Biden on the Bailouts: 'Socialism for the Rich, and Capitalism for the poor'
Joe Biden admitted last night on The Daily Show that the billions of dollars we've spent on big bank bailouts is "socialism for the rich, and capitalism for the poor."
No kidding. There's been much consternation related to the bailout of Wall Street. And even though the Obama administration says small businesses are important, unemployment at small (and large) firms continues to rise. The unemployment rate is now at a 26-year high of 10.2 percent, while payrolls are falling. Productivity aside, houses and businesses continue to close, leaving gaps in our infrastructure and personal day-planners.
Unfortunately, our financial institutions are clearly operating their businesses as usual. For example, Goldman Sachs -- the recipient of $10 billion in TARP bailout money -- has committed $16.7 billion to pay its employees this year. That's $527,192 per person for nine months work.
Banks such as Goldman, which aren't regulated by the pay czar, have been critiqued for their big bonuses. The banks argue that their best employees will leave if they don't receive proper pay. So the employees benefit, while the vulnerable American workers and small businesses suffer.
Goldman is obviously aware of its current reputation. Goldman recently offered a measly bribe for taxpayers -- $500 million to aid small businesses -- through an intiative called "10,000 Small Businesses." In comparison, that's 3 percent of the money that Goldman employees get this year.
Goldman executive Lloyd Blankfein even offered a personal apology. After claiming that Goldman is "doing God's work," Blankfein is now admitting that the bank "participated in things that were clearly wrong and have reason to regret."
Blankfein is now using Warren Buffet -- the company's largest shareholder -- to solidify his $500 million small business apology. Oh yeah, and Buffet, often regarded as one of the world's wisest (and most profitable) investors, will be on the initiative's advisory council, along with Blankfein and others. So even Buffet is looking for easy answers. "They are making a lot of money now," Buffet says. "I am all for it and this program is a beneficiary."
Goldman -- the most profitable securities company in history -- is clearly engaged in a public relations stunt. And it's not the first. In October, the company doubled its charitable foundation by committing $200 million to business education. And in November 2007, Goldman committed to raise as much as $1 billion for philanthropy. One month later, the firm awarded its employees the largest bonuses ever in the securities industry.
But Goldman, and other banks, have not increased lending to small businesses -- the main goal of the TARP program. While Goldman repaid the $10 billion in TARP money, it now doesn't have enough capital to stimulate our recovery. Biden admitted it on "The Daily Show." "These guys are not the most likeable guys in the world," he said, but "had we not bailed out the largest bank institutions in the world there would have been a flat depression."
So we're not in depression. And the recession that we were in is now allegedly over. But many people continue to lose their jobs, and banks haven't increased lending to small businesses like they were supposed to. In fact, as with Goldman, banks are dishing out big bonuses for executives and minute charity for taxpayers. Small businesses need open lines of credit if we are to "get back to the business of lending," as Treasury Secretary Timothy Geitner said.
Because people need jobs -- whether green, blue, pink, or white. And if we want to focus on job creation, we need to focus on small businesses. Our banks took risks that spurred the recession, and it's now time that they take risks to spur our recovery. But $500 million is not enough. Three percent is not "doing God's work."
Sheldon C. Good is the media assistant for Sojourners.