April 16, 2009
If there is one thing that the current financial crisis has revealed, it is the stranglehold that the big financial interests have on the American government. From the beginning it has been clear that the same interests that caused the financial crisis are the ones that control both the Bush and Obama administrations and that they are making sure that they are the ones who benefit most from the various high-cost "rescue" and "stimulus" packages that have been floated. Nowhere is this more clearly displayed that the way in which the Obama administration is slavishly adhering to satisfy the needs of the major financial interests on Wall Street.
This will be unwelcome news for those Obama fans who thought their candidate would be different. So far Barack Obama's administration seems to be acting consistently with the model that states that the US is run by a pro-war/pro-business one party oligarchy with two factions that differ only on some social issues.
Exhibit #1 is Timothy Geithner, the current Secretary of the Treasury. He was one of the many Obama nominees who had problems with their past tax payments. But Geither's case was the most serious because it was clear that he was not paying taxes in a manner that suggested willful deception. There is no way that he could not have known that he was doing something wrong by not paying his Social Security or Medicare taxes while he was at the International Monetary Fund, unless he is such a financial idiot that he should not be Treasury Secretary. The Wall Street Journal describes the problem:
As an international body, the IMF doesn't withhold taxes for U.S. citizens, and employees are responsible for paying their taxes. The IMF pays employees additional tax allowances to cover federal and state income taxes, and the employer's portion of payroll taxes.
Mr. Geithner prepared his own federal-tax returns during the first two years he worked at the IMF, 2001 and 2002, according to the Senate Finance Committee report.
"The IMF informs U.S. employees about their tax allowance and what it covers and doesn't cover -- and that includes paying your payroll taxes," said Michael Mussa, a former IMF chief economist, who is now at the Peterson Institute for International Economics. "The IMF doesn't leave this out."
An IMF booklet on taxes, which Mr. Geithner told the Senate panel he received, instructed employees that "you pay the employee's share of U.S. Social Security taxes."
Mr. Geithner's quarterly tax-allowance payments also included a statement of what the money was to be used for, and had an entry for "SE tax" -- meaning "self-employment" taxes. In a wrinkle in U.S. tax law, U.S. citizens at the IMF pay Social Security and Medicare taxes as if they were self-employed. Current and former IMF officials said that U.S. officials widely understood "SE tax" to mean payroll taxes."
I, like Geithner, do my own taxes and there is no way that you can do that without knowing what 'SE tax' means. I have been paying self-employment taxes (to cover Social Security and Medicare) every year on the small extra income I get from book royalties and consulting and speaking fees. It is quite simple and straightforward.
Current and former IMF officials said the fund provided numerous warnings to U.S. employees about payroll taxes. According to IMF documents released by the Senate Finance panel, Mr. Geithner regularly received information about his tax obligations.
Mr. Geithner didn't make any Social Security or Medicare tax payments on his income during the years he worked for the IMF, though he did pay income taxes. After the Internal Revenue Service audited him in 2006 and discovered the payroll-tax errors, Mr. Geithner corrected them for 2003 and 2004. Only after Mr. Obama picked him for Treasury secretary last fall did Mr. Geithner pay the Social Security and Medicare tax he owed for 2001 and 2002.
So even after being audited and having paid back taxes for two years, he did not pay for the other years even though he must have known that the same problem existed there. To me, this was such an egregious act that Geithner's nomination should have been rejected. But he was confirmed quite easily, which immediately indicated to me then that he was a faithful servant of the oligarchy and that he would faithfully serve Wall Street interests.
As veteran investigative reporters Don Bartlett and Jim Steele said :
The reason we said that Geithner’s was far more egregious is this. He signed a piece of paper acknowledging that he owed both taxes while he was employed by the IMF. He then collected the money from IMF to pay the taxes. Now, most of us, you know, the payroll taxes are withheld. We don’t get reimbursed for those taxes. It comes out of our own pocket. But Mr. Geithner not only signed a paper acknowledging he owed taxes, he collected money to pay the taxes and then didn’t pay them and pocketed the money. This is why it was far more egregious for him and why—you know, the New York Times demanded that Tom Daschle withdraw, and he did. But the same demand was not put on Mr. Geithner.
If this was a real two-party system, you would think that the Republicans would jump at this chance at embarrassing the incoming president by highlighting the faults of his important cabinet pick. But in a one-party oligarchy, it is the interests of the oligarchy that must be served first and Republicans know that.
A number of senators, including Republicans, continued to express their support for Mr. Geithner. "These are not the times to think in small political terms," said Sen. Lindsay Graham, a South Carolina Republican. "He has a great résumé."
Yes, he certainly does. A resume that screams that he will do Wall Street's bidding, and what's not to like about that?
POST SCRIPT: The other side of piracy
Johann Hari of the London Independent says there is another side to the pirate story that we are not being told.
In 1991, the government of Somalia collapsed. Its nine million people have been teetering on starvation ever since – and the ugliest forces in the Western world have seen this as a great opportunity to steal the country's food supply and dump our nuclear waste in their seas.
Yes: nuclear waste. As soon as the government was gone, mysterious European ships started appearing off the coast of Somalia, dumping vast barrels into the ocean. The coastal population began to sicken. At first they suffered strange rashes, nausea and malformed babies. Then, after the 2005 tsunami, hundreds of the dumped and leaking barrels washed up on shore. People began to suffer from radiation sickness, and more than 300 died.
Ahmedou Ould-Abdallah, the UN envoy to Somalia, tells me: "Somebody is dumping nuclear material here. There is also lead, and heavy metals such as cadmium and mercury – you name it."
At the same time, other European ships have been looting Somalia's seas of their greatest resource: seafood. We have destroyed our own fish stocks by overexploitation – and now we have moved on to theirs. More than $300m-worth of tuna, shrimp, and lobster are being stolen every year by illegal trawlers. The local fishermen are now starving.
This is the context in which the "pirates" have emerged. Somalian fishermen took speedboats to try to dissuade the dumpers and trawlers, or at least levy a "tax" on them. They call themselves the Volunteer Coastguard of Somalia – and ordinary Somalis agree. The independent Somalian news site WardheerNews found 70 per cent "strongly supported the piracy as a form of national defence".
No, this doesn't make hostage-taking justifiable, and yes, some are clearly just gangsters – especially those who have held up World Food Programme supplies. But in a telephone interview, one of the pirate leaders, Sugule Ali: "We don't consider ourselves sea bandits. We consider sea bandits [to be] those who illegally fish and dump in our seas." William Scott would understand.
Did we expect starving Somalians to stand passively on their beaches, paddling in our toxic waste, and watch us snatch their fish to eat in restaurants in London and Paris and Rome?
The whole article is worth reading for its history of how pirates arose in the 17th century as a reaction to the extreme hardship and cruelties suffered by sailors in the merchant and regular navies of that time. Rather than being thought of as evildoers, they were initially seen by the general public as romantic heroes, rebels against oppression. Their transformation in the public mind into senseless and savage bandits was the result of a concerted propaganda campaign by the British government.