[…] In fact, the president is on track to spend more on defense, in real dollars, than any other president has in one term of office since WWII. In that time we’ve had Korea, Vietnam, the massive military buildup under Reagan, and Bush’s funded-by-tax-cuts invasions of Afghanistan and Iraq, but in the most trying economic times since the Depression, Obama’s out-gunning them all. This is not about ignoring the threats to our national security. And it’s certainly not about pacifism. […] Even after cutting billions, (Lawrence Korb) points out, the defense budget would remain significantly higher, in real dollars, than it was at the height of the Reagan build-up. […] – Guns vs. Butter 2010

Our financial lives depend on serious financial regulation being implemented. But you simply cannot talk about our country becoming fiscally sound until you address our gluttonous defense industry, which SecDef Gates has tried to tackle, meeting much push back from the Pentagon pork crowd, aided by their right-wing enablers in both parties.

Pres. Obama will get a win on the financial regulation of Wall Street bill making it’s way through the Senate. Republicans can’t afford to be caught on the other side of this issue, especially in an election year, as I’ve been saying for weeks. However, whether you can actually call it “reform” is another matter all together.

In a piece on Pres. Obama’s speech at Cooper Union, Dylan Ratigan got down to it.

The Good: The president had strong language for backing real derivative reforms.

The Bad: Vague language about the “Volcker rule” will not stop Too Big To Fail; but a plan like this (or even one like this) for breaking up the current mega-banks and limiting their liabilities will.

The Missing: NONE of this matters while our cops still work for the crooks.

Let’s remember that Barack Obama received more campaign funds from Goldman Sachs than any presidential candidate in history. Let’s also remember that both Democratic and Republican politicians are on the take from the big banks. That’s our politics, which is on the trajectory to continue diminishing the stature of our democratic republic, because we’re hemorrhaging money. I don’t anticipate the new “reform” bill will change this, though to be fair the Dodd bill does invoke the “Volker Rule.”

However, since the financial regulation won’t specifically address too big to fail we won’t get where we need to be. No one seems to know how to go about breaking up the big banks. Some powerful interests simply don’t want to.

Enter Larry Summers, who last night on “The News Hour” said just that (via email):

(starts @ 4:45 in video)

Brown: The too big to fail issue, why not go further? Why not just limit the size of banks?

Summers: Jeff, that was the approach America took to banking before the depression. That was the approach America took to lending in the thrift sector, before we had the S&L crisis. Most observers who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies, and hurt the competitiveness of the United States. But that’s not the important issue, they believe that it would actually make us less stable. Because the individual banks would be less diversified, and therefore at greater risk of failing because they wouldn’t have profits in one area to turn to when a different area got in trouble. And most observers believe that dealing with the simultaneous failure of many small institutions would actually generate more need for bailouts and reliance on taxpayers than the current economic environment.

Whenever I watch Dylan Ratigan these days it reminds me of Bill Maher talking with Jessie Ventura last Friday. When talking about our choices in politicians, Ventura said that if American voters had a choice of Democrats, Republicans or “none of the above” on the ballot, “none of the above” would win.

Many would agree, though you have to give it to Rep. Allan Grayson when it comes to his dogged fight against what’s happening on Wall Street, but also what politicians are doing to abet it.

The Wall Street reform bill headed for a test vote on the Senate floor Monday night will allow the Federal Reserve to continue to pump trillions of dollars into major banks largely in secrecy, the co-author of House language that would open the central bank to an audit charged in a memo to the Senate. “The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn’t do anything of the sort. I’m going to run down the details for you, and reprint the legislative language so you can read it yourself,” writes Rep. Alan Grayson (D-Fla.). – Dodd Bill Would Allow Fed To Hide Its Spending

Ryan Grimm of Huffington Post got a hold of a memo from Rep. Alan Grayson on the Senate Bill. He’s got the full language, but below I offer a salient section:

Federal Reserve Secrecy

– In the Senate version, all audits must remain redacted. The GAO can’t even tell Congress to whom the Fed is lending money, the amounts it is lending, or any details about collateral or assets held in connection with any credit facility.
– The GAO can never release a full version of any audit unless the Federal Reserve first chooses to shut down the audited credit facility.
– Once the Federal Reserve shuts down the authority for the credit facility, the GAO still has to wait a year before it can release details about that facility. If the Fed simply chooses to stop making loans, but does not eliminate the authority to make loans, the GAO has to wait three years before it can release a full report. The Fed can at any point during this period choose to restart the facility, and thereby prevent the release of a full report.

To add further injury to Democratic bipartisanship fetishism, rumors are swirling that the majority is going to fall for this trap yet again, this time on financial regulation.

However, beyond what’s in front of our face is a larger problem than financial regulation. It’s part of why I spotlighted Sarah Palin’s ridiculous defense of the F-22. If we don’t get a hold of our defense budget and our irrational military exuberance none of the regulatory rules in the world will save us.

Our involvement in Afghanistan is now a three decade-long misadventure, with our current mission trying to make up for the disaster the last Republican president left us, which began under another Republican president, Ronald Reagan. Since Karzai’s corrupt re-election, the mission has become very hard to defend, regardless of the moral obligation in which it began under Barack Obama. When I read stories that invoke “jobs” in Afghanistan being our responsibility, it’s not too extreme to say it makes me want to disengage there immediately.

Read Arianna Huffington, who has written a very important essay on the matter today. Start by guessing who said this?

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.”

It’s the same Republican who warned us when he left office about the military industrial complex, which along with the crooks on Wall Street are taking us to our knees.