Not often will you see Wall Street CEOs and public employee unions mentioned in the same sentence, but in the recession drama playing out in California and across the United States, they are linked by taxpayers’ dollars.
Wall Street CEOs have been taking taxpayers money so that their companies will survive, and then turning around and paying large bonuses. They’ll tell you they are not using the bailout money for the bonuses, but without the bailout money, there would be no other money to pay the bonuses.
The public employee unions also want taxpayer money to pay their members in full without making concessions during these hard economic times. Three California public employee unions have filed lawsuits charging that Governor Arnold Schwarzenegger cannot furlough workers for two days a month to help the state weather the fiscal storm. As I discussed a couple of weeks ago, another public employee group even called for the Governor’s impeachment over the furlough demand.
It was disappointing to see promising political figure John Chiang jump on the public employee bandwagon and defy the Governor’s request on furloughs. Chiang has announced that he will stop fulfilling taxpayer refunds to conserve cash. But he won’t support furloughs to preserve cash. He has clearly chosen the public employees over the taxpayers.
And what of the taxpayers who are being asked to come up with tax money to avoid furloughs and cover bonuses?
Many of them are not worried about furloughs and bonuses for themselves. That’s because they used to work for Caterpillar and Home Depot and General Motors and Circuit City and Texas Instruments and Microsoft and many, many more companies but have now lost their jobs. And, those job losses have not only occurred with name brand companies, but also in corner shops and small businesses. California unemployment is closing in on 10% of the workforce.
The public employee union members will tell you they are sorry for the lost jobs in the private sector, and that they are only protecting their families by fighting for full pay. I believe them. Frankly, they have a better argument to make than the CEOs — If the CEOs have a good argument, I haven’t heard it.
But the fact remains — while government on the national level is pouring out taxpayer money, to what end we can’t be sure, and while state taxpayers will likely be on the hook for new taxes when budget negotiations end, even if those taxpayers lost their jobs, there is a clear sense that not all are sacrificing in this crisis. The bonuses on Wall Street and the lawsuits against the Governor in Sacramento attest to that truth.