Tuesday, July 19, 2011

Obama is open to "means testing" Soc Sec and Medicare recipients as bankers and investors rake in the dough.

The economy's looking up for some
Poor old Vikram Pandit, CEO of Citigroup is in the news again. Citigroup is the bank that received more taxpayer bailout money than any other US bank, some $45 billion. After the handout, Vikram promised Congress he’d take a $1 a year salary until the firm turned a profit.

Well Citigroup has paid back the $45 billion, (with $12 billion profit to taxpayers says Business Week) made profit for the last five quarters and is on its way to making $12.6 billion profit for the year. So this January, the Citigroup board gave Vikram a raise upping his salary from $1 to $1.75 million. Things got even better for Vikram in May when the Citigroup board gave him $10 million in deferred stock and options. He also “entered” a profit sharing plan that could “net him millions” says BW.*

Oh, looky here, almost missed this. In July, Vikram received $80 million, the final payment from Citigroup’s $165 billion purchase of Vikram’s hedge fund, Old Lane Partners. All this doesn’t make that $1 seem any sacrifice at all does it? The head of Ford, Allan Mullally played the same game. The reason for giving Vikram all this cash despite Citibank’s shares falling 87% since the day he was hired as CEO?  It’s “designed to retain Vikram as our CEO and reward him for future performance” says Citigroup Chairman, Richard Parsons. Imagine a worker being paid wages for work we might do in the future.

Meanwhile, what’s happening on the other end of the social scale, with some of the folks that actually do productive Labor? Things are going well there too it seems. “The governors and legislatures are making the tough decisions” says Mark Stockwell, director of municipal research at one of the coupon clippers outfits.** Florida is firing 1300 workers, New York is freezing public employee wages for three years and Arizona is slashing Medicaid coverage. After all, poor people, don’t get sick do they?

Savaging public services, jobs as well as Medicare and Medicaid with Social Security next in line has made municipal bond investors very happy. State government employment is down to early 1999 levels Business Week reports. “In terms of employees per 1000 population, it is at its lowest level since 1976” the magazine adds. This is good news and tax exempt bonds are returning 4.45%, the highest since 1992 in the light of it.

There is more to come as federal stimulus dollars disappear and who knows what will happen in Europe where many banks that have lent to Greece and other countries have borrowed from US money funds, some $800 billion worth. There is not an issue at the moment but if Spain, Portugal or Italy go the way of Greece it will seriously affect US funds.

The Obama administration and the Republicans are talking about means testing of Medicare and Social Security to weed out all those who don't really need it . Whether you have the means to do with less Medicare or Social Security will be decided by the “experts” and paid academics of the corporations along with the millionaires in Congress.

It is amazing that there hasn’t yet been a series of massive social upheavals in this country. We had 100,000 people in the streets in Madison Wisconsin, something that could have developed in to a more generalized mass movement but which has clearly ended in defeat. The Union leaders and their allies in the Democratic Party were very successful in rendering that movement harmless. It should be obvious to anyone awake that it will take more than 100,000 people in the streets passively marching up and down to reverse the downward spiral the US working class is in and drive the capitalist offensive back.

As far as Citibank goes, "Taxpayers saved this bank" says Graef Crystal, a compensation specialist with Bloomberg News, "and he's (Pandit) getting a bundle while shareholders are getting shortchanged."

It’s going to be nasty when it comes. But come it will.

*BW 7-11-11 Big Payday For Citigroup’s Pandit
** BW 7-11-11 Munis Rally as States Slash Spending

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