Radio commentary, January 29, 2009
How about that for bipartisanship? All that seduction from our new president, sweetened with tax cuts and lubricated with cocktails at the White House, and still the stimulus package didn’t get a single Republican vote in the House. They won’t play bipartisan. They’re stubborn as hell and stick to their cretinous principles. You’ve got to respect them for that. It may be because they have some principles, as nutty as they can be.
Meanwhile, the infrastructure component of the stimulus bill has shrunk, and is really not up to the task. According to the 2009 report on the nation’s infrastructure from The American Society of Civil Engineers, our infrastructure overall gets a grade of D. Out of 15 components, the highest grade goes to solid waste, which gets a C+. There’s one D+, five Ds, and five D-minuses. They estimate that it would take $2.2 trillion to bring our national infrastructure up to snuff. The bill that passed the House has only about $40–60 billion, depending on whose estimate you believe, for infrastructure. And only about $10 billion is for mass transit. Barely a start, even.
Turning to another disappointing spending program… Yeah, it’s nice to see that the Obama administration forced Citigroup to cancel the order for a $50 million executive jet. But otherwise, life goes on as usual. An Associated Press review of some 200 banks that got TARP money from Washington found that 87% of their top execs are still on the job, even though many of them made disastrous decisions that drove their institutions into the ground. Wells Fargo, a heavy investor in subprime mortgages which announced a $2.6 billion dollar loss for the fourth quarter of 2008 that got $25 billion from the gov, not only kept its CEO on the job, they waived their mandatory retirement age for him. Asked for comment by AP, a Wells Fargo spokesperson praised the bank’s “unchanging vision.” In fact, the comments are some of juiciest parts of the AP story, which ran on Tuesday. A flack for Cleveland-based KeyCorp, another major subprime player, said: “”The on-the-record comment I would make is that we declined to comment even though we’d like to, because we don’t have time.” Many of these banks have shed hundreds, even thousands of workers—but not the guys at the top. We’ll see if the new admin twists some arms to change this, but I have my doubts.
On the nonchanginess of changiness, the new Treasury Secretary Tim Geithner, who presided over several major mistakes while he was president of the Federal Reserve Bank of New York, issued some rules on Tuesday restricting contacts with lobbyists—and then hired a former Goldman Sachs lobbyist as his chief of staff. Goldman’s tentacles continue to extend deep into the government; early in the week, the New York Fed—the most important of the twelve regional banks in the Federal Reserve System, because of its intimate relations with Wall Street, announced that Geithner’s successor as president will by William Dudley, a former Goldman Sachs economist. Dudley’s really not a bad guy at all, but it’s getting harder to tell the difference between Goldman and the government.
Meanwhile, the New York State Comptroller’s office (PDF here) revealed on Wednesday that Wall Street paid out over $18 billion in bonuses for 2008, an average of $112,000 per worker. (That’s almost twice the spending on mass transit in the stimulus bill!) That average is very deceptive, since clerical workers might get as little as $0, while the big guys get in the millions. But these are still big numbers. While the average is down 36% from last year, it’s still the sixth-highest on record, after adjusting for inflation. It’s 15% higher than the 1999 average, which was just before the peak of the dot.com boom. And it’s almost four times the 1987 average, which was the peak of the 1980s boom. Clearly, once you reach a certain level in American society, there’s no price to be paid for failure.
Sam Stein of The Huffington Post got hold of a recording of a conference call among some retailers and Wall Street analysts trying to build corporate opposition to the Employee Free Choice Act, a bill in Congress that would make it a lot easier to organize workers into unions. Instead of having to go through a complex electoral process, which employers can mess with to no end, all you’d need is a majority of workers signing cards saying they’d like to join. As you might imagine, employers hate this. But one of the interesting things about this call is the frustration expressed by participants at the passivity of so many CEOs. It’s clear from this—and many other instances—that capitalists would rather run their businesses and make money than get involved in politics.
As Stein points out, at least two of the participants were from firms that got federal bailout money—Bank of America and AIG. Nice, eh? But the star of the conference call is Bernie Marcus, the co-founder of the anti-union Home Depot. Here are some choice samples from the call (transcript lightly edited for clarity):
“To pay for the programs that they’re going to put in, they’re going to have to get the money somewhere, and the unions will go after anybody who works for a living…there’s no question about it. Joe the Plumber, whatever the hell he does for a living, is going to pay for this in the future along with everybody else. This is the demise of a civilization, this is how a civilization disappears…. If a retailer has not gotten involved in this, if he has not spent money on this election, if he has not sent money to [Minnesota Senator] Norm Coleman and all these other guys, they should be shot…. Trying to get CEOs to understand this, so far, some of them have come out of their deep sleep, but most of them have not come out of their deep sleep. Hopefully, calls like this will stir up the pot. As a shareholder, if I knew the CEO of the company wasn’t doing anything on this, on something that was going to have a dramatic effect on my business, I would sue the son of a bitch.”