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Leo W. Gerard

By Leo W. Gerard
USW International President

The nation’s greedy corporations and insatiable wealthy are fattening themselves on workers. There’s no trickle down. It’s the opposite; the rich have been sucking the economic lifeblood from the middle class for decades.

When reckless Wall Street banksters get taxpayer-funded bailouts, billionaires get tax breaks and gigantic corporations like GE and Bank of America pay absolutely no federal income taxes, they’re getting for free the very public services that enable them to make massive profits in this country – the courts, the roads, the trade regulators, the patent enforcement.

The middle class doesn’t get those big time special deals and loopholes. Workers pay their taxes. As a result, it’s workers footing the bill for the government services that enrich the rich. Greedy corporations, their CEOs and the right-wing politicians they buy with tens of millions in campaign cash are freeloaders.

It’s time workers stood up to the freeloaders. Join Monday’s We Are One rallies. These demonstrations across the country by religious groups, social justice organizations and labor unions will illustrate that the middle class is mad as hell and not going to take trickster economics anymore.

It’s time for greedy corporations and the insatiable rich to pay their fair share. It’s time to stop cuts to the government programs most treasured by and vital to the middle class and the vulnerable in this country – education, public transportation, Social Security. It’s time to stop right-wing attempts to terminate democratic rights like collective bargaining and voting without harassment. It’s time for the middle class to stop paying for everything and for the insatiable rich and greedy corporations to start sharing the sacrifice required to recover from the economic crisis caused by reckless gambling by Wall Street bankster corporations.

March for your rights Monday. March for the middle class facing record rates of foreclosure, unemployment, child poverty, and loss of opportunity as country club conservatives cut off college loans and Head Start.  March for the right of college students to register and vote in the towns where they study. March for the right of workers to band together, elect representatives and bargain with employers for better pay and working conditions. March for the right of the people to insist that corporations pay at least the same rate of taxes as workers do. March to end tax breaks for the wealthiest one percent who have now acquired more wealth than all the workers in the bottom 90 percent.

Greedy corporations, the insatiable wealthy and their purchased politicians have for three decades skewed public policy to enrich themselves while pushing down wages and benefits for the middle class.

From 1947 to 1975, a time of strong unionization in the workforce, real wages of average workers increased with productivity. The 75 percent rise in productivity and the nearly matching rise in wages gave the United States the largest, most vibrant middle class in the history of the world.

Since 1978, productivity grew 86 percent, but compensation for workers grew only 37 percent, and if the cost of benefits, mostly uncontrolled health insurance increases, is removed, the real average  hourly wage did not rise for 35 years, according to Alan S. Blinder, professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve.

Here’s how it works: The nation’s largest corporation, General Electric, earns tens of billions in profits from the labor of its workers but refuses to share the benefits with them. GE is expected to demand that its 15,000 unionized U.S. workers accept benefit cuts. So they’ll pay more for their retirement and health care and have less money to live and to pay taxes.

Meanwhile, the share of national income captured by the richest one percent rose from 8 percent in 1975 to 23.5 percent in 2005.

Under Dwight D. Eisenhower, the president in the 1950s, the nation’s richest paid an effective tax rate of 70 percent after loopholes. Today, it’s 16 percent – significantly lower than the 25 percent forked over through payroll deductions by individual workers earning between $34,500 and $83,600 a year.

That resulted from deliberate policy changes. Beginning with Ronald Reagan, country club conservatives cut taxes for the wealthy, while at the same time ending routine minimum wage increases and undermining the bargaining rights of labor.

The changes were made by increasingly wealthy politicians increasingly influenced by lobbyists. For example, 60 percent of the freshmen in the U.S. Senate and 40 percent in the U.S. House are millionaires. By contrast, only 1 percent of Americans are worth more than $1 million.

Compounding that is corporate influence, which worsened last year when the U.S. Supreme Court enabled corporations to donate unlimited money in secret. The upshot is corporations like General Electric, spending millions to lobby and paying zero in federal income taxes. GE spent $200 million to lobby for loopholes in the federal income tax code over the past decade, made $26 billion in American profits over the past five years, and not only paid absolutely no federal income taxes, but got itself a $4.1 billion rebate from the IRS.

That is far from an anomaly. Two out of every three U.S. corporations paid no federal income taxes from 1998 through 2005, according to a report by the Government Accountability Office. And the situation hasn’t improved since then. U.S. Sen. Bernie Sanders has written repeatedly about tax avoidance by the likes of Bank of America and Goldman Sachs, Wall Street banks that former President George W. Bush handed hundreds of billions in bail out dollars.

Bank of America got a $1.9 billion tax refund from the IRS last year, even though it made $4.4 billion. Goldman paid only 1.1 percent in federal income taxes on its $2.3 billion in profits. New York Times reporter David Kocieniewski wrote in his story about GE that such tax dodging by corporations has resulted in a significant decline in federal revenue from corporations –  from 30 percent in the 1950s to 6.6 percent in 2009.

Tax avoidance is a virtuous cycle for greedy corporations and the wealthy. They pay less in taxes, then have more money to lobby politicians to lower their taxes. In fact, it’s gotten so bad that lawmakers are hiring lobbyists right from their K Street firms to write legislation. And Congress’ new right wingers are increasing this trend. Since they took office in January, nearly half of the 150 former lobbyists working in top policy jobs in Congress were hired.

For workers, however, it’s a vicious cycle. They’re forced to pay the taxes shirked by greedy corporations and the insatiable wealthy. And they’re forced to suffer service cut backs.

Right now, right wingers are trying to cut $51.5 billion from the federal budget – demanding elimination of programs essential to the middle class and poor such as subsidies for home heating for the impoverished. But if the wealthy paid their share, say hedge fund manager John Paulson who earned $2.4 million an hour in 2010 – then those cuts would be unnecessary because the federal government would have an extra $69.5 billion in revenue.

Forty-three years ago on April 4 Martin Luther King was assassinated after standing up for the right of public sector workers in Memphis, Tenn. to negotiate for better lives.

In his last speech, Rev. King said God had allowed him to go to the mountaintop where he’d looked over and seen the Promised Land. “I may not get there with you,” he cautioned, “But I want you to know tonight, that we, as a people will get to the Promised Land.”

Greedy corporations and the wealthy have made it to the mountain top. And they’re shoving American workers down the hillside to ensure the Promised Land is reserved only for the richest.

The promise of America democracy is equality. Equal rights, equal treatment under the law, equal opportunity. Freeloading by greedy corporations and the insatiable wealthy is denying those promises to the vast majority of citizens. Americans must unify and march to wrest back those rights and secure the American Dream for all.

Take a first step. Join one of the 600 We Are One demonstrations on April 4.

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Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute.  He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union.

Dean Baker

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

With the recent spate of attacks on climate science and evolution it should not be a surprise that traditional defined benefit pensions in the public sector are now also under attack. There are powerful political actors in this country who are anxious to build a bridge back to the 19th century; taking us to a time where working people enjoyed few protections and could not count on sharing in the gains of economic growth.

The effort to weaken or destroy public sector unions and take away their pensions is the latest battle in this larger war. As usual, the right has been busy making things up to push its agenda, confident that the media will not expose untrue claims.

At the center of the right’s story is the view that governments are somehow being reckless or irresponsible when they provide guaranteed pensions for their workers. They tell us that these guaranteed benefits will bankrupt state and local governments, imposing impossible burdens on future taxpayers.

This story can be easily shown to be untrue. While the right has been scaring the public with talk of a trillion dollars in unfunded liability in state pensions, this sum can also be expressed as about 0.2 percent of state income over the time-frame in which the liabilities will have to be paid. (more…)

Robert Creamer

By Robert Creamer
Political organizer, strategist and author

Yesterday, ABC News leaked a confidential report from investment bank Goldman Sachs warning that the spending cuts proposed by the Republicans to take effect this year would slow the economy by 2 percent of Gross Domestic Product. It also found that even compromise cuts of $25 billion would cut growth by 1 percent.

This report would not be surprising if it came from the progressive Economic Policy Institute (EPI) — or even someone at the Brookings Institution. Instead it comes from Wall Street — which is, after all — the principal base of the GOP.

Of course, their conclusions are not surprising. Virtually everyone with an ounce of economic literacy understands that cutting federal spending right now — just as the economy is clawing its way out of the worst recession in 60 years — will cost hundreds of thousands of jobs.

Right now, the government projects about a 2.7 percent rate of growth in the economy this year. So according to Goldman Sachs, if the Republicans have their way, most of that growth would be wiped out and we would be perilously close to a double-dip recession.

It’s time to stop treating proposals for immediate cuts in spending as “reasonable” policy alternatives. These proposals are dangerous to the economy and the welfare of everyday Americans. (more…)

Les Leopold

By Les Leopold
Author, “The Looting of America”

January’s reported unemploymentrate remains stubbornly high at 9.0 percent. The Bureau of Labor Statistics’ U6 jobless rate, which stands at 16.1 percent, is more accurate, since it counts “discouraged workers” who’ve given up looking for a job. Right now, more than 28 million Americans are without work or have been forced into part-time work. It will take more than 22 million new jobs to bring the official unemployment rate down to 5 percent (our current definition of full-employment).

Please don’t wait around for John Paulson to create those jobs. He might have raked in a record $5 billion in 2010, but his job isn’t about employing people to make things or provide services. He’s a hedge fund manager. Paulson (a spiritual but not a blood relation of Henry, Bush’s Treasury Secretary) leads the list of America’s top “earners” for the year. If you divide his 2010 take by the standard work year of 2,080 hours, you’ll find that this ubermensch had a wage of $2.4 million an HOUR.

SEC goes after Goldman from Marketplace on Vimeo.

The robber barons of old earned their moniker by commandeering railroad, meatpacking, oil and steel monopolies. Paulson’s was a different kind of theft — but theft it was. In fact, he barely evaded prison for his role in Goldman Sachs’ Abacus deal, which suckered investors into buying securities that were explicitly designed to fail. Paulson colluded with Goldman Sachs to build a synthetic collateralized debt obligation (CDO) that bet on the very worst kinds of mortgage securities. Goldman got the fees and Paulson got a billion dollars for betting against those securities. The investors, trusting GS’s sales pitch, had no idea that Paulson was allowed to pick the most toxic securities to mix into the stew. As Paddy Hirsch of American Public Media’s “Marketplace” points out in this entertaining video , it’s like a gambler and a bookie colluding to field a horse they’ve groomed to lose. Eventually, GS was flushed out into the open by an angry mob of CDO investors and forced to cough up a record $550 million in penalties for “not disclosing the role of Paulson and Co. Inc. in the portfolio selection process and that Paulson’s economic interests were adverse to the CDO investors.” (more…)

Jonathan Tasini

By Jonathan Tasini
Union Leader/Organizer, Author, Strategist

Sometimes, I wonder whether we all live in a grand farce. But, actually, it’s a real-life story about a robbery of the people that continues every day — and today is no different. The robbers grow richer.

From the Wall Street Journal, a story headlined: “On Street, Pay Vaults to Record Altitude”:

When it comes to paychecks, Wall Street’s law of gravity is back in full force: What goes down must come back up.

In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal. The total is up 5.7% from $128 billion in combined compensation and benefits by the same companies in 2009.

The increase was fueled by a revenue rebound as the financial crisis recedes in the rearview mirror…

“Things are shifting back to where they were before,” said J. Robert Brown, a law professor at the University of Denver who studies compensation and corporate-governance issues.[emphasis added]

And:

Bank of America Chief Executive Brian Moynihan got a 67% bump in his total compensation for 2010, the company said Monday. Goldman Sachs Group Inc. tripled the salary of Chairman and CEO Lloyd C. Blankfein and increased his stock-based bonus 40% to $12.6 million.
In some respects, this is reaffirming news — reaffirming in that, for those of us who have argued that nothing much has changed, this is concrete evidence.

Let me make three points here. (more…)

Les Leopold

By Les Leopold
Author, “The Looting of America”

What a great year for Wall Street: profits up, bonuses up and, best of all, criticism down, especially from Washington. Somehow Wall Street has much of America believing its lies and rationalizations. We’re even beginning to forget that Wall Street is largely responsible for the economic mess we’re in.

So before we’re completely overtaken by financial Alzheimer’s, let’s revisit Wall Street’s greatest fabrications for 2010. (For the full story, please see The Looting of America.)

1.”Honest, we didn’t do it!”
Two years ago Wall Street’s colossal greed crashed our economy. Our financial elites created and spewed highly leveraged toxic assets around the globe. These poisonous “innovations” pumped up the housing bubble and Wall Street grew insanely rich in the process. When it all burst, we learned that the big Wall Street institutions that had caused the crash were far too big to fail — and too connected. High government officials came to their rescue with trillions in cash and guarantees — underwritten, of course, by we taxpayers. Everyone knew this at the time. But if you asked just about anyone on “The Street” they denied all culpability and pointed the finger everywhere else: Fannie, Freddie, the Fed, the Community Reinvestment Act, tax deductions for home buying, bad regulations, not enough regulations, too many regulations, too much consumer debt, the rating agencies, the Chinese — and on and on. Sadly, their blame-shifting strategy worked, bamboozling the media and people across the political spectrum. The GOP members of the Financial Crisis Commission are so drunk with this Kool-Aid that in their minority report, they refuse even to use the words “Wall Street” or “speculation” in assessing the causes of the crash. Hypocrites? Crooks? Morons? Take your pick. (more…)

Dave Johnson

By Dave Johnson
Fellow with Campaign for America’s Future

I have been writing about the Tea Party, and asking what they will do if/when the DC Republicans betray them.. CAF has set up a page for the Tea Party Getting Played series. This is the latest in the series.

So, how’s that new Tea Party Congress working out for Tea Party supporters who expected that the lobbyists were going to be cleared out, the “too-big-to-fail” Wall Street banks brought under control and laws enforced?

The election was Tuesday, and on Thursday the expected new Chair of the House financial services committee warned regulators to lay off of Wall Street, particularly Goldman Sachs and JPMorgan Chase, and not enforce the “Volker Rule” in the new Wall Street reform law. That’s right, told them not to enforce the law.

In Financial Times, US regulators warned on new bank legislation, (Matthew Yglesias c/o Brad DeLong):

Spencer Bachus, a potential Republican chairman of the House financial services committee, has fired the first salvo in a battle with regulators – warning them against harming US banks by curbing their trading activity.

. . . Mr Bachus says that a ban on proprietary trading – known as the Volcker rule – … in the new Dodd-Frank financial reform law will “impose substantial costs on the American economy and market participants” with “doubtful” benefits.

. . . The proprietary trading ban, named after Paul Volcker, the former Federal Reserve chairman who proposed it, was opposed by most Republicans when it was passed by Congress in June. It also restricts banks’ investments in hedge funds and private equity firms. (more…)

--------- Tula Connell --------- Photo by Joe Kekeris

By Tula Connell
AFL-CIO Managing Editor

When the Republicans take over the U.S. House in January, one of the first things on their agenda is payback to those who helped get them in office: Wall Street.

And they’ve already announced one way they plan to do that.

The financial reform legislation that President Obama signed into law in July gave regulators a significant tool to rein in gambling by big Wall Street banks. The “Volcker Rule,” named after former Federal Reserve Chairman Paul Volcker who proposed it, is aimed at preventing Big Banks from speculating on securities or other complex financial products (a.k.a. “proprietary trading”) and putting strict limits on their ability to bet on hedge funds and private equity funds.

Payback time. Wall Street wants House Republicans to remember who brought them to Congress

The Volcker Rule would help prevent taxpayers from having to bail out banks that make risky bets and lose, which is exactly what happened during the recent financial crisis. Bear Stearns bailed out two of its hedge funds for more than $3 billion shortly before it was taken over by JPMorgan Chase in a fire sale orchestrated by federal regulators. In March 2008, Citigroup spent $1 billion to bail out several of its struggling hedge funds. Six months later, U.S. taxpayers were forced to inject billions of dollars into Citigroup to prevent a systemic crisis.

Republicans, however, are more concerned with making sure bank executives keep getting richer than preventing taxpayer bailouts. According to the Financial Times this morning, Republican Spencer Bachus, a potential chairman of the House Financial Services Committee, sent a letter to federal financial regulators expressing concern that shareholders of Goldman Sachs and JPMorgan Chase “will be hurt because the banks will be less profitable.”

The Financial Stability Oversight Council, whose members include Tim Geithner, Treasury secretary, and Ben Bernanke, Fed chairman, is this week asking for public comments on how the rules should be written.

Volcker and some Democratic senators are urging a broadly defined ban on proprietary trading and strong limits on Big Bank’s ability to invest in hedge funds and private equity. If regulators take a strong stance on the Volcker Rule, as Volcker and the Democrats have urged, banks will have to take a step back from making bets on complex financial products like derivatives and they will have more money to lend and invest in American businesses that create jobs for hardworking people.

***

Re-posted from the AFL-CIO Blog

Michael Winship

By Michael Winship
Senior writer at Bill Moyers Journal on PBS

I attended a screening this week of Alex Gibney’s new documentary, Client 9. It’s the story of the rise and fall of New York State Governor Eliot Spitzer, brought down by imperial hubris and a reckless penchant for ladies of the evening.

Gibney, an Oscar-winning filmmaker, creates a fascinating narrative. Both he and Spitzer readily concede that it was the former governor who did himself in; he haplessly provided the guns and ammo that polished him off. But there is a compelling case made suggesting that there were plenty of enemies, both in politics and business, with a motive to see him destroyed, plus the wherewithal and contacts to help grease the skids.

After all, it was Spitzer who, as state attorney general and self-appointed “Sheriff of Wall Street,” went after corruption and greed in the finance industry, exposing investment bank stock inflation, securities fraud, predatory lending practices, exorbitant executive compensation and illegal late trading and market timing perpetrated by hedge funds and mutual fund companies. Some of these practices were, of course, major factors in the calamitous financial follies of 2008.

One of Spitzer’s targets was Maurice “Hank” Greenberg, former chair and chief executive officer of the gigantic insurance company AIG. He was forced to resign by the AIG board in March 2005 after Spitzer charged Greenberg and the company with manipulative behaviors in violation of insurance and securities laws. Ultimately, criminal charges were dropped but when AIG collapsed during the ’08 meltdown, ultimately receiving the largest of the Federal bailouts — 182 billion taxpayer dollars – Greenberg said he was “bewildered” that things could have gone so wrong.

In Client 9, I was struck by a statement attributed to Greenberg, who in his AIG heyday supposedly was fond of joking, “All I ask for is an unfair advantage.”

Just three days before the screening, The New York Times had reported that one of the largest donors to a foundation run by the US Chamber of Commerce is a charity run by Greenberg.

According to the Times, “The charity has made loans and grants [to the chamber's foundation] totaling $18 million since 2003. U.S. Chamber Watch, a union-backed group, filed a complaint with the Internal Revenue Service last month asserting that the chamber foundation violated tax laws by funneling the money into a chamber ‘tort reform’ campaign favored by AIG and Mr. Greenberg. The chamber denied any wrongdoing.

“The complaint, which the chamber calls entirely unfounded, raises the question of how the chamber picks its campaigns, and whether it accepts donations that are intended to be spent on specific issues or political races.” (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

Next Tuesday Americans will be deciding whether to hand over even more of our government to corporations that have been plundering America — such as Goldman Sachs, JP Morgan Chase, Citibank, Wellpoint insurance, Massey Energy, and Halliburton, the giant oil services company.

Not every large corporation is irresponsible, of course, but plunderers that get away with it gain a competitive advantage over the more responsible, and thereby lead a race to the bottom.

Case in point: The staff of the presidential commission investigating the BP oil spill has just revealed that Halliburton executives knew the cement it was using to seal BP’s Deepwater Horizon oil well was likely to be unstable but didn’t tell BP or act on the information.

In a letter to the commission’s seven members, the staff found that the failure of the cement was a key factor in the blowout that caused millions of barrels of crude oil to escape into the Gulf of Mexico. (Not the sole factor, of course; most of the blame for the disaster, says the staff, still rests with BP and Transocean, the company BP hired to drill the well.)

Halliburton has not exactly sat out this election. Last May, as Congress began investigating its role in the disaster, its political action committee made 14 contributions — 13 to Republicans and one to a Democrat. Many were involved in the investigation; others had responsibility for overseeing oil drilling in the Gulf. It was the biggest donation month for Halliburton’s PAC since September 2008. (more…)