Pandit: Happy To Be Out of Obama's Clutches

Eager to rid itself of the government’s onerous restrictions on compensation, management and risk taking, Citi has finally decided to repay some $20 billion in aid by replacing it with private investments.

Pandit said about the decision:

We owe the American taxpayers a debt of gratitude and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need

Wells Fargo is also in the process of repaying its own loan. The company’s CEO pointed out the financial benefits of the arrangement for the government:

TARP stabilized our country’s financial system when confidence in financial markets around the world was being tested unlike any other period in our history…

Its success also generated financial returns for taxpayers, including 1.4 billion dollars in dividends paid to the US Treasury

So the government has making a decent buck from its investments in the banks – where has it all disappeared? Taxpayers should be given tax breaks, if nothing else.

Charles Lane writes in the WaPo today:

Reduce the federal minimum wage. In 2007, Congress enacted a three-step increase in the minimum wage, which was then $5.15 per hour. The final installment took effect in July, raising the rate to $7.25 per hour. In the meantime, unemployment climbed from 4.7 percent to 9.5 percent.

….It was unwise to keep raising the cost of hiring them in a recession.

The minimum wage is a socialist concept designed to reduce poverty in sweatshops. But, we don’t have such conditions in the US anymore. You couldn’t hire an illegal for $5/hour these days – you don’t need minimum wage to ensure a certain minimum pay.

What is preventing willing employers from being matched with willing employees is the anachronistic minimum wage legislation. If we get rid of minimum wage, perhaps, we could get back some of those jobs lost to countries with cheaper labor markets.

President Barack H. Obama’s latest brainwave is to conduct a “jobs summit” to discuss what needs to be done to lower the unemployment rate.

A couple of the ideas kicked around seem to be:

Give employers incentives to hire. A targeted tax credit, available to businesses that expand their payroll, is one possibility the White House and Congress may support. Ensuring that businesses can get tax credits for research and development is another.

…

Boost credit availability for small firms. “We’ve heard that loud and clear” as a top concern of business, White House economist Christina Romer said on CNBC. Large firms generally see credit markets working, Obama said in the meeting. The administration is already trying to provide new capital to small and mid-size banks, which support many small employers. Administration efforts to stabilize the housing market also tie in, because home equity is often the collateral for a small business loan.

The White House and Congress may support the most obvious method to stem job losses?

It’s already working in Germany and other parts of Europe…

In Germany … the sharp contraction in industrial output has led to – so far at least – a rise of only three-quarters of a point in the jobless rate.

…because of incentives and subsidies for businesses to cut the work-week, reduce costs and hold on to their employees. Even the IMF has grudgingly acknowledged that Germany has indeed done a good job of reducing job losses.

Another idea is that of India that is directly providing jobs to large swaths of the rural population. The good part about it is that unemployed people are getting paid to work, unlike the Unemployment Insurance system in the U.S. where folks are getting paid to sit at home. India hasn’t been hit as hard by the recession in part because of the continued increase in rural consumption.

Now, for the second point, does it take 8 months and 10.2% unemployment to realize that small businesses are starving for cash? Here in Bellevue, dozens of small businesses are shutting down every week (just drive around the Crossroads area to see all the empty stores) because they are not getting the loans that can get them through the economic crisis.

A real jobs summit would involve announcing such policies rather than another talk show.