How Goldman Sachs Sacked Washington

THE RIGHT WING
Trump attacked Hillary for her finance ties, and then proceeded to stock his Cabinet with former executives at the nation’s largest banks.

Photo Credit: Screenshot / YouTube

Irony isn’t a concept with which President Donald J. Trump is familiar. In his Inaugural Address, having nominated the wealthiest Cabinet in American history, he proclaimed, “For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished—but the people did not share in its wealth.” Under Trump, an even smaller group will flourish—in particular, a cadre of former Goldman Sachs executives. To put the matter bluntly, two of them (along with the Federal Reserve) are likely to control our economy and financial system in the years to come.

Infusing Washington with Goldman alums isn’t exactly an original idea. Three of the last four presidents, including The Donald, have handed the wheel of the U.S. economy to ex-Goldmanites. But in true Trumpian style, after attacking Hillary Clinton for her Goldman ties, he wasn’t satisfied to do just that. He had to do it bigger and better. Unlike Bill Clinton and George W. Bush, just a sole Goldman figure lording it over economic policy wasn’t enough for him. Only two would do.

The Great Vampire Squid Revisited

Whether you voted for or against Donald Trump, whether you’re gearing up for the revolution or waiting for his next tweet to drop, rest assured that, in the years to come, the ideology that matters most won’t be that of the “forgotten” Americans of his Inaugural Address. It will be that of Goldman Sachs and it will dominate the domestic economy and, by extension, the global one.

At the dawn of the twentieth century, when President Teddy Roosevelt governed the country on a platform of trust busting aimed at reducing corporate power, even he could not bring himself to bust up the banks. That was a mistake born of his collaboration with the financier J.P. Morgan to mitigate the effects of the Bank Panic of 1907. Roosevelt feared that if he didn’t enlist the influence of the country’s major banker, the crisis would be even longer and more disastrous. It’s an error he might not have made had he foreseen the effect that one particular investment bank would have on America’s economy and political system.

There have been hundreds of articles written about the “world’s most powerful investment bank,” or as journalist Matt Taibbi famously called it back in 2010, the “great vampire squid.” That squid is now about to wrap its tentacles around our world in a way previously not imagined by Bill Clinton or George W. Bush.

No less than six Trump administration appointments already hail from that single banking outfit. Of those, two will impact your life strikingly: former Goldman partner and soon-to-be Treasury Secretary Steven Mnuchin and incoming top economic adviser and National Economic Council Chair Gary Cohn, former president and “number two” at Goldman. (The Council he will head has been responsible for “policy-making for domestic and international economic issues.”)

Now, let’s take a step into history to get the full Monty on why this matters more than you might imagine. In New York, circa 1932, then-Governor Franklin Delano Roosevelt announced his bid for the presidency. At the time, our nation was in the throes of the Great Depression. Goldman Sachs had, in fact, been one of the banks at the core of the infamous crash of 1929 that crippled the financial system and nearly destroyed the economy. It was then run by a dynamic figure, Sidney Weinberg, dubbed “the Politician” by Roosevelt because of his smooth tongue and “Mr. Wall Street” by the New York Times because of his range of connections there. Weinberg quickly grasped that, to have a chance of redeeming his firm’s reputation from the ashes of public opinion, he would need to aim high indeed. So he made himself indispensable to Roosevelt’s campaign for the presidency, soon embedding himself on the Democratic National Campaign Executive Committee.

After victory, he was not forgotten. FDR named him to the Business Advisory Council of the Department of Commerce, even as he continued to run Goldman Sachs. He would, in fact, go on to serve as an advisor to five more presidents, while Goldman would be transformed from a boutique banking operation into a global leviathan with a direct phone line to whichever president held office and a permanent seat at the table in political and financial Washington.

Now, let’s jump forward to the 1990s when Robert Rubin, co-chairman of Goldman Sachs, took a page from Weinberg’s playbook. He recognized the potential in a young, charismatic governor from Arkansas with a favorable attitude toward banks. Since Bill Clinton was far less well known than FDR had been, Rubin didn’t actually cozy up to him from the get-go. It was another Goldman Sachs executive, Ken Brody, who introduced them, but Rubin would eventually help Clinton gain Wall Street cred and the kind of funding that would make his successful 1992 run for the presidency possible. Those were favors that the new president wouldn’t forget. As a reward, and because he felt comfortable with Rubin’s economic philosophy, Clinton created a special post just for him: first chair of the new National Economic Council.

It was then only a matter of time until he was elevated to Treasury Secretary. In that position, he would accomplish something Ronald Reagan—the first president to appoint a Treasury Secretary directly from Wall Street (former CEO of Merrill Lynch Donald Regan)—and George H.W. Bush failed to do. He would get the Glass-Steagall Act of 1933 repealed by hustling President Clinton into backing such a move. FDR had signed the act in order to separate investment banks from commercial banks, ensuring that risky and speculative banking practices would not be funded with the deposits of hard-working Americans. The act did what it was intended to do. It inoculated the nation against the previously reckless behavior of its biggest banks.

Rubin, who had left government service six months earlier, wasn’t even in Washington when, on November 12, 1999, Clinton signed the Gramm-Leach-Bliley Act that repealed Glass-Steagall. He had, however, become a board member of Citigroup, one of the key beneficiaries of that repeal, about two weeks earlier.

As Treasury Secretary, Rubin also helped craft the North American Free Trade Agreement (NAFTA). He subsequently convinced both President Clinton and Congress to raid U.S. taxpayer coffers to “help” Mexico when its banking system and peso crashed thanks to NAFTA. In reality, of course, he was lending a hand to American banks with exposure in Mexico. The subsequent $25 billion bailout would protect Goldman Sachs, as well as other big Wall Street banks, from losing boatloads of money. Think of it as a test run for the great bailout of 2008.

A World Made by and for Goldman Sachs

Moving on to more recent history, consider a moment when yet another Goldmanite was at the helm of the economy. From 1970 to 1973, Henry (“Hank”) Paulson had worked in various positions in the Nixon administration. In 1974, he joined Goldman Sachs, becoming its chairman and CEO in 1999. I was at Goldman at the time. (I left in 2002.) I remember the constant internal chatter about whether an investment bank like Goldman could continue to compete against the super banks that the Glass-Steagall repeal had created. The buzz was that if Goldman and similar investment banks were allowed to borrow more against their assets (“leverage themselves” in banking-speak), they wouldn’t need to use individual deposits as collateral for their riskier deals.

In 2004, Paulson helped convince the Securities and Exchange Commission (SEC) to change its regulations so that investment banks could operate as if they had the kind of collateral or backing for their trades that goliaths like Citigroup and JPMorgan Chase had. As a result, Goldman Sachs, Lehman Brothers, and Bear Stearns, to name three that would become notorious in the economic meltdown only four years later (and all ones for which I once worked) promptly leveraged themselves to the hilt. As they were doing so, George W. Bush made Paulson his third and final Treasury Secretary. In that capacity, Paulson managed to completely ignore the crisis brewing as a direct result of the repeal of Glass-Steagall, the one I predicted was coming in Other People’s Money, the book I wrote when I left Goldman.

In 2006, Paulson was questioned on his obvious conflicts of interest and responded, “Conflicts are a fact of life in many, if not most, institutions, ranging from the political arena and government to media and industry. The key is how we manage them.” At the time, I wrote, “The question isn’t how it’s a conflict of interest for Paulson to preside over our country’s economy but how it’s not?” For men like Paulson, after all, such conflicts don’t just involve their business holdings. They also involve the ideology associated with those holdings, which for him at that time came down to a deep belief in pursuing the full-scale deregulation of banking.

Paulson was, of course, Treasury Secretary for the period in which the 2008 financial crisis was brewing and then erupted. When it happened, he was the one who got to decide which banks survived and which died. Under his ministrations, Lehman Brothers died; Bear Stearns was given to JPMorgan Chase (along with plenty of government financial support); and you won’t be surprised to learn that Goldman Sachs thrived. While designing that outcome under the pressure of the moment, Paulson pled with Nancy Pelosi to press the Democrats in the House of Representatives to support a staggering $700 billion bailout. All those taxpayer dollars went with the 2008 Emergency Financial Stability Act that would save the banking system (under the auspices of saving the economy) and leave it resplendently triumphant, bonuses included), even as foreclosures rose by 21 percent the following year.

Once again, it was a world made by and for Goldman Sachs.

Goldman Back in the (White) House

Running for office as an outsider is one thing. Instantly inviting Wall Street into that office once you arrive is another. Now, it seems that Donald Trump is bringing us the newest chapter in the long-running White House-Goldman Sachs saga. And count on Steven Mnuchin and Gary Cohn to offer a few fresh wrinkles on that old alliance.

Cohn was one of the partners who ran the Fixed Income, Currency and Commodity (FICC) division of Goldman. It was the one that benefited the most from leverage, trading, and the complexity of Wall Street’s financial concoctions like collateralized debt obligations (CDOs) stuffed with derivatives attached to subprime mortgages. You could say, it was leverage that helped propel Cohn up the Goldman food chain.

Steven Mnuchin has proven particularly adept at understanding such concoctions. He left Goldman in 2002. In 2004, with two other ex-Goldman partners, he formed the hedge fund Dune Capital Management. In the wake of the 2008 financial crisis, Dune went shopping, as Wall Street likes to do, for cheap buys it could convert into big profits. Mnuchin and his pals found the perfect prey in a Pasadena-based bank, IndyMac, that had failed in July 2008 before the financial crisis kicked into high gear, and had been seized by the Federal Deposit Insurance Corporation (FDIC). They would pick up its assets on the cheap.

At his confirmation hearings, Mnuchin downplayed his role in throwing homeowners (including members of the military) out of their heavily mortgaged homes as a result of that purchase. He cast himself instead as a genuine hero, the guy who convened a cadre of financial sharks to help, not harm, the bank’s customers who, without their benevolence, would have fared so much worse. He looked deeply earnest as he spoke of his role as the savior of the common—or perhaps in the age of Trump “forgotten”—man and woman. Maybe he even believed it.

But the philosophy of swooping in, attacking an IndyMac-like target of opportunity and converting it into a fortune for himself (and problems for everyone else), has been a hallmark of his career. To transfer this version of over-amped 1 percent opportunism to the halls of political power is certainly a new definition of, in Trumpian terms, giving the government back to “the people.” Perhaps what our new president meant was “the people at Goldman Sachs.” Think of it, in any case, as the supercharging of a vulture mentality in a designer suit, the very attitude that once fueled the rise to power of Goldman Sachs.

Mnuchin repeatedly blamed the FDIC and other government agencies for not helping him help homeowners. “In the press it has been said that I ran a ‘foreclosure machine,’” he said, “On the contrary, I was committed to loan modifications intended to stop foreclosures. I ran a ‘Loan Modification Machine.’ Whenever we could do loan modifications we did them, but many times, the FDIC, FNMA, FHLMC, and bank trustees imposed strict rules governing the processing of these loans.” Nothing, that is, was or ever is his fault—reflecting his inability to take the slightest responsibility for his undeniable role in kicking people out of their homes when they could have remained. It’s undoubtedly the perfect trait for a Treasury secretary in a government of the 1 percent of the 1 percent.

Mnuchin also blamed the Federal Reserve for suggesting that the Volcker Rule—part of the Dodd-Frank Act of 2010 designed to limit risky trading activities—was harming bank liquidity and could be a problem. The way he did that was typically slick. He claimed to support the Volcker Rule, even as he underscored the Fed’s concern with it. In this way, he managed both to make himself look squeaky clean and very publicly open the door to a possible Trumpian “revision” of that rule that would be aimed at weakening its intent and once again deregulating bank trading activities.

Similarly, at those confirmation hearings he said (as Trump had previously) that we needed to help community banks compete against the bigger ones through less onerous regulations. Even though this may indeed be true, it is also guaranteed to be another bait-and-switch move likely to lead to the deregulation of the big banks, too, ultimately rendering them even bigger and more dangerous not just to those community banks but to all of us.

Indeed, any proposition to reduce the size of big banks was sidestepped. Although Mnuchin did say that four monster banks shouldn’t run the country, he didn’t say that they should be broken up. He won’t. Nor will Cohn. In response to a question from Democratic Senator Maria Cantwell, he added, “No, I don’t support going back to Glass-Steagall as is. What we’ve talked about with the president-elect is that perhaps we need a twenty-first-century Glass-Steagall. But, no I don’t support taking a very old law and saying we should adhere to it as is.”

So, although the reinstatement of Glass-Steagall was part of the 2016 Republican election platform, it’s likely to prove just another of Trump’s many tactics to gain votes—in this case, from Bernie Sanders supporters and libertarians who see too-big-to-fail institutions and a big-bank bailout policy as wrong and dangerous. Rest assured, though, Mnuchin and his Goldman Sachs pals will allow the largest Wall Street players to remain as virulent and parasitic as they are now, if not more so.

Goldman itself just announced that it was the world’s top merger and acquisitions adviser for the sixth consecutive year. In other words, the real deal-maker isn’t the former ruler of The Celebrity Apprentice, but Goldman Sachs. The government might change, but Goldman stays the same. And the traffic pile up of Goldman personalities in Trump’s corner made their fortunes doing deals—and not the kind that benefited the public either.

A former Goldman colleague recently asked me whether it was just possible that Mnuchin was a good person. I can’t answer that. It’s something only he knows for sure. But no matter how earnest or sympathetic to the little guy he tried to be before that Senate confirmation committee, I do know one thing: he’s also a shark. And sharks do what they’re best at and what’s best for them. They smell blood in the water and go in for the kill. Think of it as the Goldman Sachs effect. In the waters of the Trump-Goldman era, don’t doubt for a second that the blood will be our own.

 

Nomi Prins, a TomDispatch regular, is the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book is All the Presidents’ Bankers: The Hidden Alliances That Drive American Power (Nation Books). She is a former Wall Street executive.

http://www.alternet.org/right-wing/goldman-sachs-effect?akid=15164.265072.h9MZKP&rd=1&src=newsletter1071426&t=6

Trump executive order vows elimination of government regulations

inauguralspeechtrump

By Nick Barrickman
31 January 2017

On Monday, President Trump signed an executive order mandating that “for every one new regulation issued, at least two prior regulations be identified for elimination.” Trump declared the measure to be “the largest ever cut by far in terms of regulations,” adding, “If you have a regulation you want, number one we’re not going to approve it because it’s already been approved probably in 17 different forms.”

“Government regulation has actually been horrible for big business, but it’s been worse for small business,” Trump said, posturing as a friend to workers and small business owners. In addition to excoriating supposedly unnecessary regulations, the president stated that the order “goes way beyond that,” adding that the slate of minor regulations passed in the wake of the 2008 financial crisis, most notably the 2010 Dodd-Frank Act, were a “disaster.” Trump declared that his administration would do “a big number” on that legislation, without specifying what.

The “one in, two out” regulatory rule would mandate that for every new federal regulation introduced, two others must be singled out for elimination. In addition, the text of the order declares that for fiscal year 2017, “the total incremental cost of all new regulations, including repealed regulations … shall be no greater than zero.”

Business lobbyists lauded the action, with Jaunita Duggan, president of the National Federation of Independent Business, stating “[The] president’s order is a good first step on the long road toward eliminating ball-and-chain regulations so small businesses can create jobs and expand the economy.” Republican Speaker of the House Paul Ryan responded to the executive order by declaring, “President Trump’s executive order helps bring the nation’s regulatory regime into the 21st century by putting regulators on a budget, and addressing the costs agencies can impose each year.”

Trump sought to present the executive order as the fulfillment of campaign promises to do away with regulations which were supposedly “killing” American businesses. However, rather than supporting the interests of small businesses, Trump’s new rule would continue the consolidation of big business’s domination over American society, including the bankrupting of small businesses, while facilitating the exploitation of workers and the environment.

Elaborating on the administration’s intentions at a White House press briefing Monday, Press Secretary Sean Spicer noted that the goal of the administration would be to “unleash the American economy,” adding that Trump was focusing on “the energy sector, how to unleash America’s natural resources.”

The executive order comes on the heels of Trump’s meeting last week with manufacturing industry executives, where the president promised to eliminate “75 percent” of industrial regulations. In particular, Trump has been focused on environmental regulations which have placed higher fuel efficiency requirements on vehicles produced in the US.

Members of the scientific community expressed horror at the arbitrary measure. Ken Kimmell, president of the Union of Concerned Scientists, told the Washington Post the executive order was “absurd, imposing a Sophie’s Choice on federal agencies.”

“If, for example, the Environmental Protection Agency wants to issue a new rule to protect kids from mercury exposure, will it need to get rid of two other science-based rules, such as limiting lead in drinking water and cutting pollution from school buses?” Kimmell asked. The scientist asserted that Trump’s order was “likely illegal,” declaring, “Congress has not called upon EPA to choose between clean air and clean water, and the president cannot do this by executive fiat.”

Trump’s executive order would concentrate power in the hands of the Director of the Office of Management and Budget (OMB), whose agency is charged with overseeing federal regulations. Trump’s nomination for OMB director, Republican Congressman Mick Mulvaney, is an adamant opponent of federal spending.

According to the New York Times, “Within the Trump team, the views of Representative Mick Mulvaney… rank as among the most reactionary.” Mulvaney, who according to the Times possesses “an almost perfect conservative voting record,” has spent his six-year congressional career opposing disaster relief for victims of Hurricane Sandy as well as backing the 2013 government shutdown, which was instigated by right-wing Republicans in an effort to force the adoption of austerity measures.

Mulvaney is a proponent of ending government-provided health care, having declared that “[we] have to end Medicare as we know it” in 2011 while being interviewed on the Fox Business Network.

The onslaught against federal regulation comes as Trump’s nominees for cabinet secretaries continue to be placed at the head of departments of which they have a record of opposition. Scott Pruitt, Trump’s nominee for the Environmental Protection Agency, has a long career of leading lawsuits against the agency on behalf of the energy industry.

Myron Ebell, who led Trump’s EPA transition team, declared in a recent interview with the Washington Post that his prescription for the EPA would see the elimination of 5,000 employees and the halving of the agency’s $8.1 billion budget. “My own personal view is that the EPA would be better served if it were a much leaner organization that had substantial cuts,” stated Ebell in an interview to the Post .

The Senate Environment and Public Works Committee is scheduled to vote on Pruitt’s nomination on Wednesday. In addition, Rex Tillerson, former CEO of Exxon and Trump’s pick for Secretary of State and Treasury Secretary nominee Steve Mnuchin are set to receive committee votes this week. All three nominations would then proceed to the Senate floor for confirmation by the full Senate, where Republicans hold a narrow 52-48 edge.

Mnuchin’s vote was originally scheduled for Monday, but was postponed as Senate Democrats delayed the hearing in order to attend a candlelight vigil opposing Trump’s executive order which bans visitors from seven predominantly Muslim countries.

http://www.wsws.org/en/articles/2017/01/31/regu-j31.html

The Trump-Bannon government: Rule by decree

download

30 January 2017

The Trump administration’s order to halt the admission of refugees into the United States and bar entry to visitors and returning residents from seven countries—all majority-Muslim, all the targets of US military aggression or economic sanctions—underscores the unprecedented nature of the new government.

This is a government that will not be constrained by laws or the Constitution. Notwithstanding the fact that Trump is a minority president, his administration intends to utilize its control over the state to the maximum, operating on the principle that “possession is nine-tenths of the law.” It has already established a pattern of rule by decree.

Without any congressional vote, without any judicial process or finding of guilt for any crime, more than 100 people have been detained by federal customs and immigration agents and in some cases deported. The victims include the elderly, small children, wives returning to their husbands and people who have lived in the United States legally for many years, even decades. Hundreds more have been barred from boarding flights bound for the United States. And this is the toll just of the first weekend. The potential victims number in the many thousands, even millions.

A series of federal judges have issued court orders barring the deportations, ruling that there is a great likelihood that those challenging the Trump-ordered actions will be upheld once their cases are fully adjudicated. While some individuals have been released from detention, federal officials claim that the White House order is still in force and will be carried out.

The actions of the government in its first ten days make all the more sinister the central role being played by Trump’s “chief strategist,” Stephen K. Bannon. The media has largely downplayed the fact that Trump named Bannon, former boss of Breitbart News, a sounding board for the white supremacists, anti-Semites and neo-Nazis of the alt-right, to a White House position coequal with Chief of Staff Reince Priebus.

It was unmistakably Bannon’s voice sounding in Trump’s inaugural address, with its open embrace of the “America First” slogan first popularized by Nazi sympathizer Charles Lindbergh in the early days of World War II. His speech followed the fascist model in appealing to genuine social grievances—the devastating decline in jobs and living standards in many industrial areas—while diverting popular anger away from the American capitalist elite and toward a politically useful scapegoat, in this case China, Mexico and other foreign countries.

Bannon, a former Goldman Sachs executive, Hollywood producer and ultra-right media mogul with no national security experience, is a fervent advocate of the racist and anti-immigrant stance expressed by Trump in a series of statements and executive orders last week, from the order to build a wall on the US-Mexico border, to a crackdown on so-called “sanctuary cities,” to Friday’s ban on travelers and refugees.

Trump underlined Bannon’s central position in his White House with an executive order Saturday restructuring the National Security Council (NSC), the principal White House instrument for directing foreign and military policy. The order added “the Assistant to the President and Chief Strategist,” namely Bannon, to the list of top officials entitled to attend every meeting of the Principals Committee, a subcommittee of the NSC that plays a critical role in preparing decisions for the president, and includes the national security adviser, the secretary of state and the secretary of defense.

The same order removed from the Principals Committee the chairman of the Joint Chiefs of Staff and the director of national intelligence.

There is one further action at the weekend that provides the most chilling insight into the mentality of Trump’s chief political adviser. The White House issued a statement commemorating International Holocaust Remembrance Day that lamented the “innocent people” murdered by the Nazis, but made no mention of Jews or anti-Semitism. A White House spokesman confirmed that the omission of Jews from the 117-word statement was deliberate and not a mistake.

This is a trope taken straight out of the playbook of the neo-Nazi alt-right: the Holocaust is emptied of its specific content, the attempted extermination of the Jewish population of Europe, and transformed into a generic tragedy in which many people were killed.

The Democratic Party will do nothing to oppose the march of the Trump administration towards authoritarian rule. The Democrats have devoted their efforts to playing down the extreme-right character of the new government while centering its criticisms on Trump’s conflict with US intelligence agencies.

After a transition period in which outgoing President Obama portrayed his successor as respectable and reasonable, and said nothing about his ties to ultra-right and neo-fascist elements, the first ten days of the Trump administration have seen Democrats such as Senate Minority Leader Charles Schumer and former presidential candidate Bernie Sanders profess their desire to cooperate with the White House on its nationalistic economic policies.

It is significant that when challenged on what legal authority justified the ban on entry, Trump’s spokesmen cited the actions of the Obama administration, which designated the same seven countries—Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen—as those posing the greatest danger of terrorist attacks on the United States. This demonstrates that Trump is basing himself on the antidemocratic foundations laid by Bush and Obama and taking them to a qualitatively new level.

Trump also follows Bush and Obama in excluding from sanctions Saudi Arabia, home of nearly all of the 9/11 hijackers, but also a source of vast wealth for American big business from oil and gas as well as arms contracts. This confirms that the executive order has nothing to do with defending the American people from terrorism: its purpose is to intimidate working people, both immigrant and native-born, and pave the way for a frontal assault on the democratic rights of the American people as a whole.

The events of this weekend have demonstrated the hollowed-out character of American democracy. In its contempt for democratic and constitutional norms, the Trump administration gives naked expression to the oligarchic character of American society. His method of government is the form of rule appropriate to the social forces that his billionaire cabinet and the entire political establishment represent.

The decisive question is the independent intervention of the working class, fighting for its own class interests, including the defense of immigrant workers.

Patrick Martin

WSWS

Trial Balloon for a Coup?

Analyzing the news of the past 24 hours

The theme of this morning’s news updates from Washington is additional clarity emerging, rather than meaningful changes in the field. But this clarity is enough to give us a sense of what we just saw happen, and why it happened the way it did.

I’ll separate what’s below into the raw news reports and analysis; you may also find these two pieces from yesterday (heavily referenced below) to be useful.

From “The Day After Tomorrow.” I resisted the temptation to use the analogous shot from “Planet of the Apes.”

News Reports

(1) Priebus made two public statements today. One is that the ban on Muslims will no longer be applied to green card holders. Notably absent from his statement was anything about people with other types of visa (including long-term ones), or anything about the DHS’ power to unilaterally revoke green cards in bulk.

The other was that the omission of Jews from the statement for Holocaust Remembrance Day was deliberate and is not regretted.

A point of note here is that Priebus is the one making these statements, which is not normally the Chief of Staff’s job. I’ll come back to that below.

(2) Rudy Giuliani told Fox News that the intent of yesterday’s order was very much a ban on Muslims, described in those words, and he was among the people Trump asked how they could find a way to do this legally.

(3) CNN has a detailed story (heavily sourced) about the process by which this ban was created and announced. Notable in this is that the DHS’ lawyers objected to the order, specifically its exclusion of green card holders, as illegal, and also pressed for there to be a grace period so that people currently out of the country wouldn’t be stranded — and they were personally overruled by Bannon and Stephen Miller. Also notable is that career DHS staff, up to and including the head of Customs & Border Patrol, were kept entirely out of the loop until the order was signed.

(4) The Guardian is reporting (heavily sourced) that the “mass resignations”of nearly all senior staff at the State Department on Thursday were not, in fact, resignations, but a purge ordered by the White House. As the diagram below (by Emily Roslin v Praze) shows, this leaves almost nobody in the entire senior staff of the State Department at this point.

The seniormost staff of the Department of State. Blue X’s are unfilled positions; red X’s are positions which were purged. Note that the “filled” positions are not actually confirmed yet.

As the Guardian points out, this has an important and likely not accidental effect: it leaves the State Department entirely unstaffed during these critical first weeks, when orders like the Muslim ban (which they would normally resist) are coming down.

The article points out another point worth highlighting: “In the past, the state department has been asked to set up early foreign contacts for an incoming administration. This time however it has been bypassed, and Trump’s immediate circle of Steve Bannon, Michael Flynn, son-in-law Jared Kushner and Reince Priebus are making their own calls.”

(5) On Inauguration Day, Trump apparently filed his candidacy for 2020. Beyond being unusual, this opens up the ability for him to start accepting “campaign contributions” right away. Given that a sizable fraction of the campaign funds from the previous cycle were paid directly to the Trump organization in exchange for building leases, etc., at inflated rates, you can assume that those campaign coffers are a mechanism by which US nationals can easily give cash bribes directly to Trump. Non-US nationals can, of course, continue to use Trump’s hotels and other businesses as a way to funnel money to him.

(6) Finally, I want to highlight a story that many people haven’t noticed. On Wednesday, Reuters reported (in great detail) how 19.5% of Rosneft, Russia’s state oil company, has been sold to parties unknown. This was done through a dizzying array of shell companies, so that the most that can be said with certainty now is that the money “paying” for it was originally loaned out to the shell layers by VTB (the government’s official bank), even though it’s highly unclear who, if anyone, would be paying that loan back; and the recipients have been traced as far as some Cayman Islands shell companies.

Why is this interesting? Because the much-maligned Steele Dossier (the one with the golden showers in it) included the statement that Putin had offered Trump 19% of Rosneft if he became president and removed sanctions. The reason this is so interesting is that the dossier said this in July, and the sale didn’t happen until early December. And 19.5% sounds an awful lot like “19% plus a brokerage commission.”

Conclusive? No. But it raises some very interesting questions for journalists to investigate.

What does this all mean?

I see a few key patterns here. First, the decision to first block, and then allow, green card holders was meant to create chaos and pull out opposition; they never intended to hold it for too long. It wouldn’t surprise me if the goal is to create “resistance fatigue,” to get Americans to the point where they’re more likely to say “Oh, another protest? Don’t you guys ever stop?” relatively quickly.

However, the conspicuous absence of provisions preventing them from executing any of the “next steps” I outlined yesterday, such as bulk revocation of visas (including green cards) from nationals of various countries, and then pursuing them using mechanisms being set up for Latinos, highlights that this does not mean any sort of backing down on the part of the regime.

Note also the most frightening escalation last night was that the DHS made it fairly clear that they did not feel bound to obey any court orders. CBP continued to deny all access to counsel, detain people, and deport them in direct contravention to the court’s order, citing “upper management,” and the DHS made a formal (but confusing) statement that they would continue to follow the President’s orders. (See my updates from yesterday, and the various links there, for details) Significant in today’s updates is any lack of suggestion that the courts’ authority played a role in the decision.

That is to say, the administration is testing the extent to which the DHS (and other executive agencies) can act and ignore orders from the other branches of government. This is as serious as it can possibly get: all of the arguments about whether order X or Y is unconstitutional mean nothing if elements of the government are executing them and the courts are being ignored.

Yesterday was the trial balloon for a coup d’état against the United States. It gave them useful information.


A second major theme is watching the set of people involved. There appears to be a very tight “inner circle,” containing at least Trump, Bannon, Miller, Priebus, Kushner, and possibly Flynn, which is making all of the decisions. Other departments and appointees have been deliberately hobbled, with key orders announced to them only after the fact, staff gutted, and so on. Yesterday’s reorganization of the National Security Council mirrors this: Bannon and Priebus now have permanent seats on the Principals’ Committee; the Director of National Intelligence and the Chairman of the Joint Chiefs of Staff have both been demoted to only attending meetings where they are told that their expertise is relevant; the Secretary of Energy and the US representative to the UN were kicked off the committee altogether (in defiance of the authorizing statute, incidentally).

I am reminded of Trump’s continued operation of a private personal security force, and his deep rift with the intelligence community. Last Sunday, Kellyanne Conway (likely another member of the inner circle) said that “It’s really time for [Trump] to put in his own security and intelligence community,” and this seems likely to be the case.

As per my analysis yesterday, Trump is likely to want his own intelligence service disjoint from existing ones and reporting directly to him; given the current staffing and roles of his inner circle, Bannon is the natural choice for them to report through. (Having neither a large existing staff, nor any Congressional or Constitutional restrictions on his role as most other Cabinet-level appointees do) Keith Schiller would continue to run the personal security force, which would take over an increasing fraction of the Secret Service’s job.

Especially if combined with the DHS and the FBI, which appear to have remained loyal to the President throughout the recent transition, this creates the armature of a shadow government: intelligence and police services which are not accountable through any of the normal means, answerable only to the President.

(Note, incidentally, that the DHS already has police authority within 100 miles of any border of the US; since that includes coastlines, this area includes over 60% of Americans, and eleven entire states. They also have a standing force of over 45,000 officers, and just received authorization to hire 15,000 more on Wednesday.)


The third theme is money. Trump’s decision to keep all his businesses (not bothering with any blind trusts or the like), and his fairly open diversion of campaign funds, made it fairly clear from the beginning that he was seeing this as a way to become rich in the way that only dedicated kleptocrats can, and this week’s updates definitely tally with that. Kushner looks increasingly likely to be the money-man, acting as the liaison between piles of cash and the president.

This gives us a pretty good guess as to what the exit strategy is: become tremendously, and untraceably, rich, by looting any coffers that come within reach.


Combining all of these facts, we have a fairly clear picture in play.

  1. Trump was, indeed, perfectly honest during the campaign; he intends to do everything he said, and more. This should not be reassuring to you.
  2. The regime’s main organizational goal right now is to transfer all effective power to a tight inner circle, eliminating any possible checks from either the Federal bureaucracy, Congress, or the Courts. Departments are being reorganized or purged to effect this.
  3. The inner circle is actively probing the means by which they can seize unchallenged power; yesterday’s moves should be read as the first part of that.
  4. The aims of crushing various groups — Muslims, Latinos, the black and trans communities, academics, the press — are very much primary aims of the regime, and are likely to be acted on with much greater speed than was earlier suspected. The secondary aim of personal enrichment is also very much in play, and clever people will find ways to play these two goals off each other.

If you’re looking for estimates of what this means for the future, I’ll refer you back to yesterday’s post on what “things going wrong” can look like. Fair warning: I stuffed that post with pictures of cute animals for a reason.


Note: If you want the full feed of what I write, follow me at google.com/+YonatanZunger and @YonatanZunger on Twitter. There’s too much to put on Medium!

Medium

IS DONALD TRUMP JUST A PAWN IN STEVE BANNON’S GAME?

With his man in the White House, the architect of Trumpism takes a victory lap around the media.

The first week of Donald Trump’s presidency has been head-spinning, even for already whiplashed journalists. Since taking the oath of office, Trump has bemoaned his media coverage before a flummoxed C.I.A., dispatched his press secretary to the White House briefing room to lie about the size of his inauguration crowd, and sent Kellyanne Conway out on the morning-show circuit to redefine those lies as “alternative facts.” Despite signing executive orders appeasing his base and fulfilling campaign promises, he remained fixated on the election he already won, relitigating his campaign strategy in meetings with Congress and reportedly telling lawmakers he believed 3 million to 5 million votes had been cast illegally for his opponent, costing him the popular vote. In an interview Wednesday with ABC’s David Muir, he doubled down again and again on each debunked detail—his crowd size, the alleged mass voter fraud, even the response to his C.I.A. speech, which multiple government officials suggested was poorly received. “I got a standing ovation,” he told Muir. “In fact, they said it was the biggest standing ovation since Peyton Manning had won the Super Bowl and they said it was equal.”

The constant stream of mistruths and misdirection has left the media unmoored, hemorrhaging trust with the American public even as it finds its footing holding Trump to account. Trump’s approval ratings are plummeting, too, with only 36 percent of voters approving of the way the president has handled his first week.

It is, in other words, the perfect toxic brew for Stephen Bannon, the Breitbart executive turned White House strategist who has fueled Trump’s firefight with the media, discrediting and undermining the mainstream voices opposed to his anti-immigrant, anti-trade agenda. “The media should be embarrassed and humiliated and keep its mouth shut and just listen for a while,” he explained in an interview with *The New York Times’s * Michael Grynbaum, published Thursday, as he gloated about his newfound power and the media’s failure to see Trump coming. “I want you to quote this,” Bannon continued. “The media here is the opposition party. They don’t understand this country. They still do not understand why Donald Trump is the president of the United States.”

With Trump in the White House, Bannon has found himself emboldened in a way that he could only dream of several months ago, when he stepped away from his “alt-right” media empire to join the struggling Trump campaign as its chief executive. Since taking the oath of office, Trump has mostly stayed close to Bannon’s agenda—delivering an inaugural address written in part by Bannon himself that spoke gloomily of “American carnage” and shutting the nation off from the rest of the world in order to make it great again. He has signed executive orders, also written by Bannon, directing the federal government to build a wall along the U.S.-Mexico border, shut out refugees, increase deportations, and begin the repeal of Obamacare.

TRUMP IS A “BLUNT INSTRUMENT FOR US,” BANNON TOLD VANITY FAIR LAST SUMMER. “I DON’T KNOW WHETHER HE REALLY GETS IT OR NOT.”

None of it would have been possible had Trump not made an enemy of the media, sowing mistrust in the army of journalists tut-tutting his apocalyptic diatribes, his excoriation of immigrants, his fiery denunciations of the consensus on free trade. “You’re the opposition party,” Bannon said repeatedly in his interview with the Times, which the paper said he requested to defend Sean Spicer, the White House press secretary, who was upbraided by the media this week for lying to the press. “We think that’s a badge of honor. ‘Questioning [Spicer’s] integrity’—are you kidding me?”

It’s just one piece of Bannon’s ideological game of chess, rewiring the media landscape to clear the path for a radical reimagining of conservative politics in line with his own nationalist agenda. The president himself, Bannon has admitted in the past, is just one piece of the puzzle. Trump is a “blunt instrument for us,” Bannon told Ken Stern for Vanity Fair last summer. “I don’t know whether he really gets it or not.”

More than anyone else in his inner circle, Bannon has a good reason to use his boss. Sure, Jared Kushner, Trump’s son-in-law and senior adviser, now has an inconceivably large platform as a 36-year-old political novice. Conway, who has a longer history in politics, can probably parlay her White House gig into whatever gig she so chooses next, assuming the ship doesn’t go down in flames while she is still on board. But Bannon, who jokingly refers to himself as “Darth Vader,” is perhaps alone in viewing the Trump administration as a means to a specific philosophical end.

This strategy so far has worked for Bannon, either because Trump understands he needs him or hasn’t caught wind of the fact that he might be being played. The reason why Kushner rose to prominence so quickly, after all, is the fact that Trump knows where his loyalty lies, and that is squarely behind him. If Trump feels that Bannon’s own motives are setting him up to lose, then it’s anyone’s bet as to how topsy-turvy this West Wing could get.

http://www.vanityfair.com/news/2017/01/is-donald-trump-a-pawn-in-steve-bannons-game

Bill Moyers: Donald Trump Is Turning American Democracy into Demolition Derby

NEWS & POLITICS
Affordable health care? Smash it. Fair pay for working people? Crush it. And on and on.

Photo Credit: Moyers & Company

We’re a week into the Trump administration and it’s pretty obvious what he’s up to. First, Donald Trump is running a demolition derby: He wants to demolish everything he doesn’t like, and he doesn’t like a lot, especially when it comes to government.

Like one of those demolition drivers on a speedway, he keeps ramming his vehicle against all the others, especially government policies and programs and agencies that protect people who don’t have his wealth, power or privilege. Affordable health care for working people? Smash it. Consumer protection against predatory banks and lenders? Run over it. Rules and regulations that rein in rapacious actors in the market? Knock ‘em down. Fair pay for working people? Crush it. And on and on.

Trump came to Washington to tear the government down for parts, and as far as we can tell, he doesn’t seem to have anything at all in mind to replace it except turning back the clock to when business took what it wanted and left behind desperate workers, dirty water and polluted air.

In this demolition derby, Trump seems to have the wholehearted support of the Republican Party, which loathes government as much as it worships the market as god. Remember Thomas Frank’s book, The Wrecking Crew? Published in 2008, it remains one of the best political books of the past quarter-century. Frank took the measure of an unholy alliance: the century-old business crusade against government, the conservative ideology that looks on government as evil (except when it’s enriching its allies), and the Republican Party of George W. Bush and Karl Rove — the one that had just produced eight years of crony capitalism and private plunder.

The Wrecking Crew — and what an apt title it was — showed how federal agencies were doomed to failure by the incompetence and hostility of the Bush gang appointed to run them, the same model Trump is using now. Frank tracked how wholesale deregulation — on a scale Trump already is trying to reproduce — led to devastating results for everyday people, including the mortgage meltdown and the financial crash. Reading the book is like reading today’s news, as kleptomaniacs spread across Washington to funnel billions of dollars into the pockets of lobbyists and corporations.

That may include the pockets of Donald Trump’s own family. As Jonathan Chait wrote after the election in New York magazine, “[Trump’s] children have taken roles on the transition team. Ivanka attended official discussions with heads of state of Japan and Argentina. [As president-elect, Trump himself] met with Indian business partners to discuss business and lobbied a British politician to oppose offshore wind farms because one will block the view at one of his Scottish golf courses.” Only a couple of days ago it was reported that the Trump organization would more than triple the number of Trump hotels in America. And why not? Its chief marketer works out of the Oval Office.

Jonathan Chait went on to say: “Trump’s brazen use of his office for personal enrichment signals something even more worrisome than four or more years of kleptocratic government. It reveals how willing the new administration is to obliterate governing norms and how little stands in his way.”

And oh yes, something else: David Sirota at International Business Times has just published a new report showing that the Trump administration appears to be quietly killing the federal government’s major ethics rule designed to prevent White House officials from enriching their former clients. Experts say a review of government documents shows that regulators appear to have abruptly stopped enforcing the rule, even though it remains the law of the land.

We were warned. Donald Trump himself told The New York Times, “The law is totally on my side, meaning, the president can’t have a conflict of interest.” Shades of Richard Nixon, who said, “When the President does it, that means that it is not illegal.” And who also announced, “I am not a crook.”

I know plutocracy is not a commonly used word in America. But it’s a word that increasingly fits what’s happening here. Plutocracy means government by the wealthy, a ruling class of the rich and their retainers. If you don’t see plutocracy spreading across America, you haven’t been paying attention. Both parties have nurtured, tolerated and bowed to it. Now we’re reaching the pinnacle, as Trump’s own Cabinet is rich (no pun intended) in millionaires and billionaires. He is stacking the agencies and boards of government with the wealthy and friends of wealth so that the whole of the federal enterprise can be directed to rewarding those with deep pockets, the ones who provide the bags and bags of money that are dumped into our political process today.Which leads us to the second design now apparent in Trump’s strategy of deliberate chaos. He may have run a populist campaign, but now it appears he aims to substitute plutocracy for democracy.

Yes, both Democrats and Republicans have been guilty of groveling to the wealthy who fund them; it’s a staggering bipartisan scandal that threatens the country and was no small part of Trump’s success last November, even as ordinary people opened their windows and shouted, “We’re as mad as hell and we’re not going to take it anymore.” So now we have in power a man who represents the very worst of the plutocrats — one who knows the price of everything but the value of nothing. I shudder to think where this nightmare will end. Even if you voted for Donald Trump for a reason that truly is from your heart, I cannot believe you voted for this.

Tell me if I’m wrong. Tell me whose side are you really on? The people of America or the cynics and predators at the very top who would climb atop the ruins of the republic for a better view of the sunset?