It's hard to tell if the Washington Post is being slyly critical or willfully simple in this article about the sudden realization that the Bush administration and Treasury department switched emphasis in a way that means Wall Street financiers get to sidestep the provisions outlined for executive compensation limits:


Executive Pay Limits May Prove Toothless
Loophole in Bailout Provision Leaves Enforcement in Doubt


"But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.

Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.

"The flimsy executive-compensation restrictions in the original bill are now all but gone," said Sen. Charles E. Grassley (Iowa), ranking Republican on of the Senate Finance Committee.
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The modification reflects how the rapidly shifting nature of the crisis and the government's response to it have led to unexpected results that are just now beginning to be understood. The Government Accountability Office, the investigative arm of Congress, issued a critical report this month about the financial industry rescue package that said it was unclear how the Treasury would determine whether banks were following the executive-compensation rules.


"Rapidly shifting nature"? "Unexpected results"? Does it not defy belief that the Bush administration did not mean from the start to apply its giveaway of taxpayer money in a method guaranteed to protect the wealth of the wealthy without limits? That this one sentence change was just pure happenstance?

Paulson initially came to Congress with an authoritarian 3 page plan to bilk taxpayers to pay off Wall Street recklessness at public expense, accontability be damned. Though he got the money with a few strings attached, he has managed to sidestep or neutralize these tame restrictions. The result is precisely what the Bush administration wanted all along: the financial sector has been protected, risk transferred to a bankrupt state, and zero accountability has been established. Pretty neat, ain't it? One sentence can do a lot.

It is interesting that there was no similar difficulty in understanding the position of the Republican party in seeking to lower the wages of the autoworkers by holding a gun to the head of the whole auto industry. To them it is equally unacceptable to limit the stratospheric pay of a CEO who has produced losses of billions of dollars as it is for someone working in an assembly facility to earn a decent wage that is competing with the race-to-the-bottom wages current in the union-free states welcoming foreign auto corporations. To limit pay on the wealthy is socialistic, to be avoided with lazy disregard for the letter and spirit of the law. To limit the pay of working peoples is to be done with firmness and dispatch, a great defense of liberty.

Here is John Judis making an excellent point in this regard, and seeing what it portends:

"OK, let me get this straight. Tennessee Republican Senator Bob Corker, backed up by Alabama Senator Richard Shelby and South Carolina Senator Jim DeMint, made it a condition of the auto companies receiving help that the United Auto Workers agree to a reduction of wages and benefits to the level of those paid by the Japanese companies that have plants in those senators’ states. Desperate for the deal, the UAW and the Democrats agreed to a phased-in reduction, but the Republicans insisted on an immediate cut. The deal broke down, and Republicans--aided by a few Red State Democrats (e.g. Baucus, Lincoln, Tester)--used a filibuster to kill the bill, which would have passed on a majority vote.

Here’s what bothers me. Japanese companies, which for years have benefited from one-way deal by which they could sell cars in the U.S. while U.S. companies were stymied in selling cars and trucks in Japan, set up non-union plants in low-wage, low-education, right-to-work states where they can pay less wages and benefits to their workers. Of course, in Japan, these same companies recognize and work with unions, but not here, where they have a chance to undercut American firms that work with unions. Corker and these other great patriots want to allow these Japanese companies to dictate the wages and benefits that American companies pay their workers. It’s despicable. Imagine, for a moment, American companies being allow to operate in this manner in Japan or South Korea. It would not happen.

Of course, this is not just about automobile companies. If you look at the history of the Great Depression, what tipped that event from a global recession to depression was precisely a series of dumb, craven--or in Keynes’ word, “feather-brained”--moves by politicians blinded by ideology or by narrow self-interest. An interest rate hike here, a balanced budget there, a spending reduction or two, and we went from ten to twenty percent unemployment. Don’t imagine for a moment that the failure to bailout the auto companies isn’t one of those feather-brained moves."

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