Doing the minimum for the 99 percent

From both left and right, commentators have been heating up the Internet with proposals to raise the minimum wage from $7.25 an hour.

It’s not just Ralph Nader beating the drum for the Occupy movement to spearhead a movement to raise the wage, which hasn’t been increased since 2009.

Ron Unz, commentator at the American Conservative, has proposed an increase as part of a new Republican immigration strategy, and he’s has been pleading for Mitt Romney to adopt an increase in the minimum wage as part of his campaign.

Romney has yet to heed Unz’s plea, which force the candidate to fight some ingrained Republican dogma that preaches against the minimum wage, let alone increasing it. According to this old dogma, the minimum wage discourages small business from hiring.

It was President Obama’s chairman of his council advisers, Alan Kreuger, wrote a study, back when he was a Princeton economics professor, who debunked that notion.

In the past, Romney has shown some willingness to discard the customary Republican disdain for the minimum wage, speaking in favor of increases pegged to increases in the consumer price index.

Then last month, after the Wall Street Journal and others beat up on Romney’s minimum wage position, the leading Republican contender backed down. “There’s probably not a need to raise the minimum wage,” Romney told CNBC.

On this issue, the Wall Street Journal and the Republican base is way out of step with voters across the country, who consistently support an increase. According to one recent poll, 67 percent of voters favor an increase.

Which brings us to the other candidate: the president. He’s always said he favors an increase.

Back in 2007, when he was just a contender in Bettendorf, Iowa, Barack Obama gave a speech on “Reclaiming the American Dream,” in which he promised:  “I won’t wait 10 years to raise the minimum wage, I’ll raise it every single year. That’s the change we need.”

After Obama was elected, during his transition to the presidency, Obama’s team promised to raise the minimum wage to $9.50 an hour by 2011, with future raises pegged to inflation “to make sure that full-time workers can earn a living wage.”

But the only increase during Obama’s administration was the one in 2009 from $6.55 to $7.25, which was mandated by a law passed during a previous administration.

The president had nothing to do with it.

Last year, when his labor secretary, Hilda Solis, was asked about the need for a minimum wage hike, Huffington Post reported that she “largely ducked the questions.”

Maybe keeping his campaign promise and improving the economy are not good enough reasons to recharge the president’s enthusiasm for launching a campaign to boost wages for the lowest paid workers.

Fortunately, there are plenty of other reasons that should convince him to do what he said he would.

For one, it’s simply the right thing to do.

As the president himself pointed out just four months ago in a speech with a broad populist message in Osawatomie, Kansas, income inequality is the “defining issue of our time.”

In 1968, the federal minimum wage was $1.60 an hour. Gasoline was 34 cents a gallon and an average new car cost $2,800 dollars.

So the worker on minimum wage could buy nearly 5 gallons of gas for an hour’s wage.  Now that minimum wage worker can buy less than 2 gallons of gas for an hour’s wage.

If you adjust that 1968 wage for inflation, it would be $10 an hour – far more than today’s $7.25 minimum wage.

As the New York Times pointed out Sunday, the average corporate CEO made $14.4 million last year, compared to the average annual U.S. salary of $45,230. A fulltime worker paid the minimum wage makes far less – $15,080 a year.

Correcting for inflation, those with the least income have seen their incomes reduced over the past decade.

Another good reason for Obama to get with it– his base, which has been frustrated with his compromises with Republicans and cave-ins to bailed-out bankers, strongly supports an increase. And so do independent voters. Obama needs both of those groups to win re-election. So doing the right thing is also smart politics.

Income inequality / Martin Column / Mitt Romney / President Barack Obama - 04/11/2012

Going Without Heat For Goldman-Sachs

With all the trillions tossed around in the government’s efforts to prop up the big banks, a $2.9 billion taxpayer-funded windfall to Goldman-Sachs might not sound like that big a deal.

But imagine if we still had that $2.9 billion, if it was still in the federal coffers and not in the pockets of Goldman bankers.

Maybe President Obama wouldn’t feel the need to cut off aid for poor people to help pay for heating oil through the cold winter – that $2.9 billion would more than pay for the proposed cuts.

Maybe you’re not in favor of helping poor people stay warm in the winter.

How about space travel?

That $2.9 billion could pay for nearly a year’s worth of research on manned space travel, which is also under threat.

But what did we taxpayers get from this generosity to Goldman Sachs?

Absolutely nothing. Worse than that, we rewarded extremely bad behavior.

The $2.9 billion payment was arranged by federal authorities as part of what they have described as their emergency efforts to salvage the financial system in the wake of the financial collapse brought on by the bankers’ greed, recklessness and fraud, enabled by regulators’ laxity.

The Federal Reserve, which was supposed to be overseeing this massive giveaway to the banks, contends it didn’t intend to give the windfall to Goldman-Sachs bankers. It was just $2.9 billion that got away from them in their hurry to fill the bankers’ pockets with our cash- I mean- save the economy. McClatchy News Service, using bland journalism-speak, calls it a “potentially huge regulatory omission.”

Goldman hit the jackpot on our bailout of AIG, in which taxpayers compensated the firm 100 cents on the dollar for bad proprietary trades. That means Goldman gambled with its own money, which it is entirely entitled to do.

But when they lose their money, as the old blues song says, they should “learn to lose.”

Lucky for Goldman, we’re there to pick them up, dust them off and wish them well, no questions asked.

Just how much longer are we going to allow our public officials, Republican and Democrat, to use our money to foot the bill for these deadbeats’ bad gambling debts?

Just how many people are going to have to go cold before we cut Goldman off?

AIG / Around the Web / Federal Reserve / Financial Crisis / Goldman-Sachs / Martin Column / Outrage / President Barack Obama / Too Big To Fail - 02/18/2011

Around the Web: Landmark or Pit Stop?

I understand why people feel the need to tout the historical significance of the financial reform package that passed the conference committee. The president needs it politically and those who support him want to give him credit for getting anything at all in the face of the onslaught of bank lobbyists. Lots of folks worked very hard against tremendous odds to get something passed.

But I think a more sober analysis shows that what’s been achieved is pretty modest. It hands over many crucial details to the same regulators who oversaw our financial debacle.

Summing up, Bloomberg reports: “Legislation to overhaul financial regulation will help curb risk-taking and boost capital buffers. What it won’t do is fundamentally reshape Wall Street’s biggest banks or prevent another crisis, analysts said.”

Zach Carter characterizes it as a good first step. The Roosevelt Institute’s Robert Johnson writes: “This first round was not the whole fight. It was the wake-up call and the beginning of the fight. Rest up and get ready. There is so much more to do.”

The question is when we’ll get the chance to take the additional steps that are needed. The public is skeptical that the new rules will prevent another crisis, according to this AP poll. The Big Picture’s Barry Ritholtz grades the various aspects of the reform effort. Overall grade? C-. Top marks go to the new minimum mortgage underwriting standards. But legislators get failing grades for leaving four critical issues on the table: “to big to fail banks,” bank leverage, credit rating agencies and corporate pay.

Ritholtz saves some of his harshest evaluation for the proposal to house the new consumer protection agency inside the Federal Reserve, which he finds “beyond idiotic.”

Around the Web / Executive Pay / Financial Reform Legislation / Martin Column - 06/25/2010

From Watchdog to Pussycat

Though President Obama and the Democrats promise a fierce financial watchdog, what they’re delivering looks like a pretty tame pussycat.

There’s a disconnect between the Democrats’ tough rhetoric about the need for financial reform and the legislation that’s actually making its way through Congress.

Consumer Financial Protection Agency / Martin Column - 10/23/2009