The Crash of 2016

by Thom Hartmann

  The children of President Cleveland’s generation watched, as they grew up, the assassination of an incredibly corrupt President McKinley, which turned power over to his vice president, Theodore Roosevelt. By 1907, the revolution was on again, and Roosevelt pushed through Congress the Tillman Act, which not only made it an explicitly criminal act for a corporation to give money or any other form of support to candidates for federal office but even provided for corporate officers and directors themselves to individually go to jail for the election-influencing crimes of their companies.

  A generation later, in 1932, revolution was brewing. Forty-five thousand veterans of World War I were occupying land from the White House Lawn to the Potomac River, demanding that their bonus coupons for service in the war, redeemable in 1945, be cashed in immediately so they could deal with the Great Depression. The relatively moderate governor of New York, a man born of wealth and firmly part of the establishment, Franklin D. Roosevelt, stepped into the White House. And, recognizing the revolutionary times, Roosevelt had by 1936 become such a revolutionary himself that his opponents among the banking and industrial class were openly using the media to call him a communist and a traitor; they even organized an unsuccessful coup d’état against him.

  FDR’s revolution was resolved with Roosevelt’s death and the end of World War II in 1945. So as the wheel of history turned, inevitably there came the next generation’s revolution, the one of the 1960s.

  The tenth generational revolution in America, led by Ronald Reagan and a new batch of Economic Royalists, was promoted as a revolution against the “free love” and “tune in, turn on, and drop out” ethos of the hippies. But at its core it was a corporate revolt, following an outline drawn up by Lewis Powell (as mentioned previously in chapter 2) against the rising profiles of Rachel Carson, Ralph Nader, and their unrelenting and successful work regulating big business.

  Reagan’s Royalist revolution was continued and expanded through the presidencies of George Herbert Walker Bush and Bill Clinton, “ending welfare as we know it” and Clinton’s declaration that “the era of big government is over.”

  So, a generation after Reagan, when a young senator from Illinois came along promising change in the midst of another crisis, a nation pregnant with a new generation’s revolution found her new president.

  A dozen American generations built this nation and sustained it, with each one producing its own revolution.

  But Jefferson also knew that at times these revolutions would not be achieved so easily. That old forces—be they those of monarchy, aristocratic slaveholders, or Economic Royalists—would conspire to keep power and deny a new generation its revolution.

  He was blunt about the consequences of such a thing happening, writing, “If this avenue [of periodic revolution] be shut to the call of sufferance, it will make itself heard through that of force, and we shall go on, as other nations are doing, in the endless circle of oppression, rebellion, reformation; and oppression, rebellion, reformation, again; and so on forever.”110

  John F. Kennedy echoed this warning 150 years after Jefferson when he said, “Those who make peaceful revolution impossible will make violent revolution inevitable.”111

  The Suicide Pact

  Which brings us back to the Caucus Room on the night of President Obama’s Inauguration Day.

  Newt Gingrich was there. So, too, were some of the most prominent Republican members of Congress, including Representatives Eric Cantor, Paul Ryan, and Kevin McCarthy. Senators Jon Kyl, Jim DeMint, and Tom Coburn were there. And Frank Luntz, Republican pollster and Fox News regular, was there, too. They all sat around a square table facing each other like a group-therapy session.

  After all, Democrats were now in control of the White House, the Senate, and the House of Representatives for the first time since before the Reagan Revolution and they were talking about things like repealing tax cuts for the top 1 percent, reforming health care, passing a carbon tax, and spending huge amounts of money to rebuild America reminiscent of Franklin Roosevelt’s WPA.

  Hours earlier, a man who campaigned on “fundamentally transforming the United States of America” gave his Inaugural Address to the largest gathering of people the National Mall in Washington, DC, had ever seen.

  A new direction is exactly what the nation pregnant with revolution wanted. And the nearly 70 million people who voted for Barack Obama (the most votes ever received by a president of the United States in the history of the nation) hoped that he was the man to bring about this revolution—just as he campaigned he would do.

  So, the disciples of Reagan sat together eating their steaks and digesting the new political reality of Democrats in charge and everything they’d worked for over the last thirty years being completely wiped out. They talked about how they’d got to this point, what had gone wrong, and, most important, what to do now.

  In his 2012 book Do Not Ask What Good We Do: Inside the U.S. House of Representatives, Robert Draper recounts the outcomes of this meeting, writing, “The dinner lasted nearly four hours. They parted company almost giddily. The Republicans had agreed on a way forward… show united and unyielding opposition to the president’s economic policies… Begin attacking vulnerable Democrats on the airwaves… Win the spear point of the House in 2010. Jab Obama relentlessly in 2011. Win the White House and the Senate in 2012.”112

  Representative Paul Ryan warned that everyone “had to stick together.” Representative Kevin McCarthy chimed in, saying, “We’ve gotta challenge them on every single bill and challenge them on every single campaign.”

  The seeds of the Powell Memo, planted nearly forty years earlier, had grown into giant spruces of corporatocracy with branches wrapped around our political, economic, and media institutions.

  Just as the lessons learned in the Powell Memo were used to take power in the 1970s, they would be used to keep power during another time of crisis.

  The Royalists in the Caucus Room gambled that if only this coming Progressive Revolution could be handcuffed for just two years, then maybe the revolutionary spirit of the American people could be broken, or better yet hijacked, and the Reagan Revolution might weather the storm and even exploit this crisis to push their own revolution further. That was the plan at least, and the Republicans in the room were confident they could pull it off.

  As Newt Gingrich said after dinner, “You will remember this day. You’ll remember this as the day the seeds of 2012 were sown.”

  Republican Representative Pete Sessions from Texas, in an interview with the National Journal, compared the Republican strategy moving forward to a “Taliban insurgency.”113

  And so a suicide pact was drawn up the night that President Obama was sworn in to office, in January 2009. Which meant that even before Barack Obama went to sleep on his first night as president of the United States, he was dealing with an insurgency.

  With the help of prominent media outlets, the Royalists, now a political minority, would engage in a scorched-earth strategy to defeat a coming Progressive Revolution, even if it meant crashing the United States as we know it. If they were going down, then the rest of the nation was going down with them.

  Which is exactly what happened.

  Chapter 8

  The Royalists Strike Back

  We needed to have the press be our friend… We wanted them to ask the questions we want to answer so that they report the news the way we want it to be reported.

  —Tea Party Senate candidate Sharron Angle,

  August 2, 2010

  The very first Great Crash in our nation’s history—that of the economic exploitation in colonial America, which was followed by the Revolutionary War—was kicked off by a “Tea Party.”

  We learn about the Boston Tea Party in elementary school. But rarely do we learn what really triggered this event (another consequence of the Great Forgetting).

  As was mentioned in chapter 1, the Boston Tea Party was a revolt against the Economic Royalists, who had seized the British governm
ent and passed the world’s largest corporate tax break at the time, devastating colonial tea sellers.

  The purpose of the Tea Act was to increase the profitability of the East India Company to its stockholders (which included the king) and to help the company drive its colonial small-business competitors out of business. Because the company temporarily no longer had to pay high taxes to England and held a monopoly on the tea it sold in the American colonies, it was able to lower its tea prices to undercut those of the local importers and the mom-and-pop tea merchants and teahouses in every town in America.

  In response, in December 1773, a group of Bostonians boarded ships belonging to the East India Company and committed one of the largest acts of corporate vandalism in the history of the world—throwing what would be today millions of dollars’ worth of tea into the harbor.

  War would soon follow.

  Today, as the great cycles come back around, and battle with the Royalists reconvenes, the “Tea Party” has returned. Only this time, the Royalists are the ones dressed silly.

  A Tea Party Reimagined

  It’s hard to figure out when exactly the twenty-first-century Tea Party “started.”

  The sentiment that government should be supersmall, that taxes are evil, and that social safety nets encourage laziness has existed in America since its founding, albeit usually only on the fringes of society. But what exactly caused tens of thousands of Americans around the country to start dressing up in eighteenth-century garb and dangling tea bags from tricornered hats in the summer of 2009 is a little trickier than those simple slogans.

  The prominent Tea Party organization, the Tea Party Patriots, attributes the beginning of the Tea Party to a rant by CNBC talking head Rick Santelli in February 2009—less than a month after President Obama took office.* Santelli was reporting from the floor of the Chicago Stock Exchange when he went off on a program being floated by the Obama administration to help struggling homeowners during the height of the foreclosure crisis that was sweeping across the nation.

  Santelli went unhinged while live on the air, yelling, “The government is promoting bad behavior… How about this president and new administration? Why don’t you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the losers’ mortgages.”

  By “losers,” Santelli was referring to struggling homeowners who had been hustled into buying adjustable-rate mortgages by predatory salesmen out to make a quick buck in the banking industry.

  Never mind the program being proposed by the Obama administration to deal with that crisis was far weaker than the one passed through Congress by Franklin Roosevelt, which backstopped people’s mortgages to stop the train wreck of a foreclosure crisis during the Great Depression.

  Santelli turned to traders standing nearby and asked, “This is America. How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills? Raise your hand. President Obama, are you listening?”114

  The Economic Royalists were listening. And there was already a movement afoot to exploit Santelli’s rant for their own gain. Santelli himself gave up this fact when he shamelessly plugged what was likely the first-of-its-kind Tea Party rally, saying, “We’re thinking of having a Chicago tea party in July. All you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.”

  While on the surface Santelli’s rant may have seemed like the kickoff of the Tea Party movement, a closer look at the facts shows that a “Tea Party” was already being organized even before President Obama took office.

  A 2013 study115 published in the scientific journal Tobacco Control revealed that today’s incarnation of the Tea Party goes back a long way—well before the election of Barack Obama.

  Talk of a new Tea Party to advance corporate interests in America began in the 1980s and 1990s, when tobacco companies invested heavily in building new broad alliances with other organizations in hopes of fighting back against the emerging antismoking agenda in Congress.

  Taking the advice of the Powell Memo, written a decade earlier, tobacco companies such as R. J. Reynolds, Lorillard, and Philip Morris funneled millions of dollars into an organization called Citizens for a Sound Economy (CSE). One funder of CSE is one of the most prominent Royalists of today, David Koch.

  The purpose of CSE was to build a coalition of tobacco companies and corporate polluters to oppose regulations on smoking and air pollutants being considered in Congress. It’s estimated that at least $5.3 million was funneled into CSE by Big Tobacco.

  Then in 1993, a Philip Morris PR flack wrote a “Powell-esque” memo outlining a strategy of fighting any new taxes by joining up with other antitax groups to create a “New Boston Tea Party.”

  The memo reads, “Grounded in the theme of ‘The New American Tax Revolution’ or ‘The New Boston Tea Party,’ the campaign activity should take the form of citizens representing the widest constituency base mobilized with signage and other attention-drawing accouterments such as lapel buttons, handouts, petitions and even costumes.”116

  Ultimately, the tobacco companies failed and were hit with a massive $200 billion settlement in 1998. But in 2002, David Koch’s CSE purchased a website domain name: USTeaParty.com. Eventually, plans for this Tea Party were put on hold. After all, a Republican Royalist, George W. Bush, was in the White House, and Royalists were in control of Congress, so there was no reason to cause any trouble.

  Only after the Royalists crashed our economy, and were banished from Congress, would the so-called Tea Party be revived. And sure enough, it was revived by CSE. Only, by now, CSE had split into two Astroturf corporate-funded organizations: Americans for Prosperity and FreedomWorks. Unlike “grassroots,” Astroturf organizations are propped up by a wealthy elite and rely on corporate cash rather than genuine activism.

  Meet the Kochs

  Few did more to put the Powell Memo into motion than the billionaire Koch brothers, David and Charles.

  They run the massive transnational conglomerate known as Koch Industries, dealing in everything from petroleum refining and distribution, to chemical processing and ranching.

  Koch Industries is the second largest privately held company in the United States, taking home nearly $100 billion in annual revenue. And the Koch brothers occupy spot 4 on the Forbes 400 Richest People in America list, each worth $31 billion. Together, they are wealthier than Warren Buffett, who is in spot 2 on the list.

  They inherited Koch Industries from their father, Fred Koch, who in 1927 discovered a more efficient way of processing crude into gasoline, which he pitched to Joseph Stalin in the Soviet Union and made a fortune.

  Despite his collaboration with the communists, Fred Koch was an unapologetic Economic Royalist. Long before Lewis Powell’s memo, Fred helped found the John Birch Society in 1958. It was a group of far-right, fierce anticommunists, who also worked against the civil rights movement in America. They subscribed to the radical economics of neoliberalism, which was still shut out of the mainstream political and economic debate at the time.

  But Fred would instill in his sons, Charles and David, this same radical Royalist ideology that would soon gain favor around the world in the 1980s.

  Writing in The New Yorker, Jane Mayer talks about the political influence on the Koch brothers, such as the John Birch Society to which they were exposed through their father.

  “Members of the John Birch Society,” she writes, “developed an interest in a school of Austrian economists who promoted free-market ideals. Charles and David Koch were particularly influenced by the work of Friedrich von Hayek… [and his] belief in unfettered capitalism.”

  She adds, “Charles and David also became devotees of a more radical thinker, Robert LeFevre, who favored the abolition of the state… LeFevre liked to say that ‘government is a disease masquerading as its own cure.’ ”

  David Koch even ran for president in 1980 on the Libertarian ticket, but only received 1 percen
t of the vote. As Mayer writes, “The brothers realized that their brand of politics didn’t sell at the ballot box. Charles Koch became openly scornful of conventional politics. ‘It tends to be a nasty, corrupting business,’ he told a reporter at the time. ‘I’m interested in advancing libertarian ideas.’ ”

  And they had a lot of money to do just that.

  The Rise of the Kochtopus

  When Lewis Powell told Eugene Syndor that the Chamber of Commerce needed to spend more money influencing politics, education, the media, and school curriculums, he might have been better off just addressing the letter to the Koch brothers.

  At the onset of the Jimmy Carter presidency, in 1977, they bankrolled the CATO Institute, a think tank devoted to espousing Libertarian—or Royalist—ideology.

  Brian Doherty, a senior editor at Reason magazine, interviewed the brothers multiple times. He quoted Charles describing the strategy behind their funding to “bring about social change.” It was, Charles said, a “vertically and horizontally integrated” endeavor “from idea creation to policy development to education to grassroots organizations to lobbying to litigation to political action.”

  After CATO, the Kochs spent millions creating the Mercatus Center at George Mason University, devoted to neoliberal economics and climate change denial.

  The Wall Street Journal noted, “When it comes to business regulation in Washington, Mercatus, Latin for market, has become the most important think tank you’ve never heard of.” The article goes on to say, “Mercatus, with its free-market philosophy, has become a kind of shadow regulatory authority.”

  The Mercatus Center is so effective that when oil men George W. Bush and Dick Cheney moved in to the White House in 2001, they sought suggestions for which environmental regulations they should immediately kill off. Of the twenty-three regulations to bite the dust, fourteen were suggested by the Mercatus Center, which has been given more than $14 million by the Kochs since 1998.117