Photo Credit: Naples News

In a state that is near the top of the national chart in food insecurity, Florida Gov. Rick Scott (R) took time this holiday to pass out Thanksgiving dinner to about 1,000 families at a shelter in East Naples. The shelter’s program fed about 7,000 families last week, with roughly 200 volunteers packing and distributing meals.

“I care completely about all these programs,” said Scott while handing out food. However, he possesses a singular way of showing it, as his sweeping budget cuts this year “slashed funding to some veteran and farm surplus programs that helped the homeless.” To justify those cuts, Scott simply explained, “all the programs are very important, but nobody wants their taxes to go up”:

“I care completely about all these programs,” said Scott, whose budget cuts earlier this year slashed funding to some veteran and farm surplus programs that helped the homeless.

“All the programs are very important, but nobody wants their taxes to go up,” Scott explained, noting that businesses also can help spur the economy. “They’ve got to grow. We’ve got to make this a place people can do well.”

One Jacksonville homeless shelter official noted that Scott “zeroed out all homeless funding” — $7 million worth — in his budget proposal. That funding supported programs dedicated to homelessness prevention, housing initiatives, and programs that “re-house” people once they’re on the street. “Not only that, he took out the line items so it can never be funded again,” said the official.

To show how much he cares about the homeless, Scott went further by vetoing $12 million in funding that state legislature had passed to support homeless veterans. There are an estimated 17,000 homeless veterans in Florida — the second highest in the nation. Overall, a record 17.2 million Americans went hungry last year.

For months, Republicans have been trying to undermine the Dodd-Frank financial reform law — passed in an attempt to prevent a repeat of the 2008 financial crisis — by cutting budgets for market regulators, obstructing nominees, and advancing bills that would weaken the law’s key provisions. But sometimes efforts to dismantle the law take on a more bipartisan flavor.

One of the key sections of the Dodd-Frank law has to do with swaps, the complex financial instruments that felled, among others, insurance giant American International Group. Before the 2008 financial crisis, the swaps market was totally opaque, giving neither customers nor regulators any sense of what the instruments actually cost or how much risk was building up in the financial system.

Dodd-Frank brings transparency to this market by forcing swap trades onto open exchanges — where they can be seen by everyone — rather than allowing backroom wheeling and dealing in the instruments to continue. But a bill authored by Reps. Scott Garrett (R-NJ) and Carolyn Maloney (D-NY), as the New York Times’ Gretchen Morgensen explained, would take these bits of the bill out at the knees:

Representative Scott Garrett , a New Jersey Republican, has teamed up with Representative Carolyn B. Maloney, a New York Democrat, to introduce the Swap Execution Facility Clarification Act. It would bar the Securities and Exchange Commission and the C.F.T.C. from requiring swap execution facilities to have a minimum number of participants or mandating displays of prices. Both mechanisms promote transparency.

Mr. Garrett said the bill directed regulators “to provide market participants with the flexibility” they need to obtain price discovery. This means maintaining the old system that can keep prices in the shadows.

On Nov. 15, a House subcommittee approved the bill by a voice vote.

As Commodity Futures Trading Commission Chairman Gary Gensler — whose agency is charged with regulating swaps under Dodd-Frank — explained, “economists for decades have shown that transparency lowers margins, leads to greater liquidity and more competition in the marketplace.” “Transparent pricing is also a critical feature of lowering the risk at the banks, and at the derivatives clearinghouses as well,” he said.

As David Min and I explained back in April, 2010, opacity in the swaps market “means that no one — regulators, investors, or even the dealers themselves — has a good handle on the systemic risk these instruments pose, or who is bearing the risk. This prevents regulators from being able to take steps to reduce systemic risk and creates the conditions for financial panics.” Dodd-Frank did a lot to deal with this problem, but Congress now seems to be aiming to undo that progress.

Rep. Jaime Herrera Beutler (R-WA)

Last week, Rep. Jaime Herrera Beutler (R-WA) continued the trend of Republicans avoiding angry constituents by holding an invitation-only “community coffee.” But even the small number of constituents at the exclusive event did not let Herrera Beutler off the hook, asking her tough questions about her allegiance to a “no tax” pledge:

U.S. Rep. Jaime Herrera Beutler said Tuesday she’s happy with the smaller settings of her invitation-only “community coffees” and isn’t planning to hold another large-scale town hall. About 60 people attended her latest gathering at Judy’s Restaurant in Longview on Tuesday morning, a fraction of the attendance at earlier town halls in her Southwest Washington district. [...]

At Tuesday’s meeting, the more intimate setting didn’t cause people to shy away from criticizing the congresswoman. Kathy Thompson, a Longview real-estate broker, blasted Herrera Beutler for signing conservative activist Grover Norquist’s pledge not to support any tax increase of any kind.

“I think this is totally un-American. I think your only pledge should be to uphold the Constitution of the United States,” Thompson said.

Avoiding constituents is nothing new for Herrera Beutler — in October she even asked a local paper to keep her town hall meeting a secret. Her office does not send advance notice of meetings to local media and she doesn’t post alerts on her website. She admits that she decided to limit attendance after she was confronted at a May town hall by attendees who asked “hostile questions” about the House GOP budget, which would have effectively eliminated Medicare.

Other GOP representatives have also faced a backlash from constituents for their uncompromising, ideologically rigid commitment to Americans for Tax Reform President Grover Norquist’s “no tax” pledge. (Norquist considers any tax increase, for any reason, a violation of the pledge.) One audience member told Rep. Chris Gibson (R-NY), “We are your constituents, not Grover Norquist.”

More and more Republican congressmen, though, are disavowing the pledge after witnessing the ill effects of promising never to raise taxes under any circumstance. GOP Rep. Frank Wolf (VA) said the pledge had the effect of “paralyzing Congress” and making it impossible to even discuss ways to reform the tax code. Onetime devotee Rep. Charles Boustany (R-LA) also denounced the pledge, explaining, “We have to have the flexibility to do the right thing for American people.”

In a clear display of misplaced priorities, congressional fiscal super committee member Sen. Jon Kyl (R-AZ) entirely dismissed the idea of extending the payroll tax cut for middle class families yesterday, even though failure to do so “would reduce GDP growth by 0.5 percent and cost the economy 400,000 jobs.” “The payroll tax holiday has not stimulated job creation. We do not think that is a great way to do it,” he told Fox News Sunday host Chris Wallace.

But practically in the same breath, Kyl refused to even consider a small (and publicly-supported) tax increase on America’s millionaires to pay for the payroll tax cut extension. “Taxing the people who provide the jobs, you put off the day that we have economic recovery and job creation in this country. That’s precisely what the Democratic plan would do”:

KYL: The second problem is that by taxing the people who provide the jobs, you put off the day we have economic recovery and job creation in this country. And that’s precisely what the Democratic plan would do. It would hit those people, the small businesses who we all acknowledge are the ones who create the jobs coming out of economic difficulty. And that we think would be a big mistake in –

WALLACE: If I may, Senator Kyl, just to cut this short, are you saying no deal on extending payroll tax cuts?

KYL: The payroll tax holiday has not stimulated job creation. We don’t think that is a good way to do it.

Watch it:

Incidentally, a small tax increase on millionaires would not affect most small businesses and the businesses it does affect note that such minute increases make “zero difference” in their hiring practices. When Wallace noted that economists say a failure to extend the payroll tax cut along with jobless benefits could “cost more than half a million jobs,” Kyl responded, “I don’t know who those economists are. I just read a piece by a respected economist Art Laffer who says that isn’t true.” Of course, Laffer — a former Ronald Reagan adviser — is known for bragging about Reagan’s tax increases on low-income Americans.

Stephen Schwarzman

Last summer, mega-investor and Blackstone CEO Stephen Schwarzman — who has a net worth of about $4.7 billion, according to Forbes — said Democratic efforts to close a pernicious tax provision known as the carried interest loophole was akin to Nazi invasions during World War II. “It’s a war,” Schwarzman said. “It’s like when Hitler invaded Poland in 1939.”

This particular loophole lets private equity executives and hedge fund managers, who are some of the wealthiest people on the planet, pay exceedingly low tax rates. As billionaire investor Warren Buffet explained, “Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as ‘carried interest,’ thereby getting a bargain 15 percent tax rate.”

And it seems that Schwarzman has found his man in the 2012 election: the former private equity executive Mitt Romney:

Stephen Schwarzman, chairman of the world’s largest private-equity firm, will host a fundraiser for Mitt Romney at his Park Avenue apartment next month, a sign that Romney is closing the sale with Wall Street’s wealthiest donors.

The event marks Schwarzman’s inaugural step to help Romney secure the Republican presidential nomination, according to a person familiar with Schwarzman’s plans who spoke on condition of anonymity. He will follow up with efforts to persuade colleagues in the financial industry to get behind Romney’s presidential bid, the person said.

Schwarzman, for the record, is so wealthy that his personal chef “often spends $3,000 for a weekend of food for Mr. Schwarzman and his wife, including stone crabs that cost $400, or $40 per claw.” Yet he has vociferously fought against equalizing the tax treatment of investors like himself and the working Americans whose income is taxed at normal income tax rates.

Romney, of course, has already come out against the “Buffett rule,” the Obama administration’s proposal to ensure that millionaires and billionaires can’t pay lower tax rates than middle-class families. Romney’s net worth is about $250 million and he won’t release his tax returns (despite having previously called on his opponents to do so). However, a Citizens for Tax Justice analysis estimated that Romney pays a tax rate of about 14 percent.

Even before grabbing Schwarzman’s endorsement, Romney had been hauling in Wall Street cash. But does Romney agree with Schwarzman that asking billionaires to pay their fair share is akin to Hitler invading Poland?

In the lead-up to the financial crisis that crippled the American economy and plunged the country into a recession, the Federal Reserve made trillions in undisclosed loans to struggling banks and financial institutions, according to official documents obtained by Bloomberg News. Banks then turned those loans into more than $13 billion in previously undisclosed profits.

The total commitment of the Fed loans amounted to $7.77 trillion, and unlike the funds made available by the Troubled Asset Relief Program (TARP), the loans came with virtually no strings attached for the banks:

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

In one month, Morgan Stanley — one of the most vulnerable financial companies at the time — took $107 billion in secret loans, enough to pay off a tenth of the nation’s delinquent mortgages. The loans, like those made to other institutions, were never reported to Morgan Stanley’s shareholders or the taxpayers who subsidized them.

Other banks drew similar loans without disclosing them. Bank of America, for instance, held $86 billion in public debt on the day then-CEO Ken Lewis declared his company “one of the strongest and most stable major banks in the world.” Bank of America’s Fed borrowing peaked at $91.4 billion in February 2009; at the same time, it benefited from $45 billion in TARP loans.

And even while members of Congress were working to overhaul the nation’s financial regulatory system, the banks and the Fed kept them in the dark about the loans. Rep. Barney Frank (D-MA), one of the architects of the Wall Street reform act that eventually became law, and former Sen. Judd Gregg (R-NH), the GOP’s lead negotiator on TARP, told Bloomberg they were unaware of the specifics of such loans.

Had Congress had such information, members of both parties would have changed their votes to favor Wall Street reform, Sen. Sherrod Brown (D-OH) said. Former Sen. Byron Dorgan (D-ND), meanwhile, said knowledge of the loans could have led to a push to reinstate the Glass-Steagall Act, which prohibited banks from owning investment companies and vice versa, thereby limiting their size and vulnerability to such crises.

The secret nature of the loans, however, instead helped Wall Street work to “preserve a broken status quo” that allowed its biggest banks to grow even larger than they were before the crisis. The nation’s largest banks have turned more in profit in the last 30 months than they did in nearly eight years preceding the crisis, all while spending millions to derail significant reform legislation. And since the Dodd-Frank Act became law, they have spent millions more to weaken its rules and prevent certain regulations from taking effect. Bank lobbying, in fact, is now on pace to reach a record high this year.