The Men Behind the Curtain
The President’s tax plan has now been revealed. In an attempt to make a big splash before the 100–Day Buzzer goes off, the administration revealed a one page, double-spaced, bullet-pointed document (12 bullets, 7 sub-bullets). If you look at the document (and you can---and I encourage you to do so: http://www.cnn.com/2017/04/26/politics/white-house-donald-trump-tax-proposal) it is almost laughable, except for the fact that these guys are serious! Had this been turned in by one of my students when I was teaching, I would have told the student: a)it is woefully incomplete; b) it totally lacks specifics; and, c)given that you have had since November to create this, it is unacceptable. The initial analysis of this “plan” has been fairly consistent. “It’s a very lopsided plan to the top end of the income scale,” says Chuck Marr, director of federal tax policy for the Center for Budget and Policy Priorities. Overall, Marr notes the Tax Policy Center has estimated the top 1% of households would see a 14% increase in after-tax income, while low and middle-class Americans would see gains of just 1.2% to 1.8%.” (USA Today, April 26) This is not exactly watching out for all those blue collar folks Trump promised to “drain the swamp” for. If we take a look at who the architects of this plan are, though, we can probably understand why it looks the way it does.
When criticizing Ted Cruz during the primaries, Trump noted that Cruz’s wife had worked for Goldman Sachs --- and said: "And now he’s going to go after Goldman Sachs? It doesn’t work that way. Goldman Sachs owns him. Remember that, folks: They own him." The man who constantly harped on Hillary Clinton for accepting a speaking fee from Goldman Sachs failed to mention he is beholden to the investment bank (as well as to the Bank of China) and has proceeded to fill his appointed positions with Goldman Sachs alumni. The two most prominent these days (since Steve Bannon is now in Witness Protection with Kellyanne Conway) are the Insane Clown Posse who rolled out this tax “plan,” Steve Mnuchin and Gary Cohn. Aside from Cohn being the former President and COO of Goldman (2006-2017) and Mnuchin being a second generation G-Sachs-er (his dad was a partner at Goldman), what else do we really know about these guys? And what qualifies them to be working on Federal Tax policy?
The answer to the latter is: NOTHING. The answer to the former is a bit more interesting. If we look at Steve Mnuchin’s background we might better understand why this new tax “reform” plan (as he calls it) is skewed to primarily help the wealthy while resurrecting the ghost of voodoo economics past, “supply side” theory. Aside from his dad being a Goldman Sachs partner, Steve was not only a Goldman Sachs banker for 17 years but also a wheeler dealer during the financial crisis of 2007-08 (and later in the movie business, but you can look all that up yourself). After leaving Goldman to dabble in hedge funds for a while, Steve, it seems, found himself back in banking, acquiring a lending bank named IndyOne and morphing into OneWestBank (later merging with the CIT Group), a name you may remember popping up during the crisis. Here’s a little refresher.
According to The New York Times, OneWest "was involved in a string of lawsuits over questionable foreclosures, and settled several cases for millions of dollars." Because of another foreclosure, around 100 protesters of Occupy Los Angeles gathered outside Mnuchin's home in October 2011, and held signs, that read "Make Banks Pay." Two California fair-housing groups filed complaints to the federal government alleging that OneWest violated the Fair Housing Act by not lending money to African Americans, Hispanics, and Asians.
According to the HUD's response, CIT/Financial Freedom foreclosed on 16,220 federally insured reverse mortgages from April 2009 to April 2016. This represents about 39% of all federally insured reverse mortgage foreclosures during that time. CRC estimated that Financial Freedom only serviced about 17% of the market and thus was foreclosing more than twice as often as its competitors. CIT Group disclosed to investors that it had received subpoenas from HUD's Office of the Inspector General in the third and fourth quarters of 2015. In November 2016, two nonprofits filed a complaint with the Department of Housing and Urban Development, alleging redlining by OneWest Bank. (wiki)
So, our boy Steve, like the President, has a history of wheeling, dealing, and racially discriminating in the housing market --- which clearly qualifies him to be Trump’s Secretary of the Treasury. (Foreclosing on those reverse mortagages is pretty juicy, too --- notify Henry Winkler and Tom Selleck, please.) Here are two other McNuggets about Mnuchin you might not know.
1) During the (confirmation for Sec. of Treas.)hearing, it was also noted that Mnuchin had failed to disclose $95 million of real estate that he owned and his role as director of Dune Capital International, an investment fund in a tax haven. Mnuchin described the omissions as mistakes made amid a mountain of bureaucracy.
2) Mnuchin is registered to vote in both California and New York. (wiki)
Clearly, the man is too busy to keep track of things like $95 million or where he votes. Worse, of course, is that he has presented us with a tax “plan” that any decent high school teacher wouldn’t accept as an “outline” and has based it on the laughable (or Laff-able, for Arthur Laffer, the supply-side huckster who originally sold this b.s. to Ronald Reagan --- ask Sam Brownback how this is working out in Kansas) notion that huge tax cuts to the wealthy spurs significant economic growth (no proof whatsoever in reality --- quite the contrary, actually). This whole “wishing makes it so” idea that the “job creators” (what do hedge fund managers “create,” exactly?) spur our economy is bullshit. Once again, we have the rich watching out for the wealthy with our bogus billionaire President leading the parade.
As far as Gary Cohn goes, it is interesting how little one can find when researching this man. He has a great “origin” story about how he went from selling aluminum siding in Ohio on a Thursday to becoming a top options trader in NYC by the following Monday (you can Google it) but there’s little else said about him, beyond his arrogance and aggressive business manner.
Critics of Cohn attribute to him an arrogant, aggressive, abrasive and risk-prone work style. They see his "6-foot 3-inch & 220lbs" as intimidating, as he might "sometimes hike up one leg, plant his foot on a trader's desk, his thigh close to the employee's face and ask how markets were doing." According to former Bear Stearns Asset Management CEO Richard Marin, Cohn's arrogance is at the root of the problem.
“When you become arrogant, in a trading sense, you begin to think that everybody's a counterparty, not a customer, not a client."(wiki)
Certainly he presented himself as a no-bullshit guy when standing at the podium with Mnuchin and presenting this farcical “plan” to the American public. There is no reason to believe Cohn or Mnuchin has “the little guy” in mind at all while developing these plans which are rife with benefits for the rich (abolition of the estate tax, etc.). While little of it will probably make it through the Congress, it is not only important to note this clear statement of values by the new Administration but also to note who the messengers are.