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Re: What do you think of the government bailout proposal?
jobuntu
09-30-2008, 11:16 PM | Post #2569248
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In any business negotiation, from a farmers' market to the trading floors on Wall Street, something of value is exchanged for something else of equivalent value. The government bailout -the socialization of risk- of these corporados should involve an exchange for something of equivalent value. No one questions that we need to restore trust on Wall Street and between banks; it is essential to stabilizing the current economic crisis. But, what do we, the people, get? What is the thing or things of equivalent value? Here's what I want.
First, the entities involved need to pay for the bailout. I recommend three ways to recover our bailout: fees on shares traded; limiting executive compensation; and presuming income hiding in tax havens is taxable income. Second, there need to be conditions if we, the people, are to buy their bad debts. I recommend that they be required to invest in America by investing in the creation of the emerging post-petroleum economy.
To pay for this fiasco without causing undo hardship on the middle class, attach a fee of a penny for every share sold or bought on the exchanges. This would bring in $100's of billions each year, and the fee would remain in place until the Federal Government was completely reimbursed for the cost of the bailout (including administrative costs), while simultaneously encouraging long-term investing and stability.
Furthermore, we need to demand as taxpayers that we begin the process of limiting executive compensation. When CEOs are over-compensated, everyone loses –shareholders, workers, customers and taxpayers. Overcompensating for failure instills in us a lack of confidence in the system. Carly Fiorina was fired from Hewlett-Packard and took $21 million with her. Other CEOs were compensated for failure. For example, Merrill Lynch CEO John Thain took home over $83 million in 2007 (and his predecessor, Stanley O'Neal, who got $43 million in 2006, got a golden parachute worth $159 million) while Richard Fuld at Lehman Brothers took home “only” $22 million in 2007. (I hesitate to use the term “earn;” no one can “earn” that much in a year.) Such excessive CEO pay that we've seen at Lehman, Merrill Lynch, AIG and other companies is direct evidence that there is no oversight happening. Too often, the financial sector has thwarted attempts by active owners to rein in executive greed through the shareholder process.
Excessive executive pay is not in our best interests as a nation, and we should demand that our presidential candidates and congressional representatives endorse a maximum wage. I recommend that we tie such a maximum wage to the average wage within a given corporation; no single person at a company can be compensated more than 25 times more than the average worker's salary within that company. For example, if the average pay at AIG is $100,000, no one at AIG can be paid more than $2.5 million without penalty. AIG could decide to pay more, but would lose its ability to deduct the entire compensation package from its tax bill. Further, if AIG chose to pay more than $2.5 million, the amount above the $2.5 million would be taxed at 100%.
By tying the maximum to the average wage, we ensure:
- Executives won't earn excessive pay;
- It will be in the best interests of those executives to see that their employees are paid a living wage;
- The money that isn't spent on excessive compensation will be reinvested into the company, expanding employment (good for society and the tax base) and increasing the value of the company (good for shareholders/owners)
Defenders of executive greed will say that in order to “attract and retain talent,” executive compensation should not be limited. Calling what Thain, O'Neal and company did a talent you want to attract or retain is laughable. $2.5 million is enough to attract and retain talent worth keeping.
Congress also needs to get behind the Stop Tax Haven Abuse Act (STHA Act) introduced by Senators Levin (D-MI), Coleman (R-MN) and Obama (D-IL). That would change the way we treat money in tax havens. Currently, the US Government must prove the negative that money in tax havens –conservatively estimated at $100 billion a year, which, if taxed, could mean another $35 billion annually to pay for the bailout- is tasable income. The STHA Act would presume that money in tax havens is taxable, and individuals and corporations would have to prove that the money isn't taxable.
These taxes and fees will collect some of the money needed to pay for the bailout from those who -through their actions or omissions- were at least in part responsible for the current economic crisis and who can afford to pay for it. But, paying for the loans and bailout isn't enough.
Companies that accept taxpayers' offer to take their bad debt off their hands must agree to abide by certain conditions. They must stop investing in the offshoring of our jobs and our resources. They must invest -and invest heavily- in a post-petroleum economy. This will jump-start our national effort to be energy independent in ten years. A post-petroleum investment includes changing building codes so that all new homes will be built with energy use in mind: solar cells and solar water heaters – required; south-facing windows - required; northern berms to use the earth to insulate homes - required. All tall buildings (more than four stories) must include solar and passive heating and electricity, as well as green roofs and other “green” technologies.
If we act now, our nation can come out on the other side of this economic disaster stronger than we were before this crisis, as we did after the Great Depression. It takes leadership and shared sacrifice, and we need to demand that the financial sector, as part of our bailout, needs to give in order to get. We, the people, need to claim our stake in this bailout. These corporados have gotten us into a situation from which we have to rescue them and reinstall stability in the financial sector. Let's insist that, as part of the bailout, they must behave in the best interests of America.
That's what I want for the approximately $6,900 (~$2,300 per American) that my household will pay for the bailout. How about you, fellow taxpayer?
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