Once Again, Obama Administration Shows Its Ignorance of How Business Operates

A story  out of Washington this morning says the Obama administration is considering levying another tax on banks to help recoup some of the massive outlays made through the TARP program. This is another in a list of "Seemed Like a Good Idea at the Time" plans that have come out of this administration over the last 12 months.

Regular readers of this blog know that numerous posts have called the banking industry to task, deservedly so. But this is different.

Here's the Obama complaint: Banks are set to pay another round of huge end-of-year bonuses to their best employees, and the leftists who control Washington now are again upset that these high-producing bankers would actually earn more-a lot more-that other working stiffs.

You see, leftists like Barack Obama, Eric Holder and their Chicago mob think that everything is a zero-sum game. That means that if you win it necessarily means that it's at my expense. But these highly paid bankers have brought millions of dollars into the banks as they were supposed to. They'll take their bonus money and upgrade their homes, either building or buying, purchase yachts and take ski vacations. In the process they will provide money that eventually will hire and pay real estate workers, contractors, carpenters, boat builders, ski lift operators, hotel staff and restaurant workers. That's how a growing economy grows. And how a 10% unemployment rate shrinks.

But Pres. Obama had demonstrated a shocking lack of knowledge-in fact, an ignorance and hostility to-how business works. He and his mob would prefer an employment model that is devoid of merit. Think of a teachers contract or a union pay scale. The left won't rest till every ounce of incentive, creativity, and ambition is bred out of Americans in the workplace and in business. So the administration is predisposed to being against anyone working hard and joining that top tax bracket. (Although they should be thrilled, given how they are punishing the most successful Americans with the burden of supporting more than 50% of the population.)

There is a second reason why their thinking is just plain stupid. Workers who received these large bonuses generally have employment contracts. Those legal documents specify what the workers are to receive. Employers have no legal right to change the terms of those contracts unilaterally. What's more, the liability to the banks for these bonuses has already been calculated into the budget. Now comes the Chicago mob threatening to tax the banks even further. Those taxes have not been accounted for in the budgeting process. Which means the banks will do what companies always do when costs go up: They'll pass them on to consumers like you and me. They will pass that tax on in the form of lower interest payments, higher credit card fees or new fees that didn't exist before the tax.

What this means is that you and I are the ones who will really be paying the tax. At the end of the day the overpaid bankers will have their bonuses. The banks will retain their most productive employees. The Obama administration will have more money to waste, which is what it seems to do best. And you and I will be poorer for it.

If you want to know why the unemployment rate stubbornly refuses to budge from 10%, look no further than 1600 Pennsylvania Avenue.

Just thought you might like to know.

Yes, Virginia, There Is Such a Thing as Bad Publicity

For the 15th year in a row, San Francisco-based Fineman PR has released its list of the 10 biggest public relations blunders of the year. If to err is human, then these are super-human screw-ups. Just take a look:

1. The Obama White House cleared Air Force One to fly over Manhattan with an F-16 in pursuit last April. The purpose: A panoramic shot of Air Force 1 over the Statue of Liberty. The goal: Make President Obama look, well, presidential. But to New Yorkers still living with the horrible memories of 9-11 it was a cold, callous political stunt not worthy of any president, let alone one who had won the city's vote handily in 2008. 
2. A school district in Delaware suspended a six-year-old for bringing a camping utensil into school. The little boy had been so excited at joining the Cub Scouts that he wanted to bring his new toy in to eat lunch. The academic mandarins who run the Christina School District "reasoned" that the tool could be used as a weapon in the hands of a dangerous six-year old excited about scouting.  No amount of book learning can substitute for common sense.
3. Goldman Sachs, the venerable poster child for fat-cat investment bankers, decided it needed some pro-active PR to counter the impression that the $17 billion in bonuses it gave out last year showed it hadn't learned a thing from the global anti-banking anger that followed the onset of the current recession. CEO Lloyd Blankfein bragged to the UK Sunday Times that Goldman was "doing God's work," and pointed to the small business loans it was making.  God had a pretty good year this year. Wonder what His bonus will be?
4.  United Airlines' post-9-11 slogan was "it's time to fly" again. Apparently not if you're traveling with a musical instrument. Last year Canadian David Carroll sat aboard a UA flight and watched down below as the baggage throwers tossed his $3,500 guitar around like it was a javelin. Carroll sent the airline a $1,200 bill for the damage to the guitar. United ignored Carroll's demands, providing a textbook case for why old line industries just don't get this social media thing. Musician Carroll recorded a music video about the incident and posted it to You Tube. Within a week the video had amassed three million hits, and United was quickly back in touch with Carroll about a settlement after nine months of stonewalling.
5. Two employees of a Domino's Pizza shop were videotaped doing disgusting things to the pizzas--things usually done in private. They then posted the video to You Tube. The company dithered for two days trying to come up with a response. Faster than you can say pepperoni the video had one million views. Finally the company tried to contain the crisis using its own social media campaign. Let's hope their deliveries are faster than their crisis management responses.
6. Let's take made-for-TV award shows with a grain of salt. Still, when singer Kanye West grabbed the mic out of the hands of teenager Taylor Swift, MTV Music Award winner for Best Female Video, and told the world that his friend Beyonce should have won the award it was a bit much. Even in an industry built on overindulgence and self-promotion West's act was not a career builder. He later made a public apology on the Tonight Show.
7. Last May Kentucky Fried Chicken learned that it's not who's coming to dinner, but how many are coming to dinner that matters. In a campaign destined for the "Seemed Like a Good Idea at the Time" Hall of Fame, KFC did a coupon tie-in to The Oprah Winfrey Show as a way to introduce its new grilled chicken product. The rationale:  Oprah could deliver a lot of potential customers in the KFC key demographic. The problem: Oprah delivered a lot of customers in the KFC key demographic. Lots of them. In fact, millions. They downloaded the coupon for a free KFC grilled chicken meal and then descended on KFC restaurants like a free kegger at a college fraternity. The result: More mouths than meals, and a lot of angry and disappointed customers turned away. Somewhere the Colonel is plotting his comeback. 
8. Department store Target held an online promotion last fall for an "illegal alien" costume, complete with an extraterrestrial mask, orange prison jump suit labeled "ILLEGAL ALIEN," and a large "green card." (No word on why you'd be illegal if you had a green card.)  Target blamed the incident on a data entry error that caused the offending costume to be ordered. Regardless,  advocacy groups descended on Target faster than a bunch of grandmas on Black Friday. In a world gone made with political correctness and over-sensitivity Target somehow launched a promotion that even the most ardent anti-immigration partisan would find offensive. Bad Target.
9. The Los Angeles Times reported that a Wells Fargo bank executive had foreclosed on a $12 million Malibu beachfront estate and then used it for throwing swank parties. Allegedly the foreclosed owner had lost his wealth in the Bernie Madoff Ponzi scheme. It's worth mentioning that at the time Wells had received  $25 billion from U.S. taxpayers to stay in business. A lot of these taxpayers had themselves been foreclosed on by banks like, well, Wells Fargo. Any wonder why nobody likes bankers?
10. A Chicago landlord, Horizon Group Management, had a dispute with a renter last spring. The renter tweeted something nasty about her living conditions in an apartment managed by the landlord. Landlord Horizon sued the renter, claiming that the Twitter message was broadcast all over the world, potentially damaging its reputation. The renter at the time had a grand total of 22 Twitter followers. She would have reached more people shouting her message at a crowded El stop. Unfortunately for Horizon the story about the suit was picked up by major traditional media like  the New York Times, the Chicago Tribune, and the Associated Press. The newspaper business is fading like cheap wallpaper, but they still have a hell of a lot more than 22 readers. The only worse move for Horizon would have been to hire the coyote to go after the roadrunner. The PR lesson here: In David vs. Goliath stories, nobody ever roots for Goliath. 

There you have it, thanks to Fineman PR.   Sometimes no publicity is better than bad publicity!

Just thought you might like to know!

Responsibility

The media are alive today with stories of how developers now want a piece of the TARP bailout funding. Presumably these are the same developers who built tidy fortunes over the last five years due to the cheap money the Federal Reserve kept pumping out and the same creative lending that is now in some small part responsible for the economic mess in which we find ourselves.

Banks. Investment banks. State governments. Automobile manufacturers. Now developers. Where does it end?

There used to be an entrepreneurial spirit in this country. A spirit of risk taking that separated us from other peoples. People accepted the consequences of their behavior. Failure was not fatal. Thomas Edison failed many times in his attempted inventions before he hit it big with the incandescent light bulb and other creations. One of the most brilliant men I know failed more than once with companies before he founded one that had lasting success.

Now we line up for the government to feed us, put a roof over our heads, pay our medical bills, educate us and put us through college and take care of us in our old age. We've given up responsibility for ourselves to government.

Edmund Gibbon once said of ancient Athens, "In the end more than they wanted freedom, they wanted security. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for was freedom from responsibility, then Athens ceased to be free."

As a nation our goal was once the preservation of our freedoms as brilliantly articulated by FDR:

• Freedom of speech


• Freedom of religion


• Freedom from want


• Freedom from fear

We seem to have lost our direction, wanting instead, as the Athenians did, freedom from responsibility. And we turn to a massive, largely ineffective federal bureaucracy to be responsible for our care and keeping--cradle to grave.

But there will a price for this. As Gerald Ford said, "A government big enough to give you everything you want is a government big enough to take from you everything you have." Including your self-respect, your money, and yes, your freedom.

Just thought you might like to know.