Wall Street Making Noise, Wall Street Hiding Out

A couple different responses to the fact that everyone but a few congressional Republicans hates Wall Street bankers, their giant bonuses, and that whole “creating an economic crisis” thing.

Some bankers held a – well, they called it a rally, but apparently it was more of a press conference – to launch an organization called restorewallstreet.com, to defend their honor:

Before the rally began, Mr. Belesis explained that he had begun thinking about forming this group in the last month or so as he heard “the repeating, relentless attacks on Wall Street.”

“I wanted the people who work on Wall Street to be heard,” he said.

Wayne S. Kaufman, the firm’s chief market analyst, alluded to the insulting and “infantile language” like “fat-cat bankers” emanating from President Obama.

“At the end of the day,” he said, “we’re citizens of the United States, too.”

Exactly how the new organization will function was left unclear, though Mr. Belesis said it would stage events and put up signs.

Indeed. The problem with this country is that Wall Street hasn’t been heard enough. Working people making $50,000 a year get so much more of a platform than bankers making millions in bonus alone.

Not everyone on Wall Street is jumping up and down looking to make noise. Some of them are trying to go under the radar—but that doesn’t mean they plan to change anything beyond how ostentatious they are about their luxury purchases:

As much as Wall Street executives are seeking value, decisions are also based on whether they (and their new possessions) can hide in plain sight. A case in point: Manhattan Motorcars offered two lease programs in December, each costing about $100,000. The first was a one-year lease for a Rolls-Royce Phantom Drophead Coupe with embroidered headrests and a brushed steel hood. The second was a three-year lease for a Bentley Flying Spur or GT convertible, both of which are more understated than the Rolls.

Brian Miller, the owner of Manhattan Motorcars, said the Bentleys were more popular with Wall Street executives, not because they were less expensive, but because they attracted less attention. “They said they wanted to tone down their exposure and get something more staid and sedate,” Mr. Miller said. “Later on they said they could come back and get something flashy.”

These, bear in mind, are the people who are going to be trying to convince us all that a Financial Crisis Responsibility Fee would be super-unfair, and would leave them no choice but to pass it on to the consumer. Because clearly they, the bankers, have already been cut to the bone.


Owning and Renting in the Age of Foreclosure

Atrios has been doing great work on the continuing mortgage crisis, and the failure of government efforts to address it. They did some stuff, it hasn’t worked, and the foreclosure crisis is still very much with us. See here, here, and here.

Another side to how government policy affects people’s living situations is in the rent vs. buy equation. At The American Prospect, Monica Potts looks at how federal policies promoting homeownership contributed to the housing bubble and a lack of affordable rental properties.

Efforts to increase homeownership are partly fueled by the idea that it makes communities more stable. But eliminating and underfunding rental programs in favor of homeownership did the exact opposite. “The very best homeownership program is a robust and stable … group of renters,” Crowley says. “A renter who is able to afford where they’re living, able to pay their rent on time, develop a good credit record, and actually have some money to save … that sets people up for success in homeownership.”

In addition to families who might not be quite ready to own a home but can hold homeownership as a realistic goal, there are families at such low income levels that renting may always be their best option. Crowley says her group estimates that the gap between the need for low-income housing and the supply for it now stands at about 3 million units. From 2007 to 2008 alone, the number of units affordable for extremely low-income renters decreased by about 100,000, and the number of renters at that income level increased by about 3.5 percent. Under pressure from groups like Crowley’s, Congress passed and Bush signed a law creating a National Affordable Housing Trust Fund in 2008. Most of the money must be used for rental housing and be reserved for helping families living with incomes at no more than 30 percent of the area’s median income. Apartments that would be affordable for those groups are not the kinds of moneymakers that would draw private investment on their own.

Luckily, Potts sees a chance that things will start to be set right in this area:

Fitzgerald notes that even without total funding, the Obama administration has signaled some clear shifts in priorities. The administration has linked housing initiatives with transportation, education, and green projects, Fitzgerald said. Low-income housing that’s near transit centers and schools reduces sprawl and makes it less expensive for the residents to get around. And of the $5 billion weatherization funds in the stimulus bill, about $2 billion was targeted for multifamily housing financed by the Federal Housing Administration, which Fitzgerald believes shows a willingness on the administration’s part to concentrate on rehabilitating existing stock. “The most green thing you can do is not knock down a building and replace it all,” she says.

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“The Time for Small Change is Long Gone”

AFL-CIO President Richard Trumka responds to the State of the Union address:


State of the Union

Some of the high points of the State of the Union (for me—your mileage may of course vary). In general there was a lot I liked, but of course it was a very long speech and I’m sure many points got buried:

Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. Two hundred thousand work in construction and clean energy; 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, first responders. And we’re on track to add another one and a half million jobs to this total by the end of the year.

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right -– the Recovery Act, also known as the stimulus bill. Economists on the left and the right say this bill has helped save jobs and avert disaster. But you don’t have to take their word for it. Talk to the small business in Phoenix that will triple its workforce because of the Recovery Act. Talk to the window manufacturer in Philadelphia who said he used to be skeptical about the Recovery Act, until he had to add two more work shifts just because of the business it created. Talk to the single teacher raising two kids who was told by her principal in the last week of school that because of the Recovery Act, she wouldn’t be laid off after all.

This is the kind of salesmanship it would have been good to see all along, but good to do it now.

But I realize that for every success story, there are other stories, of men and women who wake up with the anguish of not knowing where their next paycheck will come from; who send out resumes week after week and hear nothing in response. That is why jobs must be our number-one focus in 2010, and that’s why I’m calling for a new jobs bill tonight.

Tomorrow, I’ll visit Tampa, Florida, where workers will soon break ground on a new high-speed railroad funded by the Recovery Act. There are projects like that all across this country that will create jobs and help move our nation’s goods, services, and information.

We should put more Americans to work building clean energy facilities and give rebates to Americans who make their homes more energy-efficient, which supports clean energy jobs. And to encourage these and other businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America.

Please remember to pay good wages and benefits for those jobs making homes energy-efficient, or there’s a lot less point to it…

To make college more affordable, this bill will finally end the unwarranted taxpayer subsidies that go to banks for student loans. Instead, let’s take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants. And let’s tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years –- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.

Fantastic. Really good policy.

At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion. By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. All this was before I walked in the door.

Again, a great point to make. It’s great now, would’ve been amazing a while ago before the narrative was set.

To Democrats, I would remind you that we still have the largest majority in decades, and the people expect us to solve problems, not run for the hills. And if the Republican leadership is going to insist that 60 votes in the Senate are required to do any business at all in this town — a supermajority — then the responsibility to govern is now yours as well. Just saying no to everything may be good short-term politics, but it’s not leadership. We were sent here to serve our citizens, not our ambitions. So let’s show the American people that we can do it together.

This is another of those things I like, and hope happens…but I’m not holding my breath.

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Our Union’s Perilous States

As President Obama prepares to deliver his first State of the Union address, the economic recovery he would certainly like to see is in danger of being derailed by an inadequate response to the massive jobs crisis and a potential meltdown in a public sector threatened by huge state and local budget shortfalls.

The American Recovery and Reinvestment Act of 2009 included $144 billion in federal aid to state and local governments, and to a large extent helped avert mass layoffs in the public sector. But that aid extends only through this year, and the budget situations facing states and cities look worse down the road as tax revenues decline and public service funds dwindle.

Without major, additional and extended aid to states and municipalities, hundreds of thousands, perhaps millions of new job losses could occur — virtually assuring a continuing deep recession and a lengthy postponing of any real recovery.

In a statement today, Gerald W. McEntee, president of the American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME) said:

Unfortunately, we have learned in the past year that the American Recovery and Reinvestment Act (ARRA) was not big enough to stimulate a full-scale recovery. Unless we act now, more Americans –- including nearly a million public employees –- could lose their jobs as current federal investments run out and the vital services Americans need during tough times are cut to the bone. There simply won’t be an economic recovery if Washington turns its back on Main Street USA.

Alarm bells on the situation facing state and local governments have been ringing for some time. In an OpEd titled Invitation to Disaster earlier this month New York Times columnist Bob Herbert warned:

We didn’t pay attention to the housing bubble. We closed our eyes to warnings that the levees in New Orleans were inadequate. We gave short shrift to reports that bin Laden was determined to attack the U.S. And now we’re all but ignoring the fiscal train wreck that is coming from states with budget crises big enough to boggle the mind.

This is an arrow aimed straight at the heart of a robust national recovery. The Center on Budget and Policy Priorities has pointed out that if you add up the state budget gaps that have recently been plugged (in most cases, temporarily and haphazardly) and those that remain to be dealt with, you’ll likely reach a staggering $350 billion for the 2010 and 2011 fiscal years.

This is not a disaster waiting to happen. It’s under way.

Without substantial new federal help, state cuts that are now merely drastic will become draconian, and hundreds of thousands of additional jobs will be lost. The suffering is already widespread.

Additional fiscal relief for state and local governments is a key component of the American Jobs Plan proposed by the Economic Policy Institute:

We recommend that the federal government extend the state and local budget relief provided in the Recovery Act by $150 billion over the next year and a half, through state fiscal year 2011. The additional relief will save between one million and 1.4 million jobs.

In his excellent new book, False Profits – Recovering from the Bubble Economy, economist Dean Baker writes:

“At the top of any stimulus agenda should be the very mundane effort to get more money to state and local governments.”

“Nothing is more harmful to the economy presenting a downturn than government spending cuts and tax increases that amplify the downturn’s impact. Furthermore, many of the cuts are to essential services, such as health care for low-income families or special school programs for children who are having difficulties. Government support for these programs is needed more than ever during the downturn.” (thanks to the author for his permission to quote)

It is nothing less than the nation’s social infrastructure that is threatened by the budget crises at the state and local level. ProPublica reports that with two dozen state unemployment insurance funds already in the red

The record 20 million Americans who collected unemployment insurance benefits last year landed on a safety net that was already deeply frayed.

An extensive, in-depth report just issued by the Center on Budget and Policy Priorities makes clear that failure to extend critical funding initiatives included in last year’s Recovery Act, such as the Temporary Assistance for Needy Families (TANF) Emergency Fund, would have dire consequences.

The impending reductions in basic cash support will cause affected families to cut back their expenditures. This will cause a further loss of jobs, as well as a significant increase in severe hardship and deprivation.

In fact this is already happening.

The Hunger Action Network of New York State said Jan. 19 after Paterson’s budget address that the proposed cuts to welfare and homeless program spending would not only increase hunger and poverty in the state, but would drive up costs for taxpayers by placing the financial burden on local governments.

“The federal government consistently ranks New York among the worst in the country in helping welfare participants into jobs,” said Andreas Kriefall, upstate director of Hunger Action Network. “Far more just end up moving from [TANF] to the safety net program, which is paid for entirely by state and county tax dollars. The governor claims to be using this budget to get the state on a sounder fiscal footing. He is in fact, digging the hole deeper.”

The federal government itself, though, need not assume the entire responsibility of assisting state and local governments. In an intriguing column last month, The Nation editor Katrina Vanden Heuvel proposed that the Federal Reserve do for needy states and municipalities what it has already done on a massive scale for the banks through zero-interest loans and special lending facilities:

I know states need to deal with balanced budget mandates and debt ceilings, but I also know there is some flexibility there. Shouldn’t states have access to zero-interest credit just like the Banksters? And couldn’t that make a significant contribution to their overall fiscal picture?

“Even if it just made short term loans–90 days, for example–it could still save California and other struggling states a lot of money,” said Dean Baker, co-director of the Center for Economic and Policy Research. “If it reduced their rate on short-term borrowing by 1 percentage point, this could be worth $100 million a year or so to a state like California that would have to do lots of short-term borrowing.”

The Fed has the authority–granted by law in the 1930s–to lend to virtually any public or private entity in emergency conditions. At a time of emergency in the states–with schools being shuttered, libraries closed, and health services gutted–isn’t it time to use that power to help devastated state and local governments?

Perhaps if Ben Bernanke wants to keep his job he should do what’s right for the social infrastructure of Main Street America.

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Campaign to Extend Jobless Benefits Gains Momentum

The National Employment Law Project (NELP) reports in an email this morning:

the campaign to extend the federal and federally funded UI benefits and the COBRA subsidy had a very promising first week. As the Senate went back into session, 32 Democratic Senators, well over half of the non-Leadership members of the caucus signed a letter to the Senate Democratic Leadership calling on them to extend UI benefits (the EUC program, full funding of EBs, and the additional $25 per week in benefits) and the COBRA subsidy through the end of 2010.

While the Senate has begun to consider some additional job-creation legislation, its plan does not include extending jobless benefits, and falls short of the larger but still less-than-adequate jobs bill passed by the House in December, which included provisions for six-month unemployment insurance and COBRA extensions. The Senate appears to have no plan to take up the House measure, which means that extending jobless benefits will rely on the success of separate legislation.

NELP’s campaign to extend jobless benefits reports in their email that the Senators leading the effort supporting the full extension of benefits through 2010 are Senators Casey (PA), Reed (RI), Harkin (IA), Dodd (CT), Brown (OH), and Franken (MN). They have picked up support from Senators Shaheen (NH), Levin (MI), Stabenow (MI), Leahy (VT), Sanders (VT), Specter (PA), Kaufman (DE), Boxer (CA), Feinstein (CA), Whitehouse (RI), Wyden (OR), Merkely (OR), Kerry (MA), Burris (IL), Gillibrand (NY), Lautenberg (NJ), Menendez (NY), Kohl (WI), Udall (NM), Cardin (MD), Mikulski (MD), Byrd (WV), Rockefeller (WV), Akaka (HA), Begich (AL), and Bennet (CO).

Extending unemployment insurance and COBRA eligibility and subsidies are essential components of any real job-creation policy. NELP reports:

The Economic Policy Institute estimates that up to 800,000 jobs could be lost this year if these benefits are not extended through the end of the year, pointing out the importance of the stimulative and stabilizing impact of UI benefits on local communities.

NELP urges you to help build the momentum behind its campaign to extend jobless benefits through 2010:

To that end, here is what you can do:

Contact the White House and tell the Administration that it must support and press for an extension of UI benefits and the COBRA subsidy through the end of 2010. Demand that he signal his support in the State of the Union Address. When you are done with that, continue to register your support with your Senators with our action alert, or by calling the Senate switchboard and asking for your Senator:
(202) 224-3121. The Senate also needs to be reminded that legislation needs to be signed before February 21 (Sunday) in order to make sure that no states start shutting down their systems that are processing all of the additional federal benefits available through the end of next month.

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Webinar: A Real Jobs Plan for America

The recently launched grassroots coalition Jobs for America Now and several of its participating organizations will sponsor a Jobs Policy Webinar from 3pm to 4pm Thursday, January 28.

If you think it’s a problem that 27 million in the U.S. are unemployed or underemployed, please join us on January 28.

Congress and the Obama Administration are working on job creation plans. What should they do? How can we build support for job creation that does not leave the poorest people behind? Register for the webinar and find out.

The Jobs for America Now coalition includes more than fifty major national organizations, including Working America and the AFL-CIO.

The Jobs for America Now coalition recommends a five-point plan to create jobs and stem the unemployment crisis. The plan calls for the nation to:

  • Provide relief through continued and expanded unemployment benefits, COBRA and SNAP (Supplemental Nutrition Assistance Program);
  • Extend substantial fiscal relief to state and local governments;
  • Create jobs that put people to work helping communities meet pressing needs, including in distressed communities that face severe unemployment;
  • Invest in infrastructure improvements in schools, transportation and energy efficiency, thus providing jobs in the short run and productivity enhancements in the longer run; and
  • Spur private-sector job growth through innovative incentives and providing credit to small and medium-sized businesses.

Leaders of several Jobs for America Now coalition partners will be the webinar’s featured speakers.

  • Larry Mishel, President, Economic Policy Institute
  • Deepak Bhargava, Executive Director, Center for Community Change
  • Alan Charney, Campaign Director, Jobs for America Now
  • Deborah Weinstein, Executive Director, Coalition on Human Needs

You can register here to participate by computer and phone.

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Scenes from Higher Education Cutbacks

In California, this is what giant budget cutbacks for the state university system look like:

Because of state budget cuts to higher education, San Francisco State is now offering 3,173 course sections, 12 percent fewer than two years ago. From the university administration’s point of view, that is not as bad as it might have been: over $1.5 million in federal stimulus money prevented more draconian cuts.


This spring, cutbacks have largely ended the opportunity for community college students to move into the state university system, which enrolls 433,000 students. Mr. Macias transferred a year ago from Allan Hancock College, a community college in Santa Maria.

Also, in response to budget cuts, San Francisco State plans to reduce enrollment more than 10 percent for the 2010-11 academic year.


This academic year, the university lost $38 million in state support. Student fees are 32 percent higher. Hundreds of lecturers lost their jobs; faculty and staff salaries were cut by 10 percent. Furlough days made the university’s schedule a chaotic patchwork of canceled lectures and shortened office hours.

And with fewer classes on offer, students who need to maintain a full class schedule to keep their financial aid are forced to take whatever classes have slots, even if that means taking biology without the lab section, or physics lab without the lecture course.

Meanwhile, in Massachusetts, another state that has suffered massive education cuts,

University of Massachusetts president Jack Wilson’s compensation did not crack the top echelons of public university leaders’ pay packages last year. But in a financially challenging year when many of his counterparts took pay cuts to help offset tuition increases, Wilson’s pay grew by 15 percent in 2008-09, according to a survey released yesterday by the Chronicle of Higher Education.

Wilson’s $546,000 compensation package included a $425,000 salary, a $45,000 housing allowance, $25,000 in deferred compensation, a $51,000 retirement annuity, and the use of a car. That made him the 50th-highest-paid public university executive out of the 185 surveyed.

The president of the Massachusetts Society of Professors points out:

UMass students and their families are paying dramatically higher fees.

The average professor at UMass-Amherst works more than 66 hours a week, and earns just slightly more than the raise the president received.


Why do we accept this Wall Street bailout-style abuse, where dramatically scarce higher ed funds are used to boost the president’s salary instead of helping families of UMass students and the dedicated staff of the university? Wilson teaches no students, does no research, and has failed to win state support for UMass. He deserves his raise as much as the Wall Street bankers deserve theirs.


Interesting Things Around the Internet

Snapshots from the Layoff Economy

After more than 120 years, National Cash Register left Dayton, Ohio for Atlanta, Georgia. Its CEO avoided meeting with the governor or lieutenant governor of Ohio until after the decision had been made.

In late May, state officials frantically tried to contact NCR about the growing rumors of the company’s imminent departure; the answer was a telling silence. Ohio hurriedly offered an incentive package that was much less attractive than Georgia’s, though Ohio officials say they could have matched the rival offer if given the chance.

No matter; time was up. On June 1, Mr. Strickland and Mr. Nuti finally spoke — by telephone, though — and mostly so that NCR could say goodbye.

NCR is now settling its affairs. It is leaving its archives here, as well as a data center that some company workers will continue to run. But of the 1,200 employees who were here in June, more than half have retired, resigned or been released. The company will not say how many were offered jobs in Georgia, or how many accepted.

Meanwhile, Wal-Mart…well, enough said. Wal-Mart.

It’s been a rough few weeks for Sam’s Club employees. First came the announcement that ten Sam’s Club stores would close and the 1,500 employees who worked there could lose their jobs. Then, yesterday, Walmart announced they would be laying off 11,200 workers. Most of those being laid off demonstrate products in the stores. Walmart’s spokesperson made it clear that this wasn’t about the economy, or the employees performance, rather, they were outsourcing the jobs to Shopper Events a company who’s only purpose is to demonstrate products in Walmart stores.

Walmart has suggested that the 10,000 employees they are firing can apply for a job with Shopper Events, who will be hiring roughly 10,000 employees to fill the gap left by the lay off. It sure sounds a lot like Walmart is asking 10,000 of their employees to reapply for their own jobs.

Meanwhile, unemployment insurance funds have run out in 25 states, which have been forced to borrow from the federal government. Several more states are headed in that direction.

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