My finance view

General Motors is likely to spend more than $500 million on employee bonuses and profit-sharing based on the company’s performance last year.

GM, which made a record profit in 2011, will pay bonuses of at least $182 million to white-collar workers such as engineers, car designers and managers on Wednesday, according to a formula obtained by The Associated Press. That’s on top of $332.5 million in profit-sharing it already agreed to pay factory workers.

In the past, such payments have drawn criticism from those who believe the government shouldn’t have bailed out GM and Chrysler. But GM, which made a record $7.6 billion last year, says the payments are needed to hold on to skilled employees. It’s also keeping fixed costs down by giving bonuses instead of annual pay raises.

The bonuses will go to most of the company’s 26,000 salaried employees, many of whom make more than $100,000 a year. The bonuses will range from 8 percent of base pay to 14 percent, according to the formula.

The company would not release the percentages, nor would it say how much it will spend on the bonuses. But it’s likely the average bonus for salaried employees will be more than the $7,000 that each of GM’s 47,500 factory workers will get in March.

The white-collar bonuses are determined by a worker’s pay grade, individual performance and company metrics that measure whether GM met goals including pretax earnings, market share, cash flow and quality. This year’s salaried bonuses will be smaller than last year’s, when the company met all of its goals. A small number of top performers will get pay raises or larger bonuses, the company has said.

“It’s a pay-for-performance type approach that really drives accountability in the organization and helps employees connect their compensation with performance,” says GM spokeswoman Lynda Messina.

GM must reward employees because the labor market is starting to become competitive again, especially for computer experts, engineers and other skilled jobs, says James Stoeckmann, senior compensation specialist for World at Work, an organization of human resources executives who specialize in pay issues.

“Companies are having a hard time finding all those critical skills they need,” he says. At almost every company, white-collar bonuses are higher than those given to blue-collar workers, he says.

The U.S. spent nearly $50 billion to save GM three years ago, and some Republicans think the government should get its money back before bonuses are paid. The company nearly ran out of cash when auto sales dried up in the middle of the financial crisis. With little or no private loans available, GM needed a bailout to make it through bankruptcy protection.

The government agreed to take stock in GM in exchange for most of the debt. So far it has recouped more than $22 billion. Taxpayers still own 500 million shares of GM, or 26.5 percent of the company. If the government sold those shares at the current price of around $26, it would get about $13.2 billion. But it’s waiting for the stock price to rise before selling. Shares would have to sell for more than $53 each for the government to get all its money back, which is unlikely.

Sen. Charles Grassley, R-Iowa, a critic of the bailout, said the Obama administration needs to figure out a way to get the money back.

“As the company gives out bonuses, the Treasury Department needs to have an exit strategy for getting GM to repay the taxpayers for helping the company survive,” he said in a statement. “Without an exit strategy, GM can expect more questions and scrutiny regarding employee bonuses.”

The formula to calculate the bonus percentages was given to the Associated Press by a person familiar with GM’s compensation. The person didn’t want to be identified because the company did not make the formula public.

The company announced earlier this month that it plans to freeze its U.S. pension plan for white-collar workers and move to a 401 (k)-type plan. GM also gave salaried employees five more vacation days.

White-collar workers fared better at crosstown rival Ford Motor Co. Ford said last month that 20,000 salaried workers will get 2.7 percent pay raises on April 1, plus bonuses based on individual performance.

In addition, Ford will make profit-sharing payments of around $6,200 each to its 41,600 U.S. factory employees in March.

GM CEO Daniel Akerson has been against giving annual raises, saying the added costs limit the company’s flexibility in an economic downturn.

But that could hurt GM over time, if Ford workers get pay raises and their salaries grow far larger than those at GM, says David Whiston, auto equity analyst for Morningstar.

Ford, which borrowed billions from banks but avoided a government bailout, said the raises are needed to stay competitive with other big companies. The automaker made a $20 billion profit last year

Salaried workers at Chrysler Group LLC, which made far less money than GM or Ford, also will get profit-sharing checks. The company, which is not publicly traded, would not disclose the amounts. About 26,000 union workers at Chrysler, which also took a government bailout, will get checks of about $1,500. Chrysler made $183 million last year.

GM, Chrysler and Ford agreed to the profit-sharing for factory workers in contract talks last year with the United Auto Workers union. Most of the workers won’t get pay raises.

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China is likely to see little slowdown in growth this year even as its government needs to overhaul its economy to manage expansion over the next two decades, World Bank President Robert Zoellick said.

The economy will probably have a

One of Israel’s newest startups is banking on the assumption that instead of reading this story, you’d rather watch a one-minute summary.

“There’s such an overload of information today that consuming long articles has become a really tedious and difficult task,” said Zohar Dayan, 28, the co-founder and chief executive of Wibbitz. “Why not just press a play button and get all the information in a short video?”

Wibbitz’s software takes highlights of an article and superimposes them over a slideshow of pictures and video, which are generated by keywords in the text. A computerized voice reads the selections, so all you have to do is sit back and watch.

But developing the technology only solves some of the challenges facing the two-year-old startup based in Tel Aviv. To turn a profit, the firm needs a successful business strategy. So Wibbitz has tapped a resource far away from Israel: Washington University in St. Louis.

WU students are helping Wibbitz research video advertising models. The project is part of a new class on venture consulting, which paired 12 WU students and 12 Israeli students with six Israeli startups like Wibbitz, with small budgets and basic needs.

The students’ assignments include writing social media and marketing strategies, providing pricing guidelines and compiling market research.

It’s the kind of work that many small startups can’t afford and most students don’t have the opportunity to do, said Cliff Holekamp, a professor of entrepreneurship at WU’s Olin School of Business who heads the class.

The professor, himself an entrepreneur, said this kind of experience can be beneficial to students, whether their goal is to work in venture capital, international business, or to start their own company.

“Entrepreneurs are a great way to understand international business and management consulting,” Holekamp said. “Because it’s a smaller company, you get to really see all the aspects of the business and to understand the overall business strategy.”

Many business schools are now looking to other countries for hands-on learning opportunities, said Robert Hisrich, a professor of global entrepreneurship at the Thunderbird School of Global Management in Glendale, Ariz.

Universities hope that these relationships may come to benefit their local economies. For example, if Wibbitz opens a U.S. office in five years, perhaps they will locate in St. Louis. In the meantime, students gain experience that will make them competitive in a global economy, Hisrich said.

“Part of what we do at universities is educate people to help the world,” he said. “And if we can help our own area’s economy, all the better.”

SILICON VALLEY MIDEAST

There are few places riper than Israel to gain experience with an international startup online pay day loans. The country with about 7.6 million inhabitants — a population about 30 percent larger than Missouri’s — and boasts 57 companies on the Nasdaq stock exchange, third most after the U.S. and China.

“Israel is a major world headquarters for tech startups,” Holekamp said. “It’s literally Silicon Valley east — I should say, Mideast.”

The success of Israel’s startups can be traced to its own tumultuous history, said Saul Singer, co-author of the book “Start-up Nation: The Story of Israel’s Economic Miracle.”

“Israel itself is a startup,” Singer said. “It took drive and risks to create the country called Israel.”

Singer also credits the army with giving Israeli youth both a propensity for risk-taking and a “mission orientation,” two attributes crucial to successful startups, he said.

Israel has mandatory military service; typically, men serve for three years and women for two years.

“On one hand you can’t fail and on the other hand you have to take risks,” Singer said of the Israeli army experience. “It gives you all sorts of tough real-world experiences that teach you what it means to get things done.”

Sarah Haselkorn, a WU junior studying engineering, and Tim Fetter, a 28-year-old MBA student, have spent hours researching different types of video advertising for Wibbitz.

At the end of the semester, they will tell the startup whether “pre-rolls,” the short commercials that launch before a video begins, or banner ads, which sit on the side of the webpage, are the better advertising strategy.

The group has hit a number of snags, the least of which is the challenge of coordinating weekly conference calls with four students on two different continents.

But Fetter said he’s learned a lot from the Israeli students and entrepreneurs, who he said approach business differently, and perhaps more efficiently, than Americans.

Israelis “are a lot more open — and, I would even say, confrontational, which carries a negative connotation here — but not in a bad way,” Fetter said. “I think that makes for an environment where it’s a lot easier to develop as a person and to air issues, and part of the reason they are such an innovative culture.”

His Israeli counterparts said they have some things to learn from American students as well.

“American students are very methodical, organized and thorough,” said Dayan, the Wibbitz CEO. “I think combining that with the straightforward way of the Israelis really produces excellent results.”

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It came and went in a flash, a number on a board for seconds at a time, but its symbolic power couldn’t be dismissed.

The Dow Jones industrial average, powered higher all year by optimism that the economic recovery is finally for real, crossed 13,000 on Tuesday for the first time since May 2008.

The last time the Dow occupied such rarefied territory, unemployment was a healthy 5.4 percent, and Lehman Brothers was a solvent investment bank. Financial crises happened in other countries, or the history books.

The milestone Tuesday came about two hours into the trading day. The Dow was above 13,000 for about 30 seconds, and for slightly longer at about noon and 1:30 p.m., but couldn’t hold its gains. It finished up 15.82 points at 12,965.69.

Still, Wall Street took note of the marker.

It was just last summer that the Dow unburdened itself of 2,000 points in three terrifying weeks. S&P downgraded the United States credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.

A second recession in the United States was a real fear. But the economy grew faster every quarter last year, and gains in the job market have been impressive, including 243,000 jobs added in January alone.

“Essentially over the last couple of months you’ve taken the two biggest fears off the table, that Europe is going to melt down and that we’re going to have another recession here,” said Scott Brown, chief economist for Raymond James.

The tumult of last summer and fall left the Dow as low as 10,655. Its close Tuesday put it 22 percent above that low. The Dow is less than 1,200 points from an all-time high, a 9 percent rally from here.

A long-awaited deal to cut the debt of Greece and prevent a potentially catastrophic default on its debt, announced before dawn in Europe after 12 hours of talks, helped the Dow clear 13,000.

Under the bailout deal, Greece will get euro130 billion, or about $172 billion, from other European nations and the International Monetary Fund. In a separate deal, it will owe euro107 billion less to investors who own its government bonds.

After months in which the talks crawled along and vague headlines yanked the market up and down, the conclusion was almost anticlimactic because the markets were already expecting an agreement.

European markets didn’t take the news as well. Stocks closed down 3.5 percent in Greece, where stocks have lost 80 percent of their value since 2007. Stocks declined less than 1 percent Tuesday in Germany, France and Britain.

Investors noted that Greece remains in deep recession. Its bond investors will take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.

In the U.S., investors were cheered by earnings from Home Depot, watched closely as a barometer of American spending on homes, and Macy’s. Wal-Mart missed Wall Street expectations, and its stock lost 4.2 percent, worst among the 30 stocks in the Dow.

The Dow has climbed 6 percent this year and has not lost 100 points on any day. The Greek debt crisis may be receding, but high gasoline prices are emerging as a threat to the economic recovery, and thus the stock market.

A gallon of regular gas costs $3.57 on average, the highest on record for this time of year. With tension building over Iran’s nuclear ambitions, Iran has halted oil exports to Britain and France and threatened to stop shipping to other European countries.

The price of oil settled at $106.25, up $2.65 for the day and its highest level since last May. Airline stocks got clobbered. United Continental lost 9 percent, Delta Air Lines 7 percent. The Dow transportation average lost 1.5 percent.

Materials, telecommunications and energy companies led the industries gaining ground. Health care companies, makers of consumer staples and utilities, traditionally stocks to own in more cautious times, were lower.

The Standard & Poor’s 500 index surpassed 1,363, its peak from April 2011, but closed at 1,362.21, up 0.98 point. The Nasdaq composite, which is heavy with technology stocks and trading at levels not seen since December 2000, closed down 3.21 points at 2,948.57.

Metals prices jumped because of expectations that demand may improve after the Greek bailout package was approved and China took another step to stimulate economic growth. Silver finished up 3.7 percent, and platinum, copper and palladium all rose 3 percent or more. Gold ended up 1.9 percent.

The Dow industrials last closed above 13,000 on May 19, 2008. The next day, they crossed under 13,000, not to return for almost four years. They fell as low as 6,547 on March 9, 2009. A reading of 13,094 would double that.

Dan McMahon, director of equity trading at Raymond James, called the 13,000 mark “just a big round number” as a matter of market fundamentals. But he added: “Psychologically, it matters.”

The milestone could motivate cautious investors to pump more money back into the stock market. The yield on the government’s benchmark 10-year Treasury note rose to 2.06 percent from 2.01 percent Friday, a sign that fewer investors wanted the bonds and were instead willing to buy riskier stocks.

“You need notches along the way to measure things,” and Dow 13,000 is as good as any, said John Manley, chief equity strategist for Wells Fargo’s funds group. “Is 50 older than 49 and a half? Yes, by six months. Do those six months really make a difference? Probably not. But it does give us a fixed point, something we can look at.”

The Dow is also an imperfect measure of the economy’s health. It is made up of just 30 companies, and it’s weighted so that the few with the highest stock prices carry the most heft.

A tiny percentage change in the stock of IBM, which is trading around $194, sways the index much more than a giant change in the stock of Bank of America, which is trading around $8.

Last year, the Dow rose 5.5 percent. But strip out IBM and McDonald’s, the two stocks with the highest prices last year, and it rose just 1.8 percent, according to calculations by Birinyi Associates.

Dow Jones, which decides which 30 companies are the best barometer, says the index can accurately represent the economy because they make up 25 to 30 percent of the market value of all U.S. public companies.

Among the big movers:

_ Barnes & Noble fell 4 percent after missing expectations. Rising costs offset higher sales of both traditional books and digital books. Investors seemed encouraged that the bookstore chain, a survivor in an era that has felled competitors like Borders and Waldenbooks, plans to introduce a cheaper Nook to compete with Amazon’s Kindle Fire.

_ J.C. Penney, which is trying to reinvent itself and just brought in an Apple veteran as CEO and changed its logo, fell 3 percent after Fitch Ratings dropped its credit grade to junk status.

_ Wal-Mart fell 4 percent after missing analysts’ expectations for revenue and per-share earnings.

_ High-end department store Saks rose 3 percent after beating analysts’ expectations.

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White House hopeful Rick Santorum lags behind both his 2012 competitors and wealthy Americans in general when it comes to charitable giving, according to tax documents.

Santorum gave $81,500 to charity over the past four years, or 2.2% of the more than $3.6 million in total income he earned since leaving the Senate, the documents showed.

The tax returns, provided to CNN on Thursday, did not break down charitable giving by recipient.

From 2007 to 2009, Santorum’s rate of charitable giving fluctuated between 2.03% and 2.67% of his earnings.

In 2010, the rate dropped to 1.76% of his $923,411 in income. That same year, President Obama gave 14.2% of his income to charity, while Mitt Romney donated 13.8% and Newt Gingrich gave 2.6%.

Ron Paul has not released his tax returns.

Rich, Gingrich and crazy rich

According to data from the IRS and the Congressional Budget Office, taxpayers with income in excess of $500,000 donate 3.4% of their income to charity on average.

"His donation level is on the low side," said Ken Berger, the president and CEO of Charity Navigator, who also noted that research suggests religious individuals donate more than the non-religious.

"When you put it in the context of people of faith, then it really is on the low side," Berger said.

The relatively low contribution level is also a bit puzzling for a senator who championed non-profits and charitable organizations while in office.

"We should be proactive in finding ways to more fully engage the American public in charitable giving," Santorum said in a 2005 statement on the CARE Act, a bill he sponsored that sought to promote the interests of charities and provide incentives for Americans to donate.

Santorum has also come under fire for the giving practices of a charity called Operation Good Neighbor that he started more than a decade ago.

In his "founder’s letter," Santorum wrote that one of the charity’s goals was to help "break the cycle of poverty that sours the lives of too many men, women and children in our nation."

The group collected at least $2.3 million in contributions between 2001 and its termination in 2007, but only spent around 45% of total revenue on beneficiaries, according to IRS documents.

The rest went to fundraising, office space and personnel costs. In essence, the charity was spending more on itself than the people it was designed to help.

The charity, Berger said, lagged far below industry standards.

Get more from your donation to charity

"Seventy-five percent or more reaching beneficiaries is excellent, and 65% or more is okay. If you fall below 50% you’re really performing poorly," he said. "I would recommend donors flee from an organization like this."

While the Santorum campaign did not respond to calls and e-mails from CNNMoney on Thursday, the campaign did provide comment to the Washington Post, which detailed the charity’s practices in January.

"Senator Santorum was very committed to helping raise funds for Operation Good Neighbor and did so with the understanding that those funds would be used to help many organizations and families located in urban areas of Pennsylvania," Santorum campaign adviser John Brabender told the paper.

CNN’s Dana Bash contributed to this report 

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Italian corporate bonds account for seven of the top 10 performers this year as investors renew their holdings of securities they shunned at the peak of Europe

Rioters set fire to buildings and battled police in downtown Athens as the Greek Parliament prepared to vote on Prime Minister Lucas Papademos

Seeking cooperation in a polarized climate, President Barack Obama on Tuesday urged Congress to act quickly on bipartisan measures that would extend tax breaks for small businesses and help startup companies raise money. He said he would sign the legislation “right away.”

Obama plans to include in his 2013 budget proposal later this month a series of business measures that have been percolating in Congress or that already have passed the Republican-controlled House to give entrepreneurs incentives to expand their businesses or start new ones.

Obama made his remarks during a Cabinet meeting at the White House. He noted that for the first time, the head of the Small Business Administration, Karen Mills, was participating as a full member of the Cabinet.

“It is a symbol of how important it is for us to spur entrepreneurship, to help startups, to move aggressively so that we can assure more companies that create the most jobs in our economy are getting a leg up from various programs that we have in our government,” Obama said.

The White House legislative agenda for small businesses includes permanently eliminating taxes on capital gains from investments in small businesses and a one-year extension on the ability of all businesses to immediately deduct all of the costs of equipment and software purchases.

The Obama administration also is seeking a new 10 percent tax credit for small businesses that add jobs or increase wages in 2012.

In addition, the president’s proposals would make it easier for new startup companies to raise money and to go public, embracing a series of measures that already have passed the House or that have bipartisan support in the Senate. Obama also is proposing expanding a government small business investment program from $3 billion to $4 billion.

“The president has made small businesses and particularly startups a key aspect of his economic growth agenda because he understands how much the newest and fastest-growing small businesses drive job growth in our economy,” said Gene Sperling, director of the White House National Economic Council.

Obama said the Homeland Security Department also is seeking ways to change the visa process to attract foreign-born entrepreneurs and high-skilled immigrants to invest in the United States or start new businesses. The State Department also plans a change in regulations to provide longer visas for workers whose employers transfer them from overseas to the United States guaranteed high risk personal loans.

The measures are modest by comparison to Obama’s 2009 economic stimulus or to last year’s jobs bill. But they borrow from past Obama initiatives and from bipartisan legislation that has passed or been proposed in Congress.

Obama’s package includes proposals offered in the Senate by Democrat Chris Coons of Delaware and Republican Marco Rubio of Florida, and another plan by Republican Jerry Moran of Kansas and Democrat Mark Warner of Virginia.

White House officials would not disclose the total cost of the president’s package, but Sperling said it would be more than covered by proposals to reduce tax expenditures and by closed loopholes the administration will call for in its 2013 budget.

With the presidential election set to become the main political preoccupation of 2012, the White House initiative is designed to take advantage of cooperative attempts by Republicans and Democrats to find modest remedies to spur the economy. Most of those efforts have been overshadowed by congressional bickering, the Republican presidential primary and Obama’s growing attention to his re-election.

The proposals come a year after the administration launched a consolidated effort to spur new startup businesses with a high-profile White House event featuring scores of entrepreneurs, some of whom offered testimonials to the job creation possibilities that new businesses can bring to the economy.

Besides the tax breaks, a central element of the Obama package is to assist new entrepreneurs by making it easier for them to raise money, reducing taxes on their startup expenses and removing securities barriers for new companies that have gone public.

“Our small business agenda has a specific focus on removing the barriers that have for too long blocked startups and entrepreneurs from getting the financing they need to accelerate their growth and hiring,” Sperling said.

One of the Obama provisions would increase the amount of money that can be raised through small public offerings that don’t require companies to undergo an extensive Securities and Exchange Commission registration process. The limit for such “mini public offerings” would increase from $5 million a year to $50 million.

The House passed similar legislation last year.

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A year ago, when Sydney property agent Peter Green

In the land of big-time deficits and trillion dollar budgets, Congress is spending less money on at least one thing.

Itself.

After voting last year to cut its own operating budget by 5%, House members have reduced the number of paid positions on their staffs, and are spending less on office supplies and computers.

The cuts have translated to 948 fewer salaried staff positions, a 62.5% drop in spending on computers and 30.7% less spending on office supplies, according to an analysis conducted by the Sunlight Foundation.

Staff assistant positions were the hardest hit, registering a 16.6% decline, while the number of part-time employees dropped 15.6%. Meanwhile, the number of slots for communication directors actually increased.

The House has around 12,000 staffers, and the job cuts amounted to a 7.4% overall decline in positions, according to Sunlight.

When compared to current deficits, the House spending reductions don’t add up to much in the way of savings. But for a Republican-controlled chamber, they are an important reflection of legislative priorities.

"The cuts are such a tiny fraction of the overall budget," said Lee Drutman, a data fellow at Sunlight. "And the reality is it makes it harder for them to do a decent job."

And more cuts are on the way, as funding will decrease another 6.4% for the legislative year that kicks off Tuesday.

Commentary: Debt crisis must be solved in the open

With many of the easy cuts already made, and staff salaries accounting for about half of congressional budgets, things might get tricky for lawmakers trying to keep a full roster of employees saving account pay day loan.

A report from the Congressional Management Foundation, a non-profit that helps congress improve its operations, backs that up.

"The 2011 cuts were manageable," the report said. "However, the consensus is that the cumulative two-year cut of 11.4% will require the large majority of offices to make painful cuts that will be felt by virtually all staff."

Drutman warns that any further reduction in staff levels will hurt the ability of congressional offices to independently produce sound policy recommendations and legislation.

"Capitol Hill staffers are already stretched incredibly thin," Drutman said. "And that means if you’re a staffer, you’re more dependent on outside sources."

And who are those outside sources?

For the most part, said Drutman, they’re lobbyists. And dependence on lobbyists for policy expertise is a dicey proposition.

Lobbyists can help fill policy knowledge gaps on congressional staffs, but at the same time come with deep-pocketed backers seeking a specific legislative outcome. 

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