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Democrats Turn against the White House on Economic Policy, Look to Glass-Steagall

Since the smashing defeats of the Democratic gubernatorial candidates in New Jersey and Virginia on Nov. 3, and the heavy-handed tactics used to push a fascist health care bill through the House four days later, an increasing number of Democrats threaten to jump ship – if only for fear of losing their seat in the 2010 elections. Meanwhile, the mass strike is expanding throughout the country.

The major cause of popular anger, besides the health care reform, is the outrageous bailout policy of the banks on the backdrop of soaring unemployment. On Nov. 17, Democratic Rep. John Conyers of Michigan announced in an op-ed that he "will introduce a modernized and updated version of the Glass-Steagall Act to the Congress." That Act, passed under Franklin Delano Roosevelt in 1934, was repealed in 1999 at the instigation of Larry Summers, who is now chief economic advisor to President Obama, leading to the wild speculation and financial derivatives bubbles which crashed the world economy by 2007.

Conyers specified that former Federal Reserve chairman Paul Volcker, and economists Joseph Stiglitz and Nouriel Roubini agree with him "that the Glass-Steagall firewall must be restored" between protected commercial, depository banking and "investment bank" activities in speculation. Lyndon LaRouche's political movement has been calling for a new Glass-Steagall standard since September 2008 as a sine qua non for any healthy reorganization.

On Nov. 18, an amendment introduced by Rep. Paul Kanjorski, which he has associated with Glass-Steagall, passed the House Financial Services Committee. But that text would only give future banking regulators the power to break up "systemically large" bank conglomerates if they wish to, without establishing the legal separation of "casino banking" hedge funds, equity funds, etc., from depository banking.

The same day, Rep. Peter DeFazio proposed that both Secretary of the Treasury Timothy Geithner and White House economic policy director Larry Summers should be replaced, speaking on the Ed Schultz show at MSNBC. "We may have to sacrifice just two more jobs to get millions back" for Americans, he said. President Barack Obama "is being failed by his economic team," and therefore those two must go.

DeFazio, who is a prominent member of the Congressional Progressive Caucus, DeFazio struck tones recalling LaRouche's long-standing proposals: "I think there is a growing consensus in the [Democratic] caucus [that] we need a new economic team that cares more about jobs, Main Street and the American people than it does about Wall Street and huge bonuses." He suggested that the government "reclaim the unspent funds ... reclaim some of the funds that are being paid back, which will not be paid back in full, and we use it to put people back to work rebuilding America's infrastructure."

In fact, the number of people being thrown out of work with no protection, has reached dramatic dimensions. Over 5 million jobs have been lost just since President Obama came into power. And the White House claims to have created 600,000 jobs have been exposed as completely fraudulent. Tens of thousands of exaggerated and imaginary jobs were made up by recipients of "stimulus" money. On Nov. 17, the Administration defensively dropped 60,000 out of the figure, reducing it by 10% for now, but the reality is even worse.

The following day, Appropriations Committee chairman Rep. David Obey, a Democrat, railed against the White House: "The inaccuracies on recovery.gov that have come to light are outrageous and the Administration owes itself, the Congress, and every American a commitment to work night and day to correct the ludicrous mistakes. We designed the Recovery Act to be open and transparent, and I expect the Board... to have information that is accurate, reliable and understandable to the American public. Whether the numbers are good news or bad news, I want the honest numbers and I want them now." So, more lies and cover-ups from the White House.

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