Muscle-bound Uncle Sam: Special interests--not just the undifferentiated wealthy--have money and zeal, or at least acute self-interest. But they are well financed largely because they are
special interests
that have done well in the status quo. They don't want change; they're doing very well, thank you, even in the downturn. So, when change is really needed, these groups have the muscle to stop it, or to extract a heavy price before allowing it.
The banks have at least won a battle, and so far have kept their casino intact, as evidenced by Goldman-Sachs' and JP's profits. Financial reform is something they're willing to spend their TARP money to prevent.
In order to get health care reform, Big Pharma has apparently extracted a "no price negotiations" agreement. Doctors have been assured of liability reform, which has prompted the AMA to go along.
In Defense, there has been some progress around the edges, like the defeat of the F22 in Congress, but it's clear that Obama can't move far from established military policy. Perhaps that's because of the defense industries involved, or the military telling him he just can't, for example, remove US troops and equipment from Iraq (both would be necessary--don't want to leave all that hardware to the Iraqis) in less than three years. So, there we sit in Iraq, and don't be surprised if the 2013 deadline comes and goes unmet.
And then there's the disaster that is Afghanistan/Pakistan. There, there are no good alternatives, but of course the military and all the special interests behind it would logically press for the more military and equipment-intensive solutions and they have more leverage than the State Department, which might argue for negotiations and aid, instead: State doesn't have the lobbies behind it that DOD boasts. Gates is now angling to get private contractors like Xe more involved in Afghanistan; that will make it even harder to extract our forces from there.
As to the financial system, the insiders hold the reins, through the Fed and the Treasury: the one "non-political," the other the appointee of elected political institutions, both led by graduates of Goldman Sachs. Not a particularly democratic system; it's primarily designed to serve the special interests of the largest banks, but its mandate does require that it stabilize the economy through its monetary and other actions.
Congress, on the other hand, can really lard financial policy in favor of their donors--the special interests. If huge salaries and bonuses begin to stink too badly, and the hoi polloi get restive, well then there might be some change acceptable, and the same, perhaps, for regulations. But regulations, which some financial players support--it would make their markets more predictable--are only the first step to needed reform. If there still are banks too big to fail, then their current profits really belong to the Treasury, and the taxpayer.
William Greider suggests in the Nation (8/3-10/09) that the Fed should be radically reformed or abolished. He points out that all those trillions of dollars issued by Bernanke to bail out the banks, AIG and others, would be available to the government for direct financing of green development programs, for example, if the Fed were replaced by an independent government agency like the Congressional Budget Office. Then, there would not be the problem of the banks receiving funds and not opening their lending doors: Uncle Sam could do so directly, if only when the US needed to pump additional money into the economy.
Why won't this happen? Why will the US limp along while China surges forward with its more direct controls over the economy? Think of the money; think of how those millions can, and will, be marshaled at the first scent of danger to the banks' money-tree: the Fed.
There is only one way to escape what political scientists have called "the iron triangle" of special interests: get money out of politics, by carrying out far-reaching campaign finance reform, in which public funds replace private funds. Those reforms have been partially enacted in some states; they should be enacted fully and nationally, but the Supreme Court stands in the way. As long as money is considered protected by the First Amendment (money as speech), no real, meaningful reform is possible, and the US will continue to be ruled by an unholy alliance of large corporations and the status quo special interests they are organized to defend.
Perhaps the American Empire won't "fall" the way Rome did in 476, but if most of the necessary reforms are blocked or neutered by special interests, then,
This is the way the world ends, This is the way the world ends, Not with a bang, but a whimper.
The US could end up as a large Third World country, perhaps hiring out its bloated military to those with money, and in which a tiny minority will call all the shots and live a good life. The vast majority will struggle to hang on, despite the natural wealth of this beautiful nation.
