Review: Washington's corruption of capitalism

Steve Weinberg, special for USA TODAY | USATODAY

If ever a book deserved the term "revisionist history," the newly published hybrid of investigative research/polemic by David A. Stockman is that book.

And if ever an author accumulated the right set of credentials to pull together such a book, Stockman is that author: staff member within the U.S. Congress, elected to the U.S. House of Representatives as a Republican from a Michigan district, budget director inside the Ronald Reagan White House starting in 1981, Wall Street player at Salomon Bros. and the Blackstone Group, private equity investor, unlikely whistleblower.

The word "history" in the phrase "revisionist history" must be used loosely, because Stockman devotes some of the book to the past five years, joining multiple previous authors who have presented their nominations for the villains and heroes of the 2008 economic collapse.

As a book critic and investigative reporter, I have absorbed a dozen of those previous books. Stockman's is my favorite because of his original research, the context he presents (starting with the economic depression of the 1930s), his former insider status, and his apparent political non-partisanship during the endeavor.

"Crony capitalism" is Stockman's term for why the United States of America has been experiencing severe economic failure for all but elites on Wall Street, inside corporate suites and at the highest levels of the federal government.

The Federal Reserve Board has been the chief instrument of that crony capitalism, Stockman says. He endeavors to prove the case against the Fed with massive data available to any brainy, persistent researcher.

It seems doubtful that any reader will agree with every word of Stockman's polemic. But occasional or even frequent disagreement with Stockman does not constitute a reason to ignore his big-picture theses.

Stockman began his research in earnest after George W. Bush proposed what the author terms "the $700 billion bailout of Wall Street in September 2008." That bailout, which became known by its acronym TARP, included what Stockman terms "blatant deal making, bribing and bullying of the troubled big banks being conducted out of the Treasury secretary's office, as if it were the M&A department of Goldman Sachs."

Tracing the political machinations leading to that moment in September 2008, Stockman blames every president, with the exception of Dwight Eisenhower, going back to Franklin Roosevelt.

Stockman's testimony from four years inside the Reagan administration is especially powerful. He calls the Reagan battle of the budget a "dismal failure," worsened by the lies perpetuated by the Republicans about the effort.

"Notwithstanding decades of Republican speech making about Ronald Reagan's rebuke to 'big government,' it never happened." Between then and 2008, "Republican administrations whose mantra was 'smaller government' only made Big Government more corpulent…"

Is it too late to save the USA from complete economic collapse? Maybe not, Stockman says. He suggests, among 13 recommendations:

•Restoring the Fed to its non-political role as a "banker's bank."

•Limiting banks in local communities to lending.

•Banishing trading risky financial instruments for their own accounts.

•Imposing six-year term limits on members of Congress, who would conduct their election campaigns only with public funding to create level competition.

•Requiring each two-year Congress to balance the budget before spending.

Trouble is, Stockman says, his recommendations "would never be adopted in today's regime of money politics, fast money speculation, and Keynesian economics."

Because he does not predict drastic reforms, Stockman conveys pessimism. The mess of the past five years will worsen, not improve, he says.

We should all hope Stockman is mistaken, but simultaneously honor his heavily researched polemic by considering the possibility that he might be correct.

Weinberg is a member of the National Book Critics Circle and former executive director of the Investigative Reporters and Editors group.