Word that Wall Street shelled out $18.4 billion in 2008 for bonuses is pushing taxpayers to the barricades. The New York State Comptroller mused in the news release whether TARP funds had been deployed to pay Wall Street employees. The president called it “shameful.”
In essence, Main Street is outraged that the fat cats are still fat. But I can’t help but wonder whether taxpayers in general and NY in particular would be worse off if the securities industry had withheld bonsuses.
For many on Wall Street, both the super-wealthy and middle class, bonsuses can account for up to 90% of their annual take-home pay. If they totally lost that, not only would NYState tax coffers be even lighter than they are, but businesses would suffer. After the 1987 stock market crash, the real estate market tanked and many small entrepreneurs went belly up because the city lost so much capital.
Over the past decade, too many people in finance have been paid very handsomely to do deals that were actively harmful. That has got to end. But would it really be helpful to taxpayers to pull the rug out from under New York’s financial corps? Perhaps it would be best just to say to those who are not only lucky enough to be still employed, but who actually got bonuses, to please invest it in the economy. Don’t use all of it to repay debt. Set up a program that involves, saving, debt repayment and…. Spending!!! That, in the end, would do more than any government program to get the economy going.