Patti's Blog - Advocate for Elders, People with Disabilities and Their Families

Bonuses at General Motors

Patti's Comment: I could not agree more, but heck, Wall Street gave out bonuses… why not GM?? In my opinion, neither should have been rewarded for the mess!

Excerpt from Detroit Free Press:  (click for entire article and cartoon)

When the titans on Wall St. handed out bonuses after running their companies into the ditch and turning to the government for a bailout, the public was rightly indignant. Should the public’s response be any different to news that General Motors (and Chrysler, for that matter) plan to hand out employee bonuses when the auto companies still owe the taxpayers billions? In the coming weeks, GM will post its first annual profit since 2004, according to the Free Press. Unless you’re an anti-government conservative blinded by dogma, this is great news and proof that the bailout is working. But that’s no justification for handing out bonuses - that could surpass 50% of employees’ salaries in some instances, according to published reports - before taxpayers have been made whole.

If it’s wrong for Wall St. to hand out bonuses before paying back taxpayers, it’s wrong for GM to do likewise.

Forgiving Student Loan Debt Would Stimulate Economy

Excerpt from The Huffington Post: (click for entire article)

The rich get richer, and when they get poorer...well, they get bailed out. That's how it seems lately. As Congress prepares to spend a trillion bucks (in addition to the $700 billion bailout from last fall), it makes one wonder when the working middle class will get some love. The pending American Recovery and Reinvestment Act (H.R.1) will no doubt help our economy in some form, but it's not nearly enough and it's not aimed at all demographics. If we can save the suits, why can't we save the common man, right?

Robert Applebaum, an attorney from New York, thinks so and has an idea on how to help many in his shoes -- and trust me, there are many -- while stimulating the economy at the same time. The 35 year old started up an online campaign this month to bail out those "hard-working, educated middle class" suffocating in college loan debt on Facebook. He formed the group "Cancel Student Loan Debt to Stimulate the Economy" because he believes forgiving student loan debt for those making under $150,000 annually would help boost the economy from "the bottom up."

'Side effect' of repeal of estate tax

Excerpt from The Mercury: (click for entire article)

The Economic Recovery and Tax Relief Reconciliation Act of 2001 modified the Federal Estate Tax law by reducing the maximum tax rate, as well as gradually increasing the size of an estate that would result in federal estate taxes being due.

For instance, if a person passed away in 2009, and his or her estate was worth less than $3.5 million, then no federal estate tax was owed. In 2010, there is no federal estate tax for anyone. However, it was assumed all along that Congress would act prior to 2010, and come up with a more permanent solution.

As reported in Elder Law Answers (www.elderlawanswers.com), Congress has let the estate tax law expire since Senate Democrats were unable to persuade Senate Republicans to extend the 2009 law for a few months. Congress may reinstate the tax retroactively in 2010, but this is by no means certain. In the meantime, estate planning attorneys and their clients are trying to figure out what to do.

Federal Reserve earned $45 billion in 2009

Excerpt from Washington Post: (click for entire article)

Wall Street firms aren't the only banks that had a banner year. The Federal Reserve made record profits in 2009, as its unconventional efforts to prop up the economy created a windfall for the government.

The Fed will return about $45 billion to the U.S. Treasury for 2009, according to calculations by The Washington Post based on public documents. That reflects the highest earnings in the 96-year history of the central bank. The Fed, unlike most government agencies, funds itself from its own operations and returns its profits to the Treasury.

The numbers are good news for the federal budget and a sign that the Fed has been successful, at least so far, in protecting taxpayers as it intervenes in the economy -- though there remains a risk of significant losses in the future if the Fed sells some of its investments or loses money on its stakes in bailed-out firms.

This turn of events comes as the banks that benefited from the Fed's actions are under the microscope. Starting at the end of the week, major banks are expected to announce significant earnings and employee bonuses. Anger in Washington is at such a high boil that the Obama administration will probably propose a fee on financial firms to recoup the cost of their bailout, officials confirmed Monday.

As it happens, the Fed's earnings for the year will dwarf those of the large banks, easily topping the expected profits of Bank of America, Goldman Sachs and J.P. Morgan Chase combined.

New Survey of Detroit Residents Finds Population Facing Significant Hardships but Maintaining Hope

Excerpt from Kaiser Family Foundation: (click for entire article)

The Washington Post/Kaiser Family Foundation/Harvard University Survey of Detroit Area Residents reveals a population that is facing some of the worst effects of the current economic recession.  Home of the nation’s domestic auto industry, Detroit’s residents have been at the forefront of the country’s economic woes.  The survey illuminates the experiences and needs of those living in the midst of this economic catastrophe, including questions about job loss and job security, views about the future of the Detroit area, the U.S. auto industry, and the future for American workers more generally.  It looks at the stark differences in experiences and attitudes of those living in the city of Detroit compared with the surrounding suburbs.  It also explores how Detroiters feel about their local, state, and federal governments, particularly in light of recent federal government action such as the economic stimulus and the aid provided to General Motors.

The survey is part of an ongoing three-way partnership between The Washington Post, the Kaiser Family Foundation and Harvard University. The partners worked together to pick the survey topics, design the survey instruments, and analyze the results. The Washington Post featured a collection of articles built upon the findings from the survey. 

Summary Brief

Toplines

Washington Post stories based on the survey findings

Cash in, and then what?

Excerpt from Times Union.com: (click for entire article)

How well can New York account for the billions of dollars in education stimulus funding coming to the state from Washington, D.C.?

Not very, according to a recent audit by the federal Department of Education's Inspector General, which turned up holes and shortfalls in the way the state Education Department had been set up to police the influx of money.  Unless they're corrected, the gaps in New York's oversight system could open the door to "unallowed, unsupported, or fraudulent expenditures" of stimulus dollars, according to federal inspectors.

State officials, however, say the Inspector General's audit of "internal control" systems was completed before stimulus dollars were handed out, and that they've already moved to beef up their oversight.

"It's history," Education Department spokesman Tom Dunn said of the audit findings.

Either way, the audit -- which was quietly released late last year -- highlights the difficulty that New York and other states face in making sure that stimulus money from the American Recovery and Reinvestment Act of 2009 isn't wasted.

The state Education Department "had made insufficient progress in establishing controls to ensure compliance with ARRA reporting requirements," concluded part of the audit, which was conducted during the summer by Regional Inspector General for Audit Daniel Schultz.

In addition to paying for brick-and-mortar projects such as road repaving, the stimulus plan is dispensing billions for education nationwide.

Health Fight Echoes the Stimulus Battle

Excerpt from New York Times: (click for entire article)

It’s stimulus redux, and liberal Democrats are not going to be happy about it.

When the Senate was in the final throes of negotiating the economic stimulus package this year, a band of centrist lawmakers — including Senators Olympia J. Snowe and Susan Collins, Republicans of Maine; Ben Nelson, Democrat of Nebraska; and Joseph I. Lieberman, independent of Connecticut — forced Democratic Congressional leaders and the White House to scale back the bill, slicing out billions of dollars in health and education programs.

The final stimulus deal also retained $70 billion to spare millions of middle class Americans from paying the alternative minimum tax, even though Congress would have taken that step anyway and economists said it would not add much to helping jolt the country out of the recession.

Now, as the brokering of major health care legislation comes down to the wire, some of the very same centrist senators are singing the very same tune.

“We’ve got to stop adding to the bill,” Mr. Lieberman said on “Face the Nation” on CBS on Sunday. “We’ve got to start subtracting some controversial things.”

COBRA Subsidy For Many Ends Today, Laid-Off Workers Face Bigger Bills

Excerpt from Kaiser Health News: (click for entire article)

As part of February's economic stimulus package, the federal government began subsidizing insurance premiums for millions of recently unemployed workers – such as Paul and Kate Carroll, whose story is highlighted in the Sacramento Bee. But for many people, the subsidies end Monday, leaving the laid-off workers to pay the full cost of insurance plans offered by their former employers if they wish to keep the coverage, the Bee reports.

The $25 billion subsidy program covers 65 percent of premiums for people who had become unemployed since September 2008 but retained employer-sponsored coverage through COBRA. The subsidies last nine months. COBRA coverage averages $1,069 a month, according to Families USA. Without subsidies, that may be out of reach for many unemployed people. "It's unclear when or whether Congress will address the subsidy expiration with specific legislation or as part of a major jobs bill. ... some Senate Democrats want not only to extend the subsidy to 15 months and push the expiration date to next June, but also want to boost it to 75 percent. A similar measure was introduced in the House."

Federal stimulus helps buy food in Michigan

Excerpt from Freep.com: (click for entire article)

The federal stimulus program has boosted spending on food in Michigan by more than $178 million from April through September 30, according the Michigan League for Human Services.

More than $50 million of the American Recovery and Reinvestment Act was directed to Wayne County, in which 204,775 households received benefits. Oakland and Macomb counties received $10.9 million and $10.6 million, respectively, according to the League, an advocacy group for Michigan’s needy.
The league based its report on data collected by the Center on Budget and Policy Priorities, according to spokeswoman Judy Putnam.

At a time when 12 % of Michigan households in recent years had difficulty feeding all members of their family due to lack of resources, individual assistance was boosted by the stimulus food funds by $20 to $24 per person per month, according to the League.

No More Executive Bonuses!

Patti's Comments:  AMEN!

Excerpt from The Wall Street Journal: (click for entire article)

These days, it seems, there is no shortage of recommendations for fixing the way bonuses are paid to executives at big public companies.

Well, I have my own recommendation: Scrap the whole thing. Don't pay any bonuses. Nothing.

This may sound extreme. But when you look at the way the compensation game is played—and the assumptions that are made by those who want to reform it—you can come to no other conclusion. The system simply can't be fixed. Executive bonuses—especially in the form of stock and option grants—represent the most prominent form of legal corruption that has been undermining our large corporations and bringing down the global economy. Get rid of them and we will all be better off for it.

The failings of the current system—and the executives who live by it—are painfully obvious. Although these executives like to think of themselves as leaders, when it comes to their pay practices, many of them haven't been demonstrating leadership at all. Instead they've been acting like gamblers—except that the games they play are hopelessly rigged in their favor.