Fool Me Twice

by Aaron Klein

  FINANCIAL CRIMES UNIT—BUSINESS FRAUD, BUT NOT GOVERNMENT FRAUD

  Another “progressive” agenda item of the Obama team is the establishment of a Financial Crimes Unit under the Justice Department. This would serve a number of purposes in the expansion of executive power, by:

  • centralizing and greatly intensifying prosecution of the financial industry at the federal level;

  • allowing the president’s surrogates to select who would be targeted for investigation (as well as who not); and,

  • keeping the public and government focused on business fraud rather than on government corruption.

  Thus did Obama, in his 2012 State of the Union address, admonish Congress to enact legislation to “makes the penalties for fraud count,” while announcing his establishment of a Financial Crimes Unit of “highly trained investigators to crack down on large-scale fraud and protect people’s investments.”62 Obama tasked attorney general Eric Holder to “create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit,” he said, “will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.”

  Not mentioned by the president was that the U.S. Treasury Department has operated a Financial Crimes Enforcement Network, known as FinCEN, for a number of years to track and prosecute terrorism and drug dealer financing and both domestic and international money laundering. It involves at least thirty law enforcement agencies, including the FBI, CIA, and Border Patrol. It is also linked with more than fifty countries to act as a Financial Intelligence Unit.63 In addition, many states and cities have their own Financial Crimes units.

  Commenting on Obama’s new executive agency, David John of the Heritage Foundation wrote:

  Almost all of the crimes it will consider ranging from insider trading to fraud to stealing are now crimes and have been for many years. And it is not like the Justice Department has been sitting on its hands since 2008.

  The newly announced task force may be worth a few minutes of new TV time, but it is really just doing what hard working professionals have been doing for some time…. The implication that it will do even more is an insult to the prosecutors who have been doing the same thing.64

  The Heritage Foundation’s Joe Luppino-Esposito asked, “When is enough, enough?” He challenged the president’s claim that he needed “even more fraud laws and penalties on the books for financial institutions”65 Luppino-Esposito also quoted former U.S. attorney general Edwin Meese III, then chairman of the Center for Legal & Judicial Studies of the Heritage Foundation, in his December 13, 2011, Congressional testimony before a subcommittee of the House Judiciary Committee. Meese asked:

  Will we, as a society, not be taken seriously about fighting fraud unless we double, triple, and quadruple the number of iterations of this crime?66

  “For Obama,” Luppino-Esposito wrote, “the answer is a resounding, albeit ridiculous, ‘Yes.’”

  MORE EXECUTIVE ENFORCEMENT OVER FINANCE

  Yet another front in the war over centralization of executive power—again targeting the U.S. finance industry—centers on an agency newly created (July 2011) by the so-called Dodd-Frank Wall Street reform bill, called the Consumer Financial Protection Bureau. The CFPB is essentially an executive-level enforcement operation, with broad authority not only over banking, but also over the gigantic student loan and real estate mortgage industries.

  A political storm erupted over the CFPB in mid-December 2011, as Congress was heading into winter recess. Senate Republicans had been blocking confirmation of President Obama’s nominee to head the CFPB, because they “wanted the White House to agree to a Senate GOP proposal to alter the bureau’s leadership infrastructure in new legislation.” Republicans wanted “a board in charge rather than an individual.”67

  In the words of Sen. Richard Shelby (R-AL):

  Unless Congress enacts reform, it is only a matter of time before this concentration of power is abused or misused to the detriment of American businesses and consumers.

  On May 5, 43 of my senate colleagues joined me in writing a letter to President Obama informing him that we will not confirm any nominee to head the bureau absent structural changes that will make it accountable to those it seeks to protect.68

  Unfortunately, the political storm that erupted was not over what concerned the GOP Senators, that is, the centralized command structure of Dodd-Frank’s new enforcement arm. Instead, the brouhaha was over a highly controversial—and probably unconstitutional—tactic employed by Obama to circumvent the GOP senators’ refusal to confirm.69 Still, the battle for control of the CFPB has probably only been postponed, pending the election of a new Congress in November 2012:

  By statute, the CFPB director is supposed to serve a five-year term. But a recess appointment only remains effective for the duration of the existing Congress, giving [the president’s “recess” appointee] roughly a year as director before the 112th Congress draws to a close at the end of 2012. The president could re-nominate [him] to the position after that shortened term expired, but he would likely face even fiercer opposition from Senate Republicans a second time around.70

  CENTRALIZING CONTROL OVER U.S. TRADE

  Marching ever onward in his expansion of government—and, whenever possible, executive—power, on February 28, 2012, Obama established, by executive order, an Interagency Trade Enforcement Center.71 As one “citizen commentator” observed of this president’s methods:

  [Obama] again circumvented Congress with his latest Executive Order … The Constitution gives the president no such power to regulate commerce. This power is exclusive to the Congress.

  This falls in line with the president’s “We Can’t Wait” campaign, which, contrary to appearances, is not as much a dig on Congress as it is a realization he only has until January to institute as much of his destructive policies as he can before he loses his job, as have millions of Americans during his administration.72

  Whether Obama is about to lose his job remains to be seen. But he had given advance warning of his intention to create the Trade Enforcement Unit in his landmark 2012 State of the Union address. Obama claimed the purpose of the TEU would be “investigating unfair trade practices in countries like China.”

  There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia. Our workers are the most productive on Earth, and if the playing field is level, I promise you—America will always win.73

  As usual, Obama’s rhetoric concealed more than it revealed. His real agenda appears to be:

  • centralizing trade controls within the executive branch, and from a plethora of existing agencies;

  • being able to swiftly implement protectionist policies, when needed, to reward the progressive base amongst organized labor; and

  • relentlessly promoting American “green energy” technology, into which billions upon billions more of federal dollars would be poured.

  After SOTU 2012, PolicyMic editor Jordan Wolf wondered what a new TEU would do:

  [Obama] talked about setting up a trade enforcement division, and it wasn’t clear what this would do. The WTO already monitors this sort of thing and it seems that there is very little the U.S. can really do about this, otherwise why would we not be doing it?74

  Glimpses of insight into the true purpose of the trade regulatory agency can be gleaned from the progressive think tank, the Third Way, which proudly touts its influence in setting the progressive agenda:

  Third Way’s policy and political work has been incorporated into President Obama’s State of the Union addresses, introduced in more than fifty bills in Congress, included as part of major bipartisan budget deals
and the President’s Deficit Commission recommendations, cited by the Vice President’s Task Force on the Middle Class, and used by dozens of candidates, from first-time House candidates to the Senate Majority Leader.75

  A February 2010 Third Way policy paper—“Getting Our Share of Clean Energy Trade,” by Ed Gerwin, Anne Kim, and Josh Freed—laid out a blueprint for the Obama trade enforcement point by point, much of which found its way into three pieces of legislation introduced in 2011. A principal concern of the authors is overcoming impediments to American “clean energy” exports:

  These impediments hamstring U.S. clean energy exporters, who face foreign competitors backed by robust, highly strategic and agile government export promotion efforts.76

  On March 31, 2011, Sen. Sherrod Brown (D-OH) introduced the Trade Enforcement Priorities Act, with two co-sponsors, Sens. Robert P. Casey Jr. (D-PA) and Debbie Stabenow (D-MI).77 A complementary House bill was then introduced on April 13 by Rep. Mark S. Critz (D-PA), with one co-sponsor, Rep. Linda T. Sanchez (D-CA).78 And a third bill, the Trade Prosecutor Act of 2011, was proffered November 8—again by Senator Stabenow—along with co-sponsor, Sen. Lindsey Graham (R-SC), rendering the bill “bi-partisan.”79

  The Stabenow-Graham measure would heed President Obama’s SOTU exhortation to Congress, by establishing a completely new government bureaucracy—a Trade Enforcement Division within the Office of the United States Trade Representative. Its ostensible purpose would be to “ensure that United States trading partners comply with trade agreements to which the United States is a party.” Under Stabenow-Graham, three new senior positions would be created: a Deputy United States trade representative for trade enforcement, a chief agricultural negotiator, and a chief manufacturing negotiator.

  The Third Way authors assert that the U.S. does not have enough trade rules in place. While U.S. trade officials have “crisscrossed the globe to sign trade deals designed to assure that American goods and services have access to foreign markets,” new rules are needed to help to open trade for U.S. clean energy exports. Too few USTR staffers are currently devoted to trade enforcement and monitoring activities. Trade enforcement, they write, “often takes a back seat.” Even though trade has grown rapidly, and there are new trade agreements to monitor, the size of the USTR bureaucracy has not—nor has its funding.

  Noting that there are already seventeen federal agencies involved in trade enforcement, including “multiple units within USTR and the Departments of Agriculture, Commerce, and State,” the problem is that they fail to “effectively coordinate their activities or pool their resources well.” Needed is a national strategy for getting “our share” of clean energy trade:

  For America to win a larger share of future job growth in clean energy, U.S. companies must produce innovative, efficient, competitive and high quality clean energy products and technologies.

  In addition to government support, according to Third Way’s authors, the U.S. government should “incentivize American clean energy firms by putting a price on carbon, developing smart domestic energy policies and making robust investments in clean energy technology development.”

  In other words, cap and trade taxation, and more “green energy” investment. In fact, the influential Third Way is also pushing a “clean energy export coordinator” and the creation of a “one-stop shop for clean energy exporters.”

  A WHITE HOUSE “CONSOLIDATION AUTHORITY”

  Yet another Obama initiative to expand White House control over U.S. trade and industry was reflected in a January 2011 announcement that Obama would call on Congress to give him the same type of “reorganizational power last held by a president when Ronald Reagan was in office.” The Obama plan was a “so-called consolidation authority allowing him to propose mergers that promise to save money and help consumers.” Reportedly, Obama’s first project was to be the combining of “six major operations of the government that focus on business and trade” into a single Department of Industry and Trade. The new agency would consolidate the Office of the U.S. Trade Representative, the Commerce Department’s core business and trade functions, the Small Business Administration, the Export-Import Bank, the Overseas Private Investment Corporation, and the Trade and Development Agency.80 Following ever forward in expanding executive control, three of the six named targets for consolidation—the Export Import Bank, the Overseas Private Investment Corporation, and the Trade and Development Agency—would lose their status as independent agencies. Two years earlier, a similar plan had been proposed by Derek Shearer, a former U.S. ambassador and former Commerce Department deputy under-secretary in the Clinton administration, not to mention a professor of diplomacy at Barack Obama’s alma mater, Occidental College.81

  BUY AMERICAN … OR ELSE

  The “Buy American” slogan is another legacy of FDR’s New Deal. Roosevelt’s 1933 Buy American Act “mandated a purchase preference for domestically produced goods in federal direct procurements.” During Obama’s 2008 campaign the slogan reemerged and was slated for the 2009 “stimulus” bill. But after threats of a trade war came from both Canada—which threatened its own “Buy Canada” counter-campaign—and from the European Union, the Buy American provision was deleted from the stimulus bill by February 13.82 Nevertheless, a Buy American provision mandating that all “iron, steel, and manufactured goods” used in a federally funded project must be produced in the United States is a legislative urge that progressive Democrats just can’t seem to shake.

  We devoted a whole chapter in our previous book—Red Army—to “Making It in America,” beginning with then Speaker Nancy Pelosi’s Making It in America plan. Pelosi had flashed the plan to reporters at a July 14, 2010, press conference, after meeting with President Obama at the White House.83 Then the re-proposing of Buy American continued, with a number of pieces of legislation introduced in the House during summer of 2010—all to no avail. Again, it was included in the failed American Jobs Act of 2011, and then in the Rebuild America Jobs Act. Now it has resurfaced in the Act for the 99%.84 And if the Act for the 99%—replete with a Buy American provision—fails to pass, expect to see Buy American attached and reattached to legislation introduced by Democrat progressives until they do somehow get it into law. It simply is not going to go away.

  But why is it so important?

  The bottom line is this: In the U.S., iron and steel, in particular, are produced by unions. Buy American is pure protectionism for union jobs. Large-scale manufacturing, by and large, is also carried out by union shops. If iron and steel, and large-scale manufacturing, lose out to foreign competitors, there are fewer jobs for unions, and the Democrats lose out, because union dues grease the Democratic Party’s money machine.

  That is why—as we documented in Red Army—groups like the Alliance for American Manufacturing, a union-dominated organization, have played such a prominent role in helping to push for progressive Democrats’ manufacturing legislation—including the Buy American provision. But, as we also wrote in Red Army, the whole AAM and progressive Democrats’ plan for Make It in America and Buy American went up in smoke in May 2011, when President Obama “inserted the new economic slogan, Win the Future, into the mix.”85 After the Democrats and their allies had invested a whole year pushing their Make It in America plan, Win the Future came along, only to be made the butt of many jokes ending with exclamations of WTF?

  Writing in The Hill, Russell Berman also pointed out the obvious fact that not much in the Democratic leadership’s proposal was actually new, as it included a “raft of legislation party lawmakers have proposed in recent years.”86 But progressives have no choice other than to keep on pushing Buy American—by one name or another. The Democrats’ campaign piggy bank depends on it.

  7

  “EQUAL PAY FOR EQUAL WORK” AND OTHER ACTS OF “FAIRNESS”

  AS WITH MANY “skillful politicians,” Barack Obama mostly conceals his true intentions and beliefs. But on occasion he makes them perfectly clear. In 2008, Obama’s entire presidential campaign
had been based on themes of national unity, of transcending partisan differences, on a “red, white, and blue America.” Once elected, the unifying Obama seemed to vanish. Overnight, his rhetoric radically changed.

  “We’re gonna punish our enemies and we’re gonna reward our friends,” Obama told Latino voters in an interview aired on Spanish TV channel Univision, just a month before the landslide defeat of his political allies—the Reid-Pelosi Democrats—in November 2010.1 That one sentence “pretty much sums up” Obama’s entire presidency, the Heritage Foundation’s Conn Carroll later wrote for the Washington Examiner.2

  One of the most deceptive tricks in Obama’s rhetorical arsenal is his use of the term economic fairness. A prime example of the progressives’ use, in general, of harmless-sounding rhetoric in their advancement of radical objectives, this “fairness” derives directly from the Marxist conception of economic justice. It is used today with great effect by the many shades of progressives—communists, socialists, Democratic socialists—all over the globe.

  MIT economist Lester C. Thurow, who started his career working on President Lyndon Johnson’s Great Society welfare programs—and later helped found the socialist-progressive Economic Policy Institute—put it this way in 2003:

  In addition to outlining the process whereby the system of capitalism would end, Marx went on to recommend a new system, communism, which would, he believed, eliminate the evils of capitalism. He never said much about the transformation of capitalism into communism, but in his vision of communism … it would create a new society where economic fairness and personal freedom reigned.3

  It would be a grave error, however, to mistake Marx’s personal freedom as in any way similar to the kind of freedom from tyranny of government fought for by America’s Founding Fathers and Mothers, who then enshrined it in the U.S. Constitution, a world-changing advance in human liberty and self-government. Marx’s personal freedom would become possible only within the never-realized “higher phase” of communist society. Marx’s freedom comes after “all the springs of co-operative wealth flow more abundantly.”