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A year in the troughs

Marketplace Staff Dec 27, 2006

BOB MOON: Have you noticed about the only things open this week are shopping malls and movie theaters? Congress is closed for business until next week. Wall Street’s lights are on, but barely. Probably because all those investment bankers and hedge-fund managers have cashed their record bonus checks and taken big vacations.

Marketplace commentator Robert Reich looks back on 2006 and sees a theme for the year — one that he says we should try to avoid in 2007.

ROBERT REICH: This was perhaps the worst Congress of the 20th century. Not a do-nothing Congress — a do-awful Congress. A Congress that dispensed so much lard you’d think they had a pig-slaughtering operation in the cloak rooms.

At last count, over $50 billion in earmarks — really favors for lobbyists who bundled campaign contributions on their behalf. Billions more in corporate welfare for Big Oil, Big Pharma, Big Telecom. And don’t forget the congressmen who put both hands into the trough and got back corporate gifts, junkets and outright bribes. The hall of shame grew bigger this year — Tom DeLay, Bob Ney, and Duke Cunningham all got caught up in the Abramoff scandal, not to mention the $90,000 that turned up in William Jefferson’s freezer.

Also feeding at the trough this year were defense contractors like Haliburton, found to have been wasting tens of billions of taxpayer dollars in Iraq and Afghanistan on projects that don’t work or never got built in the first place.

Also at the trough were the chief executives of some of America’s biggest companies who handed themselves the largest salaries and bonuses on record, and — we now know — stock options back-dated to maximize their value.

It was a year when investment bankers on Wall Street raked in even more. Now it’s bonus time again on the Street, and some traders, hedge-fund managers and private-equity managers are expected to take in over $50 million each. How did they make all that money? Some, by timing trades. Or by taking companies private, loading them up with debt, cutting their payrolls, and then taking them public again. Or by monopolizing initial public offerings and getting in on the juiciest ones before the rest of the public.

Most of the cost of this feeding frenzy among politicians, defense contractors and Wall Streeters has been borne by average workers, normal taxpayers and small investors.

But the real price of all this has been to our democratic-capitalist system itself. When people at the top abuse their power, the average person loses trust in that system. And then how can we possibly change it?

BOB MOON: Robert Reich teaches public policy at the University of California at Berkeley.

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