#8: Micro-Suggestions about the economic crisis

The new Congress will gather on January 6 and immediately set to work in a two-week whirlwind, hoping to get something cogent and useful on President Obama’s desk, for him to sign as soon as the Innauguration festivities are over.  Meanwhile, with a month to go until a change of administrations, the outgoing Congress is working hard with Bush officials to enact interim measures.  

While we can take some pride in this flurry of urgent action, there are also causes for concern.

1) Current Secretary of the Treasury Paulson, having blown through the first 350 billion dollars of $700B emergency TARP funding, is now asking the outgoing legislature to release the second lump.  Congress must not do this. Not without a steep price.  

That price should be early installation of Obama’s own tean in offices just down the hall from Paulson at Treasury and at every other economic agency, with informal but decisively effective veto power over all future expenditure of TARP funds.  The reason is simple.  We the People have a right to protection from seeing this treasure trove distributed willy-nilly by -- at best -- self-admitted incompetents.  At worst, by leaders of a clade that seems deeply untrustworthy.

2) A further price.  Demand equity and restitution. Use TARP to buy only items that might offer good returns, when things turn around.

Those who long howled that “government should be run like a business” have no right to complain when the United States takes advantage of an opportunity to buy, low, in order to sell high later on. Whiners who don’t like this are hypocrites .

 Note that the Big Three automakers qualify under this condition, while distressed derivative wagers, held by foolish aristocrats, do not.  

3) Require that beneficiary companies make good faith efforts toward reclaiming unfair and absurd executive compensation.  In fact, all future aided companies that have experienced outrageous executive compensation should be asked to file a lawsuit against those past executives, at least on a pro forma basis, in order to establish a legal basis for discovery processes.

Similar principles should guide the new economic stimulus plan, involving up to $850B that soon-to-be President Obama and Congressional leaders plan to spend, largely on public infrastructure projects.  Among the guiding principles ought to be:

* Spend quickly, so that a maximum number of unemployed get to work... but...

* Spend in ways that also maximize national benefit -- the purpose of concentrating on infrastructure.

* Do not stimulate with tax or other changes that will be hard to rescind, once the crisis is over.  

(Unless this is part of an overall plan, e.g. reducing FICA payroll taxes in exchange for a permanent percentage based fuels tax or a windfall bonus tax.)

* Do not fall for “emergency” scams that favor specific companies, cronies or Congressional districts.  

(This was done by the Bush Group, using 9/11 and Iraq as excuses to sign “emergency” bypasses to contracting laws, favoring pals to the tune of tens or even hundreds of billions of dollars.  This is, in fact, history’s largest loophole-for-theft, and it’s gon unmentioned in the press.)

* Establish a principle that no region of the country will benefit more than 10% more than the tax-proportion they contribute.  

Yes, Red America will howl, and Obama might have to back down on this one.  But even broaching it would be a great way to make a political point:-- to drill into peoples’ minds how hypocritical it has been to bash the blue zones, while they have been carrying more than their fair share of the burden.  Ironically, this could help ease “culture war” by making clear where Red America’s self interest lies... in toning down the bitterness.

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Finally, I feel I really need to reiterate my assertion that any bailout of the Big Three U.S. automakers ought to entail a imaginative compromise deal with the workers.  

Neither side has been either up-front, or right, in the tussle over further UAW concessions.  The Unions must realize that their present deal is archaic, brittle and contributing to the collapse of a U.S. motor industry.  On the other hand, those troglodyte Southern senators who demanded concessions simply in the form of across the board pay and benefits cuts are at-best waging civil war on behalf of the South and Toyota and the horrifically stupid managerial caste that ran Detroit into the ground.

Common sense demands that the workers accept that a third or more of their rigid wages and benefits should change its form... but not necessarily go away!  It is time for labor and pensioners to accept the blatantly obvious, that their enforceable obligations make them the top creditors of Ford, GM and Chrysler.  

For once George W. Bush said something right. Treat this as a bankruptcy!  With present shareholders and management dropping to the bottom of priority, that would leave the workers and pensioners - effectively - the owners of the Big Three. 

Live with it.  Yes, both labor and management have struggled desperately, for decades, to avoid facing this inevitable day.  But the era employee ownership has arrived. 

 So?  Turn lemons into lemonade.  

Show what you are made of, by turning these companies profitable!  And then pass out those profits to member owners.  That ought to make up for bringing formal, line wages down to competitive levels.  Think about it.  As both workers and owners, UAW folk ought to come out ahead!  That is, if they believe in themselves and in their products and potential.