Posts tagged with 'wages'
Weekly Audit: One Year After the Crash
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by Zach Carter, Media Consortium Blogger
On Thursday, the U.S. Census released new data on the economic straits many American households faced in 2008. The grim report illustrates a nation enduring its highest poverty level in decades, coupled with a significant decline in middle class financial security. But one year after Lehman Brothers filed for the largest bankruptcy in U.S. history, not a single law has been passed to protect ordinary citizens from Wall Street’s excess.
Just how bad was 2008 for the ordinary U.S. household? As Kevin Drum emphasizes for Mother Jones, median household income plunged $1,860 last year. That’s the biggest decline since the Census began tracking incomes in the 1970s. The poverty rate increased from 12.5% to 13.2%, the highest level since 1997, and the total number of people living below the poverty line surged by 1.5 million to 39.8 million. Nearly one-fifth of all children in the United States are now poor. To fit the Census definition of poor, families have to be pretty hard up: A family of four must be living on less than $22,025 to qualify.
The Census data does not include any of the economic damage the U.S. sustained this year. In February 2009 alone, the economy shed a staggering 741,000 jobs. That fallout has hurt the poor more than anyone else, as Andrew Leonard explains for Salon.
“In 2008, the rich got less rich, while the poor got even poorer,” Leonard writes. “Which just goes to show that a falling tide lowers all boats—with one difference: The boats belonging to the rich probably still float, while the poor have smashed into the rocks.”
Lest there be any doubt, President Barack Obama’s economic stimulus package was absolutely critical for the nation’s economic health. The Census believes programs enacted under the stimulus will keep a total of 6.2 million people from falling into poverty, including 2.4 million children. To put that number in perspective, over the entire course of the George W. Bush Presidency, the number of people living below the poverty line climbed by 8.2 million, while the number of children in poverty increased by 2.5 million. Were it not for the stimulus Obama pushed through, the Bush legacy would be 75% worse, and almost 100% worse for children.
What is most alarming about the Census figures is the fact that workers were already treading a difficult path before the financial crisis sent the economy off a cliff. After years of economic “growth,” the median income was lower in 2007 than it was when President Bill Clinton left office. And the majority of people entering poverty during the Bush years did so prior to the great crash of 2008.
Another recent report from Jeannette Wiks-Lim of the Political Economy Research Institute drives this point home. In an interview with Jesse Freeston of The Real News, Wiks-Lim discusses the projected path of decent jobs in the U.S. economy, based on data from 2006, well before the crisis broke out. Wiks-Lim defined a “decent job” defined as one that pays $17 an hour plus health insurance, but found that in 2006, a full 65% of workers in the U.S. were paid below that benchmark. Equally distressing, her study indicates that by 2016, the number of decent jobs will be roughly the same as in 2006. Job-quality stagnation will persist even though the economy is likely to grow over this time period. That growth will be going to those who are already well off, Wiks-Lim says, while ordinary workers will face the same problems.
There are frightening long-term trends in this data. In 1975, average pay for workers outside the managerial class was $18.23 per hour, according to the study. But by 2007, those wages dropped to $17.42 per hour. These wage declines came despite major growth in economic output over those three decades, and despite an 85% increase in worker productivity.
While workers experienced increasing pressure on their pocketbooks, Wall Street gambled away their retirement investments. Lehman Brothers filed for bankruptcy one year ago today, a move which created chaos in the financial sector and heavy damage in the rest of the economy. Things were looking bad for the economy before Wall Street imploded, but the financial crisis made those problems a lot worse. “In a modern society, a credit freeze means instant death to the real economy, since virtually every enterprise, big and small, runs on credit,” Les Leopold explains for In These Times. “When the financial sector froze, it pushed the real economy off a cliff.”
But incredibly, after a year marked by massive financial bailouts, not one new law has been signed to protect our economy—and taxpayers—from Wall Street. Not one. Even the modest plans to rein in executive pay for taxpayer-supported companies have proved toothless. Leopold notes that President Barack Obama’s refusal to crack down on the banks has left both the financial regulatory process and other important progressive plans—like overhauling the broken health care system—in a precarious political state. The largesse we have shown for bailed-out bankers gives conservatives ammunition against other, more productive activities.
“We have a horrific feedback loop where Main Street’s anger is directed as much against the government as it is against Wall Street,” Leopold writes. “In fact, more and more people are turning against the administration because it looks as if it sold out to the banks. … The outrage-turned-anti-government has spilled into the health care debate and now undermines badly needed government intervention into our wasteful health insurance industry. If we roll over on the Wall Street fight, anti-government politicians will ride to power on populist anger. ”
And make no mistake, Wall Street is pushing back as hard as it can against even the most obvious reforms. Writing for The American Prospect, Tim Fernholz details the massive push by the Chamber of Commerce against the creation of a Consumer Financial Protection Agency. The CFPA would do just what its name implies—regulate all financial products that target consumers, and nothing else. It’s a simple and much-needed reform, but Wall Street is spending a lot of money to keep it from happening.
Our entire system of economic value has become inverted, as Wendell Berry argues in an essay for The Progressive. Anything that creates financial profits is considered economically productive, while environmental impacts and social benefits are viewed as economically unimportant. “Only in a financial system, an anti-economy, can it seem to make sense to talk about ‘what the economy needs,’” Berry writes. “In an authentic economy, we would ask what the land, what the people, need.”
The U.S. is frequently referred to as the richest nation in the world. Free-market ideologues and conservative pundits often couch their preferred policies as a defense of U.S. prosperity—there’s even a right-wing astroturf group called “Americans for Prosperity.” But more than 13% of the nation lives in poverty while the government backs paychecks for millionaire bankers. The problem is obvious to everyone, but if we do not demand change, Wall Street will ride the status quo to another economic catastrophe within a few short years.
This post features links to the best independent, progressive reporting about the economy and is free to reprint. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Depression-Era Inequality, Only Worse
By Zach Carter, TMC MediaWire blogger
A new study by Economist Emmanuel Saez revealed this week that income inequality in the U.S. is more severe today than at any time since World War I, and the current recession is taking its heaviest toll on the worst-off members of our society. As our government rebuilds the financial sector using taxpayers’ money, it’s important to remember that both financiers and the government are responsible to our communities, not just bank shareholders. If we want to strengthen our country’s economic foundation, we need to demand better wages for workers and an end to all kinds of predatory lending.
Saez’s new data on income inequality is, as Paul Krugman put it, “truly amazing.” Saez, who teaches at the University of California at Berkeley, found that the top 0.01% of U.S. earners had 6% of total U.S. wages, more than double the level in 2000. Earners in the top 10%, meanwhile, took home an astonishing 49.7% of all wages. That gap is larger now than during the Great Depression or the Gilded Age of the Roaring ’20s.
“We’re seeing Depression-era inequality again—only now it’s slightly worse,” writes Steve Benen for The Washington Monthly. Benen also notes that this level of inequality is not an inevitable consequence of a market economy: It’s an extreme historical aberration. In the U.S., prosperity for much of the 20th Century was shared. But in 2007, at the economic bubble’s peak, the wealthy simply got wealthier.
In that context, it is beyond absurd that the government is allowing 8-figure bonuses to be doled out by bailed out banks. Writing for Salon, Robert Reich dissects the policy implications of Citigroup’s plans to pay its top executives an average of $10 million this year and award over $100 million to its top trader, a man who literally owns a castle in Germany. Citigroup was one of the most reckless U.S. banks during the housing bubble, a major subprime offender that received $45 billion in direct bailout money, as well as hundreds of billions in federal guarantees. How much is $45 billion? With the median U.S. home price at $174,100, that’s the full market price of over 258,000 foreclosed homes. The company says that $10 million a head is necessary to attract and maintain top “talent,” which Reich notes is a somewhat misleading term, given recent history. The problem is not just that Citigroup and other Wall Street firms are paying tons of money to a few people, it’s that these people are being rewarded for the same kind of activities that got us into this mess to begin with: Risky, highly leveraged securities trading.
“Over the last several years Wall Street has exhibited a truly astonishing lack of talent,” Reich says, noting that, “The Street is back to the same, relentlessly untalented tactics that made it lots of money before the meltdown—which also forced taxpayers to bail it out, caused the world economy to melt down, and tens of millions of people to lose big chunks of their life savings.”
In truth, Reich argues, most large financial firms in the U.S. are much more like public utility companies than private-sector businesses. Even in good times, they depend on government guarantees and other support systems to function. In bad times, we bail them out. Instead of paying financiers tens of millions of dollars to reinforce a flawed system, Reich argues that we should impose rules that result in salaries similar to the public utilities sector, where top earners are generally restricted to 6-figure incomes.
The American Prospect features two pieces emphasizing problems in the current financial sector. Under a law known as the Community Reinvestment Act (CRA), enacted in 1977 we require banks to make loans in communities where they collect deposits. The loans have to be to dependable borrowers and they have to be relatively inexpensive. The law works very well—institutions covered by it made only a tiny fraction of the high-interest subprime loans that brought down the financial sector, as National Community Reinvestment Coalition President John Taylor notes for the Prospect. But CRA only applies to actual banks. You know, the places where you deposit your paychecks. CRA does not apply to subcompanies owned by the same corporation, and it does not apply to giant Wall Street securities firms like Bear Stearns and Goldman Sachs. Taylor says we need to expand CRA to cover these other big players in the financial world.
Why? As Alyssa Katz details in a piece for the Prospect funded by The Nation Institute, many Wall Street firms are bidding on foreclosed properties and selling them at rip-off rates to low-income borrowers.
But as Mary Kane notes for The Washington Independent, banks have also devised several methods of making money without making a loan. By charging tremendous fees on borrowers for minor infractions, banks generate billions of dollars without producing anything of social value. One of the worst forms of abuse, Kane writes, comes in the form of overdraft fees. When you withdraw too much money from your bank account, the bank fronts you the money, and then charges you a fee for this “protection.” The trick is, banks almost never tell you that this has occurred, and often play around with the timing of your charges and deposits to maximize the fees they collect. Banks are on track to collect $38.5 billion in such fees this year alone. The worst part is, the fees come from the poorest customers—rich people don’t overdraw their bank accounts, because they have tons of money.
In the case of credit cards, banks routinely slap borrowers with outrageous fees and interest rate hikes when the borrowers are making payments on time. Over the years, banks have targeted younger and younger credit card customers, as Adam Waxman notes for WireTap. After years of declining wages for all but the wealthiest citizens, consumers have been turning to pricey plastic to finance basic necessities.
Sadly, corporate America does not seem very focused on helping workers establish their financial independence. The Real News talks with Richard Wolff, an economist with the New School who emphasizes that, while worker productivity has jumped in recent months, wages have not made the corresponding increases. Quarterly productivity numbers tend to jump around a lot, but the trend of not compensating workers for improved efficiency has been around for years.
In a consumer-driven economy, major problems can’t be fixed by giving lots of money to a few people, especially if those few people are already rich. To support broad, meaningful economic growth, we need to tailor our policies that empower those on the lower rungs of the economic ladder. And when we bail out giant corporations with taxpayer money, we need to make sure those companies arrange their business to improve the lot of taxpayers.
This post features links to the best independent, progressive reporting about the economy and is free to reprint. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Ending the Economic Status Quo
by Zach Carter, TMC MediaWire Blogger
The banking lobby still holds enough sway inside the Beltway to torpedo sensible consumer protection rules, even after releasing a flood of predatory mortgages that kicked off the current economic crisis. On issues ranging from payday loans to subprime mortgages, the banking industry continues to successfully defend itself against new regulations that would protect the consumer. As if that weren’t outrage enough, the finance lobby has also joined other corporate interest groups to fund misinformation campaigns that smear unions and block wage growth.
As Mary Kane explains for The Colorado Independent, the push to rein in predatory mortgage lending appears to be losing steam on Capitol Hill. An extremely complex mortgage reform bill that is conciliatory to the finance lobby passed the House last month, angering consumer advocacy groups. Among the problems: the bill pre-empts many stronger state predatory lending laws and protects the Wall Street investment banks that gorged themselves on mortgage-backed securities.
Consumer protection shortfalls are not limited to messy mortgages. Lagan Sebert and David Murdoch detail the payday loan industry’s continued assault on U.S. consumers for the American News Project. By offering small loans, typically in amounts ranging from a few hundred to a few thousand dollars, payday lenders target consumers who need money for basic necessities, then charge them outrageous interest rates (as in, above 700%).
For years, newspaper editorials have denounced payday lenders for systematically exploiting the most vulnerable members of society, including members of the U.S. military, who are often targeted as a result of their reliable paychecks. The solution to the problem is as simple as the business is repulsive: Capping annual interest rates on all consumer credit products at 36% would make this kind of predation impossible.
Nevertheless, the payday loan industry has been able to escape a regulatory crackdown via an intense and sustained lobbying effort. Senate Banking Committee Chairman Chris Dodd, D-Conn., is now parroting payday lending lobbyists. Since payday loans are supposedly paid back within a matter of weeks, Dodd and the payday lending lobby say that it’s unfair to hold them subject to the same standards as a 30-year mortgage.
The argument is insane. No bank would ever get away with charging a 36% interest rate on a mortgage. Even the most predatory subprime mortgages didn’t have interest rates anywhere near that high. But Sebert and Murdoch go further, highlighting a report from the Center for Responsible Lending which found that payday lenders make 90% of their revenue from borrowers who do not pay their loans off on time. The loans are structured to be so expensive that consumers become trapped into making payments for the long-term, often spending thousands of dollars over multiple years to get out from under an initial loan of just a few hundred dollars.
Dodd has received major campaign contributions from the banking industry, but sometimes the lobbying effort is much more subtle. Several major corporate lobby groups have united under the misleading moniker of “Alliance to Save Main Street Jobs” to finance shoddily researched projects that defend the interests of the executive class in economic policy. An Alliance for Main Street Jobs report written by Anne Layne-Farrar has received quite a bit of attention for its claim that the Employee Free Choice Act (EFCA) would kill 600,000 jobs by making it easier for employees to organize. Several major news outlets have cited the allegation, including Fox News, MSNBC, The Wall Street Journal, and CBS News. As Art Levine reveals for In These Times, however, this research relies on completely meaningless statistical trends and disingenuous research design that render its findings utterly hollow.
Corporate executives are not afraid of EFCA because they think it will kill jobs or disenfranchise workers. They are afraid because it will empower workers to fight for living wages and provide safe working conditions—things that leave less money around for big executive bonuses at the end of the year and give workers a greater say in how companies operate.
In some respects, EFCA also represents the other side of the predatory lending problem. It is important to ban abusive loans, but it is just as important to make sure people are paid fairly for their work to ensure they don’t need to seek out shady credit just to make ends meet.
When so many brewing legislative battles relate to the economy, it’s easy to forget about the programs that have already been enacted. Some of the tax cuts included in the economic stimulus package were aimed at fostering investment in low-income and minority neighborhoods—a worthy goal. But as Michelle Chen notes for ColorLines, the program has some significant flaws. Chen highlights a report from the Government Accountability Office (GAO) which found that minority-owned community development entities are largely being excluded from the program, with approval rates about 67% lower than other applicants. The GAO could find no reasonable explanation for why minorities were not making the cut, especially when some recipients of the tax credits have a history of consumer exploitation. Capital One Bank, for instance, is receiving $90 million of these tax credits, despite its long history of abusive subprime credit card lending.
There have been some successes this year in the push for an economy that answers to workers and consumers. Much of the stimulus bill is designed to make sure important jobs don’t disappear during the recession, and Sen. Dodd’s credit card reform bill passed both chambers of Congress by comfortable margins and included some very strong improvements. But we know what caused the economic crisis: stagnant wages and predatory lending. A true recovery will have to empower workers and protect consumers, both of which will require breaking with the corporate status quo.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Workers will build the recovery, not Wall Street
With new bailout plans for Wall Street being unveiled almost every week, it’s easy to forget that nearly all of the work that fuels our economy takes place outside of Manhattan. While reviving the financial sector is an important part of recovery, any lasting economic solution must also empower American workers and protect them from corporate abuses.
Workers’ rights are a core issue for our democracy, as progressive icon Noam Chomsky argues in an interview with Paul Jay of The Real News. The discussion covers the current economic crisis and its implications for the democratization of the U.S. economy. It’s a fascinating exchange. In the video below, Chomsky advocates for a much broader palette of reform than a simple clean-up the financial sector.
Chomsky notes that while the recent bank bailouts have brought a great deal of attention to the disconnect between public investment and private profit, it has become routine for the taxpaying public to foot the bill for important research that eventually creates big corporate profits. To ensure that we all reap the benefits of our investments, it is essential to make institutions accountable to their communities, rather than exclusively dedicated to maximizing shareholder returns.
The first step in democratizing the U.S. economy, according to Chomsky, is promoting unionization by enacting the Employee Free Choice Act, which makes it easier for workers to organize.
“The Employee Free Choice Act is always misrepresented,” Chomsky says. “It’s described as an effort to avoid secret elections. It’s not that. It’s an effort to allow workers to decide whether there should be secret elections, instead of leaving the decisions entirely in the hands of employers.”
EFCA would give workers more control over their circumstances, leading to improved wages and living standards for laborers. In a column for The American Prospect, Terence Samuel points out that even if Treasury Secretary Timothy Geithner’s plan to bailout Wall Street succeeds in stabilizing the banking sector, banks can do little to bring about recovery if U.S. citizens are all broke. If we want to get out of the bubble-and-bust cycle, we must establish a middle class that has money to spend. Fundamentally, that means raising wages.
Robert Eshelman puts the plight of today’s workers into focus in a devastating piece for Salon. Even where clear, straightforward laws to protect laborers from predatory employers exist, major corporations have been able to use the fear of being fired to push employees into “voluntarily” working under illegal conditions (Wal-Mart just agreed to pay out $640 million to settle charges that it intimidated its own employees into skipping mandatory breaks and accepting pay rates below the minimum wage).
“If corporations were able to exert such coercive power when the unemployment rate was around 5 percent, what can they do in a job market in which 14.8 percent of the population can’t find adequate work?” Eshelman asks.
Under the Bush administration, the U.S. Department of Labor systematically ignored its duty to enforce labor laws. Writing for Colorlines, Michelle Chen highlights a report from the Government Accountability Office that takes the Department to task for failing to even return phone calls from workers who complained about employer abuses.
Millions of jobs are hanging in the balance as President Barack Obama formulates his rescue plan for the U.S. auto industry. But while the administration has insisted that factory workers at GM and Chrysler have to accept wage cuts, they’ve almost bent over backwards to funnel bonus money to executives at failed insurance giant AIG. General Motors’ CEO Rick Wagoner has stepped down at the Obama administration’s request, and while it’s hard to feel sorry for an executive who lobbied aggressively against the environment and ran his company into the ground, his ousting reflects Wall Street’s privileged status in Washington. As Josh Marshall highlights in Talking Points Memo, it is astonishing that executives at Bank of America and Citigroup, who have put taxpayers on the hook for far greater sums of bailout money than GM and Chrysler, have not been subjected to the same treatment as Wagoner.
We’ve all seen the grim statistics indicating how severe the current economic crisis really is, but the proliferation of roving tent, shack and lean-to communities along U.S. railways underscores the true costs of the recession more grimly than any consumer spending metric or gross domestic product projection. All over the United States, people who cannot afford even rental housing are living in makeshift structures without access to basic amenities. It’s much like the rise of Hoovervilles in the late 1920s and 1930s, where out-of-work laborers took up residence anywhere they could.
While these squatter communities are growing as the crisis deepens, the worst part of the whole phenomenon is that they were common before the current downturn, as Scott Bransford notes for High Country News.
Whatever happens on Wall Street, fixing the economy will mean making sure ordinary people have access to basic amenities, and guaranteeing that workers have the power to prevent abuses from corporate America’s executive class.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Curbing Decline in 2009
In 2008, we witnessed the first serious fallout from deep structural flaws in the relationship between the nation’s public and private sectors, a relationship which fell short in every conceivable area from Wall Street regulation to the basic social safety net. The biggest economic stories of 2009 will be about how President-elect Barack Obama’s administration repairs—or fails to repair—that connection.
The first step in rebuilding a government that actually responds to problems before they reach the bailout stage will be Obama’s highly anticipated economic recovery package. As Dean Baker notes for The Huffington Post, the failure to date of Congress to pass meaningful stimulus legislation has been beyond negligent. Several Congressional leaders are cautioning that a bill will not be ready until February, but with more than two weeks to go before Obama’s inauguration, Congress has both the time and the public support necessary to pass a major bill before Obama takes up a chair in the Oval Office, as anyone who remembers the speed of Congressional action moved on the Wall Street bailout can attest.
The content of the legislation will reveal a great deal about Obama’s priorities. No president since Franklin Delano Roosevelt has entered office with an economic mandate as clear as that Obama enjoys, but one early warning sign for progressives is this week’s news that Obama plans to devote as much as 40% of the bill to tax cuts, a number that could go higher in legislative haggling with Congressional Republicans.
In a blog post over at The Washington Monthly, Hilzoy highlights the well-established economic fact that tax cuts are the least efficient method for boosting economic activity. Remember the February 2008 economic stimulus bill? Fat lot of good those $600 tax rebates did.
Public investment in areas like health care, green energy and research into sustainable manufacturing also leaves a stronger economy in its wake, and spending on basic infrastructure projects—roads, bridges, etc.—has been sorely neglected for the past eight years.
What’s more, as Ezra Klein notes for The American Prospect, the U.S. government seems to be in perpetual tax cutting mode, whether economic times are good or bad. While cutting the right taxes amid a severe recession can be justified, President George W. Bush’s decision to take a chainsaw to the IRS code during an economic boom cannot become a permanent facet of U.S. policy.
Imperative services provided by state governments are currently in severe jeopardy amid tax shortfalls prompted by lower housing values. The Public News Service discusses budget problems in Michigan and Missouri in pieces by Tony Bruscato and Laura Thornquist. Michigan faces cutbacks in health care for the poor and college tuition assistance programs, while Missouri needs to fill a $900 million hole by 2010.
State and local governments are likely to be $200 billion underwater next year, according to a piece by Robert Kuttner appearing in Chelsea Green. Even if Obama does not want to tackle major issues like universal health care in his first 100 days in office, he could fund community health clinics and make sure police officers, firefighters and teachers do not lose their jobs.
It has been easy to forget amid the mortgage market news of 2008 that other aspects of the economy have been under intense strain. In a frightening interview with The Real News, Leo Panitch details how a drop-off in working-class wages, fueled by a decades-long decline in the power of organized labor, has forced millions of Americans to turn to expensive consumer debt just to make ends meet.
That surge in credit card debt has been accompanied by a refusal on behalf of the federal government to place meaningful regulations on credit card lending practices. The Federal Reserve finally took steps in December to rein in deceptive credit card lending, but as Mike Lillis demonstrates for The Colorado Independent, the new rules are relatively modest given the scope of credit card-related abuses. Lenders can still do pretty much anything they want to a borrower once they miss a payment, and the Fed’s restrictions do not even go into effect until July 2010.
If low wages and predatory credit cards are not enough to push consumers into financial ruin, consider what is taking place in the student loan industry. The government keeps the student loan market going in two primary ways: by directly lending to students and by guaranteeing loans students take out from private lenders like Sallie Mae, making it cheaper for Sallie Mae to extend loans. The government-assisted private sector loans cost taxpayers significantly more money than loans made through the direct loan program.
When student lenders hit the skids this year amid a Wall Street-induced credit crunch, the government responded by financing student loans made through private companies.
But if the government is not only guaranteeing private-sector loans but financing them as well, the resulting scheme is essentially a less efficient version of the direct loan program, as Cole Robertson explains in a piece for The Nation. Sallie Mae CEO Albert Lord seems to approve of the bailout plan, but has not offered to return one penny of the orgiastic pay he’s accumulated over the past year in return for this taxpayer largess. Lord cashed out over $44 million in stock options in one day during the summer of 2007, and has been targeted by Congressional insider trading investigations for convenient sales of Sallie Mae stock.
A big federal bailout accompanied by outrageous executive compensation. Sounds familiar.
It is truly astonishing to consider how much damage conservatives have done to public attitudes on economic issues over the past 14 years. There is nothing inherently progressive about policy suggestions like like funding emergency health care, paying firefighters and teachers or refusing to allow lenders to arbitrarily change the terms of a contract without borrower consent. This stuff is basic sanity. At least 2009 promises not to be boring. We will either witness a return to said sanity that would have been unthinkable even a year ago or another depression. Happy New Year.
This post features links to the best independent, progressive reporting about the economy. Visit Economy.NewsLadder.net for a complete list of articles on immigration, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.