Today's Wall Street Journal reports that President Obama has placed limits on the salaries of executives at firms that are receiving large-scale bailout funds from the Federal government:

Under the new rules, companies that receive "exceptional assistance" from taxpayers may not pay any top executive more than $500,000 a year. Any additional compensation would have to be in restricted stock that will not vest until taxpayers have been repaid. (Wall Street Journal)

No one can object to limiting the salaries of bankers; but this announcement raises many questions.

First, while penalizing some bankers, who gets the money that they would have gotten? Shouldn't this money be turned over to a fund to help the millions facing foreclosure and unemployment.

Second, if the government can use Executive power to impose its will on private businesses, why stop there? Why not order them to stop foreclosures and plant closings? RealtyTrac currently lists 1.5 million foreclosed homes being held by banks in the U.S.

Third, why not demand that banks free up bailout money and other funds, to make them available in low-interest loans to workers, students, and families in desperate need of a real bailout. The whole justification of the TARP was to free up money to 'get the economy going again,' but banks are not lending money. They've even refused to disclose what they've done with the money that they've received. In front of Congress, the new Secretary of the Treasury Timothy Geitner has defended the banks' refusal to tell what they've done with $350 billion of taxpayers' money.

One thing that is known about what they did with some of the money, is that they made loans of $25.4 billion to finance the merger between pharmaceutical giant Pfizer and Wyeth.

According to the New York Times:

Pfizer’s bid is being financed by four banks that received federal bailout money: Goldman Sachs, JPMorgan Chase, Citigroup and Bank of America, the people involved in the deal said. Such banks have been criticized for not doing more lending since they received the government aid.

Barclays, which acquired Lehman Brothers out of bankruptcy in the fall, is also providing financing, these people said.

Fourth, while in Miami, more than 1,000 people lined up for 35 firefighting jobs, and the Los Angeles Times reports that U.S. companies announced 241,749 layoffs last month, it has come to light that U.S. financial institutions are sitting on $3.9 trillion, which is more than four times the amount of the projected stimulus package. This money is sitting in money market accounts, earning interest for wealthy investors. The Federal government should use the same authority that it used to limit executive pay to force these investors and institutions to make this money available to put people back to work and back in their homes.

Labels: bailout, Bank of America, Citigroup, executive pay, foreclosures, Goldman Sachs, JPMorgan Chase, Lehman Brothers, loans, merger, pfizer, stimulus program, tarp, wall street, wyeth

According to the Boston Globe, the "stimulus" package currently being debated in the Senate will create, at most, 3 or 4 million jobs.

As part of its hard sell, the White House this afternoon released job-creation estimates for Eastern states from the economic recovery package.

It said that of the 3 million to 4 million jobs the plan would save or create, 800,000 of them would be in 10 Eastern states.

The estimates include 83,000 jobs in Massachusetts, 44,000 in Connecticut, 17,000 in New Hampshire, 16,000 in Maine, 13,000 in Rhode Island, and 8,000 in Vermont.

Three or four million jobs will not even put a dent in the growing unemployment crisis.

The official unemployment rate, which was 7.2 percent at the end of 2008, is expected to shoot up rapidly in the coming months. However, there is a less publicized but also official figure called “total” unemployment—and it has already reached 13.4 percent. This number includes people who couldn’t get anything but part-time work when they need to work full time, plus the millions who have stopped looking altogether, termed “discouraged” workers. This means, out of a total workforce of 154 million, that 20 million workers are unemployed.

At the present rate, millions more will lose their jobs in the coming months. Last year 2.6 million lost their jobs—a huge number but still deceptively low when trying to project what will happen this year because, of the 2.6 million, 2 million lost their jobs just in the last four months of 2008.

The 20 million workers already considered unemployed or underemployed—and this figure is sure to rise in the new year—will have to wait for the stimulus package to go into effect. Meanwhile, 1.5 million people enter the work force each year. This means that the "stimulus" program won't put any dent in the 20+ million people who will be out of a job.

Working people and their organizations need to organize to demand a real jobs program - one that puts people directly to work, instead of just throwing money at big corporations and government bureaucracies.

Labels: senate, stimulus program, total unemployment, unemployment

Labels: bailout, banks, fred goldstein, low wage capitalism, socialism, treasury department, wall street