Trade Wars, Gateways to Diminished Credibility and Economic Hardship

This article first appeared in Truthdig. 

As Jonathan Swift once noted: “There is nothing constant in this world but inconsistency.”

That’s the operative motto for all things Trump, one that makes analyzing the gap between what he thinks and what he tweets much easier. Along those lines, my former boss from my Goldman Sachs days—Gary Cohn—just resigned from his White House post as chief economic adviser to the Chaos Producer in Chief. This was ostensibly in protest against the president’s  announcement  about imposing steel and aluminum tariffs. The next day, Trump signed the order sealing that deal, citing his actions as a “matter of necessity for our security.”

Along the way, he said there would be no exemptions to the tariffs, then said there would be—for Canada and Mexico. Trump glowed in the light of his new-found power grab over trade agreements, leaving himself room to decide which countries would be “in” and “out” with respect to these and other tariffs in the future. And that was the week that was in Trump World.

The timing of Cohn’s departure certainly put a wrench in his plans to convene executives dependent on steel and present their case against steel tariffs to Trump. Instead, Trump signed the tariffs order flanked by steel and aluminum workers supporting it. Speaking of steel, Cohn’s nerves were seemingly made of that metal. At Goldman, he was the man who regularly waded through deals without losing his cool (unlike Trump). On 9/11, I witnessed him directing traders to keep trading oil as shreds of debris and billows of smoke engulfed the windows of the Goldman trading floor, only a few blocks away from the World Trade Center.

 

He became president (or number two) at Goldman, continually handling the less “cool” behavior of chairman and CEO Lloyd Blankfein, who remained above him in the pecking order for decades. Cohn commanded daily activities at Goldman that led to the firm’s creation of shady financial instruments that were later at the core of the financial crisis. Under Cohn, Goldman was bailed out by U.S. taxpayers. The firm morphed, for government subsidy purposes, into a bank holding company, though it handled scant deposits from regular people. It did this to retain access to Federal Reserve support, as it has done, over the past decade. Cohn was also at Goldman when it reached a $5 billion settlement with the Department of Justice over its consistent misconduct regarding mortgage-related securities from 2005 to 2007.

That type of conflict-meets-crisis readied him for his government service. When Cohn came up against Trump, the president’s flavor-of-the-minute trade policy hawk, Peter Navarro, met “Globalist Gary” head on. Shortly therafter, Cohn’s Trump administration career was over.

The financial news media didn’t take Cohn’s departure well. Past transgressions forgotten completely, it considered Cohn, one of the few adults in the room, another Trump appointee biting the dust, pointing to what we already know: Inconsistency is the only constant in this White House.

The Tariffs

When Trump added imported steel and aluminum to his list of already announced tariffs for solar panels and washing machines, members of his own party joined the world in expressing their disapproval. Many business sectors reliant on raw steel expressed fears that the tariffs would ultimately lead to major job losses, not gains, throughout that U.S. economy. Though the action invoked Section 232 of the 1962 Trade Expansion Act, the rest of the world knows that imported steel costs don’t represent security risks, whereas the alienation of allies actually does.

As European Commission President Jean-Claude Juncker said: “We strongly regret this step, which appears to represent a blatant intervention to protect U.S. domestic industry and not to be based on any national security justification.” He vowed that Europe would retaliate.

There were three sets of tariffs proposed by the Commerce Department, run by billionaire Wilbur Ross, and the latest, a 25 percent tariff on steel and 10 percent tariff on aluminum imports, are the harshest so far. For the president to circumvent Congress on tariffs, it must allegedly alleviate what would otherwise be a national security risk. That’s just the loophole Trump used to ostensibly deliver on his campaign promises to American steelworkers. The problem is that the tariffs could wind up hurting those and other workers, as well as American consumers, instead. It would also add fuel to the fire in an already existing trade war.

Why is it already existing? Because Trump’s entire isolationist posture and dogma have already caused U.S. allies and adversaries to seek tighter relationships with each other, from a currency and trade agreement perspective. The latest tariffs are another element on the path away from diplomacy (which could be better used to create agreements that truly benefit workers on all sides of our borders) and toward the school-yard bullying tactics Trump adheres to.

Reactions from around the world were of anger. China’s foreign ministrycalled the tariffs “unreasonable and excessive” and, in true trade war style, promised that Beijing “will take necessary measures to safeguard its legitimate rights and interests.”

Our friend to the north, Canada, one of the biggest sources of steel for the U.S., and one of biggest buyers of American steel, was equally incensed. Foreign Affairs Minister Chrystia Freeland said tariffs on Canadian steel and aluminum would be “absolutely unacceptable.”

Even if Trump meant well (OK, a really big IF), his lack of diplomacy will ultimately render products the U.S. must import more expensive. As for American steel, any money made on extra tariffs will be lost on a reduced pool of buyers for our exported products. Domestic consumers ranging from home to bridge builders will inevitably face higher raw steel prices as a result.

Tariff Timing and Mexico’s Stance Affecting NAFTA Talks

Before Trump decided to levy the tariffs, conversations between the U.S. and its NAFTA partners, Mexico and Canada, were coming along, not perfectly, but well enough. Then, the subject of the border wall resurfaced during a phone conversation between Trump and Mexican President Enrique Peña Nieto. That stalemate continues. Peña Nieto reiterated that Mexico won’t pay for the wall. Trump “insisted that it would.” According to The Washington Post, an involved Mexican official said that the entire conversation sparked Trump’s temper. Surprise, surprise. Trump’s ongoing temper tantrums are a real chip at the wall of international diplomacy.

It was following that heated discourse (after which Peña Nieto canceled his trip to the U.S., the second time he has done so due to the wall dispute), Trump declared he would impose the tariffs.

Whether a negotiation technique, or a campaign promise confirmed to his base, Trump initially implied that the tariffs were aimed at China (from which the U.S. imports less than 6 percent of its steel). But they hurt Canada the most. Canada provides 16 percent of U.S. imported steel. Brazil and South Korea rank second and third. China isn’t even one of America’s top 10 suppliers. Worse for Canada, 75 percent of our northern friend’s total steel exports go to the U.S. The tariff would cripple one of Canada’s leading exports while we are trying to negotiate the “best” NAFTA deal with them.

But that’s exactly what Trump wants. By dangling financial threats and then taking them away, he elevates himself to being more of a dictator, and less of a leader, of the country’s trade agenda. On Monday, he tweeted that he might consider dropping the tariff on Canada and Mexico if they played ball with him on the new NAFTA agreement. Trump’s notion of reciprocity at that time meant Mexico paying for a wall and Canada “treating our farmers better.” Navarro, director of the White House National Trade Council, had said something different earlier that morning, but the mismatch between Trump’s tweets and people trying to do their jobs in perpetual guess mode as to his decision is par for the course.

All manner of diverse voices called out the tariffs. Goldman Sachs noted that “import tariffs make the U.S. less competitive by raising the prices of raw materials.”

In Hamburg, Juncker responded to Trump’s announcement with: “We can also do stupid.” He vowed to fight back against Trump’s tariffs, noting, “This is basically a stupid process, the fact that we have to do this. But we have to do it. We will now impose tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on bourbon. We can also do stupid. We also have to be this stupid.”

Trump retorted with an uppercut to the jaw. “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” he tweeted on Saturday. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”

Perhaps, just perhaps, competition for stupid isn’t in the interest of the U.S., other countries, or the workers and citizens of the world. Destroying U.S. credibility only reduces the desire of other countries to buy from the U.S., or to negotiate better terms for U.S. consumers or workers, and instead, trade more with each other.

Trade War Casualties

It’s not rocket science. If it costs more to import steel, either that cost will be passed on to the end user of steel-made products and to middlemen that build things using steel, or U.S. steel manufacturers will step up to the demand that comes from less imported steel.

The part of U.S. industry that uses steel is far larger than that which supplies steel. The ratio is more than 6.5 million workers to about 140,000 in the steel industry itself. And sure, as billionaire U.S. Secretary of Commerce Wilbur Ross pointed out, if a Campbell’s soup can uses 2.6 cents worth of steel, and if that steel cost rises by 25 percent, it adds only an extra six-tenths of one cent to the can’s price.

But that math doesn’t account for whether American companies can accommodate extra domestic steel demand, or whether they will also now raise steel prices—because they can. The U.S. has been behind in infrastructure surrounding the steel industry, one of the reasons U.S. steel mills have been at over, not under, capacity. Renovating mills would enable domestic steel producers to produce more steel for domestic use than raising tariffs on importing steel would.

When the Bush steel tariff was in effect in 2002, 200,000 Americans in industries requiring steel lost their jobs because of higher steel prices, versus 187,500 workers working in the steel industry. The reality is that there needs to be better infrastructure.

The Trade Deficit

Trump’s use of tariffs as a means to control trade deficits comes after his first year in office, during which the overall U.S. trade deficit widened 12.1 percent to $566 billion, its highest level since the 2008 financial crisis. Exports rose 5.5 percent to $2.33 trillion, while imports climbed 6.7 percent to a record $2.9 trillion. The trade gap with China increased 8.1 percent to a record $375.2 billion, and the gap with Mexico rose to $71.1 billion, the second highest on record.

According to the Department of Commerce’s International Trade Administration, the U.S. is the world’s largest steel importer, with U.S. imports representing about 8 percent of all steel imported globally. Part of the reason for that is not just the price of steel, but the ability of U.S. steel companies to produce it in the U.S. The top eight countries that export steel to the U.S. provide about 1 million metric tons each and make up 75 percent of U.S. steel imports. Canada, Brazil and Mexico send more than a third of their total steel exports to the U.S.

Treasury Secretary Steven Mnuchin tried to assuage fears of global trade wars at a congressional committee hearing, saying, “We are not looking to get into trade wars.” He added that he was “supportive” of imposing the duties, thereby contradicting himself, taking a page out of Trump’s book of bipolarity and reducing the legitimacy of anything the U.S. government says or does.

House Speaker Paul Ryan has also expressed repeated concerns about a trade war. Yet our internal dramas just serve to alienate us from the world, not obtain better overall “deals,” because we are doing so from a position of increasing weakness and erratic White House behavior.

1920s Isolationism and Tariffs

U.S. history during an equally isolationist and deregulatory period shows that alienating the world doesn’t help the U.S.—or the world. The Emergency Tariff Act, signed in May 1921, increased import taxes on wheat, sugar, meat, wool and other agricultural products.

The Fordney-McCumber Tariff Act, signed in September 1922, raised tariffs and extended them to industrial goods. The tariffs did encourage Americans to buy American goods. However, they did not help U.S. exports. Other countries retaliated by introducing tariffs of their own, so U.S. exports became more expensive and less popular.

In 1930, following the crash of 1929, President Hoover signed the Smoot-Hawley Tariff Act, against, raising already high tariffs on more than 20,000 imported goods to as much as 60 percent. That set off a global trade war, causing more trading partner retaliation, and a 66 percent drop in global trade between 1929 and 1934 that deepened the Great Depression. To lower the high tariffs, President Roosevelt passed the Reciprocal Trade Agreements Act in 1934.

Why Mexico Matters

Meanwhile, the seventh round of NAFTA talks between Mexico, Canada and the U.S. finished in Mexico City this week, three weeks before Mexico’s’ campaign season begins on March 30. Jared Kushner flew to Mexico City, having lost his security clearance and thus ability to negotiate world peace in the Middle East. Whether he had anything to do with it or not, the next day, Trump did relent, and agree to exempt Mexico and Canada from tariffs. That said, he could easily re-impose them if talk about a wall or other conversation goes against his demands.

A trade war is about more than prices in and prices out. It’s about considering how those prices impact real people and jobs. It’s about considering multiple trade and diplomatic relationships—not just between other countries and the U.S., but among those countries with each other.

Trump’s supporters may believe that drawing a line in the sand against China that impacts Canada is good for American jobs, but the devil is in the details, and details are not Trump’s forte. The reality is that America is losing its position on the world stage as a country that shows consistency in any capacity. These tariffs will inspire better trade relationships among other countries, something Trump’s isolationist stance has already put in motion. They will diminish U.S. credibility, the lack of which is a product Trump has coined as his main export.

In the 1930s, U.S.-initiated trade wars contributed to a global Great Depression, one factor that lead to World War II. This time around, the rest of the world is more likely to work together and less with the U.S., not quake in economic fear of U.S. retaliation. This is clear and evidenced by the recent agreement between Japan and the EU, and the Regional Comprehensive Economic Partnership, in which Japan and China are key participants, their historical differences set aside, in efforts to forge non-U.S. trade relationships.

The U.S. remains in a precarious economic situation, as does the world, and that means Trump’s trade war and nationalism, coupled with bank deregulation, could inflict more risk on depleted economies. That path would be a truly disastrous one for the U.S.

Jeb! All In! The Bush Dynasty (And Banker Friends) Go For Round Three

[This piece has been adapted and updated from my book All the Presidents' Bankers: The Hidden Alliances That Drive American Power, now out in paperback. An intro by TomDispatch is here.] 

It’s happening. As expected, dynastic politics is prevailing in campaign 2016. After a tease about as long as Hillary’s, Jeb Bush (aka Jeb!) officially announced his presidential bid last week. Ultimately, the two of them will fight it out for the White House, while the nation’s wealthiest influencers will back their ludicrously expensive gambit.

And here’s a hint: don’t bet on Jeb not to make it through the Republican gauntlet of 12 candidates (so far). After all, the really big money’s behind him. Last December, even though out of public office since 2007, he had captured the support of 73% of the Wall Street Journal’s “richest CEOs.” Though some have as yet sidestepped declarations of fealty, count on one thing: the big guns will fall into line. They know that, given his family connections, Jeb is their best path to the White House and they’re not going to blow that by propping up some Republican lightweight whose father and brother weren’t president, not when Hillary, with all her connections and dynastic power, will be the opponent. That said, in the Bush-Clinton battle to come, no matter who wins, the bankers and billionaires will emerge victorious.

The issue of political blood and family lines in Washington is not new. There have been four instances in our history in which presidents have been bonded by blood. Our second president John Adams and eighth president John Quincy Adams were father and son. Our ninth president William Henry Harrison and our 23rd president Benjamin Harrison were grandfather and grandson. Theodore and Franklin Delano Roosevelt were cousins. And then, of course, there were our 41st and 43rd presidents, George H.W. and George W.

If Jeb becomes the 45th president, it will be the first time that three administrations share the same blood and “dynastic” will have a new meaning in America.

The Bush Legacy

The Bush political-financial legacy began when President Ronald Reagan chose Jeb’s father, George H.W., as his vice president. Reagan was also the first president to choose a Wall Street CEO, Donald Regan, as Treasury secretary. Then-CEO of Merrill Lynch, he happened to be a Bush family friend. And talk about family tradition: once upon a time (in 1900, to be exact), Jeb’s great-grandfather, George Herbert Walker, founded G.W. Walker & Company. It was eventually acquired by -- you guessed it! -- Merrill Lynch, which was consumed by Bank of America at the height of the 2008 financial crisis.

That merger was pressed by, among others, George W. Bush’s Treasury Secretary (and former Goldman Sachs chairman and CEO), Hank Paulson. It helped John Thain, Paulson’s former number two at Goldman Sachs, who was by then Merrill Lynch’s CEO, out of a tight spot. Now chairman and CEO of CIT Group, Thain is also a prominent member of the Republican Party whosponsored high-ticket fundraisers for John McCain during his 2008 campaign. Expect him to be there for Jeb. Paulson endorsed Jeb for president on April 15th. That’s how these loops go.

As vice president, George H.W. co-ran a task force with Donald Regan dedicated to breaking down the constraints of the 1933 Glass-Steagall Act, so that Wall Street banks could become ever bigger and more complex. Once president, Bush promoted deregulation, while reconfirming Alan Greenspan, who did the same, as the chairman of the Federal Reserve. In 1999, after President Bill Clinton (Hillary!) finished the job that Bush had started by overseeing the repeal of Glass-Steagall, banks began merging like mad and engaging in increasingly risky and opaque practices that led to the financial crisis that came to a head in George W.’s presidency.  In other words, it’s a small world at the top.

The meaning of all this: no other GOP candidate has Jeb's kind of legacy political-financial power. Period. To grasp the interconnections between the Bush family and Wall Street that will put heft and piles of money behind his candidacy, however, it’s necessary to step back in time and see just how his family helped lead us to this moment of his.

Bush Wins

By the time George H.W. Bush became president on January 20, 1989, the economy was limping. Federal debt stood at $2.8 trillion. The savings and loan crisis had escalated. Still, his deregulatory financial policies remained in sync with those of the period’s most powerful bankers, notably Citicorp chairman John Reed, Chase (now JPMorgan Chase) Chairman Willard Butcher, JPMorgan chief Dennis Weatherstone, and Bank of America Chairman Tom Clausen.

With the economic odds stacked against him, Bush also remained surrounded by his most loyal, business-friendly companions in Washington, who either had tight relationships with Wall Street or came directly from there. In a preordained arrangement with President Reagan, Bush retained Nicholas Brady, the former chairman of the board of the blue-blood Wall Street investment bank Dillon, Read & Co., as Treasury secretary.

Their ties, first established on a tennis court, extended to Wall Street and back again. In 1977, after Bush had left the directorship of the CIA, Brady even offered him a position at Dillon, Read & Co. Though he didn’t accept, Bush later enlisted Brady to run his 1980 presidential campaign and suggested him as interim senator for New Jersey in 1982. The press dubbed Brady Bush’s “official confidant.”

The new president appointed another of his right-hand men, Richard Breeden (who had drafted a “Blueprint for Reform” of the banking industry as directed by a task force co-headed by Bush), as his assistant for issues analysis and later as head of the Securities and Exchange Commission (SEC). Then, on February 6, 1989, Bush unveiled his plan to rescue the ailing savings and loan (S&L) banks. Initial bailout estimates for 223 firms were put at $40 billion. It only took the Bush administration two weeks to raise that figure to $157 billion. On the offensive, Brady stressed that this proposal wasn’t a bailout. Instead, it represented “the fulfillment of the Federal Government’s commitment to depositors.”

A few months later, under Alan Greenspan’s Fed, JPMorgan Securities, the investment banking subsidiary of JPMorgan Chase, became the first bank subsidiary since the Great Depression to lead a corporate bond underwriting. Over the next decade, commercial banks would issue billions of dollars of corporate debt on behalf of energy and public utility companies as a result of Greenspan’s decision to open that door and Bush’s deregulatory stance in general. A chunk of it would implode in fraud and default after Bush’s son became president in 2001.

The S&L Blowout

The deregulation of the S&L industry between 1980 and 1982 had enabled those smaller banks, or thrifts -- focused on taking deposits and providing mortgages -- to compete with commercial banks for depositors and to invest that money (and money borrowed against it) in more speculative real estate ventures and junk bond securities. When those bets soured, the industry tanked. Between 1986 and 1989, 296 thrifts failed. An additional 747 would shut down between 1989 and 1995.

Among those, Silverado Banking went bankrupt in December 1988, costing taxpayers $1.3 billion. Neil Bush, George H.W.’s son, was on the board of directors at the time. He was accused of giving himself a loan from Silverado, but denied all wrongdoing.

George H.W.'s second son, Jeb Bush, had already been dragged through the headlines in late 1988 for his real estate relationship with Miguel Recarey Jr., a Cuban-American mogul who had been indicted on one charge of fraud and was suspected of racking up to $100 million worth of Medicare-related fraud charges.

Meanwhile, the president was crafting his bailout plan to stop the S&L bloodletting. On August 9, 1989, he signed the Financial Institution Reform, Recovery, and Enforcement Act, which proved a backdoor boon for the big commercial banks. Having helped stuff the S&Ls with toxic real estate products, they could now profit by selling the bonds that were constructed as part of the bailout plan, while the government subsidized the entire project. Within six years, the Resolution Trust Corporation and the Federal Savings and Loan Insurance Corporation had sold $519 billion worth of assets for 1,043 thrifts that had gone belly up. Key Wall Street banks were involved in distributing those assets and so made money on financial destruction once again. Washington left the public on the hook for $124 billion in losses.

The Bush administration and the Fed’s response to the S&L crisis (as well as to a concurrent third-world debt crisis) was to subsidize the banking system with federal and multinational money. In this way, a policy of privatizing bank profits and socializing their losses and risks became embedded in the American political system.

The New Banking Game in Town: “Modernization”

The S&L trouble sparked a broader credit crisis and recession. Congress was, by then, debating the “modernization” of the financial services industry, which in practice meant breaking down remaining barriers within institutions that had separated deposits and loans from securities creation and trading activities. This also meant allowing commercial banks to expand into nontraditional banking activities, including insurance provision and fund management.

The Bush administration aided the bankers by advocating the repeal of key elements of the Glass-Steagall Act. Related bills to dismantle that Depression-era act won the support of the House and Senate banking committees in the fall of 1991, though they were defeated in the House in a full vote.  Still, the writing was on the wall. What a Republican president had started, a Democratic one would soon complete.

In the meantime, the Bush administration was covering all the bases when it came to the repeal of Glass-Steagall, which would be the nail in the coffin of decades of banking constraint. As commercial bankers pushed to enter non-banking businesses, Richard Breeden, Bush’s SEC chairman, began championing the other side of the Glass-Steagall divide -- fighting, that is, for the rights of investment banks to own commercial banks. And little wonder, since such a deregulation of the financial system meant a potential expansion of Breeden’s power: the SEC would be tasked with monitoring the growing number of businesses that banks could enter.

Meanwhile, Wendy Gramm, head of the Commodity Futures Trading Commission (CFTC), promoted another goal the bankers wanted: unconstrained derivatives trading. Gramm had first been appointed chair of the CFTC in 1988 by Reagan (who called her his “favorite economist”) and was then reappointed by Bush. She was determined to push for unregulated commodity futures and swaps -- in part in response to lobbying from a Texas-based energy trading company, Enron, whose name would grow far more familiar to Americans in the years to come. While awaiting legislative approval, bankers started sending their trading exemption requests to Gramm and she began granting them.

9/11 Overshadows Enron

In early 2001, in the fading light of the rosy Clinton economy and an election result validated by the Supreme Court, the second President Bush entered the White House. A combination of Glass-Steagall repeal and the deregulation of the energy and telecom sectors under Clinton catalyzed a slew of mergers that consolidated companies and power in those industries upon fabricated books. The true state of the economy, however, remained well hidden, even as it teetered on a flimsy base of fraud, inflated stocks, and bank-created debt. In those years, the corporate and banking world still appeared glorious amid so many mergers. But the bankers’ efforts to support those transactions would soon give way to a spate of corporate bankruptcies.

It was the Texas-based energy-turned-trading company Enron that would emerge as the poster child for financial fraud in the early 2000s. It had used the unregulated derivatives markets and colluded with bankers to create a slew of colorfully named offshore entities through which the company piled up debt, shirked taxes, and hid losses. The true status of Enron’s fictitious books and those of other corporate fraudsters nonetheless remained unexamined in part because another crisis garnered all the attention. The 9/11 attacks at the World Trade Center, blocks away from where many of Enron’s trading partners were headquartered (including Goldman Sachs, where I was working that day), provided the banking industry with a reprieve from probes. The president instead called on bankers to uphold national stability in the face of terrorism.

On September 16, 2001, George W. famously merged financial and foreign policy. “The markets open tomorrow,” he said. “People go back to work and we’ll show the world.” To assist the bankers in this mission, Bush-appointed SEC chairman Harvey Pitt waived certain regulations, allowing corporate executives to prop up their share prices as part of a plan to demonstrate national strength by elevating market levels.

That worked -- for about a minute. On October 16, 2001, Enron posted a $681 million third-quarter loss and announced a $1.2 billion hit to shareholders' equity. The reason: an imploding pyramid of fraudulent transactions crafted with banks like Merrill Lynch. The bankers were now potentially on the hook for billions of dollars, thanks to Enron, a client that had been bulked up through the years with bipartisan support.

Amid this financial turmoil, Bush was focused on retaliation for 9/11. On January 10, 2002, he signed a $317.2 billion defense bill. In his State of the Union address, he spoke of an “Axis of Evil,” of fighting both the terrorists and a strengthening recession, but not of Enron or the dangers of Wall Street chicanery.

In 2001 and again in 2002, however, corporate bankruptcies would hit new records, with fraud playing a central role in most of them. Telecom giant WorldCom, for instance, was found to have embellished $11 billion worth of earnings. It would soon supplant Enron as America’s biggest fraud of the moment.

Bush Takes Action

On July 9th, George W. finally unveiled a plan to “curb” corporate crime in a speech given in the heart of New York’s financial district. Taking the barest of swipes at his Wall Street friends, he urged bankers to provide honest information to investors. The signals were now clear: bankers had nothing to fear from their commander in chief. That Merrill Lynch, for example, was embroiled in the Enron scandal was something the president would ignore -- hardly a surprise, since the company’s alliances with the Bush family stretched back decades.

Three weeks later, he would sign the Sarbanes-Oxley Act, purportedly ensuring that CEOs and CFOs would confirm that the information in their SEC filings had been presented truthfully. It would prove a toothless and useless deterrent to fraud.

And then the president acted: on March 19, 2003, he launched the invasion of Iraq with a shock-and-awe shower of cruise missiles into the Iraqi night sky. Two days later, by a vote of 215 to 212, the House approved his $2.2 trillion budget, including $726 billion in tax cuts. Shortly thereafter -- a signal to the banking industry if there ever was one -- he appointed former Goldman Sachs Chairman Stephen Friedman director of the National Economic Council, the same role another Goldman Sachs alumnus, former co-Chairman Robert Rubin, had played for Bill Clinton.

By the end of 2003, grateful bankers were already amassing funds for Bush’s 2004 reelection campaign. A bevy of Wall Street Republicans, including Goldman Sachs Chairman and CEO Henry Paulson, Bear Stearns CEO James Cayne, and Goldman Sachs executive George Herbert Walker IV (the president’s second cousin), became Bush “Pioneers” by raising at least $100,000 each.

The top seven financial firms officially raised nearly three million dollars for George W.’s campaign. Merrill Lynch emerged as his second biggest corporate contributor (after Morgan Stanley), providing more than $586,254. The firm’s enthusiasm wasn’t surprising. Donald Regan had been its chairman and the Bush-founded investment bank G.H. Walker and Company, which employed members of the family over the decades, had been absorbed into Merrill in 1978. Merrill Lynch CEO Earnest “Stanley” O’Neal received the distinguished label of “Ranger” for raising more than $200,000 for Bush’s reelection campaign. It was a sign of the times that O’Neal and Cayne hosted Bush’s first New York City reelection fundraiser in July 2003.

Government by Goldman Sachs for Goldman Sachs

The bankers helped tip the scales in Bush’s favor. On November 3, 2004, he won his second term in a tight election. By now, bankers from Goldman Sachs had saturated Washington. New Jersey Democrat Jon Corzine, a former Goldman Sachs chairman and CEO, was on the Senate Banking Committee. Joshua Bolten, a former executive director at the Goldman Sachs office in London, was director of the Office of Management and Budget. Stephen Friedman, former Goldman Sachs chairman, was one of George W.’s chief economic advisers as the director of the National Economic Council. (He would later become chairman of the New York Federal Reserve Board, only to resign in May 2009 amid conflict of interest charges concerning the pile of Goldman Sachs shares he held while using his post to aid the company during the financial crisis.)

Meanwhile, from 2002 to 2007, under George W.’s watch, the biggest U.S. banks would fashion nearly 80% of the approximately $14 trillion worth of global mortgage-backed securities (MBS), asset-backed securities, collateralized debt obligations, and other kinds of packaged assets created in those years. And subprime loan packages would soon become the fastest-growing segment of the MBS market. In other words, the financial products exhibiting the most growth would be the ones containing the most risk.

George W. would also pick Ben Bernanke to replace Alan Greenspan as chairman of the Federal Reserve. Bernanke made it immediately clear where his loyalties lay, stating, “My first priority will be to maintain continuity with the policies and policy strategies during the Greenspan years.”

In 2006, two years after persuading the SEC to adopt rules that enabled many of the “assets” being created to be undercapitalized and underscrutinized, the president selected former Goldman Sachs CEO Henry Paulson to be his third Treasury secretary. Joshua Bolten, who had by then had become White House Chief of Staff, arranged the pivotal White House meeting between the two men that sealed the deal. As Bush wrote in his memoir, Decision Points, “Hank was slow to warm to the idea of joining my cabinet. Josh eventually persuaded Hank to visit with me in the White House. Hank radiated energy and confidence. Hank understood the globalization of finance, and his name commanded respect at home and abroad.”

Under Bush, Paulson, and Bernanke, the banking sector would buckle and take the global economy down with it.

Goldman Trumps AIG

Insurance goliath AIG stood at the epicenter of an increasingly interconnected financial world deluged with junky subprime assets wrapped up with derivatives. When rating agencies Fitch, S&P, and Moody’s downgraded the company’s credit worthiness on September 15, 2008, they catalyzed $85 billion worth of margin calls. If AIG couldn’t find that money, Paulson warned the president, the firm would not only fail, but “bring down major financial institutions and international investors with it.” According to Bush’s memoir , Paulson convinced him. “There was only one way to keep the firm alive,” he wrote. “The federal government would have to step in.”

The main American recipients of AIG’s bailout would, in fact, be legacy Bush-allied firms: Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), and Citigroup ($2.3 billion). Lehman crashed, but Merrill Lynch and AIG were saved. The bankers with the strongest alliances to the Bush family (and the White House in general) needed AIG to survive. And it did. But the bloodletting wasn’t over.

On September 18, 2008, George W. would tell Paulson, “Let’s figure out the right thing to do and do it.” He would later write, “I had made up my mind: the U.S. government was going all in.” And he meant it.  During his last months in office, the Big Six banks (and marginally other institutions) would thus be subsidized by an “all-in” program designed by Bernanke, Paulson, and Geithner -- and later endorsed by President Barack Obama.

The bankers’ unruliness had, however, already crippled the real economy. Over the next few months, Bank of America, Citigroup, and AIG all needed more assistance. And in that year, the Dow Jones Industrial Average would lose nearly half its value. At the height of the bailout period, $19.3 trillion in subsidies were made available to keep (mostly) American bankers going, as well as government-sponsored enterprises like Fannie Mae and Freddie Mac.

As George W. headed back to Texas, the economy and markets went into free fall.

The Money Behind Jeb

Jump seven years ahead and, with the next Bush on the rise and the money once again flowing in, it’s still the age of bankers. Jeb already has three mega super PACs -- Millennials for Jeb, Right to Rise, and Vamos for Jeb 2016 -- under his belt. His Right to Rise Policy Solutions group, which, as a 501(c)(4) nonprofit, is not even required to disclose the names of its donors, no less the size of their contributions, is lifting his contribution tally even higher. None of these groups have to adhere to contribution limits and the elite donors who contribute to them often prove highly influential. After all, that’s where the money really is. In the 2012 presidential election, the top 100 individual contributors to super PACs and their spouses represented just 1% of all donors, but gave a staggering 67% of the money.

Of those, Republican billionaire Sheldon Adelson and his wife, Miriam, donated $92.8 million to conservative groups, largely through “outside donor groups” like super PACs that have no contribution limits. Texas billionaire banker mogul Harold Simmons and his wife, Annette, gave $26.9 million, and Texas billionaire homebuilder Robert Perry coughed up $23.95 million. Nebraska billionaire (and founder of the global discount brokerage TD Ameritrade) John Joe Ricketts dished out $13.05 million. Despite some early posturing around other candidates with fewer legacy ties, these heavy hitters could all end up behind Bush 45. Dynasties, after all, establish the sort of connections that lie in wait for the next moment of opportune mobilization.

“All in for Jeb” is the mantra on Jeb’s official website and in a sense “all in,” especially when it comes to national bankers, has been something of a mantra for the Bush family for decades. With a nod to his two-term record as Florida governor, Jeb put it this way: “We will take command of our future once again in this country. I know we can fix this. Because I've done it.”

Based on Bush family history, by “we” he effectively meant the family’s billionaire and millionaire donors and its cavalcade of friendly bankers. Topping that list, though as yet undeclared -- give him a minute -- sits Adelson, who is personally and ideologically close to George W. In April, the former president was paid a Clintonian speaking fee of $250,00 for a keynote talk before the Republican Jewish Coalition meeting at Adelson’s Las Vegas resort. While Adelson has expressed concerns about Jeb’s lack of hawkishness on Israel when compared to his brother, that in the end is unlikely to prove an impediment. Jeb is making sure of that.  He recently told a gathering of wealthy New York donors that, when it came to Israel, his top adviser is his brother. (“If you want to know who I listen to for advice, it’s him.”)

Let’s be clear.  The Bush family is all in on Jeb and its traditional banking allies are not likely to be far behind.  There is tradition, there are ties, there is a dynasty to protect.  They are not planning to lose this election or leave the family with a mere two presidents to its name.

The Wall Street crowd began rallying behind Jeb well before his candidacy was official.  Private equity titan Henry Kravis hosted a 25-guest $100,000-per-head gathering at his Park Avenue abode in February, one of six events with the same entry fee. In March, Jeb had his first Goldman Sachs $5,000-per-person event at the Ritz Carlton in New York City, organized by Dina Powell, Goldman Sachs Foundation head and George W. Bush appointee for assistant secretary of state.  A more exclusive $50,000 per head event was organized by Goldman Sachs exec, Jim Donovan, a key fundraiser and adviser for Mitt Romney who is now doing the same for Jeb.

And then there’s the list of moneyed financiers with fat wallets still to get behind Jeb. New York hedge fund billionaire Paul Singer, who donated more than any other conservative in the 2014 election, has yet to swoop in.  Given the alignment of his foreign financial policy views and the Bush family’s, however, it’s just a matter of time.

With the latest total super PAC figures still to be disclosed, we do know that Jeb’s Right to Rise super PAC claims to have raised $17 million from the tri-state (New York, New Jersey, and Connecticut) area alone so far. Its head, Mike Murphy, referred to its donors in a call last week as “killers” he was about to “set loose.” He intimated that the July disclosures would give opponents “heart attacks.” Those are fighting words.

Sure, all dynasties end, but don’t count on the Bush-Banker alliance going belly up any time soon. Things happen in this country when mountains of money begin to pile up. This time around, the Bush patriarchy will call in every chip. And know this: Wall Street will be going “all in” for this election, too. Jeb(!) and Hillary(!) will likely split that difference in the primaries, then duke it out in 2016. Along the way, every pretense of mixing it up with the little people will be matched by a million-dollar check to a super PAC. The cash thrown about in this election will be epic. It’s not the fate of two parties but of two dynasties that’s at stake.

Presidents and Their Proclamations on Mother's Day

More than a century ago, before it became the commercialized occasion it is today, Congress approved the second Sunday in May to be Mother’s Day. It declared that the American mother marked, “the greatest source of the country’s strength and inspiration.” American protocol requires each President to issue a new Mother’s Day proclamation every year.

On May 9, 1914, President Woodrow Wilson first officially proclaimed Mother’s Day, He directed the display of the American flag on Government buildings and citizen residences “as a public expression of love and reverences for the mothers of our country.”

Two years after President Franklin Delano Roosevelt (FDR) took office, he decided that rather than issue a special proclamation, he would deliver a White House statement instead. On May 7, 1935, he said that tributes to American mothers should “come simply and spontaneously from our hearts.”

Still, delivery of the Mother’s Day proclamation remains part of American tradition. Presidents add their own thoughts about mothers into their annual proclamations., some more descriptive and emotional, evoking conditions of the time, some more perfunctory. These are some excerpts from their proclamations regarding Mother’s Day and mothers over the years:

President Harry S. Truman, April 17, 1945:

“Whereas in this year of the war’s greatest intensity we are ever mindful of their splendid courage and steadfast loyalty to the highest ideals of our democracy;”

President Dwight D. Eisenhower, May 5, 1955:

“Whereas since the earliest days of our history American mothers have inspired our most exalted national ideals through their teachings and by example in their daily lives…”

President John F Kennedy, April 26, 1963:

“Whereas the strength of our Nation depends upon the strength of the American home, which is based on the virtues fostered by the mothers of our country; and Whereas the American mother plays a vital role by precept and example in building a strong family unit and in teaching our children to become good citizens…” 

President Lyndon B. Johnson, May 10, 1967:

“The fortitude to brave the frontier, the courage to bear our flag in battle, the compassion to help the needy and the weak at home and in distant lands—all these have come to our people through traits of character instilled by our mothers.”

President Richard M. Nixon, April 25, 1969:

“Nowhere in the complexity of the modern world are we more forcefully reminded of the power of love against hate, of creation over destruction, of life against death than in the gentle strength, the deep compassion of a mother.”

President Gerald R. Ford, May 5, 1976:

“Motherhood is more than a life role, it is a job that is continuously demanding and rewarding. A mother’s guidance is most significant in the growth of her children into responsible, self-reliant, understanding and productive human beings.”

President Jimmy Carter, April 1, 1980:

“Mother’s Day 1980 finds the always demanding role of being a mother made even more complex by the choices modern women have that were not available to women of previous generations. Whether they seek careers or work full time in the home, mothers contribute immensely to our Nation’s future by shaping the character of our children.”

President Ronald W. Reagan April 26, 1988:

“Generation after generation has measured love by the work and wonder of motherhood. For these gifts, ever ancient and ever new, we cannot pause too often to give thanks to mothers. As inadequate as our homage may be and as short as a single day is to express it — “What possible comparison was there,” a great saint wrote of his mother, “between the honor I showed her and the service she had rendered me?” — Mother’s Day affords us an opportunity to meet one of life’s happiest duties.”

President George H. W. Bush, May 10, 1990:

“For more than three-quarters of a century, we Americans have celebrated the second Sunday in May as Mother’s Day. On this day, we pause to honor all those women who, by virtue of giving birth, or through marriage or adoption, are mothers.

Today we no longer face the cruel test of world war, but we still do well to reflect upon the example provided by our mothers. Their courage, faithfulness, and generosity must never fail to strengthen and inspire us.”

President William J. Clinton; May 11, 1995:

“Americans’ vitality as a people flows from the health of our families. The heart and soul of our national life, mothers rise each day to take on myriad tasks, from driving a carpool to directing a city council. They are an anchor to generations past and a bridge to the world of the future. Meeting the challenge of motherhood is one of society’s greatest responsibilities, and those who do this work every day do a service to all humanity.”

President George W. Bush, May 8, 2008:

“We are especially thankful for the mothers who support their sons and daughters serving in our Armed Forces and for the mothers who bring honor to the uniform of the United States by defending our freedom at home and abroad.

Every child blessed with a mother’s love has been given one of life’s great gifts. On this Mother’s Day, we recognize the extraordinary contributions America’s mothers make to their children, their families, and our country.”

President Barack H. Obama, May 8, 2014:

“For over a century, Americans have come together to celebrate our first friends and mentors, our inspirations and constant sources of strength. Our mothers are breadwinners, community leaders, and pillars of family. They pioneer scientific discoveries, serve with valor in our Armed Forces, and represent our Nation in the loftiest halls of Government. Whether biological, adoptive, or foster, they play a singular role in our lives. Because they so often put everything above themselves, on Mother’s Day, we put our moms first.”

This piece appeared originally in Forbes.