Executive compensation

Corporate and Financial Institution Compensation Fairness Act of 2009

hmoroz — Tue, 04 Aug 2009 11:32:32 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Combined compensation received in 2008 by 11 executives at Citigroup, a primary recipient of financial bailout funds: $77.25 million

Net losses of Citigroup in 2008: $27.7 billion

Factor by which the average CEO pay exceeded that of the American worker in 2007: 344 times

Average value of perks like private jets given to executives in 2008: $336,248

Payment included in an executive compensation package that the heirs of James Bernhard, Chairman and CEO of the Shaw Group, were to receive from the construction giant upon his death: $40 million

Percentage of Shaw shareholders who voted in favor of having a say on executive compensation packages that include such payments to heirs: 66.7%

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. Today nearly half of Americans own some stock, with many middle-class families relying on 401(k)s and other investments to finance their retirement security or help their children afford college. Workers with traditional pension plans, including many public employees, also have a stake in the long-term financial performance of companies their pensions are invested in. As a result, the retirement security middle-class Americans work a lifetime to earn can be thrown into jeopardy by lavish CEO pay and retirement packages that reward executives with hundreds of millions of dollars even if they perform poorly, behave unethically, or manipulate pay through a biased compensation committee. As the financial crisis demonstrates, excessive pay can provide incentives for executives to take on excessive risk, endangering both shareholder value and the entire economy.

When executives get sumptuous rewards for inferior or mediocre work, middle-class Americans get shortchanged on the retirement benefits they have earned. Yet there is little shareholders can do to curb the excesses of companies in which they have a vital stake. This bill would introduce an important element of accountability, giving all shareholders “a say on pay” in the form of a nonbinding advisory vote to the Board of Directors. Although the vote is nonbinding, knowing they have option to vote increases shareholders’ scrutiny of executive pay and provides regular shareholder feedback to Boards of Directors. The mechanism of a nonbinding vote on compensation has been used successfully in other countries to put the brakes on questionable compensation plans and tie CEO pay more closely to performance. Some U.S. companies, such as Blockbuster, have also voluntarily adopted a shareholder vote on executive compensation, which they regard as a “best practice” in corporate governance. The improved independence of compensation committees, which can be heavily influenced by management and compensation consultants overly favorable to the interests of executives, and federal oversight of the riskiness of pay schemes will further improve accountability.

Quotes from Experts

Beyond this Bill

Additional Resources

“Giving Shareholders a ‘Say on Pay’ with Blockbuster Inc. Chairman and CEO James Keyes,” from the Drum Major Institute for Public Policy

“2009 Executive PayWatch,” from the AFL-CIO

“Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay,” from United for a Fair Economy

Pay for Performance Act of 2009

hmoroz — Wed, 01 Apr 2009 17:23:23 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Total amount of federal assistance authorized for AIG, according the Government Accountability Office, in dollars: 182,500,000,000

Minimum amount of bonuses distributed to employees of AIG’s Financial Products Subsidiary, the unit principally responsible for the firm’s collapse, in dollars: 165,000,000

Percent ownership stake in Fannie Mae, Freddie Mac, and AIG held by the United States government, respectively: 79.9, 79.9, 77.9

Value of assets received for every $100 the Treasury Department spent on the ten largest TARP investments in 2008, in dollars: 66

Value of securities received by Berkshire Hathaway for each $100 it invested in Goldman Sachs in September of 2008, in dollars: 110

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. Taxpayer bailout funds should be used first to prevent a collapse of the financial system and next to make the financial system work for current middle-class Americans by addressing the housing crisis and increasing the availability of loans. Under no circumstances should taxpayer funds pay exorbitant bonuses or excessive compensation. The compensation restrictions imposed by the Pay for Performance Act provide taxpayers with a measure of accountability by helping to ensure that taxpayer funds are not misused by financial institutions whose very existence is largely predicated on government assistance. The legislation does not excuse the government’s failure to include meaningful restrictions on compensation in the original financial bailout legislation. However, the bill protects middle-class taxpayers by preventing firms from using public money inappropriately for excessive compensation and bonuses.

As difficulties for middle-class Americans worsened at the end of 2008, Congress prioritized the country’s financial sector instead of struggling homeowners and the growing ranks of the unemployed. Legislators rushed passage of the Emergency Economic Stabilization Act (EESA), arguing that a failure to shore up the financial system would cause great pain throughout the economy. In exchange, they promised strict oversight and accountability for the $700 billion of taxpayer money that would be funneled to the very banks and financial institutions responsible for the current crisis. But strong measures to ensure appropriate use of taxpayer funds were not included in EESA. Despite a majority government stake and commitment of 183 billion of government funds, American International Group, for example, paid executives bonuses unthinkable to the vast majority of working Americans. Similar compensation payments are planned for executives of the housing finance companies Fannie Mae and Freddie Mac, which are also under government control.

Quotes from Experts

Beyond this Bill

Additional Resources

TARP Oversight and Accountability Reports, from the House Financial Services Committee

TARP Congressional Oversight Panel

“Re: AIG 2008 Retention Bonuses,” Letter from New York Attorney General Andrew Cuomo to Rep. Barney Frank

A Bill To Impose An Additional Tax On Bonuses Received From TARP Recipients of 2009

hmoroz — Thu, 19 Mar 2009 15:35:25 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Total amount of federal assistance authorized for AIG, according the Government Accountability Office, in dollars: 182,500,000,000

Minimum amount of bonuses distributed to employees of AIG’s Financial Products Subsidiary, the unit principally responsible for the firm’s collapse, in dollars: 165,000,000

Percent ownership stake in Fannie Mae, Freddie Mac, and AIG held by the United States government, respectively: 79.9, 79.9, 77.9

Value of assets received for every $100 the Treasury Department spent on the ten largest TARP investments in 2008, in dollars: 66

Value of securities received by Berkshire Hathaway for each $100 it invested in Goldman Sachs in September of 2008, in dollars: 110

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. Taxpayer bailout funds should be used first to prevent a collapse of the financial system and next to make the financial system work for current middle-class Americans by addressing the housing crisis and increasing the availability of loans. Under no circumstances should taxpayer funds pay exorbitant executive bonuses. The tax on bonuses imposed by H.R.1586 provides taxpayers with a measure of accountability by recovering taxpayer funds that are misused by financial institutions whose very existence is largely predicated on government assistance. The tax cannot excuse the government’s initial failure to limit executive compensation at firms propped up by taxpayers. However, the bill will protect middle-class taxpayers by holding firms accountable when they use public money inappropriately for bonuses.

As difficulties for middle-class Americans worsened at the end of 2008, Congress prioritized the country’s financial sector instead of struggling homeowners and the growing ranks of the unemployed. Legislators rushed passage of the Emergency Economic Stabilization Act (EESA), arguing that a failure to shore up the financial system would cause great pain throughout the economy. In exchange, they promised strict oversight and accountability for the $700 billion of taxpayer money that would be funneled to the very banks and financial institutions responsible for the current crisis. But strong measures to ensure appropriate use of taxpayer funds were not included in EESA. Despite a majority government stake and commitment of $183 billion of government funds, American International Group paid executives bonuses unthinkable to the vast majority of working Americans. Similar compensation payments are planned for executives of the housing finance companies Fannie Mae and Freddie Mac, which are also under government control.

Quotes from Experts

Beyond this Bill

Additional Resources

TARP Oversight and Accountability Reports, from the House Financial Services Committee

TARP Congressional Oversight Panel

“Re: AIG 2008 Retention Bonuses,” Letter from New York Attorney General Andrew Cuomo to Rep. Barney Frank

American Recovery and Reinvestment Act of 2009 - Conference Report

hmoroz — Tue, 17 Feb 2009 19:06:44 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Unemployment rate in early 2010, if current laws and policies governing federal spending and taxes do not change, according to the Congressional Budget Office: 9.2%

Reduction in unemployment rate in 2010 if the American Recovery and Reinvestment Act is enacted, according to the Congressional Budget Office, Mark Zandi of Moody’s Economy.com, and White House economic advisers, respectively: 1.9%, 2.1%, 1.8%

Increase in GDP from spending $1 on extended unemployment insurance benefits, in dollars: 1.63

Increase in GDP from spending $1 on accelerated depreciation, which provides businesses a tax break for new investment, in dollars: 0.25

Percentage of spending and tax cuts that will take effect by the end of 2010, according to the Congressional Budget Office: 74%

Percentage reduction in aid to states made by the conference report of the American Recovery and Reinvestment Act compared to the House version: 32%

Overview/Summary

Middle Class Position Analysis

Middle Class Supports.Economic conditions are bleak. The Congressional Budget Office estimates that if the economy continues on its current course, both the length and depth of the current downturn will be the worst since the Great Depression. For middle-class Americans, this means job and wage cuts, loss of health insurance, and, simply, a daily struggle to keep up with everyday costs like mortgage payments and college tuition.

The Congressional Budget Office estimates that if current economic conditions persist the unemployment rate could reach as high as 9.2% by 2010. With 46 million Americans already uninsured, the Kaiser Family Foundation reckons that if unemployment averages just 7% in 2009 (the current rate is 7.2%), the number of uninsured will increase by 2.6 million with an additional 2.4 million individuals enrolled in Medicaid and SCHIP. Indeed, state governments are struggling to provide the increased services needed to keep the swelling ranks of unemployed, uninsured individuals from falling out of the middle class. But the current economic climate has left states with decreased revenue from income, sales, and property taxes: 46 states face budget shortfalls with combined budget gaps of $350 billion through 2011. To confront these gaping budget holes, more than 20 states have implemented or are considering cuts to health insurance programs; the same is true of K-12 and early education programs and of funds for public colleges and universities.

Beyond the decidedly dire short-term outlook, economic improvement is probably quite far off. Douglas Elmendorf, director of the Congressional Budget Office, has testified that “economic recovery is likely to be slow and protracted.” Thus, programs that address longer-term concerns – investment in infrastructure and green technology are two primary examples – are as important as an immediate, stimulative jolt to the economy.

The American Recovery and Reinvestment Act ties together measures designed to assist middle-class households struggling to make ends meet, provisions that will provide an immediate economic stimulus, and investment that can help set the stage for an economy built on energy efficiency and durable infrastructure. Economists generally agree that the legislation will save around 3 or 4 million jobs by 2010, while increasing economic output. Indeed, the Congressional Budget Office, Mark Zandi of Moody’s Economy.com, and White House economic advisers all project that the legislation will reduce the unemployment rate by around 2%. Extended unemployment insurance will allow 6.7 million people to collect benefits. Importantly, aid to state governments for Medicaid and education programs would shore up budget gaps and help prevent cuts to vital services.

While assisting those most at need during the economic downturn, extended unemployment insurance and state fiscal assistance also generate the most “bang for their buck” in terms of stimulus because they funnel money into the hands of the people most likely to spend it. Extended unemployment insurance generates an estimated $1.63 in economic activity for each dollar spent; aid to state governments generates $1.38. In contrast, though they act more quickly than spending measures, tax cuts generate less stimulus. The Making Work Pay, Child, and Earned Income tax credits will help keep more than 2.3 million Americans out of poverty and the American Opportunity credit will make 3.8 million more students eligible for a higher education tax break. These are important measures that will assist aspiring middle-class and middle-class Americans struggling to make ends meet. But the expansions are temporary and tax cuts, even when refundable and directed at the low-income individuals most likely to spend them, are less effective stimulus measures. Worst of all, though, are tax cuts for businesses like accelerated depreciation and carryback loss provisions that have little economic benefit.

Despite concern that the spending included in the American Recovery and Reinvestment Act will be delayed, perhaps a valid concern due to the legislation’s size and complexity, the Congressional Budget Office estimates that 74% of spending would occur between 2009 and 2010. Indeed, funds for investment in infrastructure and energy efficiency, though perhaps more complicated to spend, are a critical step in longer term economic recovery. Beyond its stimulative value – infrastructure spending’s “bang for the buck” is $1.59 – the United States desperately needs new infrastructure to compete in the global economy. The American Society of Civil Engineers estimates that $2.2 trillion in infrastructure spending is now necessary. The funding for infrastructure projects included in the legislation is a first step in addressing this deficiency and funds devoted to high-speed rail are particularly welcome. Similarly, spending on a modernized electricity grid, retrofitted low-income housing, and weatherized homes creates the framework for a future economy less reliant on fossil fuels and, indeed, based on green technology.

Limitations on executive compensation and bonuses are a first step in establishing the accountability that has been missing from the financial bailout. Still, the bill does not set forth a comprehensive plan to address the foreclosure crisis that includes a moratorium on foreclosures, a mechanism to require modification of mortgages, and a change to the bankruptcy code to permit modification of mortgages on primary residences. Funds for the Neighborhood Stabilization Program are a necessary, but insufficient, step in mitigating the widespread negative effects that foreclosures can have on entire neighborhoods and communities.

Quotes from Experts

Beyond this Bill

Additional Resources

Recovery.gov, the official website of the American Recovery and Reinvestment Act

“Recession and Recovery,” from the Center on Budget and Policy Priorities

“Impact of Economic Turmoil on Health Coverage and State Medicaid Programs,” from the Kaiser Commission on Medicaid and the Uninsured

American Recovery and Reinvestment Act of 2009 - Senate Version

hmoroz — Tue, 10 Feb 2009 16:24:04 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Unemployment rate in early 2010, if current laws and policies governing federal spending and taxes do not change, according to the Congressional Budget Office: 9.2%

Increase in GDP from spending $1 on extended unemployment insurance benefits, in dollars: 1.63

Increase in GDP from spending $1 on accelerated depreciation, which provides businesses a tax break for new investment, in dollars: 0.25

Percentage reduction in aid to states made by the Senate version of the American Recovery and Reinvestment Act: 50.1%

Percentage reduction in Head Start and Early Head Start funds made by the Senate version of the American Recovery and Reinvestment Act: 50%

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. Economic conditions are bleak. The Congressional Budget Office estimates that if the economy continues on its current course, both the length and depth of the current downturn will be the worst since the Great Depression. For middle-class Americans, this means job and wage cuts, loss of health insurance, and, simply, a daily struggle to keep up with everyday costs like mortgage payments and college tuition.

The Congressional Budget Office estimates that if current economic conditions persist the unemployment rate could reach as high as 9.2% by 2010. With 46 million Americans already uninsured, the Kaiser Family Foundation reckons that if unemployment averages just 7% in 2009 (the current rate is 7.2%), the number of uninsured will increase by 2.6 million with an additional 2.4 million individuals enrolled in Medicaid and SCHIP. Indeed, state governments are struggling to provide the increased services needed to keep the swelling ranks of unemployed, uninsured individuals from falling out of the middle class. But the current economic climate has left states with decreased revenue from income, sales, and property taxes: 45 states face budget shortfalls with combined budget gaps of $350 billion through 2011. To confront these gaping budget holes, more than 20 states have implemented or are considering cuts to health insurance programs; the same is true of K-12 and early education programs and of funds for public colleges and universities.

The American Recovery and Reinvestment Act ties together measures designed to assist middle-class households struggling to make ends meet, provisions that will provide an immediate economic stimulus, and investment that can help set the stage for an economy built on energy efficiency and durable infrastructure. Economists generally agree that the legislation will save around 3 or 4 million jobs by 2010, while increasing economic output. Indeed, the Congressional Budget Office , Mark Zandi of Moody’s Economy.com, and White House economic advisers all project that the legislation will reduce the unemployment rate by around 2%. Extended unemployment insurance will allow 6.7 million people to collect benefits. Importantly, aid to state governments for Medicaid and education programs would shore up budget gaps and help prevent cuts to vital services.

While assisting those most at need during the economic downturn, extended unemployment insurance and state fiscal assistance also generate the most “bang for their buck” in terms of stimulus because they funnel money into the hands of the people most likely to spend it. Extended unemployment insurance generates an estimated $1.63 in economic activity for each dollar spent; aid to state governments generates $1.38. In contrast, though they act more quickly than spending measures, tax cuts generate less stimulus. The Making Work Pay, Child, and Earned Income tax credits will help keep more than 2.1 million Americans out of poverty and the American Opportunity credit will make 3.8 million more students eligible for a higher education tax break. These are important measures that will assist aspiring middle-class and middle-class Americans struggling to make ends meet. But the expansions are temporary and tax cuts, even when refundable and directed at the low-income individuals most likely to spend them, are less effective stimulus measures. Worst of all, though, are tax cuts for businesses like accelerated depreciation and carryback loss provisions that have little economic benefit.

Despite concern that the spending included in the American Recovery and Reinvestment Act will be delayed, perhaps a valid concern due to the legislation’s size and complexity, the Congressional Budget Office estimates that 78% of spending would occur between 2009 and 2010. Indeed, funds for investment in infrastructure and energy efficiency, though perhaps more complicated to spend, are a critical step in longer term economic recovery. Beyond its stimulative value – infrastructure spending’s “bang for the buck” is $1.59 – the United States desperately needs new infrastructure to compete in the global economy. The American Society of Civil Engineers estimates that $2.2 trillion in infrastructure spending is now necessary. The funding for infrastructure projects included in the legislation is a first step in addressing this deficiency. Similarly, spending on a modernized electricity grid, retrofitted low-income housing, and weatherized homes creates the framework for a future economy less reliant on fossil fuels and, indeed, based on green technology.

Requirements for application of TARP funds to foreclosure prevention and for limitations on executive compensation and bonuses are first steps in establishing the accountability that has been missing from the financial bailout. Still, the bill does not set forth a comprehensive plan to address the foreclosure crisis that includes a moratorium on foreclosures, a mechanism to require modification of mortgages, and a change to the bankruptcy code to permit modification of mortgages on primary residences.

Quotes from Experts

Beyond this Bill

Additional Resources

“Recession and Recovery,” from the Center on Budget and Policy Priorities

“The State of the Economy and Issues in Developing an Effective Policy Response,” Statement of Douglas W. Elmendorf before the House Committee on the Budget

“Impact of Economic Turmoil on Health Coverage and State Medicaid Programs,” from the Kaiser Commission on Medicaid and the Uninsured

A Joint Resolution Relating to the Disapproval of Obligations under the Emergency Economic Stabilization Act of 2008

hmoroz — Tue, 20 Jan 2009 18:14:38 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Amount allocated by the Treasury Department under the initial TARP tranche: $354 billion

Percentage of that original amount allocated for foreclosure mitigation efforts: 0

Number of foreclosures Credit Suisse projected in April of 2008 would occur over the next five years: 6.5 million

Number of foreclosures Credit Suisse projected in December of 2008 would occur over the next five years: 8.1 million

Proportion of homeowners who will lose their homes to foreclosure over the next five years: 1/9

Decrease in the number of loans in loss mitigation in May of 2008 compared to January of 2008: 40,000

Overview/Summary

Middle Class Position Analysis

Middle-Class supports the Joint Resolution of Disapproval and opposes the release of TARP funds without additional conditions. $350 billion have been distributed to the nation’s largest financial institutions so far. Yet, struggling middle-class homeowners have enjoyed no apparent benefit from an expenditure of taxpayer dollars sold to them with a promise to pursue foreclosure mitigation efforts. 1.5 million homes were lost to subprime foreclosures between 2005 and 2007 and another 2 million loans are currently more than 60 days delinquent. In the next five years, 8.1 million homes of all mortgage types will be lost to foreclosure. Worse, there has been little accountability for the spending of the original $350 billion in taxpayer funds.

As the former Treasury Secretary notes in his report to Congress requesting the second $350 billion authorized by the Emergency Economic Stabilization Act, the original Troubled Assets Relief Program created by EESA was designed to stabilize the financial system, increase the availability of mortgage finance and avoid preventable foreclosures, and protect taxpayers. While the Treasury Department argues that the first objective has been achieved, the Congressional Oversight Panel charged with monitoring TARP’s implementation has expressed doubt that financial stability has been accomplished as a result of TARP. Treasury has all but ignored the second and third objectives. In congressional testimony, the head of the Center for Responsible Lending pointed out that foreclosure mitigation efforts have largely failed: seriously delinquent loans are at a record level and the redefault rate on modified loans is high. Nearly eight in ten seriously delinquent homeowners are not on track for any loss mitigation, a figure that has worsened over time. One in five loan modifications made in the past year is currently delinquent. Thus, not only are government efforts to prevent initial foreclosures falling short, but loan modification programs are failing to keep homeowners in their homes in the long term. Congressional oversight of the first $350 billion in TARP funds was meager, primarily because financial institutions refused – with Treasury’s approval – to provide detailed accounts of how the bailout money was used. The Treasury Department has not explained why funds were dispensed in the manner they were, while news reports suggest that few banks have used TARP money to increase lending, choosing instead to shore up their capital positions in case of further economic decline and to plot takeovers of rival institutions.

In short, taxpayers have spent several hundred billion dollars to shoulder the risk of the nation’s largest banks and it is unclear what we have received in return. The Senate Joint Resolution of Disapproval provided an opportunity to delay authorization of the second half of TARP funds until a coherent strategy for distribution and oversight that benefited middle-class Americans could be developed. While assurances from President Obama that he will improve TARP administration are welcome, the force of law is necessary to ensure true accountability.

Quotes from Experts

Beyond this Bill

Additional Resources

TARP Related Documents, from the House Financial Services Committee

Emergency Economic Stabilization Act, from the Department of the Treasury

“Continued Decay and Shaky Repairs: The State of Subprime Loans Today,” from the Center for Responsible Lending

Senate Version of the Auto Industry Financing and Restructuring Act of 2008

hmoroz — Fri, 12 Dec 2008 14:47:37 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Estimated jobs lost if General Motors alone collapsed: 914,000

Estimated jobs lost if the U.S. motor-vehicle assembly complex collapsed: 3.3 million

Increase in the number of unemployed persons since the beginning of the recession in December 2007: 2.7 million

Minimum percentage increase in the unemployment rate in the 10 states hit hardest by a total motor-vehicle assembly shutdown: 2.8

Three-year government tax loss if all of Detroit’s operations ceased, in dollars: 156.4 billion

Number of states that would experience job losses of at least 1,000 if General Motors alone collapsed: 50

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports.
The automobile industry is a critical component of the American economy. Motor vehicle and parts industries employed over 700,000 people directly as of September and each job in the auto industry supports about 1.7 additional jobs in industries as diverse as textiles and retail. Auto industry workers with solid wages create jobs in their local economies with their spending. More importantly, the jobs in and supported by the auto industry are solid middle-class jobs that tend to provide health insurance and employment stability. At a time of economic recession when job losses are already steep, the middle class cannot afford to lose hundreds of thousands of well paying jobs.

Indeed, a failure of one or, significantly worse, of all three American automakers would seriously harm the middle class. The Economic Policy Institute predicts that over 900,000 jobs would disappear if GM collapsed, while a worst-case-scenario shutdown of the entire U.S. auto industry would eliminate 3.3 million jobs. Though this scenario is worst case and some jobs would eventually reappear as the industry reconstituted itself, the short-term damage to the American middle class would be severe. Unemployment would rise several percentage points in the hardest hit states and every state would experience job losses. Increased unemployment benefit payments, significant tax revenue losses, and government assumption of pension obligations are all additional outcomes that could result from an automaker’s failure.

The legislation will prevent the short-term failure of the automobile industry in the United States and makes a leaner, more energy-efficient Detroit plausible. An auto czar cannot make the Big Three automakers profitable. But the czar’s influence – backed up by the capacity to speed loan repayment and impose bankruptcy – and the thorough restructuring guidelines laid out by Congress can ensure that the American automakers do not once again fail to confront environmental concerns and recalcitrant management. Most experts agree that bankruptcy in the current liquidity crisis would be devastating to the auto manufacturers: already weak sales would be exacerbated by consumers frightened to buy from a bankrupt manufacturer, while lending institutions normally accessible to bankrupt companies would be unavailable. The Auto Industry Refinancing and Restructuring Act imposes reasonable restructuring requirements, while ensuring that solid middle-class jobs are preserved in a period of deep economic crisis.

The Senate version’s addition of heavy-handed requirements for reduction of labor costs is unjustified and even reckless. We fear that the inclusion of such requirements is no more than an attempt by conservatives to blame management’s poor judgment on middle-class workers making decent wages and earning decent benefits. Further, imposing such requirements prior to restructuring limits what negotiations between a car czar, the UAW, and the automakers can accomplish. While they bemoan business decisions being made in Washington, some conservatives evidently are confident enough in their business savvy to decide the appropriate level of autoworkers’ wages. Still, preservation of millions of jobs in the auto industry makes support for the Auto Industry Refinancing and Restructuring Act absolutely necessary.

Quotes from Experts

Beyond this Bill

Additional Resources

“When Giants Fall,” from the Economic Policy Institute

“Better Than A Bailout,” from The New Republic

“Panic in Detroit,” from The New Republic

Auto Industry Financing and Restructuring Act of 2008

hmoroz — Thu, 11 Dec 2008 16:44:49 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Estimated jobs lost if General Motors alone collapsed: 914,000

Estimated jobs lost if the U.S. motor-vehicle assembly complex collapsed: 3.3 million

Increase in the number of unemployed persons since the beginning of the recession in December 2007: 2.7 million

Minimum percentage increase in the unemployment rate in the 10 states hit hardest by a total motor-vehicle assembly shutdown: 2.8

Three-year government tax loss if all of Detroit’s operations ceased, in dollars: 156.4 billion

Number of states that would experience job losses of at least 1,000 if General Motors alone collapsed: 50

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

“When Giants Fall,” from the Economic Policy Institute

“Better Than A Bailout,” from The New Republic

“Panic in Detroit,” from The New Republic

Emergency Economic Stabilization Act of 2008

hmoroz — Fri, 03 Oct 2008 17:44:58 -0400

Legislation

The middle class

Opposes

Video Summary

Injustice Facts

Amount authorized for the Treasury Secretary to use to buy troubled assets: $700 billion

GDP (PPP) of Taiwan in 2007: $695.4 billion

Percentage increase in foreclosure filings from August of 2007 to August of 2008: 27

Likelihood that a U.S. household received a foreclosure filing during August of 2008: 1/416

Number of foreclosures expected to occur in late 2008 and throughout 2009: 2,164,000

Estimated number of foreclosures that the mortgage restructuring provision for primary residences, not included in this legislation, would prevent: 600,000

Decrease in home values caused by nearby subprime foreclosures in late 2008 and throughout 2009: $352 billion

Overview/Summary

Middle Class Position Analysis

Middle Class Opposes. Middle-class Americans, no matter how far removed from Wall Street, will be adversely affected by the crisis in finance and credit that now grips our economy. After a prolonged period of stagnant wages and economic growth that benefited primarily the wealthiest, middle-class Americans rely heavily on credit to purchase everyday necessities, pay medical bills, and fund college educations. Epic stock market declines have eaten away at the retirement savings of senior citizens who have no other source of income. If the government does not act to make more credit available, credit for the loans that finance payrolls and state and local government operations will dry up, increasing unemployment. Government action is absolutely necessary to ensure that middle-class Americans’ standard of living does not suffer gravely from the credit crisis.

Yet, the Emergency Economic Stabilization Act of 2008 is not the action middle-class Americans need. Instead of a top-down bailout, credit markets should be stabilized from the bottom up. To the extent that a direct investment in the financial services industry is made, it should fully complement large-scale mortgage restructuring and foreclosure prevention efforts and the re-regulation of the financial services industry. This would not only benefit struggling homeowners, but is widely understood to be part of an effective strategy to aid financial markets through stabilized payment streams.

The nation’s first priority should be to repair the damage done to the housing market and to the lives of working- and middle-class Americans.

Any proposed remedy for the financial crisis must begin with assistance for struggling homeowners. This should come in the form of a longer-term, government-led commitment to reshape the mortgage landscape of this country. One promising model is the Home Owners’ Loan Corporation (HOLC). Originally established during the New Deal, HOLC made more than 1 million loans to refinance mortgages in distress, which constituted a fifth of all mortgage loans. At present, this would represent about 10 million loans, with the total value of mortgages held by HOLC in 1937 approximately equivalent to the total of all subprime mortgage loans. HOLC helped about 80% of homeowners who refinanced stay in their homes.
Bankruptcy protection for primary residences is critical. This measure would allow bankruptcy judges to rewrite mortgages on first homes (as is now possible for second homes and yachts) on terms struggling homeowners could afford. The change could prevent as many as 600,000 foreclosures.
A moratorium on foreclosures would provide an immediate opportunity for homeowners to work out loan modifications with lenders.

The financial crisis is serious and will affect the lives of middle-class Americans immediately and significantly. At the same time, only financial rescue legislation that includes significant assistance for homeowners can initiate a full, long-term recovery from the current crisis.

Despite the inclusion of several special-interest tax breaks in the Act, the tax changes added to the legislation are generally very important to the middle-class. The energy tax credit expansions and extensions are part of a long-term strategy to alleviate high gas and heating costs, make the country more energy efficient, and ensure that the economy retains jobs in renewable energy and technology. Changes to the child tax credit would make 2.9 million additional children eligible for the benefit and would increase the benefit for 10.1 million more. Temporarily raising the Alternative Minimum Tax exemption ensures that middle-class Americans are not overwhelmed by a tax that they were never intended to pay.

Finally, the mental health and “substance use disorder” parity provisions of the Act not only do much to remedy the discriminatory practices of insurers, but will increase access to mental health care services for middle-class Americans already struggling with high health care costs.

While these last-minute additions to the bailout package are positive for the middle class and should become law, they are not relevant to this bill and should be enacted separately. Ultimately, these provisions do not outweigh the substantial shortcomings of the financial bailout.

Quotes from Experts

Beyond this Bill

Additional Resources

Harvard Law Professor Elizabeth Warren on Bankruptcy Reform and the Housing Crisis

Center for Responsible Lending on Court-Supervised Loan Modifications

A History of the Home Owners’ Loan Corporation from the Center for American Progress

Renewable Energy and Job Creation Act of 2008

hmoroz — Thu, 22 May 2008 17:49:06 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percentage of the benefits of the child tax credit that went to families in the top 40% of the income distribution in 2005: 60

Maximum percentage of the benefits of the child tax credit that went to families in the lowest 20% of the income distribution in 2005: 1

Estimated number of children that the child tax credit provision in the legislation would benefit: 13 million

Estimated number of children who would become newly eligible for the child tax credit under the legislation: 2.4 million

Estimated industry revenues from renewable energy and efficiency in 2006, in dollars: 970 billion

Estimated lost investment if federal tax credits for solar and wind energy are not extended, in dollars: 19 billion

Estimated jobs in the renewable energy and efficiency industry in 2006: 8.5 million

Estimated number of jobs that could be lost if federal tax credits for solar and wind energy are not extended: 116,000

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. While politicians are proposing short-term band-aids to deal with rising fuel costs, middle-class Americans are increasingly feeling the effects of an energy policy that harms the environment and favors large oil companies. The energy tax credit expansions and extensions in the Renewable Energy and Job Creation Act are part of a long-term strategy to alleviate high fuel costs, make the country more energy efficient, and ensure that the economy retains jobs in renewable energy and technology. Indeed, a recent study demonstrated that failure to extend energy tax credits for solar and wind power could result in the loss of 116,000 jobs. With the middle class already feeling the effects of weak employment, Congress must strengthen a renewable energy and energy efficiency industry that benefits both the environment and the economy.

Aspiring middle-class families with children are in a particularly difficult situation in an economy of high food, fuel, and health care costs. The Renewable Energy and Job Creation Act’s changes to the child tax credit would make 2.4 million additional children eligible for the benefit and would increase the benefit for 10.5 million more. Expanding the income floor for the credit means that very low-income aspiring middle-class families, who currently benefit less from the credit than higher-income families, will receive the support they need to make ends meet.

The revenue raising provisions of the Renewable Energy and Job Creation Act not only make the legislation fiscally responsible, but make the tax code fairer by eliminating loopholes exploited by wealthy executives and multinational corporations.

Quotes from Experts

Beyond this Bill

Additional Resources

“Greener Pathways: Jobs and Workforce Development in the Clean Energy Economy,” from the Apollo Alliance

“Taxation and the Family: What is the child tax credit?” from the Tax Policy Center

“Families Helped by the Child Tax Credit Expansion Work Hard in Low-Paying Jobs,” from the Center for Budget and Policy Priorities

Executive compensation

Corporate and Financial Institution Compensation Fairness Act of 2009

Legislation

The middle class

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Middle Class Position Analysis

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Pay for Performance Act of 2009

Legislation

The middle class

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Middle Class Position Analysis

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A Bill To Impose An Additional Tax On Bonuses Received From TARP Recipients of 2009

Legislation

The middle class

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Middle Class Position Analysis

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American Recovery and Reinvestment Act of 2009 - Conference Report

Legislation

The middle class

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Middle Class Position Analysis

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American Recovery and Reinvestment Act of 2009 - Senate Version

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The middle class

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A Joint Resolution Relating to the Disapproval of Obligations under the Emergency Economic Stabilization Act of 2008

Legislation

The middle class

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Injustice Facts

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Middle Class Position Analysis

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Senate Version of the Auto Industry Financing and Restructuring Act of 2008