The Quiet Coup

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

The Atlantic

Administration Seeks an Out On Bailout Rules for Firms

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Washington Post

Bailout Watchdog: Treasury’s stonewalling

Elizabeth Warren, the law professor appointed as Congress’s oversight czar on bank bailouts, blasted the Treasury Department — saying new legislation might be needed to give the House and Senate more access to details of the $700 billion rescue program.

Warren, testifying before the Senate Finance Committee Tuesday morning, said keeping Congress in the loop isn’t a “priority” of Secretary Tim Geithner — and suggested a possible “next step” would be to pass legislation that would “require [Treasury] to consult” with her.

Glenn Thrush

Where Wall Street Trades in Political Currency

With sweeping reforms coming, the Wall Street-Washington connection may be more important than ever, and political connections may be the new currency for deal makers.

Below is a matrix of Wall Street chiefs and private-equity bosses, as well as their personal contributions to politicians in 2007 and 2008, as recorded by the Center for Responsive Politics. The list, which gives politicians’ titles at the time, also illustrates the political action committee money given by each chief’s firm and its employees.

NY Times

The Definition of Insanity

A few months ago, I did some posts and TV appearances discussing some of the problems that would inevitably occur with the appointment of Goldman Sachs lobbyist Mark Patterson as the chief of staff at the Treasury Department. As Mother Jones subsequently reported, we’ve already seen some of those problems happen.

Open Left

Mr. Taleb Goes to Washington

Nassim Taleb is an unlikely choice to play the Jimmy Stewart role in a 21st-century remake of the Depression-era classic Mr. Smith Goes to Washington. But the tale of a naive do-gooder who tries to remind a corrupt political class of its obligations was re-enacted this week when Taleb attended the Wall Street Journal’s Future of Finance conference in Washington, D.C.

The Big Money

Was Eliot Spitzer Taken Out Because He Was Going to Bust AIG?

Eliot Spitzer is back and he’s talking. The thought of this, no doubt, brings a small shiver to the boardrooms of some of the perps walking around trying to figure out how to hide the money this week. Today Edward Liddy testified that there have been death threats made to or about executives who received bonuses, so no names will be put on the record, but these anonymous players must know that the jig is up in the land of easy-money. Isn’t what to do a no-brainer for these great Americans?

AlterNet

Specter Announces His Intention To Vote Against Employee Free Choice Act

Today on the Senate floor, Sen. Arlen Specter (R-PA) announced his intention to vote against cloture on the Employee Free Choice Act. Specter was the only Republican to vote for cloture when the measure was last considered in 2007. During his announcement, Specter noted his previous support for EFCA, but suggested that the current condition of the economy makes “this a particularly bad time to enact employee’s choice legislation”

Think Progress

Recruited to Serve and Sniff — Again

The wars in Iraq and Afghanistan aren’t just forcing thousands of soldiers and Marines to deploy for two and three tours. The sacrifice is being shared by a key, and growing, part of the U.S. military: highly trained German shepherds and Belgian Malinois. In a war with no front lines, they have become valuable at sniffing out makeshift bombs, which cause most U.S. casualties.

Washington Post

Around the Country, Calls for Lawmakers to Address “Real Problems, Not Imaginary Ones”

As several states enter critical phases in their legislative sessions, the debate for one of the most controversial election reforms continues to dominate headlines and legislative hearings. This year, more than 26 states introduced legislation to go above and beyond federal election law relating to voter ID, despite near consensus among voting rights advocates that it hurts the process far more than it helps. Last week, the hysteria around voter ID reached an all time high in six states, evoking public concern from advocates and citizens alike.

Open Left

The Woman Who Could Nail Bush: Are the Worst of the Torture Memos Still to Come?

On March 19, the nomination of Indiana University law professor Dawn Johnsen to head the OLC was endorsed by the Judiciary Committee with every Republican voting against her and Sen. Arlen Spector (R-PA) abstaining. The nomination was to have been brought to the Senate floor for a vote on Monday and then again on Wednesday, but it has been held back. Republican leaders, it appears, are playing with the notion of making Johnsen the target of their first filibuster.

AlterNet

Insurers shun those taking certain meds

Trying to buy health insurance on your own and have gallstones? You’ll automatically be denied coverage. Rheumatoid arthritis? Automatic denial. Severe acne? Probably denied. Do you take metformin, a popular drug for diabetes? Denied. Use the anti-clotting drug Plavix or Seroquel, prescribed for anti-psychotic or sleep problems? Forget about it.

Miami Herald

The Missing $1,000,000 Tax Bracket

Matt Yglesias has this creepy habit of writing about things the very moment that I’m thinking about them. Today I was looking at this handy chart prepared by the National Taxpayers’ Union on the top marginal tax rates at different points in time. If you’re at all familiar with debate over tax policy, this will be pretty familiar territory to you: the top marginal tax rate is now higher than it was under Reagan, but lower than it was under Clinton, and much lower than it’s been at various other points in history. (The average top marginal tax rate since the income tax was established is 60 percent).

What the discussion over the top marginal tax rate ignores, however (and what Ygelsias picks up upon) is that this rate has been assessed at very different thresholds of income. In 1940, for example, the top marginal tax rate was 81.1 percent — but this rate only kicked in once you made $5,000,000 or more in income, which is equivalent to about $75,000,000 in today’s dollars.

FiveThirtyEight

Why Labor Law Doesn’t Work for Workers

Behind the verbal fireworks, workers on the ground say that current labor law has no teeth and must be changed. In Lancaster, California, one of the country’s hardest-fought organizing drives highlights the obstacles they face. A year ago, employees at Rite Aid’s huge drug warehouse there voted to join a union. On March 21, 2008, the National Labor Relations Board certified that union, giving it the right to negotiate a first union contract. But Rite Aid, workers say, has just been waiting for the year to expire. Once it does, the company can stop the pretense of negotiating.

truthout

Competing Views of Government: Universal Medicare or Government-Protected Insurance Companies

We all know that people have different ideologies about the proper role of government. Some people, who tend to be left of center, think that the government’s role is to try to promote the general good, by providing basic services, protecting the poor and the sick, and ensuring a well-working economy. On the other hand, there are others, who usually place themselves right of center, who believe that the proper role of government is to redistribute as much income as possible to the wealthy.

truthout

Capitalism and Moral Sentiments

In recent days, both Tom Friedman and David Brooks urged us to take our attention away from the trivialities of the AIG bonuses (just 0.001 percent of GDP, sniffed Brooks), to focus on truly weighty macroeconomic matters. Friedman bade us to look forward to, and support, the next mega-bailout of the banks, and Brooks applauded the leadership of Mssrs. Geithner and Summers in leading the G20 to macroeconomic stimulus and a rejuvenation of the International Monetary Fund.

Both pieces had the feel of planted stories, with insider tips about what’s coming next and praise for the economics team as it battles against little minds in Europe and populist sentiments at home. Whether or not the stories came from Washington, both stories are wrong.

Huffington Post

AIG

I’ll leave to others the question of who knew or should have known that the bonus firestorm was coming; but it’s part of a pattern. At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached.

The Conscience of a Liberal

Financial Policy Despair

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

New York Times

The obvious answer is that the Democrats are now in power in both houses of Congress and in the White House. This is true, but it’s hardly a sufficient answer. The Democratic Party has long been the party of unions by default, rather than by policy. For at least the last couple decades, Democrats have been very friendly to businesses.

Instead, I think it’s time to refer to Bill Clinton’s famous campaigning motto. “It’s the economy, stupid.”

In times of relative economic prosperity, it’s easier for a worker to forget how many of our countries laws and protections apply to capital and how few apply to production. Sure, a job may not be a certain thing, but there are more. And barring skills restricted to a few industries that are always in trouble, aren’t we all at least above average in our ability to out-compete if the time comes to find a new job?

When the recession hits, it becomes much harder to remain blinded by our optimism. When an economic event of the magnitude of the one we’re experiencing now comes along, it’s impossible to miss the fact that the people who have no say in deciding the future of a company suffer the worst in the decisions that are made.

There are the layoffs:

In a single day, on Jan. 26, at least 50,000 new layoffs were announced at companies as varied as telecom giant Sprint Nextel (S), construction equipment maker Caterpillar (CAT), semiconductor manufacturer Texas Instruments (TXN), and pharmaceutical house Pfizer (PFE).

It was a stark reminder of how rapidly the recession is claiming jobs. Already 170,000 jobs have been lost in January. The U.S. economy lost 2.6 million jobs in 2008.

The worst news, though, may be that some economists say in their most optimistic view the U.S. has only reached the halfway mark in terms of the layoffs expected for this recession. A growing number of economists also say that the U.S. economy is not just shedding jobs temporarily, but may be undergoing a painful restructuring process that will eliminate some types of jobs for good. “We are seeing very large layoffs—the kind you get when companies don’t expect to be re-employing any time soon,” says Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. “They [represent] structural, not cyclical, changes to the economy. We’re looking at a permanently smaller economy with prolonged unemployment at an unacceptable level.”

Many of those who are keeping their jobs are still seeing pay cuts (including unpaid leave) and other reductions in benefits, particularly in 401(k) matches:

A couple of months ago, I started getting e-mails from readers curious about the announcements of plans reducing and/or suspending their matching contributions.

As the weeks passed—and the number of reports grew—so did the inquiries. Those first inquiries were clearly seeking assurances that the announcements did not constitute a trend, that this was still just something a (very) few employers were embracing. Indeed, that was my sense of things, borne out not only by one of our weekly surveys, but also in a couple of industry reports as well—and I was happy to provide those assurances (and links to those surveys) to any and all who asked.

However, in recent weeks, those inquiries have taken on a different tone; this new wave of inquiries seems to be seeking validation, if not vindication. Now, not in every case—and not enough to persuade me that we were on the verge of a match-suspension tsunami—but enough to suggest that such a thing could be possible.

Pension plans aren’t taking quite so much of a hit at the moment, perhaps because they’ve been declining for several years, but the Wall Street Journal says it’s only a matter of time (sorry, paywall), which means that companies have now been given permission to say everyone’s doing it.

Admittedly, many of these changes might still be happening if these employees were represented by a union. In particularly hard-hit industries, like auto manufacturing, unions are making pay and benefit concessions.

However, because these employees work under a contract, they have a voice in the process. They can negotiate to make these changes are temporary. They can negotiate the form of their concessions, receiving, for example, unpaid leave instead of wage reductions for the same work they’re already performing. They can negotiate concessions from the company in exchange for their own sacrifices.

Also, making it easier for employees to organize offers benefits for more than just represented employees. The standard (legal) advice to companies that don’t want to deal with unions is simple: Keep your employees happy.

There are a number of steps facilities can take if they wish to avoid unionization. These include the following:

* Develop a policy on unionization.

* Train supervisors to deal effectively with employees.

* Maintain effective communication with employees.

* Keep wages, benefits and other working conditions up to area standards.

* Provide periodic supervisor training.

* Enforce company rules uniformly.

* Establish/maintain company-sponsored committees, delegations, etc.

Or to put it more broadly:

First, if you are routinely taking care of the business I mentioned above, then you probably have little to worry about.

Let me put a finer point on it: if you have taken care of your employees as well as you have taken care of yourself, Mr. CEO, then you have little to fear from a union. It’s unlikely your employees will see much value in paying an intermediary to deal with you.

Second, if you are not routinely taking care of the business I mentioned above, it’s never too late to start. Right now, job security is everyone’s top priority so maybe you can start there.

Whatever you do, it must reduce the gap between what your workers get and what you want to give … before an intermediary steps in on their behalf and reduces the gap for you. You don’t need to close the gap entirely, just reduce it to the point where the difference is not worth the union dues to them. And if you are not sure how to proceed, try asking them how they would like you to proceed.

Doesn’t seem like much of a “burden” for the EFCA to lay on employers, does it? But it certainly has the potential to ease the way for employees as they deal with the current economic downturn. Given that, what better time is there for EFCA than right now?