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President Obama, Taxes, Bailouts, And Class War

Barack Obama
AP
Barack Obama

President Obama has wasted no time since taking the oath less than one week ago.

The President has gathered congressional leaders to lobby for an aggressive economic stimulus package and he’s selling an ambitious agenda of economic overhaul straight to the American people.

That agenda includes help for homeowners with mortgage trouble, help for the financial system with toxic “assets” and a myriad of tax breaks.

Over the weekend, his aides indicated that we can expect proposals for tighter regulation of the financial system alongside the $825 billion stimulus package.

Phew!

President Obama wants to create four million jobs with the package, begin rebuilding the nation’s infrastructure, reform the healthcare system, decrease America’s dependence on oil, improve educational opportunities for average Americans and do it all in a non-partisan way. Well, what’s not to like? In addition, one has to admire the President for getting digital by creating a White House blog, promising a stimulus package website to launch once the legislation is passed, bringing broadband to the Oval Office and retaining possession of his personal Blackberry despite security concerns. All of his activities in his first week in office seem transparent and bi-partisan which certainly feel right for this time in history. All in all, it’s been a good start for the young President.

So how dare I see any storm clouds on the horizon? Because – since I blog about executive careers – it’s my job.

I see a new (or should I say “renewed”?) class war in the offing and I’ll be interested to see how (if at all) the Obama team manages this. My fear was triggered by two unrelated events last week – and a lifetime of historical perspective. The first event was the firing of John Thain, former CEO of Merrill Lynch (yes, he of the $37,000 toilet!) The second was the announcement on his first full day in office that President Obama was freezing the salaries of all White House employees who made more than $100,000 a year. The media applauded both measures and so did millions of Americans, cheering for justice against 21st Century robber barons and the comeback of “the poor.”

Here’s my problem.

There’s a huge difference between guys like John Thain and the thousands of American career executives who make six figures. Tell that to the angry mobs and romantic media. They smell blood, and rightfully so. They’ve had their fill of big time CEO’s and their oversized bonuses and perks. Hey, so have I. But thinking that anyone making more than $100,000 a year should suffer might be a case of throwing the baby out with the bathwater. There are literally thousands of C-level execs, white collar managers, and seasoned government workers who make six-figure salaries, drive success for their divisions or departments and work their butts off. They pay their taxes and they make their monthly mortgage and other credit obligations. Generally, they have lived within their means and even if they went for a slick mortgage vehicle, they are up to date with their payments. And at today’s high prices, they are not necessarily living high on the hog.

It appears that President Obama’s attitude – and the conventional wisdom of the media – is to freeze salaries and raise taxes (either directly or indirectly) and eliminate bonuses of the most responsible, best educated and hardest working Americans in the name of Justice. Many of us in that category appreciate the enormity of the situation, the sense that President Bush tilted the game in favor of “the wealthy” for eight years, and the reservoir of resentment from those who “have less.” (If you doubt the appreciation, witness the sizeable support President Obama received on Election Day from Americans at all income levels.) We certainly can’t and don’t blame the President for egregious behavior of corporate leaders at AIG, Merrill Lynch, Lehman Brothers and elsewhere. Despite the considerable bi-partisan spirit aloft in the nation on Inauguration Day, make no mistake. Things could get ugly, and fast, as distinctions are made about who should pay what to get this country out of this mess.

And that would be bad for everyone.


  • Thain Defends BofA Deal, Will Pay Back Office Costs

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Erik Sorenson is chief executive officer of Vault.com, Inc. Mr. Sorenson, 52, oversees the strategic direction of the global, New York-based media company. He is widely regarded as an expert on media strategy and industry trends, with experience spanning radio, local and network broadcast television, cable and syndicated TV, and the Internet. From 1998 through 2004, Mr. Sorenson served as president of the MSNBC cable news channel. He has won more than twenty Emmy awards as a writer, producer, and television executive.

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