Mark Gongloff is off the newsletter this morning, so today's 7.5 Things are brought to you by Jillian Berman.
Thing One: Obama Offers To Cave: It looks like President Obama may cave in to Republicans in hopes that they’ll cave to him. Obama told lawmakers on both sides of the aisle that he would consider cuts to to social programs like Medicare and Social Security in hopes that the move would convince Republican leaders to raise taxes and ultimately make a deal to mitigate the crippling economic damage of Friday’s sequester, according to Reuters. It’s as if Obama forgot that he won reelection in part on promises to raise taxes on the rich.
But as The New York Times’ Paul Krugman and the Washington Post’s Ezra Klein note, Obama’s efforts at compromise will likely be for naught. Every time the president gives Republicans what they want they just ask for more, the two write. And it looks like they might be right; on Sunday, Speaker of the House John Boehner repeated his stubborn line that Republican leaders wouldn’t consider budging on the tax issue.
Meanwhile as politicians argue, the nation’s poor are bracing for cuts to programs they rely on, The NYT writes. At the same time, corporations will likely still be sitting pretty. During the recovery, corporate profits have soared but companies haven’t boosted hiring, and the sequester -- which is expected to cost the U.S. at least 750,000 jobs -- may only increase the gap between the profitable companies and their workers, according to the NYT.
Thing Two: Swiss Voters Fans Of Common Sense: It’s unfair for executives to get paid millions of dollars to no longer do their jobs, according to an overwhelming majority of Swiss voters. They approved one of the toughest curbs on executive pay Sunday -- a measure appropriately dubbed the “rip off” initiative -- which gives shareholders vast authority over executive pay, according to the Wall Street Journal. The rule bans golden parachute agreements, like the sweet deal the outgoing chairman of Swiss drugmaker Novartis got, but ultimately turned down, on his way out ($77 million to retire).
The rule will also limit companies’ ability to give executives big bonuses when they come aboard, which could make it more difficult for Swiss-based multinationals like Novartis and UBS to compete with other companies for the best talent, according to the WSJ. Business lobbyists in the country also predictably warned that the new rules could put the country’s reputation as a shady haven for companies at risk, according to The New York Times.
Thing Three: The Foreclosure Crisis Was Worse Than We Thought: Major banks wrongly foreclosed on more military members than they previously thought. Bank of America, JPMorgan Chase, Citigroup and Wells Fargo, wrongly foreclosed on more than 700 military members and took the homes of more than 20 other borrowers that were current on their mortgage payments, The New York Times reports. The banks uncovered the findings as they were combing through mortgages as part of a multi-billion settlement with federal officials. The findings, which indicate wrongful foreclosures were more widespread during the financial crisis than previously thought, could underscore housing advocates’ criticisms of the settlement. They say the banks received favorable terms for giving out some of the relief to homeowners, which could lessen the amount of aid they receive.
Thing Four: Exotic Dancers' New Friends: Exotic dancers are making some new friends in the Labor Department and IRS. The agencies are cracking down on companies that wrongly classify workers as independent contractors in order to avoid paying them overtime and payroll taxes, the Wall Street Journal reports. The move affects a variety of workers, including exotic dancers, cable installers, truck drivers and manicure artists. Many states estimate that 10 to 30 percent of companies misclassify workers as independent contractors, which means those employees aren’t eligible for unemployment insurance. In addition, by not paying payroll taxes for those workers the companies are cheating cash-strapped states out of billions of dollars.
Thing Five: Scandal May Hurt Bonus Pool: Apparently accusations of money laundering for drug cartels and countries the U.S. has less-than-cordial relations with can result in a hit to your bonus. Standard Chartered and HSBC will reportedly cut their bonus pools because they have to pay so much money to U.S. authorities to settle the scandalous claims, according to Reuters. But don’t feel too sorry for them: The banks’ two CEOs will both take home bonuses that are slightly less than 2 million pounds.
Thing Six: Amazon Fights Labor Battle In Germany: One powerful union is taking on Amazon. In Germany. The online retailer is facing intense pressure from labor activists in the country where it employs 8,000 permanent workers to negotiate a union contract with its nonunion workforce in the country, The New York Times reports. The battle comes shortly after one of Germany’s two main public television stations showed an investigation accusing Amazon of mistreating temporary workers in Germany and accusing an Amazon subcontractor of hiring neo-Nazi security guards to keep workers in line. Amazon is no stranger to criticism from labor activists. The company announced in May that it would retrofit some of its warehouses with air conditioning after a report found employees were working in sweltering and unsafe conditions.
Thing Seven: No More Profitting Off Hunger: Good news! Many major European banks have decided they will no longer make money off the hunger crisis. In the wake of a report from Oxfam that accuses banks of “speculating on hunger,” many banks are opting not to speculate on food prices or to get rid of their funds that track agricultural prices, according to the Financial Times. The Oxfam report argued that banks’ decisions to speculate on food prices were artificially driving them up.
Thing Seven And A Half: Impress Your Friends With These Facts: Did you know that Warren Buffett was a millionaire by the time he was 25 if you adjust for inflation? We didn’t think so. Here are 99 other facts about the economy that will blow your mind, courtesy of the Motley Fool.
Calendar Du Jour:
Economic Data:
Nada.
Corporate Earnings:
Nothing.
Heard On The Tweets:
-- Calendar and tweets rounded up by Mark Gongloff.
Correction: An earlier version of this article incorrectly said that the sequester budget cuts would affect "a children’s health insurance program and food stamps." In fact, those are protected from the sequester.
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