Tuesday, February 10, 2009

Fiscal Wrangling

The United States Senate, with the assistance of three Republican Senators (Specter of Pennsylvania and Collins and Snowe of Maine), yesterday approved a $838 billion bill to arrest the deepening recession. In its bid to take a chunk of the stimulus out of the House of Representatives' stimulus bill (and to make the proposal appealing to a few Republicans), so-called Senate "centrists" worked out numerous changes to the House bill, most of which are regressive, and all of which are detailed here.

Paul Krugman, in his blog of February 4, said it best: "when it came to stimulus legislation, when Obama finally introduced his economic plan he immediately began negotiating with himself, preemptively offering concessions to the GOP, which voted against the plan anyway."

And now comes more discouraging news. On February 4, President Obama announced curbs on compensation of senior executives at companies receiving Toxic Asset Relief Program (TARP) funds. But as Representative Brad Sherman (D.-Ca.) points out, there are three major loopholes. He notes

First, the terms do not apply to firms like Citigroup or AIG who have already received TARP funds, unless they receive even more. Both Citigroup and AIG have both received over $45 billion, and they face no limits on executive compensation if they choose to retain what they have received without seeking more.... Second, most of the firms who received TARP funds in the future are allowed to pay any amount in executive compensation or bonuses.... Third, the proposal has no effective limits on luxury perks. The Administration’s proposal simply requires boards of directors to adopt policies on such luxury items as private jets and lavish parties.

It has been said "God is in the details" or "the devil is in the details" (a curious duo). One can only hope that upon dissemination of additional TARP funds and negotiation between the House and the Senate on the stimulus bill, more God than Satan is present.

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