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By Jim Hightower
Author, Commentator, America’s Number One Populist

In these times of nationwide job insecurity, with five applicants lined up for every job opening, CEOs warn workers that they’d better perform – or else. Or else they’ll be unceremoniously booted out the door.

But what happens when the bosses themselves fail to perform? Well, they, too, are shown the door. But rather than getting a swift kick in the tush, they’re being given little golden kisses to soothe the pain of their failures. Actually, the kisses are not so little.

For example, when Burger King’s board ousted its CEO in April for years of under-performing, his care package included a $20 million severance. That was on top of $29 million more in pension, deferred bonuses, and stock payments. Likewise, Massey Energy, the reckless mining giant that killed 29 coal miners last year and now faces charges of deliberately disregarding safety rules, handed its chief $34 million as a fond farewell for his ugly performance when he departed in June.

Then there’s Hewlett-Packard, which supposedly is in the business of making computers, but seems to specialize in making outlandish payouts to failed CEOs. In 2007, Carly Firoina was sent packing with a $21 million severance; then her successor got $12 million to leave last year; and, this September his successor, Leo Apotheker, departed too, after only 11 months on the job. Apotheker’s pay-for-failure totaled $13.2 million, including – get this – a $2.4 million bonus! Plus, HP is paying to relocate Leo to Europe and to cover the $300,000 loss he took on the sale of his house.

Getting fired has never been so sweet – and shareholders are getting a tad miffed at seeing so much of their money going out the door in these gilded goodbyes. For more information, go to www.aflcio.org/corporatewatch/capital.

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“Lucrative Fall From Grace,” The New York Times, September 30, 2011.

“Layoffs at All-Time Low, but Still 5 Unemployed for Every Job Opening,”
www.nytimes.com, March 11, 2011.

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National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be – consumers, working families, environmentalists, small businesses, and just-plain-folks. Twice elected Texas Agriculture Commissioner, Hightower believes that the true political spectrum is not right to left but top to bottom, and he has become a leading national voice for the 80 percent of the public who no longer find themselves within shouting distance of the Washington and Wall Street powers at the top. He publishes a populist political newsletter, “The Hightower Lowdown.” He is a New York Times best-selling author, and has written seven books including, Thieves In High Places: They’ve Stolen Our Country And It’s Time To Take It Back; If the Gods Had Meant Us To Vote They Would Have Given Us Candidates; and There’s Nothing In the Middle Of the Road But Yellow Stripes and Dead Armadillos. His newspaper column is distributed nationally by Creators Syndicate.

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This piece was first published on Jim Hightower’s website.

Dean Baker

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

For some reason most of the discussion in Washington and the media of the bank bailouts is overlooking their central feature: taxpayer dollars are being used to sustain the income of incredibly rich bankers. The public should be furious over this upward redistribution of income.

The basic story here is very simple. If we got the government out and left things to the market, virtually the entire banking sector would be bankrupt. Citigroup, Bank of America, Goldman Sachs, Morgan Stanley and almost all the other big banks, and thousands of smaller ones, would be out of business. (My bet is that even “healthy” banks like Wells Fargo would be in bankruptcy before too long. They hold plenty of bad debts, too.)

Most of the top executives of these banks would likely be sent packing, while those remaining would have their compensation (including “golden parachutes” and bonuses) set by bankruptcy judges who would be running the companies in the interest of the creditors, not the shareholders. The shareholders themselves would be out of luck for the most part. Many bank stocks have already lost 80-90 percent of their value over the last 18 months. Bankruptcy would likely eliminate what little remains.

However the banks are not in bankruptcy because the confused state of affairs and potential loss of creditors’ wealth created by large-scale bankruptcies in the financial sector would be a devastating hit to the economy. This is the rationale for the TARP, the various special lending facilities created by the Fed, and other measures to ensure the survival of the banking system.

The government has intervened in a huge way to keep the market from taking its course. But the key issue that has been buried in the debate in the media and political circles is the separation of the interest of the public in a functional financial system and the interests of bank executives in high salaries and shareholders in getting returns on their capital.

At this point, the banks are desperate — they would be dead without government handouts. This means that the government can set whatever terms it wants. And, for both economic and moral reasons, it has an obligation to set terms that do not reward the bank executives and shareholders.

The bank executives and shareholders took big risks that went bad. If they are rewarded with taxpayer handouts, then the message this sends to the financial sector is to keep taking irresponsible risks. The game becomes heads they win, tails we lose. If the bets pay off, then they are incredibly rich. When the bets go bad, the taxpayer gets the tab.

The moral reason for not rewarding executives and shareholders is that these rewards require the taxation of middle income people, like truck drivers and nurses, to transfer money to some of the richest people in country.

This sort of upward redistribution is difficult to justify. Usually people in the United States like to believe that the market determines the distribution of income. Many get outraged over the idea that a mother on TANF can get a check for a few hundred dollars a month from the government. In this case, the government is effectively handing checks of millions of dollars to bank executives who would be out of work if the market was left to run its course.

We have to keep the financial system functioning, but we can do this without transferring hundreds of billions of dollars from middle class taxpayers to the wealthiest people in the country. If the bailout conditions imposed by the Obama administration and Congress don’t effectively eliminate shareholder wealth in the bankrupt banks and bring compensation (in whatever form) of bank executives back down to main street levels then it is can only be explained by corruption. There is no excuse for this massive intervention to redistribute income upward.