From Volume 37, Issue 4 of EIR Online, Published Jan. 29, 2010

United States News Digest

Showdown Week for Bernanke

Jan. 24 (EIRNS)—In the aftermath of the Democratic defeat in the Massachusetts special election Jan. 19, and accelerating defections by Senate Democrats, the White House and Fed went into a heavy-handed mobilization Jan. 22-23, to arm-twist Senators from both parties into throwing their support behind the reconfirmation of Ben Bernanke as Fed Chairman. After Sens. Barbara Boxer (D-Calif.) and Russ Feingold (D-Wisc.) announced they would vote "no" on the Bernanke nomination, and Majority Leader Harry Reid delayed the scheduled vote based on canvassing Democratic Senators midweek, White House spinmeisters claimed, today, that they had quashed a "populist uprising among Democrats," and that they were "confident" that the Bernanke confirmation would squeak through.

Given the White House disconnect from the mood in the country, it is not certain that Bernanke will make it, and new revelations about his hands-on role, along with Tim Geithner, in the scandalous AIG bailout of September 2008, could spell new trouble. The Washington Post revealed today, that on Sept. 16, 2008—the crucial day in the AIG bailout—Geithner was constantly on the phone with his boss, Bernanke, and with Treasury Secretary Hank Paulson. This is according to telephone logs from the then-president of the New York Fed that were provided to the House Government Reform Committee this past week.

Also, today, Sen. John McCain (R-Ariz.) indicated that he might not be voting for Bernanke's reconfirmation; even Minority Leader Mitch McConnell (R-Ky.), while expressing the belief that Bernanke would be reconfirmed, refused to say how he would vote. Yesterday, John Kerry (D-Mass.) and Dick Durbin (D-Ill.) both announced they would be voting in favor of Bernanke's confirmation, but only after they both received phone calls from the President and from Bernanke. In another effort to boost Bernanke's confirmation, Chris Dodd (D-Ct.) and Judd Gregg (R-N.H.) announced in a joint statement that they were confident that Bernanke would pass the Senate. Both men are leaving the Senate this year.

Bernanke's term expires on Jan. 31, and unless Reid files a cloture motion on Jan. 26, it will be impossible to bring the Bernanke renomination to a vote before the term expires. There are still four hold motions pending on Bernanke's nomination, and it will require 60 Senate votes to break the holds. If the holds are broken, Bernanke's confirmation will require a simple 51-vote majority. As of yesterday, there were 27 Senators from both parties on record backing Bernanke's confirmation, 13 opposed, 10 undecided. The remaining 50 Senators have not publicly weighed in yet.

Nerobama Joins Peterson To Get His Revenge on the American People

Jan. 23 (EIRNS)—Because the American people humiliated him with a massive defeat in the Jan. 19 election in Massachusetts, Nero-like President Obama has now joined with the evil, dotty billionaire Pete Peterson, to take his revenge on us, just as the original Nero avenged himself on his ungrateful Romans by setting their city on fire. That is the meaning of today's White House announcement that Obama "strongly" endorsed legislation to be voted Jan. 26 in the Senate, for the so-called "fiscal responsibility commission" for which Peterson has been campaigning for many years, putting well over a billion dollars into his various front-groups, including the Peter G. Peterson Foundation, the Concord Coalition, the Fiscal Times newspaper and others. It is expected that Obama will make a pitch for Peterson's scheme in his State of the Union address Jan. 27.

Peterson's goal for a quarter-century has been to cut off the support for elderly Americans through Social Security and Medicare, while simultaneously increasing taxes on the poor and middle-class. In 1996, Peterson wrote, in Atlantic magazine, that senior entitlements are unsustainable, undeserved, unprincipled, and unfair, as Saul Friedman noted in Huffington Post on Jan. 21. Peterson wrote, "We now face public budgets strained to the breaking point by demographic aging which will crowd out all forms of capital accumulation, private and public, material and human." He saw "a nation of Floridas" as part of a "gray wave of senior citizens that fills the states' streets, beaches, parks, hotels, shopping malls, hospitals, Social Security offices and senior centers."

As Atlantic reported more recently: "Peter Peterson is 82, and is thinking about death. Yours!"

The plan for the Commission is that it will meet immediately, and issue its recommendations immediately after the November 2010 elections, to be forced through the lame-duck Congress, which need not fear popular reaction, immediately afterwards. Its proposals for Medicare and Social Security cuts and regressive tax increases would be fast-tracked through the Congress for a simple up-or-down vote, all in violation of the Constitution. Part of the scheme is that the annual budget deficit would be reduced from 10% of GDP at present, to 3% by 2015. No coincidence that this is exactly the "3% solution" of the European Union and its Maastricht Treaty, which have made Europe an economic wastebasket today. The same British imperial controllers who forced the "3% solution" on the European Union, have told their puppet Obama to implement it here as well.

Lyndon LaRouche has said that imposing austerity during an economic collapse like this one, is an ever-steepening downwards spiral to nowhere.

"If you try to put austerity through, or allow people to go to austerity measures," he said, "as the Obama Administration is going to try to do now, you're going to destroy the U.S. economy and you're going to kill a lot of your friends and neighbors, and probably yourself, too. So anyone who wants to do that, or tolerate that, or allow it to happen is being very stupid, criminally stupid, or something like that. And therefore, it must not happen. We must, despite what Paul Volcker's doing now, and what he's encouraging—we must let Wall Street take the heat! The merchant banks will take the heat; the merchant banking section will take the heat. The commercial banking section will be protected and survive—we need it. We are then going to use the power of the Federal government, to utter credit, to utter large masses of credit, in trillions of dollars, to launch large-scale production and related programs, investments in capital improvements, to get the economy growing up again."

Obama has negotiated with Pelosi and Reid, a scheme to institute the "commission" by Executive Order, if the Senate rejects it on Jan. 26.

Rep. Issa Accuses New York Fed of Contempt

Jan. 21 (EIRNS)—In a letter to Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, Rep. Darrell Issa (D-Calif.) accused the Federal Reserve Bank of New York (FRBNY) of contempt for selective document disclosure, and urged Towns to hold Fed officials responsible. "Unfortunately, the document production is incomplete and not in full compliance with the Committee's subpoena.... I am writing to request that you clarify the scope of the subpoena with the FRBNY and hold FRBNY officials in contempt if they do not fully comply."

Issa quotes the Committee's subpoena as directing the FRBNY to produce: "All documents in the possession, custody, or control of the Federal Reserve Bank of new York, relating to AIG credit default swap counterparty payments, the decision to compensate AIG's credit default swap counterparties at par, and public disclosure of the counterparty payments." He then points out: "The subpoena does not limit the production by a range of dates. Unfortunately, the FRBNY has only produced documents that were originated between September of 2008 and May of 2009. This production is incomplete on both ends of the produced date range. "First, the FRBNY's production does not include documents related to the FRBNY's knowledge of AIG's credit default swap counterparty exposure before AIG was bailed out in September 2008. The Committee needs to understand AIG's counterparty exposure and the FRBNY's knowledge of the potential problems at AIG before federal officials thought it became necessary to spend billions of taxpayer dollars to bail out the company.

"Second, the FRBNY's production does not include documents related to the counterparty payments after May of 2009, including but not limited to the FRBNY's response to Congressional and press inquiries, such as this Committee's investigation. As you know, the FRBNY has stonewalled this Committee's investigation at every turn since I initially requested information from FRBNY in October of 2009. It is crucial that this Committee understand the full extent of FRBNY's efforts to cover up the counterparty payments and to prevent and delay other efforts to bring details about these transactions to the public." Issa concludes: "Once again, I request that you clarify the scope of the subpoena with the FRBNY and direct the FRBNY to produce all documents in their possession related to the AIG counterparty payments through January 19, 2010."

Murkowski To Block EPA CO2 Ruling

Jan. 21 (EIRNS)—Following the defeat of the British Empire at the recent Copenhagen Summit, Sen. Lisa Murkowski (R-Ak.) intends to introduce a resolution of disapproval against the Obama Administration's effort to bypass U.S. Senate opposition to the fraud of Global Warming by using the Environmental Protection Agency to impose green fascism through a regulatory ruling that CO2 emissions endanger human existence. Murkowski said at a press conference Jan. 20: "At this point in time, my inclination is to proceed with the resolution of disapproval. I think that is a more clear path forward." If it passes, the resolution, brought under the Congressional Review Act, would remove the Obama administration's "plan B" for climate change. The measure—called the "nuclear option" by environmentalists— would also ban the administration from drafting any new regulation that would be substantially the same.

Yesterday, Sen. Mary Landrieu (D-La.) told reporters that she is working with Murkowski on blocking the EPA. Jim Webb (D-Va.) also told reporters this week that he opposes using the EPA to regulate emissions. Sens. Blanche Lincoln (D-Ark.) and Ben Nelson (D-Neb.) have also signed on to the Murkowski initiative.

All rights reserved © 2010 EIRNS