By Manifesto Joe
AIG (American International Group Inc.), Americans are being told, must be bailed out because it is too big to fail. Originally the world's biggest insurance company, AIG got into trouble with a vast foray into derivatives trading, insuring the kind of trash that giant financial institutions were bundling after they got into the subprime mortgage quagmire.
It's useful to extend an argument. I pose that the ultimate entity that is too big to fail is the federal government itself. Hell, it now owns 80% of AIG, anyway. Let the ultimate bailout commence.
So, where would the bailout money come from? There used to be, even in this country, the allegedly socialist notion of progressive taxation -- that those with the ability to pay should be taxed more. I understand that we don't want to punish successful people, you know, like those bonus-wealthy executives and derivatives traders at AIG. After all, we've got to keep attracting and retaining "the best and the brightest" to our giant financial institutions.
But one cannot even propose a more progressive income tax in this country without having to endure endless caterwauling from the right-wing attack apparatus. This is from MoveOn.org:
The media has been obsessing about President Obama's plan to roll back the Bush tax cuts for the wealthiest Americans—from 35% to 39.6% -— even asking if that makes him a socialist.
But do you know what tax rate the wealthiest Americans paid on the top portion of their earnings at the end of Ronald Reagan's first term? 50%.
Under Richard Nixon? 70%. Under Dwight Eisenhower? 91%!
Yes, we once had a progressive income tax in this country, and we even took that for granted -- like the right to organize a labor union, among other such quaint New Deal-era notions. There was even once a corporate income tax. It still exists on the books, but there are so many ways to elude it that 60% of American corporations don't pay anything. According to expert tax reporters Barlett and Steele, in 1959, corporations actually provided 39% of all IRS revenue. It's a fraction of that now.
I'm not even radical on this issue. To me, a 91% marginal tax rate on personal income does seem punitive. Even 70% sounds like too much. What sounds right? I'd say 50%, like at the end of Reagan's first term.
Even at 39.6%, the Clinton administration rate, the U.S. saw its last federal budget surplus, and the last we're likely to see for a while. President Barack Obama wants it there again, and he has shown an admirable fighting spirit.
But he's up against something very powerful. Facts and history mean nothing to these people. The objective is to defend the economic status quo, however toxic and indefensible. And they have a history of being able to mobilize armies of wage-enslaved fools who are more than willing to blame the wrong people for their problems. The idea at the core of their mission is not where we will be in 10 years. It is how much profit can be made for the right people in the next 10 minutes.
When we get down to it, the bailouts of financial institutions, all generally undeserving, won't cut it unless we do the ultimate bailout -- our own federal government. It is far too big to fail. Two plus two do not equal five, and if this economy is going to be put back on the tracks any time soon, it's clearly the federal government that's going to have to do it.
Granted, that's a scary thought -- almost as frightening as leaving it in "free-market" hands such as AIG's "best and brightest."
Showing posts with label bailout. Show all posts
Showing posts with label bailout. Show all posts
Monday, March 16, 2009
Monday, December 8, 2008
Workers Take Over Chicago Factory, Blame Company's Bailed-Out Creditor
By Manifesto Joe
This is an example of why a bailout, any bailout, is fundamentally a no-win situation for the taxpayer.
You may have heard news that workers at the Republic Windows and Doors factory in Chicago occupied the building and began a sit-in after the factory shut down Friday on three days' notice. Last time I checked, they're still there.
The workers say the factory was closed in violation of a law that requires a 60-day notice for a shutdown. They say they won't leave without assurances that they'll get severance and vacation pay.
What you may not have heard is the reason for the abrupt shutdown. The company's creditor, Bank of America, canceled Republic's line of credit. Republic's sales have tumbled in the sour economy, and with no line of credit, CEO Rich Gillman said the company had "no choice but to shut our doors," The Associated Press reported.
This is the same Bank of America that got $25 billion of the federal government's $700 billion financial bailout. That's over 3.5% of the total package. And they can't afford to extend a line of credit so that 250 mostly Hispanic wage earners in Chicago can keep their jobs?
SOCIALISM FOR THE RICH, "FREE" MARKET BUGGERY OF THE POOR
The Associated Press also reported that Bank of America, in a statement Saturday, said that it isn't responsible for Republic's financial obligations to its employees.
Exactly for whom, and to whom, is Bank of America, sucking at the federal tit to the tune of $25 billion, responsible and accountable?
It's in the public interest that people can get and hold jobs. These people can't pay taxes when they're in the unemployment line. Since this largess is coming from the taxpayers, we've got a perverse situation of collectivist capitalism for the bankers, and the icy sidewalk for the faceless mass of suckers who put up money for the bailout.
WHITHER THE BAILOUTS?
Along with many other people, I held my nose and voiced support for the bailout as a necessary evil. But this case illustrates why taxpayer-funded bailouts end up being no-win situations. It's a sort of blackmail -- the national economy would fall into a downward spiral of Depression proportions if financial institutions the size of Bank of America were allowed to go under. They seem to know this, and their behavior is commensurately unaccountable.
Chicago will easily survive a loss of 250 jobs at Republic. But multiply that scenario across the country, with many hundreds of struggling companies and overextended creditors, and you get a mental picture of what the U.S. economy is
facing.
This is an example of why bailouts need to have many strings attached to them, and very sturdy ones. In exchange for that $25 billion, the federal government ought to have pretty much leverage over what Bank of America uses it for. Republic operates at the level of a few million dollars per month, not in the billions like BOA. This is a microcosm of the kind of abuse that the many have endured, at the hands of the few, for decades.
A UNION SUNRISE?
A bright spot is that this incident may become a rallying point for the revival of a union movement in America. Here's more from the AP report:
"Across cultures, religions, union and nonunion, we all say this bailout was a shame," said Richard Berg, president of Teamsters Local 743. "If this bailout should go to anything, it should go to the workers of this country."
Outside the plant, protesters wore stickers and carried signs that said, "You got bailed out, we got sold out."
Leah Fried, an organizer with United Electrical Workers, obliquely compared the sit-in to the landmark 1936-37 General Motors sit-down strike in Flint, Mich., which helped unionize the auto industry. (Yeah, I know, there's the automakers bailout. That's another post.)
"We're doing something we haven't done since the 1930s, so we're trying to make it work," AP quoted Fried as saying. She pointed out that the occupying workers have been shoveling snow and cleaning the building during the sit-in.
Realistically, the financial bailout is a bitter concoction we're going to have to gulp down. But that doesn't mean we have to like it. And, for a dramatic change from '80s and '90s stupor, a lot of Americans seem to be waking up from virtual date-rape drugs and realizing who's been carrying out the assault on working people for many years.
I hope the 53-46% mandate for Barack Obama was only the beginning. Republic should trigger a reborn union movement in this country. Against the kinds of monolithic entities we now face, like Bank of America, lots of people getting together again is the only chance we have.
Manifesto Joe Is An Underground Writer Living In Texas.
This is an example of why a bailout, any bailout, is fundamentally a no-win situation for the taxpayer.
You may have heard news that workers at the Republic Windows and Doors factory in Chicago occupied the building and began a sit-in after the factory shut down Friday on three days' notice. Last time I checked, they're still there.
The workers say the factory was closed in violation of a law that requires a 60-day notice for a shutdown. They say they won't leave without assurances that they'll get severance and vacation pay.
What you may not have heard is the reason for the abrupt shutdown. The company's creditor, Bank of America, canceled Republic's line of credit. Republic's sales have tumbled in the sour economy, and with no line of credit, CEO Rich Gillman said the company had "no choice but to shut our doors," The Associated Press reported.
This is the same Bank of America that got $25 billion of the federal government's $700 billion financial bailout. That's over 3.5% of the total package. And they can't afford to extend a line of credit so that 250 mostly Hispanic wage earners in Chicago can keep their jobs?
SOCIALISM FOR THE RICH, "FREE" MARKET BUGGERY OF THE POOR
The Associated Press also reported that Bank of America, in a statement Saturday, said that it isn't responsible for Republic's financial obligations to its employees.
Exactly for whom, and to whom, is Bank of America, sucking at the federal tit to the tune of $25 billion, responsible and accountable?
It's in the public interest that people can get and hold jobs. These people can't pay taxes when they're in the unemployment line. Since this largess is coming from the taxpayers, we've got a perverse situation of collectivist capitalism for the bankers, and the icy sidewalk for the faceless mass of suckers who put up money for the bailout.
WHITHER THE BAILOUTS?
Along with many other people, I held my nose and voiced support for the bailout as a necessary evil. But this case illustrates why taxpayer-funded bailouts end up being no-win situations. It's a sort of blackmail -- the national economy would fall into a downward spiral of Depression proportions if financial institutions the size of Bank of America were allowed to go under. They seem to know this, and their behavior is commensurately unaccountable.
Chicago will easily survive a loss of 250 jobs at Republic. But multiply that scenario across the country, with many hundreds of struggling companies and overextended creditors, and you get a mental picture of what the U.S. economy is
facing.
This is an example of why bailouts need to have many strings attached to them, and very sturdy ones. In exchange for that $25 billion, the federal government ought to have pretty much leverage over what Bank of America uses it for. Republic operates at the level of a few million dollars per month, not in the billions like BOA. This is a microcosm of the kind of abuse that the many have endured, at the hands of the few, for decades.
A UNION SUNRISE?
A bright spot is that this incident may become a rallying point for the revival of a union movement in America. Here's more from the AP report:
"Across cultures, religions, union and nonunion, we all say this bailout was a shame," said Richard Berg, president of Teamsters Local 743. "If this bailout should go to anything, it should go to the workers of this country."
Outside the plant, protesters wore stickers and carried signs that said, "You got bailed out, we got sold out."
Leah Fried, an organizer with United Electrical Workers, obliquely compared the sit-in to the landmark 1936-37 General Motors sit-down strike in Flint, Mich., which helped unionize the auto industry. (Yeah, I know, there's the automakers bailout. That's another post.)
"We're doing something we haven't done since the 1930s, so we're trying to make it work," AP quoted Fried as saying. She pointed out that the occupying workers have been shoveling snow and cleaning the building during the sit-in.
Realistically, the financial bailout is a bitter concoction we're going to have to gulp down. But that doesn't mean we have to like it. And, for a dramatic change from '80s and '90s stupor, a lot of Americans seem to be waking up from virtual date-rape drugs and realizing who's been carrying out the assault on working people for many years.
I hope the 53-46% mandate for Barack Obama was only the beginning. Republic should trigger a reborn union movement in this country. Against the kinds of monolithic entities we now face, like Bank of America, lots of people getting together again is the only chance we have.
Manifesto Joe Is An Underground Writer Living In Texas.
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