If you are at all like most people you’ve spent the past few months wondering who the Government is going to bail out next?” Well, Senator John Kerry (D-MA) has your answer and it is… wait for it – the U.S. Newspaper industry. It seems many of the nation’s most well known newspapers are in serious financial trouble. The New York Times is a reported $133 billion in debt and its subsidiary, the Boston Globe, is expected to lose $85 million this year. Major daily papers in Seattle and Denver have been shut down completely and the LA Times, Chicago Tribune and many others are seeking bankruptcy protection.
Whether one is in favor or opposed to the financial and automotive bailouts by our Government (and I’ll admit, I go back and forth), there is little doubt that there are complex issues at play and it’s a tough question. Perhaps the experts are correct and a collapse of the financial system was imminent, and potentially catastrophic, had the government not stepped in. Perhaps there is more to be gained than lost by saving the U.S. auto industry, although I doubt it. But newspapers Senator Kerry? Really?
Apparently Mr. Kerry wasn’t listening on April 15th when hundreds of thousands of American citizens took to the streets at 800 tea parties around the country to demand that this government stop throwing money away, money it doesn’t have to begin with. Although the incompetent U.S. media (some of the same ones who apparently now need a bailout) tried to portray these peaceful rallies as anti-tax, the key issue for these concerned citizens was out-of-control spending. Now Senator Kerry wants Congress to consider spending even more.
Consider the political ramifications of such an action. Afterall, journalists although they rarely act like it in these partisan days, were once known as the Fourth Estate for their ability to provide one more check and balance on government. So, I ask the question that is obvious to everyone except John Kerry; how does a newspaper honestly report on a government that is subsidizing their very existence?
Not many Americans noticed, but this week the House of Representatives passed legislation giving the Treasury Secretary authority to regulate excessive pay at any company that takes government bailout funds. The fact that this legislation passed on April Fool’s Day, unfortunately, doesn’t make it a joke. No, it’s very, very real.
At first blush, you may take this legislation for entirely reasonable, after all, they are getting taxpayer money and we wouldn’t want them to waste it. But, there are so many problems with this action it’s hard to know where to begin. First, and most obvious, Congress doesn’t bother to define “excessive”. Gee, does anyone think that might be problematic? What a joke this government has become! And, I’m not picking on the Democrats, both parties are absolutely worthless. Pass a law that hinges on a totally ambiguous term like “excessive compensation” without bothering to define even the general parameters of your legislative intent behind the word “excessive. Are they serious? Really?
The intent of the TARP money was to stabilize U.S. banks to prevent the economy from collapsing. To that end, it would be wise for a bank to keep the money until certain it has avoided any calamity. However, another problem with this action by the Congress is the incredible pressure it places on these financial institutions to pay the money back early, perhaps too early, in order to get out from under government control.
Many of the banks who took TARP funds are now expressing concern that with these compensation restrictions they will struggle to attract the best talent. Their competitors in the U.S. who didn’t take TARP funds and foreign banks, whose governments aren’t so short-sighted, will not face these same restrictions and will have a competitive advantage over the TARP recipients. I know what you’re thinking, “Who cares, they failed and now they’ll have to suffer the consequences”. Well, you better think again. As a taxpayer your money is on the line. Taking any action that hampers the competitiveness of the TARP recipients puts taxpayer money in further unnecessary jeopardy.
So in the end, we have yet another poorly written law by an inept Congress which will restrict the ability of the banks to hire and/or retain the appropriate talent decreasing the likelihood of eventual repayment of the people’s money. And need I remind you, this government can hardly afford to waste any more of the people’s money.
Can there be a more blatant example of the stupendous incompetence of government bureaucracies (and there are soo many to choose from), then the latest news that they have somehow managed to run the U.S. postal system into the ground. Think about that – even with a federally mandated monopoly they cannot operate profitably. The USPS lost $2.8 billion in 2008 and are seeking financial aid from Congress in order to stay afloat. Now before you say it, let me remind you that neither GM, AIG nor any of the other bailout recipients had the post office’s luxury of zero competition and forced consumer usage. Sure, there are FedEx and UPS if you’re sending a package or an overnight envelope, but in this country, if you are mailing a letter, bill, advertisement, magazine or even ‘junk’ you have no choice, you must use the post office.
With all this guaranteed patronage, the unfettered discretion to raise prices whenever it suits them (not surprisingly, it suits them often!) and the monumental competitive advantage of tax exempt status, they still can’t make it work. Meanwhile FedEx and UPS are going strong, FedEx most recent quarter ended with a $97 million profit. Of the three, the post office has by far the lowest customer approval rating as well.
For those of us in business, the idea of having the federal government force the entire population to use our product exclusively and still not be capable of operating profitably or satisfying our customers is unimaginable. We operate in the real world where you have to earn your customers patronage and loyalty, where price increases come with an inherrent risk of lost business, where a competitor could open a new location or develop a new service and take market share away.
In the end, the USPS, with none of these worries, and with the backing of the U.S. government, still can’t manage to run its business effectively. And with that we see the demise of the last example of a service or function the government performs better than the private sector. The government can’t balance its budget, but expects its citizens to do so. Can’t educate the country’s youth, but refuses to allow parents a choice in what school their child will attend. Can’t protect its borders and yet has the audacity to allow illegals to sue an American who protects his property since his government won’t. And, now we find that the government can’t effectively run a monopolized business. Yet the administration has the audacity to take over GM and expect to survive going head-to-head with all the world’s succesful auto makers. I wish them luck with that. Common Sense and experience tells us this can’t possibly turn out well.
This week the White House began airing a TV commercial trying to pressure Congress into enacting the President’s irresponsible budget. This follows a door knocking campaign last weekend by Obama’s post-election, grassroots lobbying group, Organizing for America.
On a side note, if the sitting President, with HUGE majorities in both houses of Congress, has to lobby this hard to get his agenda through, the American people really ought to ask themselves why!!!
Of course, it’s not unheard of for a President to campaign for a policy change he believes in; Presidents have been doing it for decades now. But, campaigning has always meant making speeches either around the country or, if the issue is a high enough priority, going on television to make his case. The hope being that the people will respond positively and put pressure on their representatives in Washington to support the policy.
That’s politics. However, these recent actions take the country in a dangerous direction. One in which the campaigning never stops and the divisions in our society that crop up every four years never heal over. In our system, people are of course free to campaign for what they believe in. Our country was founded by citizens campaigning for their beliefs, but when the President is sitting on Pennsylvania Avenue directing foot soldiers (make no mistake they consider this a war) to knock on your door and tell you what you should think… Well, that’s a slippery slope if ever there’s been one.
You know what’s funny? Watching CSPAN. No, I’m serious! It’s absolutely hilarious watching these hack politicians from both parties fall all over themselves to get in front of the microphone and condemn the compensation packages on Wall Street. Why is this so funny? Have any of you ever examined what a U.S. Congressman makes in salary and benefits? They’ve got a lot of nerve condemning Wall Street for its excesses! Here’s a little background information for you. They get:
- Salary of $174,000 per year. (leadership gets more – Nancy Pelosi makes $223,500).
- They get a cost-of-living increase every year regardless of performance.
- An extremely generous pension for life that starts after as little as 5 years of service (it’s complicated and I won’t bore you with it, but you can get all the details here.
- Staff allowance – Reps. get about $1.3M and Sens. around $3.0M per year to hire staff.
- Expense allowance for travel, telephone, etc. Basically anything you can think of, they expense!
- Foreign Travel – as appropriated by Congress.
- Free Mail Service to their constituents.
- Free office furniture and equipment.
All this is for a part-time job. Remember, they are only in session about 125 days a year (hilarious video on that subject here). When Congress was first seated in 1789, they were paid $6.00 per day and only for the days they were actually in session. This remained unchanged for the next 66 years until 1855. Sixty-six years without a raise and now they give themselves a raise every year?!? $6 a day, that sounds good, let’s go back to that plan.
No, seriously, my proposal is for a straight compensation for performance plan for Congress. The rest of the world only gets paid when they actually do their job and do it well (ok not true for unions, but everybody else). So, what would a pay-for-performance package for Congress look like? Balance the budget, get a salary. Produce a surplus, get a bonus. But, run a deficit, sorry pal, no paycheck for you! It really is that simple. And while we’re at it, we can tie their staff compensation to a similar albeit less harsh formula. Something like deficit = 75% of salary, balanced budget = 100% of salary, surplus = 125% of salary. Any manager or small business owner can tell you that rewarding performance is the only way to actually get performance and yet we pay these people (and re-elect them) for failure year after year, decade after decade. Congress is failing us in every way. Both parties. Every day. Why do they still have their jobs? Why are they still getting a paycheck? And, how in the world can they possibly deserve a raise?