Grand Theft Auto: How Stevie the Rat Bankrupted GM June 8, 2009
Posted by rogerhollander in Economic Crisis, Labor.Tags: car czar, Citibank, general moters, gm bankruptcy, gm pension, Greg Palast, jp morgan chase, labor, labor unions, labour, Obama, obama administration, pension funds, robert rubin, roger hollander, steven rattner, tarp, treasury secretary, workers, workers rights
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Monday 01 June 2009
by: Greg Palast | Visit article original @ GregPalast.com
Screw the autoworkers. They may be crying about General Motors’ bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won’t spoil Jamie Dimon’s day.
Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders – led by Morgan and Citibank – expect to get back 100% of their loans to GM, a stunning $6 billion.
The way these banks are getting their $6 billion bonanza is stone cold illegal.
I smell a rat.
Stevie the Rat, to be precise. Steven Rattner, Barack Obama’s “Car Czar” – the man who essentially ordered GM into bankruptcy this morning.
When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what’s left. That’s the law. What workers don’t lose are their pensions (including old-age health funds) already taken from their wages and held in their name.
But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.
Here’s the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM’s stock – or 25%. Whatever, 17% or 25% is worth, well … just try paying for your dialysis with 50 shares of bankrupt auto stock.
Yet Citibank and Morgan, says Rattner, should get their whole enchilada – $6 billion right now and in cash – from a company that can’t pay for auto parts or worker eye exams.
Preventive Detention for Pensions
So what’s wrong with seizing workers’ pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it’s illegal.
In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can’t seize workers’ pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that’s because they are the same thing: workers give up wages in return for retirement benefits.
The law is darn explicit that grabbing pension money is a no-no. Company executives must hold these retirement funds as “fiduciaries.” Here’s the law, Professor Obama, as described on the government’s own web site under the heading, “Health Plans and Benefits.”
“The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits.”
Every business in America that runs short of cash would love to dip into retirement kitties, but it’s not their money any more than a banker can seize your account when the bank’s a little short. A plan’s assets are for the plan’s members only, not for Mr. Dimon nor Mr. Rubin.
Yet, in effect, the Obama Administration is demanding that money for an elderly auto worker’s spleen should be siphoned off to feed the TARP babies. Workers go without lung transplants so Dimon and Rubin can pimp out their ride. This is another “Guantanamo” moment for the Obama Administration – channeling Nixon to endorse the preventive detention of retiree health insurance.
Filching GM’s pension assets doesn’t become legal because the cash due the fund is replaced with GM stock. Congress saw through that switch-a-roo by requiring that companies, as fiduciaries, must
“… act prudently and must diversify the plan’s investments in order to minimize the risk of large losses.”
By “diversify” for safety, the law does not mean put 100% of worker funds into a single busted company’s stock.
This is dangerous business: The Rattner plan opens the floodgate to every politically-connected or down-on-their-luck company seeking to drain health care retirement funds.
House of Rubin
Pensions are wiped away and two connected banks don’t even get a haircut? How come Citi and Morgan aren’t asked, like workers and other creditors, to take stock in GM?
As Butch said to Sundance, who ARE these guys? You remember Morgan and Citi. These are the corporate Welfare Queens who’ve already sucked up over a third of a trillion dollars in aid from the US Treasury and Federal Reserve. Not coincidentally, Citi, the big winner, has paid over $100 million to Robert Rubin, the former US Treasury Secretary. Rubin was Obama’s point-man in winning banks’ endorsement and campaign donations (by far, his largest source of his corporate funding).
With GM’s last dying dimes about to fall into one pocket, and the Obama Treasury in his other pocket, Morgan’s Jamie Dimon is correct in saying that the last twelve months will prove to be the bank’s “finest year ever.”
Which leaves us to ask the question: is the forced bankruptcy of GM, the elimination of tens of thousands of jobs, just a collection action for favored financiers?
And it’s been a good year for Senor Rattner. While the Obama Administration made a big deal out of Rattner’s youth spent working for the Steelworkers Union, they tried to sweep under the chassis that Rattner was one of the privileged, select group of investors in Cerberus Capital, the owners of Chrysler. “Owning” is a loose term. Cerberus “owned” Chrysler the way a cannibal “hosts” you for dinner. Cerberus paid nothing for Chrysler – indeed, they were paid billions by Germany’s Daimler Corporation to haul it away. Cerberus kept the cash, then dumped Chrysler’s bankrupt corpse on the US taxpayer.
(“Cerberus,” by the way, named itself after the Roman’s mythical three-headed dog guarding the gates of Hell. Subtle these guys are not.)
While Stevie the Rat sold his interest in the Dog from Hell when he became Car Czar, he never relinquished his post at the shop of vultures called Quadrangle Hedge Fund. Rattner’s personal net worth stands at roughly half a billion dollars. This is Obama’s working class hero.
If you ran a business and played fast and loose with your workers’ funds, you could land in prison. Stevie the Rat’s plan is nothing less than Grand Theft Auto Pension.
It doesn’t make it any less of a crime if the President drives the getaway car.
——-
Economist and journalist Greg Palast, a former trade union contract negotiator, is author of the New York Times bestsellers “The Best Democracy Money Can Buy” and “Armed Madhouse.” He is a GM bondholder and card-carrying member of United Automobile Workers Local 1981. Palast’s latest reports for BBC Television and Democracy Now! are collected on the newly released DVD, “Palast Investigates: From 8-Mile to the Amazon – on the trail of the financial marauders.” Watch the trailer here.
Stealth Move in Washington Aims to Get $100 Billion for IMF Without Congressional Debate May 14, 2009
Posted by rogerhollander in Economic Crisis.Tags: roger hollander, bailout, pakistan, IMF, turkey, obama administration, mark weisbrot, latvia, pakistan taliban, international monetary fund, pakistan economy, pakistan economic crisis, pakistan political stability
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“You don’t have to do this.” Those are the near-last words of several victims in the Coen brothers’ classic film No Country for Old Men, as they try to convince the movie’s unrelenting assassin that he should spare them. The assassin, played by Javier Bardem, finds this annoying, because in his mind these murders are pre-determined.
So it is with the IMF’s continuing confrontations with its borrowers, with one government after another pleading: “You don’t have to do this.” Turkey and Latvia were in the news last week, having joined the roster of governments whose IMF disbursements are being withheld because they find it politically impossible to impose the required punishments on their citizens.
The IMF sees these measures as necessary and pre-determined – in most cases by the borrowing countries’ having run-up unsustainable external or budget imbalances. But in fact the IMF has a long track record – dating back decades – of imposing unnecessary and often harmful conditions on borrowing countries.
Latvia missed a 200 million euro disbursement from the IMF in March for not cutting its budget enough. According to press reports, the government wants to run a budget deficit of 7% of GDP for this year, and the IMF wants 5%. Latvia is already cutting its budget by 40%, and is planning to close some public hospitals and schools in order to make the IMF’s targets, prompting street protests. Latvia’s GDP crashed by 18% in the first quarter of this year, after a 10.3% drop in the preceding quarter. These are among the worst declines in the world. This indicates that the IMF’s prescription is serious overkill. The purpose of IMF aid is supposedly to make any necessary adjustment easier, not worse.
In Pakistan, it would be surprising if the US Treasury, which is the principal overseer of the IMF, did not see a need to ease up on the contractionary IMF conditions there. The government of nuclear-armed Pakistan is facing serious political problems right now, having recently launched a major offensive against a growing Taliban insurgency. Slowing Pakistan’s economy at a time when the global economic crisis is already doing that may not be the best policy from the point of view of political stability. The IMF has negotiated an increase in Pakistan’s fiscal deficit from 3.4% to 4.6% of GDP, but is holding the line against lowering interest rates.
In almost all of its standby arrangements negotiated over the last year, the IMF has included conditions that will reduce output and employment in situations where economies are already shrinking.
Yet here in Washington there is a rush to get the IMF more money without any congressional hearings or debate. We are told that poor countries will suffer if the IMF does not get a $108bn appropriation from Congress immediately. But this is nonsense.
If we add up all of the IMF’s commitments under the 16 standby arrangements negotiated since the crisis intensified last year, the total is less than $46bn. The poorest countries will not be allowed to borrow anywhere near that amount.
The IMF already has $215bn on hand, plus more than $100bn in gold reserves. It plans to create another $250bn in SDR’s, ie the IMF’s currency. Even if we include the $67.5bn that Mexico ($47bn) and Poland ($20.5bn) together can tap under the IMF’s flexible credit line, it is clear the IMF is trying to get hundreds of billions of dollars more than it is likely to need. And it has at least ten times the money that the poor countries – whose needs are pocket change compared to IMF resources – will ever be allowed to borrow.
Yet the Obama administration, in a surprise move out of nowhere on Tuesday, decided to try and attach the $108bn for the IMF to another spending bill in order to circumvent the normal legislative process. The reason for this stealth maneuver is that they might run into trouble in the House, where legislators are wary of voting for multi-billion blank cheques after the backlash against the Tarp financial bailout. They will try to convince Congress to approve this money without hearings or debate with the idea that it must be done in order to save poor people in poor countries.
Congress should be met with a chorus of opposition: “You don’t have to do this.”
Obama Preserves Entrenched Power, Sidesteps Racial Disparities May 12, 2009
Posted by rogerhollander in Barack Obama, Economic Crisis, Race.Tags: afro-americans, andre showell, banking interests, banksters, black unemployment, corporate america, Economic Crisis, food samps, foreclosures, glen ford, health care reform, health insurance, healthcare reform, institutional racism, john kennedy, lawrence summers, president obama, private health insurance, public assistance, Race, racial disparities, racism, recovery act, robert rubin, roger hollander, ronald reagan, single payer, structural racism, tim geithner, trickle down, unemployment insurance
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“The Obama presidential bully pulpit is reserved for banking interests.”
Mortgaging the White House May 2, 2009
Posted by rogerhollander in Economic Crisis.Tags: Economic Crisis, roger hollander, bailout, Federal Reserve, Wall Street, bank bailout, white house, Larry Summers, robert rubin, treasury, geithner, citigroup, taxpayer, fdr, foreclosure, tarp, michael winship, president obama, franklin delano roosevelt, congressional oversight, bill moyers, banksters, finance industry, tarp bailout, great deression, cop, new york federal reserve, banking barons, jo becker, gretchen morgenson, economic advisor, laissez-faire, richard durbin
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Published on Saturday, May 2, 2009 by CommonDreams.org
In his first hundred days, FDR came out swinging. He shut down the banks, threw the money lenders from the temple, cranked out so much legislation so fast he would shout to his secretary, Grace Tully, “Grace, take a law!” Will Rogers said Congress didn’t pass bills anymore; it just waved as they went by.
President Obama’s been busy, but contrary to many of the pundits, he’s no FDR. Our new president got his political education in the world of Chicago ward politics, and seems to have adopted a strategy from the machine of that city’s longtime boss, the late Richard J. Daley, father of the current mayor there. “Don’t make no waves,” one of Daley’s henchmen used to advise, “don’t back no losers.”
Your opinion of Obama’s first 100 days depends of course on your own vantage point. But we’d argue that as part of his bending over backwards to support the banks and avoid the losers, he has blundered mightily in his choice of economic advisers.
Last week, at a hearing of the Congressional Oversight Panel (COP) monitoring the Troubled Asset Relief Program (TARP), Treasury Secretary Timothy Geithner tried to correct AFL-CIO General Counsel Damon Silvers. “I’ve practiced law and you’ve been a banker,” Silvers said. Never, Geithner replied, “I’ve only been in public service.”
We beg to differ. Read Jo Becker and Gretchen Morgenson’s front-page profile of Secretary Geithner in Monday’s New York Times, and you’ll see how Robert Rubin protégé Geithner, during the five years he was running the New York Federal Reserve, fell under the spell of the big barons of banking to whom he would one day help shovel overly generous sums of money at taxpayer expense.
During “an era of unbridled and ultimately disastrous risk-taking by the financial industry,” the Times reported, “… He forged unusually close relationships with executives of Wall Street’s giant financial institutions.
“His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.”
Wined and dined at the Four Seasons, and in corporate dining rooms and fine homes by the very men whose greed and judgment helped bring on the Great Collapse, Geithner became so much a favorite of the Club that former Citigroup chairman Sandy Weill talked with him about becoming the bank’s CEO.
According to Becker and Morgenson, “Even as banks complain that the government has attached too many intrusive strings to its financial assistance, a range of critics — lawmakers, economists and even former Federal Reserve colleagues — say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense.”
The two reporters write that Geithner “repeatedly missed or overlooked signs” that the financial system was self-destructing. “When he did spot trouble, analysts say, his responses were too measured, or too late.”
In choosing a man to manage the bailout of the banks who’s so cozy with its players, and then installing as his White House economic adviser Larry Summers, who in the Clinton administration took a laissez-faire attitude toward the financial industry which would later enrich him, the president bought into the old fantasy that what’s best for Wall Street is best for America.
With these two as his financial gatekeepers, President Obama’s now in the position of Louis XVI being advised by Marie Antoinette to have another piece of cake until that rumble in the streets has passed on by.
In fact, other Wall Street insiders — many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest — privately are expressing serious concerns that Geithner, Summers and their associates are leading the president and America’s taxpayers down a path toward further economic disaster.
This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, “The banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
He could say the same of the White House.
Banksters on the War Path: How Wall Street Is Fighting Back and Winning Their Fight for the Status Quo May 2, 2009
Posted by rogerhollander in Economic Crisis.Tags: Economic Crisis, roger hollander, bailout, democracy, capitalism, subprime mortgages, foreclosures, Wall Street, Robert Scheer, Lobbyists, Larry Summers, eric holder, robert rubin, workers, taxpayer, chrysler, senate, financial system, bankers, tarp, trade unionists, tim geithner, obama administration, arlen specter, banksters, derivatives, banking industry, finance industry, hedge funds, danny schechter, dick durbin, kevin phillips, zogby poll, us regulators, tarp bailout, chrysler bankruptcy, naked capitalism, unemployed
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Published on Saturday, May 2, 2009 by CommonDreams.org
Dick Durbin knows his way around the Senate. He’s been there a long time, long enough to know how things really work. Over the years, the man from Illinois has come to realize that it’s not the elected officials who are in charge. Last week, he said it was the bankers “who run the place” acknowledging that Senators may be in office, but not necessarily in power.
Usually, the people who pull the strings stay in the background to avoid too much public exposure. They rely on lobbyists to do their bidding. They prefer to work in the shadows. They may back certain politicians, but coming from a world of credit default swaps as they do, they hedge their bets by putting money on all the horses.
They have so much influence because they have been reengineering the American economy for decades through “financialization,” a process by which banks and financial institutions gradually came to dominate economic and political decision-making. Kevin Phillips, a one time Reagan advisor and commentator, says our deepest problem is “the ascendancy of finance in national policymaking (as well as in the gross domestic product), and the complicity of politicians who really don’t want to talk about it.”
Curiously, despite the journalists like Bill Moyers and Arianna Huffington who have been blowing the whistle on the role of the “banksters” in our political life, criticizing the Republicans and Democrats who deregulated the financial system, this issue seems to float above the heads of most of the public, much of the press, and even the activist community more drawn to punishing the torture inflicted on a few by a former Administration than the economic duress being imposed on the majority of Americans by a minority of the super rich.
Demonstrators are still drawn more to the White House than the banks that have proliferated on every corner of the country.
Last week, a Zogby poll found that a majority of the public believes the press made things worse by reporting on the economic collapse. Not only is that blaming the messenger, it also overlooks the fact that much of the media was complicit in the crisis by not covering the forces that caused the collapse when it might have done some good.
Exacerbating the problem is that the Obama Administration has, in Robert Scheer’s words, enlisted “the very experts who helped trigger the crisis to try to fix it.”
“Obama,” he writes “seems depressingly reliant on the same-old, same old cast of self-serving house wreckers who act as if government exists for the sole benefit of corporations and executives.”
The team of Tim Geithner and Larry Summers has been carrying Wall Street’s water as Robert Rubin did before them. No wonder that Obama’s Attorney General Eric Holder told the Street last February, “We’re not going to go on any witch hunts.”
That was before we learned that Wall Street forced US regulators to delay the release of stress test results for the country’s 19 biggest banks until next Thursday, because some of the lenders objected to government demands that they needed to raise more capital. They are trying to rig the results.
That was also before the public learned of the obscenely huge bonuses the firms benefiting from the TARP bailout were shelling out to their executives. That was before we saw how the bankers with help from Democrats, including new convert Arlen Specter, managed to kill a bill to help homeowners stop foreclosures.
“The Senate on Thursday rejected an effort to stave off home foreclosures by a vote of 51 to 45. It was an overwhelming defeat, with the bill’s backers falling 15 votes short — a quarter of the Democratic caucus — of the 60 needed to cut off debate and move to a final vote. Across the United States, the measure is estimated to have been able to prevent 1.69 million foreclosures and preserve $300 billion in home equity.”
Commented the Center for Responsible Lending, “Instead of defending ordinary Americans, the majority of Senators went with the banks. Yes, the same banks who have benefited so richly from the TARP bailout.”
There was one small victory with the House approving a bill to protect consumers from credit card abuses. It’s not clear if the Senate will pass it too. “It’s one step forward and one step backward,” said Travis Plunkett, of the Consumer Federation of America. “Congress is moving in fits and starts to re-regulate the financial services industry and the banking lobby still has tremendous clout.”
“Tremendous clout” is an understatement.
In this past week, we also saw how a few hedge funds undermined the attempt to save Chrysler from bankruptcy by holding out for more money even after the unions and big banks agreed to compromise to save jobs.
The President was furious but apparently powerless: “A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout,” Obama said. “They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting.”
Explains the blog Naked Capitalism, “the banksters are eagerly, shamelessly, and openly harvesting their pound of flesh from financially stressed average taxpayers, and setting off a chain reaction in the auto industry which has the very real risk of creating even larger scale unemployment than the economy already faces. It’s reckless, utterly irresponsible, over-the-top greed.”
Will they be allowed to get away with it? A “captured” Congress is doing their bidding. There is no doubt that class antagonism is stewing, says the editor of the blog. He expressed a fear of a reaction that will go way beyond flag-wavng tea parties.
“… I am concerned this behavior is setting the stage for another sort of extra-legal measure: violence. I have been amazed at the vitriol directed at the banking classes. Suggestions for punishment have included the guillotine (frequent), hanging, pitchforks, even burning at the stake. Tar and feathering appears inadequate, and stoning hasn’t yet surfaced as an idea. And mind you, my readership is educated, older, typically well-off (even if less so than three years ago). The fuse has to be shorter where the suffering is more acute.”
One is reminded of the title of that movie, “There will be blood.” Rather than show contrition or compassion for its own victims, Wall Street is hoping to jack up its salaries and bonuses to pre-2007 levels. The men at the top are oblivious to the pain they helped cause. And so far, they’ve only occasionally been scolded by politicians that have mostly enabled, coddled, bankrolled, funded, rewarded, and genuflected to their power.
Wall Street’s behavior may be predictable, but how can we account for the silence of so many organizations that should be out there organizing the outrage that is building? Knock, Knock, Obama supporters, bloggers, trade unionists, out of work workers and fellow Americans. Will we fight back or roll over?
Pitchforks anyone?
Thievery Under the TARP April 22, 2009
Posted by rogerhollander in Economic Crisis.Tags: AIG, bailout, bush administration, d.e.shaw, Economic Crisis, Federal Reserve, Goldman Sachs, hedge funds, Henry Paulson, inspector general, lawrence summers, obama administation, Robert Scheer, roger hollander, tarp, tarp fraud, taxpayer money, timothy geithner, toxic assets, treasury department, Wall Street
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Published on Wednesday, April 22, 2009 by TruthDig.com
We are being robbed big-time, but you can’t say we haven’t been warned. Not after the release Tuesday of a scathing report by the Treasury Department’s special inspector general, who charged that the aptly named Troubled Asset Relief Fund bailout program is rife with mismanagement and potential for fraud. The IG’s office already has opened 20 criminal fraud investigations into the $700 billion program, which is now well on its way to a $3 trillion obligation, and the IG predicts many more are coming.
Special Inspector General Neil M. Barofsky charged that the TARP program from its inception was designed to trust the Wall Street recipients of the bailout funds to act responsibly on their own, without accountability to the government that gave them the money.
He pointed to the example of AIG, which has acted as a conduit of funds to the banks it had insured without being required to tell the government what it is doing: “Failure to impose this requirement with respect to the injection of yet another $30 billion into AIG would not only be a failure of oversight, but could call into question the credibility of the government’s efforts.”
AIG is just one example in a bailout that has left the financial conglomerates unsupervised as they spend taxpayer money in what the report termed a government program of “unprecedented scope, scale and complexity,” putting the public and the Treasury Department in the dark as to how the money is being used by the very tycoons who got us into this mess. “The American people have a right to know how their tax dollars are being used,” Barofsky wrote in the report, which sharply criticized the government for failing to hold financial institutions accountable.
For all of its criticism of the original program, designed by the Bush administration, the report was equally severe in denouncing the Obama administration’s plan to partner with hedge funds and other private capital groups to buy up the “toxic” holdings of the banks. Charging that the plan carries “significant fraud risks,” the inspector general’s report pointed out that almost all of the risk in this new trillion-dollar plan is being borne by the taxpayers. The so-called private investors would be able to put up money they borrowed from the Fed through “nonrecourse” loans, meaning if the toxic assets purchased prove too toxic and the scheme failed, the private investors could just walk away without repaying the Fed for those loans.
The reason those loans may prove even more toxic than expected and the price paid by this government-underwritten partnership far too high is that the government is purchasing the most suspect of the banks’ mortgage packages. In addition, the plan is to accept at face value the evaluation of those packages by the very same credit-rating firms whose absurdly wrong estimates of the dollar worth of these securities helped create the problem that now haunts the world’s economy. “Arguably, the wholesale failure of the credit rating agencies to rate adequately such securities is at the heart of the securitization market collapse, if not the primary cause of the current credit crisis,” the report found.
As with the entire banking bailout, the new plan of Obama’s treasury secretary, Timothy Geithner, is likely to enrich the very folks who impoverished the rest of us, as the report notes: “The significant government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit.”
At the heart of this potentially massive fraud was the original decision of Henry Paulson, President Bush’s treasury secretary and a former Goldman Sachs chairman, to not require the recipients of the bailout, such as his old firm, to account for how the money was spent. Unfortunately, President Obama’s administration continued that practice.
The only difference is that the amount of public money being put at risk is now far greater, and the hedge funds, which are totally unregulated, have been brought in as the central players. One of the largest of those hedge funds, D.E. Shaw, carried Obama’s top economic adviser, Lawrence Summers, on its payroll to the tune of $5.2 million last year. He may have reason to trust these secretive enterprises that operate beyond the law, but the public does not.
Rich Cause the Crisis, Workers Get the Blame July 14, 2009
Posted by rogerhollander in Canada, Economic Crisis, Labor.Tags: canada labor, canada workers, cupe, Economic Crisis, economic meltdown, harper government, labor, linda mcquaig, municipal governement, recessions, roger hollander, steven harper, tax cuts, tim hudak, toronto, toronto city workers, toronto strike, toronto workers, Wall Street, workers rights
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For a while, the Wall Street meltdown gave the rich a bad name.
Even they seemed embarrassed by their own excess. There were reports of designer shops packaging purchases in plain paper bags.
But as going downscale lost its novelty, the rich have grown weary of their own embarrassment. Gratuitous extravagance is making a comeback. I noticed a Tiffany’s ad in a Toronto newspaper last week for a “diamond solitaire on a platinum band of channel-set diamonds. From $3,550 to $1,000,000.”
Clearly the rich are feeling good in their own skin again. Public wrath, having briefly nipped at the heels of the well-to-do, has moved on to the heels of the less well-heeled – who also carry plain paper bags, but ones you can eat lunch out of.
And so, as the Wall Street-generated economic storm has squeezed public finances, Toronto’s city workers find themselves in the crosshairs.
The striking workers are demonized for wanting to hold onto their benefits, including the right to bank sick days, even though they won this fair and square at the bargaining table. It’s just one of dozens of concessions the city is now demanding from them.
Although the strike is a terrible drag for all of us, the city workers are in some ways doing us a service – holding the line against employers taking advantage of the recession to demand concessions (if unions simply give in, emboldened employers will go for more), and taking a stand against further erosion of public services.
Of course, in the media narrative, the workers are the villains. The role of the financial elite in triggering the economic storm is omitted, as is the elite’s relentless campaign over the past three decades for tax cuts, which set the stage for today’s financial shortfalls.
Responding to this campaign, Ottawa kept cutting taxes (more than $160 billion since 2003), rather than using its massive surpluses for public reinvestment. That meant cuts in transfers to provincial and municipal governments, even as extra responsibilities were downloaded onto them.
By August 2007, crash-strapped Toronto announced an array of cuts that threatened to diminish life in the city: less snow removal, shorter library hours, delayed openings for skating rinks, etc. Further down the food chain, struggling school boards were closing swimming pools.
In fact, the crunch could have easily been alleviated – if the Harper government had been willing to transfer the revenue from a planned one percentage point reduction in the GST, as municipal leaders across the country pleaded. His October 2007 budget gave the answer: no.
Business groups never mention that tax cuts necessitate cuts in public services. For the rich, it’s often a good trade-off; they can buy their own high-end services. But it’s rarely good for the rest of us.
As economists Hugh Mackenzie and Richard Shillington showed in a study last April, Canadian families typically get about $41,000 in public services for their taxes, which amounts to “the best bargain they’ll ever get.”
Meanwhile, provincial Conservative Leader Tim Hudak, sensing the frustrated public might be ready for a Mike Harris revival, has gone after the strikers, suggesting they should “get a grip.”
Hudak wants to direct your anger at the people who pick up garbage, rescue animals, run daycare centres – not at those who’ve spent years pushing for tax cuts that have left our public services underfunded and who now chase the recession blues with million-dollar shopping sprees at Tiffany’s.
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