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Taking a Bullet on Wall St.
Superintendent Carol Johnson of the Boston Public Schools last week officially lined up at the soup kitchen of American education by announcing nearly $60 million in budget cuts. Her pared-down $810 million budget comes after she announced in November new initiatives intended to help Boston "serve as a model for every urban school district in America.'' The recession has rendered Boston as yet another district that is freezing salaries, slashing transportation and cramming kids into fewer schools.
"We will be forced to make tough yet necessary decisions that will impact all of us,'' Johnson said. "In some cases, the decisions may be unpopular, but we must remain on a course that will allow us to offer world-class schools in our world-class city.''
The degree to which so-called world class cities remain glass ceilings for public school kids was illustrated by other recent events. The institutions we bailed out after they brought us to our knees were back to handing out obscene bonuses. JP Morgan Chase awarded CEO Jamie Dimon $17 million in stock. Goldman Sachs CEO Lloyd Blankfein received $9 million in stock. Wells Fargo CEO John Stumpf received $18 million in cash and stock. Morgan Stanley CEO James Gorman received a stock bonus of $8 million. AIG last week announced $100 million in bonuses. Bank of America was reported to be giving out $4.4 billion in bonuses.
This is all part of what the Wall Street Journal last month predicted would be a record $145 billion in compensation at the nation's top 38 banks and securities firms. While national unemployment still hovers around 10 percent, the banking industry has given itself an 18 percent pay raise. The most appalling part of this is that Wall Street actually believes it is responding to our outrage over CEO compensation. In 2007, Blankfein received a Wall Street record $68 million bonus.
About Blankfein's stock award, compensation consultant Brian Foley told the New York Times, "For running an organization that big . . . nine million is not a lot of money.'' In an Associated Press story, compensation consultant Mark Borges said "While the fact that he's making this much won't sit well with people out of work, it seems Goldman is being sensitive to the political considerations and optics of this amount. It's almost as if he's (Blankfein) taking a bullet for everyone else.''
If $9 million is "taking a bullet,'' then there really is no hope to close the gap between Wall Street and Main Street, let alone close any resource and achievement gaps for the nation's school children. While Wall Street bankers feast over $145 billion in compensation, state departments of education are fighting like crabs in a barrel to apply for a chunk of the $4.4 billion that President Obama has put aside for "Race to the Top.''
The federal government did schools a temporary favor last year as the stimulus package contained $100 billion for education. But most of that money will be gone by the end of the school year, leaving them as vulnerable as ever to the antiquated system of tying school budgets to property taxes, which automatically puts low-income urban or rural children in a hole.
Last week, Senators Barbara Boxer of California and Jim Webb of Virginia proposed a 50 percent "taxpayer fairness fee'' on bonuses over $400,000 to employees of Wall Street firms that received federal bailout money. Boxer and Webb claim that up to $10 billion could be raised by the tax. Webb said, "If you're going to get that kind of a bonus, you can share it 50-50 with the people who helped bail you out.''
Where the actual proposal will go is questionable, given Wall Street's deft, bipartisan influence on Capitol Hill and in the White House. But there would be no faster way for the Obama administration and the Democrats to build support for the tax than to say that the $10 billion would go into public education. It is still a paltry sum. But at least, when Wall Street "takes a bullet,'' it could do so on behalf of the schoolchildren of America.