Robinhood in Reverse More Bail-outs for Big Corporations Blamed on 9/11 By KT, Executive Editor On September 21st, 2001, Congress authorized the federal government to give an initial $15 billion of American tax dollars to the major airlines. Transportation Secretary Norm Mineta, who, before the attack, used his power to stop security personnel from detaining suspicious-looking foreigners, said that an additional $3 billion in tax dollars would be spent to upgrade security in airports. In total, at least $18 billion will be transferred from the Social Security "Trust Fund" and other government coffers to the corporate accounts of air carriers. Additionally, the Federal government pledged to cover the losses of Silverstein Properties, the company that holds the lease on the WTC. This billion-dollar company owned by New York real-estate developer Larry Silverstein was effectively given a retro-active insurance policy. Though Silverstein Properties has not made any payments on this "policy", American families are now paying out millions of dollars each month to cover Silverstein's losses. What is wrong with this picture? First do the Math To get proper perspective, let's do a quick calculation using Silverstein Properties as an example. In April 26, 2001, Silverstein Properties entered a 99-year contract with the New York Port Authority to lease 7 World Trade Center and the Twin Towers. According to Larry Silverstein in a televised interview with Britt Hume on September 9, 2002, his company pays $10 million/month for the 10 million square feet of rentable space. Thus, has pays $1 per square foot. But for how much does Silverstein rent the space to tenants? Considering the location and presige of the buildings, we can assume, conservatively, that Silverstein collects $500/month per square foot. Offices on the higher floors would rent for much more, but if we add property taxes, insurance, and common expenses into the equation, $500/mo is a fair number. Doing the math, it can thus be estimated that Silverstein's monthly profit on the WTC is $5,000,000,000 per month! In the interview on September 9, 2002, Mr. Silverstein stated that the Federal goverment is covering his losses. Was he referring to the $10 million per month or the $5 billion per month? Whichever, part of the deductions from Joe Citizen's annual salary of 50 thousand dollars is now paying Silverstein. This isn't exactly what Robin Hood had in mind. The Victims Pay Until the late 1980's, it was understood in America that victims should be compensated for damages caused by willful, accidental, or negligent acts of individuals or corporate bodies. Yet a 180-degree shift has occurred during the last 15 years. Now it is the victims who must compensate the criminals. The bail-out package passed today is a strong example. For decades, the airlines have made the same mistakes made by thousands other companies. They have had plenty of opportunity to employ and train competent security personnel, install impenetrable cockpit doors, and perfect remote control override systems. However, they have chosen to ignore the increasing aircraft tragedies and, instead, cash-out hefty profits. Now that their negligence has taken the lives of innocent Americans, it is Americans who are going to pay the monetary costs as well. The victims are paying for the negligent acts of those responsible for the damage. Who Usually Pays for Negligence? If I own a hunting rifle, and that recreational tool is stolen and used in a murder, current court rulings indicate that I and the gun manufacturer will likely be held partially or totally responsible for those crimes. I will have to pay the survivors. If I have a senior citizen busing service, and some buses are used during a charter to plow through a park full of people, my company will be charged with manslaughter, and myself or my insurance company will have to pay for my negligence. Thereafter, few will want to buy my services and, hence, my business will suffer. Will the federal government pay me for my inept management skills and give me money to stay in business? No. It is likely that, if a busing service is needed, a smarter businessman will buy my bankrupt company and implement the safety precautions that my customers want. Another Real Life Example Californians, more than any other Americans, are painfully familiar with the consequences of foolish business decisions and shortsighted planning. By coincidence, PG&E, the power company that serves nearly half of California, filed a $13.2 billion bankruptcy reorganization plan on September 21st, 2001, just hours before the Presidential Address announcing the airline bailout. The foundational causes of its financial distress are these facts: During its sustained enjoyment of fat profits, PG&E chose to pay extremely high salaries and bonuses to the executive elite, rather than invest in its infrastructure. For decades, the building of new, innovative plants, and the upgrading of its existing plants was sacrificed on an alter of private jets and $10 million vacation homes. In times of plenty, PG&E took no actions to improve its operational efficiency. Instead, unskilled workers were hired and encouraged to be lazy through compensation packages that discouraged improvement and rewarded poor performance. PG&E ignored California's ever-growing population and failed to plan for the growing demand and inevitable deregulation. In contrast to the actions of any prudent business, the company neglected to prepare for catastrophic scenarios. As a result of these mistakes, Californians have had to pay enormous utility rates, many power-sensitive businesses have been destroyed, and the Silicon Valley economy that drives the GNP of America is in dire trouble. Restoring solvency to California's leading energy provider could very well kick-start the national economy. Yet, while Congress is readily giving handouts to the airlines, it refuses to bail-out PG&E. In my view, neither company should receive any tax payer support. Using the Tax Payers to bail out Tycoons Like any other business, the airlines have had the abundance of time, technology, and money necessary to prevent disasters such as those of September 11th. Perhaps the airline coalition chose not to implement safety and security measures because they knew the feds would prop them up if a major tragedy ever occurred. We know that, instead of investing their profits in safety and security, airlines and aircraft manufacturers opt to funnel millions of dollars into FAA pocketbooks and political campaigns (see www.aircrash.org). As they have grown richer, air travel has become more risky. Who Should Pay? The airplanes-cum-missiles that struck the East Coast last Tuesday have destroyed the following: At least 7,000 innocent lives; The World Trade Center, a privately owned pair of buildings that generated hundreds of millions of dollars in rents each month for its owners; Adjacent buildings and streets in Manhattan; One fifth of the Pentagon; Americans' confidence in air travel. Who should pay these damages? The airlines, the aircraft manufacturers and the insurance companies for these airlines and the properties that were destroyed. Like any other business, the airlines should be held responsible for their failure to provide adequate security. The ax needs to fall upon the roots of the tree of negligence. Similarly, the insurance companies should pay on their policies, for the purpose of insurance is to cover such losses. U.S. tax payers should not have to pay these cost; nor should they pay billions of dollars to cover the losses of the extremely wealthy. Forcing Americans to do so is no different than a land-owner forcing a slave to work for his pleasure.