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Dec. 12 2009 - 9:31 am | 1,400 views | 4 recommendations | 82 comments

On Obama’s Sellout

This is pernicious for a lot of journalistic reasons, but politically it’s bad for progressives beacuse conspiracy theories stand in the way of good policy analysis and good activism, replacing them with apathy and fear.

via TAPPED Archive | The American Prospect.

When we went to print with the latest Rolling Stone piece about Obama’s economic hires, a couple of my sources advised me to expect some nastiness in the way of a response from Obama apologists. One jokingly suggested that there would be a waiting period to see if anyone even read the piece first, and only if there was enough negative buzz would I start getting hit with the charges of being an irresponsible conspiracy theorist, factually sloppy, and so on.

Well, weeks after the piece came out, that process is finally underway, most notably with this post on the American Prospect. And, to be perfectly honest, some of this is my own fault, since there is indeed a factual error in the piece — a minor biographical detail that identifies Bob Rubin’s son Jamie as a former Clinton diplomat. There is in fact a James Rubin who was a diplomat in the Clinton White House, but that James Rubin is not the James Rubin I’m referring to in the piece.

So I fucked up with that line — “a former Clinton diplomat” — and for that I certainly am sorry, among other things because Rolling Stone’s fact-checkers are the most rigorous in the business (much more so than any other newspaper or magazine I’ve worked for) and I think actually this was my error and not theirs, a late-stage mixup near press time.

Now, that said, it was indeed Bob Rubin’s son Jamie who worked with Michael Froman in the Obama transition team. Had it not been Bob Rubin’s son, that would certainly have qualified as a serious error, because then we’d be making an argument based upon a factual error.

But the basic argument of the article was that an enormous number of people with ties to Bob Rubin and/or other Wall Street insiders had assumed positions of responsibility in the Obama transition and White House. And Jamie Rubin is Bob Rubin’s son, and he was a headhunter for Obama’s economic hires from the first days of the transition. So the meaning here is really not significantly different. The fact that this heads the Prospect’s list of complaints says a lot about the substance of this criticism.

I’m not going to go through all of this Prospect post now, but I feel like I ought to address some of it, since it’s really an obnoxious piece of writing, on par with what I got from the Goldman people. The “factual” issues he addresses are mostly areas in which we agree on the facts and he disagrees with me on how they should be interpreted.

Take this bit about Karen Kornbluh. In my story all I really wrote about her was that she played a key advisory role in Obama’s campaign and had a major influence on the party platform, but after the campaign had lost influence and had been shipped overseas to work at the OECD (I described her post-election role as Obama’s “never-again-to-be-seen-on-TV ambassador to the OECD”). The Prospect writer recounts exactly the same facts and somehow makes it sound like there is an error somewhere. See if you can understand the point of this passage:

“Neither did Karen Kornbluh, who had served as Obama’s policy director and was instrumental in crafting the Democratic Party’s platform.” The reasons why Kornbluh didn’t get a job remain unclear, but she lost her influence earlier in the year while Obama campaign and she remained in Washington as his Senate Office policy director and later at the DNC, where she played an important role by crafting the 2008 Democratic platform. She has recently been nominated as U.S. Ambassador to the Organization for Economic Co-Operation and Development.

So in other words while I reported that Kornbluh had been a key voice in the campaign only to lose influence and ultimately get shipped off to the OECD, the truth is that she was a key voice in the campaign who lost her influence and ultimately got shipped off to the OECD. Am I missing something?

Then there’s this bit about Michael Froman, the Citigroup executive who was Obama’s economic headhunter during the transition:

His connection to Obama is through their time together on the Harvard Law Review, not through Rubin. He did indeed once work for Rubin, and was a member of Obama’s transition advisory board; he was not on the transition staff.

Again, this is exactly what I reported. I reported that Froman was Obama’s former Harvard classmate, that he had later worked for Rubin, and that he had introduced Obama to Rubin. I think what this person is trying to say is that it’s wrong to suggest that Froman was a Rubin connection when in fact it was Rubin who was a Froman connection. Or something like that. Actually, I’m not sure what he’s trying to say. Again, the point of the article was that a lot of Obama’s key hires have close ties to Rubin. And Froman, who’s held important roles in both the transition and in the White House, certainly qualifies on that front. So what’s the issue here?

Then there’s this:

“Rubin was the man Barack Obama chose to build his White House around.” Or maybe he merely built his White House around economic policy experts who had been mid-level officials in the previous Democratic administration? To my knowledge, Rubin has not been involved with policymaking efforts.

I’m not sure how anyone could describe Gary Gensler, Larry Summers, and Timothy Geithner as mid-level officials in the previous administration. They were three of Rubin’s closest aides during his Clinton years, and Summers was Treasury Secretary, for God’s sake. Rubin’s son was one of the key headhunters during the Obama transition, and Rubin himself was part of the transition effort; Froman, another Rubin colleague, has a key role; not one but two former heads of Rubin’s Hamilton Project think tank, Peter Orzsag and Jason Furman, hold key roles. And all this doesn’t even take into account the people who have less direct ties to Rubin, either by being former Hamilton Project members, or vets from Goldman or Citi.

Moreover the proof here is really in the pudding, to use a worn analogy. It wouldn’t matter that all of these people had ties to Rubin if they didn’t also follow Rubinite principles after joining the Obama White House. Obama the candidate promised to renegotiate NAFTA; Obama the president, led by his new economic team, abandoned the idea (free trade is one of the pillars of Rubinite thought). We see Orszag now talking about deficit reduction, and the word is that this key Rubinite principle is going to be a focus of the administration going forward. And the deregulatory instinct that was such a key part of Rubin’s world view has shone through during the decidedly soft-touch regulatory reform effort.

Even CFTC chief and former Rubin aide Gary Gensler’s apparently sincere religious conversion in the area of derivatives reform took place in opposition to loopholes put forward by another former Rubin aide, Timothy Geithner. (One of my sources, former CFTC official Michael Greenberger, joked about Gensler: “Gensler turned out to be one of the good guys on this stuff, but that was an accident. He would never have been nominated if they’d known that was going to happen.”)

In any case, to point out that all of these people who are making these decisions have ties to Rubin is absolutely valid. It’s certainly not invalid or factually incorrect to point out that Gensler worked closely with Rubin in the Clinton White House and also worked at Goldman Sachs. That fact was significant enough to cause two Senators to place a hold on his nomination.

Moreover it was symptomatic of the larger issue this piece is all about. Gensler, as one of the prime forces behind the disastrous Commodity Futures Modernization Act in 2000 (which affirmatively deregulated the derivatives market and helped make disasters like AIG possible), was a guy who bore direct responsibility for the financial crisis, and he was the guy Obama put in charge of this crucial post at the CFTC. Even just from an optics standpoint, it’s a terrible decision, and many people who work in the commodities business were genuinely appalled when Gensler’s name was first put forward. That he subsequently proved to be more sensible than Tim Geithner on the one issue of derivatives reform is a nice mitigating detail, but I personally would rather be talking about a CFTC chief who didn’t have to completely change his mind and reverse his long-demonstrated course in order to do the right thing.

Then there’s this passage, which is really irritating:

“Neil Barofsky, the inspector general charged with overseeing TARP, estimates that the total cost of the Wall Street bailouts could eventually reach $23.7 trillion.” It could, if every single loan guaranteed by the Federal government failed at once and all of the assets bought with those loans were destroyed — and many of those loans are to homeowners, including low-income homeowners, through Fannie Mae and Freddie Mac, or to small businesses. Some of that money went to Chrysler and GM in what was primarily a job saving move. TARP’s actual outlays are only $518 billion (still nothing to sneeze at), including foreclosure relief for homeowners. More money has been actually allocated so far on fiscal stimulus, including funds to reinforce the social safety net, than on the bank bailouts.

First of all, Barofsky did use that number, so let’s get that out of the way — there’s no factual issue with the passage I wrote. The Prospect writer wants to take issue with Barofsky’s number and imply that the use of it is misleading. Obviously Barofsky’s number is a worst-case scenario. But let’s cut the bullshit about the bailouts being intended to help ordinary homeowners and save auto workers. We could have paid off every subprime mortgage in America for about $1.4 trillion and instead shelled out at least ten times that to Wall Street, primarily to pay off derivative bets made by bankers on those assets.

The writer notes that the total TARP outlay was only $518 billion, and implies that this is the entire outlay for the bailouts when in fact the TARP is just one small slice of the bailout package — most of the bailout monies went out through little-known Fed programs like the TALF, the TLGP, the TIP, the PPI, and the Maiden Lanes. The number my friend Nomi Prins is using now for the bailouts is about $14 trillion in total outlays, and just as Barofsky pointed out, that number could rise. But to imply that the bailout outlay is not only comparable to the $700 billion stimulus but smaller than it is totally disingenuous.

The bailouts have been a massive boon to Wall Street, not so much to the rest of us (again, see Nomi’s report on that). Most of the bailouts came in the form of very cheap money lent out to the same banks that caused the crisis, who then took that money and lent it out at market rates, pocketing the difference.

That’s where all these billions in bonuses for the major banks are coming from this year. It’s almost impossible to not make mountains of money when your cost of capital is next to nothing because you’re borrowing your money from the government basically for free. Moreover we issued government guarantees for all the least responsible banks in the country — so while you and I have to keep our same old shitty credit scores, all the people who leveraged themselves to the hilt and bet the farm on subprime mortgages that we ended up bailing out now get squeaky clean, brand-new AAA credit ratings to borrow from. The cost of credit for them plummeted thanks to these guarantees, while we’re paying the same old rates to borrow our money.

This, again, is perfectly in line with the basic premise of the article. Geithner and Ben Bernanke continued a bailout policy that rewarded the very people who were most responsible for the crisis. The rest of the population did not see those same benefits. We can argue about the motives behind Obama’s bailout decision, but the numbers are not really a factual issue.

Then there’s this:

“It’s the sweetheart deal of the century, putting generations of working-stiff taxpayers on the hook to pay off Bob Rubin’s fuck-up-rich tenure at Citi.” Actually, the U.S. structural deficit and resultant national debt is mainly a hangover from the Bush Administration, with economic remedies to the financial crisis and the recession making a relatively small piece of the pie. Obama will be rolling back most of Bush’s tax cuts for the wealthy, but Taibbi deigns not to mention that.

I have no idea what he’s talking about here. I was referring specifically to the Citigroup bailout, which was indeed a sweetheart deal and does indeed put working-stiff taxpayers on the hook to pay for Bob Rubin’s fuckups. Not generally speaking, not metaphorically speaking, but literally. Rubin encouraged Citi to leverage up to invest in subprime crap; it blew up; we’re paying for it. I’m not sure what the factual issue is here.

Lastly, there’s this bit about the “resolution authority” part of Frank’s regulatory reform bill:

“Even more outrageous, it specifically prohibited Congress from rejecting tax giveaways to Wall Street, as it did last year, by removing all congressional oversight of future bailouts.” The legislation actually only allows federal regulators to use funds taxed from banks to assist them in a crisis; if they want to use taxpayer money, Congress can say no.

The writer is correct — thanks to late intervention in committee by congressmen like Brad Sherman well after my piece went to print, Congress does now indeed have veto power over future bailouts in the House version of the bill. When we went to print, however, the measure concocted by Frank’s staff in conjunction with Geithner specifically excluded any requirement for congressional approval. In fact, as we went to press, Sherman and others were fighting just to obtain a compromise in the form of a “resolution of disapproval,” which would have given Congress the right to vote on future bailouts only after they had been implemented.

And even then, if both houses passed such a resolution, the White House could have overturned it using a Presidential veto. That was what was on the table as we went to press; ultimately Sherman and the rest overcame opposition from the more senior Democrats to restore congressional approval. But that was no thanks to the Obama White House. Undeniably, the original proposal that was drawn up by Frank’s committee in conjunction with Geithner did not include any sort of congressional oversight over future bailouts.

As for the idea that only funds taxed from banks can be used for bailouts, that is indeed how it’s supposed to work. But the original legislation had the actual money for future bailouts coming via a several stage process. First it would be borrowed directly from the Treasury (or from other agencies like the FDIC). Later, that money would be recouped through a tax imposed by the White House on financial businesses with assets larger than $10 billion.

That sounded great — except that the measure contained no specific formula for when and how to recoup that money. The tax on these financial businesses could come in any amount, large or small, in any year. It could be put off indefinitely. In other words, the money could be borrowed first from the taxpayer and then later, eventually, would be collected via some unspecified vague taxation process from large financial companies. That has been corrected to a degree in the House version since we went to print, but that was the original scheme as envisioned by Obama’s appointee Geithner.

The writer’s interpretation of “no equity in any form” is interesting and clashes directly with what I was told by two different congressmen. Sherman, for instance, said that the measure, along with the lack of oversight, meant that future bailouts would be “Warren-less and warrant-less,” meaning no oversight (i.e. no meddling of the sort demonstrated by Elizabeth Warren’s congressional oversight panel) and no warrants — “no share in the upside,” as he put it.

“The House of Representatives had proven last year to be an unreliable partner of Wall Street,” Sherman said. “That’s why these things were included.”

In journalism one always comes across issues where one set of sources interprets facts one way and another sees it a different way. This resolution authority business is a classic example. Congressmen like Sherman and Paul Kanjorski were appalled by portions of the new bailout authority sections and worked to correct them, while others I spoke to seemed less concerned and, like the Prospect writer, said that they were uncontroversial technical matters merely describing a liquidation process similar to what the FDIC does. Their disagreement over how to interpret the facts extended to actual votes in the committee, where those who were alarmed by the bailout sections voted one way and those who weren’t, for whatever, reason, voted the other way.

I felt that Sherman and the others who opposed the bailout sections and fought to change them were more believable. Among other things this was because Sherman spent almost two hours walking me through the original bill line-by-line. On balance, all the evidence to me suggested that the original bill would have given the White House basically unlimited bailout authority, and it was only late-stage opposition from junior Democrats and Republicans that curbed that authority, restored congressional oversight, more clearly defined which firms could be taxed to pay for bailouts (the original version put forward by Geithner basically had medium-sized firms paying taxes for bailouts that could only go to the 20-25 largest firms), and moreover gave the government the authority to break up the so-called too-big-to-fail firms before they reached the stage where bailouts would be necessary.

So what this writer describes as a factual error is actually a question of me throwing in with one set of sources and him throwing in with another. And that’s basically what is going on with this whole Prospect post. My sources tell me that Austan Goolsbee doesn’t have the president’s ear (“Goolsbee answers his own phone,” was how one put it), point out that Goolsbee didn’t have a job in the transition, and note that the one genuine progressive in the administration, Jared Bernstein, works in the Vice President’s office in a job they had to invent for him.

This Prospect writer interprets the same facts this way: Goolsbee “skipped” transition work to immediately start working for the PERAB (which didn’t meet until May), while Bernstein now has an important job in the Vice President’s office! I don’t mind that he disagrees with my interpretation of things, but to couch those disagreements as factual errors on my part is, frankly, a little douchey.

Again, I do absolutely admit to mixing up that biographical passage about Jamie Rubin. But the rest of these issues are not issues of fact but differences of opinion. I understand the argument that the fact that Obama happened to name a dozen or so people with ties to Bob Rubin to key posts does not indicate a conspiracy, and undoubtedly I left out a great many good things that Obama has done, even in the realm of economic policy. But it’s not my job to give equal time to both the naughty and nice lists.

It is my job to point out that many of the same people who bear direct responsibility for the financial crisis were given positions of great power in the Obama White House, and that in many important ways the Obama appointments represented a resounding reaffirmation of the status quo (I didn’t even mention the renomination of Ben Bernanke), and the exact opposite of “change.” One can argue about the extent to which this is true, but I don’t think the facts are really in question.

p.s. The Prospect writer argues that “the problems Taibbi tries to describe aren’t some ridiculous cabal” but instead “come from group-think and structural influences.” Correct me if I’m wrong, but this was exactly the point of the article. The issue with the modern Democratic party is that its leaders all share a world view that’s extremely narrow. They genuinely believe in Rubinite ideas, have grown accustomed to an incestuous relationship with Wall Street, and they probably think that the right people were put in charge. Their failure to look beyond their own “group-think” for solutions to economic problems is exactly the issue.

Update Not that he did it for my benefit, but thanks to Felix Salmon at Reuters for this post fact-checking the Prospect fact-check.


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  1. collapse expand

    Go get ‘em Matt. Obama is a sellout on so many levels. I see him as a one term prez. His base is disppearing and the conservatives he tongues won’t give him the time of day in 2012. It’s time for a new party. Burn down the Dems, let the Wingnuts take over, and then come back with real change from a real party.

  2. collapse expand

    Nice reply. But please, PLEASE don’t fall in with all of the MBA-holders whose most recent abuse of the English language is the term “optics.” As in, “Even just from an optics standpoint, it’s a terrible decision . . . ”

    We have a word in English that means what you meant there: “appearances.” “Optics” is just a hop, skip and jump from leveraging synergies.

  3. collapse expand

    just read the Prospect piece. what the fuck? why even bother?
    he claims your article was a factual mess and then spends 90% of the remainder echoing your points. maybe he’s trying to take credit for your work? incredible.

  4. collapse expand

    Amazing how you went from hero to goat shit in a blink of a page when you went after Obama. I was on Dailykos trying to discuss this. People who hadn’t even read the article were saying you were staying out of your area of expertise. To which many replied ” He’s been writing about the great Heist all year, where the fuck have you been?”

    What’s just as amazing as Obama’s 180 degree turn is his supporters who complained bitterly during the Bush years about not questioning the president and derisively calling him King George. The same people now are doing exactly
    what Bush’s people did: “attack the messenger” as a diversion from the message.

    Your article was dead on. . Real ballsy stuff. You probably will have to do what you did to Goldman Sachs by delving deeper before driving this home. We have the first reaction right now of denial and anger. Good Journalists will recognize that and keep digging. You’re a good journalist. Can’t wait to hear the rest of the story.

  5. collapse expand

    Let’s not forget that is was Robert Rubin, a graduate of the Goldman Sachs crime syndicate, who said white males should not get jobs created with stimulus dollars….but the joke was on everyone as no private sector jobs were created….the stimulus was used to buy off teachers and their unions and local government

    When these people think jobs….the only thing that comes into their minds is government jobs….such as the one they got for Jamie

  6. collapse expand

    Matt, you do great work. I’ve read your Rolling Stone piece and some of the criticism. The criticism fails on nearly every level.

    I was in newspapers for most of my now-ending career, mainly in low-end editing jobs at high-end newspapers–30 years of frustration and despair. I could not for the life of me figure out why vast, highly paid reporting and editing staffs could so consistently miss the most obvious and glaringly important stories. I began to suspect there was something wrong with my news judgment, that such glorious institutions couldn’t possibly be so damned wrong.

    But what a joy it has been to discover your work in my waning years. You find the obvious stories and then you just do them. You don’t need anonymous sources (a scourge to public debate; I could write a book on it); you just report what’s happening and put it in context.

    That’s journalism. Wish I’d had the chance to practice it with someone even half as dedicated as you.

  7. collapse expand

    Great article in Rolling Stone on the team of Rubins. It says something that a lengthy critique of your work is grasping at straws. You got the Rubin family straight now though; perhaps that’s something.

    Your concluding 3 paragraphs were an excellent take on the situation.

    My only quibble with the RS piece was the reference to Frank as a “sharp-tongued critic of Wall Street.” Yes, he was, at intervals; I also heard Frank playing both sides of the fence. He definitely pushed for massive funds saying that we would get them back, and depending on how you read the numbers I suppose he could claim some righteous prophecy there. But non Wall Street folk ain’t getting the benefit of TARP; we’re not getting a tax break from the banks who have returned money. Frank dd push for oversight of the banks, meeting stiff resistance, so I know this is just a quibble and not some deal. Mainly it’s been my sense that Frank has vacillated with bailout $ and regulation ideas to work the political system in his favor.

    As you noted in RS, Kanjorski and Sanders got the ball rolling, and now Sherman is furthering the cause. The house did get a bill passed (http://www.nytimes.com/2009/12/12/business/12regulate.html?_r=1&th&emc=th), but 1. It still has to go through the Senate and 2. It has to go through the white house. Given this

    >”The overhaul of Wall Street regulation is a top domestic priority of the Obama administration, which supported the House bill and applauded its approval. But Treasury Secretary Timothy F. Geithner signaled that the administration would seek changes in any final measure. ”

    I’m not holding my breath on meaningful regulation, any more than I will for health care reform.

  8. collapse expand

    Of course there would be a backlash. The latest of our emperors is also naked. Please keep saying so. If not for your voice and tragically few others, there would be no opposition. We are pretty much doomed, but it’s unbearable to be doomed without at least hearing the truth before our final demise so we know we’re not as crazy as we feel.

  9. collapse expand

    Saw you on Colbert. Not your best work. You need a forum where you can get into some detail and Comedy Central is not it. I assume you were pitching the Rolling Stone article.

    I read with dismay your assertion that, but for a few junior legislators, we would be facing yet more draconian legislation skewed towards the whims of the non-elected government men.

    As we have seen, junior congressmen are not the most reliable of people when it comes to rational reasoning of complex issues. Things are truly fucked up, in my opinion, if they are our safety valve.

    • collapse expand

      Since you wrote about this, i went over and checked the clip. It’s typical Colbert as Baby Bear O’Reilly schtick. Anyone who comes on should know they won’t really get to detail their writing, as Colbert throws out typical neo-con rhetoric in a fashion FOX news opinion show anchors should covet. In terms of this and how much Stephen was cracking Matt up, i was surprised at how much Matt’s ideas actually got into the repartee. Shows like Colbert and TDS often create more buzz about an author than they do material; then other shows pick up the writers and offer a more substantive venue.

      What can I say? That clip plus that episode’s “Word” segment made me laugh. Matt could explore the fodder brought up in the “Grand Old Purity.”

      In response to another comment. See in context »
  10. collapse expand

    Excellent article and analysis- they can pick out tiny differences but the main idea stays intact. Why are we the only country not trying to find a way to tax away these outrageous bonus payments? Rubin/Obama?

  11. collapse expand

    Excellent article, excellent rebuttal. Hope the WH is listening. For want of a better economic policy, we may be losing our last, best hope for change. Does the WH distinguish between glorious speeches (aka Oslo) and what’s happening on the ground?

  12. collapse expand

    Just a little thing we need to keep in mind when we think about bailouts and alternatives (such as buying all sub-prime mortgages for $1.4 trillion):

    Remember that in the derivatives market – there are those on one side of the bet (mortgages won’t default very much) and those on the other side of the bet (mortgages are going to default a lot). Now, not all derivatives are betting on mortgages, but a WHOLE LOT are.

    So, there are those who WANT mortgages to default, and they have bet LOT on this. Who might those people be?

    We don’t know because the derivatives market is UNREGULATED. (Note that these contracts DO have the force of law.)

    Lets remember this when we wonder why the government won’t bail out homeowners and why we cannot pass effective regulation of these financial instruments of mass destruction.

    • collapse expand

      Well, America’s largest retirement fund, the government run CALPERS….along with it’s sister, the government run teachers retirement, CALSTRS….which were both against social security privatization….have lost $100 billion of taxpayer provided and backed funds…in the toxic dumps…



      it is the 2547 government run retirement systems across the usa which fund the crooks on wall street….calpers alone has loaned out $1 tillion in stocks to short sellers…for a few billion in quick returns

      In response to another comment. See in context »
  13. collapse expand

    I think your postscript says it all and equally applies to the Republican party. Why is it that junior Congressmen on both sides of the line were able to come together in opposition? Because of the entrenched interests of long-term career politicians.

    I look forward to the next piece and further posts here. You seem to be the only journalist out there doing the hard work to help those of us not on the inside wrap our minds around this clusterfuck of stupidity, greed, and selfishness.


    ps. re: your fact checkers – I wouldn’t doubt they are better than the others. The NYT has become atrocious for typographical and copy errors, at the very minimum, these past two years.

  14. collapse expand

    n classical political terms you are considered left and I would be considered right, however there are many things we agree on. We know the difference between right and wrong. We know of thief when we see one, whether he is wearing a three piece suit or not. I do take offense to your reference to some people protesting as teabaggers. Sure some may not be educated in economics or finance, and they really cannot understand the dynamics of how all this happened. Who can blame them, it is complicated and boring to most. These people though do have a gut feeling that things are not right. They may not know exactly why but they feel it, and this goes for people on the right and left.

    This whole right left charade that has been going on for decades is the problem. They use the issues of race, gay rights, abortion, and religious bullshit to shift the focus of the people away while they are being robbed out of there back pockets. Right and left are equally guilty of this. They never address these issues in Congress, instead they allow the bankers who finance them to continually plunder us.

    I am glad to see that you have exposed Obama. He is just another politician, judge them by their actions not their words. What we need to do is harness the energy of the so called “teabaggers” and combine it with others like yourself. While I considered myself more of a libertarian than anything, registered independent, I respect and ofter agree with people like Bernie Sanders, Brad Sherman and Dennis Kucinich (sp). These are some of the very few people in Congress that I respect. They know the difference between right and wrong and are men of principles.

    The only way to conquer the beast of Wall Street and its influence in DC is to join forces. Otherwise they will continue to have us fighting over the same old recycled issues while they rob us blind. Until then the gap between rich and poor will continue to grow and our country will start to look more like Mexico day by day.

  15. collapse expand

    The expression is “the proof of the pudding is in the eating”. It sometimes gets shortened to “the proof of the pudding…”, which is meant as shorthand for “the results are what matters”.

    It comes from a time when “proof” meant something closer to “test” than what it means now, and the meaning was that you have to eat the pudding (dessert, basically) to know how it came out, just looking at it isn’t enough.

    I know that we’ve somehow turned this into “the proof is in the pudding” but it never made the slightest bit of sense to me. I always wondered “Why does the proof that a meal was good rest only in the pudding? Is it some English/European thing I don’t know about? Do they judge everything by dessert??”

    Nope. It’s because that’s not the expression, nor what it meant, which I realized only after learning the real expression.

    I know these things take on a life of their own, and trying to reverse it is like trying to reverse the tides, but shouldn’t we at least try, in the interest of not confusing the hell out of another generation?

    Ah well.

    PS: Great post. That’s my only fact-check. The Prospect article was ridiculous, the argument he had about Biden was another one I noticed: you claimed that Biden and his adviser weren’t focused on regulatory issues, and Fernholz “corrected” this by saying that Biden works on jobs and stimulus sometimes. It seemed full of nonsense like that, to anyone who just read the two pieces and compared them, without having to have expertise in the subject matter.

  16. collapse expand

    “..a little douchey.”

    The best description of this Turdholz character I’ve seen yet (as only The Taibbi can phrase it!).

    I normally don’t read the Prosect as I am, and have always been, an authentic Democrat and an authentic Progressive, and I, as so many other of your fans, am truly and violently fed up with these constant whores (Constant Whores? I may patent this phrase!) who proclaim themselves journalists and reporters — such absolute trash talk!

    I, among many others, count myself lucky that there exists Matt Taibbi, Nomi Prins, Greg Palast, Larissa Alexandrovna, Pam Martens, and only a handful of other, true journalists and investigative reporters (quite probably the smallest minority in America).

    The Prospect is another faux crat, poseur, neolib swill rag not worthy of comment!

  17. collapse expand

    And speaking of conspiracy thinking: would the Prospect’s Turdholz, or any other neocon or neolib clown, please point out any other group more involved with the offshoring of American jobs and the disassembling of the American economy and the creation of more debt-financed billionaires (through the Depository Institutions Act of 1982, the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 and the previously mentioned Commodity Futures Modernization Act of 2000 – and all those SEC and Fed exemptions accorded the banksters) the Obama’s appointments??????

    Please enlighten this American who bothers to stay self-aware!

    Also, kindly explain to me why Obama would appoint Stephen Friedman (Intelligence Advisory Board) to anything?

    Or Diana Farrell? Or Laura Tyson? Or Larry “women can’t do science” Summers? Or Timmy Geithner? Or Herb Allison? Or Peter Orszag? Or Lipton….

  18. collapse expand

    Tim Fernholz even LOOKS like a douche.

    A conspiracy theory? I don’t see how he can figure that. It’s all out in the open; it’s called the revolving door. Officials go back and forth from the private sector to public administration all the time. Timmyboy is just in severe denial about Obama, and American politics in general. His article indicates that he actually buys the false left-right dichotomy propagated by the mainstream press, which means he believes his own bullshit.

    I’m sure if Taibbi’s Rolling Stone article were an autopsy on the Bush administration and its revolving door of top officials with both public and private sector experience (Cheney, Rumsfeld, Rice), Fernholz would heartily agree. But, point out some obvious facts about the revolving door of the Obama administration, and that constitutes a “conspiracy theory.”

    Fernholz is bad for America, and is trying to muddy the waters on what is an extremely straightforward issue. Thankfully, people don’t seem to be taking him seriously, mainly because they don’t know who he is.

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    Fine work, Matt. Keep after ‘em.

    I feel your pain. As a longtime Republican, I took a lot of heat (being called a RINO was the least of it) over my criticisms of Bush. Now that I find myself forced to criticize Obama for doing the same stuff, I’m supposedly just a “partisan critic.”

    We’ve got two groups of Americans: Those who work for Americans, and those who don’t. The leadership of both major political parties, and much of the rank and file, are in the latter group. You, sir, are in the former group. Stay there and stay after it.

  20. collapse expand

    Obama’s going to Hawaii over the holiday’s….to get at that birth certificate and destroy it….where it is locked up in Gov Lingle’s office drawer….that old piece of paper is the only thing that can stop the leftists juggernaut from rolling over middle class america…..

  21. collapse expand

    It’s sad to see people clutching to the coattails of Obama come hell or high finance. Isn’t this what we blamed Bush’s kool-aid drinkers for over the last 8 years? Really, we got screwed and The Prospect is acting like a useful idiot for the banksters.

  22. collapse expand

    In at least one respect, the situation is even worse than you describe:

    The cost of credit for them plummeted thanks to these guarantees, while we’re paying the same old rates to borrow our money.

    We don’t necessarily get to pay the same old rates to borrow our money. In January, Citibank raised the interest rate on my credit card from 12% to 18%, even though I hadn’t even been late on a payment for more than five years.

  23. collapse expand

    I read the Prospect article before your deconstruction and independently came to the same conclusion. It’s the Tiny Truth tactic taken to the extreme of Tiny Disagreement on Interpretation.
    But I still like Obama better than Newt Gingrich and I’m afraid the Progressive anti-Obama people are shooting themselves in the face. You can dream about some fantasy candidate who will agree with you on every political issue in play, but that person doesn’t exist. Instead, we all have to choose to support an actual individual who has a real opportunity to implement change. If that person makes things a little better, you must support them over those who would make it a little worse. And if you hold out for purity and infinite light, you will constrain yourself to darkness.

  24. collapse expand

    And even then, if both houses passed such a resolution, the White House could have overturned it using a Presidential veto.

    From my standpoint it’s a damned good thing he didn’t use his veto power for this since he seems so unwilling to do anything to rescue this healthcare extortion bill.

  25. collapse expand

    Back in my formative years (on occasion I have been known to go back there) I didn’t really care if I garnered positive or negative attention — just as long as I was getting SOME kind of attention, Now when I post a message on one of these news blogs and other bloggers go all postal on what I have written I really enjoy it because I am getting attention. In my opinion you should thank Fernholz for his attention to your article.

  26. collapse expand

    Great article! Thank you.
    If the left is disgusted with Obama (and I am), and the right hates him, and the middle is drifting away from him, how does he expected to be reelected? I am not asking this
    rhetorically. I really can’t figure it out. He and his team seem to relish shitting all over their base at every turn. And what about Congress, do they expect to be reelected after this Wall Street & health care fiasco?
    After this year I really think that there is only one true party in our government, the Corporatist Party.

  27. collapse expand

    One jokingly suggested that there would be a waiting period to see if anyone even read the piece first, and only if there was enough negative buzz would I start getting hit with the charges of being an irresponsible conspiracy theorist, factually sloppy, and so on.

    Well, weeks after the piece came out, that process is finally underway

    One more thing to point out that I find amusing: I don’t think those weeks of waiting were due to see if there was any consensus but because your article was just now released online. Wasn’t it originally in the November issue? If there was any actual outrage from anyone it would’ve spread through the ranks beforehand. This is all huffing and puffing that is going on now. It was also funny to see Slate refer to your tone as ‘caustic’. Obviously they never read your or Ames in the eXile. If only the other journalists out their out the cojones to say what they mean instead of couch it in newspeak.

  28. collapse expand

    “But it’s not my job to give equal time to both the naughty and nice lists.”

    Matt, as you said earlier in this piece, you knew you were going to catch hell from the Obama apologists. Which you did. Which is good.

    I’m a (very skeptical) Obama fan and your piece in RS made me greatly question whether or not the man has our best interests at heart. Maybe he does, maybe he doesn’t. I guess we’ll have to see how the next three years go.

    That being said, it is your job to question those in power, making sure the decisions they are making are truly for the people who give them their jobs, not to simply suck their dicks and pretend everything is ok.

    Jon Stewart and Stephen Colbert made their names making fun of George W. Bush and constantly questioning the decisions he made. And yet nobody seemed to care. Seems like a double-standard to me.

    What you do is no different. Hold his feet to the fire. We cannot blindly just believe what Obama is doing is best. That’s what the 2008 election was. It’s now the end of 2009. Things are vastly different.

    We cannot afford to look the other way. That was the main problem on our part during the Bush Administration.

    Keep up the good work, Matt! You are one of the main reasons I look forward to Rolling Stone.

  29. collapse expand

    oh c’mon matt, give us a break. first off, you’re faux tough guy routine, where you liberally sprinkle profanities throughout your posts does not impress. you’re a punk ass white boy who looks silly. as to your lame rationalization, just man up and accept the fact that yes, facts matter. you made errors of “fact,” not opinion – and they called you out on it. that’s the thing about the internet; we fact check your ass. so stop whining

  30. collapse expand


    Is this a new word that I didn’t know existed until Mr. Fernholz brought it to my attention, or … is it simply his inability to correctly type ‘because’?
    If he can’t correctly spell the words he chooses to use then there is nothing that he can teach me. But maybe mine is just one more ‘opinion’ that Mr. Fernholz would say is wrong.

  31. collapse expand

    Leonard whats-his-name at Salon is going after you, too. But almost everyone in the comments section there is setting that envious craphound straight.

    Part of his argument is, unbelievably, that you are not funny. To which I had to point out that your comment about Daschle sucking off a corpse for a cheeseburger is something, as Glenn Greenwald says, that stands in a class of its own in political writing.

    Fantastic response here. Thanks for all you do.

  32. collapse expand


    I think it was a terrific article — clear, to the point, really helped me understand.

    One way you can tell that factually it was pretty darn accurate, is that if it wasn’t Fernholz and everyone else at Tapped and in the liberal blogosphere would be calling you a racist.

    That you’ve so far escaped cries of racism for critiquing the one demonstrates that you’re pretty well on target.

  33. collapse expand

    Thanks for being so thorough with your reports and your follow-ups.

    A thing which concerns me a lot and about which I have not seen anyone write yet: What happens if, due to the lack of oversight and the new loopholes in regulation, the economy takes another nosedive in the near future? How much more bailing out can the US government do, before the economy tailspins into a smoking crater, taking down the world economy with it?

    The lack of any projections of such a scenario by a everyone leads me to the conclusion that the consequences would be too horrible to contemplate. What would your thoughts be on that scenario?

  34. collapse expand


    I suggest oil trading. Phil, of Phil’s Stock World, posted an article on Zero Hedge that deserves some mainstream press. You should talk to him.

    I know that the idea that “the oil market is a fix” is instantly labeled a “conspiracy.” Ok, oil before the crash was going to $200, then in the blink of an eye it drops to $40.

    Did half the world stop driving?

    I encourage you to keep hammering the steal of the century, apparently Volkner and WSJ reporters are listening, even though they are not and it’s untrue!!

    But you might strike a cord with oil, since perhaps more americans are interested in oil.

    I suggest a balanced article. For instance, did you know that Moby Dick was about the search for oil? Really, they burned whale oil back then. Also, everyone who says that there is infinite oil in America (most of them reside in Texas) seem to forget that Texas was once the Saudi Arabia of oil. Really, before there was Saudi Arabia, there was this place called Texas that produced all the oil for this big war called “World War II.”

    Anyway, don’t loose your focus.

  35. collapse expand


    The death of the auto industry. very connected to the “FIRE” economy. It really tells the story of how america merged from building and selling real stuff to marketing and financial chicanery to prop up the economy.

    A good counterpoint is the German auto industry, which concentrated on engineering and auto racing, instead of GMAC and “cup-holders.”

  36. collapse expand

    I’m beginning to envy you –as a reporter on American disasters, you are a real life Ryan Bingham.

    I’m going to stop helping you, you hyena!

  37. collapse expand

    Matt, this blog rebuttal reaffirms the fact that you are indeed a real journalist and can right directly, argumentatively, without the personal attacks stated or implied in the Am Prospect article by Tim Ferenholz.
    I like to think your time in Buffalo helped shape your relentless focus on and identification with people who actually work…or want to work for a living.
    Keep up the great work. And work it is.

  38. collapse expand

    My comment contains a typo…”right” instead of “write”.
    Probably discredits the whole paragraph according to TAP.
    Oh, well.

  39. collapse expand

    You know, one point in your piece that seems to slip past the goalie is how teabaggers, birthers, tenthers, Obama’s-a-secret-muslim-who-managed-to-go-undetected-by-CIA-FBI-NSA-24hr media-to-become-President’ers, etc are actually the best friends this administration has. These assholes are so busy screaming “Socialist” and getting their panties all bunched up about bullshit that 1) they’re oblivious to things Obama is legitimately doing wrong, and 2) it prompts the staunch Obama supporters to dig in deeper to drown out any and all criticism of “their guy”….including valid points. Its a total win-win for Obama.

    It makes me wonder sometimes, why do outlets like FOX news, townhall.com, etc waste time propogating the horseshit “Socialist” stuff and not go after the vast number of legitimate, undeniable issues? Then I remember the mental capacity of the run-of-the-mill teabagger….ironically using corporate-written talking points to argue against things like fascism……and I come back to earth.

    However, the point you make is totally in line with my hypothesis of modern politics, which is that its become nothing but a media-fueled equivalent of the WWE. . . .except the hoods, elf-boots and capes are replaced by Brooks Brothers suits and flag lapel pins. Its two guys talking shit about each other, hitting each other in the head with aluminum chairs, and throwing sand in each other’s eyes while they’re in front of the camera. But, once they’re back in the locker room, safely out of the public eye. . . .they’re sharing shampoo, snapping each other in the ass with rolled-up towels, and laughing about the show they just put on. “Did you see that guy in the 3rd row giving you the finger? He HATE’S your ass! Bwahhh hahhh hahhh!” These teabaggers holding signs of Obama with Joker makeup is pretty much the equivalent of flashing a “Bury the Undertaker” sign on Monday Night Raw, except some nut is going to take it seriously, snap, and abuse his 2nd Amendment right on a group of innocent people.

    Another great piece of writing, Matt. I forwarded it to some of my old friends down in Virginia and Alabama in exchange for the Obama “not saluting the flag” pictures they’ve been good enough to flood my inbox with over the last year. However, I’m pretty sure it will fall on blind eyes. Maybe you can dig up a picture of Obama pulling out his junk and taking a piss on the national debt clock to accompany your next article. . . .it just might resonate with a wider audience!

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    About Me

    I'm a political reporter for Rolling Stone magazine, a sports columnist for Men's Journal, and I also write books for a Random House imprint called Spiegel and Grau.

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