The liberal economist John Kenneth Galbraith, a key figure in President John F. Kennedy’s administration, famously blamed Goldman Sachs in his book, The Great Crash, 1929, for helping to set the stage for the Great Depression. Galbraith, who died in 2006, devoted a whole chapter he titled “In Goldman, Sachs, We Trust,” to detailing the “large-scale corporate thimblerigging” that Goldman and other investment firms practiced in the 1920s.
Now Goldman Sachs veterans at the highest levels of the Bush administration are trying to convince policy makers and the public that they know the way out of the current market troubles. (In hopes of bringing in fresh capital in the form of bank deposits, Goldman Sachs received authority from the Federal Reserve Board to become an ordinary commercial bank over the weekend.)
But there has to be another way to restore stability to the nation’s markets other than the outrageous $700 billion taxpayer-funded bailout of banks proposed by Secretary of the Treasury Henry Paulson, a former head of Goldman Sachs. As Jed Babbin of Human Events sagely opines, “There is only one certainty: whatever the government does will cost taxpayers vastly more than anyone will now admit.”
Of course, Paulson downplays the costs. “I hate the fact that we have to do this, but it is better than the alternative,” he said yesterday. The Wall Street Journal reported that earlier in the week behind closed doors the Treasury Secretary sounded positively apocalyptic: “If it doesn’t pass, then heaven help us all.”
It’s no surprise that this plan hails from former Goldman Sachs banker Paulson. The powerhouse investment bank has long been a friend of Big Government.
Goldman has provided Treasury secretaries to both Republican and Democratic administrations (e.g. Robert Rubin in the Clinton administration). A Goldman veteran, Joshua Bolten, now serves as President George W. Bush’s chief of staff. “Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few, they might just take over the whole darn thing,” writes New York Times columnist David Brooks.
The company’s politics skew left. It supports much on the left’s laundry list of trendy environmental initiatives including a government-imposed cap on carbon dioxide emissions. Its corporate foundation’s donations go only to the left, according to a study we published in Foundation Watch, August 2006. We found that in 2004 the Goldman Sachs Foundation gave $35,525,000 to liberal non-profit groups, mostly to environmental organizations such as the Nature Conservancy and the Wildlife Conservation Society. There were no recorded contributions to conservative or free market public policy organizations.
Goldman Sachs also has a long history of caving in to left-wing pressure groups, such as Jesse Jackson’s Citizenship Education Fund and the extremist Rainforest Action Network (RAN).
And Paulson’s ethics have been questioned.
POST SCRIPT: We keep hearing from some commentators that Secretary of the Treasury Henry Paulson is a Democrat. Although it’s no secret that Paulson is an ardent environmentalist, to the best of our knowledge, he’s a Republican. Campaign finance data suggest he’s a Republican too. Of the $661,540 he’s given since 1983, $336,250 has gone to Republicans and just $13,990 to Democrats. However, Robert Novak argued in a column last year that Paulson has extensive ties to Democrats.