The Business section of the New York Times framed itself with two articles that I found amusing. The one is Wall Street Pay is still too big to fail. The other was about the drop in Governmental support for children, from Education to Medicine. You know the one’s that are used in every single scenario, justification or explanation. “We must do this for future generations”
This is ironic when it actually comes to doing anything for any generation other than the Greatest one. Its not Boomers actually the ones running amok with the complaints. Take a good close look at the ages of some of the largest complainers about the current state of America, they are all well past 70 and are inordinately wealthy and secure from ever needing a safety net for they or theirs. Their future generations are quite secure thank you very much but it sounds good on paper.
I reprint them both. What more can I say. I have said it before. The boomers against women’s reproductive rights are because they came of age when theirs weren’t secure so why bother; they are just reaching Social Security or sold their house during the boon so they are financially safe and secure; their health care is secure thanks to Medicare and they were likely not part of the big 401K debacle so they have pensions and secure income. They are just fine. They like their Greatest Generation counterparts have pulled themselves up by their bootstraps, neglecting to mention they came of an age and time when Government was in its biggest boon in building a secure safety nets and business was doing just great with no global competition so what is the problem right?
This is the Me Me Mine Generation and they have passed that skill on well. I cannot wait to see the incestuous community reality show on Bravo about the Silicon Valley youth just looking for their million one startup at a time. I should make about one episode before longing for the Housewives of some City to remind me why there is a war on women.
A Bigger Paycheck on Wall Stree
By SUSANNE CRAIG and BEN PROTESS
Outside the New York Stock Exchange in the financial district, where jobs have been pared back. It still pays to be on Wall Street.
The financial industry in New York has slashed jobs by the thousands over the last two years. For those who remain, annual compensation in total is at near-record levels, according to a report released Tuesday by the New York State comptroller.
Since the financial crisis, Wall Street firms have wrestled with two competing market forces. Faced with a heavier regulatory burden, a lethargic economic recovery and the loss of once-big moneymakers like complex derivatives tied to mortgages, the banks have instead tried to cut their biggest expense: people. Yet there persists a view on Wall Street that profits can’t come simply by holding the line on costs — big pay is still needed to lure talent from other firms.
Toward that end, firms have sought to cut jobs and noncompensation expenses rather than compensation itself. Both Goldman Sachs and Bank of America have announced big noncompensation cost-cutting efforts over the past year, for example.
The result is that compensation over all continues to rise even as some shareholders press firms to cut costs further amid weak profit growth. (Nearly half of all revenue on Wall Street is earmarked for compensation; in 2009, Morgan Stanley, which was hit harder during the crisis than most of its rivals, found itself paying out a record 62 percent of its net revenue in compensation and benefits. That number has since come down.)
The report showed that total compensation on Wall Street last year rose 4 percent, to more than $60 billion. That was higher than any total except those in 2007 and 2008 — before the financial crisis fully took its toll on pay.
The average pay package of securities industry employees in New York State was $362,950, up 16.6 percent over the last two years.
“It’s good work if you can get it,” said Thomas P. DiNapoli, the comptroller.
The results are sure to raise eyebrows on Main Street and in Washington, where lavish pay packages have come under attack since the crisis.
Still, the report provides only a snapshot of Wall Street’s finances. The wage data largely covers 2011. With the third quarter in the books, Wall Street firms will soon begin figuring out their bonus pool and how to distribute it. For some Wall Street professionals, the year-end bonus can easily account for more than half their total compensation.
Yet expectations for this year appear to be high, according to another study out on Tuesday. Some 48 percent of 911 Wall Street employees surveyed by eFinancialCareers.com said they felt their bonuses this year would higher than in 2011. That was an increase from 2011, when 41 percent of survey respondents said they believed their annual bonus would increase.
There, the comptroller’s report was not encouraging, saying that a survey it took earlier in the year suggested that Wall Street’s total cash bonus pool for 2012 was likely to decline for the second consecutive year.
The comptroller’s report attested to the importance of financial services to New York City. Financial jobs accounted for nearly a quarter of all private sector wages paid in the city last year, even though they accounted for just a fraction, 5.3 percent, of the city’s private sector jobs.
Over all, the annual report depicted a cloudy outlook for the financial industry and its thousands of employees.
“The securities industry remains in transition and volatility in profits and employment show that we have not yet reached the new normal,” Mr. DiNapoli said.
After posting a “disappointing” $7.7 billion in earnings last year, Wall Street in the first half of 2012 earned $10.5 billion, he said. The industry “is on pace” to earn more than $15 billion by the end of the year.
But even with some signs of improvement, Wall Street is rapidly shedding jobs. The austerity efforts have claimed 1,200 positions so far this year, according to the report. Mr. DiNapoli estimated that the industry lost more than 20,000 jobs since late 2007.
“In the short run, as a way to keep profits up, the firms will drive down costs and that will mean contraction in the work force,” Mr. DiNapoli said.
Goldman Sachs had 32,300 on the payroll at the end of its second quarter in June, down 3,200 people from the year-ago period. Bank of America has cut 12,624 employees over the past year, leaving it with 275,460 people.
Banks have also taken aim at lavish cash bonuses. The comptroller in February estimated that cash bonuses declined 13.5 percent, to $19.7 billion.
As Wall Street reins in cash payouts to top executives, the banks have been encouraged to reward employees with more stock and other long-term compensation. Some people argue that such a move discourages outsize risk-taking and ties an employee’s interest to the long-term health of the bank.
While pay remains high across the board, senior executive pay has fallen since the financial crisis. In 2007, the year before the financial crisis, Goldman’s chief executive, Lloyd C. Blankfein, made $68.5 million. In 2011 he took home $12 million.
For an executive like Mr. Blankfein, $12 million may be a pay cut, but it is still a princely sum compared with other industries. Between 2009 and 2011, compensation in the securities industry grew at an average annual rate of 8.7 percent, outpacing 5.3 percent for the rest of the private sector.
“Whether you love or hate people on Wall Street, they are spending money that is driving our economy,” Mr. DiNapoli said.
Cutbacks and the Fate of the Young
By EDUARDO PORTER
Published: October 9, 2012
During the presidential debate last week, Mitt Romney reminded us that it is our children, and grandchildren, who will end up paying for our budget deficits. His comment about the immorality of passing on such a large bill is a welcome reminder that our generation bears responsibility for the well-being of the next.
But the nation’s growing debt is not the only threat to our children’s future. We need a broader debate about how to ensure that the next generation — the children of today and the taxpaying adults of tomorrow — have a fair shot at prosperity.
Right now, the next generation is getting shortchanged all around, with children too often treated as an afterthought in policies meant to appeal to their elders. The United States tolerates the highest rate of child poverty in the developed world. Yet federal expenditures on children — including everything from their share of Medicaid and the earned-income tax credit to targeted efforts like child nutrition and education programs — fell 1 percent last year and will fall an additional 4 percent this year, to $428 billion, according to estimates by the Urban Institute based on the Congressional Budget Office’s projections.
The federal government spent $8 billion less on child health last year than it did the previous year, as fiscal stimulus programs to combat the Great Recession were phased out. It cut aid to states to pay for primary education by about the same amount.
The states, which provide more than 60 percent of the total government dollars spent on children, aren’t in great shape either. According to the Urban Institute’s estimates, state and municipal spending on children fell in each of the last three years.
And the outlook is not much better for the coming decade. Despite health care reform, which will lead to coverage for millions of uninsured children, the Urban Institute forecasts that federal expenditures on children — including direct spending and tax breaks — will shrink to about 2.3 percent of the nation’s economic output by 2022, from 3 percent last year.
Children have needs besides sound fiscal accounts. Deprived childhoods lay the groundwork for future social ills. We have the third-worst rate of infant mortality among 30 industrialized countries and the second-highest teenage pregnancy rate, after Mexico. We’re in the bottom quarter of countries in terms of literacy. Unsurprisingly, perhaps, half of American children born to low-income parents grow up to be low-income adults.
Investing in children is not just a matter of fairness but of economic vitality. Early interventions to help disadvantaged children can have an enormous return. They improve children’s cognitive and social abilities. They promote healthy behavior. They increase productivity and reduce crime. Investing in education is about as good an investment as a society can make.
With all the concern about the next generation’s fiscal future, these investments are falling by the wayside. If Mr. Romney becomes the next president and delivers on his promise to cap federal spending at 20 percent of the nation’s economic product while increasing the defense budget, programs for youth are bound to shrink even below the Urban Institute’s estimates.
According to the Center on Budget and Policy Priorities, if Mr. Romney spared those 55 and over from any changes to Medicare or Social Security, as his campaign has promised, spending on everything else would have to be cut by more than $6 trillion from 2014 to 2022. The center did not specify how this would affect the young. But a repeal of health care reform would drastically reduce health benefits. The budget for Medicaid, which is the biggest federal program serving children, would be cut by almost $2 trillion over 10 years.
There is good reason to be worried about our long-term budget deficits. They are indeed projected to be huge — driven mostly by the growing health care spending of an aging population. Medicare will absorb about 6.7 percent of the nation’s economic output by 2037, up from 3.7 percent today, under the most likely situation laid out by the Congressional Budget Office.
Though President Obama and Mr. Romney acknowledge the American economy can’t afford that, they have each devoted a big chunk of their campaigns to convincing seniors that their benefits will not be compromised. Social Security and Medicare “are bedrock commitments that America makes to its seniors,” President Obama said in a speech to the AARP last month. The Republican vice-presidential candidate, Paul Ryan, told the same gathering, “Medicare is a promise, and we will keep it.” The generation whose taxes will be footing the bill in 2037 doesn’t get the same type of commitment.
Isabel Sawhill, a senior fellow at the Brookings Institution and a co-director of its Center on Children and Families, argues it is time to reconsider the intergenerational deal that has held since Social Security’s inception in the 1930s. The assumption behind it was that working-age Americans could support their children and every senior would be able to retire at age 65.
Today, this compact is under strain. Health spending has skyrocketed while middle-class wages have failed to keep up with the cost of living. The old are living longer and collecting more benefits than before. Even under new measures of poverty that account for seniors’ high medical spending, poverty rates among children have surpassed deprivation among the old. Seniors, Ms. Sawhill suggests, could shoulder more costs so that more of the money from working Americans could be devoted to the young.
There are ways to do this while still protecting the most vulnerable seniors. Social Security benefits could be indexed to slow their growth for high-income seniors. Wealthier retirees might bear a larger share of their medical expenses. The retirement age could be raised.
The challenge isn’t going to get any easier as we keep aging and medical costs keep rising faster than economic growth. But so far the presidential candidates have stopped short of any fundamental change to the longstanding generational compact.
Mr. Obama proposes to address the problem by raising taxes on the rich. He hopes the Affordable Care Act can wring a lot of excess from our health care system — reducing Medicare costs along the way. The plan is likely to come up short, however. The efficiency gains remain hypothetical. And while raising more money from high-income Americans is a first step, most economists believe that to avoid cuts in health benefits the government must raise taxes on the middle class.
Mr. Romney’s plan could be more radical: replacing Medicare with vouchers for Americans to buy health insurance and capping the vouchers to control spending directly. But he has already said he would exempt most of the baby boom generation from his reforms. And he has been careful not to disclose any details — repudiating earlier proposals from his running mate that would have raised how much seniors pay out of pocket, fearful of an intense reaction.
If the next generation is going to be handed the bill for our budget deficits, we might as well make the investments needed to help it bear the burden. So far, we seem on track to bequeath our children a double whammy: a mountain of debt and substantial program cuts that will undermine their ability to shoulder it when their time comes.