Reading Paul Krugman’s “End This Depression Now!” He makes it quite clear that the whole income inequality and the 2008 financial meltdown was a bipartisan accomplishment. To keep this short, I’ll give a timeline mentioning just the players and the legislation responsible and you can Google them for more information.
1980: Congress passes and Carter signs into law the Monetary Control Act of 1980 which deregulated and opened up many more kinds of deposits that banks could now pay interest on.
1982: Congress passes and Reagan signs into law the Garn–St Germain Depository Institutions Act of 1982 which relaxed restrictions on the kinds of loans banks could make.
1998: Citicorp merges with Travelers Group to attain both Smith Barney and Shearson Lehman and form Citigroup. The problem was that at that time Glass-Steagall prevented commercial banks from engaging in either insurance or investment banking. Citigroup CEO Sandy Weill pays a visit to and makes sure large contributions are paid to Texas Senator Phil Gramm. The result:
1999: Congress passes and Clinton signs into law the Gramm-Leach-Bliley Act of 1999, which retroactively authorizes the Citi-Travelers merger. Oh, the key White House figure supporting the bill? Clinton’s Treasury Secretary Robert Rubin. Gramm left the Senate and joined the board of directors of UBS. Rubin was a former co-chairman of Goldman Sachs and after leaving the Clinton White House became vice chairman of…Citigroup.
Also in 1998: Deputy Secretary of the Treasury Larry Summers testifies before Congress that regulating derivatives would be a bad idea and so the issue is tabled. He later endorses the the Gramm-Leach-Bliley Act of 1999. (In 2009, Summers admits he was wrong about everything. Better late than never? Tell that to all the people worldwide who lost homes, jobs, savings, retirement accounts, lives–everything–before Summers in essence said “Oops.”)
My contributions outside of the book:
2001: Along with the British, Dubya starts a war in Afghanistan. The costs for the war is kept off the federal budget.
2001: Congress passes and Dubya signs into law the Economic Growth and Tax Relief Reconciliation Act of 2001.
2003: Dubya invades Iraq. The costs for the war are kept off the federal budget.
2003: Congress passes and Dubya signs into law Jobs and Growth Tax Relief Reconciliation Act of 2003.
2009: Congress passes and Obama signs into law the American Recovery and Reinvestment Act of 2009. It authorizes a stimulus payment of what grew to be $831 billion. Economic adviser Christina Romer insisted that the minimum stimulus needed to jump start the economy was $1.8 billion, and she was later proven right although she was gone from the White House by that time. Who overruled her, insisting on the lower stimulus package? Our old friend (and Bill Clinton’s), Larry Summers, along with Peter R. Orszag, yet another ex-Clinton economic adviser who headed the CBO under Obama. After leaving the Obama administration, Orszag took a job with…Citigroup.
So, as Krugman and I have shown, what led to the 2008 meltdown and which continues the basis and continued extension of income inequality (through all the deregulation because yes indeed, as the rich get richer the poor get poorer) has been a bipartisan affair. It is very true: when it comes to the economy, there is no difference between the two parties.