By Thomas DiLorenzo
It’s hard to imagine a better endorsement of Donald Trump’s economic policies – whatever they may be, whenever he finds the time to explain them – than the recent endorsement of Hillary Clinton by former Goldman Sachs CEO and U.S. Treasury Secretary Hank Paulson. As the man in charge of the biggest explosion of corporate welfare in world history – the “TARP” bailouts, he defined himself as a sworn enemy of capitalism and a socialist when it comes to the capital markets. Socializing billions of dollars in investment bank, insurance company, and automobile industry losses with taxpayer dollars qualifies Paulson as deserving of the S-word label. As such, Hillary Clinton may well have found a new political and financial soulmate.
Paulson began his career and cut his political teeth with some of the sleaziest and most disastrous political hacks in American history – first as a Pentagon assistant to the secretary of defense from 1970-1972, then as a Nixon administration assistant to John Ehrlichman, the convicted Watergate felon. Such sterling credentials earned him a position at Goldman Sachs, where he presumably mastered the political dirty trick skills that he must have learned from Ehrlichman and the rest to eventually claw his way up to the CEO position.
Paulson and Hillary Clinton might as well be cloned twins when it comes to using their positions of political power to line the pockets of the wealthiest people in America in return for kickbacks and political support. As the chief corporate welfare czar during the Bush administration, a first order of business was the $180 billion bailout of the insurance company AIG, ninety percent of which was totally solvent, as documented by David Stockman in his book, The Great Deformation (p. 6). Rather than allowing a healthy free-market purge of AIG’s bad assets, Paulson showered the company with taxpayer dollars in a totally unnecessary bailout.
The real purpose of the bailout, Stockman shows, was “protecting short-term earnings and current-year executive and trader bonuses,” not saving the company from bankruptcy. “The bailout’s primary effect was to provide a wholly unwarranted private benefit at public expense; namely, the shielding of highly paid bank traders and executives who had exposed their institutions to embarrassing losses from taking the fall . .. . “ Not that saving the company from bankruptcy with tax dollars would be wise or desirable. Capitalism is a profit and loss system, not an I-keep-the-profits/you-pay-for-my-losses system.
Paulson’s employer, Goldman Sachs, was paid nearly $19 billion on various claims against AIG, which means that the “AIG bailout” was also a giant bailout of Goldman Sachs. Then there was the $13 billion bailout of General Motors, “justified” by Paulson by the outrageously false theory that GM did not have enough assets to justify private loans to keep the company afloat. He warned America that the bankruptcy of GM could cost a million jobs even though the entire industry employs only about 750,000 workers according to the U.S. Bureau of Labor Statistics.
The real purpose of the bailout of GM (and Chrysler) was a demonstration of why the Republican Party is known in some quarters as The Stupid Party. Had those two companies downsized or even declared bankruptcy, and the free market was allowed to work, there would have simply been a transfer of automobile production (and jobs) from the older, less-efficient, unionized factories to the mostly non-union factories in Kentucky, Tennessee, South Carolina, Mississippi, Georgia, and Alabama. These are all right-to-work states where Republicans are more prevalent than in the heavily unionized “rust belt” states. The “GM bailout” was partly bailout of the United Autoworkers Union and its bankrupted pension plan. It is safe to assume that it did not result in a single vote, or a single dollar in campaign contributions to Paulson’s Republican party.
After showering Goldman Sachs and his other Wall Street cronies with tens of billions of tax dollars, Paulson returned to Goldman where he must have been very handsomely rewarded indeed. When it comes to the Wall Street banksters like Hank Paulson, the “revolving door” between business and government is literally paved with gold. His endorsement of “pay-to-play” corporate welfare queen Hillary Clinton is as perfect a political match as one can imagine.