Friday, August 29, 2008

Employees Continue to Get the Shaft in GOP’s “Ownership Society”

In his speech last night, accepting the DNC nomination for the presidency, Barak Obama highlighted a constant refrain of the Bush GOP over the last eight years regarding the “ownership society”…

"For over two decades, [McCain has] subscribed to that old, discredited Republican philosophy: Give more and more to those with the most and hope that prosperity trickles down to everyone else. In Washington, they call this the 'ownership society,' but what it really means is 'you're on your own’. Well, it's time for them to own their failure.” (source)

The heart of the “ownership society” philosophy is that Americans need greater ownership – literally, not figuratively – in health care, home ownership, and retirement assets. (source). Many have attributed the current subprime mortgage crisis, in significant part, to the flawed rationale of encouraging “ownership” at any cost, and without an economic infrastructure that supports it. (source).

Another failure of the “ownership society” philosophy is highlighted today in a New York Times article, which reported that employees of Fannie Mae and Freddie Mac, the mortgage monoliths at the center of the subprime meltdown, have lost nearly $100 million in compensation assets paid out in Employee Stock Ownership Plans (ESOPs). The Times reports that at the end of 2006, Fannie Mae/Freddy Mac employees owned $116M in company stock. Today, the value of that investment is roughly $17.5M.

ESOPs have been a popular trend under the Bush administration, allowing companies to appear to offer rich compensation packages to employees while not having to actually reach into their pockets to pay employees more, and while reaping major tax benefits extended under the Republican tax scheme. Many employees, such as those at Fannie Mae/Freddy Mac, don’t read the fine print on these “benefit” packages, which frequently limit the employees’ ability to diversify their investments until retirement. Like their colleagues at Enron and WorldCom, Fannie Mae/Freddie Mac employees are learning that investing in one’s company also means that you’re investing in the political policies that impact the economy as a whole – and the political leaders who set those policies.

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