Restitutor Orbis

It is not at all surprising that the economy remains the single most important issue in the minds of Americans. Unemployment is higher than at any other time in a quarter century, and CNN, not necessarily the most balanced media outlet, suggests that there is a rift in Democratic ranks as to how the crisis should be addressed. Clearly, the myth of a "liberal media elite" touted by McCain and Palin is just that, a myth, and the media is not particularly friendly to Obama. The hate groups are out in force, and Republicans are still lining up behind Rush Limbaugh, who refuses compromise, who's motto is "stay the course". Republicans are blaming everybody for the economic crisis but themselves. Inexplicably, Bush is innocent and the blame falls squarely on a man who has been president for less than two months.

AP echoes CNN, saying

Confronting misgivings, even in his own party, President Barack Obama mounted a stout defense of his blueprint to overhaul the economy Thursday, declaring the national crisis is "not as bad as we think" and his plans will speed recovery.

Obama has gone on record as saying that the recent stimulus package would not be the last, that more would be needed. But according to AP, Nancy Pelosi refuses to make any commitment:

Meanwhile, House Speaker Nancy Pelosi, D-Calif., played down talk that Democrats would consider a second economic stimulus bill.

"I know that people have made suggestions that we should be ready to do something, but I really would like to see this stimulus package play out," Pelosi said. "It's just not something that, right now, is in the cards," she added later.

The Republicans are feeding fears about mounting deficits, and the burden placed on our children and on their children. Roosevelt famously said "the only thing to fear is fear itself" and I am afraid his words are still accurate. It is this fear that may prevent our government from doing what it takes to pull us out of the depression we find ourselves in.

On top of that, Obama wants to overhaul health care, reduce greenhouse-gas pollution and undertake major changes in energy policy. He's projecting a federal deficit of $1.75 trillion this year, by far the largest in history, but says he can get it down to $533 billion by 2013.

"I am not choosing to address these additional challenges just because I feel like it, or because I'm a glutton for punishment," Obama told the Business Roundtable, a group of top business executives. "I am doing so because they are fundamental to our economic growth, and to ensuring that we don't have more crises like this in the future."

I believe Obama is right. I agree with Paul Krugman that we need to be more pro-active, more aggressive, not less so, and that to date our response has been too tame, too cautious. If you start fighting a fire by pissing on it, you will soon discover that it is too late to put it out even with a firehouse, because while you were pissing, it was burning out of control.

The Administration has made clear that the stimulus already voted will be spent appropriately, and dire threats have been uttered:

Vice President Joe Biden opened the meeting by warning state officials that if they misuse money from the stimulus package, they should not expect more help from the federal government for a long time.

"If we don't get this right, folks, this is the end of the ability to convince Congress that anything should go to the states," Biden said.

Added Obama: "If we see money being misspent, we're going to put a stop to it."

I hope they are good at their word. I hope that we do not keep throwing money at Wall Street CEOs who horde it or spend it on expensive trips or to redecorate their offices. I do not think the people will put up with this for long. And I think it is quite possible that populist rage has not yet peaked.

Barack Obama wrote an op-ed piece for the Washington Post which appears in today's paper: The Action Americans Need. "What Americans expect from Washington is action that matches the urgency they feel in their daily lives -- action that's swift, bold and wise enough for us to climb out of this crisis."

Agreed. And in this piece Obama answers his critics:

In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis -- the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive.

I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We've seen the tragic consequences when our bridges crumble and our levees fail.

He goes on to conclude, and again I agree:

So we have a choice to make. We can once again let Washington's bad habits stand in the way of progress. Or we can pull together and say that in America, our destiny isn't written for us but by us. We can place good ideas ahead of old ideological battles, and a sense of purpose above the same narrow partisanship. We can act boldly to turn crisis into opportunity and, together, write the next great chapter in our history and meet the test of our time.

I reported yesterday that Wall Street wasn't happy about Obama's new rules. I'm reading more about that this morning. This in particular is a hoot:

The salary limit is "still a hefty sum to be sure, and the spirit of the order certainly has popular appeal, but it's a slippery slope when the government puts restrictions on how much an individual can earn in the private sector," said Patrick O'Hare of the independent research firm Briefing.com.

It's a slippery slope, Mr. O'Hare, when Wall Street CEO's expect impoverished citizens to pay their bloated salaries so they can live like princes. Get a clue.

There is a lot of whining going on and you won't see the American people shed a tear:

Douglas McIntyre at the financial website 24/7 Wall Street said the limits could make it more difficult for troubled banks to retain their best executives.

"Wall Street may keep most of its bankers if they face pay cuts, but it is the top five or 10 percent who make these companies really profitable, and they will soon be on their way to greener pastures if this measure is enacted," McIntyre said.

Is this an argument FOR high pay? Please. These so-called talented people you're whining on behalf of ran their businesses, and our country, into the ground. If this is talent, we can do without it. Get some high school kids in there. They can't do worse.

Don Lindner, a compensation specialist with the human resources association WorldatWork, said the new restrictions could mean a "huge cut in pay" for many top executives.

"They might leave to find jobs where they are paid more, that's my concern, that the restrictions are so deep that the leadership won't stay," Lindner told AFP.

GOOD! That's the outcome we want! Too many still have their jobs. Any CEO who accepted TARP funds should have been fired, along with the entire Board of Directors. They already proved they were incompetent to lead.

Time Magazine has a piece on this. Their question is, Can Obama's Executive-Pay Limits Tame Wall Street?

The New York Times is reporting this morning that the Obama administration "is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money, according to people familiar with the plan." This plan would also prohibit executives from receiving any bonuses above their base pay, "except for normal stock dividends."

And why is the Obama administration taking this step? Because it's listening to the American people, who are outraged by the huge bonuses these modern-day French aristocrats are paying themselves on top of their already obscene salaries.

Under the Treasury’s $700 billion rescue program, most companies that have received money so far have been considered “healthy” rather than on the brink of collapse.

But five of the biggest companies to get help — Citigroup, Bank of America and the American International Group, General Motors and Chrysler — were all facing acute problems. And top executives at those companies made far more than $500,000 in recent years.

Kenneth D. Lewis, the chief executive of Bank of America, took home more than $20 million in 2007. Of that, $5.75 million was in salary and bonuses.

Vikram Pandit, who became chief executive of Citigroup in December of 2007 and previously held other senior positions at the bank, made $3.1 million.

Richard Wagoner, the chief executive of General Motors, made $14.4 million, much of it in stock, options and other non-cash benefits. He earned a $1.6 million salary.

Maureen Dowd lists a few other mind-blogglings acts by the completely immoral and clueless:

Until it came to light Tuesday, Wells Fargo, which received $25 billion in federal funds, was blithely planning a series of “employee recognition outings” to Las Vegas luxury hotels this month.

As ABC reported, Bank of America took its $45 billion in bailout funds and sponsored a five-day carnival outside the Super Bowl stadium, and Morgan Stanley took its $10 billion in bailout money and held a three-day conference at the Breakers in Palm Beach. (Morgan Stanley had also still planned to send top employees to Monte Carlo and the Bahamas, events just canceled.)

The New York Post revealed that Sandy Weill, former chief executive of Citigroup, took a company jet to fly his family for a Christmas holiday to a $12,000-a-night luxury resort in San José del Cabo, Mexico. No matter that the company just got a $50 billion federal bailout and laid off 53,000 worldwide.

The interior of the 18-seat jet, as described by The Post, is posh, with a full bar, fine-wine selection, $13,000 carpets, Baccarat crystal glasses, Cristofle sterling silver flatware and — my personal favorite — pillows made from Hermès scarves.

As of now, the plan has been put into place, as the AP reports:

Obama announced the dramatic new government intervention into corporate America at the White House, with Treasury Secretary Timothy Geithner at his side. The president said the executive-pay limits are a first step, to be followed by the unveiling next week of a sweeping new framework for spending what remains of the $700 billion financial industry bailout that Congress created last year.

Obama clearly understands how the American people perceive the actions of these CEOs, who enrich themselves while their companies fail and while the American people pay to keep them afloat:

"This is America. We don't disparage wealth. We don't begrudge anybody for achieving success," Obama said. "But what gets people upset - and rightfully so - are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."

On top of this, Obama said that massive severance packages for executives who leave failing firms are also going to be eliminated. "We're taking the air out of golden parachutes," he said.

Of course, the CEOs are not happy. They've lived high off the hog for a long time and have been a law unto themselves, far above such petty concerns as ethics and morality. Honestly, 500K is pretty generous. I'd like to see steeper cuts in their privileged lifestyle. But it's a start, and it was the right thing to do.

Finally, there is this tidbit of news: TARP recipients paid $114M to lobby lawmakers.

Bank of America, combined with Merrill Lynch, spent $14.5 million and got $45 billion from the bailout. General Motors spent $15 million and got $10.4 billion, and American International Group spent $10.6 million and was paid out $40 billion.

Of all companies that have been helped by TARP, 25 paid lobbyists $76.7 million to represent them on Capitol Hill last year. According to the Washington Business Journal: