Applying Mitt-o-nomics To The Citigroup Bailout

As we all know, Mitt Romney is the smartest and greatest businessman that ever graced our land. For some reason, I haven't heard him weigh in on the bailout of Citigroup. But since he already offered a plan for dealing with the struggling auto companies, I imagine we can simply apply the same principles for dealing with General Motors as we do for Citigroup.

Mitt says: We need "new labor agreements to align pay and benefits to match those of workers at competitors."

Citigroup's average salary is $87,000, much more than its competitors JPMorgan Chase ($66,000), Wells Fargo ($56,000) and Bank of America ($43,000).

Citigroup's average salary also is more than the average salary of a GM assembly-line worker ($28/hour, or $58,240 for a full year of work.)

Clearly, those Citigroup contracts need to be re-worked if the firm is going to be viable.

Mitt says: "You don't have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th."

Obviously, Citigroup must have kept secret its unionized workforce. Otherwise, how could it be suffering from such outrageous labor costs! These insidious underground unions must be rooted out and destroyed.

Mitt says: "management as is must go."

Citigroup's management failures have been well documented. It would be craaazy to give taxpayer money to same people that got Citigroup -- and the entire global financial system -- into this mess.

Mitt says: "It is not wrong to ask for government help, but the automakers should come up with a win-win proposition."

Just as management has to go, so does the deregulated marketplace that allowed Citigroup management to act so irresponsibly. Surely, no bailout would occur without major strings attached and new rules to ensure the same mistakes won't be repeated.

Fortunately, the same pressure that has been put on the auto industry has been put to bear on the financial industry, ensuring sound judgment, fairness and accountability still reigns in Washington.

Thank you Mitt-o-nomics! Now go shopping.

Originally posted at OurFuture.org

Comments

[kstuff]

The union argument has been around forever. It doesn't hold water. The Big 3 were extremely profitable in the 90's, when union wages were higher than today. The UAW has made many concessions, as have the management. I'm outraged that Citibank gets bailed out, without parading it's management in front of the congress. Sure, the Big 3 flew in on private jets. That was a mistake. Citibank, on the other hand, never had to even fly in!

[leftLibertarian]

Bailouts encourage incompetency. No Bailouts. If you can't make it go bankrupt.

[cynicalintell]

This is a double standard by the privatization, Corporations should be KING crowd. Those at the top who sit on their butts all day, deserve millions of dollars in compensation, while those who don't get to sit at all, all day, deserve to live in poverty.

Why do they want us to live as peasants? Whatever happened to there being honor in honorable work? Why are "we" no longer valued unless we're "at the top"?

It seems the motto is "Take from the poor to give to the rich". Shame. America is being destoyed from within by the greedy and powerful, and the poor and weak will have to save them. As always.

Something I used to say, while working on the line, regarding management, "This place will run without them, but, it will not run without me". That is something the upper classes have forgotten, we should remind them. Just saying.

[William1950]

Anything for the middle class is out... If you steal a million dollars you will become a hero, if you steal a thousand you will go to jail.
Unions have become the new bad guy in the right wing lexicon. It must be the machinists fault that the company is run poorly, the twenty something dollars per hour they EARN is excessive and for sure the health and retirement they EARN has to go too... Then when the great unwashed are all using the emergency room for medical care, and all driving uninsured vehicles ( gas guzzlers at that) The "ownership class" can all drive their BMWs and sip french wine and complain that the help just isn't what it used to be.
And when it is all over we will be sheltering our children in cardboard boxes and sleeping in shifts. Why are we so afraid?

[leftLibertarian]

Agreed. No bailouts for anyone.

[IgIzBliss]

Brilliant. Don't bail ANYONE out in a global economy that's connected by the speed of light electronic funds transfer--AND WE'RE ALL BACK TO MAKING OUR CLOTHES BY HAND?!

Yeah, right. . . . Williams1950 is right--but what is sleighing (sic) me about this discussion is that none of those posting are talking about the countries we're competing against. That's a huge missed opportunity. Right now, the only real competitors in the US car market are countries like Germany and Japan that already have some kind of national universal health care system already--so businesses can go on out there and be competitive completely on PRODUCTS. The sooner we universalize health care, the more competitive our products will be. PERIOD.

The elites in our society are largely against unions because it allows them to squeeze workers who cannot collectively bargain, to say nothing of skirting safety requirements. Their "dollar per conflict resolution" ratio goes way up. And the right's stance vs. unions has meant elites pocketing more loot. I worked at a GM plant in Defiance, OH when I was in HS (before getting my undergrad/PhD), and we heard about workers killed using safe equipment improperly--crushed to death. GM management just hosed down the line, gave folks a day off, and the next day it was back to work. This was late 80s, and people were doin' lines of white ON THE LINE, hiding 40 oz bottles of single malt next to their work stations, etc.

[IgIzBliss]

Brilliant. Don't bail ANYONE out in a global economy that's connected by the speed of light electronic funds transfer--AND WE'RE ALL BACK TO MAKING OUR CLOTHES BY HAND?!

Yeah, right. . . . Williams1950 is right--but what is sleighing (sic) me about this discussion is that none of those posting are talking about the countries we're competing against. That's a huge missed opportunity. Right now, the only real competitors in the US car market are countries like Germany and Japan that already have some kind of national universal health care system already--so businesses can go on out there and be competitive completely on PRODUCTS. The sooner we universalize health care, the more competitive our products will be. PERIOD.

The elites in our society are largely against unions because it allows them to squeeze workers who cannot collectively bargain, to say nothing of skirting safety requirements. Their "dollar per conflict resolution" ratio goes way up. And the right's stance vs. unions has meant elites pocketing more loot. I worked at a GM plant in Defiance, OH when I was in HS (before getting my undergrad/PhD), and we heard about workers k.i.l.l.ed using safe equipment improperly--crushed to d.eat.h. GM management just hosed down the line, gave folks a day off, next day-back to work. This was late 80s, and people were doin' lines of white ON THE LINE, hiding 40 oz bottles of single malt next to their work stations, etc.

[Hoelder]

And after all, it's the middle classes' fault. We didn't shop enough with the money we don't have and went to the wealthy so they can have a nice life. Of course we trusted organizations like Freddy and Fanny and Moody's that was our first mistake. Don't trust ratings agencies. We did not buy enough gas guzzlers and houses. It's our fault that a few crooked investment bankers made up some values and some paper about papers. We should have saved the corporate CEO's. We could have warned them. Now they are going to fire our sorry asses, because we didn't warn them. While we will live from those luscious unemployment checks, they have to sell their corporate jets and have to give up their bonuses and can only get a salary of around a million. It was our decision to storm into meetings and prevent them from signing bad deals. Because these stallions of corporations were betrayed by us and have to tighten their belt and have to live on $1,000,000. Now our government is giving them Billions of Taxes that we will have to pay somewhere in the future. It is like selling your kids into slavery. Corporation can never fail, because they protect us from great evil. And they have to do evil to thrash this evil. Alleluia

[Chippy020]

Quickly- Save the Autos....
Structured Bankruptcy...MGT must go
GM -public -bailout w/strings
Chrysler-Owned by Vulture Fund-Cerebus must be gotten rid of -they made a bad investment and are asking for almost 100% of what they paid
Cerebus is not a long-term enterprise....they will deal (and have tried) Chrysler the second chance they get -putting 50,000+ jobs at risk....
F-ok for now

[Plank]

First, the republicans are in position to lecture anyone after 8 disastrous years at the helm. Romney is a hypocrit. Here's what he said during the primaries: "I've heard people say that the auto jobs are gone, and they're never coming back," Mr. Romney said at a rally Sunday in reference to Mr. McCain. "Well, baloney, I'm going to fight for every single good job. ... I'm not going to rest until Michigan is back."
Another notorious republican who has been an ardent anti domestic auto manufacturing is Shelby of Alabama. As it turned out, Alabama offered a stunning $253 million incentive package to Mercedes. Additionally, the State also offered to train the workers, clear and improve the site, upgrade utilities, and buy 2,500 Mercedes Benz vehicles. All told, it is estimated that the incentive package totaled anywhere from $153,000 to $220,000 per created job. On top of all this, the State gave the foreign automaker a large parcel of land worth between $250 and $300 million, which was coincidentally how much the company expected to invest in building the plant.

The only logical explanation is the Rethugs are doing everything they can to destroy this country.

[Overd0g]

What the workers make is irrelevant. If the company can afford it, fine. If not, they need to die.

[lapdogs]

Gee, I thought the Anti-Union Republicans were outraged at how ALL GM Assembly Line Workers make $75 per HOUR. They "conviently forget" to mention that that wage includes health cost and retirement cost and that the actual take home pay was a lot less.

But now that CITI is costing an arm and a leg to the taxpayers, that fine and dandy.

Oh, and where is CITI's "plan to get out of this mess" and their forced testimony before congress to get the money?

Just wondering.

[solopico]

Mr. Scher,

In my opinion you are presenting an arguement biased to liberalism and union successes. I see what I believe to be a more centrist view, for these reasons:

Romney stated, as you present, "management as is must go." when speaking of the autoworkers. Generally speaking, both are doing good work. Therefore, for both CitiGroup and the 'Big Three' there is some equivalency, but my concern with both is executive salaries and bonuses.

CitiGroup is one of the biggest lenders of sub-prime mortgages - the root cause of the current economic downturn. Sub-prime is now directly affecting CitiGroup. To say that the salaries of the workers of CitiGroup are responsible for the company's current problems, as opposed to their company's adherance to the Community Reinvestment Act of 1977, is beyond absurd.

The 'Big Three' are being affected by the credit crunch, but more of their issues are found within the noose the labor unions have on the corporations. $1600 in legacy costs per vehicle American, $160 per foreign. I can buy $1500 better car for equal dollar. Enough said.

Unions were created during a time when employees needed representation for safety and wages. Today, given modern legislation, a non-unionized 'Big Three' would be more competitive in a global marketplace.

One additional thought - if the 'Big Three' came in with a *smart* plan, it would include a requirement for Congress to loosen the trade taxes on exports and increase the trade taxes on imports. marketplace.

[vippy]

The American Auto Union Worker has a salary of $ 46 per hour that includes retirement, healthcare, etc. That is about half of what his German Counterpart makes. Do you think that
is too high then look around and complain what the CEOs are making and they don't break a
sweat and have on top of that ruined the companies. Someone has to make that kind of money
in order to afford a normal lifestyle. Geez, do we all want poverty compared to the rest of the world?

[solopico]

Here's how I read what you're telling me:

A UAW worker's gross pay, including pension and benefits, is $48 / hr (http://www.nytimes.com/2008/02/15/business/15union.html)

Without pension and healthcare, gross salary is $28/hr ($58K/yr).

I make just over $30K in a pressure-paced work environment that requires a bachellor's degree, and from that I have a payroll deduction for healthcare and I provide my own savings and retirement (401K).

Not to mention the discounts the UAW get on a new vehicle that I don't qualify for - regardless of the advertisements...

And I'm supposed to feel sorry for the Auto worker?? I understand they have difficult jobs, but truthfully all they have to do is show up and do their job every day like any other American. There's no science or difficult math skills involved, no engineering.

Mostly what the workers in the UAW do is a simpler version of what your local auto mechanic does for $20/hr or less!!!

I am not suggesting poverty for everyone, by any means, but I am suggesting a buyout of the higher wage-earners, followed by a re-negotiation of the structure of pay. Why the UAW is needed anymore is beyond understanding.

In today's marketplace, if we haven't all seen by now, private investment for security and retirement is the only answer. Company pensions and Social Security are elements of days-gone-by and we all need to wake up to that fact.

[super]

"Unions were created during a time when employees needed representation for safety and wages. Today, given modern legislation, a non-unionized..." Perhaps that's why real incomes for most of the middle class have fallen in the last 20 years, while the disparity between the richest and poorest has gone up hundred-fold.

[solopico]

"The group with homes, investments and other assets worth more than $10 million comprised 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent."

That quote is from http://www.iht.com/articles/2005/06/05/news/class.php - the global NYT.

So we in America have had 400% growth into the $10million bracket over a 20 year span, and only 27% household growth, and you want to complain about what again??
This is the nation of opportunity - apply yourself and succeed. Period.

If anything, unions are propping up a layer of wage earners who are not true to the majority of the labor force, while costing the rest of that labor force more of their earnings to buy the product those union workers provide.

Perhaps if union workers made less, cars would cost less, and other hard working Americans would be able to keep more of the income they now must spend to provide the union workers these abnormally high wages.

[DanBest]

So it was all the fault of the Community Reinvestment Act of 1977? And I guess nothing else happened in the thirty years since, and surely nothing that the republicans did. Underneath the Community Reinvestment Act of 1977, this straw that conservatives cling to is the specious notion that lending to the poor and to minorities is bad business. Really? Do you have any proof other than your certitude that minorites and poor people have higher rates of default? I used to be a credit investigator and more often than not, the people who were in default were people with high paying jobs and an appetite for consumption. How do you explain the multitude of subprime mortgages that were peddled, not by Fannie or Freddie, but by private banks and investment firms to lendees (quite often minorities) who probably should have been given a fixed rate mortgage?

You may consider that money was lent to those people, not because the big, bad government under Carter made them do it. (show me a law that requires a lender to make a loan to someone they don't want to) but becuase it is profitable. My dad used to be in finance and I can tell you that it was drilled in my head that if you lent money to someone and they didn't pay you back, it was your fault for not being a better judge of that person's character. My republican father would have called that personal responsibility.

[PATina]

$1600 in legacy costs per vehicle American, $160 per foreign. I can buy $1500 better car for equal dollar. Enough said.

I wonder how much is added per vehicle for upper management salaries???? How much more car could you get if they took a cut??

[DuganS1]

You can't compare average salaries of Citi employees and JP Morgan and Bank of America employees because Citi is (as a share of their overall business) more involved in certain higher-paying businesses, plus they have a larger share of their employees working abroad.

[lapdogs]

Gee, I thought the Anti-Union Republicans were outraged at how ALL GM Assembly Line Workers make $75 per HOUR. They "conviently forget" to mention that that wage includes health cost and retirement cost and that the actual take home pay was a lot less.

But now that CITI is costing an arm and a leg, that fine and dandy.

Oh, and where is CITI's "plan to get out of this mess" and their forced testimony before congress to get the money?

Just wondering.

[super]

"Citi is ... more involved in certain higher-paying businesses" - excellent! So let them pay themselves from those "higher-paying businesses" - why ask for a handout from low-paying me?

[ihavenobias]

Excellent piece.