The Republican vs. Democrat charade — good cop, bad cop nonsense — is a mere smokescreen. Don’t be confused by obsolete preconceptions and propaganda. There is one war being fought, The Global Economic Elite Vs. The People. (Source)
It should be clear to anyone with a little more intelligence than a turnip that the bailouts were nothing more than calculated theft from ‘the people’ in order to cover the inconvenient results of Wall Street’s greed and mistakes and to allow for wholesale robbery in name of protecting the system. (Source) Consider Goldman Sachs, for example (Source2):
- Investment: Goldman Sachs is the 3rd largest contributor to House and Senate campaigns–and to the Obama Administration
- Rise to power: Goldman Sachs successfully lobbied the Obama Administration and Congress to have 48 Goldman Sachs operatives appointed to key financial administration positions (updated list here: An Updated List of Goldman Sachs Ties to the Obama Government).
- Payouts: Goldman has taken more than $20 billion in taxpayer cash through bailouts, payments and backstops; BUT, what a lucky coincidence, in 2009 Goldman paid themselves $16.2 B in “bonuses”; plus Goldman Sachs paid out $5 billion more in bonuses in the first three months of 2010 [Without Governments bailouts Goldman’s 2009 bonuses would have been zip, zero, ziltch.]
- It’s systemic: The nation’s six largest banks set aside $140 billion for executive compensation in 2009–which works out to an amount equal to over $1000 from every household in America, just for Wall Street’s 2009 bonuses! . . . and Wall Street to get $144 Billion in Bonuses for 2010.
- But, it’s all OK because, “We Serve the Banks“–see also Econ 101, and At a Glance.
After the public’s money has been given away to bail out the rich, of course there’s nothing left to pay for much else . . . Meanwhile,
There’s been a wave of propaganda over the last couple of months, which is pretty impressive to watch, trying to deflect attention away from those who actually created the economic crisis, like Goldman Sachs, Citigroup, JP Morgan Chase, their associates in the government who—Federal Reserve and others—let all this go on and helped it. (Source)
For example, Mish Shedlock of the blog Global Economic Trend Analysis, routinely scapegoats public sector workers by arguing that state and local finances are completely broken because government workers are overpaid. But apparently public workers are not the problem in states like California–Mish himself writes in his blog that:
California could fire all 200,000+ state workers on forced furloughs and still not balance its budget! http://globaleconomicanalysis.blogspot.com/2009/07/furloughs-drop-in-bucket-towards.html
Let’s try and follow Mish’s logic:
- Mish argues that public employees are overpaid.
- Mish also argues that firing all State employees would not solve the State of California’s economic problems.
- But, according to Mish, state and local finances are completely broken because government workers are overpaid.
Nonsense. The problems lie elsewhere. This is scapegoating.
To understand Mish’s scapegoating of public workers take a look at Mish’s almost religious bias against all public workers (and, coincidentally, his bias in favor of of privateers) when he writes:
However, being the ever-optimist, I feel obliged point out the bright side of things:
- Over the long haul, the fewer the government workers the better.
- The bigger the miss in budget expectations, the more public workers will have to be fired to balance the budget.(Source)
It is not workers, public or private, who are bankrupting us.
The States are now in deep economic trouble. Nobody is talking about the shrinking pie and why it is shrinking.
What happened? Tax payers are footing the bill for all the overpaid executives at all the bailed out Wall Street firms, at GM, GE, AIG, Fanny and Freddy; for Wall Street’s $140 billion dollar bonuses in 2009 and 2010; for all the billions and billions of dollars in losses they just took; and for all the trillions in losses they will take in the near future. After the public’s money has been given away to bail out the rich, of course there’s nothing left to pay for much else . . .
A unionized public employee, a tea party activist and a CEO are sitting at a table with a plate of a dozen cookies in the middle of it. The CEO takes 11 of the cookies, turns to the tea partier and says, “Watch out for that union guy… he wants a piece of your cookie!
It should be clear why are public workers being asked to “make sacrifices”:
- Study says “Most corporations pay no U.S. income taxes.”
- Corporate Tax Revenues Nearing Historic Lows As A Percentage Of GDP
- Financial services as a share of US GDP has more than tripled in the last 60 years. (Source)
- CEO salaries are still running at double the 1990s CEO pay average after inflation adjustment according to the 17th annual executive compensation survey, CEO Pay and the Great Recession by the Institute for Policy Studies. (Source: CBS News)
- Life at the Top: Endless Obscene Bonuses for Execs, Everyone Else Getting Shafted
- Middle class workers in the United States, when you adjust wages for inflation, make less money today than they did back in 1971.
Source: Institute for Policy Studies, Executive Excess 2009, p. 2.
Perhaps the fact that most corporations pay no U.S. income taxes has something to do with government deficits?
Perhaps it is the squeezing of workers’ pay, the moving of jobs off-shore, and the laying off of workers that explains State’s declining tax bases and the undermining of State economies?
Perhaps it is the rapidly expanding financial services industry, Wall Street bailouts, and the grossly over-paid CEOs who are selfishly sucking the life blood out of our economy?
First they put economic pressure on all Americans by shipping jobs overseas. Then they enact policies that bring on massive levels of state and federal debt. Then they give us a devastating recession to ratchet up economic insecurity. (Source)
Wall Street’s corrupt banks have lost their moral compass … their insatiable greed has become a deadly virus destroying its host nation … their campaign billions buy senate votes, stop regulators’ actions, manipulate presidential decisions. Wall Street money controls voters, runs America, both parties. Yes, Wall Street is bankrupting America. (Source)
Why ignore the greedy elephant in the economy? Obsession with public workers’ compensation sidesteps much bigger issues–although it may serve to distract attention away from those responsible. As Mish’s readers point out in their posts:
Mish, the issue is not whether two wrongs make one right. The issue is your overweighed reporting on unions, and by comparison, your underweight reporting on Wall Street fraud. You have reported on the Wall Street fraud and you are not pro-fraud at all. But by comparison, your zeal for union misbehavior is way out of bounds compared to other issues. (Source: Comment on Mish’s blog)
Mish continues to ignore the big hole on the wall, and keeps repeating “fix the lock”. The number one problem that leads to all other problems is collusion between wall street banksters and corrupted government. All else is bullshit designed to disguise this and confuse everyone else. (Source)
Those dang unions. First they sell fraudulent mortgages, and fraudulent securities, bringing down the world economy, and now they are paying themselves huge bonuses with taxpayer dollars. Damn them. . . . It seems that Mish and others are more than willing to bash the little guy, but are less active in demanding similar treatment for the “elites.” . . . Private citizens have had enough of overpaid, crooked investment bank employees with bonuses most private workers can only dream about. . . . C’mon. Mish. You have the chops to take on the real criminals here – the Wall Street sociopaths who committed fraud so massive as to plunge the world into an economic depression. Why continue to pick on the working stiff? (Source: Comments by Blurt)
Pension money has been siphoned away by Wall Street (90%) and public union bosses (10%). . . It would be interesting to know the contribution to the union pension funds’ shortfall caused by the purchase of fraudulently rated securities sold by former US Treasury Secretary and unprosecuted criminal Hank Paulson and his Wall Street criminal ilk. Shouldn’t these pension funds be suing Goldman Sachs, JP Morgan and the other sellers of fraudulently rated toxic securities?
What sort of person does not think there is anything wrong with asking the folks that are tasked with teaching our children to take a 20% cut on a 50,000 annual salary, but think it’s terrible idea to asked millionaires to pay an additional 3% more in taxes?
Seriously, think about this: They’re going to cut pensions on people who make $25k per year, while all-time record-breaking profits and bonuses are raining down on the economic top one-tenth of one percent. That is sick and twisted. Lloyd Blankfein gets five-times the annual salary of Wisconsin public employees when he simply gives a 30-minute speech on “doing God’s work.” (Source)
Inconvenient Data: Private companies contribute about 3.5% of total employee compensation to pension/401k plans. Pension contributions from state and local employers vary between 2.9% and 3.8% of total compensation. So much for the “the union pension contracts are killing state budgets” theory. More accurately, states are facing pension shortfalls because they entrusted the funds to Wall Street. We all know how that turns out, time after time. (Source)
Scapegoating public workers is not the answer. Let’s be fair and put all compensation in perspective.
Wonder what a chart of top financial companies pay and benefits compared to common folk would look like, guess it would have to be done as exponential or on a decibel or Richter Scale as real scaled data would make it way too big to be viewed. (Source)
The much, much greater disparity, and greater drain on the US economy, is due to the huge and growing gap between:
- Levels of US top management’s compensation package (pay, benefits, bonuses, zero interest loans, stock options, etc.), and
- That of ordinary US workers–private or public.
A Map of the Territory: The GOP’s Wisconsin attack is part of a larger strategy they have aimed at splitting the middle class from the workers, pitting unionized workers against non-unionized workers, trying to set the general public against the demonized government employees, dramatizing the gulf between benefit seeking oldsters and younger workers and to set the working middle class against the poor. Why? To distract the 90% from the rapine of the uppermost 10%. (Source)
Excess Compensation for CEOs and Top Management
CEO compensation is still running at double the 1990s CEO pay average after inflation adjustment. (Source: CBS News)
Consider the excess billions given to top management in just the financial sector (the FIRE sector = finance, insurance, real estate sector). How many billions in “bonuses” have been paid? For example:
- Wall Street to get $144 Billion in Bonuses–that’s an amount more than $1000 from every US household
- UK banks given go-ahead to pay unlimited bonuses
- $10 Billion For Bonuses At JPM
- Goldman Defies Public Fury In Another £10b Bonus Payout
- Wall St. says “Thanks to each and every US family for our $140 Billion bonus.”
- Economic Outlook in “Stick Figures” that Anyone Can Understand
- When Obama criticizes bailed-out banks like BoA for their huge bonuses, but fails to take action to stop them, isn’t he just admitting who really runs the country?
Just like in 2009, investment banks will once again in 2010 get bonuses of over $140 billion. That is an amount equal to more than $1000 from every US household in 2009, and another $1000 from every US household again in 2010. (Source)
Look at total US dollar outlay for of “excess compensation and benefits” for these CEOs:
|Company||CEO in 2009||2009 total compensation||Layoffs2008-10|
|1. Schering-Plough||Fred Hassan||$49,653,063||16,000|
|2. Johnson & Johnson||William Weldon||$25,569,844||8,900|
|3. Hewlett-Packard||Mark Hurd||$24,201,448||6,400|
|4. Walt Disney||Robert Iger||$21,578,471||3,400|
|5. IBM||Samuel Palmisano||$21,159,289||7,800|
|6. AT&T||Randall Stephenson||$20,244,312||12,300|
|7. Wal-Mart Stores||Michael Duke||$19,234,269||13,350|
|8. Ford||Alan Mulally||$17,916,654||4,700|
|9. United Technologies||Louis Chenevert||$17,897,666||13,290|
|10. Verizon||Ivan Seidenberg||$17,485,796||21,308|
Chief executive officers who cut the most jobs during the recession earned significantly more than their peers, according to a study released Wednesday by the Institute for Policy Studies.
The CEOs of the 50 firms that have laid off the most workers since the onset of the economic crisis took home nearly $12 million on average in 2009, 42% more than their peers at S&P 500 firms, according to CEO Pay and the Great Recession, the 17th in a series of annual Executive Excess reports from the progressive think tank.
Combined, the CEOs at those 50 firms made $598 million and laid off 531,363 workers — accounting for more than three quarters of the 697,448 announced layoffs at the top 500 firms. The study also found that 72% of them announced their mass layoffs during periods of positive earnings reports, and that those companies enjoyed a 44% profit increase in 2009.
“These numbers all reflect a broader trend in Great Recession-era Corporate America: the relentless squeezing of worker jobs, pay, and benefits to boost corporate earnings and maintain corporate executive paychecks at their recent bloated levels,” the study authors said. (Source)
Commentator, Les Leopold, in 2010 noted:
Wall Street is awarding itself $150 billion in bonus money…..and it comes from us!
That’s $500 for every man, women and child in the country — $2,000 for a family of four. (Maybe we should try deducting it from our income taxes as a charitable donation.)
Had we not bailed out the financial sector, there would be no bonus pool this year. Zip, zero, ziltch.
Wall Street, and no one else, crashed the economy through its fantasy finance extravaganza. Wall Street went begging for subprime debt in order to create and market their new financial securities, the most profitable activity in their history. As a result of their securitization casino, which leveraged bet upon bet, the housing market turned into a bubble and finally burst. Wall Street had miscalculated, big time.
We gave the Wall Street banks gigantic loans and enormous guarantees on their toxic assets. We gave them TARP. It all totaled to more than $12 trillion, with most of it still in play, even after the TARP repayments. (See Nomi Prins’s excellent accounting..)
Yep, that’s it
Wall Street was saved from bankruptcy, including Goldman Sachs which now cavalierly insists that it didn’t really need the bailout money (yet it took $12.9 billion of taxpayer support via AIG, and tossed it into its bonus pool.) Wall Streeters actually think they’ve earned the $150 billion in bonuses through their own cleverness. Think again. It’s nothing more than taxpayer welfare. (Source)
Where should we be more concerned?
The supposed national cost burden due to labor unions’ “extra benefits” is trivial compared to the national overhead cost burden of bailout subsidies–which magically turn into billions in “bonuses” for CEOs and top management.
Let’s do simple calculations:
There are about 17 M US unionized workers in 2008 who each earn on average $40k/yr in personal income (U.S. Department of Labor’s Bureau of Labor Statistics).
17 M union workers X $40,000/yr salary = $680 B
Estimated union fringe benefits (health, pension, etc.) = 30% of salary
Estimated non-union fringe benefits (health, pension, etc.) = 20% of salary
“Excess” union benefits over non-union benefits = 10% of salary
$680 B X 10% = $68 B annual cost of “excess” Union benefits
Hmmmmm, $68 B is less than half the 2010 bonuses given to just Wall Street. (Source: Wall Street to get $144 Billion in Bonuses) Was Wall Street’s $144B a well earned “bonus” for hard working, non-union folks? As Les Leopold correctly points out, “Had we not bailed out the financial sector, there would be no bonus pool this year. Zip, zero, ziltch. ” (Source)
Where should we be more concerned–top management, or private workers, or public workers?
OF COURSE! It’s those damned greedy unions and their excess benefits! It’s their fault.
Is anyone surprised to learn that “excess” total dollars paid out to just the finance sector top management in the US (alone) far, far exceeds any reasonable estimate of the supposed “excess” paid out to all public sector employees across all of America?
Why is it that teachers, government clerks and other public employees are asked to “make sacrifices for the common good,” but people making more than a million a year can’t be asked to make ANY sacrifice at all.
The Bankers, and Wall St. are bailed out, while the States bleed out. (Source)
Be fair. Compare excesses of top management vs. private sector vs. public sector. How many billions of dollars of excess has been handed over to top management in the US? Compare that to the pittance that private or public workers get. When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971.
Anger at public employees (i.e., the government rank and file) is exaggerated to the extent that the lion’s share of “excess” has gone to CEOs and top management.
Do either private or public employees really deserve our anger?
Is the public and private worker compensation “issue” just a tempest in a teapot used for the purpose of deflecting attention away from the real culprits?
Are public workers being set up as scapegoats?
Comparing Private and Public Sector Compensation
Contrary to what you may have heard, public-sector workers in Wisconsin and elsewhere are paid somewhat less than private-sector workers with comparable qualifications, so there’s not much room for further pay squeezes. (Source: NY Times)
The Federal Employees Pay Comparability Act of 1990 (FEPCA) requires OPM to regularly provide comparability of private and public sector positions in different localities around the country, for purposes of setting the locality adjustment component of General Schedule compensation. You may disagree with their methodology, but it represents hard and substantial numbers. For the 2009 numbers, used for the 2010 locality adjustments, see: http://www.opm.gov/oca/payagent/2009/PayDisparities.asp . (Source)
Jobs in the public sector typically require more education than private sector positions. State and local employees are twice as likely to hold a college degree or higher as compared to private sector employees. Only 23 percent of private sector employees have completed college, as compared to about 48 percent in the public sector.
Wages and salaries of state and local employees are lower than those for private sector employees with comparable earnings determinants, such as education and work experience. State workers typically earn 11 percent less and local workers 12 percent less.
During the last 15 years, the pay gap has grown: Earnings for state and local workers have generally declined relative to comparable private sector employees.
The pattern of declining relative earnings remains true in most of the large states examined in the study, although there does exist some state level variation.
Benefits make up a slightly larger share of compensation for the state and local sector. But even after accounting for the value of retirement, healthcare, and other benefits, state and local employees earn less than private sector counterparts. On average, total compensation is 6.8 percent lower for state employees and 7.4 percent lower for local employees than for comparable private sector employees.
For a long time, there has been a compensation trade-off in public sector jobs – better benefits come with lower pay as compared with private sector jobs. This study tells us that is still true today. What’s striking is that on a total compensation basis looking at pay and benefits; employees of state and local government still earn less than their private sector counterparts. – Beth Almeida, NIRS Executive Director (Source)
I do not comprehend why all of you people doing the union hate thing do not want to understand how Germany does it, they have strong unions, high living wages and healthcare, their factories make quality things purchased throughout the world. . . yet none of you who are complaining [about unions] have any curiosity on why we can’t do the same here. (Source)
The real question I have is, why the race to the bottom?
You [Mish] and a lot of like minded individuals feel that any American who earns a decent living, $40-60k is a evil person who is undeserving of their compensation. That because their salary is derived from providing a service to the public good, that these people are evil. To me, evil is providing a $120 million tax cut to corporations i.e. Wisconsin, and then expecting the public employees to cover this fascist style of governing with wage and benefit concessions.
It really is amazing to me Mike, that you would subscribe to promoting this type governing. I understand the need to reduce expenses, but to do so on the shoulders of the middle class, to the benefit of Corporate Amerika, is to me, disgusting. (Source)
Just-In-Time: The future for the American worker is not a union job, nor anything resembling a traditional job. The future is “just-in-time” work as a self-employed day worker with no benefits, no vacation, no health coverage, no seniority and no security. Temps. (Source)
In a Labor Day address in 1980, Ronald Reagan said:
These are the values inspiring those brave workers in Poland … They remind us that where free unions and collective bargaining are forbidden, freedom is lost. (Source)
The Scam in Wisconsin
What about the attack on public employees in Wisconsin? Rush Limbaugh and his ilk, including Mish, are using unions as a smokescreen to hide yet another scam. Right now everyone thinks this is about collective bargaining and the rights of the worker. BUT, what Wisconsin Governor Walker really wants is for Democrats to just “compromise” and pass his budget “as is”–a budget that authorizes selling off of Wisconsin’s state-owned power plants for pennies on the dollar in closed unsolicitated bids for which there will be no oversight.
Here’s how the scam is set up:
1) Koch Brothers get their puppet Governor Walker in power
2) Governor Walker gins up a crisis
3) Democrats and Progressives take the bait and counter-protest on collective bargaining
4) Governor Walker will compromise on collective bargaining if the rest of the budget is passed as is
5) Bill passes, with trojan horse give-a-way to the Koch Brothers nested in
6) Koch Brothers will buy Wisconsin state-owned power plants for pennies on the dollar in closed unsolicitated bids for which there will be no oversight
7) Koch Brothers get the best vertical monopoly in a generation (Source)
Look at how easy it is to solve Wisconsin’s budget deficit, as Paul Jay stated on The Real News Network:
“How about Wisconsin passes a law that takes the estate tax level back to 2001? And let’s say the first million’s tax free. The collective net worth of the esteemed group on the Forbes 400 from Wisconsin comes to around $21.7 billion. That would make Wisconsin’s share of their estates at the time of passing around $4 billion. We just paid down the debt.”
- The Koch Brothers’ End Game in Wisconsin
- Wall Street Pay to Hit a Record High This Year (dailyfinance.com)
- “Executive Pay Defies Gravity – Wall Street Journal” and related posts (economicpopulist.org)
- GM to dole out $4,000 bonus checks — but not to U.S. taxpayers (content.usatoday.com)
- “Government Motors Gives Record Bonuses” and related posts (bobcesca.com)
- Les Leopold: Financial Socialism by and for Wall Street Elites? (huffingtonpost.com)
- Wall Street Pay Hits Record Highs (ritholtz.com)
- Global bonus watch: Ireland to Wall Street (finance.fortune.cnn.com)
- For Big Investment-Banking Bonuses, Go East, Young Banker (blogs.wsj.com)
- Scapegoating workers (thehill.com)
- Wisconsin and elswhere: Union busting as ‘Seeds of Despotism’ (seattlepi.com)
- “Record Bonuses on Wall Street” and related posts (weeklyworldnews.com)
- Life at the Top: Endless Obscene Bonuses for Execs, Everyone Else Getting Shafted (alternet.org)
- Naomi Klein on Anti-Union Bills and Shock Doctrine American-Style: “This is a Frontal Assault on Democracy, It’s a Kind of a Corporate Coup D’Etat”
- Do you work weekends? If not, thank a union Do you have to work 70 hours per week for poverty pay? If not, thank a union. Got benefits? Thank a union. They are the ONLY powerful organized force against the likes of the super rich bastards like the Koch Brothers. (dailykos.com)
- The Solution to Our Budget Problems Is So Obvious: We Need to Raise Taxes on the Rich, ASAP (alternet.org)
- New York State is broke, but Gov. Cuomo joins GOP push to spare wealthy. That’s right, a new, astonishing trick for his recovery plan – tax cuts for the wealthy. (nydailynews.com)
- The predators at the top, billionaires and millionaires, are pitting ordinary workers against one another. So we’re left with the bizarre situation of unionized workers with a pension being resented by nonunion workers without one. (nytimes.com)