economy – Page 19 – Hank Kalet

Geithner faces problems — should he go?

Timothy Geithner can probably be described by three words/phrases — smart, competent and out of touch? Eugene Robinson asks whether the Treasury secretary ultimately is up for the job:

Obama’s job would be much easier if Geithner were more effective at communicating with the public about what happened to the economy and what the administration is doing to fix it. As things stand, Obama has to do all the explaining himself. Perhaps it’s unrealistic to expect Geithner to be both a financial whiz and a silver-tongued orator. He does speak the language of Wall Street, though, and one of the nonnegotiable requirements in his job description should be to make the men and women who run our financial institutions understand that their behavior has to change.

The basic strategy for handling the crisis, begun under the Bush administration and continued by Obama, is to hook up a fire hose to the Treasury and shower irresponsible and greedy financial institutions with money until the fire is put out. In political terms, to put it mildly, this is a hard sell. It becomes an impossible sell when Wall Street displays not gratitude but arrogance, reminding us how emotionally satisfying it would be — if ultimately counterproductive and even disastrous — to stand back and let the fire burn.

The vast amount of money poured into Wall Street has bought American
taxpayers the right to say that business-as-usual practices such as the AIG
bonuses are over. Geithner needs to deliver this message. If he can’t or won’t,
Obama should find somebody who can and will.

Free choice for workers

Frank Askew offers a powerful rejoinder to the corporate folks who are opposing the Employee Free Choice Act:

But as the renowned Justice Oliver Wendell Holmes once reminded us, the life of the law is not logic, but experience. And experience has demonstrated over the past many years, the National Labor Relations Act (NLRA), which allegedly guarantees workers the right to organize unions, is irretrievably broken.

I speak with some personal experience in such matters. I spent the 95th Congress (1977-78) as special counsel first to the House labor-management committee and then the Senate labor committee.

What was even then apparent to any open-minded observer was that national labor law was nothing but a hunting license for employers to prevent union organizing. All they had to do was harass union organizers, fire union supporters and drag out elections forever, all with the help of highly paid and skillful anti-labor consultants.

Of course, those tactics were all illegal, and eventually the employers would pay fines, sometimes even large fines, but that was small change compared with having to sign a union contract. They might even have to rehire some of their fired employees years down the road, but by then the wind had been removed from the sails of the organizing drive.

The result, he says, has been the steady decline of unions and the wages of all workers.

Hence the need for EFCA:

The National Labor Relations Act, a major component of FDR’s New Deal, by permitting union organization of major U.S. industries, provided an important stimulus to the economy in the late 1930s and post World War II era. That was before employers discovered the many tactics to avoid the law. Passage of the Employee Free Choice Act could again provide a stimulus to the economy as the nation struggles to emerge from its current financial crisis.

Does populist rhetoric equal populist action?

The anger outside the Beltway has forced the House of Representatives to act. But the question is just how much our federal representatives understand the depths of this simmering anger and what it really means.

The House today — by a wide and bipartisan margin — approved a 90 percent tax on bonuses for executives that received at least $5 billion in federal bailout money. The tax would be retroactive so that it applies to AIG, which has sparked the latest outrage because of the $160 million in bonuses the company has handed out.

The question is whether this is anything more than a symbolic action or whether the federal government will actually recoup the bonus money. Critics say the tax is unconstitutional, while some Republicans were pushing an alternative plan they say would recoup all the cash. There also are questions about whether the plan will make it through the Senate.

And while everyone in the lower chamber wore their populist armbands on their sleeves, I doubt that more than a few truly understand the anger and where it stems from. Both parties have spent the better part of the last three decades cozying up to Wall Street, even as they talked up their connections to workers and small business. And now, as the economic crisis continues to rage — and not just in the financial sector — we are witnessing the beginnings of a revolt.

At the moment, Barack Obama has some political capital, but he needs to turn hard left in his policy proposals, focusing all of his attention on efforts to aid working people, homeowners and the dispossessed. To be fair, he has put a number of these efforts on the table, but they are nowhere near what is needed and should be expanded.

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I mentioned the bipartisan support — nearly as many Republicans voted for the bill (85) as voted against it (87) — because Republican leaders on cable are attempting to may politican hay from it. But four of five New Jersey Republicans — including Central Jersey Reps. Chris Smith and Leonard Lance — joined all eight New Jersey Democrats in voting yes.

Obama at the precipice?

Two posts from David Sirota that are worth reading, one on the Obama administration’s unexpected tin ear on the AIG fiasco and the other on the odd respect still accorded to the Federal Reserve despite its very public failure of oversight.

The first post outlines the mixed messages that are coming from the administration — with his chief of staff and chief political advisor downplaying public anger while the president himself acknowledges it — and points out the potential damage to its credibility this could create:

I get that nobody in Establishment Washington genuinely cares that taxpayers are being ripped off, and I get that the super-wealthy political class from millionaire investment banker Emanuel to millionaire consultant Axelrod to millionaire banker Tim Geithner gives much of a shit that our taxpayer dollars are being used to make new millionaires on Wall Street. But their boss, President Obama, is right: The majority of Americans, most of whom are not millionaires, is really angry and has a right to be angry.

These latest mixed messages are yet another indication that a the White House is creating a major economic credibility gap for itself. On the biggest economic issues of the day, the administration is saying contradictory things, and if it doesn’t get out of the tone deaf D.C. echo chamber and get back on message, my bet is that very soon Republicans’ faux populism that portrays Democrats as part of the problem is going to start getting traction.

I’m expecting that, given the president’s words, the administration will unify its message and reclaim the populist mantle on the economy — especially because I am fairly confident that Obama understands the dangers of ceding it to the Herbert Hooverites in the Republican Party. He can’t afford to waste his high approval ratings and let the GOP up off the floor, creating a possibility of a rerun of the 1994 anti-Clinton backlash.

And, make no mistake, the Clinton reference is apt because the Clinton presidency was a failed presidency, his third way nothing more than moderate conservatism dressed up in Democratic stylings, his social liberalism a smokescreen for fiscal policies friendly to big money as opposed to working people.

The second post focuses on Barney Frank’s oversight plan, pointing out the basic problem:

Seems to me that if a secretive regulatory agency falls down on the job and then proceeds to waste trillions of dollars on no-strings-attached bailouts, Congress might want to look to better, more publicly accountable agencies to become the chief regulator.

Good question: Why didn’t Geithner think of it?

From Truthdig:

Treasury Secretary Timothy Geithner has sent Congress an explanation of his plan to deal with the AIG bonus fiasco. Essentially, Treasury will dock the $165 million in bonuses from AIG’s next bailout payment. Here’s a question: If AIG can do without that $165 million, why were we giving it to the company in the first place?

This question, in the end, is the operative one — and one that could damage the Obama administration’s credibility with the American people. The AIG debacle has ignited a firestorm that could engulf Obama and his economic advisers.

The reality is that this mess is wonderfully (sarcasm alert) bipartisan — a bailout negotiated by the Bush administration and Federal Reserve Chairman Ben Bernanke and exemptions for AIG and others pushed by the Obama financial team has created federally subsidized bonuses for bad behavior. What should happen now is that the Obama administration should step up and take responsibility for its role in the AIG fiasco, work to recoup the bonuses and put tough rules in place to prevent it from happening again.