Things are getting funky out there, with very big (big like the solar system big) changes in store for us. Five years from now, this country, and the world economic order, are going to be fundamentally changed from what they are today. We don’t yet know how, but we are without a doubt in what I called in my book on American history a Big Change Moment. But before I go there, let me start with a word about our politics and how political dynamics will impact our Big Change Moment.

In politics, most things are unpredictable and highly variable (especially in wild times like these), but there are at least a couple of things that are truisms. They are what I’d call the two destinies: demographics is destiny, and economics is destiny.

On the demographics side of things, the campaign most likely to win is the one whose base voters are fired up to turn out to vote, and fired up to go out and persuade the swing voters. Looking at the demographic differences between the 2008 electorate and the 2010 electorate is a classic case in point. In 2008, the electorate was proportionally far younger, far less white, and far less married than they were in 2010. Young people, people of color, and unmarried people are far more likely than older, whiter, married people to vote Democratic. Guess who won in 2008, and who won in 2010?

If demographics is destiny, economics is doubly so. The party in the White House never does well unless the economy is either good or is clearly getting better from a previous low point (the only two incumbents in the last 100-plus years to win re-election in a weak economy were FDR and Harry Truman, who incidentally ran classic fighting populist campaigns). We are now on the brink of true economic crisis, with markets on the verge of melting down and Europe teetering on the edge of leading the world into an economic panic, but even if policymakers control the short-term damage and reassure the markets in the short term, the best case scenario right now is that the American economy will still be pretty close to dead in the water deep into next year. That means that President Obama has to make a choice in terms of how he runs his campaign next year.

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Most of the time, in political history and in economics, things travel along a fairly predictable and relatively stable pathway. Debate is contained within a fairly narrow set of conventional and familiar choices. When it comes to economic policy, the Federal Reserve can lower interest rates or raise them a little. The government can pump a little more spending into the economy or a little less depending on the rate of growth. The economy generally starts moving again relatively quickly after a recessionary slowdown. In terms of political history, the more progressive party and the more conservative party have periods where one or the other is more powerful, but they each tend to have enough power to slow each other down, to check and balance each other. They resolve their legislative differences through a pattern of competition and compromise that is, again, fairly predictable and stable, and in periods of national crisis they come together and get big things done.

These long periods of relative stability and predictability aren’t nirvana — most people's quality of life and economic condition may not be getting better and might be getting gradually worse, as we have seen in the last 30 years of our country's history. And lots of problems tend to go unresolved in these periods as well, as they don't tend to be periods of major reforms or progressive advance, and people on the bottom end of society don't tend to get lifted up. But stability and predictability at least keeps society chugging along, the economy keeps moving, and citizens have a sense of what they can expect from their government.

Every so often, though, things get so out of whack that we come to a moment of maximum crisis. In these moments, conventional wisdom not only doesn't work but actually makes things far worse. It happened with our economy in the Great Depression of the 1930s, and it happened with our political system in the Civil War era of the 1850s-60s. We are now, on a worldwide scale, in such an economic moment. What is even scarier is that increasingly it feels like we are simultaneously moving toward such a moment in our political system as well. At least in the 1930s, the political system worked well: voters kicked out the political party who had screwed things up, and the new government got things done that helped lift us out of the depression. And at least in the 1860s, the economy was functioning reasonably well in the Civil War era.

Right now, it feels like both our economy and our politics are increasingly dysfunctional, and that is an incredibly dangerous place to be.

Whatever happens next in our country's politics, the economy has become completely derailed. We stopped maintaining the tracks, we stopped checking the brakes and engines on the train, and we have a hell of a crash on our hands. Between the U.S. and Europe, our answer has been to keep bailing out banks (when countries who owe a lot of money to bondholders are bailed out, it isn't the people or government of that country that is bailed out, it is the bankers who own the bonds) hoping that one more bailout will solve things. When government spending goes up and tax collections go down because of the terrible economy, and the bankers demand we "tighten our belts,” it just makes things worse. The Federal Reserve, which has already poured tens of trillions of dollars into saving the banking system, and already has kept interest rates at historically low numbers for years, is mostly out of weapons to fight this battle.

The train has already wrecked, but there's another locomotive with weak brakes coming full speed down the same track.

The only answer is to reject conventional wisdom economics, and start to look at big ideas that go against the established economic ideology, the ideology dominated by the Chicago school economists who believe that free markets solve all problems and that bankers are the masters of the economic universe. Both Europe and the U.S. need to take off the chains that tie us to these monstrously big megabanks, and their utterly corrupt ratings agencies. These enormous banks, far more than any other institution, caused the big train wreck of the economy with their too complex financial "innovations" and their big housing bubble, and now they are making things far worse by using their political and market power to force round after round of government austerity programs and bailouts. It is the big banks as well that have created the black hole of a housing market where prices continue to drop, more and more homeowners are going underwater on their mortgages, and foreclosures continue unabated. That black hole of housing will keep this country locked into a flat-lined economy for as far as the eye can see, unless and until policymakers finally stand up to the bankers and force them to write down those mortgages.

It is, in fact, writing down debt — major amounts of it — that will be the biggest thing that helps this economy recover. We need less debt in our entire economy, and rather than kowtowing to the ones that wrecked the train by one bailout and self-defeating austerity program after another, we should be demanding that they write down a very large share of the debt they themselves helped create- in housing, in government debt, in our trade debt, and in other forms of debt. We need to do something else that bankers hate as well: encourage just a little bit of inflation. Worrying about inflation overheating when you have this amount of economy-wide debt, and the biggest danger in front of you is deflation from a dead economy, is quite literally insane. If inflation went to 4 or 5 percent, it would be a good thing right now because it would make all that debt easier to pay off, and it would mean that the economic engine would start running again.

Finally, we need to focus our efforts — focus like a laser beam, as my old boss Bill Clinton used to say — on creating good jobs with good wage levels. Continually cutting spending in a moment like the one we are in now is utterly self-defeating, because every time you cut, more jobs are lost, more income and the spending that fuels the economic engine is lost. Right now is exactly when we need to be rebuilding our falling-apart infrastructure, hiring more teachers, investing in more job training and R&D, and helping the industries of the future get a solid start here in America. Not just the best but in fact the only way to balance our federal budget in the long run, as we learned in the 1990s, is for every American in the workforce to have a job, a job whose wages are heading up not staying flat.

So stop listening to these Wall Street bankers and their entirely corrupt ratings agencies that rated thousands of derivative deals and credit default swaps AAA when they were pieces of absolute junk. Stop listening to the crazies who think we can cut our way to prosperity, because it has never worked and won't work now — especially now. We need a strong and expanding middle class far more than we need big Wall Street banks with good balance sheets and big bonuses for their execs.

The ancient Israelites had something they called "the year of our Lord" where all debts were forgiven. In Jesus' very first sermon, he announced that he had come to "bring good news to the poor, proclaim liberty to the captives, bring the blind new sight, set the downtrodden free, to proclaim the year of our Lord.” We need some good news for our poor (which more and more of us are becoming). We need liberty for the captives of big banks and right-wing economic policy. We need the new sight that comes from taking off the blinders of the conventional wisdom that is strangling us to death. We are all downtrodden except for a very wealthy set of elites who are trying to economically enslave us, and we need to be set free. And we most assuredly need a modern version of the year of our Lord, where unsustainable debt is written down by these bankers who have had their run of the store for far too long. It is time for big, bold new ideas that will clean up the train wreck, rebuild the tracks and engine, and finally get it moving again. And it would help a lot if those new ideas were motivated by these kinds of 2,000-year-old values.

On this depressing day when the crazies, willing to destroy what’s left of the economic engine that is barely sputtering down the road got their ransom paid, everyone has to pick themselves up and decide what to do next. The President, having once again (in his memorable words) given in to the hostage takers, has to decide how to rebuild his political coalition that is in tatters, and how to show some strength after looking weak. Harry Reid and Nancy Pelosi have momentous decisions to make: Are they going to appoint strong negotiators who won’t back down on Democratic Party principles, or will they give away a crucial seat on the super-duper commission who will once again give in to Republican demands? And progressives have to decide as well: do we give up, move away, get out of politics — or do we get out of this depression we’re feeling and come up with a winning political strategy?

As to the President, what is important to understand is that he wanted this negotiation. He had opportunities to avoid it last year, getting this deal done as part of the lame duck budget deal, or at the beginning of this year by making clear that he would only sign a clean debt ceiling increase. But he waded into these negotiations willingly and eagerly, hoping that reason and Wall Street lobbyists would help him craft the grand compromise he was willing to make if the Republicans agreed to raise taxes. It was part of his long-term strategy for getting the deficit issue off his back — Ezra Klein’s piece here (which I have been assured by people at the White House that it very much reflected Obama’s thinking) lays out the thinking: cut a big dramatic budget deal, get the deficit issue off his back, look like a centrist going into the next election. And through most of this showdown, he did look far more reasonable than the Republicans and was doing better than them in the short-term polling. The problem is that if Republicans don’t ever compromise, if they don’t care about being reasonable or not blowing up the economy, the President is the one who would have to fold, and that is exactly what happened. It made him look weak, and it tore a gaping hole in his relationship with his base. D.C. centrists loved his reasonableness, his willingness to reach out, and all those other things praised in the editorial pages of the Washington Post, but even the pundits who were praising him — in fact, especially the pundits that were praising him — turned on him when he lost. Such is the nature of this town.

What he needs to do now is to show strength and reconnect with his disillusioned and depressed base. He needs to pick some fights with the Republicans who just beat him, and show he’s not willing to back down. He needs to take on the bankers (who once again came out of this entire showdown completely unscathed, fancy that) and aggressively move to revive the housing market. Most importantly, he needs to introduce a bold new jobs initiative with two tracks. The first track should be a legislative package in Congress. The Republicans will never agree to it, which will show people how little they care about actually creating jobs. The second track should be the initiatives that the administration can do itself to create jobs, things they don’t need Congress to help them on. There are at least five all-important things the administration could do right now that would make a big difference in creating jobs: aggressively move on China currency manipulation; force Fannie Mae and Freddie Mac to write down underwater home mortgages; force the banks to write down underwater mortgages (which can be done through the administration’s regulatory powers and by pressing them on their servicers’ legal violations); step up enforcement of the “Buy American” provisions already in existing laws; and use the remaining TARP money authorized as a public bank to make investments in businesses that want to expand their workforce. All of these things would put more money into middle-class Americans’ pocketbooks, and would create real jobs right away.

These five policies, by the way, all have the added benefit of taking on the big banks on Wall Street, which will do more to show strength and rally his base than anything else Obama could do. Even more importantly, all of these initiatives would actually produce good jobs and help stabilize the American middle class, which is being crushed to death by the economy.

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The United States has now experienced more than 3 years of an economy worse than anything Japan experienced in its “lost decade” of the 1990s, and we are still dead in the water economically. The real unemployment rate, when you include discouraged workers and part timers/short-term temporary workers desperate for a full time job, is hovering frighteningly close to 20%, with any marginal progress in the private sector being more than wiped out by government sector cutbacks. The American middle class is being crushed by flat or declining wages, higher prices on most essential items like energy and groceries, and declining value in home prices. And the deal on the default crisis agreed to last night, combined with a continued weak response to the housing crisis, will (absent a major reversal in the next Congress) lock us in to a spiral even more destructive to the middle class. It will be a lost decade on steroids.

Our government’s focus should be on how to rebuild, expand, and strengthen the economic position of working and middle class Americans. We will not get out of the hole we are in without most Americans being able to spend more, save more, and make sure their kids are well educated. Without a little more economic standing and security, most people who want to start new businesses won’t have the ability to get their new enterprise off the ground. Without customers who have the ability to spend a little more money, small businesses won’t be able to survive and expand, and won’t have the confidence to hire new workers to help them grow. Without seniors being able to afford to take care of themselves economically through Social Security and Medicare and Medicaid, already stressed middle class families will have even less to spend in their local communities. Unless the number of foreclosures and underwater mortgages start to decline, tens of millions of homeowners who should be building economic equity will have no confidence to buy new products, start new businesses, or do anything else to grow the economy. In order for our economy to get on the right track, more Americans need to have money to spend, save, and invest- it is as simple as that. Hoping that rich people suddenly start creating more jobs, hoping that cash-flush big businesses suddenly starts investing in expansion when their customers don’t have the money to buy anything, hoping that the confidence fairy suddenly spurs millions of new jobs: it is just a crock.

When you hear generalized talk about more government cutbacks, it can all sound harmless in theory. And there is of course some wasteful government spending out there- subsidies to millionaire farmers, poorly written government contracts that allow contractors to make money even when they screw things up, subsidies for oil companies that make plenty of money, etc- but most of the cuts that will be made aren’t even in these areas of obvious waste. They’ll cut money for education and Pell Grants; they’ll cut the R and D spending that could produce important new technological breakthroughs; they’ll cut investments in green jobs that are key to the future; they’ll cut spending on badly outdated infrastructure projects; they’ll cut money for social service agencies that are helping people create productive lives for themselves.

I wrote a few weeks back that whatever deal would be cut would be a bad deal, and I was right. When the President didn’t push to make the debt ceiling extension part of last year’s lame duck session deal, and then waded into these negotiations instead of announcing that the only default deal he would accept would be a clean bill, he set himself up for this kind of unbalanced deal that has turned into an attack on the middle class. This deal, of course, could have been far worse: defense spending could have been off the chopping block, and Social Security could be on it. But it is still a terrible bill.

This country needs to fundamentally re-align its policies and its priorities. The engine of our economy, and our only hope for the future, is a strong middle class. We need to put that middle class back into the center of our economic policy.

One of the thing I learned while in the Clinton White House is that most Washington rumors, I’d say generally around two out of three, are false. In a deadline/crisis period that number goes to about 95 percent false. And by rumors, I am including most news reports, which trade in rumor, gossip, and leaks designed to help the agenda of the leaker. So most of what is coming out of D.C. right now on the default crisis is garbage. What deal is up and what deal is fading changes so fast that it may even be true at the moment it is reported, but could be completely reversed 15 minutes later.

So every time your blood pressure spikes in the coming days, just take a Valium like a normal person (as the sister-in-law character from “Desperately Seeking Susan” would say), and go do something other than watching cable TV.

Having said all that, though, there are some things that seem a lot more certain. The economy, already stalled, will have more roadblocks piled in its way. Middle-class and poor people will get more cuts in government programs that really do matter to their lives and their incomes. Nothing will be done to actually make the investments in infrastructure and housing and manufacturing we so desperately need. It is a sad state of affairs.

Many people, me included, have all kinds of theories — short-term and long-term — as to how we have gotten into this terrible place, but that is not my subject today. I want to talk about what happens if the worst of the rumors becomes mainly what happens. I still am hoping against hope that the final deal the President agrees to will not be as bad as the current rumors have it. Maybe the details will be a lot better than what they sound like today. Maybe the rumor mill just has it wrong, and that the deal that happens doesn’t have cuts in Social Security or Medicare that hurt the middle class. Maybe the McConnell-Reid compromise, which right now is the best of the deals out there, will come back into favor. But if this deal does as much damage to the middle class and poor as is currently rumored, if any tax increases are fudged so that might not even happen at all, then I think progressives have to declare all-out war on the deal and try to rally Democratic members of the House and Senate to vote against it and defeat it.

I want to be clear: I don’t believe that means declaring war on the President. The idea of Bachmann or Romney or one of these other Ryan-budget loving extremists as President, with these Republicans in charge of Congress, is a mortal threat to everything any progressive person, or for that matter any of the 80 percent of Americans who care about the middle class, cares about. Social Security and Medicare and Medicaid and Pell Grants would likely be gone, not just cut, by the time they were through. We still have to help get Obama re-elected, no matter how much we oppose him on specific issues. But just because you support his re-election doesn’t mean you have to support a terrible budget deal. If it is as bad as it looks like it might be, we have to leave no stone unturned in tracking down every Democratic vote to beat this bill. As bad as a default will be, and it would be very bad for the economy, decimating the middle class for generations would be worse. I also think if a bad deal goes down, the President and Congressional leaders would very quickly pass a version of the McConnell compromise, which would not be nearly as damaging as a bad deal.

We live in dark times, and they will get darker if the President is not re-elected. But that doesn’t mean the rest of the Democratic Party has to support him when he is wrong on policy.

The combination of this Washington Post article, with its references to Grover Norquist’s sacred texts, and the Jon Stewart clip below had me highly entertained today:

Far-right Republican fundamentalists have led their party straight into a concrete dead end. No one except their own tiny minority of no tax/no government churchgoers is buying their shtick anymore, and they are trapped. No fact can reach them, because their dogma is too thick. No argument or logic will sway them. Polling showing them losing the issue debate by big numbers doesn’t matter. Appeals to their morality fall on deaf ears.

But now they are in even deeper trouble, because their corporate masters have come calling. The bankers on Wall Street know that while most Americans would feel the effects of the economic consequences of not raising the debt ceiling, they would be the first to feel the pain, and that isn’t acceptable to them, so they are calling in their massive amount of chits. John Boehner being willing to cut a deal with Obama on taxes was the first sign of it; Mitch McConnell turning tail and crying uncle with his rather strange proposal was the second signal. There’s a problem, though: the Republicans have dug themselves so far in with the tea partiers on the lunatic fringe, they are having trouble returning to the land of reality. In the 30 years I have been involved in politics, the Republicans have been one of the most disciplined, lockstep political machines in American history, but today they are in complete disarray. It’s called meltdown, and it isn’t pretty. Caught between crazy tea partiers and big business guys used to having their orders followed to a T, they are in a very bad place.

I have plenty of complaints about Democratic politicians, but at least most of them are sane. The Republicans have locked themselves in a big building that looks increasingly like an asylum, and they are in deep trouble. We’ll see what happens next, but it doesn’t get more interesting than this.

With the jobs picture bleak and getting steadily bleaker, President Obama needs to shed the tightly restrained list of options that the D.C. establishment considers it acceptable to consider. The things Republicans want to consider would be laughable if they weren’t so awful: more (and more and more and more) tax cuts for the wealthiest 1 percent and biggest corporations already awash in money they aren’t using to create jobs. The list of things establishment D.C. Democrats want to consider range from the good but politically impossible (like more fiscal stimulus) to the good but really small (such as tinkering here and there with small targeted tax credit ideas) to bad ideas taken from Republicans and modified to make them slightly less extreme.

But there are ideas outside of this very narrow range of conventional wisdom in Washington that the Obama administration, along with key big states with Democratic Governors and legislatures, could do right now that could boost the economy significantly. Here are four big ideas that would make an immediate difference in pumping up the economy, things the Obama administration could do without going through Congress:

1. Use TARP. The economic crisis that spurred the creation of TARP may have stabilized, but it sure hasn’t ended. And TARP is still open for business: while most of the no-strings-attached big bank bailout money has been returned, TARP still is authorized to spend $475 billion. Since the big banks are hoarding their money and using it to give huge bonuses to their execs, why not turn the TARP money into a modern day Reconstruction Finance Corporation (the agency that FDR used to help lift us out of the Great Depression), and start lending TARP money out to small business entrepreneurs who actually planned to create jobs. This might also provide some competitive spur to the banks who are just sitting on their money. TARP is unpopular, and Republicans might score some short-term political points screaming about the money being used for this, but I think Obama would win the fight by saying that rather than investing in the big banks, it's time to invest in small businesses that are actually going to use the money to create real jobs.

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The ironic thing was that I had been planning to write a positive piece this morning about Obama’s remarks on housing in yesterday’s Twitter town hall, as I was pleased he was acknowledging the mistakes of his housing policy, and was hopeful that this statement — along with the outstanding news this morning of new Treasury rules forcing banks to give some mortgage relief to unemployed homeowners — signaled a tougher stance on Wall Street. And I was hoping that Christine Varney’s departure from the antitrust division at the Department of Justice might give an opportunity for someone more aggressive to be appointed there, so my mood was pretty good before I saw this morning’s all-hope-dies-here headline on Social Security. Oh, well. This administration has specialized at raising progressive hopes one minute and crushing them the very next.

The question now on Social Security is what exactly is on the table and what isn’t. The statement the White House put out this morning is this:

There is no news here. The President has always said that while Social Security is not a major driver of the deficit, we do need to strengthen the program and the President said in the State of the Union Address that he wanted to work with both parties to do so in a balanced way that preserves the promise of the program and doesn't slash benefits.

That not slashing benefits part of the statement sure sounds good and makes me feel better, but what does working with the Republicans in a balanced way mean? They want to cut benefits, not raise the payroll tax. And Social Security — unlike Medicare and Medicaid which include a lot of payments to providers that can be tinkered with in different ways to potentially lower costs — is all benefits. So is it on the table or isn’t it? The White House says the President is opposed to cutting benefits, which is wonderful, and I’m grateful for them reiterating that in the wake of the news reports this morning. But if you put it on the table, that means benefits might get cut, which is a disaster for the middle class, and a disaster for the Democratic Party. It would break the Democratic coalition into pieces, do more to alienate the base than any other thing the President could do, alienate seniors, who have never been too crazy about Obama anyway and who we need to move toward us in 2012, take away the political high ground Democrats seized because of the Ryan budget’s attacks on Medicare and Medicaid.

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Two articles this weekend caught my eye as a great study in contrasts, one by George Will called Burning Down the House, the other by Frank Rich, titled Obama’s Original Sin. They both discuss the 2008 financial collapse and policies surrounding it, and they are both critical of some people in the Democratic Party, but the resemblance pretty much ends there.

Will’s column is a particularly remarkable example of how modern corporate conservatives are so worshipful of the free market über alles that when they read something critical of it, they are only capable of recognizing the nuggets of anti-government and anti-Democratic Party analysis in it. Will’s column recounted how he had just read the book “Reckless Endangerment” by New York Times reporter Gretchen Morgenson and financial wunderkind Joshua Rosner, and how it is full of analysis documenting the terribleness of government, liberal policies, and Democrats. According to Will, that is the single overwhelming message of the book, that progressive policies of all kinds were responsible for the housing crash — that the Community Reinvestment Act, efforts to stop racial discrimination, Bill Clinton, and an old Mondale campaign aide who had become head of Fannie Mae created an evil vortex that destroyed the poor, benighted free market which would have sorted everything out nicely for everyone if left to its own devices.

Of course, Will believed this before he read “Reckless Endangerment,” and has been making the same points in a number of columns for three years running. And he will believe all of this until the day he dies, no matter what books he reads in the meantime that might contradict this view. You know how I know this? Because “Reckless Endangerment” is not all about how perfect the free market is in the banking sector. The authors, who are brilliant writers on the financial sector whose columns and blog posts I have avidly read for years, are not free market banking apologists. They do have a lot of negative things to say about Fannie Mae, as they certainly should; it evolved into an out-of-control corporate monster that beat back every attempt at even modest regulation. But they are also extremely critical of the banking industry, and argue for a far tougher regulatory cop on the beat throughout the financial sector. You wouldn’t know that from Will, though: apparently the only sentences he read in the book were the ones critical of Fannie Mae and its CEO Jim Johnson, who had once been an aide to Walter Mondale.

Will is an emblematic modern conservative. Everything about the free market is glorious, to be worshipped at some fundamentalist altar no matter its contradictions, and everything about the government (except defense) is evil. Any nugget of information you find that reinforces that worldview, you shout it out over the hilltops. But if you run across some facts and analysis, such as those in “Reckless Endangerment” that run contrary to that point of view, you just ignore it or forget about it.

Frank Rich’s column was a classic one for him as well. He pulled no punches, being very critical of President Obama and his administration for their handling of the Wall Street banks and the economy in the wake of the 2008 financial collapse. But Rich’s approach was very different from Will’s. Rather than being blindly convinced that government is good or bad, Rich wants to know the answer to a simple question: Which side are the people who run our government going to be on?

To me, that question is the most critical one there is when it comes to government policy. I don’t believe that government is inherently good — having lived through Vietnam, Watergate, J. Edgar Hoover’s corruption at the FBI, the massive deficit producing tax-cuts-for-the-rich policies of Reagan and Bush, the S&L crisis, financial deregulation, media consolidation, the Iraq war, Katrina, and the utter economic incompetence of the President George W. Bush economic years. I have no illusions that government as a whole is always on the side of most people. But what I want and believe in is a government of, by, and for the people — most especially for the people. Given the size and power of the financial industry, and other huge multinational corporations, I want a government that is on our side in making sure these massive companies don’t destroy our economy (again), and then demand bailouts (again) because they are too big to fail. I want a government on our side so that big insurance companies don’t tell people they can’t have coverage anymore because they got sick. I want a government on the side of senior citizens who have worked hard their whole lives and now want to live with some modest measure of dignity and economic security through Social Security, Medicare, and Medicaid coverage. I want a government on the side of working class families thrown out of their jobs and homes through no fault of their own. I want a government that is on the side of our kids and helps them get a good education. I want a government that is on the side of small business and start-up entrepreneurs as they work their butts off trying to compete with huge corporations.

The Republican Party and conservatives like George Will seems to have been captured lock, stock, and barrel by the wealthiest and most powerful special interests. That is the only side they are on, and the policies they are proposing will only make things worse — a whole lot worse — for regular folks. People like Frank Rich — and Rosner and Morgenson for that matter — are critical of Democrats when they get too close to those wealthy special interests. Rich argues that it is only by standing up the powers that be on the economy, and standing up for the middle class, that Democrats will find their political way. I couldn’t agree more.

Silly me.

Here I thought that the rule of law actually mattered, and that when the good guys triumphed (three times — twice in Congress, once in the courts) the battle was over, we could enjoy the moment and brace for the next fight. As I wrote yesterday, “The proposed rule that came out from the Fed a while back was reasonably fair to the retailers, which was a major upset given how kind to Wall Street banks the Fed has historically been.”

Silly me for forgetting about the immeasurable political influence of the big banks:

The Federal Reserve said Wednesday that banks can only charge retailers 21 cents each time they swipe a debit card.

The board raised the cap from its initial proposal of 12 cents per swipe. Banks and big payment processors like Visa and Mastercard convinced the Fed that was too low to cover the cost of handling transactions, maintaining networks and preventing fraud.

Banks currently have no limit and charge an average of 44 cents per swipe.

It’s uncommon for the Fed, or any other government regulators for that matter, to change their rules dramatically during the comment period, but this change is a big deal. It’s simply offensive that the Board of Governors decided to give another handout to the Too Big to Fail financial institutions in this manner.

This ruling also pushed back the implementation deadline to Oct. 1, which is later than expected (And for every month that swipe fee reform is delayed, banks snag an extra $1.35 billion in fees, according to The Nilson Report.)

As I wrote yesterday, the Too Big to Fail banks are so big and so powerful that they win almost every battle and undermine almost every regulation — and it has happened again. Today’s craven sellout to the big boys by the Fed is one more reminder of why we need to break these banks apart so they don’t keep running roughshod over our democracy.