "When you take over the Exchange, I hope you'll remember we've been in business one hundred and fifty years. There may be some things that you will like to ask us."

Douglas: "There is one thing I'd like to ask."

Jackson: "What is it?"

Douglas: "Where do you keep the paper and pencils?"

(From Michael Hiltzik, The New Deal: A Modern History, New York: Simon & Schuster, Inc., 2011, pp. 409-410)

Unfortunately, New Deal-type policymakers are few and far between today. Throw in an apathetic electorate, and you have the recipe for continued greed, corruption, and crime on Wall Street. And this is why Jaime Dimon, CEO of J.P. Morgan Chase, can smile at a U.S. Senator and say, "So hit me with a fine. We can afford it" ("Guess What Happened When JPMorgan's CEO Visited Elizabeth Warren's Office," Huffington Post, March 31, 2015).

The New Deal created the SEC to be tough on the misdeeds of Wall Street, for the benefit of investors and also for the benefit of the broader public. But today, one has to wonder: Who is the SEC working for?

The Reverse New Deal: A willing embrace of regressive taxation

(At Griffith Stadium in Washington, D.C., President Roosevelt throws the ceremonial first pitch for a game between the Washington Senators and the Boston Red Sox, 1934. Photo courtesy of the FDR Presidential Library & Museum.)

Sales taxes are highly regressive taxes. The lower your income, the greater your burden. For example, suppose you and Bill Gates both went to a store and bought the same dish washing machine for $500, and paid a 5% sales tax. The $25 sales tax that you paid required a higher percentage of your income to satisfy than it did of of Bill Gates' income. Indeed, to Bill Gates, the $25 is nothing more than a tiny fraction of a penny. But to you, the $25 could fill up your gas tank, buy a new pair of jeans, help pay for a family dinner, and so on. This is the nature of regressive taxation.

This fundamental unfairness of the sales tax caused President Franklin Roosevelt to shun it time and time again, in favor of more progressive business and income taxes. As historian Joseph J. Thorndike highlights, even as war escalated, "Roosevelt never wavered...Roosevelt came out firmly against the sales tax in all its forms. Time and again, when asked by reporters to reconsider his position, the president stood firm" (Their Fair Share: Taxing the Rich in the Age of FDR," Washington, DC: The Urban Institute Press, 2013, p. 240).

The favoring of progressive taxation over regressive taxation was a consistent theme in the FDR Administration. They weren't always successful, but they tried to adhere to that principle. FDR believed that the wealthy should pay more, out of a matter of fairness (i.e., their greater ability to bear the burden).

   (Republican Governor of Kansas, Sam Brownback. Photo courtesy of Wikipedia.)

My, oh my, how things have changed under Republican leadership. In contrast to FDR, Republican and Tea Party politicians all across the country are seeking to lower the tax burden on the super-wealthy, and raise it on the middle-class and poor. And the most remarkable thing of all, is that millions of middle-class and poor Americans are in agreement - as evidenced by their electing and re-electing of these politicians.

Governor Sam Brownback of Kansas recently promoted regressive taxation: "I think over time I would like to see us move toward a consumption basket of taxes. Not the property tax — leave that alone — but move more toward consumption set of taxes to overall fund the government." Indeed, Brownback and his fellow "conservative" legislators have already begun the process, with a proposal to raise the tax on a pack of cigarettes from 79 cents to $2.29. Their ultimate goal is "eliminating the income tax," so that the tax burden will shift more and more towards the middle-class & poor - in the form of higher sales & consumption taxes, higher road & bridge tolls, higher DMV fees, more traffic fines, etc. (See "Lawmakers tackle education, social issues but budget remains," The Topeka Capital-Journal, April 4, 2015)

Similar to the Kansas situation, a conservative politician and radio show host in Los Angeles has called for an increase in the sales tax to pay for the repair of roads, bridges, sidewalks, and so on, after his conservative colleagues in Congress have spent decades cutting taxes on the wealthy (thereby reducing the federal government's willingness and ability to help improve our nation's infrastructure). (See "Infrastructure Cracks as Los Angeles Defers Repairs," New York Times, September 1, 2014)

If you're interested in seeing other ways that Republican and Tea Party politicians are siphoning more cash from your wallet, see my blog post, "Ten Ways The Political Right Is Vacuuming Money Out Of Your Wallet With Their Trickle-Down Economics. Welcome To "The Great Right-Wing Revenue Switcheroo."

Welcome to the Reverse New Deal: A willing embrace of regressive taxation.

Easter Sunday Dust Storm

Above: A dust storm barreling through Baca County, Colorado on Easter Sunday, 1935. In response to dust storms like this, as well as other erosion events, New Deal policymakers created the Soil Conservation Service. Photo courtesy of the FDR Presidential Library and Museum.)

WPA Art - Alaska

The following images are from the 1939 WPA publication, A Guide to Alaska: Last American Frontier and, with respect to the paintings, probably only give a hint as to the fine quality of the actual art. I don't know if any of the paintings still exist. If you have any information, please let me know (wpatoday@gmail.com).

Click on any image to enlarge.

(Inside cover of the book.)

("Matanuska Valley," by WPA artist Merlin Pollock.)

("Glacier," by WPA artist F. Lo Pinto.)

("Spawning Creek," by F. Lo Pinto.)

New Deal Stamps

(President Roosevelt and his stamp collection. Photo courtesy of the Library of Congress Prints and Photographs Division.)

A while back I did some blogs about postage stamps related to, or reminiscent of, the New Deal. I recently found another one--the Rural Electrification Administration--so I thought I would show all the stamps again here. (All images are scans from personal collection.)