Blog

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

The elites hate to acknowledge it, but when large numbers of ordinary people are moved to action, it changes the narrow political world where the elites call the shots. Inside accounts reveal the extent to which Johnson and Nixon’s conduct of the Vietnam War was constrained by the huge anti-war movement. It was the civil rights movement, not compelling arguments, that convinced members of Congress to end legal racial discrimination. More recently, the townhall meetings, dominated by people opposed to health care reform, have been a serious roadblock for those pushing reform.

Those disgusted by the bank bailouts, and the bankers who brought us this recession, will have a chance to make their views known when the American Bankers Association has its annual meeting in Chicago, October 25-27. A large coalition of labor, community, and consumer organizations are organizing a protest at this “Showdown in Chicago”

A big turnout at this event can make a real difference. Just to review the scorecard, most of the country is still suffering the fallout from the bankers’ irrational exuberance of the housing bubble era. The Congressional Budget Office (CBO) and other forecasters expect the suffering to endure for years to come.

The unemployment rate is about to cross 10 percent, with an additional 9 million workers only able to find part-time work. CBO projects that unemployment will not return to normal levels until 2014. Almost 200,000 people are losing their homes every month through foreclosure. Tens of millions of people who had expected a comfortable retirement just saw most of their wealth disappear with the collapse of the housing bubble. State and local governments are being forced to lay off school teachers and fire fighters under the pressure of enormous budget deficits.

But not everyone is suffering. Thanks to the bailout programs put in place last fall, most of the country’s major banks are back on their feet. In fact, in the most recent quarter, bank profits hit a new record high as a share of all corporate profits.

And the banks are sharing their wealth. Many of their top executives and high performers will be getting bonuses this year worth millions of dollars, in some cases the bonuses will be in the tens of millions.

In the meantime, in elite Washington circles people are busy making plans for a national sales tax so that the government can limit the fiscal damage caused by the bankers’ recession. A sales tax is of course very regressive since low and moderate-income people typically spend the vast majority of their income, while our banker friends will more likely to be able to save some of their income or spend it in other countries where they will not be paying this new sales tax.

To summarize: the bankers wrecked the economy with their greed, ran off with taxpayer dollars in a massive bailout, and now plan to raise taxes for the rest of us. If that picture doesn’t sound quite right, then go to Chicago.

This is a case where the divisions are not left-right, but of the elite against everyone else. When Congress was debating the TARP bank bailout last fall, members of Congress were hearing calls from people across the political spectrum who were outraged that their tax dollars were going to the banks that had wrecked the economy. A higher percentage of Republicans than Democrats ended up voting against this bankers’ piñata.

The policies that will rein in the banks: reform of the Federal Reserve Board to make it democratically accountable, a tax on financial speculation to pay for the bankers’ mess, and restrictions on the bank abuses of consumers that caused the carnage have support from people on both the left and right.

A bill that would require the Fed to disclose what it did with more than $2 trillion in loans to banks and other financial institutions was originally co-sponsored by Ron Paul and Alan Grayson, one of the most conservative and one of the most progressive members of Congress. Due to public pressure, it now has more than 270 co-sponsors.

This is exactly the sort of alliance that gets the elite worried. Reining in the power of the financial industry will be a long hard fought war, but it is one that must be fought. President and Nobel peace prize winner Barack Obama may not have been able to bring the Olympics to Chicago, but everyone who wants to retake our country from the banks can bring their backside there on October 25th.

***

 Dean Baker is the author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy.” 

***

This piece was first published on Huffington Post.

David Sirota

By David Sirota
Political journalist, best-selling author and syndicated newspaper columnist

I wrote a newspaper column this week noting the rank hypocrisy in political and media circles when it comes to their supposed concerns about the deficit. I noted that Tea Party protesters are among the biggest hypocrites – and chief among them is political terrorist Glenn Beck, because, as you’ll see, the truth is the bailout is the Beck Bank Bailout.

As Frank Rich notes, Beck has been promoting himself not only as a racist culture warrior, but as an economic populist who rails on government giveaways to Wall Street. In that sense, he’s sort of trying to be a neo-Buchananite…except, there’s just one problem with his economic argument: Glenn Beck championed the Wall Street bailout he claims to be leading the fight against. In fact, when progressives were fighting tooth and nail against the bailout (and taking significant criticism for doing so) Beck was promoting it, offering criticism only for it not being bigger:

“I think the bailout is the right thing do. The “REAL STORY” is the $700 billion that you’re hearing about now is not only, I believe, necessary, it is also not nearly enough, and all of the weasels in Washington know it.” – Glenn Beck, CNN, 9/22/08

That’s right – this is the Beck Bank Bailout. So the next time you hear Glenn Beck railing on government spending and corporate giveaways and the failure to crack down on Wall Street largesse, remember – Glenn Beck is railing on the very largesse that Glenn Beck intensely promoted and supported on the national Glenn Beck television show.

(huge h/t to Jenkins Ear and ThinkProgress)

NOTE: Beck sometimes calls the stimulus bill a “bailout” – but let’s be clear: As you can see from the transcript, he’s referring not to the stimulus bill, but to the TARP bailout that he now rails on.

UPDATE: Time magazine, and its reporter David Von Drehle, just published a cover story puff piece on Beck. The fact that the magazine devoted substantial resources to such a piece – and didn’t bother to even mention this central hypocrisy of Beck – is not only an absolute embarrassment, it shows exactly why journalism is in a severe crisis.

***

David Sirota is the bestselling author of the books “Hostile Takeover” (2006) and “The Uprising” (2008). Find his blog at OpenLeft.com or e-mail him at ds@davidsirota.com

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

Treasury Secretary Timothy Geithner wants to have the government lend up to a trillion dollars to hedge funds, private equity, funds and the banks themselves to clear their books of toxic assets. The plan implies a substantial subsidy to the banks. It is likely to result in the disposal of these assets at far above market value, with the government picking up the losses.

As much as we all want to help out the Wall Street bankers in their hour of need, taxpayers may reasonably ask whether this is the best use of our money. After all, the $1 trillion that is being set aside for this latest TARP variation is equal to 300 million SCHIP kid years. Congress has had heated debates over sums that were a small fraction of this size. To give another useful measuring stick, the Geithner plan could fund 1 million of the Woodstock museums that were the main prop of Senator McCain’s presidential campaign.

The core problem is that many of our big banks are bankrupt. If they had to acknowledge the losses that they have incurred on their housing related loans (and increasing their loans in commercial real estate) Citigroup, Bank of America, and many other large banks would be insolvent. Thus far, they have avoided reality by keeping these loans on their books at inflated prices.

The Geithner plan is an effort to rescue the banks by using government funding to prop up the price of these bad loans to levels that will allow the banks to stay solvent. It is not clear that the plan is big enough to accomplish this goal, but that is the basic intention. If it doesn’t work, then presumably Geithner will come out with another TARP permutation that involves giving the banks even more money.

There is an alternative. Rather than using government money to keep them alive, we could force the banks to go through a type of managed bankruptcy process like the one that is currently being proposed for General Motors and Chrysler.

Geithner has supposedly ruled out the bankruptcy option because when he, along with Henry Paulson and Ben Bernanke, tried letting Lehman Brothers go under last fall, it didn’t turn out very well. Of course, it is not necessary to go the route of an uncontrolled bankruptcy that Geithner and Co. pursued with Lehman.

The government could set up an arranged bankruptcy under which creditors have accepted conditions in advance. While this may not be easy to negotiate, the government does have enormous bargaining power in pursuing such a deal. The creditors (other than insured deposits, which will be paid in full) of these banks may end up with nothing if the government just let the banks sink.

The prospect of even an arranged bankruptcy of a major bank will undoubtedly shake up markets, but many safeguards have been put in place since the Lehman collapse. If the stock market goes down for a few weeks or months, who cares? Running the economy to serve the stock market is a sure recipe for disaster; if President Obama fixes the economy, the stock market will do just fine in the long run.

Anyhow, the Geithner crew insists that there are no alternatives to his plan; we have to just keep giving hundreds of billions of dollars to the banks. Perhaps Geithner is right. But before we throw such huge sums away, further enriching the bankers who wrecked the economy, maybe we should get a second opinion.

Suppose that Congress appropriated a modest chunk of money to have independent economists put together teams to construct alternative plans. Why not give M.I.T. professor Simon Johnson, a former chief economist of the IMF, $5 million to hire a crew to outline his preferred path? Congress could give Joe Stiglitz, a Nobel Prize winner and one-time chief economist to President Clinton, who is also a harsh critic of the Geithner plan, a similar sum to put together his own team.

These economists could develop their best plans and put them out for public consumption. Geithner’s crew can then tell us why their plans are unworkable and we must instead hand over the money to banks.

Given how much money Geithner wants to spend – putting it in the hands of the folks that brought on this economic crisis – it would seem appropriate to first examine all the alternatives. After all, we could find out what our options are in this case for the price of just a few A.I.G. executive bonuses. That has to be a good deal in anyone’s book.

Dean Baker is the author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy.”

This piece was first published on Huffington Post.

Robert Kuttner

Robert Kuttner
Co-Founder and Co-Editor of The American Prospect

Dear David,

President Obama faces two huge challenges in the next few months. One is dealing with the reality of an impending depression. It will take much stronger medicine to avert a depression than the measures taken to date, and the president needs to rally public opinion if he is to persuade Congress to act at the necessary scale.

The related challenge is about appearances — about whether middle America feels that the federal outlays are trickling down to regular people. So far, bankers seem to be getting too much and Main Street too little.

The two challenges are related. If the solutions are not bolder, they won’t cure the crisis. If the public isn’t persuaded of the need, Congress won’t act. If the economy keeps sinking, the people will lose confidence in the president’s leadership.

And if President Obama doesn’t boldly address both challenges, his presidency is in trouble. I take heart from some of the subtle shifts in the president’s positioning in recent weeks, but he needs to go farther, and move faster.

At the core of both problems is the sinking economy and the fact that he hired a team of orthodox economic advisers to fix it. A radical crisis requires radical solutions, but the economic team has been far behind the curve in the remedies it has put forward, both in the reality and the optics.

The Reality:

To prevent a slide into depression, you will need to spend roughly another three trillion dollars of public money in order to pay for a second stimulus package (at least a trillion) and to recapitalize the banking system (as much as two trillion.) Neither Congress nor public opinion is remotely prepared for that action yet. No one but the president is capable of the kind leadership necessary to move public opinion in this direction, and Barack Obama is a better teacher than most presidents. But that money needs to be understood as practical help for ordinary American families, not as more bailout for the culprits who created the mess.

Faced with three trillion dollars in additional needs, the administration has only $350 billion at its disposal — the as yet unspent TARP funds. Right now, the administration seems to be trying to spend that money several times over — first as an equity guarantee to anchor more borrowing from the Federal Reserve as the core of Tim Geithner’s latest bank rescue; then as a source of public funds for the auto restructuring; and again as part of the plan to refinance mortgages and prevent foreclosures. This string is more than played out. There are limits, financially and politically, to the use of the Fed as all-purpose piggy-bank. At some point very soon, Congress needs to be brought back in, because your efforts require both Congressional support and a lot more real money. And Congress will only act if the people understand the stakes.

The political reality is that the economy needs to be on the mend by mid-2010, or the Democrats will lose seats in the mid-term election. But most informed observers think that if present trends continue, the economy will not be in recovery by Election Day 2010. If the Republicans eat into what is now a bare working Congressional majority, you will face legislative gridlock. And the perception of a weakened presidency will become a reality — portending even worse political news for the president’s re-election in 2012.

Right now, the president has enlisted some Republican governors like Charlie Crist urging diehard GOP legislators to back his program. That’s a trifecta. It splits the opposition party, reinforces the perception of Republican obstructionism in Congress, and vindicates the president’s bipartisan overtures. Well done! But this will last only as long as President Obama’s program seems to be working.

As you must know, President Obama is at grave risk of getting on the wrong side of a populist backlash, which the Republicans — however improbably — will exploit. Regular Americans are losing savings, incomes and jobs, and see vast sums from bank rescues going mainly to bankers. A USA Today/Gallup poll published Monday shows that 83% of Americans favor federal aid to create jobs, 67% favor aid to states in financial trouble, and 64% favor relief to homeowners facing foreclosure. But only 39% favor aid to banks. I recently gave a speech to a blue collar audience, and one questioner asked why they didn’t just mail a check for $100,000 to every American family instead. Far fetched as that sounds, the seven trillion dollar cost about equals the direct and indirect costs of the serial bank bailouts (counting advances and guarantees from the Fed.) In days ahead, you will be hearing more of this on talk radio and cable TV.

You already grasp the need for better symbolism on this front. The limit on executive pay for top bankers getting federal relief is a good start. But the public expects a lot more. In the public mind, the bank bailout is conflated with the stimulus package; and what gets the publicity is the fact that the relief is going mostly to bankers, bank shareholders, and bondholders.

It did not help that Tim Geithner went on stage before his plan was ready for prime time. The plan laid an egg on Wall Street, but the financial market is not the only audience that matters. Geithner’s approach is also increasingly unpopular with ordinary people and with commentators. The fact that Geithner’s latest housing rescue also channels the relief through banks and bondholders, and solves only a fraction of the foreclosure crisis, does not help either.

The week that the 2008 election campaign locked in your favor, was, in retrospect, a very close call. That was the week of September 29, after candidate Obama had announced that even though the bank bailout bill was not perfect, he would support it. A large majority of House Republicans, meanwhile, refused to support the bill. Their mail and phone calls were running a hundred to one against the measure.

As you will recall, John McCain clumsily announced the suspension of his campaign and dramatically returned to the Senate, where he played no useful role whatever. When the dust settled, the White House rounded up just enough Republican votes over rank and file GOP opposition, and Barack Obama looked like a statesman while McCain looked like an inept opportunist. But had McCain behaved as a more adroit demagogue and played to the latent populism in the backlash against the bill, he could have been the net beneficiary while painting Obama as the “elite” agent of the banks. Given the close Republican alliance with Wall Street and McCain’s own prior record, the claim would have been preposterous, but politically it might have worked.

There will continue to be this sort of risk going forward. Republicans will posture as pseudo-populists. The administration’s emergency measures both need to cure the economic collapse — and to do so by symbolically and palpably siding with regular people.

With all of these alarms, there is still a lot that I find encouraging about the president’s actions in recent weeks.

President Obama’s event January 31 launching the task force on middle class working families chaired by Vice President Biden was superb, and the president’s remarks were spot on. Among other things, he declared:

We know that you cannot have a strong middle class without a strong labor movement. We know that strong, vibrant, growing unions can exist side by side with strong, vibrant and growing businesses. This isn’t a either/or proposition between the interests of workers and the interests of shareholders. That’s the old argument. The new argument is that the American economy is not and has never been a zero-sum game. When workers are prospering, they buy products that make businesses prosper. We can be competitive and lean and mean and still create a situation where workers are thriving in this country.

We have not heard language like that in the Oval Office since Franklin Roosevelt. And the Employee Free Choice Act, if enacted, would not just create a stronger labor movement but a stronger constituency for the Obama administration and future progressive electoral majorities. It puts the president on the side of working Americans.

I noted with great interest a most unusual front-page piece in the New York Times February 10, headlined, “Geithner Said to Have Prevailed on the Bailout.” In this piece, you and unnamed officials were quoted to the effect that Geithner had won the argument inside the administration against more severe executive pay limits and other tough conditions on banks receiving additional government aid.

What made this piece so interesting is that it deliberately publicized a split in a team famous for self-discipline and for never leaking anything about internal disputes. A blunter translation of the leak might be “You won that one and good luck, Tim, this baby is all yours.” I certainly hope that’s what you meant, because the baby is something of an orphan that nobody wants to claim. And if Geithner is not doing the job in a way that protects the public interest and the president, he certainly deserves to be isolated. Unless he improves on his performance to date, I would not be surprised if in six months, Geithner “decided” to resign to spend more time with his family.

It will be interesting to see whether the center-right economic team who took senior posts in the campaign and then got the top jobs in the administration learns how to get with a bolder program. If they don’t, it is up to the political team to re-educate them or to find people who get it right. I certainly hope you and the president are also talking to people who have a more radical view of how to fix the banking system, like Joe Stiglitz, Nouriel Roubini, Dean Baker, James Galbraith and Paul Krugman. The fact that people like Alan Greenspan and Sen. Lindsey Graham have said that bank nationalization might be necessary certainly gives the president some cover.

In early February, the president’s economic advisers came up with the idea of a White House summit on fiscal responsibility, which was held this Monday, February 23. The idea was to reassure fiscally conservative Blue Dogs and lay the groundwork for a “grand bargain” long promoted by Robert Rubin, Pete Peterson, and some in Congress to pay for the sins of emergency deficit spending this year and next by cutting back on Social Security and Medicare down the road. The preferred vehicle to bring this about was a bipartisan commission modeled on the base-closing commission. It would come up with a plan for automatic triggers for cutbacks in social insurance, and would be subject only to an up or down Congressional vote.

But someone failed to run the political traps. There was plenty of consultation with the Blue Dog Democrats and with some senior Republicans, but nobody thought to tell Nancy Pelosi or Harry Reid. Senior Congressional Democrats, among them Senate Finance Committee Chairman Max Baucus, who is nobody’s idea of a fiscal wastrel, warned the president that this was no time to be cutting back on Social Security and Medicare or putting government on bipartisan automatic pilot.

To his credit, the president changed the character of the White House summit, and preempted it with a budget briefing for reporters on the administration’s commitment to being the deficit back below three percent of GDP by 2013 — by letting the Bush tax cuts expire and by finding other revenue — not by gutting social insurance. Despite a lot of rhetoric about bipartisanship, the idea of a commission is off the table. Congratulations on preventing what might have been a political debacle and seizing the fiscal high ground.

It has been a real pleasure to see President Obama get out of the Washington bubble and get back on the road. His speech in Springfield, where the campaign began, marking the two-hundredth anniversary of President Lincoln’s birth, was one of his finest. And he articulated the themes that must be persuasive to Americans if he is to save the economy and his presidency.

In that speech, he challenged “the philosophy that says every problem can be solved if only government would step out of the way; that if government were just dismantled, divvied up into tax breaks, and handed out to the wealthiest among us, it would somehow benefit us all.”

And he added:

“Such knee-jerk disdain for government – this constant rejection of any common endeavor — cannot rebuild our levees or our roads or our bridges. It cannot refurbish our schools or modernize our health care system; lead to the next medical discovery or yield the research and technology that will spark a clean energy economy.

“Only a nation can do these things. Only by coming together, all of us, and expressing that sense of shared sacrifice and responsibility — for ourselves and one another — can we do the work that must be done in this country. That is the very definition of being American.”

I hope we hear a lot more of this.

Before the economy moves toward recovery, we will need a very different strategy for reviving a functioning banking sector — one rebuilds a simplified financial system to serve the real economy. The current approach is more about saving existing zombie banks, and the people notice. You can call it receivership or nationalization, but sooner or later the president will have to embrace it, and it is better done sooner.

We also need a plan to prevent foreclosures that goes directly to help homeowners, rather than hoping that by giving more incentives to banks and bondholders we can somehow induce them into passing along some relief — a plan that helps homeowners directly. I think the political team gets that. Either the economic team needs to get it, or you need to get a different economic team.

There is the further challenge of branding the practical help that the Obama administration is already providing. Franklin Roosevelt had the blue eagle of the NRA plastered in every store window. And when jobs came via the CCC or the WPA, nobody doubted who was the author of that help. For now, even though $780 billion is a lot of money, it passes through so many hands before it finally reaches local communities that it isn’t branded as help from President Obama. You are probably better equipped to figure out that one than I am, but it is another challenge.

In closing, let me say that during the campaign I wrote a lot of commentary, sometimes back-seat-driving what you were doing. Nine times out of ten when I second guessed your tactics, you were already several steps ahead of me. You’re a stellar political strategist. However, you now have the added challenge of governing, and of governing on the edge of a depression with a team of economic advisers that is sometimes more of an echo of the past than an asset. You don’t have much margin of error, and you need to get the politics right in order to get the economics right. We all need you and President Obama to succeed.

Robert Borosage

By Robert L. Borosage
Co-Director Campaign for America’s Future

Will President Obama defend Social Security from the folks who want to plunder it? That’s the question Bill Grieder poses in a critically important article in the Nation Magazine.

We’ll get an early indication this Monday when the president convenes a “Fiscal Responsibility Summit,” designed as he put it, “to send a signal that we are serious” about America’s long-term deficits.” The focus will be on “entitlement programs” like Social Security and Medicare. “Everything will be on the table,” the budget hawks will get a platform, and rumors now suggest the president may announce a commission designed to “fix” Social Security.

The president is surely right about the need to address America’s long term finances. Doing so now is dicey, for the president has to convince Americans — and the Congress — on the need for more deficit spending: to pay for the bank bailout, finance mortgage relief and eventually a second stimulus to get the economy going. The danger — as Roosevelt discovered in the Great Depression — is to do too little and stop too soon, seeking to balance the budget before the economy regains its feet. But a long term discussion of America’s finances now could help Americans look beyond the crisis, defining where we need to go and how, in the long term, we’ll pay for it.

Progressives, of course, are worried about Obama falling for a trap set by the budget hawks, conservatives in both parties, the beltway establishment and financial elites, personified by Pete Peterson, a billionaire Wall Street baron. Peterson is spending a fortune trying to terrorize Americans about long-term deficits to justify hacking at Social Security and Medicare. Peterson, who made his fortune on Wall Street, never raised a word about the dangers of hyper leveraged finance houses gambling other people’s money. He never expressed qualms about the leveraged buyout artists who were using debt finance to rip apart companies. He didn’t fund an all out effort to stop Bush from raiding the Social Security surplus to pay for tax cuts for the rich. But now he wants folks headed into retirement who have already prepaid a surplus of $2.5 trillion to cover their Social Security retirements to take a cut tor work a few years longer to cover the money squandered on bailing out banks, wars of choice abroad, and tax cuts for the few.

Will Obama fall for this ploy? Not likely. In fact, his position on entitlements has been spot on. Social Security, he has argued, is basically sound, funded far into the future. If it needs more funds decades from now, lifting the cap that now cuts off payroll taxes at $102,000 would take care of the problem.

The real deficit problem, as Obama has argued, is caused by soaring medical costs. This isn’t a problem of “entitlements” like Medicare and Medicaid alone. It’s the result of our broken health care system that wastes over a third of its costs on administration, puts no limits on the costs of drugs, and does a terrible job limiting costs. Other advanced industrial countries spend far less of the GDP on health care while insuring all their people and producing better health results. Solve the problem of soaring health care costs and you solve America’s long term federal budget deficits. Fail to solve it and you bankrupt everything – families, companies that provide health care, state and national governments.

Obama gets this. That’s why he’s insisted on universal health care reform, and why he demanded a downpayment be made in the stimulus on accelerating the transition to computerized medical records and comparative treatment research.

So if the president sticks to his campaign pledges, the summit may provide a platform for the distortions of the budget hawks, but it won’t do much damage.

What we really need however is a true fiscal summit: a long-term assessment of our needs and our finances to begin framing a real “Grand Bargain” to pay for the investments we need.

That would start with what we consider to be the basics. I’d take the measure of a government that works that Obama defined in his inaugural address: a government that “helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.”

Meeting those basic goals will require developing an expanded public social compact to replace the promises that the corporations have shredded – particularly affordable health care and a secure pension above Social Security. It requires expanded public investment in areas vital to a vibrant economy and democracy: notably world-class education, 21st century infrastructure, and investments to fuel the transition to new energy.

Despite our current travails, this is still a rich country. We can afford to pay for this.
Indeed, successful health care reform would save money. The gold standard Lewin Group estimates that Obama’s plan would save some $1.04 trillion over ten years.

New priorities could provide hundreds of billions more. For example, what if we decided to sustain the world’s strongest military by spending as much on our military as the next 10 biggest militaries combined? As Bill Greider reports in his forthcoming book, Come Home America, that would save an estimated $180 a year to invest in areas vital to our future.

Given America’s gilded age inequality, which has been worsened because of wholesale tax cuts and loopholes for the wealthy, progressive tax reform is a moral imperative. Reform of the estate tax – with a complete exemption for fortunes up to $2 million per person ($4 million for a couple) would provide $60 billion a year. Repealing the Bush top end tax cuts for households earning over $250,000, as Obama promised in the campaign, provides another $43 billion a year. A small financial transaction tax on the buying and selling of stocks and other financial products — a vital reform to reduce excessive short term speculation — could generate $100 billion a year. Ending overseas tax havens could generate $100 billion a year from the unpatriotic corporations and wealthy (all figures from Chuck Collins of Responsible Wealth and the Institute for Policy Studies).

This doesn’t claim to be the last word. We can and should argue about the elements of any grand bargain. But everything should be on the table, not just “entitlements.” What are the promises we will make to one another to create a decent society? What are the investments we need coming out of this crisis to sustain the American dream in a global economy? And then, how do we pay for them in the most equitable and efficient way? Now that would be the Fiscal Responsibility Summit we need.

               ********************                                                    

                Steelworkers Organization of Active Retirees (SOAR): http://legacy.usw.org/usw/program/content/overview_sub.php?modules2_ID=774&modules_ID=775

Leo W. Gerard

By Leo W. Gerard

International President

Creep of the Week is a special award bestowed by the Untied Steelworkers on a corporate scoundrel or political bobble-head nodding to anti-worker demands. The awardee must, however, be human — not a demon, or robot or avatar. This week’s winner is former Merrill Lynch Chief Executive Officer (CEO) and Expensive Toilet Connoisseur (ETC) John A. Thain.

Thain’s behavior has been so cartoonish as to suggest he’s a soulless concoction of Marvel Comics. A Wall Street villain: Thain – the bond-shark who spends more on a commode to festoon his office than most Americans earn in a year!

Even James Post, a management professor at Boston University, suggested that Thain was more of an avatar than a human when talking to the AP about him and other Wall Street CEOs who spent $18 billion on year-end bonuses after getting $350 billion in taxpayer dollars to bailout their failing financial companies, “Thain is a symbol of the species. It’s a breed that I think is going to have to change its habits, at least for a time.”

But here’s proof that greed hasn’t completely converted Thain’s soul into a black hole: he paid his chauffeur $230,000 for a year’s service. That, of course, included an $18,000 bonus, about half of what the average American makes for an entire year’s work.

The fact that Thain paid his driver more than what a U.S. Supreme Court justice earns probably says more about what Thain thinks of his own value than what he believes the chauffeur deserved. Still, Thain could have stiffed the guy. Which means, somewhere under all that arrogance and excess, there’s a human. Thus, he qualifies for the award.

The Creep of the Week prize doesn’t come with cash, something Thain will be completely unaccustomed to. This is a guy who slipped his staff at Merrill $3.6 billion in bonuses, including 700 at the $1 million and above level, and did it deliberately in December, a month earlier than usual. That way, they arrived just days before reports of Merrill’s $15 billion fourth quarter losses. And the bonus checks got cashed just days before Bank of America completed its take over of Merrill. BoA may well have cancelled all of the bonuses that weren’t contractually required because they were, in effect, a reward for losing Merrill a grand total of $27 billion that year.

And, BoA had to slither back to taxpayers and beg for another $20 billion from the bank bailout fund to help it complete the Merrill takeover after it discovered the extent of the losses at the brokerage firm.

Even so, Thain thought he should cash in on those bonuses too. After all, he had given his driver one! He planned early in December to ask the BoA board of directors for a $10 million bump just for himself – until bad publicity made him think the better of it.

Then, just last month, BoA’s CEO dumped Thain, placing him among the nearly 600,000 Americans thrown out of work in January. And just after he’d agreed to reimburse the company for that $1.2 million he’d spent renovating his personal office — including his $35,000 ornamental, non-flushable toilet!

Don’t cry for Thain, America. While the typical U.S. worker counts his annual wage in thousands, Thain tabulated his in millions. In 2007, he was the highest paid CE0 on Wall Street, taking $83 million in compensation out of the financially-struggling Merrill. As 7.6 percent of Americans are pinching pennies on the unemployment line, he’ll be squeezing megabucks in the lap of luxury.