Passing the Buck

by Gene Barnes
Professor Emeritus of Physics
California State University

Former U.S. President Harry S. Truman was reported to have had a sign on his desk reading: “The Buck Stops Here.”. The sign was intended to mean that he—as the top executive in the U.S. Government—was willing to take the final responsibility for the decisions made by his administration.

Today, at the highest levels of our government and of our industrial and financial corporate enterprises, almost no one is willing to accept any responsibility for anything. Passing the buck has become our national pastime, instead of baseball. I believe that passing the buck is truly bi-partisan, practiced by both Republicans and Democrats alike. Let’s look at some of the evidence of this during the last decade or so.

In 2000, George W. Bush was elected President. After the attack on the World Trade Center on September 11, 2001, the responsibility for the attack was attributed to al- Qaeda on the basis of intelligence reports gathered from the CIA and the FBI. As it turned out, quite a lot of the information concerning the conspirators had been obtained prior to 9/11, but it had never been taken seriously enough by the senior officials in these organizations. Even when information on the possibility of “attacks involving airplanes” was given to then Secretary of State Condoleezza Rice by Security Advisor Richard Clarke, she chose not to pay much attention. On the day of the attack, President Bush had no immediate response, preferring to finish reading a story to school children. The order to scramble U.S. fighter jets was not given until it was too late to stop even the second plane from hitting the other twin tower nearly an hour later. To my knowledge, none of the members of the Bush administration have accepted any responsibility for their failures to provide an adequate defensive response to these attacks. For example, George Tenet, who was the Head of the CIA from 1997 until Robert Mueller’s confirmation 7 days before 9/11, never accepted the responsibility for the mismanagement of the information by his agency. Later, President Bush awarded the Medal of Freedom to him.

In contrast, after the Japanese attack on Pearl Harbor in1941, hearings were held to establish the responsibility for the inadequate defense of the Naval Base. Some of the senior Navy officers in command were reduced in rank as a result. Historians still argue as to whether President Roosevelt himself could (or should) have foreseen the possibility of an attack and strengthened the Pearl Harbor defenses. He was, after all, a former Assistant Secretary of the Navy.

Fast-forward to the financial crisis of 2007-2010, resulting in the bailout. A recent editorial in the San Francisco Chronicle entitled, “Why did the economy sink?” describes the verdict of the Financial Crisis Inquiry Commission’s 545-page report on the causes of the crisis. Apparently, this bi-partisan Report dealt rather heavily in generalizations, rather than specific accusations of individual misconduct—an ideal way to pass the buck. Phrases such as “the crisis was the result of human action and inaction,” and the Chronicle’s suggestion that “plenty of smart people did stupid things” are not very enlightening. One of those so-called “smart people” was probably Alan Greenspan, Chairman of the Federal Reserve Board under both President Clinton and President Bush. But when Greenspan testified before Congress, he seemed confused and not especially intelligent. He didn’t seem to understand the simple fact that self-regulation in government or industry does not work, and has never worked, something that really can be learned in kindergarten, if you are paying attention. Still, he managed to pass the buck. Apparently, however, this was a lesson that President Clinton had also failed to learn, because he signed the Gramm Leach Bliley Act in 1999, which repealed the Glass-Steagall Act of 1933. According to Wikipedia, this repeal “removed the separation that had previously existed between the Wall Street investment banks and the depository banks and may have caused the collapse of the subprime mortgage market that led to the financial collapse of 2007-2010.” Neither President Clinton nor President Bush have assumed any responsibility for the financial crisis, to my knowledge.

Among the many other Wall Street investment ploys that contributed to the crisis was the now-infamous Credit Default Swap. Basically, to create a CDS, you sell an investment to a buyer who can insure the investment so that if it fails the insurance will pay him a certain par value. However, this insurance (the CDS) is not subject to the same regulations as casualty or life insurance, and can be traded or sold to someone else. Thus, you can buy insurance on someone else’s investment that seems likely to fail—such as a mortgage loan to someone who can’t afford to keep up the payments. You might wonder who would be foolish enough to insure something like that. AIG would, if you were careful enough to pay the investment rating services such a Moody’s or Standard & Poor’s to give it a AAA rating. Most of the largest banks and investment firms in America sold the packaged mortgages all over the world, and profited from their demise—until AIG ran out of money and had to be bailed out. None of the CEOs of these banks have been charged with criminal misconduct, though a few have resigned—with golden parachutes. One of these firms, Goldman Sachs, seems to have done especially well. President Obama appointed Tim Geithner, Larry Summers, and Ben Bernanke—all former “smart people” from Goldman Sachs—to top economic posts in his administration. They all passed the buck, with the help of President Obama.

This is a very long blog already, so I’ll stop here—even though I haven’t mentioned Monica Lewinski, Weapons of Mass Destruction, Torture, or Healthcare. I’m sure that the leaders of other countries are also very good at passing the Buck, or the Franc, or the Deutsche Mark, etc. Why not send some of your own favorite examples. I welcome both Liberal and Conservative contributions, though I reserve the right not to respond unless it seems worthwhile. leave comment here