AlterNet.org: Sarah Anderson http://www.alternet.org/authors/sarah-anderson en Mike Pence Is a Loyal Friend to Polluters http://www.alternet.org/environment/pences-partners-against-climate-regs-tax-dodging-utilities <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">In 2015 the Indiana governor told Obama his state would not comply with the Clean Power Plan.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2016-07-18_at_2.39.17_pm.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>In Mike Pence, Donald Trump has picked a running mate who could be relied on to take a chainsaw to President Obama’s signature environmental policy.</p><p>In 2015 the Indiana governor <a data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.in.gov/activecalendar/EventList.aspx?view%3DEventDetails%26eventidn%3D221567%26information_id%3D215753%26type%3D%26syndicate%3Dsyndicate&amp;source=gmail&amp;ust=1468953144262000&amp;usg=AFQjCNGcIDQtvVg6MjdrFwq6EGhabgigEw" href="http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&amp;eventidn=221567&amp;information_id=215753&amp;type=&amp;syndicate=syndicate" target="_blank">told</a> Obama in no uncertain terms that his state would not be complying with the Clean Power Plan, which sets targets for reducing power plant emissions in each state. Pence joined a lawsuit that has succeeded in tying up the plan in court.</p><p>He and other climate crisis-denying policymakers have benefited from a well-coordinated network of industry front groups, conservative think tanks and law firms bent on blocking the Clean Power Plan. A good chunk of the funding for this cabal comes from some of the country’s largest electrical utilities companies.</p><p>Where do they get all that extra spending money? It turns out public utilities are champion tax dodgers—the dodgiest of all U.S. business sectors, in fact.</p><p>According to a <a data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.ips-dc.org/utilities-pay-up/&amp;source=gmail&amp;ust=1468953144262000&amp;usg=AFQjCNEEz2iY25gxblG96B80hc7CmMXX5g" href="http://www.ips-dc.org/utilities-pay-up/" target="_blank">new report</a> by the Institute for Policy Studies, 23 of the 40 publicly held utilities that were profitable in 2015 paid no federal taxes that year. Sixteen of them paid no state income taxes. The most extreme example last year was Southern Company, which reaped $210 million in federal and state tax refunds, despite $3.6 billion in pre-tax income.</p><p>This Georgia-based firm, with nine million customers in the southeastern United States, is a fierce Clean Power Plan opponent. In <a data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.regulations.gov/document?D%3DEPA-HQ-OAR-2013-0602-22907&amp;source=gmail&amp;ust=1468953144262000&amp;usg=AFQjCNEloeiUlVrzyjpwSgm_mX7fOo6NIg" href="https://www.regulations.gov/document?D=EPA-HQ-OAR-2013-0602-22907" target="_blank">comments to the Environmental Protection Agency</a>, the firm warned the plan would result in “a complete deconstruction of the nation’s electric sector.”</p><p>Southern officials also did their best to make their customers’ hair stand on end by claiming the CPP would put $35 billion in upward pressure on their rates over the next 15 years. By contrast, the administration forecasts <a data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.epa.gov/cleanpowerplan/fact-sheet-clean-power-plan-benefits-cleaner-more-efficient-power-sector&amp;source=gmail&amp;ust=1468953144262000&amp;usg=AFQjCNFqCzaARtFbVKPuBvxfy5i6DaS3Hw" href="https://www.epa.gov/cleanpowerplan/fact-sheet-clean-power-plan-benefits-cleaner-more-efficient-power-sector" target="_blank">$80 per year</a> in average savings per household through increased efficiency.</p><p>Southern CEO Tom Fanning pocketed $11.8 million in compensation last year and steered a good share of the rest of the proceeds from tax-dodging into blocking the Clean Power Plan through various industry groups, such as the American Coalition for Clean Coal Electricity. That outfit is in turn a member of the <a data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.documentcloud.org/documents/2475751-utility-air-regulatory-group-brief-for.html&amp;source=gmail&amp;ust=1468953144262000&amp;usg=AFQjCNEnl6eO5fIUOYiYSR0l-2Qv73NI0A" href="https://www.documentcloud.org/documents/2475751-utility-air-regulatory-group-brief-for.html" target="_blank">Utility Air Regulatory Group</a>, a petitioner along with Pence’s state of Indiana in the <a data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.chamberlitigation.com/sites/default/files/cases/files/2015/ESPS%2520Litigation%2520Tracker%2520for%2520February%25209%25202016.pdf&amp;source=gmail&amp;ust=1468953144262000&amp;usg=AFQjCNGtNhxljEwNNpRe0u1etLP0V7j-Gw" href="http://www.chamberlitigation.com/sites/default/files/cases/files/2015/ESPS%20Litigation%20Tracker%20for%20February%209%202016.pdf" target="_blank">lawsuit</a> to overturn the Clean Power Plan. The company is also a major Capitol Hill presence in its own right, having spent more than <a data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.opensecrets.org/orgs/summary.php?id%3DD000000168&amp;source=gmail&amp;ust=1468953144262000&amp;usg=AFQjCNEmEt1R5mNbqytd2U2vTpwtt-bTdg" href="https://www.opensecrets.org/orgs/summary.php?id=D000000168" target="_blank">$25 million</a> in federal lobbying in 2013-2014.</p><p>Pence and his utility industry partners against the CPP say they’re looking out for the public interest. They claim the EPA’s rules will be expensive for ratepayers and cost jobs. And yet if they were truly interested in what’s best for ordinary Americans, they would be investing much more in energy efficiency, the cheapest and fastest route to reducing carbon emissions.</p><p>Utilities are required by law to invest in “demand-side” energy efficiency at the consumer end, but the patchwork of state and federal programs have not gone nearly far enough to mitigate climate change and move the country toward a clean energy future.</p><p>Most of these programs also require home and building owners to invest significant upfront capital and so poor households often cannot participate. And since such programs potentially reduce utilities’ profits by reducing energy demand, the firms have had little incentive to do more.</p><p>It would make far more sense to plug the loopholes that have allowed these highly profitable utilities get away without paying their fair share of taxes. Then invest the revenue in projects that would benefit everyday Americans, especially low-income and communities of color. If Southern had paid the full statutory federal and state tax rates last year, for example, they would’ve contributed nearly $1.5 billion to public coffers—enough to fund 9,000 good jobs for people in retrofitting homes or building wind turbines.</p><p>If all 40 profitable utilities had paid their fair share at the state and federal levels in 2015, they would’ve paid about of $14 billion in additional revenue. That would’ve been enough to create 88,000 energy efficiency jobs or weatherize homes for up to three million low-income families.</p><p>Of course such sensible plans would have as much chance of happening under a Trump-Pence administration as a snowball’s survival in you-know-where. This climate change-denying duo would be too busy butchering environmental protections to bother with tax-dodging utilities.</p><p></p><div alt="" class="media-image" height="560" style="width: 600px; height: 318px;" width="1055"><img alt="" class="media-image" height="560" style="width: 600px; height: 318px;" width="1055" typeof="foaf:Image" src="http://qwww.alternet.org/files/screen_shot_2016-07-18_at_6.36.27_pm.png" /></div> Mon, 18 Jul 2016 11:27:00 -0700 Sarah Anderson, Janet Redman, AlterNet 1060354 at http://www.alternet.org Environment Election 2016 Environment pence The Terrible Things That Happen When Santa Claus Visits CEOS http://www.alternet.org/economy/terrible-things-happen-when-santa-claus-visits-ceos <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">A 20-year-old rule intended to control CEO pay has bloated executive paychecks while draining tax revenue and widening inequality.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_108874103-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>This week marks the 20th anniversary of an epic boondoggle in U.S. policy-making history. On Dec. 20, 1995, a tax rule went into effect that was supposed to rein in CEO pay. Boy, did it backfire. </p><p>That year, the gap between pay for large company CEOs and average workers ran 180 to 1. Today, it stands at <a href="http://www.aflcio.org/Corporate-Watch/Paywatch-2015" target="_blank">373 to 1</a>.</p><p>How did this reform go so very, very wrong? The idea was to put a $1 million cap on corporate tax deductions for executive pay, with the idea that boards might be loath to send pay levels into the stratosphere if it meant a corresponding spike in their IRS bills. The problem is that the new rule, Section 162(m) of the tax code, included a massive loophole. The $1 million cap didn’t apply to so-called “performance pay.”</p><p>It wasn’t hard for corporations to rejigger their pay plans so that (voila!) most of the money became fully deductible. The more companies paid their CEOs, the less they paid in taxes. So why not deliver them even bigger boatloads of pay?</p><p>Meanwhile, the rest of us got stuck with the bill. American taxpayers who have seen their wages stagnate have been forced to subsidize the pay of those who sit atop the largest businesses.</p><p>According to a <a href="http://www.ips-dc.org/ceo-stocking-stuffers/" target="_blank">report </a>we’ve just co-authored, this “performance pay” loophole allowed 10 U.S. corporations alone to cut their 2014 tax bill by more than $182 million through CEO pay-related deductions. And this is just part of their total subsidy, since loophole applies to four top executives at each company.</p><p>One CEO was off the charts. McKesson CEO John Hammergren pocketed $112 million in fully deductible “performance pay” in 2014. This included more than $60 million in stock options and more than $50 million in stock and bonuses tied to performance criteria. That translates into a $39 million taxpayer subsidy for the pharmaceutical company, assuming a 35 percent corporate tax rate.</p><p>The stock-pay incentives created by this loophole have also played a powerful role in deepening wealth inequality. Fortune 500 CEOs collectively owned more than $270 billion of their companies’ stock, according to Center for Effective Government analysis of proxy statements. This represents $550 million in stock wealth per executive. In contrast, the median total net worth of the average American household is only <a href="http://www.ips-dc.org/billionaire-bonanza/" target="_blank">$81,400</a>.</p><p>Obamacare closed the performance pay loophole—but only for health insurance companies. Big insurers like UnitedHealth and Cigna can deduct no more than $500,000 in pay per executive, with no exceptions. The reasoning is that these companies should not pass off increased profits from the public program into the pockets of their executives.</p><p>But other companies that have benefited from the expanded pool of insured customers, including pharmaceutical firms like McKesson, are not subject to the same deductibility cap. That’s obviously nuts. But the real solution is to eliminate the perverse performance pay loophole for all firms.</p><p>The <a href="http://www.reed.senate.gov/news/release/reed-blumenthal-introduce-the-stop-subsidizing-multimillion-dollar-corporate-bonuses-act" target="_blank">Joint Committee on Taxation estimates</a> that eliminating this loophole would generate $50 billion in revenue over 10 years. Several bills have been introduced that would do just that.</p><p>Most recently, Senator Elizabeth Warren introduced the <a href="http://www.warren.senate.gov/files/documents/SAVE_Benefits_One_Pager_Press.pdf" target="_blank">Seniors and Veterans Emergency Benefits Act</a>, which would use revenue from eliminating the loophole to provide about 70 million seniors, veterans, people with disabilities, and others a one-time payment equal to 3.9 percent of the average annual Social Security benefit, or about $581. According to the <a href="http://www.epi.org/publication/top-ceos-make-300-times-more-than-workers-pay-growth-surpasses-market-gains-and-the-rest-of-the-0-1-percent/" target="_blank">Economic Policy Institute</a>, 3.9 percent is the average raise received by CEOs of large U.S. corporations enjoyed last year.</p><p>By closing this loophole, we could make progress toward creating a fairer society and generating funds that could be used for greater public purpose. After 20 years, it’s time to pull the plug on this policy disaster.</p> Mon, 21 Dec 2015 10:02:00 -0800 Sarah Anderson, Scott Klinger, AlterNet 1047729 at http://www.alternet.org Economy Economy corporations economy 100 CEOs’ Nest Eggs = Retirement Savings of 41% of Families http://www.alternet.org/economy/100-ceos-nest-eggs-retirement-savings-41-families <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">We need to talk about the retirement savings gap.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2015-10-26_at_11.23.40_am.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>If you think the pay gap in this country is bad, consider the retirement savings gap. </p><p>Just 100 CEOs have company retirement assets that are equal to the entire retirement account savings of 41 percent of American families. On average, these 100 CEOs’ nest eggs are worth more than $49.3 million. That’s enough to generate a $277,686 monthly retirement check for the rest of their lives. </p><p>It probably comes as no surprise that the CEO with the largest retirement nest egg in the Fortune 500 presides over a low-wage empire. David Novak, CEO of fast-food giant YUM Brands, has $234 million in his company retirement fund—enough to deliver a $1.3 million monthly check after he retires. With that kind of dough, in one month Novak could buy a membership to the 10 <a href="http://www.insidermonkey.com/blog/the-10-most-expensive-golf-memberships-336939/" target="_blank">most expensive golf clubs</a> in the world, with enough left over for a couple kilos of the world’s <a href="http://www.cnbc.com/2015/02/19/is-this-the-worlds-most-expensive-food-white-gold-caviar-selling-for-100000-euros-a-kilo.html" target="_blank">most expensive caviar</a> (sprinkled with gold leaf). Meanwhile, hundreds of thousands of Novak’s employees who fry chicken and toss pizzas at Taco Bell, Pizza Hut and KFC have no company retirement assets whatsoever. </p><p>These numbers come from a <a href="http://www.ips-dc.org/tale-of-two-retirements/" target="_blank">new report</a> we’ve co-authored for the Institute for Policy Studies and the Center for Effective Government that is the first to analyze the gap between the retirement assets of Fortune 500 CEOs and the rest of America. The report tells the tale of two retirements—one for CEOs and the other for the rest of us. </p><p>Why have executive nest eggs reached such massive proportions? One major reason is that loopholes in the tax code give executives preferential treatment. <a href="http://teresaghilarducci.org/index.php/pension-reform-beyond-401ks" target="_blank">Nearly half</a> of all American workers have no retirement plan at work. Those who have a 401(k) or other type of tax-deferred plan face strict limits on how much they can set aside in these accounts for their golden years. Workers 50 and older can contribute $24,000 each year, while younger workers can contribute $18,000. </p><p>CEOs have no such limits. While slashing worker pensions, CEOs take advantage of special loopholes that allow them to invest unlimited amounts of compensation into tax-deferred accounts set up by their employers. Seventy-three percent of Fortune 500 firms offer executives deferred compensation plans. As of the end of 2014, CEOs at these firms had accumulated $3.2 billion in these accounts. </p><p>Take Glenn Renwick, CEO of the Progressive insurance company. Last year he dropped the biggest wad of cash in his tax-deferred account of any Fortune 500 CEO: $26.2 million. That saved him more than $10 million on his IRS bill last year. That money can be invested and grow tax-free until he starts spending it, at which point he would owe a one-time tax payment at an ordinary income rate. And if he really suffers from tax-itis, as so many executives do, he has the option of further lowering his liability by moving to a state like Florida, which has no income tax, before he withdraws the funds. </p><p>On top of these tax-deferred accounts, more than half of Fortune 500 CEOs have executive pensions that guarantee them a fixed monthly payment for their entire post-retirement life. For workers, that kind of benefit is about as common as a typewriter in today’s American workplaces. Last year 18 percent of private sector employees were covered by this type of “defined benefit” pension, down from 35 percent in the early 1990s. </p><p>Few people realize that the lavish retirement packages for executives and growing retirement insecurity for the rest of us are inextricably linked. Executives have huge incentives to slash worker retirement benefits as a way of boosting corporate profits and stock prices. And since more than half of executive compensation is tied to the company’s stock price, every dollar not spent on employee retirement security is money in the CEO’s pocket. </p><p>To reverse the retirement divide, we need to expand Social Security. Unlike corporate retirement plans, these benefits are progressive, favoring low- and middle-income workers. Nearly a third of those approaching retirement will be depending almost solely on Social Security, and the current average monthly benefit check is only about $1,200. </p><p>How to pay for this expansion? After slashing employee retirement benefits for so many years, it’s time for CEOs and large corporations to step up and pay their fair share of a program that would allow all seniors to live a dignified life. Top executives (and other high-income Americans) should contribute to Social Security on all their income, including stock-based pay. Corporations should no longer get unlimited tax deductions for executive pay and benefits. And there should be just one set of deferred compensation rules for all employees—regardless of whether they work in the executive suite or the fast food line. </p><p>Especially with our rapidly aging population, bold action now to narrow the retirement gap is critical if we are to avoid a segregated world for seniors, with unmet basic needs for millions and gold leaf-sprinkled caviar for the privileged few.  </p> Mon, 26 Oct 2015 08:10:00 -0700 Sarah Anderson, Scott Klinger, AlterNet 1044713 at http://www.alternet.org Economy Economy retirement savings economy money Papal Smackdown: Pope Francis v. Fossil Fuel Execs http://www.alternet.org/environment/papal-smackdown-pope-francis-v-fossil-fuel-execs <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The Pope has taken aim at a lucrative system.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_171443828.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>For most of us in the cities on Pope Francis’ upcoming U.S. tour, the major concern is traffic congestion. For fossil fuel executives, look out.</p><p>The Pope closed out his blockbuster, 180-page <a href="http://w2.vatican.va/content/dam/francesco/pdf/encyclicals/documents/papa-francesco_20150524_enciclica-laudato-si_en.pdf" target="_blank">encyclical on climate change</a> in May by appealing to God to “Enlighten those who possess power and money that they may avoid the sin of indifference, that they may love the common good, advance the weak, and care for this world in which we live.”</p><p>Sound like anybody you know, Rex Tillerson? The ExxonMobil CEO is notoriously obstinate in his opposition to Pope Francis’ call for a shift from intensive fossil fuel use to alternatives like solar and wind. In fact, when a Catholic priest and shareholder activist urged investment in renewables at the company’s annual meeting this year, Tillerson openly <a href="http://www.wsj.com/articles/pope-inspires-catholic-investors-to-press-environmental-concerns-1436434201" target="_blank">mocked</a> him.</p><p>Enlightening Tillerson and all the other wealthy and powerful U.S. fossil fuel executives who are just as dismissive of climate change will be a challenge of biblical proportions. A <a href="http://www.ips-dc.org/executive-excess-2015/" target="_blank">new report</a> I’ve just co-authored for the Institute for Policy Studies sheds light on just one of the major obstacles: our CEO pay system. In 2015, corporate boards are still designing compensation packages that give oil, gas and coal executives zero personal incentive to diversify their companies’ portfolios to include renewable energy sources. </p><p>It’s pretty much a “pay more to drill more” system, and it’s been enormously lucrative. While shoving the costs of their climate-damaging activities on the rest of us, the 30 top fossil fuel CEOs made $14.7 million last year on average. Tillerson, with $33 million, made well more than double the S&amp;P 500 average of $13.5 million.</p><p>One of the most perverse aspects of the fossil fuel executive pay system is that it rewards CEOs at bonus time for expanding their carbon reserves. Never mind that if the world’s largest fossil fuel companies were to burn all the oil, coal and gas they already own, it would cause <a href="http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719" target="_blank">irreversible climate disaster</a>, everything from extreme flooding and drought to a significant rise in sea level.</p><p>And it doesn’t matter what’s in those reserves. At Marathon Oil, CEO Lee Tillman won an “above-target” bonus of $1.2 million in 2014, in part for expanding reserves of U.S. oil shale, the fracking of which poses well-documented environmental risks, including water contamination and even earthquakes.</p><p>CEOs are also rewarded for project execution, regardless of the environmental impacts. At ExxonMobil, the board justified high payouts to Tillerson and other execs in 2014 in part because they’d “<a href="http://www.sec.gov/Archives/edgar/data/34088/000119312515128602/d855824ddef14a.htm" target="_blank">successfully drilled</a>” their first well in the Russian Arctic, even though their Russian joint venture partner has a <a href="http://www.greenpeace.org/norway/Global/norway/Arktis/Russian%20Roulette.pdf" target="_blank">dismal environmental record</a> and the project was eventually <a href="http://www.bloomberg.com/news/articles/2014-12-01/exxon-rosneft-scrap-arctic-contracts-as-russia-sanctions-bite" target="_blank">scrapped</a>.</p><p>Pope Francis has a growing number of <a href="http://divestinvest.org/" target="_blank">allies</a> in the investment community who fear climate change-dismissive CEOs are taking their firms down a risky financial path. If these firms don’t diversify, they could wind up stuck with massive quantities of devalued “<a href="http://www.carbontracker.org/resources/#key-terms" target="_blank">stranded assets</a>.” The coal industry is already imploding as a result of climate regulations and other factors that have reduced demand.</p><p>The Pope will need all the help he can get to turn this bunch around. A just-released investigation by <a href="http://insideclimatenews.org/news/15092015/Exxons-own-research-confirmed-fossil-fuels-role-in-global-warming" target="_blank">Inside Climate News</a> reveals that ExxonMobil executives were warned of fossil fuels’ role in creating devastating climate change in the late 1970s, long before most of the rest of the world. How did they respond? By devising strategies to block climate solutions.</p><p>Changing Rex Tillerson’s personal reward system won’t be enough to prevent climate catastrophe. But as long as fossil fuel executives are insulated from the crisis they’ve helped create, we’ll all remain at risk.</p> Mon, 21 Sep 2015 08:30:00 -0700 Sarah Anderson, AlterNet 1042744 at http://www.alternet.org Environment Environment pope catholic belief oil fossil fuel climate change The 3 Most Asinine Corporate Arguments Against CEO-Worker Pay Disclosure http://www.alternet.org/labor/3-most-asinine-corporate-arguments-against-ceo-worker-pay-disclosure <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">As Dodd-Frank turns five, the SEC hasn&#039;t been able to put the regulations into practice.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_127785641-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Regulators of the Great Depression era could teach their modern-day counterparts a few lessons in how to get things done. Consider, for example, how fast the Securities and Exchange Commission of that era was able to implement the first executive pay disclosure rules, compared to today’s bureaucratic foot-dragging.</p><p>When Congress required U.S. corporations to start reporting their exec comp figures in 1934, it provoked a huge corporate backlash. One firm wrote, for example, that the public’s interest in this information amounted to “<a href="http://lawreview.richmond.edu/wp/wp-content/uploads/2010/01/Wells-442-JB.pdf" target="_blank">criminal curiosity</a>.” Another suggested it would do nothing but make the “rank and file seethe with discontent.” But those 1930s regulators ignored the pushback and put the law into force in less than a year.</p><p>Fast forward to 2010, when the Dodd-Frank financial reform law mandated expansion of pay disclosure to include median worker pay and the ratio between that and CEO pay. The big corporate lobby groups, predictably, threw another fit. Despite research showing that narrower pay gaps are good for business because they lower worker turnover and boost morale, these groups set out to kill the ratio in the rule-making phase.  </p><p>Unfortunately, in today’s Washington, SEC officials appear much less capable of ignoring that kind of corporate pressure than they were 80 years ago. When Dodd-Frank turns five years old on July 21, this simple rule will still not be in force. It may be the law of the land, but the SEC has not finalized the regulations to put it into practice.</p><p>So what are the brilliant corporate arguments that have stopped SEC officials in their tracks? Here are a few of the most common – and asinine—claims.</p><p><strong>1.      </strong><strong>The CEO-worker pay ratio is too costly and difficult to calculate.</strong></p><p>The <a href="https://www.uschamber.com/press-release/us-chamber-report-finds-sec-woefully-underestimated-impact-proposed-pay-ratio-rule" target="_blank">U.S. Chamber of Commerce</a> put out a study last year claiming that for large companies, it would take an average of 1,825 hours, at a cost per company of $311,800, to produce this one number. What a joke. This wage information should already be in company files. But to make it even easier, the SEC’s proposed regulation would allow companies to use statistical sampling so they wouldn’t even have to enter every single employee’s wage into the calculation. If the claims are not exaggerated, investors should be very concerned about why these companies have so much difficulty figuring out what they’re paying their own workers.</p><p><strong>2.      </strong><strong>The worker pay part of the calculation should be limited to just U.S.-based full-time workers because that would “<a href="http://www.sec.gov/comments/s7-07-13/s70713-228.pdf" target="_blank">provide more useful disclosure</a>.”</strong></p><p>This is simply not the intent of the law. Section 953(b) of Dodd-Frank explicitly references “all employees.” And this is for good reason. Investors have an interest in knowing whether companies are outsourcing to low-wage areas where routine violations of basic worker rights can contribute to political and economic instability. And corporations that turn good jobs into bad ones <em>should</em> have to pay more in compliance costs than companies that maintain a commitment to good jobs.</p><p><strong>3.      </strong><strong>This new disclosure requirement will harm poorer states and cities.</strong></p><p>This one is a real doozy. The <a href="http://www.sec.gov/comments/s7-07-13/s70713-228.pdf" target="_blank">National Investor Relations Institute</a>, which represents 1,600 U.S. companies, argues that their members will feel so much pressure to have a low CEO-worker pay ratio that they might not expand into low-income areas. Get real. Corporations that refuse to pay decent wages and force their workers to rely on taxpayer-funded social programs are the real threat to poorer communities.</p><p>The AFL-CIO, which has fought to narrow the gap between workers and top executives, has pretty much had it with the SEC on this one. Recently, they <a href="https://drive.google.com/file/d/0B1hw4csNsPTBbFRZdFlVUGpnZWs/view" target="_blank">submitted a Freedom of Information Act request</a> for SEC records pertaining to this rule. They also <a href="https://drive.google.com/file/d/0B1hw4csNsPTBcVZXUkZiX3M3Q0k/view" target="_blank">organized a letter</a> in support of this request signed by 19 organizations that represent investors and the public.  In a separate <a href="http://ourfinancialsecurity.org/sec-executive-compensation-petitions/" target="_blank">petition to the SEC</a>, more than 165,000 Americans demanded that the commission finally take action.</p><p>For five years, corporate lobbyists have succeeded in stalling this simple, commonsense regulation. There are rumors that the <a href="http://www.bloomberg.com/news/articles/2015-06-18/sec-could-make-gabelli-pay-new-front-in-fight-over-income-divide" target="_blank">SEC may finally take action</a> on August 5. If they do, I predict the corporations that are currently fighting this new pay reporting requirement will eventually accept it as routine—just as they did in the 1930s – and will likely even benefit from it.</p> Wed, 15 Jul 2015 13:36:00 -0700 Sarah Anderson, AlterNet 1039393 at http://www.alternet.org Labor Economy Labor ceo worker pay corporation dodd-frank sec Supporting NAFTA Was the Kiss of Death for Democrats --Why Dems Should Think Twice About Voting for TPP http://www.alternet.org/economy/obama-twists-arms-tpp-lets-take-look-back-dems-who-sold-us-out-nafta <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">As President Obama twists arms to pass “fast track,” a look back at the Democrats who helped Clinton win the bloody trade battle of 1993.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2015-06-08_at_11.16.24_am.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>It’s serious flashback time for those involved in the 1993 debate over the North America Free Trade Agreement. With the “fast track” trade vote expected as early as this Thursday, a Democratic president is once again twisting arms and dangling rewards in a desperate effort to muster votes for a corporate-driven trade deal. And just like in 1993, the vote will be one of those rare bipartisan moments in Washington. The word is only <a href="http://www.politico.eu/article/fast-track-trade-vote-still-up-in-the-air/" target="_blank">about a dozen members</a> remain on the fence, most of them Democrats. The president is reportedly <a href="http://www.nytimes.com/2015/06/05/business/black-caucus-is-wooed-for-trade-pact-votes.html" target="_blank">putting the tightest screws</a> on members of the Congressional Black Caucus. After the NAFTA wheeling and dealing began in earnest back in 1993, it didn’t take long to push enough Dems off the fence. All these years later, NAFTA remains the basic blueprint for every U.S. trade deal. </p><p>Let me skip over NAFTA’s failure to deliver on promises for workers, the environment, human rights, etc. These have all been <a href="http://action.sierraclub.org/site/DocServer/0642_NAFTA_Report_05_web_high.pdf?docID=15301" target="_blank">extensively documented</a> over the years by the Institute for Policy Studies, and many others across the continent. President Obama acknowledged its flaws himself when he made a campaign trail promise to <a href="http://www.politico.com/story/2014/02/nafta-barack-obama-trade-mexico-103701.html" target="_blank">renegotiate the deal</a>. Instead, let’s take a look at what individual members got by helping to ram the pact through Congress. Did their support for the big business lobby’s dream deal ensure a glittering political career? </p><p>Starting at the top: Democratic House Speaker Tom Foley sided with the White House and against most of the House Democrats, including Majority Leader Richard Gephardt. In his 30-year political career, that controversial move stood out enough for the New York Times to mention it in Foley’s <a href="http://www.nytimes.com/2013/10/19/us/politics/thomas-foley-former-house-speaker-dies-at-84.html" target="_blank">obituary</a>. A year after the NAFTA vote, the obit noted, “Mr. Foley became the first speaker since the Civil War to be defeated for re-election in his own district.”</p><p>Ouch. While Foley’s defeat can’t be attributed to a single factor, his decision to side with the corporate lobby on NAFTA certainly didn’t prevent his electoral humiliation either.  </p><p>Foley was not the only Democrat to flame out within a year of casting a vote for NAFTA. In fact, of the 34 Democratic incumbents who were defeated in the Republican sweep of 1994, 16 had voted for NAFTA. Several of these losers had been among the fence-sitters who received goodies from the administration. </p><p>Public Citizen has meticulously documented many of these trade vote deals over the past two decades and is planning to release a new report this week on the lessons from all this horse-trading. (Look for the report soon <a href="http://citizen.org/documents/dealmaking-lessons.pdf" target="_blank">here</a>.) What it found over the years is that most of these promises were never fulfilled. In a detailed 2001 report following up on the <a href="http://www.citizen.org/documents/fast_track_deals.PDF" target="_blank">NAFTA</a> deals, Public Citizen concluded that “systematically, the White House promises of special safeguards for U.S. farm commodities, bridges and more remained unfulfilled. Exceptions were several meaningless promises, such as photographs with the president, and one campaign fund-raising event.”</p><p>One of these unfulfilled promises targeted textile and apparel state members. In the days before the NAFTA vote, President Bill Clinton sent them letters aimed at calming concerns about a pending global trade rule to phase out import protections on these products within 10 years. The administration would secure an extension to 15 years, Clinton promised. A month after the NAFTA vote, U.S. negotiators accepted the 10-year timeline. </p><p>Rep. Clete Donald Johnson, Jr. was one of the targets of that empty promise. After voting for NAFTA, the Georgia Democrat got demolished in 1994, losing by a <a href="http://clerk.house.gov/member_info/electionInfo/index.html" target="_blank">margin of more than 30 percent.</a> A few years later, Clinton offered Johnson a consolation prize: a post as chief U.S. trade negotiator for textiles, a sector in rapid decline due to low-wage foreign competition. </p><p>Rep. Bill Sarpalius, of Texas, was another NAFTA sellout whose political career was cut short. According to <a href="http://www.citizen.org/documents/fast_track_deals.PDF" target="_blank">Public Citizen</a>, he pocketed a bevy of promises, including a new federally funded nuclear research lab that was to be located in his district. After Sarpalius lost his seat in 1994, the lab deal fell through.</p><p>Rep. David Price also lost his re-election bid after casting his NAFTA vote. According to <a href="http://www.multinationalmonitor.org/hyper/issues/1993/12/mm1293_04.html" target="_blank">Multinational Monitor</a>, the North Carolina Democrat came out in support of the deal after the Clinton administration conceded to his long-sought demands to award American Airlines two lucrative international air routes that would benefit his district. Price later regained a seat in Congress and is now once again sitting on the fence in the fast track debate. </p><p>The lure of prestigious institutional pork proved dangerously tempting for other members as well. Clinton promised <a href="http://www.multinationalmonitor.org/hyper/issues/1993/12/mm1293_04.html" target="_blank">Rep. Lewis Payne, Jr.</a> of Virginia that his district would be considered as the future site of the National Institute of Standards and Technology. The Institute wound up in Gaithersburg, Maryland. </p><p>Dems from Dallas were proud to get a promise from the Clinton administration to site the new NAFTA Commission for Labor Cooperation in that city. Representatives Eddie Bernice Johnson and Jack Bryant both proudly attended the <a href="http://www.naalc.org/publications/annual_reports/annual_report_1995/secretariat_activities_1995.htm" target="_blank">inaugural ceremony</a> in 1995, along with Dallas mayor (and later Obama U.S. trade representative) Ron Kirk. </p><p>Cornell University professor Lance Compa, who directed labor law research at the Commission, told me, “They thought they were getting dozens and dozens of high-paid professionals who would pump money into the local economy. They were disappointed when the grand total of nine Secretariat staff arrived.” Less than five years later, the Commission was <a href="http://new.naalc.org/english/pdf/report5.pdf" target="_blank">moved to Washington, DC</a>. During the Bush administration, it was quietly shut down. </p><p>Why President Obama is pulling out the stops for fast track, we may never know. After 20 years, it’s still hard to fathom why President Clinton was willing to sell out the store for NAFTA. </p><p>In his brilliant book <em>The Selling of Free Trade: NAFTA, Washington, and the Subversion of American Democracy,</em> John R. MacArthur provides some insights. Rahm Emanuel, per usual, was particularly candid. Then a top advisor to Clinton, Emanuel was a key leader of the NAFTA war room, along with chief trade negotiator Mickey Kantor and NAFTA czar William Daley. Asked about Clinton’s final drive for passage, Emanuel said: “He had to win. It’s better to win than to lose. I’m a big believer in that. I do not believe in moral victories.”</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><p>Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.</p> </div></div></div> Mon, 08 Jun 2015 08:07:00 -0700 Sarah Anderson, AlterNet 1037519 at http://www.alternet.org Economy Economy nafta clinton economy mexico How the Civil War Never Ended for Black America http://www.alternet.org/civil-liberties/how-civil-war-never-ended-black-america <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">By righting a 150-year-old wrong, re-enactors aim to help remedy long untreated ills at the root of today’s #BlackLivesMatter movement</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/union.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Hundreds of African-American men marched to the White House this past Sunday. They were not wearing hoodies in honor of Trayvon Martin. They were not making the “hands up don’t shoot” gesture in honor of Michael Brown.</p><p>They were wearing blue wool trousers and greatcoats, forage caps and cavalry boots—in honor of African American soldiers who fought in the Civil War. Their aim: to correct a wrong made in 1865, when black soldiers were left out of the Grand Review, the Union Army’s victory parade.</p><p>1865? Seriously? With all the critically important racial justice causes of 2015?  </p><p>“Everything about the Civil War is present tense,” author <a href="http://portofharlem.net/cgibbs/#.VViBsY5Viko" target="_blank">C.R. Gibbs</a> told me. “This is not settled. Ferguson and Baltimore are just match flares on a long historical fuse.”</p><p>One need look no further than the U.S. Supreme Court docket for evidence of the Civil War in our contemporary lives. In March, the court heard a case regarding a request by the Sons of Confederate Veterans for a special Texas license plate featuring a Confederate battle flag.</p><p>In 2010, the Virginia public school system introduced a 4th grade <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/10/19/AR2010101907974.html" target="_blank">textbook</a> with bogus claims about thousands of loyal slaves fighting on the side of the Confederacy. The source? The Sons of Confederate Veterans.</p><p>Such disinformation is part of a broader neo-Confederate movement to deny that slavery was a major factor in the conflict—and to bury the history of African-Americans’ active role in their own emancipation.</p><p>Dr. Clarence Anthony Bush, whose great-grandfather fought in a light artillery regiment of the U.S. Colored Troops (USCT), told me it’s especially critical for young people to learn this little-known history. “Some African-Americans feel a little ashamed, thinking it was Abraham Lincoln who gave them their freedom. When you know your people fought for their freedom, it changes the way we look at ourselves and what our abilities are.”</p><p>Bush created a <a href="http://www.alutheranchurch.com/uploads/media/InterviewonBattleHymnofaFreedman-Transcript.pdf" target="_blank">gospel jazz musical</a> about black Civil War soldiers that was performed at the <a href="http://www.afroamcivilwar.org/" target="_blank">African American Civil War Museum</a> in Washington, DC. Nearby is a monument engraved with names of the more than 200,000 USCT members. By war’s end, they made up 10 percent of federal troops.  </p><p>For years, the museum has been tracking down descendants of black Civil War soldiers, recording their stories, and organizing them for the big Grand Review 150. On the eve of the parade, they hosted a vigil in which descendants from across the country paid tribute to their ancestors. Audrea Barnes, a second cousin of First Lady Michelle Obama, spoke about one of their mutual slave ancestors, Jerry Sutton (aka Suter), who ran away from a plantation in Alabama and joined the USCT’s 55th Regiment. Through archival research, she’s learned of his struggles for military pay equity and a failed attempt to obtain a veteran’s disability pension.</p><p>While the pension program was supposed to be color-blind, <a href="http://news.byu.edu/archive10-feb-unionarmy.aspx" target="_blank">Brigham Young University</a> research confirms that African-American veterans received less than their white counterparts. In part, this was a result of a lack of necessary documentation, but bureaucrats were also less likely to believe their claims. For example, they approved 44 percent of white soldiers’ claims regarding back pain, compared to only 16 percent of such claims by black soldiers.</p><p>A century and a half after the Civil War, racial inequalities in America are still staggering. Median income for nonwhites is only 65 percent that of whites. The wealth gap is even wider, with white families’ <a href="http://inequality.org/racial-inequality/" target="_blank">net worth six times</a> that of non-whites.</p><p>Jeremiah Lowery, a 29-year-old labor activist with <a href="http://rocunited.org/" target="_blank">Restaurant Opportunities Centers United</a>, told me he attended the Grand Review because “Just like the slogan ‘Black Lives Matter,’ black history matters too. They started to break down institutions of slavery 150 years ago. Today we have institutions that block people from earning a living wage and make people victims of brutality in the streets. It’s all connected.”</p><p>African-Americans led the Grand Review in 2015, but hundreds of white re-enactors also marched. “We even had people who’ve always re-enacted as Confederates put on Union uniforms today,” said African-American Civil War Museum Director (and former civil rights activist) Dr. Frank Smith.</p><p>Asked whether the event was more poignant in light of the explosion of the #BlackLivesMatter movement, Smith said, “The Civil War led to the passage of the 14th Amendment, which was supposed to ensure that the federal government protected African-Americans when states didn’t. These young men don’t feel safe. And today it’s not just in the South, it’s in the North too. The fact that people are in the streets, though—that’s what gives me hope.”</p><p>Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies in Washington, DC.</p> Sun, 17 May 2015 15:42:00 -0700 Sarah Anderson, AlterNet 1036489 at http://www.alternet.org Civil Liberties Civil Liberties News & Politics #Ferguson 3 Charts That Show Just How Much Wall Street Bonuses Swamp Low-Wage Worker Pay http://www.alternet.org/labor/3-charts-show-just-how-much-wall-street-bonuses-swamp-low-wage-worker-pay <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">We’re unfairly rewarding the people whose work we couldn’t do without, such as taking care of the elderly. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/16785968405_4566a37073_o.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>While workers’ wages stagnate, the Wall Street bonus culture is flourishing.</p><p>New figures from the New York State Comptroller reveal that Wall Street banks handed out $28.5 billion in bonuses to their 167,800 employees last year. That’s nearly double the combined annual earnings of the more than 1 million full-time U.S. minimum wage workers, according to a <a href="http://www.ips-dc.org/deep-end-wall-street/">report I authored</a> for the Institute for Policy Studies.</p><p></p><div alt="" class="media-image" height="350" width="600"><img alt="" class="media-image" height="350" width="600" typeof="foaf:Image" src="/files/story_images/16785968365_0285d19eba_o.png" /></div><p>Low-wage workers across multiple sectors are demanding a raise in the minimum wage to $15 per hour and are organizing <a href="http://april15.org/">“Fight for $15” actions</a> around the country on April 15. While $15 is more than double the current federal minimum of $7.25, the size of the Wall Street bonus pool puts these figures in perspective.</p><p>Consider this: the bonus pool is so large it would be far more than enough to lift all 2.9 million restaurant servers and bartenders, all 1.5 million home health and personal care aides, or all 2.2 million fast food preparation and serving workers up to $15 per hour.</p><p></p><div alt="" class="media-image" height="350" width="600"><img alt="" class="media-image" height="350" width="600" typeof="foaf:Image" src="/files/story_images/16785968405_4566a37073_o.png" /></div><p>While millions of low-wage workers are taking care of our basic human needs, Wall Streeters continue to be rewarded for high-risk behaviors that endanger the entire economy. And that’s not the only price we pay for our lopsided compensation system. Because the very rich squirrel away much of their income, their gigantic bonuses don’t have nearly the stimulus effect as raising pay for low-wage workers who have to spend nearly every dollar they make.</p><p>Based on standard fiscal multipliers, if the $28.5 billion in Wall Street bonuses had gone to minimum wage workers instead, our GDP would be expected to grow by about $34 billion, over triple the $11 billion boost expected from the Wall Street bonuses.</p><p></p><div alt="" class="media-image" height="350" width="600"><img alt="" class="media-image" height="350" width="600" typeof="foaf:Image" src="/files/story_images/16166032243_55da4d9f2d_o.png" /></div><p>What can be done? Well, on top of raising the minimum wage, it would be nice if regulators would stop dragging their feet and finally implement modest Wall Street pay reforms in the Dodd-Frank financial reform legislation. For nearly five years now they have stalled the part of that law that prohibits financial industry pay packages that encourage “inappropriate risks.”</p><p>In 2011, regulators issued a wimpy <a href="http://fortunedotcom.files.wordpress.com/2014/10/34-64140.pdf">proposal</a> that <a href="http://fortune.com/2014/10/27/the-london-whale-sized-loopholes-in-wall-street-pay-reform/">ignores key lessons</a> from the last half-dozen years of financial scandals. It leaves off the hook traders and other non-executive employees whose activities could put the financial system at risk. And for the top brass, the only restriction is that they would have to wait three years to collect half their annual bonuses. <a href="http://ourfinancialsecurity.org/blogs/wp-content/ourfinancialsecurity.org/uploads/2014/09/AFR-956-Comment-Letter-9.18.14.pdf">Americans for Financial Reform</a> has put forward detailed proposals for strengthening the regulation.</p><p>We don’t know yet whether last year’s Wall Street bonuses were based on high-risk gambles that could eventually ruin our economy. What is clear is that we’re unfairly rewarding the people whose work we couldn’t do without, such as feeding us and taking care of our disabled and elderly.</p> Wed, 11 Mar 2015 11:55:00 -0700 Sarah Anderson, AlterNet 1033130 at http://www.alternet.org Labor Economy Labor wall street workers minimum wage salary These Companies Paid Their CEOs More Than They Pay in Taxes http://www.alternet.org/corporate-accountability-and-workplace/these-companies-paid-their-ceos-more-they-pay-taxes <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Adding insult to injury, there&#039;s hardly any transparency from public corporations on how much taxes they actually pay. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_142163770-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>Of the 30 largest U.S. corporations, seven paid their CEO more last year than they paid Uncle Sam.</p><p>All seven—Boeing, Ford Motors, Chevron, Citigroup, Verizon, J.P. Morgan, and General Motors—had strong U.S. profits in 2013. And yet thanks to various tax credits, loopholes, and deductions, each reported getting more money back from the U.S. government than they paid in federal income taxes.</p><p>CEO pay at the seven firms ranged from $9.1 million for Daniel Ackerson at GM to $23.3 million for Jim McNerney at Boeing.</p><p>These figures are from <a href="http://www.ips-dc.org/fleecing-uncle-sam/%20%E2%80%8E" target="_blank">a new report</a> I co-authored by the Institute for Policy Studies and the Center for Effective Government, the third in a series on corporations that paid their CEO more than they reported paying in federal income taxes.</p><p>As in years past, the corporate flacks have come out swinging, but in sort of a kindergarten wiffle ball style.</p><p>First, all of the companies proudly deny having broken any laws. We never accused them of criminality. The problem is that tax-dodging that should be criminal currently isn’t.</p><p>The second rebuttal tactic is to claim that the firm pays just oodles and oodles of taxes worldwide. But when asked to separate out how much they pay the U.S. Treasury versus state or foreign governments, they refuse. Verizon, for example, told <a href="http://finance.yahoo.com/news/seven-big-u-companies-paid-053220279.html?soc_src=mediacontentstory&amp;soc_trk=tw" target="_blank">Reuters</a> that it paid $422 million in income taxes in 2013, but “we do not provide a breakdown.” Our report focuses on federal taxes because they happen to be the focus of congressional debate.</p><p>Boeing spokesman Chaz Bickers told <a href="http://www.cbsnews.com/news/when-companies-pay-ceos-more-than-uncle-sam/" target="_blank">CBS News</a> that their total tax expense in 2013 was $1.6 billion, “but much of that is deferred.” We don’t include deferred taxes in our calculations because many firms, particularly large ones that have amassed significant profits in overseas tax havens, can defer these taxes indefinitely. The foreign earnings of U.S. corporations are only taxed in the United States if they are repatriated.</p><p>Some have also questioned the source of our tax data. Like <a href="http://www.ctj.org/corporatetaxdodgers/sorrystateofcorptaxes.pdf" target="_blank">Citizens for Tax Justice</a> and many other reputable research groups, we rely on the number public corporations report to the SEC in their 10-K forms for current taxes paid. The figure is what company accountants expect the firm pay when they file their tax return, which they prepare several months later. This is the only available information on corporate income taxes broken down by federal, state, and foreign governments, and we stand by it.</p><p>At the same time, we’d be very pleased if corporations would voluntarily reveal the precise tax payment figure from their IRS returns (Line 31 of Form 1120). So far, none have done so.</p><p>We’d be even more pleased if public corporations were required to report how much they’re paying in taxes —in the United States and other countries—as well as an explanation of why their U.S. tax payment may be less than the statutory 35 percent. We know large corporations <a href="http://www.ctj.org/corporatetaxdodgers/sorrystateofcorptaxes.pdf" target="_blank">pay much less</a> on average, but figuring out exactly why is next to impossible.</p><p>Some companies would scream privacy invasion, but publicly traded corporations already must report detailed financial information to the SEC. And at a time when taxpayers are footing the bill for massive corporate tax breaks, privacy doesn’t seem the overriding issue.</p><p>In the lame-duck session, Congress is considering the renewal of a package of tax breaks known as the “extenders.” The House already passed one bill to permanently extend a business tax credit—at a cost of <a href="http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/113/saphr4438r_20140506.pdf" target="_blank">more than $500 billion</a> over the next decade.</p><p>Today’s debate over corporate tax disclosure reminds me of the historical debate over CEO pay disclosure. In 1936, corporate critics of the initial SEC executive pay disclosure rules claimed that any public interest in executive salaries amounted to “<a href="http://lawreview.richmond.edu/wp/wp-content/uploads/2010/01/Wells-442-JB.pdf" target="_blank">criminal curiosity</a>.”</p><p>About a decade ago, when the SEC required more detailed, standardized reporting, business groups again objected. Today, while debates over CEO pay practices continue to rage, squabbles over accurate numbers have all but disappeared.</p><p>Polls suggest a strong public appetite for more information on corporate taxes. When <a href="http://www.gallup.com/poll/168521/taxes-rise-half-say-middle-income-pay.aspx" target="_blank">Gallup</a> asked Americans if corporations are “paying their fair share in federal taxes, paying too much or paying too little,” two-thirds said “too little.”</p><p>A <a href="http://www.americansfortaxfairness.org/files/ATF-Oct-2013-Poll-Toplines.pdf" target="_blank">Hart Research Associates poll</a> found that 67 percent of voters believe “we should end tax breaks for companies that ship jobs and profits offshore and level the playing field for small businesses that create jobs in America.”</p><p>Indeed, smaller corporations stand to gain the most from greater clarity over which companies pay how much and where. As the <a href="http://mainstreetalliance.org/6189/what-nfibs-study-on-effective-tax-rates-really-tells-us-about-small-business-priorities-for-tax-reform/" target="_blank">Main Street Alliance has pointed out</a>, it’s America’s largest corporations that are able to take greatest advantage of tax havens and many other loopholes designed to benefit mega-firms.</p><p>As with CEO pay, increased disclosure wouldn’t end the battles over corporate tax policy. But at least we could move past the bickering over the numbers and have a better-informed debate over a central issue in our economic future.</p><p> </p> Tue, 18 Nov 2014 08:42:00 -0800 Sarah Anderson, Institute for Policy Studies 1027307 at http://www.alternet.org Corporate Accountability and WorkPlace Corporate Accountability and WorkPlace Economy corporations tax breaks Food Chain CEOs Want Subsidies for Their Salaries, But Are Against Raising Workers' Wages http://www.alternet.org/economy/food-chain-ceos-want-subsidies-their-salaries-are-against-raising-workers-wages <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">There&#039;s injustice inside your Chipotle burrito bowl and your Starbucks latte. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/800px-chipotle_mexican_grill.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>You might say the chieftains of America’s largest restaurant corporations want it every which way and then some.</p><p>Having read the polls supporting a minimum wage hike, they’re skittish about trashing the idea personally. So they pay their DC lobby machine to do their dirty work. And it’s not enough for them to shove the costs of their low-wage model onto Joe Schmo taxpayer. These CEOs are also making the rest of us pay for their own fat paychecks.</p><p>How’s that again? Yes, ordinary taxpayers are not only covering the cost of <a href="http://laborcenter.berkeley.edu/publiccosts/fast_food_poverty_wages.pdf">billions of dollars in public assistance</a> for restaurant workers who earn poverty wages. We’re also subsidizing the pay of our nation’s notoriously overpaid CEOs.</p><p>Here’s how it works: Under the current tax code, corporations can deduct no more than $1 million for executive pay from their federal income taxes. But there’s a giant loophole that allows unlimited deductions for “performance pay.” So, no surprise, what the big corporations tend to do is put about $1 million of their executive pay packages toward salary and call the rest “performance pay.” That way the more they shovel into their CEO’s pockets, the less they pay Uncle Sam. And the rest of us foot the bill.</p><p>A <a href="http://www.ips-dc.org/reports/restaurant_industry_pay/">new report</a> I co-authored at the Institute for Policy Studies explains how the 20 largest corporate members of the National Restaurant Association have benefited from this loophole. These corporations aren’t necessarily bigger exploiters than those in other sectors. But they deserve extra scrutiny because of the high social costs of their low-wage model—and because they’re fighting so hard to preserve it.</p><p>Nearly all of the big restaurant corporations are members of the National Restaurant Association, which is leading the charge against minimum wage increases.</p><p><strong>1. Starbucks</strong></p><p>In 2012 and 2013, Starbucks CEO Howard Schultz took in $1.5 million per year in salary, which is subject to the $1 million deductibility cap. But that was just the foam on top of a triple venti.</p><p>Now we get to the serious money. Schultz cashed in stock options worth $230 million over this two-year period. For good measure, the board tossed him $2 million-plus incentive bonuses each year. Both of these types of compensation fall into the “performance pay” loophole.</p><p>So how much does Starbucks get to subtract from its tax bill for the cost of this one guy’s “performance pay”? $82 million.</p><p>That’s a lotta lattes.</p><p>Like several other big restaurant CEOs, Schultz has <a href="http://money.cnn.com/2014/03/19/news/companies/schultz-minimum-wage/">taken a soft line</a> on the minimum wage. That is, when asked about it personally. Meanwhile, Starbucks remains a member in good standing of the National Restaurant Association, which is deploying dozens of lobbyists to block a wage increase. </p><p><strong>2. Yum! Brands</strong></p><p>Next time you’re shelling out for a Gordita Supreme at Taco Bell, keep in mind that you’re also contributing to a grande-sized paycheck for the CEO of the chain’s parent company, Yum! Brands. </p><p>Yum! CEO David Novak took $67 million in “performance pay” over the years 2012 and 2013, which lowered the firm’s federal tax bill by about $23 million.</p><p>Low-level workers at Taco Bell and Yum!’s other chains (Pizza Hut and KFC) earn <a href="http://www.thewire.com/business/2013/03/starbucks-higher-minimum-wage/63397/">less than $8 per hour on average</a>. Since that’s not a living wage anywhere in the United States, it’s no surprise that many Yum! workers must rely on Medicaid or other taxpayer-funded anti-poverty programs to make ends meet. The <a href="http://www.nelp.org/page/-/rtmw/uploads/NELP-Super-Sizing-Public-Costs-Fast-Food-Report.pdf?nocdn=1">National Employment Law Project</a> estimates that Yum! employees receive nearly $650 million in public assistance annually.</p><p>In addition to the firm’s membership in the NRA, Yum! has also been active with the <a href="http://www.sourcewatch.org/index.php/American_Legislative_Exchange_Council" title="American Legislative Exchange Council">American Legislative Exchange Council</a>. In 2011, a Yum! official <a href="http://www.sourcewatch.org/index.php/YUM!_Brands">co-led an ALEC task force</a> focused on blocking paid sick leave benefits. Rather than giving sick employees a break, it seems they’d rather have them sneezing on your Gordita.</p><p><strong>3. Chipotle</strong></p><p>Chipotle has invested heavily in developing a progressive customer base by projecting <a href="http://www.motherjones.com/politics/2013/09/chipotle-commercial-sustainable-food-truth">the image of</a> a “sustainable” fast food alternative. So it’s not surprising that the firm’s top brass have shied away from speaking out personally against the popular push to raise the minimum wage.</p><p>Co-CEO Monty Moran <a href="http://blogs.marketwatch.com/behindthestorefront/2014/01/31/chipotle-says-it-could-afford-a-minimum-wage-hike-as-it-signals-possible-price-rise/">has commented</a> that average wages at Chipotle are already $9 and so the effect of raising the minimum to $10 would be “not too significant.” Like other image-conscious CEOs, Moran appears to prefer to have his Washington lobby shop, the NRA, handle the dirty work on this issue.</p><p>Moran is probably also reluctant to draw attention to his own paycheck. The company has an extremely top-heavy pay structure in part because it has two CEOs. In 2012, Moran cashed $55 million in stock options and his co-CEO, Steve Ells, cashed in $47 million. In 2013, both men received more than $20 million in vested performance stock and Ells exercised another $42 million in options. Altogether, their 2012-2013 “performance pay” generated a CEO pay subsidy for Chipotle of $69 million.</p><p><strong>4. Dunkin’ Brands</strong></p><p>At the helm of Dunkin’ Donuts and Baskin Robbins, CEO Nigel Travis cashed in on more than $20 million in stock options in both 2012 and 2013, generating a performance pay tax subsidy for the company of more than $15 million. For comparison’s sake, that $15 million would be enough to cover the cost of one public assistance program on which many fast food workers rely, the Supplemental Nutrition Assistance Program, for 9,608 households for a year.</p><p>Like the CEOs of Starbucks and Chipotle, Travis has taken a soft line on the minimum wage when speaking out personally. In one <a href="http://nbr.com/2014/01/14/transcript-tuesday-january-14-2014/">recent interview</a>, he said, “We believe the minimum wage will go up. So there’s no point fighting that.” Maybe there’s no point for Travis. He’s got the NRA to do that job.</p><p><strong>5. McDonald’s</strong></p><p>In his first six months as CEO in 2012, CEO Donald Thompson took in more than $10 million in “performance pay,” which translates into a $3.5 million subsidy for the company. Last year, Thompson’s haul was more modest because he opted not to cash in any of his hundreds of thousands of exercisable “in-the-money” stock options.</p><p>Faced with a wave of worker protest actions, he may have decided to hold off on a big payout until the spotlight on the fast food giant is not quite so bright. On top of growing demands for living wages, the company has also faced a spate of wage theft charges. In 2013, the company settled a New York case for <a href="http://www.reuters.com/article/2014/03/18/us-mcdonalds-settlement-wages-idUSBREA2H1TK20140318">$500,000</a> and workers in <a href="http://www.nytimes.com/2014/03/14/business/mcdonalds-workers-in-three-states-file-suits-claiming-underpayment.html?_r=0">two additional states</a> recently filed similar suits. Due to the company’s notoriously low wages, McDonald’s workers rely on an estimated $1.2 billion in public assistance per year, according to the <a href="http://www.nelp.org/page/-/rtmw/uploads/NELP-Super-Sizing-Public-Costs-Fast-Food-Report.pdf?nocdn=1">National Employment Law Project</a>.</p><p><strong>6. Darden</strong></p><p>Among full-service restaurant chains, Darden has enjoyed the largest CEO pay subsidy. The owner of Olive Garden, Red Lobster, LongHorn Steakhouse, Bahama Breeze, and Capital Grille, Darden is the world’s largest full-service restaurant company. In 2012 and 2013, CEO Clarence Otis received nearly $9 million in fully deductible “performance pay,” which works out to a more than $3 million taxpayer subsidy for the company.</p><p>Darden pays at least <a href="http://www.ips-dc.org/blog/darden_corporation">20 percent</a> of its U.S. employees only the federal minimum wage for tipped workers, which has remained at $2.13 an hour for more than 20 years. Together with the NRA, they’re lobbying hard to keep it that way.</p><p>The NRA will be among the targets of a <a href="http://rocunited.org/event/battle-for-the-capitol-tell-congress-to-stop-taking-theothernras-corporate-cash/">demonstration</a> organized by several grassroots organizations on April 28 under the theme of “kicking corporate cash out of Congress.”</p><p>Restaurant Opportunities Centers United, which has built a network of thousands of restaurant workers and high-road employers to improve industry standards, is partnering with the National Domestic Workers Alliance and National People’s Action to urge elected officials to put the interests of regular people first. The following day, members of the NRA will converge in Washington for a major lobby push against increasing the minimum wage. </p><p>It’s time the big restaurant CEOs were called out on their paycheck hypocrisy. For too long they’ve been sticking taxpayers with the bill for their bad pay practices —at both the bottom and the top ends of the corporate ladder.</p> Mon, 21 Apr 2014 05:53:00 -0700 Sarah Anderson, AlterNet 983835 at http://www.alternet.org Economy Economy Labor america american legislative exchange council business ceo Clarence Otis Co-CEO Company Affiliates congress David Novak donald thompson Employment compensation executive pay Food and drink food industry Howard Schultz Institute for Policy Studies Joe Schmo labor living wage management Massive CEO Monty Moran National Domestic Workers Alliance National People National Restaurant Association new york Nigel Travis olive garden Person Career Quotation recruitment Restaurant Corporations Restaurant Opportunities Centers United starbucks steve ells USD united states washington YUM! Brands executive food alternative food giant food workers low-wage model official restaurant CEOs Ferrari and Yacht Dealers Rejoice! Wall Street Hands Out Even More Obscene Bonuses Than Last Year` http://www.alternet.org/ferrari-and-yacht-dealers-rejoice-wall-street-hands-out-even-more-obscene-bonuses-last-year <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">If the $26.7 billion in bonuses had instead gone to minimum wage workers, our economy would be expected to grow by about $32.3 billion</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/05bead30df07187ea8ee883746ab42b48f3ca42a.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Purveyors of Ferraris and high-end Swiss watches keep their fingers crossed toward the end of each calendar year, hoping that the big Wall Street banks will be generous with their annual cash bonuses.</p><p>New figures show that the bonus bonanza of 2013 didn’t disappoint. According to the New York State Comptroller’s office, Wall Street firms handed out $26.7 billion in bonuses to their 165,200 employees last year, up 15 percent over the previous year. That’s their <a href="http://www.bloomberg.com/news/2014-03-12/wall-street-bonuses-grew-15-in-new-york-dinapoli-says.html">third-largest haul on record</a>.</p><div><p>That money will no doubt boost sales of luxury goods. Just imagine how much greater the economic benefit would be if that same amount of money had gone into the pockets of minimum-wage workers.</p><p>The $26.7 billion Wall Streeters pocketed in bonuses would cover the cost of more than doubling the paychecks for all of the 1,085,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour.</p><p>And boosting their pay in that way would give our economy much more bang for the buck. That’s because low-wage workers tend to spend nearly every dollar they make to meet their basic needs. The wealthy can afford to squirrel away a much greater share of their earnings.</p><p>When low-wage workers spend their money at the grocery store or on utility bills, this cash ripples through the economy. According to my <a href="http://www.ips-dc.org/reports/wall_street_bonuses_and_the_minimum_wage">new report</a>, every extra dollar going into the pockets of low-wage workers adds about $1.21 to the national economy. Every extra dollar a high-income American makes, by contrast, only adds about 39 cents to the gross domestic product (GDP).</p><p>And these pennies add up.</p><p>If the $26.7 billion Wall Streeters pulled in on their bonuses last year had instead gone to minimum wage workers, our economy would be expected to grow by about $32.3 billion — more than triple the $10.4 billion boost expected from the Wall Street bonuses.</p><p>This immense GDP differential only speaks to one price we pay for Wall Street’s bonus reward culture. Huge bonuses, the 2008 financial industry meltdown made clear, create an incentive for high-risk behaviors that endanger the entire economy.</p><p>And yet, nearly four years after passage of the Dodd-Frank financial reform, regulators still haven’t implemented the modest provisions in that law to prohibit financial industry pay that encourages “inappropriate risk.” Time will tell whether last year’s Wall Street bonuses were <a href="http://www.nakedcapitalism.com/2009/02/taleb-attacks-wall-street-bonuses.html">based on high-risk gambles</a> that will eventually blow up in our faces.</p><p>Low-wage jobs, on the other hand, endanger nothing. The people who harvest, prepare, and serve our food, the folks who keep our hotels clean, and the workers who care for our elderly all provide crucial services. They deserve much higher rewards.</p></div><p> </p> Wed, 12 Mar 2014 12:48:00 -0700 Sarah Anderson, Other Words 969476 at http://www.alternet.org bonuses And the Oscar for Most Brilliant Activism by Hollywood Celebrity Goes to ... 'Flesh-Eating Zombies on Wall St.' http://www.alternet.org/activism/and-oscar-most-brilliant-activism-hollywood-celebrity-goes-flesh-eating-zombies-wall-st <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Andrew Lincoln of popular show, &#039;The Walking Dead&#039; has a hilarious new video attacking the greed of our financial system. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/richzombie.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>The Harry Potter director and five movie stars have just <a href="http://www.robinhoodpetition.org/">released a new advocacy video</a>. Can you guess the cause célèbre? Stray dogs in Sochi? No. Victims of the latest natural disaster? No. Raising taxes? Yes.</p><p>For their courage in promoting the least sexy of all topics, the Academy will be honoring them with the Oscar for best celebvocacy short. Or at least they should be, if such a category existed.</p><p>One of the actors in the video is Andrew Lincoln of the AMC series “The Walking Dead,” in which he fights flesh-eating zombies. By participating in this project, Lincoln is taking on an even more formidable adversary: Wall Street.</p><p>The setting is a newscast in the year 2024, looking back at the impact of a financial transaction tax on stock and derivatives trading. In real life, 11 European governments are aiming to finalize the details of such a tax in the coming months – in the face of intense opposition from Wall Street lobbyists and their allies across the pond.</p><p>But in the video, Lincoln anchors a panel of bankers from Germany, France, and Spain who have come to love the tax. Even at a small fraction of a percent on each trade, it has generated enough money for their countries to boost public services and programs to fight global poverty and climate change.</p><p>Meanwhile, a British banker, played by Bill Nighy (you’ll recognize him from “The Best Exotic Marigold Hotel” with Judi Dench, "Love, Actually" and many other films), becomes increasingly agitated by all the plaudits. His country, you see, never adopted the tax. </p><p>Now we need an American version of the video. While the big economies of continental Europe are moving ahead with this tool for curbing short-term speculation and raising much-needed revenue, the United States, like the UK, is being held hostage by its financial sector.</p><p>Let’s see, what Hollywood star could we get to play the short-sighted banker? Michael Douglas didn’t mind exposing Wall Street greed as Gordon Gekko. Kevin Spacey lifted the veil on the financial casino in Margin Call. Or perhaps Leonardo DiCaprio would like to play the wolf against Wall Street?</p> Mon, 17 Feb 2014 12:58:00 -0800 Sarah Anderson, AlterNet 959731 at http://www.alternet.org Activism Activism zombie How Fast Food Giants Use Loopholes to Avoid taxes, Pay Execs Giant Pay, and the Workers Peanuts http://www.alternet.org/food/how-fast-food-giants-gorge-govt-subsidies-rake-monster-profits <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Thanks to a loophole that subsidizes CEO pay, huge food chains trimmed millions from their tax bills in 2011 and 2012.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_106778468.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><div><p>The fast food industry is notorious for handing out lean paychecks to their burger flippers and fat ones to their CEOs. What’s less well-known is that taxpayers are actually subsidizing fast food incomes at both the bottom — and top — of the industry.</p><p>Take, for example, Yum Brands, which operates the Taco Bell, KFC, and Pizza Hut chains. Wages for the corporation’s nearly 380,000 U.S. workers are so low that many of them have to turn to taxpayer-funded anti-poverty programs just to get by. The <a href="http://www.nelp.org/page/-/rtmw/uploads/NELP-Super-Sizing-Public-Costs-Fast-Food-Report.pdf?nocdn=1" target="_blank">National Employment Law Project</a> estimates that Yum Brands’ workers draw nearly $650 million in Medicaid and other public assistance annually.</p><p>Meanwhile, at the top end of the company’s pay ladder, CEO David Novak pocketed $94 million over the years 2011 and 2012 in stock options gains, bonuses and other so-called “performance pay.” That was a nice windfall for him, but a big burden for the rest of us taxpayers.</p><p>Under the current tax code, corporations can deduct unlimited amounts of such “performance pay” from their federal income taxes. In other words, the more corporations pay their CEO, the lower their tax burden. Novak’s $94 million payout, for example, lowered YUM’s IRS bill by $33 million. Guess who makes up the difference?</p><p>Combined, these firms’ CEOs pocketed more than $183 million in fully deductible “performance pay” in 2011 and 2012, lowering their companies’ IRS bills by an estimated $64 million. To put that figure in perspective, it would be enough to cover the <a href="http://kff.org/other/state-indicator/avg-monthly-food-stamp-benefits/" target="_blank">average cost</a> of food stamps for 40,000 American families for a year.My new <a href="http://www.ips-dc.org/reports/fast-food_ceos_rake_in_taxpayer-subsidized_payhttp:/www.ips-dc.org/reports/fast-food_ceos_rake_in_taxpayer-subsidized_pay" target="_blank">Institute for Policy Studies report</a> calculates the cost to taxpayers of this “performance pay” loophole at all of the top six publicly held fast food chains — McDonald’s, Yum, Wendy’s, Burger King, Domino’s, and Dunkin’ Brands.</p><p>After Yum, McDonald’s received the second-largest government handout for their executive pay. James Skinner, as CEO in 2011 and the first half of 2012, pocketed $31 million in exercised stock options and other fully deductible “performance pay.” Incoming CEO Donald Thompson took in $10 million in performance pay in his first six months on the job. Skinner and Thompson’s combined performance pay translates into a $14 million taxpayer subsidy for McDonald’s.</p><p>What makes all this even more galling is that these fast food giants are pocketing massive taxpayer subsidies for their CEO pay while fighting to keep their workers’ wages at rock bottom. All of the big fast food corporations are members of the National Restaurant Association, which is aggressively working to block a raise in the federal minimum wage to a level that would let millions of fast food workers to make ends meet without public support.</p><p>There’s an easy solution to the perverse “performance pay” loophole. A bill introduced by Senators Jack Reed (D-RI) and Richard Blumenthal (D-CT) would simply set a firm $1 million cap for executive pay deductions — with no exceptions. Corporations could still pay their CEOs whatever they choose, but at least taxpayers wouldn’t be subsidizing anything above $1 million. The Joint Committee on Taxation estimates this legislation would generate more than <a href="http://www.reed.senate.gov/news/release/reed-blumenthal-introduce-the-stop-subsidizing-multimillion-dollar-corporate-bonuses-act" target="_blank">$50 billion over 10 years</a>.</p><p>It makes no sense for employees of highly profitable giant corporations to have to rely on government assistance for basic needs. It makes even less sense for ordinary taxpayers to subsidize the CEOs who are benefiting most from the fast food industry’s low-road business model.</p><p>With Congress again mulling deficit-reduction strategies, it’s high time that Washington stopped letting fast food giants gorge on both of these absurd subsidies.</p></div><p> </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><p>Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and is the author of the new report <a href="http://www.ips-dc.org/reports/fast-food_ceos_rake_in_taxpayer-subsidized_pay" target="_blank">Fast Food CEOs Rake in Taxpayer-Funded Pay</a>.</p> </div></div></div> Mon, 02 Dec 2013 14:02:00 -0800 Sarah Anderson, OtherWords 931412 at http://www.alternet.org Food Corporate Accountability and WorkPlace Food ceo pay Filthy Rich CEOs Are Lobbying to Cut Medicare, Social Security and Push the Retirement Age Back http://www.alternet.org/economy/ceos-against-grandmas <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The loudest calls for Social Security cuts are coming from CEOs who will never have to worry about their own retirement security.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/greedyceo.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><div class="article_insert_separator"><strong>The following originally appeared on <a href="http://otherwords.org/ceos-grandmas/" target="_blank">OtherWords</a>, and is cross-posted here with permission.</strong></div><p>David Cote, the CEO of Honeywell, has more than $134 million in his personal retirement fund. If I were sitting on a nest egg that big, I might feel a bit sheepish about telling ordinary grandmas and grandpas to take a cut in their Social Security payments.</p><p>But Cote — and leaders of many other large corporations — don’t see it that way. In fact, as Congress prepares for yet another budget showdown at the end of the year, the loudest calls for Social Security cuts are coming from CEOs who will never have to worry about their own retirement security.</p><p>Two lobby groups have organized CEOs into an austerity army. One is the Fix the Debt campaign, which is spending tens of millions of dollars on slick PR tactics to garner public support for cutting popular programs like Social Security and Medicare. More than 135 chief executives have signed up as Fix the Debt spokespeople.</p><p>The other is the Business Roundtable, a 40-year-old club for about 200 of America’s most powerful CEOs. The Roundtable doesn’t sugarcoat. They want everybody to <a href="http://www.cbsnews.com/8301-505146_162-57564374/">work until age 70</a> before they can get Social Security.</p><p>Like Cote, these are people who are sitting on massive nest eggs of their own. According to <a href="http://www.ips-dc.org/reports/platinum_plated_pensions">a new report</a> by my organization, the Institute for Policy Studies, and the Center for Effective Government, Business Roundtable CEOs have retirement accounts worth $14.5 million on average. That’s enough to generate a monthly retirement check of $86,043 starting at age 65. By contrast, the average monthly Social Security check is only $1,237.</p><p>Many of these CEOs are also shortchanging their own workers’ pension funds. General Electric CEO Jeffrey Immelt, for example, has made his employees’ future less secure by building up a nearly $22.6 billion deficit in the company’s retirement fund.</p><p>Why do CEOs with platinum pensions care so much about cutting Social Security? The CEOs claim it’s all about patriotism. “As an American,” Cote says, “I couldn’t know about this problem and not try to do something about it.” As the Baby Boom generation ages, Cote says, we’re facing a “demographic time bomb.”</p><p>There’s a raging debate among economists about whether we’re really facing a bomb or if this is just another phony crisis. What’s clear is there are far more effective ways to ensure Social Security’s sustainability than cutting benefits.</p><p>One of the most effective ways would be to lift the cap on wages subject to Social Security taxes. Right now, just the first $113,700 of an American worker’s wage income is subject to this 12.4 percent payroll tax. The <a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/21/why-rich-guys-want-to-raise-the-retirement-age/">Congressional Budget Office estimates</a> that if this cap were eliminated, it would do reduce Social Security’s projected shortfall by three times as much as raising the retirement age to 70.</p><p>It’s not hard to figure out why these powerful CEOs aren’t supporting that change. They’d have to pay way more into the system. For example, Cote received an unusually large cash payout in 2011 of $25.1 million. If the cap didn’t exist, he would’ve paid $2.6 million in Social Security taxes instead of the maximum for that year of $11,107.</p><p>If these CEOs were truly patriotic, they’d work to ensure a dignified retirement for all their fellow Americans.</p> Wed, 20 Nov 2013 14:05:00 -0800 Sarah Anderson, OtherWords 926873 at http://www.alternet.org Economy Corporate Accountability and WorkPlace Economy Labor honeywell business roundtable social security retirement aging medicare budget cuts How Progressives Won Four Important Victories in 10 Days http://www.alternet.org/activism/how-progressives-won-four-important-victories-10-days <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Are there some lessons here for future fights? </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/victory_0.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Progressives won big in four arenas over the past two weeks. They played key roles in stopping a military strike on Syria, defeating Larry Summers’s bid to head the Fed, winning basic protections for 1.9 million home health care workers, and forcing companies to disclose the gap between their CEO and worker pay.</p><p>Were the stars just aligned for once? Or are there some lessons here for future fights? Here are some thoughts from four Institute for Policy Studies analysts and activists.</p><p><strong>1.    Stopping U.S. military strikes on Syria</strong></p><p>It is a huge victory that the United States is not bombing Syria right now. If not for the huge mobilization of anti-war pressure on the president and especially on Congress, things would have turned out very differently. It was what the<a href="http://www.washingtonpost.com/politics/syria-situation-further-strains-obamas-relationship-with-the-antiwar-movement/2013/09/13/06c9b0f2-1bb9-11e3-a628-7e6dde8f889d_story_1.html" target="_blank">Washington Post</a> called a “test of the strength of the anti-war movement in the Obama era.”  We’ve failed earlier tests – Guantanamo, Afghanistan, the expanded drone war, Libya… But this time, yes – we passed the test.</p><p>First the British parliament, facing a cavalcade of protest from our friends in the <a href="http://www.stopwar.org.uk/statements/syria" target="_blank">Stop the War coalition</a> and beyond, unexpectedly stood up to pressure from their conservative prime minister, voting against a US strike. That turned everything around. Suddenly President Obama – who had been prepared to go to war illegally without the UN, without NATO, without the Arab League – was apparently not quite ready to go to war without the Brits. His decision to ask Congress for authorization to use military force against Syria set the stage for a resurgent anti-war movement that cohered quickly, re-energizing long-time peace activists and pulling in new constituencies from those mobilizing for economic justice, women’s rights, immigration, labor and beyond.</p><p>We were everywhere – and we kept the focus on Congress. We were inside and outside the Capitol, in raucous protests outside and in one-on-one meetings with Members, in church basements and on <a href="http://www.youtube.com/watch?v=x3wIkADabpU&amp;feature=youtu.be" target="_blank">world-wide television</a>. We didn’t worry about organizational forms or creating new coalitions. We just went to work. Organizing groups like <a href="http://www.peace-action.org/" target="_blank">Peace Action</a>,<a href="http://ggjalliance.org/bombingsyriaisnottheanswer" target="_blank">Grassroots Global Justice</a>, <a href="http://fcnl.org/issues/middle_east/faq_on_syria/" target="_blank">Friends Committee on National Legislation</a>, <a href="http://codepink.org/section.php?id=487" target="_blank">Code Pink</a>, <a href="http://www.winwithoutwar.org/blog/entry/syria" target="_blank">Win Without War</a>, <a href="http://pac.petitions.moveon.org/sign/join-rep-alan-grayson-1?source=none&amp;fb_test=0" target="_blank">MoveOn</a>, <a href="http://www.justforeignpolicy.org/" target="_blank">Just Foreign Policy</a>, and others led campaigns that were agile and focused. Analysts from IPS and other groups helped frame the debate through <a href="http://www.democracynow.org/2013/8/28/as_strikes_on_syria_loom_is" target="_blank">media work</a>, <a href="http://www.ips-dc.org/articles/talking_points_why_we_shouldnt_attack_syria" target="_blank">talking points</a>, <a href="http://www.ips-dc.org/articles/joint_statement_jackson_bennis_syria" target="_blank">statements</a>, and <a href="http://front.moveon.org/moveon-syria-town-hall/#.Ujuqh43D_CY" target="_blank">teach-ins</a>.</p><p>The overall strategy was go broad, keep the inside and outside work coherent, don’t spent a lot of time trying to organize big demonstrations, and keep the focus on Congress. And it worked. Our pressure made Congress scared of antagonizing their anti-war base – and thus unwilling to support military strikes. The White House has enormous power to shape the narrative, to control the media, and to bully Congress. They tried to do all that, but they failed.</p><p>Celebrations should perhaps be muted – the threat of US military strikes remains, and Syria's brutal civil war is far from over. But this is an extraordinary, unforeseen victory for the global anti-war movement.</p><p><strong>2. Defeating Larry Summers</strong></p><p>The victory in knocking Larry Summers out of the running for Fed chair is connected to the Syria victory. Summers saw the writing on the wall when Obama couldn’t line up progressive Democrats behind a Syria attack. How could the president possibly hold the party line on an unpopular Fed nomination?</p><p>But the fact that <a href="http://www.huffingtonpost.com/2013/09/16/larry-summers-federal-reserve_n_3935861.html?utm_hp_ref=tw" target="_blank">at least five key Democratic Senators</a> were reportedly prepared to vote against a former top advisor to both Presidents Clinton and Obama was the culmination of years of work by various segments of the progressive movement.</p><p>Over two decades, Summers received regular job promotions despite his knack for offending women’s, environmental, racial justice, global poverty -- well, pretty much every group on the progressive side. Many of these groups were involved in petitions and other tactics to squash Summers’s nomination.</p><p>For the Senate Democrats, though, most damning was Summers’s role in the 1990s financial deregulation. According to former Wall Street Journal reporter Ron Suskind, the former Treasury Secretary used his well-developed intimidation skills to make sure no one in the current administration <a href="http://www.huffingtonpost.com/mary-bottari/failing-up-to-the-fed-a-r_b_3859965.html" target="_blank">admitted that Clinton era mistakes</a> had contributed to the 2008 crisis. But nervy progressive leaders refused to let Summers get away with burying his past -- even if speaking out might mean fewer invitations to meetings at the White House and Treasury.</p><p>Public Citizen set up a bare-knuckled attack site (<a href="http://forgetlarry.org/" target="_blank">ForgetLarry.Org</a>) and generated thousands of petition signatures against his nomination. Dean Baker, co-director of the Center for Economic and Policy Research, churned out a relentless stream of criticism, from Summers’s mishandling of the 1990s global financial crisis to his failure to spot the $8 trillion housing bubble. Baker and more than 500 other economists signed an Institute for Women’s Policy Research <a href="http://www.iwpr.org/publications/public-policy-economists-yellen-letter" target="_blank">letter supporting alternative candidate Janet Yellen</a>.</p><p>Obama claimed such attacks were biased. “Don’t believe everything you read in the Huffington Post,” he <a href="https://www.commondreams.org/headline/2013/08/01-2" target="_blank">reportedly told</a>members of Congress. In the end, though, it seemed the message got through. The office of Montana Democrat Jon Tester (by no means the most radical member of the Senate Banking Committee) echoed long-time progressive critics in a<a href="http://www.reuters.com/article/2013/09/13/us-usa-fed-summers-tester-idUSBRE98C0W620130913" target="_blank">statement</a> explaining his opposition: “Senator Tester is concerned about Mr. Summers's history of helping to deregulate financial markets.”</p><p><strong>3. Advancing 1.9 million workers’ rights</strong></p><p>On September 17, President Obama and Labor Secretary Tom Perez announced that in-home care workers will no longer be excluded from minimum wage and overtime protections.</p><p>This is not only a victory for the millions of hardworking caregivers, mostly women, who are struggling to get by. It’s also a victory for families. Every eight seconds another American turns 65. By improving job quality, these new protections will reduce turnover and lead to improved care for seniors and people with disabilities, allowing more of them to remain in their homes and communities, rather than institutions.</p><p>The Obama administration was able to make this happen through regulatory action, specifically by closing the “companionship exemption” loophole in the 1938 Fair Labor Standards Act. But even though Congressional approval was not needed, victory had still been elusive. President Obama announced his intention to correct this unfair carve-out in 2011, but it still took relentless advocacy on the part of home care workers and their allies to keep the momentum going.</p><p>Home care agencies mobilized employer opposition during the public comment period after the Labor Department released the proposed rule. But progressive groups, particularly the broad coalition Caring Across Generations (spearheaded by the National Domestic Workers Alliance and Jobs with Justice), countered by organizing high-road employers who supported the rule because of the long-term benefits it will bring. The Labor Department received more than 26,000 public comments on the proposed regulations and a whopping 80 percent were in favor.</p><p>The final rule issued this week allows employers to put off implementation until January 2015. That’s a long time to wait for the right to basic labor protections, but this is still a major victory for progressives, workers, and families. </p><p><strong>4. Forcing Corporations to disclose their CEO-worker pay ratio</strong></p><p>The Securities and Exchange Commission <a href="http://www.bloomberg.com/news/2013-09-17/ceo-to-worker-pay-ratio-disclosure-proposal-to-be-issued-by-sec.html" target="_blank">has just formally proposed</a> a new rule that requires America’s top firms to annually reveal the ratio between what they pay their CEOs and what they pay their most typical workers.</p><p>That pay gap has exploded over the past three decades. Big-time CEOs made 40 times average U.S. worker pay in 1980. The current gap: 354 times. But the new SEC rule now gives shareholders, consumers, and workers what they’ve never had: the ability to compare individual corporations by their level of CEO greed and grasping. More important still: This disclosure sets the foundation for follow-up action. With ratio disclosure in effect, for instance, lawmakers could offer corporations with narrow pay gaps preferential treatment on taxes and government contracts.</p><p>America’s corporate power suits, naturally, have opposed pay ratio disclosure ever since analysts at IPS and other groups<a href="http://www.thenation.com/article/ending-plutocracy-12-step-program#axzz2fNog7KqU" target="_blank">first began pushing</a> for it. But in 2010 corporate lobbyists let down their guard, at the eleventh hour, and let slip into the massive Dodd-Frank financial reform bill a provision that mandated disclosure. Corporate America immediately began a full-court press on the SEC, demanding watered-down regulations that would leave the mandate an effective dead-letter.</p><p>But labor and public interest groups pushed back. The SEC received over 20,000 public comment letters and coalition representatives from Americans for Financial Reform met with SEC officials to give this citizen pressure a human face.</p><p>In the end, the rule the SEC adopted reflected almost all the key recommendations advanced by the AFL-CIO, Public Citizen, and other reform-minded groups. The SEC must by law hold another round of public comment — but we can take lessons from the victory so far. The most important: Progressive Americans can shove egalitarian policy options onto the nation’s political center stage. In this case, the shoving included <a href="http://www.ips-dc.org/reports/executive-excess-2013" target="_blank">20 years</a> of annual reports on executive pay from IPS and allied groups, extensive handholding to help mainstream reporters understand why corporate pay gaps matter so deeply, and constant outreach to identify and support sympathetic legislative and regulatory officials.</p> Fri, 20 Sep 2013 09:29:00 -0700 Phyllis Bennis, Sarah Anderson, Tiffany Williams, Sam Pizzigati, AlterNet 899149 at http://www.alternet.org Activism Activism Economy World military strike syria progressives larry summers ceo worker pay labor workers' rights How Highly Paid CEOs Rip Off Their Companies and the Public Via Fraud and Walk Away With Their Pockets Bulging http://www.alternet.org/corporate-accountability-and-workplace/how-highly-paid-ceos-rip-their-companies-and-public-fraud-and <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Just one example of a corporate culture that rewards executives for behavior that hurts workers, taxpayers, and shareholders.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/greedy.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>After exposing CEO scoundrels for 20 years, it’s hard to keep them all straight. The guy who cooked the books to buy a golden shower curtain blends together with the one who used ill-gotten Iraq war windfalls to pay for his wife’s racehorses and plastic surgery and the one who cashed in on subprime mortgages and sailed off on a yacht before the bubble burst.</p><p>But then you stumble into a story that makes you realize you can still get riled up. At first you tell yourself it’s not breaking news and nobody will care so just forget about it. But then you find yourself fuming about it to your husband over breakfast. And then you’re grousing about it over drinks with your friends. And then you decide you have to write about it.</p><p>For me, this is the Charles Heimbold Jr. story.</p><p>Now some may say this story stuck in my craw because Heimbold obtained a position I covet: U.S. ambassador to Sweden. Serving my country and my grandfather’s beautiful homeland while grazing on magnificent smorgasbords—that’s a gig I’d love.</p><p>But unfortunately the way to get those gigs seems to be to pay politicians more money than I’ll ever have. That’s what Heimbold did. As CEO of pharmaceutical giant Bristol-Myers Squibb, Heimbold contributed $<a href="http://usatoday30.usatoday.com/news/washington/2001-05-04-envoy.htm" target="_blank">367,200</a> to Republican candidates or campaign organizations in the 2000 election cycle. By September 2001, he was President George W. Bush’s man in Stockholm.</p><p>But that’s not what got me riled.</p><p>While Heimbold was enjoying the Land of the Midnight Sun, federal agents were combing through the books at Bristol-Myers Squibb. Something was fishy.</p><p>The Securities and Exchange Commission and the Justice Department eventually accused the company of various accounting tricks to boost earnings and stock prices. Bristol-Myers Squibb settled their SEC case with a payment of <a href="http://www.sec.gov/news/press/2004-105.htm" target="_blank">$150 million</a>. The Justice Department agreed to defer prosecution (essentially putting the firm on probation) as part of a deal in which company executives forked over an additional <a href="http://www.forbes.com/2005/06/16/bmy-settlement-governance-cx_da_0616topnews.html" target="_blank">$300 million</a> and promised to be good boys in the future.</p><p>The <em>Wall Street Journal </em>reported in December 2002 that 27 current and former Bristol-Myers Squibb executives had said the accounting tricks were carried out under strong pressure to meet Heimbold’s high earnings targets.</p><p>Those tricks appear to have paid off well for the former CEO. A perennial pay leader, in 2001 alone Heimbold cashed in <a href="http://www.sec.gov/Archives/edgar/data/14272/000091205702013817/a2072380zdef14a.htm" target="_blank">$70 million in stock options</a>. What would those options have been worth had Bristol-Myers Squibb not been cooking the books? We’ll never know. We do know he was never forced to pay back a dime.</p><p>Heimbold’s story is actually not that uncommon. In a report I co-authored at the Institute for Policy Studies, we analyzed 18 extremely highly paid CEOs who led companies that had to shell out more than $100 million in fraud-related settlements. Eleven of the CEOs had left their firms before the fraud charges were fully resolved.</p><p>This finding is part of a larger IPS “performance review” of CEOs who made the annual top 25 highest-paid lists over the past 20 years. Theoretically, these CEOs should be the cream of the crop of American corporate leadership. But instead of stellar performance, we found that nearly 40 percent were bad performers -- even by the most narrow, incontrovertible definitions.</p><p>Twenty-two percent led firms that crashed or got bailed out in the 2008 crisis. Another eight percent had to pay massive settlements for fraud. And yet another eight percent wound up getting fired. Even the guys who got the boot didn’t suffer too much. The size of their average golden parachute: $48 million.</p><p>And so the Heimbold story is just one example of a corporate culture that rewards executives for behavior that winds up hurting workers, taxpayers, and shareholders. Unless we change that culture, we’ll see many more CEOs take the money and run.</p> Tue, 27 Aug 2013 10:24:00 -0700 Sarah Anderson, AlterNet 888223 at http://www.alternet.org Corporate Accountability and WorkPlace Corporate Accountability and WorkPlace Economy economy election george w. bush Stockholm Securities and Exchange Commission justice department stock ceo Bristol-Myers Squibb With Inequality Spiraling Out of Control It's Insane to Consider Cutting Social Security http://www.alternet.org/hard-times-usa/inequality-spiraling-out-control-its-insane-consider-cutting-social-security <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The United States already has a poverty rate among the elderly of 24 percent. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_130135037.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Rhonda Straw is one of millions of Americans who do important work every day but still have a hard time saving for retirement. As a home health aide, Straw administers medication, changes bandages, and performs other vital services to the elderly and disabled. With an hourly wage of only $9, Straw, 51, expects to rely almost entirely on Social Security when she retires.</p><p>Unfortunately, workers like Straw aren’t big players in the Social Security debate. The Business Roundtable, the club for America’s most powerful corporate CEOs, is using its muscle to push for an increase in the retirement age to 70 and to recalculate inflation in a way that would further reduce benefits. Fix the Debt is another CEO-driven outfit that’s throwing around tens of millions of dollars in a campaign to cut Social Security and Medicare.</p><div class="wp-caption alignright" id="attachment_15093" style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0.5em; padding-right: 0.5em; padding-bottom: 0.5em; padding-left: 0.5em; display: inline; float: right; max-width: 100%; height: auto; text-align: center; width: 170px; "><a href="http://otherwords.org/wp-content/uploads/2013/03/social-security-hemsley-ceo.jpg" style="color: rgb(51, 102, 153); text-decoration: none; background-color: inherit; "><img alt="social-security-hemsley-ceo" class="wp-image-15093 " src="http://otherwords.org/wp-content/uploads/2013/03/social-security-hemsley-ceo-160x300.jpg" style="border-top-width: 1px; border-right-width: 1px; border-bottom-width: 1px; border-left-width: 1px; border-style: initial; border-color: initial; border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; border-width: initial; border-color: initial; margin-top: 5px; margin-right: 0.25em; margin-bottom: 0.25em; margin-left: 0.25em; border-top-color: rgb(204, 204, 204); border-right-color: rgb(204, 204, 204); border-bottom-color: rgb(204, 204, 204); border-left-color: rgb(204, 204, 204); padding-top: 2px; padding-right: 2px; padding-bottom: 2px; padding-left: 2px; box-sizing: border-box; " /></a><p class="wp-caption-text" style="margin-top: -0.4em; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; font-size: 0.8em; color: rgb(102, 102, 102); ">Institute for Policy Studies infographic</p></div><p>Compared to ordinary workers like Rhonda Straw, these CEOs have virtually no skin in the Social Security debate. To illustrate the disparity, we compared her situation to that of two health industry CEOs who are active with both the Business Roundtable and Fix the Debt.</p><p>Larry Merlo, CEO of CVS Caremark, the nation’s largest drug retailer, has $46 million in employer-provided retirement benefits. Stephen Hemsley, the head of the leading insurance company UnitedHealth Group, has accumulated $18 million. If the reforms they advocate are approved, Merlo and Hemsley stand to lose only 0.3 percent and 0.7 percent of their expected retirement income.</p><p>By contrast, Straw would likely lose nearly 16 percent of her retirement income under the reforms.</p><p>In the richest country in the world, it’s downright insane to even consider cutting back on benefits necessary to provide a dignified retirement for hard-working Americans.</p><p>The United States already has a poverty rate among the elderly of 24 percent. That puts us much closer to our southern neighbor Mexico, which has a 28 percent rate, than our northern neighbor, Canada, where only 6 percent of the elderly live in poverty.</p><p>If we’re serious about preserving Social Security for years to come, there are far more sensible approaches. One practical step would be to eliminate the cap on wages subject to Social Security taxes. Currently, the first $110,100 of an American worker’s wage income is subject to a 10.4 percent Social Security tax. This means that CEOs who make exorbitant pay stop paying into the system shortly after New Year’s Day.</p><p><br />The <a href="http://thinkprogress.org/economy/2012/11/16/1208701/democratic-senator-introduces-bill-to-lift-social-securitys-tax-cap-extend-its-solvency-for-decades/" style="color: rgb(51, 102, 153); text-decoration: none; ">Congressional Research Service</a> has determined that such a reform would eliminate 95 percent of the expected Social Security shortfall over the next 75 years.Honeywell CEO David Cote, for example, paid only about $11,107 into the system last year. If the cap were lifted, he would have paid $2.6 million in Social Security taxes. And Cote could well afford it. He already has $25.1 million in his company retirement fund.</p><p>Next time you see one of these CEOs on TV lecturing about belt-tightening, keep in mind who’s talking. The stakes in this debate are extremely high for ordinary Americans who work hard every day but still have to worry about their retirement security. For CEOs with mega-million retirement funds, there’s not much to lose.</p><p> </p> Fri, 15 Mar 2013 11:18:00 -0700 Sarah Anderson, AlterNet 809885 at http://www.alternet.org Hard Times USA Economy Hard Times USA Labor Occupy Wall Street social security economy austerians 4 Modest Wishes for New Treasury Secretary Jack Lew http://www.alternet.org/economy/4-modest-wishes-new-treasury-secretary-jack-lew <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> I can only hope that the incoming Secretary may learn a few lessons from his predecessor’s shortcomings.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/110510_jack_lew_ap_605.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p> </p><p>I happily joined the more than 200,000 people who’ve signed the “Paul Krugman for Treasury Secretary” progressive fantasy <a href="http://signon.org/thanks.html?petition_id=33135&amp;from_source=none&amp;id=-6801709-%3Dsd%3DVR" target="_blank">petition</a>. It was a clever way to tell the administration to reject this nutty austerity craze.</p><p>Now, however, President Obama has made the far less exciting choice of his Chief of Staff, Jack Lew, for the job. And especially given the experience with Timothy Geithner over the past four years, it’s time to develop some more modest wishes for the new top dog at 1500 Pennsylvania Avenue.</p><p>1. If you were complicit in the 2008 crash, please fess up and make a convincing case that you’ve seen the light.</p><p>Lew was the chief operating officer of Citigroup's Alternative Investments unit from 2006 through the crash (he left in 2009) and he should reveal more about what he did there. This should also apply to other top Treasury leaders. Since Lew, a former head of the Office on Management and Budget, is considered more of a budget guy than a financial markets guy, there are <a href="http://www.bloomberg.com/news/2013-01-03/geithner-said-to-plan-departure-before-debt-ceiling-deal.html" target="_blank">rumors</a> that President Obama is planning to install a Wall Street executive as his deputy.</p><p>When Geithner was up for confirmation in 2009, Senator Carl Levin asked him to respond in writing to <a href="http://www.levin.senate.gov/.../PSI.GeithnerResponses.012209.pdf" target="_blank">38 hard-hitting questions</a>. Many of his answers were the evasive inanities you’d expect from someone trying to squeak through a polarized Senate (e.g., “I believe that we need more transparency to promote transparency…”). But the only questions he flat out refused to answer had to do with his role in the Clinton Treasury’s push to deregulate over-the-counter derivatives. The law that resulted, the Commodity Futures Modernization Act of 2000, gave rise to the explosion of credit default swaps that were a key factor in the crash.</p><p>We should’ve known then that Geithner was insufficiently reformed. In fact recently he was back at it, exempting <a href="http://www.businessweek.com/news/2012-11-16/u-dot-s-dot-treasury-exempts-foreign-exchange-swaps-from-dodd-frank" target="_blank">foreign exchange derivatives</a> from the new Dodd-Frank regulations over the objections of other regulators and consumer protection groups.</p><p>2. If you oppose a popular progressive reform, have the decency to explain your position.</p><p>The current deficit fixation could be turned into an opportunity for bold, creative thinking on how to use fiscal policy to shift our economy in ways that would make it more equitable, green, and secure. At the <a href="http://www.ips-dc.org/reports/not-broke-2012" target="_blank">Institute for Policy Studies</a>, we’ve compiled a long list of fair and environmentally friendly proposals that could generate hundreds of billions in additional money per year.</p><p>One of our favorites is the idea of a small financial transaction tax that could raise massive revenue while discouraging short-term financial speculation. Over the past four years, much of Obama’s core base – including major labor unions and environmental, anti-poverty, public health, and consumer organizations – have been pushing for such taxes. The <a href="http://www.imf.org/external/np/seminars/eng/2010/paris/pdf/090110.pdf" target="_blank">International Monetary Fund</a> has documented that they are administratively feasible and could be a significant revenue raiser. The European Commission has also produced reams of analysis on the potential benefits, prompting a <a href="http://www.yesmagazine.org/new-economy/european-union-parliament-landslide-vote-robin-hood-financial-transactions-tax" target="_blank">dozen European governments</a> to commit to implementing such taxes this year.</p><p>Here’s Geithner’s <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&amp;sid=a45uxLtxi3N8&amp;pos=3" target="_blank">most substantive public statement</a> on the issue:  “I have not seen the version of that that I think works.” The Obama Treasury has never published a research paper on the topic. Never offered a thoughtful response to the IMF and European Commission analyses. Never engaged in a meaningful debate. Never even responded to the many civil society letters calling for such taxes.</p><p>So Mr. Lew, if you’re confirmed, please at least be open to a respectful dialogue over this and other bold progressive tax and financial reform ideas.</p><p>3. Please don’t help rich people and corporations hide their money in overseas tax havens.</p><p>In Geithner’s response to Senator Levin’s questions, he pledged to “treat the offshore tax abuse issue as a high priority.” Behind closed doors, he has reportedly advocated a shift to a <a href="http://www.ips-dc.org/reports/ceo-campaign-to-fix-the-debt" target="_blank">“territorial” tax system</a> that would exempt U.S. corporations’ foreign earnings, giving them even more incentive to disguise U.S. profits as income earned in tax havens. In his most recent book, Bob Woodward wrote that in negotiations with House Speaker John Boehner, Geithner said “The goal is territorial.” Boehner’s staff <a href="http://www.politico.com/news/stories/1012/82894_Page2.html" target="_blank">confirmed the accuracy</a> of the quote.</p><p>As a Senator, Obama co-sponsored legislation with Levin to crack down on tax haven abuse – a practice that drains an estimated $100 billion per year from Uncle Sam’s coffers. Fixing the problem would also help level the playing field for small businesses that provide more than half of U.S. jobs – and don’t have accounts in the Caymans. Mr. Lew, you could help make this a legacy issue for Obama.</p><p>4. Don’t be a jerk to other governments</p><p>Lew doesn’t seem to have much international experience, but he wouldn’t have to do much to improve on the current Secretary’s record. Geithner has sparked animosity by attempting to impose his opposition to some fair taxation ideas on other countries. After receiving a lecture against financial transaction taxes from her U.S. counterpart, the <a href="http://www.reuters.com/article/2011/09/16/us-eurozone-fekter-idUSTRE78F2DM20110916" target="_blank">Austrian finance minister</a> commented dryly, “I found it peculiar that even though the Americans have significantly worse fundamental data than the euro zone that they tell us what we should do and when we make a suggestion ... that they say no straight away.”</p><p>Geithner has also been the main advocate of using U.S. trade agreements to limit other governments’ ability to control volatile financial flows. When more than <a href="http://www.ase.tufts.edu/gdae/policy_research/CapCtrlsLetter.html" target="_blank">250 economists</a> urged the administration to lift current trade restrictions on the use of capital controls, Geithner was dismissive. As a result, U.S. trade officials are pressuring the 10 countries negotiating a Trans-Pacific Partnership trade deal to give up this legitimate policy tool. By contrast, the International Monetary Fund’s <a href="http://triplecrisis.com/imf-may-be-on-collision-course-with-trade-policy/" target="_blank">new “institutional view”</a> in support of capital controls makes them look like a beacon of enlightenment. Mr. Lew could make sure governments around the world have all the tools they need to prevent financial crisis.</p><p>This humble wish list doesn’t cover every important issue on the next Treasury Secretary’s plate. I haven’t even gotten into the core question of whether he or she will put the interests of ordinary homeowners and Main Street businesses above those of Wall Street. But it has allowed me to get some of my gripes about Geithner off my chest. And I can only hope that the incoming Secretary may learn a few lessons from his predecessor’s shortcomings.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><p><span style="color: rgb(0, 0, 0); font-size: medium; font-family: Georgia, Arial; font-style: italic;">Sarah Anderson directs the Global Economy Project at the </span><a href="http://www.ips-dc.org/" style="font-family: Times; font-size: medium;" target="_blank"><span style="font-family: Georgia, Arial; font-style: italic;">Institute for Policy Studies</span></a><span style="color: rgb(0, 0, 0); font-size: medium; font-family: Georgia, Arial; font-style: italic;">.</span></p> </div></div></div> Wed, 09 Jan 2013 10:27:00 -0800 Sarah Anderson, AlterNet 773849 at http://www.alternet.org Economy Economy News & Politics lew geithner treasury Robin Hood Rising: Grassroots Campaign Spurs EU Parliament to Tax Financial Speculation http://www.alternet.org/world/robin-hood-rising-grassroots-campaign-spurs-eu-parliament-tax-financial-speculation <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">European legislators voted overwhelmingly this week in favor of a tax on financial speculation, which could raise billions of Euros. Could it happen in the United States?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/hood.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Under pressure to address a massive deficit, legislators voted overwhelmingly this week in favor of a tax on financial speculation. This really happened, I swear.</p><p>OK, it was in Europe, not the United States. But it could happen here—and it should.</p><p>The vote in the European Parliament on December 10 was the latest in a series of victories by international campaigners for a tax on trades of stocks, bonds, and derivatives. Often called a “Robin Hood Tax,” the goal is to raise massive revenues for urgent needs, such as combating unemployment, global poverty, and climate change.</p><p>A financial transaction tax would also discourage the senseless high frequency trading that now dominates our financial markets. Recently, the chief economist of the Commodity Futures Trading Commission (the top U.S. derivatives regulator) <a href="http://www.nytimes.com/2012/12/04/business/high-speed-trades-hurt-investors-a-study-says.html">found</a> that such trading practices are hurting traditional investors.</p><p>In reaction to the Parliamentary vote, David Hillman, of the U.K. Robin Hood Tax campaign, said that the tax “will raise at least 37 billion euros per year for the countries involved whilst reining in the worst excesses of the financial sector.”</p><p>Nicolas Mombrial, a Brussels-based policy adviser for Oxfam, added that “The European Parliament’s overwhelming support reflects the will of Europe’s people. In cash-strapped times, an financial transactions tax is a no-brainer that is morally right, technically feasible, and economically sound.”</p><p>What the European Parliament specifically voted on was whether to give the green light to a coalition of governments that want to pioneer the tax. The countries that have committed to participate are Germany, France, Italy, Spain, Belgium, Austria, Greece, Portugal, Slovakia, Slovenia, and Estonia. The Netherlands is interested, too, but they want to negotiate an exemption for their pension funds.</p><p>Not sure Europeans would use this term, but the vote was a slam dunk. Yeas outnumbered nays by a margin of 6-to-1. The next step will be a vote in the European Council, which is likely to happen in early 2013. (On the off chance you’re not an expert on European Union governance structures: the Council represents national governments, while E.U. Parliamentarians are elected directly by voters). Then, participating governments will negotiate the details, working off a proposal for a tax of 0.1 percent on stock and bond trades and 0.01 percent on derivatives.</p><p>Once revenues start rolling into European coffers, policymakers here are likely to take the idea more seriously. But many U.S. progressives aren’t waiting around. A wide range of union, consumer, global health, and environmental groups are pushing for such taxes to be included in the current deficit negotiations. On December 10, National Nurses United, a union representing registered nurses, organized <a href="http://www.nationalnursesunited.org/press/entry/rns-to-hold-candlelight-vigils-protests-in-20-u.s.-cities/">actions in 20 cities</a> to call on Congress to support a Robin Hood Tax.</p><p>Taxing financial speculation is just one step we can take towards re-orienting our national priorities in ways that will be good for people and the planet. At the Institute for Policy Studies, we’ve put together a <a href="http://www.ips-dc.org/reports/not-broke-2012">broad agenda</a> of revenue-raisers and spending cuts that would address our current fiscal challenge while helping to make our economy more equitable, green, and secure.</p><p>There’s no denying that our current political divisions make it difficult to get anything done in Washington. But we can learn some lessons from Europeans on consensus-building. Their political spectrum is arguably even wider than ours—from Green and Left parties to hard-core conservatives. And yet the Parliament’s overwhelming vote in favor of financial transaction taxes is a reminder that such divisions can be overcome.</p><hr /><p>Sarah Anderson wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions.  is Global Economy Project Director of the <a href="http://www.ips-dc.org/">Institute for Policy Studies</a>. </p><p>Interested?</p><ul><li><a href="http://www.yesmagazine.org/issues/9-strategies-to-end-corporate-rule/nurses-fight-for-a-dose-of-tax-justice" title="Nurses Fight for a Dose of Tax Justice">Nurses Fight for a Dose of Tax Justice</a> <br />Before there was Occupy, thousands of nurses were already taking on Wall Street to demand a financial transaction tax.</li><li><a dir="ltr" href="http://www.yesmagazine.org/new-economy/5-ideas-from-detroit">Seeding Small Business: 5 Ideas from Detroit</a><br />Detroit entrepreneurs are learning to rely on each other, finding the seeds of a new economy in resources discarded by corporate America.</li><li><a href="http://www.yesmagazine.org/people-power/what-about-the-peoples-budget" title="What About the People’s Budget?">What About the People’s Budget?</a><br />There are better—and more fair—budget ideas out there. Why aren’t they being heeded?</li></ul> Thu, 13 Dec 2012 14:58:00 -0800 Sarah Anderson, YES! Magazine 760621 at http://www.alternet.org World Economy World eu robin hood tax Five Job-Destroying CEOs Trying to “Fix” the Debt by Slashing Corporate Taxes and Cutting Social Security Benefits http://www.alternet.org/economy/five-job-destroying-ceos-trying-fix-debt-slashing-corporate-taxes-and-cutting-social <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Let&#039;s name them and shame them.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/randal.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>In poll after poll, the American people say they are far more concerned about the jobs crisis than the “debt crisis.” A powerful coalition of CEOs says they have an answer for both problems.</p><p>Give us more tax breaks, they say, and we’ll use the money to invest and create jobs. The national economic pie will expand and Uncle Sam will get plenty of the frothy meringue without having to raise tax rates.</p><p>That’s the line of the <a href="http://www.fixthedebt.org/">Fix the Debt</a> campaign. Led by more than 90 CEOs, this turbo-charged PR/lobbying machine is blasting the message that such “pro-growth tax reform” should be a pillar of any deficit deal (along with cuts to benefit programs like Social Security and Medicare).</p><p>And it might be a good line — if not for some pesky real-world facts. You see the same corporations peddling this line have already been paying next to nothing in taxes. And instead of creating jobs, they’ve been destroying them. Here are five examples of job-cutting, tax-dodging CEOs who are leading Fix the Debt.</p><p><strong>1. Randall Stephenson, AT&amp;T</strong></p><p><strong>U.S. jobs destroyed since 2007: 54,000</strong></p><p><strong>Average effective federal corporate income tax rate, 2009-2011: 6.3%</strong></p><p>Randall Stephenson presides over the biggest job destroyer among the Fix the Debt corporate supporters, having eliminated 54,000 jobs since 2007. The company also has one of the largest deficits in its worker pension fund — a gaping hole of $10 billion.</p><p>Can Stephenson blame all this belt-tightening on the Tax Man? Not exactly. Over the last three years, AT&amp;T’s tax bills have been miniscule. According to the firm’s own financial reports, they’ve paid Uncle Sam only 6.3 percent on more than $43 billion in profits. If the telecom giant had paid the standard 35 percent corporate tax rate over the last three years, the federal deficit would be $12.5 billion lower.</p><p>So where have AT&amp;T’s profits gone? A huge chunk has landed in Stephenson’s own pension fund. His $47 million AT&amp;T retirement account is the <a href="http://www.ips-dc.org/reports/pension-deficit-disorder">third-largest among Fix the Debt CEOs</a>. If converted to an annuity when he hits age 65, it would net him a retirement check of more than a quarter million dollars every month for the rest of his life.</p><p>While his economic future is more than secure, Stephenson emerged <a href="http://trailblazersblog.dallasnews.com/2012/11/fiscal-cliff-atts-randall-stephenson-optimistic-after-obama-ceo-confab.html/">from a meeting</a> with President Obama on November 28 “optimistic” about the chances of reforming (i.e., cutting) Social Security as part of a deal to avoid the so-called “fiscal cliff.”</p><p><strong>2. Lowell McAdam, Verizon</strong></p><p><strong>U.S. jobs destroyed since 2007: 30,000</strong></p><p><strong>Average effective federal corporate income tax rate, 2009-2011: -3.3%</strong></p><p>Another telecommunications giant, Verizon, is close behind AT&amp;T in the layoff leader race, with 30,000 job cuts since 2007. Like its industry peer AT&amp;T, Verizon also has a big deficit in its pension accounts. It would need to cough up $6 billion to meet its promised pension benefits to employees and another $24 billion to meet promised post-retirement health care benefits.</p><p>Did the blood-sucking IRS leave Verizon no choice but to slash jobs and underfund worker pensions? Far from it. The company actually got money back from Uncle Sam, despite reporting $34 billion in U.S. profits over the last three years. If Verizon had paid the full corporate tax rate of 35 percent, last year’s national deficit would have been $13.1 billion less. Had that amount been used for public education, it could have covered the cost of employing more than 190,000 elementary teachers for a year.</p><p>Verizon’s new CEO, Lowell McAdam, already has $8.7 million in Verizon pension assets, enough to set him up for a $47,834 monthly retirement check. McAdam’s predecessor, Ivan Seidenberg, who has also signed up as a Fix the Debt supporter, retired with more than <a href="http://www.sec.gov/Archives/edgar/data/732712/000119312512121526/d269615ddef14a.htm#toc269615_21">$70 million in his Verizon retirement package</a>.</p><p><strong>3. David Cote, Honeywell</strong></p><p><strong>U.S. jobs destroyed since 2007: 4,000</strong></p><p><strong>Average effective federal corporate income tax rate, 2009-2011: -14.8%</strong></p><p>Honeywell has created 10,000 new jobs since 2007 – outside the United States. At home, the firm has eliminated 4,000 jobs. In July, Honeywell announced it was <a href="http://www.courierpress.com/news/2012/jul/20/honeywell-lay-228-workers-southern-illinois-plant/">closing a Metropolis, Illinois plant</a>, laying off 230 workers, and selling <a href="http://www.examiner.com/article/bain-capital-is-closing-an-illinois-plant-and-shipping-jobs-to-china">another Illinois property, Sensata Technologies, to Bain Capital</a>, Mitt Romney’s old private equity firm. Bain, another Fix the Debt supporter, immediately announced it was closing the 175-worker plant and shipping the jobs to China.</p><p>Are Honeywell’s U.S. job losses the result of Uncle Sam strangling all the life out of the company? Hardly. Over the last three years, the firm has been highly profitable each year, with total U.S. profits of $2.5 billion. And yet Honeywell used deductions, credits, and loopholes to garner refunds totaling $377 million over the last three years – an effective tax rate of negative 14.8 percent. If Honeywell had paid the full 35 percent corporate tax since 2009, the U.S. deficit would have been reduced by $1.3 billion.</p><p>Honeywell is not only near the front of the IRS refund line, it is also among the top recipients of government contracts. In 2011, the firm got $725 million in government deals, making it the 35th-largest federal contractor. Tax refunds go in one pocket, while taxpayer-financed government contracts go in the other.</p><p>Still, Honeywell’s nearly tax-free status hasn’t kept CEO Cote from being one of the most outspoken advocates for more corporate tax cuts. One of his favorite proposals is a shift to a territorial tax system, which would permanently exempt all foreign earnings of U.S. corporations from U.S. income taxes. Cote was one of 12 big company CEOs who <a href="http://online.wsj.com/article/SB10001424127887324595904578119663435483742.html">met with President Obama on November 14</a> to plead for this tax break. Honeywell has more than $8 billion stashed offshore and could receive an immediate tax windfall of more than $2 billion if Congress approved this shift to a “territorial” tax system. According to an <a href="http://www.ips-dc.org/reports/ceo-campaign-to-fix-the-debt">Institute for Policy Studies report</a>, Fix the Debt corporations as a whole would stand to gain $134 billion.</p><p>Perhaps even more galling is Cote’s demand for cuts to earned benefit programs. Cote has $78 million in his Honeywell retirement accounts, enough to qualify for monthly retirement checks of $428,000 starting at age 65. In contrast the average retiree receives just $1,237 a month from Social Security.</p><p><strong>4. Kenneth Frazier, Merck</strong></p><p><strong>U.S. jobs destroyed since 2007: 13,000</strong></p><p><strong>Average effective federal corporate income tax rate, 2009-2011: 13.2%</strong></p><p>In 2009, Merck merged with Schering Plough to become the world’s second-largest pharmaceutical company. Less than a year later, Merck slashed <a href="http://www.cbsnews.com/2100-500395_162-6657723.html">15 percent</a> of its workforce, including closing facilities in Miami Lakes, Florida and Cambridge, Massachusetts. All told, between 2007 and 2011, Merck destroyed nearly 25,000 jobs, including at least 13,000 in the United States.</p><p>Merck’s radical downsizing has little to do with burdensome taxes. Between 2009 and 2011, the drug giant paid just 13.2 percent of its $9 billion of U.S. income in federal corporate income taxes. If Merck had paid the full 35 percent rate over the three-year period, the U.S. debt would have been reduced by nearly $2 billion, enough to pay for college scholarships for more than 250,000 students. But that’s not a low enough tax rate for Merck. As a part of Fix the Debt, CEO Kenneth Frazier is telling Congress the prescription to restore the U.S. economy should include a permanent corporate tax holiday for offshore earnings. If Congress fills that prescription, Merck could receive a $15 billion windfall on the $44 billion it has stashed offshore.</p><p><strong>5. Terry Lundgren, Macy’s</strong></p><p><strong>U.S. jobs destroyed since 2007: 7,000</strong></p><p><strong>Average effective federal corporate income tax rate, 2009-2011: 20.7%</strong></p><p>Though Macy’s sales have rebounded from their recessionary slump, the department store owner’s workforce is still down by 7,000 compared to 2007. Meanwhile, Macy’s CEO Terry Lundgren has seen his pay more than double over the period, from $8.7 million in 2007 to $17.6 million last year. Macy’s has also showered Lundgren with generous retirement benefits, currently worth more than $16.7 million. Over the last three years, Macy’s has taken advantage of various tax credits and deductions to lower its federal income tax rate to 20.7 percent. Lundgren also attended the November 28 meeting with President Obama, where Fix the Debt CEOs pushed cuts to Social Security and Medicare.</p><p><strong>Another Way to Fix the Debt: End Corporate Entitlements, Demand Big Business Pays Its Fair Share</strong></p><p>The five companies profiled here have contributed enormously to the national debt by eliminating livelihoods — together they’ve destroyed 108,000 jobs since 2007 — and through tax-dodging. If they had simply been required to pay the full statutory corporate tax rate of 35 percent, they would’ve paid $48 billion in additional federal income taxes over the last three years. And now these CEOs expect us to fall for their argument that even more tax breaks will be good for American workers.</p><p>There is an entitlement problem at the center of the debt debate — it is the entitlement of CEOs with track records of job destruction and tax dodging lecturing the rest of us on how to fix the debt.  </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><p><i>Sarah Anderson is Global Economy Project Director and Scott Klinger is an Associate Fellow of the </i><font color="#0000ff"><i><u>Institute for Policy Studies.</u></i></font><i> They are co-authors of the repor</i>t “<font color="#0000ff"><u><a href="http://www.ips-dc.org/reports/pension-deficit-disorder">A Pension Deficit Disorder.</a></u></font>”</p><br /><p style="margin-bottom: 0in"> </p> </div></div></div> Fri, 07 Dec 2012 12:37:00 -0800 Sarah Anderson, Scott Klinger, AlterNet 757281 at http://www.alternet.org Economy Economy Occupy Wall Street fix the debt hypocrisy 10 Filthy-Rich, Tax-Dodging Hypocrites Pushing Disastrous Austerity on America http://www.alternet.org/economy/10-filthy-rich-tax-dodging-hypocrites-pushing-disastrous-austerity-america <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The Fix the Debt coalition is using the so-called “fiscal cliff” to push the same old corporate agenda of more tax breaks while shifting the burden on to the rest of us.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_83073271_0.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p> </p><p>Brace yourself for one of the most aggressive corporate lobbying campaigns of all time. And one of the most hypocritical.</p><p>“<u><a href="http://www.fixthedebt.org/">Fix the Debt</a></u>” is a coalition of more than 80 CEOs who claim they know best how to deal with our nation’s fiscal challenges. The group boasts a <u><a href="http://www.fixthedebt.org/uploads/files/CEO-Talking-Points-10.2.12.doc">$60 million</a></u> budget just for the initial phase of a massive media and lobbying campaign.</p><p>The irony is that CEOs in the coalition’s leadership have been major contributors to the national debt they now claim to know how to fix. These are guys who’ve mastered every tax-dodging trick in the book. And now that they’ve boosted their corporate profits by draining the public treasury, how do they propose we put our fiscal house back in order? By squeezing programs for the poor and elderly, including Social Security, Medicare, and Medicaid.</p><p>Fix the Debt claims their agenda is not just about spending cuts. But when it comes to their tax proposals, they use the slippery term “pro-growth reform” to push for cuts in deductions that are likely to include credits for working families and — you guessed it — more corporate tax breaks. Chief among these is a proposal to switch to a <u><a href="http://www.fixthedebt.org/.../The-Debt-Challenge-Presentation.pptx">territorial system</a></u> under which corporate foreign earnings would be permanently exempted (instead of being taxed when they are returned to America).</p><p>This idea, also supported by the Bowles-Simpson deficit commission, would make it even more profitable for big corporations to use accounting tricks to disguise U.S. profits as income earned in tax havens. Citizens for Tax Justice <u><a href="http://www.ctj.org/taxjusticedigest/archive/2012/10/tax_policy_invades_the_foreign.php">estimates</a></u> that such tax haven abuse will cost the Treasury more than $1 trillion over the next decade.</p><p>So who are the CEOs who are telling the rest of us to be responsible and tighten our belts after they’ve spent decades stiffing the U.S. Treasury? Of the 80 members of Fix the Debt’s CEO Fiscal Leadership Council, here are 10 that stand out as the biggest hypocrites:</p><p><strong>1. Jeffrey Immelt, General Electric</strong></p><p>Perhaps no tax-dodging U.S. corporation has done more to drain the U.S. Treasury than General Electric. Over the last 10 years GE reported more than $80 billion in U.S. pre-tax profits and yet paid a federal corporate income tax rate of <u><a href="http://ctj.org/taxjusticedigest/archive/2012/02/press_release_general_electric.php">just 2.3%</a></u>.</p><p>One of GE’s favorite tricks is the “Active Financing Exception.” U.S. corporations are supposed to pay U.S. taxes on interest income earned anywhere in the world. But GE enjoys this special exception for companies that have “captive” foreign finance subsidiaries, such as their credit card arm. The measure was repealed as part of fair taxation reforms in 1986, but GE led a successful lobbying effort to bring it back in 1997. Although the exception was supposed to be temporary, Congress has renewed it six times. And, despite all the public hand-wringing over the deficit, lawmakers are seriously considering extending this and other corporate loopholes before the end of the year.</p><p><strong>2. Jim McNerney, Boeing</strong></p><p>Last year, Boeing was one of 25 major U.S. firms that paid their CEO more than they paid Uncle Sam in corporate income taxes, according to an <u><a href="http://www.ips-dc.org/reports/executive_excess_2012">Institute for Policy Studies report</a></u>. The aerospace giant enjoyed a $605 million tax refund in 2011, despite reporting more than $5 billion in U.S. pre-tax profits. CEO Jim McNerney made $18.4 million in personal compensation. In fact, Boeing is a <u><a href="http://www.ctj.org/pdf/boeing2012.pdf">serial tax dodger</a></u>, having paid federal corporate income taxes in only two of the last 10 years.</p><p>One of the ways Boeing avoids paying taxes is by taking advantage of the Research and Experimentation Tax Credit, which saved the $137 million last year alone. Government investment in basic research is not a bad idea, but current R&amp;D credits are structured in a way that primarily benefits large, well-resourced high-tech firms like Boeing that would probably do the research anyway. CEO McNerney also chairs the Business Roundtable, which aggressively lobbies for more corporate tax breaks.</p><p><strong>3. Lloyd Blankfein, Goldman Sachs</strong></p><p>Few corporations have been as dependent on U.S. taxpayers for their very existence as Goldman Sachs. The 2008 bailout of <u><a href="http://www.nytimes.com/2010/07/24/business/economy/24goldman.html?_r=0">American International Group</a></u> and the steady stream of low- and non-interest loans for the financial sector have kept the company alive.</p><p>CEO Blankfein says he’d accept a small increase in individual taxes for the wealthy in exchange for a comprehensive budget deal. But his corporate tax proposals would wipe out the revenue gains from rolling back the Bush tax cuts for top earners. Blankfein is a big supporter of the territorial tax system explained above. This is hardly a surprise, since Goldman Sachs already operates <u><a href="http://www.sec.gov/Archives/edgar/data/886982/000095012311020067/y88213exv21w1.htm">37 subsidiaries in tax havens</a></u>.</p><p>Blankfein has also used his position at the helm of the Financial Services Forum, a club for the CEOs of 20 top banks, to <u><a href="http://businessroundtable.org/news-center/joint-association-letter-to-secretary-geithner-on-continuing-oppositio/">oppose financial transaction taxes</a></u> -- small levies on trades of stock, derivatives, and other financial instruments. Goldman Sachs has made as much as <u><a href="http://dealbook.nytimes.com/2011/03/18/ex-goldman-programmer-sentenced-to-8-years-for-theft-of-trading-code/" target="_hplink">$300 million</a></u> per year from the volatile high-frequency trading strategies that would be hardest hit by such a transaction tax. In early October, <u><a href="http://www.ft.com/intl/cms/s/0/c5a49c1c-1219-11e2-bbfd-00144feabdc0.html">11 European governments</a></u> announced a plan to implement such taxes, with expected revenues in the neighborhood of $<u><a href="http://www.reuters.com/article/2012/10/23/eu-tax-idUSB5E8KQ02D20121023">75 billion per year</a></u>. But Goldman Sachs and other Wall Street firms have blocked U.S. progress on this major revenue-raiser.</p><p><strong>4. Brian T. Moynihan, Bank of America</strong></p><p>After a decade of risky and reckless mortgage lending, Bank of America survived the 2008 financial crash with the help of a<u><a href="http://dealbook.nytimes.com/2009/12/02/bank-of-america-to-repay-45-billion-from-tarp/">$45 billion bailout.</a></u> Today, Bank of America sits on $128 billion in cash — $18 billion of it is overseas —and much of that is sitting in the company’s <u><a href="http://www.gao.gov/assets/290/284522.pdf">115 tax haven subsidiaries</a></u>.</p><p>Last year, after investors saw their stock price decline 58 percent and 30,000 Bank of America employees lost their jobs to layoffs, <u><a href="http://articles.latimes.com/2012/mar/28/business/la-fi-mo-bank-of-america-moynihan-pay-20120328">CEO Brian Moynihan</a></u> saw his compensation quadruple to more than $8 million. His predecessor, Ken Lewis, raked in more than $50 million in the two years before the housing bubble that Bank of America had help inflate burst in 2008.</p><p><strong>5.</strong><strong>David Cote, Honeywell Corporation</strong></p><p>Over the last three years, Honeywell received more than $2.7 billion in federal defense contracts and reported more than $2.5 billion in U.S. pre-tax profits. And yet thanks to corporate deductions, tax subsidies, and loopholes, Honeywell has claimed $377 million in federal tax refunds during this period.</p><p>Honeywell CEO David Cote has been a fixture at Congressional hearings calling for a territorial tax system for corporations. He is also Vice-Chair of the Business Roundtable, a club for big business CEOs that has called for an extension of all the Bush tax cuts, including those for millionaires and billionaires, as well as the tax cuts on unearned income from capital gains and dividends. These combined measures would add $1.5 trillion to the debt over the next ten years.</p><p><strong>6. Randall Stephenson, AT&amp;T</strong></p><p>AT&amp;T is another firm that paid its CEO more last year than they paid in federal corporate income taxes. CEO Randall Stephenson made <u><a href="http://www.ips-dc.org/reports/executive_excess_2012">$18.7 million</a></u>, while the firm enjoyed a $420 million refund from Uncle Sam.</p><p>AT&amp;T is a major beneficiary of “accelerated depreciation” rules that allow companies to turbo-charge tax deductions in the early years of the life of an asset. A 2009 accelerated depreciation rule saved the company $5.2 billion on their 2011 taxes, according to the firm’s 10-K report. Although touted as a way to jumpstart spending in a downturn, such tax breaks often result in taxpayers bearing a substantial portion of the cost of investments firms would’ve made anyway.</p><p><strong>7. Arne Sorenson, Marriott International</strong></p><p>In 2009, the U.S. Department of Justice prosecuted Marriott International for using an illegal tax shelter swindle dubbed “<u><a href="http://www.cnn.com/2012/08/08/opinion/canellos-kleinbard-romney-taxes/index.html">Son of Boss</a></u>.” The scam involved setting up a series of complex paper transactions between company subsidiaries to create $70 million in fake losses that could be offset against Marriott’s real profits. Presidential candidate Mitt Romney, a long-time friend of the Marriott family and named after Marriott’s patriarch J. Willard Marriott, was the head of the hotel giant’s audit committee in 1994 at the time the board first approved the Son of Boss transaction. According to <u><a href="http://www.bloomberg.com/news/2012-02-22/romney-as-auditing-chairman-saw-marriott-son-of-boss-tax-shelter-defy-irs.html">Bloomberg</a></u>, Marriott has also shifted profits to a Luxembourg shell company and avoided hundreds of millions of dollars in taxes through one federal tax credit for so-called synthetic fuel that Senator John McCain dubbed an “expensive hoax.”</p><p><strong>8. Alexander Cutler, Eaton Corporation</strong></p><p>Less than two years after accepting <u><a href="http://www.cleveland.com/business/index.ssf/2010/06/eaton_breaks_ground_for_170_mi.html">$90 million</a></u> in taxpayer-financed subsidies to locate a new world headquarters in the suburbs of Cleveland, Eaton Corporation announced that it would be moving its headquarters and reincorporating as an Irish company. The move is part of a merger deal with Cooper Industries, another Fix the Debt coalition member. The two companies boast that Eaton’s departure after 100 years in Cleveland will cut their tax bill by <u><a href="http://www.bloomberg.com/news/2012-05-21/eaton-expects-160-million-tax-savings-from-ireland-move.html">$160 million</a></u>. Meanwhile, Eaton is fighting a <u><a href="http://www.bloomberg.com/news/2012-05-21/eaton-expects-160-million-tax-savings-from-ireland-move.html">$75 million bill</a></u> from the IRS for back taxes and penalties related to alleged violations of transfer pricing agreements.</p><p><strong>9. Lowell McAdam, Verizon</strong></p><p>Verizon is one of 30 companies identified by <u><a href="http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf">Citizens for Tax Justice</a></u> as having paid “less than nothing” in federal income taxes over the entire 2008-10 period. Despite earning $32.5 billion in profits during these three years, the firm got so much in tax subsidies that they wound up with a net tax refund of $951 million. That works out to a tax rate of negative 2.9%. In effect, every Verizon phone customer paid more in federal telephone excise taxes than Verizon paid in federal income taxes.</p><p><strong>10. Steve Ballmer, Microsoft</strong></p><p>A recent <u><a href="http://www.hsgac.senate.gov/subcommittees/investigations/hearings/offshore-profit-shifting-and-the-us-tax-code">Senate investigation</a></u> exposed how Microsoft has used Olympic class accounting acrobatics to avoid paying taxes. Specifically, the Senate Permanent Subcommittee on Investigations charged that the software giant had devised a complicated transfer pricing agreement with a subsidiary in Puerto Rico to lower its tax bill on goods sold in the U.S. market by as much as $4.5 billion from 2009 to 2011. The investigation also accused Microsoft of avoiding billions in U.S. corporate income taxes by shifting royalty revenue to low-tax jurisdictions. Subcommittee Chair Carl Levin described Microsoft’s strategies as “tax alchemy, featuring structures and transactions that require a suspension of disbelief to be accepted.” Such alchemy, while not illegal, is a major contributor to the national debt.</p><p><strong>Sanders to CEOs: Look in the Mirror</strong></p><p>When Fix the Debt launched their 80 CEO-strong coalition on October 25, <u><a href="http://www.sanders.senate.gov/newsroom/news/?id=9D15C4D6-189A-41D6-848B-F07B523C2EEE">Senator Bernie Sanders</a></u> responded by stating, “Before telling us why we should cut Social Security, Medicare and other vitally important programs, these CEOs might want to take a hard look at their responsibility for causing the deficit and this terrible recession.”</p><p>Instead, the Fix the Debt coalition members are portraying themselves as the honorable ones who are brave enough to push the tough austerity medicine that is the only remedy for our fiscal ills. Nonsense. We are the richest nation in the history of the world. Our problem is that too much of our wealth is going into the coffers of rich individuals and corporations and to pay for misguided wars.</p><p>There are numerous budget plans by Senator Sanders, the Congressional Progressive Caucus, and others that would get us on the right track. At the <u><a href="http://www.ips-dc.org/reports/america_is_not_broke">Institute for Policy Studies</a></u>, we’ve identified a dozen policies that would collectively raise trillions of dollars to in ways that would not only address the fiscal challenge but help make our economy more equitable, green, and secure. The report also points out that until we recover from the current unemployment crisis, we should not be contemplating any spending cuts that could deepen the crisis.</p><p>The Fix the Debt coalition is using the so-called “fiscal cliff” as an opportunity to push the same old corporate agenda of more tax breaks while shifting the burden on to the middle class and the poor. If America’s CEOs really want to Fix the Debt, they should first commit to eliminating the loopholes that have allowed them to avoid paying their fair share of the cost of government, including investments necessary to keep our families and our communities strong and secure.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><p><i>Sarah Anderson is Global Economy Project Director and Scott Klinger is an Associate Fellow of the </i><font color="#0000ff"><u><a href="http://www.ips-dc.org/"><i>Institute for Policy Studies</i></a></u></font><i>. </i></p> </div></div></div> Fri, 26 Oct 2012 08:00:00 -0700 Sarah Anderson, Scott Klinger, AlterNet 733921 at http://www.alternet.org Economy Economy fix the debt austerity taxes fiscal slope 6 Rigged Rules Corporations Use to Dodge Taxes http://www.alternet.org/story/155007/6_rigged_rules_corporations_use_to_dodge_taxes <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">AT&amp;T, Boeing, Citigroup, Duke Energy and Ford reported more than $20 billion of US pre-tax income last year, but didn&#039;t pay any federal income taxes. Here&#039;s why.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/images/managed/storyimages_1332421805_taxes.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p><em>The following article first appeared on the Web site of </em><a href="http://www.thenation.com/"><em>The Nation</em></a><em>. For more great content from the Nation, sign up for its </em><a href="http://www.thenation.com/nation-email-subscription-center"><em>e-mail newsletters here.</em></a><em> </em> </p> <p>As American families rush to complete their annual tax returns, many will have paid more in federal income taxes than some of America’s largest and most profitable corporations. AT&amp;T, Boeing, Citigroup, Duke Energy and Ford collectively reported more than $20 billion of US pre-tax income last year, yet none of them paid a dime in federal income taxes. Instead, they claimed refunds of more than $1.3 billion from the IRS. <br />  <br /> These corporations are not alone in turning tax dodging into a competitive sport. Last year, US corporations paid an effective tax rate of just 12.1 percent, the <a href="http://www.thenation.com/node/SB10001424052970204662204577199492233215330">lowest level in the last forty years</a>, according to the Congressional Budget Office. Sixty years ago, when Republican President Dwight Eisenhower lived in the White House, corporations paid 32 percent of federal government’s tax receipts; last year they paid 9 percent.<br />  <br /> Below are six examples of how large corporations have rigged the tax rules to ensure that those who have the most get to amass even more, at the expense of everyone else. Figuring out how to unrig them is not rocket science, but it will require strong public pressure on lawmakers to ensure that America’s most prosperous corporations pay their fair share.<br /><br /><strong>Boeing’s Double Dip</strong><br />  <br /> In each of the past nine years, Boeing has reported at least $1 billion in pre-tax profits, yet in only one did it pay any US corporate income taxes. In fact, the aerospace giant got so much money in tax subsidies that it had an effective tax rate of -7.8 percent during this period.<br />  <br /> One of the main reasons Boeing has avoided the taxman is that the rest of us subsidize their research and development spending. Last year this amounted to $137 million. Congress first passed the research and experimentation tax credit during the 1981 recession, intending to provide a temporary boost to America’s sagging economy. Though it has expired for short periods over the years, it has been renewed thirteen times, and Congress is presently considering making the tax credit permanent.<br />  <br /> Government investment in basic research and development can be valuable, but the way the current tax credit is structured, much of the support goes to large well-resourced high-tech firms like Boeing that would have conducted the research anyway as a part of maintaining a vibrant business.<br />  <br /> What’s particularly disturbing about the Boeing subsidies, however, is that the company already bills the Pentagon for research costs. The third largest defense contractor, Boeing has landed more than <a href="http://washingtontechnology.com/toplists/top-100-lists/2011.aspx">$54 billion in government contracts in the past nine years</a>. So essentially, taxpayers are paying for the company’s research—twice.<br />  <br /><strong>GE’s Tax-Free Offshore Profits</strong><br />  <br /> General Electric employs <a href="http://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=3&amp;_r=1">975 people</a> to mine the tax code for every possible deduction. One of their IRS returns ran an awe-inspiring <a href="http://www.weeklystandard.com/blogs/ge-filed-57000-page-tax-return-paid-no-taxes-14-billion-profits_609137.html">57,000 pages</a>. As a result, GE paid an effective tax rate of just <a href="http://ctj.org/taxjusticedigest/archive/2012/02/press_release_general_electric.php">2.3 percent on more than $81 billion</a>of US income over the last decade.<br />  <br /> One of GE’s most lucrative tax breaks is dubbed “the active financing exception.” Under US tax law income earned from interest anywhere in the world is taxable in the United States. That is because interest is consider a “passive business activity” that is easily transferred from country to country. The active financing exception allows corporation that establish captive foreign finance subsidiaries to exclude interest they earn offshore from their US taxes. The 1997 subsidy was meant as a temporary measure to help US banks and manufacturers compete internationally.<br />  <br /> General Electric’s lobbyists, who led the fight to create the subsidy, have made sure the “temporary” part was just a joke. Congress has renewed the exemption multiple times over the last fifteen years. And in the meantime, active financing has allowed GE to legally shift much of its US profits to <a href="http://www.nytimes.com/2011/04/05/opinion/05nocera.html">overseas jurisdictions with lower taxes</a>.<br />  <br /> The active financing exception is one of sixty tax breaks, known as “tax extenders,” that expired last year. Congress is actively <a href="http://www.ey.com/Publication/vwLUAssets/TechnicalLine_BB2279_TaxExtenders_9February2012/$FILE/TechnicalLine_BB2279_TaxExtenders_9February2012.pdf">considering reauthorizing them</a>, even while they also consider dramatic cuts to social programs.  <br /><br /><strong>AIG’s Stealth Bailout</strong><br />  <br /> In 2008, American International Group’s reckless uncovered bets helped lead the global economy to the brink of collapse. Taxpayers bailed out the rogue insurer to the tune of $182 billion.<br />  <br /> Less well-known is a perk the US Treasury made available to AIG that allowed the company to retain its losses to offset against future profits. Tapping these tax losses allowed AIG to report more than $17 billion in tax-free profits in 2011, a move Elizabeth Warren, who chaired the TARP oversight panel, labeled a “stealth bailout.” “When the government bailed out AIG, it should not have allowed the failed insurance giant to duck taxes for years to come,” wrote Warren in a <a href="http://dealbook.nytimes.com/2012/03/12/bailout-watchdogs-criticize-a-i-g-tax-breaks">statement co-signed by three other panel members</a>.<br />  <br /> “This corporate tax break transfers public money to AIG’s private shareholders and inflates executive pay at AIG—both at the public’s expense,” added Damon Silvers, another member of the oversight panel. At least four of the executives who stand to benefit financially from the tax break were leading the company at the time of the massive failure.<br />  <br /><strong>Apple and Facebook’s Double Books</strong><br />  <br /> Under current rules, companies can show shareholders and the IRS two different sets of books. In financial statements to shareholders, they’re allowed to estimate the value for their executives’ stock options at the time they’re granted. But when it comes to paying their taxes, they can lower their bill by deducting the full value of the options on the day executives cash them in, which is often a much higher figure. This loophole saved Apple $1.5 billion on its taxes between 2008–10, <a href="http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf">according to Citizens for Tax Justice</a>, boosting its bottom line and its executive bonuses.<br />  <br /> When Facebook becomes a public company later this year, the stock option deduction will save it an estimated $3 billion on taxes, including an immediate $500 million IRS refund of the taxes it has paid during the last two years.<br />  <br /> The Ending Excessive Corporate Deductions for Stock Options Act (S. 1375) and the Cut Unjustified Tax Loopholes Act (S. 2075), both introduced by Senator Carl Levin (D-MI) would close this loophole and limit companies to a tax deduction no greater than the expense they report to shareholders.<br /><strong> <br /> Pfizer Heaves Domestic Profits Overseas</strong><br />  <br /> Pfizer is the largest drug company in the world. It generates 40 percent of its sales in the largest and most lucrative drug market—the United States. And yet Pfizer has reported losses in the US in each of the last four years.<br />  <br /> Pfizer’s tax disclosures offer some clues to how the company achieves this puzzling result. First, it operates eighty subsidiaries in <a href="http://www.gao.gov/assets/290/284522.pdf">offshore tax havens</a>. Second, Pfizer’s 2011 non-US tax rate was a low 14.7 percent, suggesting that they booked a significant portion of overseas profits in tax havens like Luxembourg, Ireland and Jersey, places where Pfizer has at least <a href="http://www.gao.gov/assets/290/284522.pdf">ten subsidiaries each</a>.<br />  <br /> Here’s how these <a href="http://www.bloomberg.com/news/2010-07-23/tax-shenanigans-turn-u-s-sales-to-foreign-income-with-billions-offshore.html">strategies work</a>. A company like Pfizer conducts the bulk of its product and research development in the United States. This work is done by scientists, many of whom were educated in US schools, often using basic research that was funded by US taxpayers. The corporation then takes the patents earned by its US labs and registers them in nations that impose little or no taxes on income from patent royalties. When Pfizer sells a pill, it charges a lot for the use of the patent, telling the IRS that without the intellectual property, the product would be virtually worthless. By doing this, Pfizer transfers much of their profits to the tax haven, while retaining much of the costs of research, advertising and management in the United States. Such shenanigans cost the US Treasury an estimated <a href="http://www.levin.senate.gov/newsroom/press/release/levin-unveils-stop-tax-haven-abuse-act">$100 billion a year</a>.<br />  <br /> A pending bill, the Stop Tax Haven Abuse Act, would require that offshore subsidiaries managed from the United States and often little more than a post office box and a brass nameplate be treated as US entities for tax purposes.<br /><br /><strong>Bechtel’s “Mini” Masquerade</strong><br />  <br /> Though Bechtel is the world’s largest telecommunications, engineering and construction firm (with $32.9 billion in revenue and 52,700 employees), in terms of corporate structure it is one of America’s largest “small businesses.” That’s because the giant corporation takes advantage of a 1958 law intended to extend limited liability protection to owners of small, family-owned businesses. Companies that qualify for this law’s “S Corporation” status do not have to pay federal corporate income taxes. Instead the company’s profits are reported as personal income by individual owners. While the Bechtel empire was hardly the intended beneficiary, their firm technically qualifies for the S Corporation status because it is family run and has less than 100 shareholders.<br />  <br /> At the time the law was enacted, the wide differential between top corporate tax rates (52 percent) and top individual rates (91 percent) was a disincentive for gaming the system to dodge taxes. Fast forward half a century and top tax rates have collapsed to only 35 percent for corporations and individuals, erasing the previous disincentive for big corporations to change their business status. By incorporating as an S Corporation, enormous businesses like Bechtel pay just individual taxes, rather than having their corporation pay taxes on corporate profits and shareholders pay taxes on their dividends.<br />  <br /> S Corporations, and other businesses where income is taxed only at the individual level, have become the new tax haven, where large businesses have fled to avoid US corporate income taxes. In 2008, more than 14,000 S Corporation tax returns were filed by firms with more than $50 million in revenue, according to the IRS. These 14,000 firms, with an average profit of $6.4 million each, collectively reported <a href="http://www.tax.com/taxcom/taxblog.nsf/0971609221721415852572ac0067c130/d94fb9d1dee0e2bd852578ae0049507e/$FILE/Table%201.pdf">29 percent of the total profit on nearly 4 million S Corporation tax returns</a>. Preserving S Corporation status for real small businesses can help level the playing field, but closing the loophole that allows giant multinational corporations to avoid the corporate taxes that their peers have to pay is key to bringing more fairness to the tax code and more funds into public coffers.<br />  <br /> As the 99% Spring unfolds, restoring fairness to our tax code must be at the center of the debate. As it stands, our tax system rewards those at the top, robbing the rest of us of the public money we need to transform the economy from one that works for the 1 percent to one that works for the 100 percent.<br />  <br /><b><i><br /></i></b></p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and is a co-author of the report "Taxing the Wall Street Casino." Scott Klinger is an Associate Fellow at Institute for Policy Studies. </div></div></div> Mon, 16 Apr 2012 16:00:01 -0700 Sarah Anderson, Scott Klinger, The Nation 670371 at http://www.alternet.org Economy Economy economy taxes Runaway CEO Pay Helped Create the Economic Crisis; So Why Are Politicians Still Covering For Rich Execs? http://www.alternet.org/story/152256/runaway_ceo_pay_helped_create_the_economic_crisis%3B_so_why_are_politicians_still_covering_for_rich_execs <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">A new study looks at the worst executive excesses--while Congress continues to help CEOs hide their outrageous pay rates from the public.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p> A global catastrophe occurs. An outraged public shakes pitchforks at the corporate culprits. Lawmakers respond. They propose some modest new laws that require corporations to more fully disclose what they’re doing. Corporate America, unchastened, goes ballistic.</p> <p>Sound familiar? We’ve seen this story play out before. In fact, we’ve seen this story play out after almost every grand corporate catastrophe over the last 80 years.</p> <p>Back in 1933, with the nation still reeling from the stock market crash, President Franklin Roosevelt pushed for legislation that required firms to register securities trades and provide basic financial information. That act eventually passed — over shrill Wall Street opposition. </p> <p>A more modern example? In 1984, a Union Carbide chemical leak killed thousands in India’s Bhopal. U.S. lawmakers had to battle relentless industry opposition before they could pass a right-to-know law on toxic emissions. </p> <p>And now, in 2011, history repeats — over executive pay disclosure rules adopted in the wake of the 2008 financial crash.</p> <p>Runaway executive pay, almost all analysts now believe, played a key driving role in the run-up to the Great Recession. Executive pay excesses, as President Obama has <a target="_blank" href="http://www.whitehouse.gov/the_press_office/RemarksbyPresidentBarackObamaOnExecutiveCompensationSecretaryGeithner">put it</a>, “have contributed to a reckless culture.”</p> <p>Rep. Elijah Cummings (D-MD), Ranking Member of the House Oversight and Government Reform Committee, this week<a target="_blank" href="http://democrats.oversight.house.gov/index.php?option=com_content&amp;view=article&amp;id=5401:cummings-calls-for-oversight-hearings-on-ceo-compensation-&amp;catid=3:press-releases&amp;Itemid=49">called on Republican leaders</a> to hold hearings “to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today.”</p> <p>In part, Cummings wants to look at the status of several CEO compensation-related reporting requirements included in the 2010 Dodd-Frank reform law that are currently under corporate assault. No. 1 on their hit list: a provision that requires U.S. corporations to publicly disclose, on an annual basis, the ratio between their CEO and median employee pay.</p> <p>Given what Congress could have legislated, this most certainly rates as a modest reform. We’re not talking about banning bonuses or even limiting the tax deductibility of executive compensation. We’re just talking disclosure here.</p> <p>Is this too much to ask? Outrageous pay packages, research indicates, encourage outrageous executive behaviors that range from high-risk investing gambles to outsourcing jobs and cooking the corporate books. The wider the pay gap between the guy in the corner suite and that guy’s workers, the lower the workforce morale, the higher the turnover.</p> <p>In other words, the more cash we let corporations stuff in executive pockets at employee expense, the less competitive our corporations become.  </p> <p>The corporate lobby doesn’t see things this way. This past July, the <a target="_blank" href="http://www.centerforcapitalmarkets.com/wp-content/uploads/2010/04/HR1070_HR1062_HR1082_Bachus_Frank-6.20.2011.pdf">U.S. Chamber of Commerce</a> cheered when the House Financial Services Committee approved a repeal of the Dodd-Frank pay ratio provision. The full House will likely pass the bill early this fall.</p> <p>That would set up a battle in the Senate, where “moderate” Democrats may see CEO-worker pay disclosure as an inconsequential bone they can throw to the rabid anti-Dodd-Frankers.</p> <p>The main corporate argument against the disclosure mandate? Compliance, they declare, would be too burdensome. The<a target="_blank" href="http://www.hrpolicy.org/issues_story.aspx?gid=276&amp;sid=4464&amp;miid=1">association for human resources executives</a> claims: “It is a common misperception that pay information as mandated by Dodd-Frank is ‘available at the touch of a button.’”</p> <p>In other words, corporations that routinely pay CEOs over $10 million a year can’t afford to perform enough arithmetic to know how much their typical employees are making.</p> <p>It seems clear that corporations simply want to avoid embarrassment and public outrage. Our organization, the Institute for Policy Studies, has been able to track national average CEO-worker pay ratios for almost 20 years. Last year, we find in our latest <i><a target="_blank" href="http://www.ips-dc.org/reports/executive_excess_2011_the_massive_ceo_rewards_for_tax_dodging/">Executive Excess<span style="font-style: normal; "> report</span></a></i>, S&amp;P 500 CEOs made 325 times what average American workers made, up from 263-to-1 in 2009. </p> <p>But we’ve never been able to compare individual corporations by this CEO-worker pay benchmark. The new mandate that would make that possible is scheduled to go into effect next year. And corporate lobbyists clearly fear the pending public outrage, just like the chemical companies did in the 1980s when toxics reporting rules were going into effect.</p> <p>Those companies, <a target="_blank" href="http://www.law.fsu.edu/journals/landuse/vol112/wolf.html">notes</a> Public Citizen’s Sidney Wolf, eventually found themselves having to “to promise to meet sharp pollution reduction goals.” That became the only way they could “fend off public outcry.”</p> <p>If CEO-worker pay disclosure should survive the current assault, who knows, maybe corporate boards will finally find enough motivation to rein in toxic levels of executive pay.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson and Sam Pizzigati are among the coauthors of the new Institute for Policy Studies report, "Executive Excess 2011: The Massive Rewards for Tax Dodging.” </div></div></div> Wed, 31 Aug 2011 09:00:01 -0700 Sarah Anderson, Sam Pizzigati, AlterNet 667582 at http://www.alternet.org News & Politics Economy work economy inequality crisis jobs executive pay bonuses Bankers' Pay Still Skyrocketing, as Wall Street's Casino Rolls On http://www.alternet.org/story/149187/bankers%27_pay_still_skyrocketing%2C_as_wall_street%27s_casino_rolls_on <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">While any petty shoplifter or check-bouncer would have to face the prospect of jail time, Countrywide CEO Mozilo thus far has managed to escape criminal charges.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>As a critic of runaway CEO pay, I have a lot of scars from debates I've done on cable TV business shows. But my most memorable pummeling was in August 2007, when I nearly got my head bitten off for criticizing Countrywide Financial CEO Angelo Mozilo on the CNBC show <em>Squawk Box</em>.</p> <p>My offense? I questioned whether Mozilo really deserved to be the sixth-highest paid CEO in the country, given that the company's sub-prime mortgages were already showing clear signs of toxicity, with skyrocketing foreclosure rates.</p> <p>Suddenly I had show host Carl Quintanilla and the other guests, including David John of the Heritage Foundation, shouting me down, saying that Mozilo had built the company from nothing and shareholders should be happy to give him every penny of his <a href="http://www.otherwords.org/reports/executive_excess_2007">$42.9 million in compensation</a>.</p> <p>Looking back, it's hard to find a clearer example of the business press blindly glorifying highly paid CEOs. As we all know today, Mozilo's reckless subprime adventures were a disaster for the company and the country. Four months after that CNBC show, Countrywide no longer existed. In January 2008, Bank of America agreed to purchase the ravaged lender in a fire sale.</p> <p><em>The</em><em>Washington Post</em> recently published an extensive analysis of how Countrywide's toxic loans continue to poison Bank of America -- and the national economy. Of the 14 million loans Bank of America is managing today, Countrywide originated 10 million. And of those who borrowed from Countrywide, 15 percent are behind on payments, compared with 6 percent for loans that Bank of America originated.</p> <p>Bank of America also had to cough up $43.5 million to settle a Securities and Exchange Commission suit over charges that Mozilo engaged in fraud and insider trading as he tried to hide the signs of the coming crash. Mozilo had to fork over $24 million for his share of the SEC settlement. That's a small fraction of the <a href="http://online.wsj.com/public/resources/documents/st_execpay1007_20100725.html">$529 million he pocketed over the past decade</a>, according to <em>The</em><em>Wall Street Journal</em>.</p> <p>While any petty shoplifter or check-bouncer would have to face the prospect of jail time, Mozilo thus far has managed to escape criminal charges. He's free to spend his remaining ill-gotten loot any way and anywhere he pleases.</p> <p>Countrywide's recklessness also continues to be a drag on federal agencies that purchased or guaranteed their trashy mortgages. Fannie Mae, Freddie Mac, and the Federal Reserve Bank of New York are among the investors who are demanding that Bank of America repurchase mortgage packages that were based on sloppy paperwork. <a href="http://www.bloomberg.com/news/2010-12-01/bank-of-america-s-sloppy-prime-mortgages-increase-pressure-for-buybacks.html">More than half</a> of these "buyback" claims stem from mortgages created by Countrywide.</p> <p>It doesn't give me much pleasure to look back at that CNBC show and say "I told you so." It would be different if policymakers had learned from the examples of Mozilo and other Wall Street bandits and cracked down on such pay for plunder practices once and for all.</p> <p>By all accounts, however, financial industry compensation is on track to break a record high this year -- for the second year in a row. For a new generation of Angelo Mozilo wannabes, the sky is still the limit.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and is a co-author of the report Executive Excess 2010: CEO Pay and the Great Recession. </div></div></div> Wed, 15 Dec 2010 06:00:01 -0800 Sarah Anderson, Other Words 664553 at http://www.alternet.org Economy News & Politics Economy bank of america countrywide foreclosures mozilo ceo executive pay Shut Down the Global Financial Casino Where Food Is Traded Like a Poker Chip http://www.alternet.org/story/148872/shut_down_the_global_financial_casino_where_food_is_traded_like_a_poker_chip <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Excessive speculation played a significant role in the 2008 food crisis, when soaring prices pushed 130 million people into hunger in the world&#039;s poorest countries.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>This Thanksgiving, most farmers around my hometown in central Minnesota are celebrating a good harvest. Rain -- for once -- fell at the right time in the right amounts, and prices for many crops grown in Litchfield are high.</p> <p>After yo-yoing up and down for the past several years, corn prices are particularly high. In mid-October, the national average was $4.78 per bushel, up $1.17 from the year before. Corn-Belt families still have to cover the costs of expensive fertilizer and other inputs, but many will be able to enjoy a more bountiful holiday this year.</p> <p>In the long term, however, such drastic price swings are as bad for farmers as they are for consumers. How do you plan for the future? If farmers make plans now to plant more corn next year, the price bubble may pop before they can sell their crops.</p> <p>One reason agricultural commodity prices have been so volatile is the rampant gambling in the futures markets. These markets were originally created to help ensure more stable prices for the actual producers of corn, wheat, milk, and other commodities, as well as food manufacturers, like flour mills and cereal makers.</p> <p>A farmer-owned grain elevator, for example, can use a futures contract like insurance to fix a price for a future sale. This allows them to plan ahead without having to worry about wild price swings.</p> <p>Today, however, the commodities markets are dominated by speculators who have never gotten their hands dirty in a corn field, or come anywhere near a food processing plant. They're simply big-time gamblers, hoping to profit from changes in futures prices.</p> <p>It's now widely recognized that excessive speculation played a significant role in the 2008 food crisis, when soaring prices pushed 130 million people into hunger in the world's poorest countries. Here in the United States, consumers also faced the sharpest increases in grocery prices since 1980. These problems were exacerbated by the dismantling, over the past couple of decades, of programs designed to protect farmers and consumers, such as food reserves, price supports, and import controls.</p> <p>The financial reform bill that became U.S. law in July made some progress in cracking down on speculation. It limits how much a trader can hold in a certain commodity and increases market transparency.</p> <p>However, the new law doesn't address problems with commodity index funds and exchange-traded funds. Institutional investors like pension funds and university endowments have been plowing money into such funds, driving prices artificially high. Then, as we saw with the 2008 crash, speculators can exit in a stampede, causing prices to plummet.</p> <p>A coalition of family farm, faith-based and anti-hunger groups, along with business associations have initiated a campaign to persuade investors to pull out of commodity index funds. Their first target: CALSTRS, the California teachers' retirement system, which had been considering shifting $2.5 billion of their portfolio into commodities.</p> <p>In response to the divestment campaign, the CALSTRS board decided on November 4 to adopt a different strategy. Instead of $2.5 billion, they will invest no more than $150 million in commodities for 18 months, while further studying the potential problems.</p> <p>This is an important step towards shutting down the global financial casino where food is traded like a poker chip. The big-time gamblers should stick to the Las Vegas casinos. Let's keep food where it should be -- on our tables.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson is the director of the Global Economy Project at the Institute for Policy Studies. </div></div></div> Tue, 16 Nov 2010 05:00:01 -0800 Sarah Anderson, Other Words 664255 at http://www.alternet.org Food Investigations Food Economy corn food prices commodity pricing Hidden Corporate Scandal: CEOs Who Laid Off the Most Workers Rake in the Most Treasure http://www.alternet.org/story/148035/hidden_corporate_scandal%3A_ceos_who_laid_off_the_most_workers_rake_in_the_most_treasure <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">CEOs are throwing workers onto the unemployment rolls and dodging taxes to boost short-term profits and fatten their own paychecks.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>The CEO of the world's biggest tech company brought down by a Reality TV "cougar." It's a hard story to resist. </p> <p>And indeed, the business press has had a field day with the saga of Mark Hurd, the Hewlett-Packard chief who was recently fired for falsifying expense reports to conceal a relationship with a woman from a truly bizarre TV dating show. </p> <p>After starring in a few soft porn movies, Jodie Fisher, a 50-year-old with Lady Godiva tresses, got a gig in 2007 on NBC’s "<a target="_blank" href="http://www.nbc.com/Age_of_Love/">Age of Love</a>," in which a male tennis pro was to choose a mate from groups of over-40 “cougars” or under-30 “kittens.” </p> <p>Fisher didn’t get the red rose, but she did get a contract job with HP. Her task: introduce Hurd to clients at parties. Seriously -- you can get paid for that. But then Fisher claimed she lost the job because she wouldn't sleep with Hurd. He said she was merely on the wrong end of conscientious cost-cutting, but he paid her off anyway. The board got wind of the sexual harassment settlement, discovered the phony expense reports and gave Hurd the ax. </p> <p>Titillating? Mildly. The biggest scandal at HP? Hardly. The biggest scandals at HP haven't made the headlines because they are so commonplace in Great Recession Corporate America. CEOs in one company after another are throwing workers onto the unemployment rolls and dodging taxes to boost short-term profits and fatten their own paychecks. They are shifting the burden of a poor economy onto the public purse -- while continuing to line their own pockets. </p> <p>According to a new <a target="_blank" href="http://www.ips-dc.org/reports/executive_excess_2010.pdf">report</a> by the Institute for Policy Studies, CEOs from the 50 firms that have laid off 3,000 or more workers since the onset of the crisis took home nearly $12 million on average in 2009. That’s 42 percent more than the average for CEOs of S&amp;P 500 firms as a whole.  </p> <p>At HP, Hurd made $24.2 million in 2009, while cutting 6,400 jobs. That was on top of 24,600 layoffs he announced in September 2008 after a merger with EDS. His slash and burn, merge and purge approach was a stark departure from the “no-layoff” policy of HP cofounders William Hewlett and David Packard, who built the company from a garage operation into a global giant.  </p> <p>Messrs. Hewlett and Packard seemed to understand what more and more research is showing: Mass layoffs are often bad for business. Employers have to deal with morale problems among remaining staff and then all the costs related to hiring and training new workers when conditions improve. A University of Colorado <a target="_blank" href="http://www.iveybusinessjournal.com/view_article.asp?intArticle_ID=450">survey</a> of S&amp;P 500 companies from 1982 to 2000 found no evidence that downsizing leads to increased returns on assets.<sup></sup> In fact, stable employers — companies that have less than 5 percent annual staff turnover — outperformed companies that had major layoffs.  </p> <p>Today’s Hewlett-Packard illustrates still another troubling trend that has largely escaped the headlines: massive corporate tax avoidance.  </p> <p>Under current law, U.S. corporations face a 35 percent tax rate on corporate profits. Hewlett-Packard, under Hurd, sent $47 million to Uncle Sam in 2009 federal corporate income taxes, a mere 2 percent of the company’s reported $2.6 billion in pretax domestic net income.  </p> <p>As a result of various tax avoidance schemes, U.S. corporate income taxes overall have plummeted from almost a third of all non-Social Security federal tax revenues in the 1960s to only a sixth of total taxes today, according to <a target="_blank" href="http://www.ctj.org/pdf/summaryremarksoffshorecorpabuses.pdf">Citizens for Tax Justice</a>.  </p> <p>Since paying taxes apparently gives rich execs the hives, it’s routine for big companies to shield their CEOs from taxes on perks. In 2009, HP gave Hurd $29,028 in such “tax gross-ups” to offset taxes related to his use of the company’s private jet and other perks. Over the past three years, Hurd’s gross-ups have totaled $137,924. </p> <p>After the board gave Hurd the blade, he walked away with a <a target="_blank" href="http://finance.yahoo.com/news/HP-CEO-forced-to-resign-amid-apf-3431130388.html?x=0">severance payout</a> of cash and stock estimated at more than $28 million. That should tide him over until his next executive post, which may not be long. According to the <i> Wall Street Journal</i>, Hurd claims he received a recruiter call the day after he left HP.</p> <p>Meanwhile, who knows how many of the tens of thousands of HP employees who have lost their jobs are stuck collecting unemployment checks. That’s the real scandal at HP.  </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson is a co-author of the new Institute for Policy Studies report, <a target="_blank" href="http://www.ips-dc.org/reports/executive_excess_2010.pdf">Executive Excess 2010: CEO Pay and the Great Recession</a>. </div></div></div> Tue, 31 Aug 2010 21:00:01 -0700 Sarah Anderson, AlterNet 663445 at http://www.alternet.org Economy News & Politics Investigations Economy economy executive excess Proving That Tea Partiers' Anti-Tax Extremism Isn't Even Loved by All Conservatives http://www.alternet.org/story/147229/proving_that_tea_partiers%27_anti-tax_extremism_isn%27t_even_loved_by_all_conservatives <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Taxing speculation could take us a long way toward reining in Wall Street.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Could we please get a few European-style economic conservatives over here?</p> <p>German Chancellor Angela Merkel and French President Nicolas Sarkozy are considered right-wingers in their countries. This week the leaders of the two largest European economies held a joint press conference to reiterate their pledge to make the financial industry pay for the costs of the crisis. They’re pushing two types of taxes -- by definition anathema to the Tea Party conservatism we have on this side of the pond. And one of them might prevent a repeat of the Great Recession that's caused so much economic pain around the world.</p> <p>The first is a fairly timid levy on top banks similar to an Obama administration proposal that is aimed at recouping the direct costs of the bailouts.  </p> <p>The other is way more exciting – a tax on each trade of stock, derivatives, currency, and other financial instruments. Such “financial speculation taxes” (aka financial transactions taxes) would discourage the short-term speculation that can lead to dangerous bubbles, while generating massive revenues that could be used for urgent needs, like jobs programs. </p> <p>Merkel and Sarkozy want the major economies to agree to adopt such taxes at the upcoming G-20 summit in Toronto on June 26-27. As Merkel said in the <a target="_blank" href="http://www.bundeskanzlerin.de/nn_683698/Content/DE/Mitschrift/Pressekonferenzen/2010/06/2010-06-14-bkin-sarkozy.html">press conference</a>, “We have agreed to jointly promote an international financial markets transaction tax. We will demand this." </p> <p>Tough talk -- especially in light of the U.S. Treasury Secretary’s obvious aversion to the proposal. Timothy Geithner has been promoting the modest bank levy as an alternative, rather than a complement to the speculation tax.  </p> <p>There are members of Congress, though, who don’t take their marching orders from the Treasury. Bills to create financial speculation taxes have been introduced in both the <a target="_blank" href="http://thomas.loc.gov/cgi-bin/query/z?c111:S.2927">Senate</a> and the <a target="_blank" href="http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.4191">House</a>. And a growing U.S. campaign is gearing up to make this part of round two of financial reform. As Dan Pedrotty, director of the AFL-CIO’s office of investment, put it in a recent <a target="_blank" href="http://thehill.com/business-a-lobbying/102621-labor-groups-fight-for-transaction-tax-but-face-tough-battle">interview</a>, “This is the next phase of the battle to rein in Wall Street.”  </p> <p><b>Speculation Taxes and Recent Financial Fiascos</b> </p> <p>A new <a target="_blank" href="http://financialadvisormagazine.com/fa-news/5078-what-transaction-tax-foes-dont-say.html">report</a> by my organization, the Institute for Policy Studies, spells out concrete examples of how financial speculation taxes might have changed the outcome of several recent financial fiascos: </p> <ul type="DISC"><li><b>Flash Crash:</b> Remember when the Dow plummeted nearly 1,000 points in less than a half hour on May 6? If a tax of 0.25 percent on securities trades had been in place for just the 20 minutes of wildest trading that day, it could have generated $142 million in revenue. That's more than $7 million per minute. Ideally, the tax would encourage big-time investors to think before placing their bets, instead of relying on the computer-driven high-frequency trading that now makes up 50-75 percent of daily stock trades.</li> </ul><ul type="DISC"><li><b>AIG Collapse:</b> A financial speculation tax probably wouldn’t have changed the behavior of the insurance giant’s greed-crazed executives. But if it had applied to the insurance giant's $440 billion worth of exceptionally risky credit default swaps, it would have amounted to as much as $1.1 billion, enough to cover the annual salaries of more than 20,000 elementary school teachers.  </li> </ul><ul type="DISC"><li><b>Greek Tragedy:</b> When Greece cut a $10 billion derivatives deal with Goldman Sachs that was designed to conceal their oversized debts, a financial speculation tax would have raised the cost of the shady maneuver by $25 million.</li> </ul><p><b>Top Revenue Raiser</b> </p> <p>Without a financial speculation tax, it’s hard to imagine how the Obama administration expects to find the money to address urgent needs, such as the trillions needed to shore up our crumbling infrastructure or create good jobs. According to the <a target="_blank" href="http://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdf">Center for Economic and Policy Research,</a> a financial speculation tax would be expected to generate about $177 billion per year in the United States. That's 20 times as much as could be expected from Geithner’s preferred bank levy. It’s also more than three times as much as other key revenue proposals, such as allowing the Bush-era tax breaks for the rich to expire ($45 billion) or restoring estate taxes on large fortunes ($40 billion).  </p> <p><b>Industry Opposition</b> </p> <p>Of course the financial industry is apoplectic about the idea of a tax on their activities – even one as minuscule as the 0.25 percent max proposed in the pending bills. Their favorite argument is that it will hurt the little guys. In reality, a financial speculation tax would target the hedge fund investors and other high fliers in the global casino who make most of their money through high-frequency betting on short-term market movements that often have little to do with what's going on in the real economy. Since the tax would apply to each of these transactions, it would make this type of speculative gambling much less profitable and encourage more long-term, patient investment. </p> <p>For ordinary investors whose portfolios turn over relatively infrequently, the tax would hardly be noticeable. Moreover, the pending House and Senate bills include exemptions for pension and individual retirement accounts and the first $100,000 of trades made by an individual each year. </p> <p>No one claims that taxing speculation will solve all our problems. It won't single-handedly prevent another financial crisis. It won't create all the jobs we need or solve all our other economic problems. But combined with other sensible financial regulations, it could take us a long way toward reining in Wall Street and meeting urgent social and environmental needs.</p> <p>So let’s hope the Europeans continue to stand tough on this. We need all the help we can get to move this in the U.S. political landscape. And let’s also work toward a day when pro-tax, bank-bashing politicians are standing on the right wing of our own political spectrum.  </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><p><i>Sarah Anderson is the director of the Global Economy Project at the Institute for Policy Studies and the lead author of the new report </i><a href="http://ips-dc.org/Report/taxing_the_wall_street_casino" target="_blank"><i>“Taxing the Wall Street Casino</i></a><i>.” </i></p> </div></div></div> Wed, 16 Jun 2010 21:00:01 -0700 Sarah Anderson, AlterNet 662579 at http://www.alternet.org Economy World News & Politics Economy europe conservatism sarkozy merkel tea parties Time to Tax the Financial Speculators http://www.alternet.org/story/145660/time_to_tax_the_financial_speculators <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">As we reel from the worst financial crisis in 80 years, the idea of rethinking the role of Wall Street is much more open.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>For decades, international activists have been pushing the idea of a tax on financial transactions. Such a tax would give us a twofer: a drop in short-term speculation that serves no productive purpose and leads to dangerous bubbles, and 2) loads of money that could be used for good things, like health, climate, and jobs programs.</p> <p>Today, we’re closer to achieving this two-for-one deal than we’ll probably ever be in our lifetimes. Reeling from the worst financial crisis in 80 years, policymakers are not only desperate for new sources of revenue, they’re more open to <a href="/issues/path-to-a-new-economy/3236" class="internal-link" title="Don't Fix Wall Street, Replace It">rethinking the role of Wall Street</a> and making sure it <a href="/multimedia/yes-audio/life-in-a-real-wealth-economy" class="internal-link" title="Life in a Real-Wealth Economy">serves real economic needs</a>.</p> <p>To take advantage of these new opportunities, a wide range of activists, including trade unionists, international health advocates, and climate justice groups, have come together to move this decades-old proposition into practice. Their efforts are gaining traction—and even some celebrity support.</p> <p>The specific proposal is to tax trades of all types of financial assets, including stock, derivatives, and currencies. The tax rate would be so low that ordinary investors wouldn’t even notice it. Some U.S. legislative proposals would even exempt retirement funds and mutual funds, the primary middle class investment vehicles. The real target would be the hedge fund investors and other high fliers in the global casino, who make most of their money through high-frequency betting on short-term market movements that often have nothing to do with <a href="/issues/money-print-your-own/money-versus-wealth" class="internal-link" title="Money Versus Wealth">what’s going on in the real economy</a>. Since the tax would apply to each of these transactions, it would make this type of speculative gambling much less profitable and encourage more long-term, patient investment.</p> <p>The Center for Economic and Policy Research has <a href="http://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdf" class="external-link">analyzed</a> the likely impact of a set of taxes, ranging from 0.01 percent on currency transactions to 0.25 percent on stock trades. Assuming that trading volumes dropped by 50 percent, these taxes could raise more than $175 billion per year in the United States alone.</p> <p>The call for such taxes has been particularly loud in Europe, where activists have managed to win promises of support from leaders of the three largest economies—the United Kingdom, Germany, and France. But more pressure is needed to make speculation taxes a reality.</p> <p>In the UK, activists have teamed up with filmmaker Richard Curtis (<em>Four Weddings and a Funeral</em>, <em>Notting Hill</em>, <em>Bridget Jones’ Diary</em>) to put some star power behind the cause. Through a <a href="http://www.robinhoodtax.org.uk/" class="external-link">creative media campaign</a> being launched today, they aim to secure commitments from candidates vying for votes in the upcoming general election.</p> <p>One of the campaign tools Curtis has produced is <a href="#bill-nighy-s-video" title="Bill Nighy's video in support of the &quot;Robin hood Tax&quot; in the UK:">this video</a>, starring British actor Bill Nighy (who you'll recognize from his roles as Davy Jones in one of the <em>Pirates of the Caribbean</em> movies or as the ribald aging pop singer in <em>Love Actually)</em>as a haughty banking executive whose arguments against the tax completely unravel in the course of three minutes. The UK groups kicked off their campaign by projecting a giant image of ordinary people wearing Robin Hood masks and the slogan “Be Part of the World’s Greatest Bank Job” on the side of the Bank of England.</p> <p>In the United States, we may not yet have Hollywood spokespeople, but we do have prominent business leaders on our side, including <a href="http://wealthforcommongood.org/campaign/financial-transaction-tax/" class="external-link">John Bogle</a>, founder of the Vanguard Mutual Fund. We also have bills to create financial speculation taxes in both the House and the Senate, introduced by Rep. Peter DeFazio (D-OR) and Sen. Tom Harkin (D-IA).</p> <p>President Obama is not yet on board. Recently, he did call for a new fee on the top 50 banks. This is a positive, but far more modest, approach—it wouldn’t directly affect speculation, would leave hedge funds off the hook, and would generate far less revenue.</p> <p>U.S. activists are hoping to see a shift in the administration’s position by the time Obama travels to Toronto in June for a summit with the leaders of the other G20 big economies. Americans for Financial Reform (AFR), a coalition of more than 200 labor unions, consumer groups, and other activist organizations, has been working to raise the profile of the issue in the media and on Capitol Hill and recently sent this <a href="http://ourfinancialsecurity.org/2010/02/afr-letter-to-obama-in-support-of-the-financial-responsibility-fee/" class="external-link">letter</a> to the president, urging his support. AFR is also working with other U.S. and international activists to coordinate pressure on key governments and the International Monetary Fund, which is carrying out a feasibility study of the issue at the G20’s request.</p> <p>Taxing financial speculation won’t single-handedly prevent another crisis or solve the world’s climate and jobs crises. But for those of us who want the financial industry to serve people and the planet rather than dominate them, this is the most exciting reform under serious consideration on the world stage. And it is an idea whose time has come.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson wrote this article for <a class="external-link" href="http://www.yesmagazine.org">YES! Magazine</a>, a national, nonprofit media organization that fuses powerful ideas with practical actions. Sarah directs the Global Economy Project at the <a class="external-link" href="http://www.ips-dc.org/">Institute for Policy Studies</a> in Washington, DC. </div></div></div> Fri, 12 Feb 2010 12:00:01 -0800 Sarah Anderson, YES! Magazine 661013 at http://www.alternet.org Economy Economy wall street tax financial speculation Calling Greedy Wall Street Bankers Fat Cats Is an Insult to Cats http://www.alternet.org/story/144935/calling_greedy_wall_street_bankers_fat_cats_is_an_insult_to_cats <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">My cat is on the pudgy side, but she is nothing like our titans of finance. Let&#039;s stop maligning our feline friends by comparing them to greedy, evil Wall Street execs.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>It's a good thing my long-haired calico Hyacinth can't read the newspaper. Otherwise I'm sure she'd be deeply offended by all the recent headlines about "fat cats."</p> <p>President Obama used the derogatory term in an interview on CBS's "60 Minutes." "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," he said.</p> <p>Granted, Hyacinth may be on the pudgy side, but she has little in common with greedy financial executives.</p> <p>First of all, her pleasures are simple ones. Fresh water, regular meals, and a ball of string are all it takes to keep her purring.</p> <p>Wall Street executives are the ultimate in high maintenance. Ever since the government put the most modest of restrictions on compensation at bailout firms, they have been in panic mode. Desperate to free themselves of these constraints and protect their nine-figure-paycheck lifestyles, they are rushing to return the bailout funds.</p> <p>Never mind that the top banks haven't found the resources to provide sufficient credit to people who need it for their homes, businesses, or school tuition. The number of zeroes on their executive paychecks seems to be what matters most.</p> <p>Secondly, how much damage could Hyacinth do to the world? A few hairballs here and there on the carpet-nothing a damp sponge can't handle.</p> <p>Wall Street executives, for their part, drove the global economy off a cliff. Their reckless behavior is largely responsible for tens of millions of people falling into poverty and joblessness. And now they are lobbying to block Congress from enacting new regulations to prevent future crises.</p> <p>For thousands of years, cats have had one primary job: rodent control. They've done it well, with pride, required no training or exorbitant perks, and made only the most minimal demands on the rest of society.</p> <p>In fact, recent research indicates that cats give back to us humans-big time. The University of Minnesota studied more than 4,000 Americans for 10 years and found that cat ownership reduced the risk of heart attack by nearly one third. Think having a banking CEO around the house would have the same healthy effect?</p> <p>Contrary to popular belief, cats aren't even all that lazy. A recent study by animal behavior specialists for the Nestle Purina PetCare Company found that cats spend only about six percent of their daytime hours napping.</p> <p>I think it's time to stop maligning our feline friends by comparing them to Wall Street executives.</p> <p>Whether fat or not, cats deserve much more respect. </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson is a fellow of the Institute for Policy Studies in Washington, DC. IPS is a multi-issue think tank that turns ideas into action. <a href="http://www.ips-dc.org">www.ips-dc.org</a>. </div></div></div> Mon, 04 Jan 2010 21:00:01 -0800 Sarah Anderson, MinuteMan Media 660267 at http://www.alternet.org News & Politics financial crisis fat cats wall street execs 30 Hours Clashing with Corporate Lobbyists on a White House Committee Showed Me How Hard "Change" Really Is http://www.alternet.org/story/143750/30_hours_clashing_with_corporate_lobbyists_on_a_white_house_committee_showed_me_how_hard_%22change%22_really_is <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The &quot;cow-boy&quot; model of capitalism has failed dramatically, but corporate America still wants to roam the planet free of regulation.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>During the past several months, I spent nearly 30 hours in meetings of a private sector committee tasked with advising the Obama administration on a particular set of international economic policies.</p> <p>My seat at the table was one of many signs of the new opportunities for advocates of progressive change in Washington. At the same time, my experience was an up-close-and-personal look at how hard corporate lobbyists are fighting to make sure nothing changes.</p> <p>The committee was made up of about 30 people, with one-third from labor, environmental, and other public interest groups and nearly all the rest representing global corporations, including Citigroup, ExxonMobil, and Procter and Gamble, as well as the major corporate lobby groups.</p> <p>Our assignment was to review the U.S. approach to bilateral investment treaties (BITs), deals that are nearly identical to the investment chapters of our trade agreements. The topic may sound obscure. But for all those many hours, we grappled with what I see as the critical question of our time: What is the proper role of government in our economy? </p> <p><b>Investor Protections</b></p> <p>Even before uncontrolled corporate greed drove the global economy off a cliff, civil society groups around the world had pointed to so-called "international investor protections" as dangerous tools in a deregulatory agenda.</p> <p>In a nutshell, these rules give private foreign investors the right to bypass domestic courts and sue governments directly in international tribunals. The most controversial is the right to sue over government actions — including health, environment, and other public interest regulations — that diminish the value of an investment.</p> <p>For example, Mexico had to pay off a U.S. company that had been denied local permission to build a hazardous waste facility in an environmentally sensitive area. Canada repealed a public health law in the face of a threatened lawsuit by a U.S. chemical company. The U.S. government has spent millions of dollars defending itself against claims over legitimate environmental regulations.</p> <p>A growing number of international cases demonstrates how these rules threaten democracy and the public interest. Even more disturbing are the hidden costs. We'll never know how many times governments have decided to not take actions in the public interest — for fear of provoking an expensive investor lawsuit.</p> <p>On the campaign trail, President Obama committed to changing these rules, <a href="http://www.citizenstrade.org/pdf/QuestionnairePennsylvaniaFairTradeCoalition040108FINAL_SenatorObamaResponse.pdf" target="_blank">stating</a> "With regards to provisions in several free trade agreements that give foreign investors the right to sue governments directly in foreign tribunals, I will ensure that foreign investor rights are strictly limited and will fully exempt any law or regulation written to protect public safety or promote the public interest. And I will never agree to granting foreign investors any rights in the U.S. greater than those of Americans."</p> <p>The economic crisis has added even more urgency. Beyond their overall deregulatory thrust, these investment agreements specifically prohibit certain policies designed to mitigate or prevent financial crisis. Surely, I thought, the time had come for some serous rethinking. The advisory committee seemed to present just such an opportunity.</p> <p><b>Corporate Pushback</b></p> <p>The corporate representatives on the advisory committee didn't quite see it that way. Instead, as the <a href="http://www.state.gov/e/eeb/rls/othr/2009/131098.htm" target="_blank">final report</a> to the Obama administration reveals, they fought back hard against nearly every proposal to increase policy flexibility. In fact, in several areas, they pushed to further curtail regulatory powers. Their favorite argument was that if U.S. investment deals were to allow governments more policy space, U.S. corporations would be at a disadvantage relative to foreign competitors. By that logic, the regulatory race to the bottom would never end.</p> <p>There was a modicum of consensus on a few narrow issues. For example, in light of concerns over a new debt crisis in the poorest countries, we were all able to agree that the administration should at least take a look at the potential danger of international investors using these treaties to undermine debt restructuring programs.</p> <p>But the page numbers alone reflect the high degree of polarization. The main body of the report is dwarfed by the annexes, where committee members were allowed to express their views unedited.</p> <p>I worked with eight others to submit a joint set of recommendations for a dramatic overhaul of the rules that govern international investment. While it was a shame that we weren't able to find much common ground with the corporate representatives, this annex demonstrates how much was learned.</p> <p><b>Key Recommendations</b></p> <p>We made four major recommendations: dispute settlement should be consistent with the public interest; foreign investors should not have greater rights than U.S. investors; our investment agreements should protect health, safety, and the environment as well as promote good jobs; and such agreements should help mitigate and prevent financial crises.</p> <p>More specifically, we argued that the current "investor-state" process should be replaced with a "state-state" process. Since these cases often concern matters of broad social impact, they should be handled by governments representing the public interest. This is the position supported by the more than 125 members of the House of Representatives who have endorsed a pending bill in Congress called the TRADE Act (HR 3012). The U.S.-Australia free trade agreement also uses a state-state process.</p> <p>We also made several recommendations to fix the fuzzy language that some tribunals have interpreted in ways that go beyond the investor rights under U.S. law (and most likely the laws in other countries). For example, these rules give investors the right to so-called "fair and equitable" treatment. These are subjective terms with no clear legal meaning.</p> <p>Similarly fuzzy language applies to the treaty's impact on the environment and workers' rights. For example, the U.S. model bilateral investment treaty says governments shall "strive to ensure" to protect the environment and worker rights. I might strive to be seven feet tall or to never eat another potato chip, but neither of those aspirations is very serious.</p> <p>Finally, current rules restrict governments from placing even temporary controls on capital flows, despite the fact that many countries have used this policy tool effectively in crisis situations. We also recommended fixes for vague language that could open the door to investor-state cases over other financial regulatory reforms.</p> <p><b>What Next?</b></p> <p>Our report will be part of an internal, interagency process coordinated by the State Department to produce a new model bilateral investment treaty. Then the Obama administration will need to figure out what to do about BIT negotiations begun by the Bush administration with China and India. The corporate lobby is pushing hard for new deals based on the current model, particularly with China.</p> <p>Of course, those of us who devoted much of our summer vacations to the advisory committee are hopeful that our work will have broader repercussions as well. Candidate Obama promised to revisit some existing trade pacts, and the BIT advisory report should inform any review of the investment chapters of U.S. trade agreements. Moreover, several governments that already have a BIT with the United States would be eager to renegotiate those pacts. Particularly in South America, policymakers are increasingly challenging these rules as a threat to sovereignty.</p> <p>The Institute for Policy Studies has partnered with the Bolivia-based <a href="http://democracyctr.org/" target="_blank">Democracy Center</a> to help better link the U.S. debate with those in other countries. We have just launched a bilingual (English-Spanish) <a href="http://www.justinvestment.org/" target="_blank">website</a> as a tool for activists, policymakers, and academics working to build a more just and democratic system for governing global investment.</p> <p>The fact that the Obama administration, early in its term, launched a process to gather civil society input into our bilateral investment treaties was a huge positive step toward the broad-based debate we need about our whole approach to international economic policy. Let's hope it's just a first step and not the last step in the process.</p> <p> For More Information: Click <a href="http://www.state.gov/e/eeb/rls/othr/2009/131098.htm" target="_blank">here</a> to read the Subcommittee's consensus report. Click <a href="http://www.state.gov/e/eeb/rls/othr/2009/131118.htm#b" target="_blank">here</a> to read an annex produced by Anderson and several other members of `the subcommittee.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Global Economy Project at the <a target="_blank" href="http://www.ips-dc.org/">Institute for Policy Studies</a> and served on the Investment Subcommittee of the State Department's Advisory Committee on International Economic Policy. </div></div></div> Thu, 05 Nov 2009 05:00:01 -0800 Sarah Anderson, Foreign Policy in Focus 659139 at http://www.alternet.org Economy News & Politics Economy obama trade lobbying investor protections Turning Lead Into Gold: How CEOs' "Performance Incentives" Are Screwing Everybody http://www.alternet.org/story/143085/turning_lead_into_gold%3A_how_ceos%27_%22performance_incentives%22_are_screwing_everybody <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">A new Institute for Policy Studies Report shows how big-business bubbles are keeping CEOs in the black -- and robbing the little guy.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p><em>This piece originally appeared in the <a href="http://www.projo.com/">Providence Journal.</a></em></p> <p>Back in the Middle Ages, shadowy figures known as alchemists claimed that they could turn lead into gold. We have alchemists today who don’t have to fake such miracles. We call them CEOs.</p> <p>Our contemporary power-suited alchemists can turn sinking sales, falling profits, even global economic collapse into personal mega-million-dollar windfalls. They have discovered, in effect, the secret to perpetual income growth.</p> <p>Want in on that secret? Want to be able to make every bump that comes your way just another springboard to grand fortune, just like CEOs? Here’s what you need to do.</p> <p>First: Get yourself a job as a top executive at a Fortune 500 company. Second: Announce your total commitment to "pay for performance" and urge your corporate board to pack your pay deal with "performance incentives."</p> <p>Now the fun begins. In your first year as a typical big-time CEO, you’ll receive a token million or so in straight salary. Your real rewards will come in those performance incentives, neat little gimmicks such as stock options. These options give you the right to buy, at some future date, shares of your company’s stock at the current share price.</p> <p>Let’s say that your firm’s stock is currently selling at $10 a share. You get options to buy a million shares, a few years down the road, at that $10 price. If your firm’s share price should jump to $20 over those few years, you can buy the million shares at $10 and turn around and sell them at $20. Your personal profit: $10 million.</p> <p>But let’s suppose your shares don’t appreciate. Let’s suppose your firm’s share price, after a year, has dropped to $5. Your options have essentially become worthless. You can’t make any money, after all, buying stock at $10 a share and selling at $5.</p> <p>Time for some alchemy. In your second year, with your firm’s shares sputtering at $5, your board of directors ever so thoughtfully hands you still another "performance incentive" to right the corporate ship: options to buy a million more shares — at the current $5 share price. If this share price, over the next year, should move back to $10, you stand to make $5 million — without improving, by one iota, the share value your company held when you were originally came on as CEO.</p> <p>Wait, things can get even more magical: It’s year three of your CEO tenure. Your share price has fallen yet again, to $2. Now you really need an incentive to perform. So your board supplies one: new options to buy not one million, but two million shares — all at the current $2 share price.</p> <p>Ah, now you really have an incentive to "perform." You rush to fatten your company’s bottom line by any means necessary. You outsource jobs. You squeeze consumers. You play games with credit-default swaps. Maybe you even cook the books.</p> <p>Your share price, after all this hard work, rises to $10. You now stand to make $5 million on your year two options and $16 million more on year three, $21 million in all. And those shareholders who owned your firm’s stock three years ago, when that stock traded at $10? They haven’t made a dime.</p> <p>As the chief executive, in short, you made $21 million for accomplishing nothing. Pure alchemy.</p> <p>This scenario, we document in a new Institute for Policy Studies report, is playing out — with a vengeance — once again this year. Take American Express CEO Kenneth Chenault.</p> <p>Last January, Chenault pocketed options to buy nearly 1.2 million shares at a moment when American Express stock was trading at a bargain basement price of $16.71. Thanks to the bailout generosity of U.S. taxpayers, American Express shares have risen steadily in 2009, trading at around $32 in recent weeks. That’s still only half what the credit-card giant’s shares were worth at their peak in 2007. But Chenault still stands to make, from his 2009 options alone, nearly $18 million.</p> <p>Chenault doesn’t stand alone. At SunTrust, options awarded early in 2009 have so far upped the personal portfolio of the CEO and two fellow execs by $7.9 million. The comparable gain for Capital One CEO Richard Fairbank: $16.3 million.</p> <p>Alchemy, in whatever guise, has always been a racket. To get our economy moving again — with more than smoke and mirrors — we need to go after the racketeers. We need to place real limits on the rewards that racketeering can bring. That’s something that Congress and the Obama administration have, at least so far, not been willing to do.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Institute for Policy Studies’ global economy project. Sam Pizzigati, an institute associate fellow, edits Too Much, an online weekly on excess and inequality. They are co-authors of the recent IPS report America’s Bailout Barons: Taxpayers, High Finance, and the CEO Pay Bubble. </div></div></div> Tue, 06 Oct 2009 07:00:01 -0700 Sarah Anderson, Sam Pizzigati, AlterNet 658514 at http://www.alternet.org Economy News & Politics Economy crisis money recession bailout financial crisis performance incentives There's a Bubble That Still Threatens the Entire American Economy ... and Few Are Talking About It http://www.alternet.org/story/142325/there%27s_a_bubble_that_still_threatens_the_entire_american_economy_..._and_few_are_talking_about_it <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Outrageously large rewards for executives give executives an incentive to behave outrageously -- and engage in behaviors that put the rest of us at risk.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>At the Institute for Policy Studies, we've been tracking our nation's astounding executive pay bubble since 1994. We began our annual "Executive Excess" series because we believe that excessive executive compensation has deeply troubling consequences, for both our economy and our polity.</p> <p>To put the matter most simply: Outrageously large rewards for executives give executives an incentive to behave outrageously -- and engage in behaviors that put the rest of us at risk.</p> <p>Over the years, we've documented, for instance, how CEOs who downsize, outsource and cook their corporate books have consistently collected bigger paychecks than even the average overpaid U.S. top executive.</p> <p>Now looking back on our work, we plead guilty to a lack of imagination. We didn't imagine, even in our most cynical moments, that America's top executives -- in their chase after fortune -- would be reckless enough to melt down the entire global financial system.</p> <p>Since last September, all sorts of analysts and public officials have pinpointed executive excess right at the heart of the recklessness that brought the United States -- and the world -- to the brink of economic cataclysm.</p> <p>"It is the compensation system," former Federal Home Loan Bank Board Litigation Director William Black put it most simply, "that has proved to be the weak point in everything critical that went wrong, that has produced a global catastrophe."</p> <p>Treasury Secretary Timothy Geithner, at least at times, appears to concur.</p> <p>"The financial crisis had many significant causes," he said in June. "But executive compensation practices were a contributing factor."</p> <p>In February, President Barack Obama signaled an intent to act on this analysis. He committed his administration to a "long-term effort" that would examine how executive pay patterns "have contributed to a reckless culture and quarter-by-quarter mentality that in turn have wrought havoc in our financial system."</p> <p>This "long-term effort," sadly, has yet to seriously begin. The denizens of our nation's executive suites are going about their business with the same visions of compensation sugarplums that danced in their heads before last September.</p> <p>In our just-released edition of "Executive Excess<i>,</i>"<i> </i>we explain how many of the executives responsible for our country's economic woes are now using the crisis as a springboard for even greater personal windfalls.</p> <p>Of the 20 financial firms that have received the most bailout dollars, 10 have reported details on the stock options handed out to executives early this year, when share prices were bumping the market bottom.</p> <p>Thanks to taxpayer assistance, most of these firms have enjoyed surges in their stock prices in recent months that have inflated the value of these options. The top five executives at these 10 firms have seen their personal portfolios jump by $90 million -- in stock-option gains alone, not counting any salary or bonus.</p> <p>American Express CEO Kenneth Chennault has been one of the big winners. In January, he pocketed options to buy nearly 1.2 million shares at a moment when the credit card giant's stock had nosedived to $16.71 per share.</p> <p>With the help of $3.4 billion in bailout support, the company has since started to rebound, and in recent weeks, American Express shares have been trading at around $32. That's still only half what they were worth at their peak in 2007, but Chennault, amazingly, stands to make nearly $18 million from his 2009 options alone.</p> <p>What about all those bailout executive-pay "restrictions" put in place since last September? These restrictions affect only those firms that have collected bailout dollars from the federal government. And the restrictions apply only to a small number of personnel at these firms, and even then they do precious little to return pay at the top of the corporate ladder to the much lower levels considered eminently adequate a generation ago.</p> <p>Beyond the large but limited universe of bailout recipients, the executive pay status quo remains securely in place. Last year, S&amp;P 500 CEOs averaged $10.1 million, that's 319 times the salary of the average U.S. worker. The gap three decades ago was between 30 and 40 times.</p> <p>Lobbying armies from corporate and financial trade associations are now energetically doing battle behind the scenes to keep even modest changes in pay rules off the legislative table. We need, truth be told, much more than modest changes.</p> <p>The debate in Washington over executive pay reform is currently revolving around questions of corporate governance, about how we can better "empower shareholders" to keep executives in check.</p> <p>These questions certainly do need to be explored. But unless we also address more fundamental questions -- about the overall size of executive pay, about the unconscionable gap between the rewards that executives and workers are receiving -- the executive pay bubble will continue to inflate.</p> <p>Public officials in Congress and the White House hold the pin that could deflate the executive pay bubble. They have so far failed to use it.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Institute for Policy Studies Global Economy Project. Sam Pizzigati, an Institute associate fellow, edits <a href="http://www.toomuchonline.org/">Too Much</a>, an online weekly on excess and inequality. </div></div></div> Tue, 01 Sep 2009 21:00:01 -0700 Sarah Anderson, Sam Pizzigati, AlterNet 657796 at http://www.alternet.org Economy Economy ceo pay executive excess Executive Pay and the Obscene Culture of Wall Street http://www.alternet.org/story/134772/executive_pay_and_the_obscene_culture_of_wall_street <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Some expert talking points on an economy in crisis.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p><b>What’s happening with the AIG bonus scandal?</b></p><p>Congressional action to recoup the $165 million in bonuses already handed out to AIG employees has been derailed.  On March 19, the House responded to public outrage by voting 328-93 to approve a bill that would impose a 90% tax on any bonuses given to employees at AIG and other firms that received more than $5 billion in bailout money.  However, when the White House expressed concerns about the bonus tax, the Senate punted the issue until after the April recess. Sensing the loss of momentum behind bonus taxes, the House voted on April 1 to approve a substantially weaker approach.  The new bill, which passed by a 247-171 margin, would place some limits on future bonuses, but would otherwise allow Treasury Secretary Timothy Geithner to determine whether employee compensation at the bailed out firms was "unreasonable" or "excessive." </p><p><b>Who is to blame for the bailout bonus scandal?</b></p><p>There is plenty of blame to go around.  Executives of AIG and other Wall Street firms have acted like modernday Marie Antoinettes, so disconnected in their own little bubbles that they can’t respond to the crisis with human decency.  But we can’t let Congress off the hook.  They had ample opportunity to prevent this from happening by putting strict, measurable limits on compensation in the original bailout plans.  Instead they backed down to pressure from Treasury officials, first in the Bush administration and then in the Obama administration.  Congress’s inaction on excessive compensation over the past two decades has led to an increase in the gap between CEO and average worker pay from 41-to-1 in 1980 to 344-to-1 in 2007.</p><p><b>Should Congress tax back the bailout bonuses? </b></p><p>The House proposal to tax bonuses at 90 percent was a better late than never option in response to their failure to protect taxpayers from such bailout profiteering.  Congress should also begin a debate about how to restore greater progressivity to the federal tax system, with steeper rates on higher incomes across the board and rolling back some of the Bush and Reagan era tax cuts at the top. At some point, there needs to be a clear plan on how to pay for the substantial investments our nation is making to address the recession and improve health care, education and energy systems.  We had high income taxes between the late 1930s and the early 1960s that accompanied a period of middle class prosperity and stability. Progressive taxes are one of the ways we can discourage speculation.</p><p><b>Is the public acting like crazed pitchfork populists? </b></p><p>The public is waking up to the unaccountable and reckless practices and culture of Wall Street.  And they are furious at the ways in which politicians from both major parties have accepted this Wall Street mindset (along with millions in campaign contributions).  The American people don’t resent fair compensation for hard work or innovative achievements.  But for decades, we’ve watched a powerful elite rig the rules of the game in their own favor.   We should channel this anger into long-lasting reforms to ensure such abuses never happen again – and that the economy works for everyone, not just the superrich.</p><p><b>Isn’t the problem of executive compensation just symbolic? </b></p><p>Runaway excessive pay is both a contributing cause of the economic crisis and a symptom of what is deeply off kilter with Wall Street culture.  Our executive pay system contributes to what President Obama has called the “quarter by quarter mentality” that has infected corporate American for several decades.  When top managers are rewarded for short-term gains –- and not long-term stewardship –- they are more likely to pursue fast gains through stock price manipulation, outsourcing, speculative investments, and other actions that have jeopardized the stability of our economy.</p><p><b>What are immediate reforms Congress should implement?</b></p><p>There are several immediate actions Congress could take today to remove the perverse incentives in the executive compensation system.</p><p>First, Congress should eliminate incentives in the tax code that encourage excessive pay.  They should pass the Income Equity Act, which would cap the amount of pay a company can deduct off their income taxes at either 25 times the pay of the lowest paid worker at a firm or $500,000.</p><p>Second, Congress could allow shareholders at publicly traded companies to vote on executive compensation.  While “Say on Pay” won’t solve this systemic problem, giving shareholders this authority might stop some of the most obscene pay packages.</p><p>Thirdly, Congress should pass corporate governance reforms that require democratic elections at corporations, truly independent compensation committees, and prohibitions on compensation consultants that have other business with the firm.</p><p><b>How can we address this problem over the long term?</b></p><p>Ultimately we need to radically change the culture of Wall Street and transform the economy.  Too much of the activity on Wall Street has been about speculation and gambling, not productive economic investment. With all the focus on Wall Street greed we forget a fundamental truth:  Wall Street is NOT the economy; people are the economy – local and regional businesses are the economy.</p><p><b>Should we be bailing out big banks like Citigroup and insurance companies like AIG?</b></p><p>Not the way we are.  The problem with these “too big to fail” companies is when they make money it goes to private shareholders –- but when they mess up –- we taxpayers are on the hook. Right now, the timid approach of Bush/Obama Treasury officials has given us the worst of two worlds.  Taxpayers cover all or most of the losses but have insufficient management power.  U.S. taxpayers now own 80 percent of A.I.G., yet we don’t have the power to dictate compensation?  The answer is for our government to aggressively step in as receivers and break up these companies into smaller units. Big banks should be broken up and assets allocated to regional and local banks. Or we should create quasi-public authorities to manage these entities for public purposes.</p><p><b>What is the alternative to Wall Street?</b></p><p>It is very important to make a distinction between the casino economy of Wall Street and the real economy of Main Street. The real economy includes the millions of small- and medium-sized regional businesses that produce and provide useful life-sustaining goods and services.  These businesses are rooted in communities and concerned with livelihoods.  Local banks and credit institutions -–a key part of the real economy -- are for the most part healthy because they are subject to state-level regulation and were not engaged in the Wall Street casino binge.</p><p>The casino economy has been focused on betting on the movement of money and expropriating value out of the real economy.  Wall Street has been focused on phantom wealth creation.   The Main Street real economy is about creating real wealth, livelihoods, and useful products and services.</p><p><b>What is the role of government in fixing the economy?</b></p><p>Government must create a firewall between the parasitical casino economy and the healthy real economy.  It must do this by confining such activities to regulated casinos and providing aggressive oversight to the rest of financial marketplace. Examples:</p><ul><li>Strict reserve requirements for all financial institutions and instruments</li> <li>A financial transaction tax on purchase and sale of financial instruments</li></ul><p><b>Won’t the recession be over within a year and everything be back to normal? </b></p><p>The economy has suffered a system failure and needs to be transformed into a new and hopefully sustainable economic system.  The forces of Wall Street, however, and the politicians, media and think tanks that serve them (and who got us into this mess) want to quickly bring back the old system.  They want to restore the bubble economy and start funneling wealth to the top one percent again.  They hope to goose the system with taxpayer dollars and extract more phantom wealth for themselves and a small elite.  The challenge is to make sure a replay of the events that led to the current crash never reoccur by reengineering the economy to ensure broader prosperity and ecological sustainability. </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson and Chuck Collins of the Institute for Policy Studies (IPS) are also members of the <a target="_blank" href="http://www.neweconomyworkinggroup.org/">New Economy Working Group</a>, an initiative to stimulate bold thinking about a New Economy that serves the long-term needs of all our children, families, communities, and natural systems. IPS is also helping to form <a target="_blank" href="http://www.commonsecurityclub.org/">Common Security Clubs</a> to help people come together to study the changing economy and help one another take action.  For more information on actions you can take, see IPS’s web site on <a target="_blank" href="http://www.neweconomyworkinggroup.org/">extreme inequality</a>. </div></div></div> Thu, 02 Apr 2009 10:00:01 -0700 Sarah Anderson, Chuck Collins, AlterNet 654696 at http://www.alternet.org Economy Economy wall street economic crisis executive compensation Bailouts Dwarf Spending on Climate and Poverty Crises http://www.alternet.org/story/108499/bailouts_dwarf_spending_on_climate_and_poverty_crises <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Neglecting aid to the developing world, and fixating on the financial mess, will negatively affect Western nations.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>The financial crisis is only one of multiple crises that will affect every country, rich and poor alike.</p><p>There's also the global poverty crisis. Tens of millions of people across the developing world are expected to fall into extreme poverty and joblessness as a result of an economic mess originating in the United States. This is bad news for workers everywhere, as it means even more brutal competition in the globalized labor pool.</p><p>And then there's the climate crisis. If we don't do something about that one, we could find out what a real meltdown feels like.</p><p>Yet the richest nations in the world appear fixated almost entirely on the financial crisis, and specifically, on propping up their own financial firms.</p><p>A new <a target="_blank" href="http://www.ips-dc.org/reports/#912">report</a> by our organization, the Institute for Policy Studies, finds that the approximately $4.1 trillion that the United States and European governments have committed to rescue financial firms is 40 times the money they're spending to fight climate and poverty crises in the developing world.</p><p>And as officials head to two upcoming global summits, there's strong reason for concern that rich-country governments may backtrack even further on their aid and climate finance commitments. On Nov. 29, the Middle East nation of Qatar will host a Financing for Development conference, where governments will review aid obligations made six years ago. On Dec. 1, international negotiators will convene in Poland to hammer out commitments to fighting climate change, including climate-related financial assistance for developing countries.</p><p>The financial crisis has overshadowed both of these major summits. When bank failures escalated in September, the U.S. and European governments moved with lightning speed to mobilize those $4.1 trillion in resources to aid struggling financial institutions.</p><p>For the United States, the total so far comes to about $1.3 trillion, including the $700 billion bailout bill, as well as rescues for individual firms, deposit insurance for failed banks and purchases of banks' short-term debts. In Europe, countries have pledged about $2.8 trillion for bank-loan guarantees and cash injections.</p><p><b>More than Development Aid</b></p><p>The combined $4.1 trillion is more than 45 times the sums the U.S. and Western European governments spent on development aid last year.</p><p>Some individual companies have enjoyed bailouts that dwarf the size of country aid packages. For example, the U.S. government's $152.5 billion rescue plan for AIG greatly exceeds the $90.7 billion U.S. and European governments spent on aid to all developing countries in 2007. And remember when AIG executives headed off to a luxury resort a few days after getting their taxpayer bailout? The tab for that <a target="_blank" href="http://www.financialpost.com/most_popular/story.html?id=866284">junket</a> -- $440,000 -- came to roughly the equivalent of U.S. food aid last year to Lebanon, a country struggling to recover from conflict.</p><p>The biggest company-specific bailout -- the $200 billion for Fannie Mae and Freddie Mac -- comes to nearly 1,000 times U.S. economic aid to Haiti, the Western Hemisphere's poorest country. The $29 billion for investment bank Bear Stearns was far more than the U.S. government's total aid bill of $23.2 billion.</p><p>Shortchanging countries in such extreme need will only boomerang back to the United States in the form of greater global insecurity and reduced export markets.</p><p>Likewise when it comes to climate finance, the U.S. and European governments appear to be a penny-wise but a pound-foolish. Europe's new and additional funding commitments for a variety of climate-related efforts in developing countries over the next several years add up to only $13.1 billion, and very little of this has been disbursed.</p><p>The Swiss government has committed $60 billion to rescue the ailing bank UBS, which invested heavily in U.S. subprime mortgage debt. That's more than five times Europe's total commitments to climate finance for developing countries.</p><p>The U.S. Congress has not approved a single dollar of contributions to the developing world's climate-change efforts. This is in part because the Bush administration insisted that such financing be channeled through the <a target="_blank" href="http://www.ips-dc.org/reports/#292">World Bank</a>, an institution with a poor environmental track record.</p><p>All three crises -- financial, poverty and climate -- underscore the interconnectedness of every nation on the globe. Thus, such extremely lopsided spending priorities, if continued, will only come back to haunt the United States and the rest of the global North in the long run. The richer countries not only have an obligation to clean up the messes they've made abroad -- it's also in our own interest.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><p><i> </i></p><p>Sarah Anderson is Global Economy Project Director of the Institute for Policy Studies and John Cavanagh is IPS Director. They are co-authors of the report "<a href="http://www.ips-dc.org/reports/#912" target="_blank">Skewed Priorities: How the Bailouts Dwarf Other Global Crisis Spending</a>" and <a href="http://www.fpif.org/" target="_blank">Foreign Policy in Focus</a> contributors.</p> <p> </p> </div></div></div> Tue, 25 Nov 2008 06:00:01 -0800 Sarah Anderson, John Cavanagh, Foreign Policy in Focus 651696 at http://www.alternet.org Economy Environment Economy climate change poverty financial crisis The Massive Wealth Redistribution that Doesn't Bother John McCain http://www.alternet.org/story/105653/the_massive_wealth_redistribution_that_doesn%27t_bother_john_mccain <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Upward wealth redistribution has taken billions of dollars out of the pockets of average Americans.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Thank you, John McCain, for shoving the issue of "redistributing wealth" back into political primetime. Just two problems. You're only a quarter-century or so late -- and you have everything backwards.<br /><br />Senator McCain, you're attacking Senator Obama for trying to "redistribute" our nation's wealth with his plan to raise taxes on America's rich. But America's wealth is already being redistributed. Over recent decades, in fact, we've seen here in the United States the most massive redistribution of wealth in world history -- and you haven't said a word to complain.<br /><br />This redistribution has been taking dollars out of the pockets of average Americans and stuffing them into the pockets of the power-suits and wheeler-dealers who sit in America's corporate executive suites and play money games on Wall Street.<br /><br />Just how massive has this redistribution -- up the income ladder -- actually been?<br /><br />In 2006, the most recent year with IRS figures available, 90 percent of American families took home less than $104,000. Families in this bottom 90 percent made, on average, $30,659. That's 2 percent less than the bottom 90 percent of American families averaged, after adjusting for inflation, back in 1973.<br /><br />Meanwhile, since 1973, the wallets of Americans at the top of the income ladder have been swelling monumentally. The top 1 percent in our country, analyses of IRS data by University of California economist Emmanuel Saez indicate, have seen their incomes more than triple. The incomes of the top tenth of 1 percent -- taxpayers who averaged $6.3 million in income in 2006 -- have more than quintupled.<br /><br />Let's look at this whopping redistribution from another angle. Let's assume that none of this redistribution had ever taken place. Let's assume that we had the same exact distribution of income in the United States today as we had back in 1973.<br /><br />If that were the case, where would average Americans be? The simple answer: Much better off than they currently are.<br /><br />If the redistribution upwards since 1973 had not taken place, if the average American family in the bottom 90 percent were today getting the same share of the nation's income as the average bottom 90 percent family received in 1973, this average family would now be taking home in income over $10,000 more per year.<br /><br />John McCain, so far as we know, has never criticized this colossal redistribution of wealth we have as a nation been experiencing. That may be because this redistribution -- to the rich -- really started revving up when his hero, Ronald Reagan, became President in 1981.<br /><br />The rich were paying taxes on their income over $400,000 at a 70 percent rate when Reagan entered the White House. Right now, on that income, they pay taxes at no more than 35 percent.<br /><br />And that's before loopholes. After exploiting loopholes, our richest pay taxes at about half that rate. In 2005, for instance, the top 400 income-earners in the United States took home an average $214 million. They paid only 18.5 percent of that in federal income tax.<br /><br />Barack Obama wants to hike the top tax rate on income in the highest tax bracket up to 39.6 percent. For proposing this modest increase, he's now getting blasted by the McCain campaign as someone will be "taking your money and giving it to someone else." Obama, McCain charges, wants to "penalize success."<br /><br />Penalize success? Don't America's workers contribute to the success of the American economy? Just since 2000 alone, the productivity of workers in the United States has increased a hefty 18 percent, notes the Economic Policy Institute. Yet incomes for working Americans aren't now even keeping up with inflation.<br /><br />That's the real penalty for success in the U.S. economy today. But if you're sitting way at the top of America's economic ladder looking down, this penalty can be awfully hard to see. John McCain, sad to say, just doesn't see it.<br /><br /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Global Economy Program for the Institute for Policy Studies in Washington, D.C. Sam Pizzigati, an Institute associate fellow, edits <a href="http://toomuchonline.org/">Too Much</a>, on online weekly on excess and inequality. </div></div></div> Fri, 31 Oct 2008 21:00:01 -0700 Sarah Anderson, Sam Pizzigati, AlterNet 651040 at http://www.alternet.org Economy Election 2008 Economy obama mccain middle-class squeeze wealth redistribution Truth, Lies, the Bailout and CEO Pay http://www.alternet.org/story/101820/truth%2C_lies%2C_the_bailout_and_ceo_pay <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The bailout does precious little to limit the extravagant pay that gives top executives the incentive to behave outrageously.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Democratic lawmakers went into their bailout negotiations with Treasury Secretary Henry Paulson with some promising approaches for restraining executive pay.<br /><br />We don't yet know what happened inside those negotiations, aside from a bit of reported shouting. But we do know what came out: a bailout that does precious little to limit the outrageously extravagant pay rewards that give top executives the incentive to behave outrageously.<br /><br />Members of Congress who back the bailout, you may have noticed, have been singing a different tune. Rep. Barney Frank, a lead negotiator on the bailout bill, has even hailed the legislation's executive pay provisions as the first "restrictions on excessive CEO compensation" in U.S. history.<br /><br />The bailout bill's one-page summary delivers the same celebratory message. The <a href="http://banking.senate.gov/public/_files/latestversionEESASummary.pdf">title</a> for the summary's section on CEO pay: "No Windfalls for Executives."<br /><br />The bailout now blessed by both the Senate and the House does, to be sure, include some long-overdue reforms on executive pay. The legislation has a ban on "golden parachutes," for instance, and language that lets the feds "claw back" executive earnings based on phony accounting.<br /><br />And the legislation also includes a provision that places a $500,000 cap on the individual executive pay that bailed-out companies can deduct from their taxes. Any executive pay over that cap -- including pay in the form of stock options and other so-called "performance-based incentives" -- will now be taxed.<br /><br />This represents a solid advance over current law. Our current $1 million deductibility cap on executive pay only applies to straight salary. Companies can deduct everything else, no matter how many millions that everything else ends up totaling.<br /><br />All these executive pay restrictions in the bailout bill, listed like this, certainly do sound impressive. So what's the problem? Just this: Nearly every executive pay restriction in the bailout bill comes with a built-in loophole.<br /><br />Take, for instance, that $500,000 cap on how much executive pay bailed-out companies can deduct off their taxes. This cap only applies when the Treasury Department buys up over $300 million of a company's "troubled assets" through an auction process. If Treasury Secretary Paulson's people buy up a company's troubled assets directly, the $500,000 deductibility cap doesn't apply. Nor does the "clawback" provision.<br /><br />Even the bailout bill's celebrated ban on golden parachutes comes with a loophole. The golden parachute ban, in auction bailout situations, only applies to executives hired after the auction takes place. Those executives who led their companies into the bailout zone will be able to ride off, into the sunset, with saddlebags stuffed with windfalls.<br /><br />But that's not the worst of it. In situations that don't involve auctions, the bailout legislation directs the Treasury secretary to "require that the financial institution meet appropriate standards for executive compensation." Who will define "appropriate"? The legislation leaves that up to Secretary Paulson.<br /><br />That may not be a great idea. Secretary Paulson, as CEO of investment banking giant Goldman Sachs, amassed a personal stock stash worth over three-quarters of a billion dollars. His conception of what constitutes "appropriate" pay for bailed-out executives just might not gibe with the definition American taxpayers have in mind.<br /><br />Still, in the end, should any of this really bother us? Does executive pay really matter all that much? Sure, we all want to punish the executives who created this mess. But isn't cleaning up the mess -- and getting credit flowing once again -- more important?<br /><br />Cleaning up the mess must surely be a top priority. But avoiding more mess also needs to rate right up there on our priority list, and that's why we need serious restraints on the pay of bailed-out executives - not to "punish" the denizens of executive suites, but to prevent the reckless executive behaviors that have brought us face-to-face with so much economic peril.<br /><br />The bottom line: The longer we as a society let executives chase after dazzling rewards, the more recklessness we encourage.<br /><br />With the bailout, we have a shot at stopping the chase. The bailout legislation, as now passed, does establish the principle that we need "limits on compensation" that discourage financial executives from taking "unnecessary and excessive risks that threaten the value of the financial institution during the period that the Secretary holds an equity or debt position in the financial institution."<br /><br />Lawmakers, as the next stage of the bailout process, now need to define specifically what these limits should be. We even have a "bipartisan" consensus of sorts on what a specific common-sense limit might be.<br /><br />Senator John McCain, in an aside that gained relatively little public attention, last month called for capping the pay of bailed-out executives at the compensation of the highest-paid federal official. That highest federal compensation would be $400,000, the salary of the President of the United States.<br /><br />Senator Diane Feinstein, a Democrat from California, has called for capping compensation for bailed-out execs at this same $400,000, and Senator Max Baucus, a Democrat from Montana, has proposed $400,000 as the cut-off for executive pay tax deductibility.<br /><br />Is there anything magic about $400,000? Turns out there is. At $400,000, the President of the United States makes close to 25 times what the lowest-paid federal worker makes. The 20th century's most brilliant business thinker, Peter Drucker, considered the 25-times ratio the most appropriate pay gap standard for private-sector enterprises. Wider gaps, Drucker believe, create defective enterprises.<br /><br />To succeed in the 21st century, we need effective enterprises. Let's start with the companies we bail out. No tax dollars to any reeling financial institution that pays its top exec over 25 times what that institution's lowest-paid workers take home.<br /><br />Lawmakers didn't get that right on their first go-around with the bailout. In January they'll have another chance. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Global Economy Program at the Institute for Policy Studies. Sam Pizzigati, an associate fellow at the Institute, edits Too Much, an online weekly on excess and inequality. </div></div></div> Mon, 06 Oct 2008 10:00:01 -0700 Sarah Anderson, Sam Pizzigati, AlterNet 650311 at http://www.alternet.org Economy Economy ceo pay bailout In Wake of Crash, McCain Talks Tough About CEO Pay -- Will Congress Call His Bluff? http://www.alternet.org/story/100024/in_wake_of_crash%2C_mccain_talks_tough_about_ceo_pay_--_will_congress_call_his_bluff <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The candidate is proposing a radical restriction on pay for CEOs of bailed-out firms.  But is he serious or is this just election season populism?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->John McCain, reborn on the campaign trail as an anti-corporate-greed populist, now wants to cap executive pay. No CEO at any business bailed out by our tax dollars, the GOP Presidential nominee is declaring, "should receive any more than the highest-paid person in the federal government."<br /><br />That high-paid federal employee just happens to be the President of the United States. The President's annual compensation: $400,000, or about 24 times the current take-home of the lowest-paid federal employee.<br /><br />How radical a step is McCain proposing here? An enormously radical step, at least by Corporate America's existing executive pay standards. Last year, says a new Institute for Policy Studies <a href="http://www.ips-dc.org/getfile.php?id=262">report</a>, top CEOs in the United States pocketed 344 times more pay than average American workers.<br /><br />On the other hand, by historical standards, McCain's cap amounts to nothing radical at all. Back in the early 1980s, at the beginnings of America's executive pay explosion, top CEOs took home just 30 to 40 times what their workers were making.<br /><br />And some people considered that 30 to 40 times way too large a divide. Among the critics: Peter Drucker, the founder of modern management science and the preeminent business thinker of the 20th century. Drucker, as a recent Business Week commentary reminds us, felt that any top-to-bottom pay gap wider than 25-to-1 undermines the teamwork that modern enterprises needs to operate effectively.<br /><br />Drucker, who died three years ago, never changed his mind about that, and, in the current debate over the bailout, a variety of activists from the progressive side of the political spectrum are keeping his spirit alive. They're calling on lawmakers to deny bailout dollars to any company where the top executive is making over 25 times what the company's lowest-paid worker is making.<br /><br />John McCain, with his call to link pay for bailed-out executives to the top federal paycheck, is essentially calling for the same thing. His proposal would apply to all the firms that want in on the $700 billion of bailout dollars. That's every big financial institution in the country. And getting a solid executive pay cap in this bailout would set an important precedent that progressives can then fight to have extended to government procurement in general.<br /><br />Does Senator McCain actually mean it? Is he really serious about reversing Corporate America's generation-long compensation tilt to the top? Or is the Arizona senator just blowing campaign smoke?<br /><br />Democrats in Congress can easily find out. They can plug into the Senate bailout bill a clause that spells out McCain's CEO pay cap proposal. Let's see if the senator votes for it. If he doesn't, his "populism" would stand revealed as a campaign fraud.<br /><br />More importantly, if McCain does vote for a serious bailout cap on executive paychecks -- and if enough Democrats join him -- we will have taken a giant step to common sense in corporate compensation. We will be putting the kibosh on the excessive executive pay rewards that have given our nation's CEOs the incentive to behave so recklessly.<br /><br />So what are Democrats in Congress waiting for? Stand up against greed. Put a real CEO pay cap in the bailout bill. Help make our economy work again. Call John McCain's bluff.<br /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies. Sam Pizzigati, an Institute associate fellow, edits Too Much, an online weekly on excess and inequality.  They are co-authors of the recently released report <a href="http://www.ips-dc.org/getfile.php?id=262">Executive Excess 2008:  How Average Taxpayers Subsidize Runaway Pay</a>. </div></div></div> Tue, 23 Sep 2008 11:00:01 -0700 Sarah Anderson, Sam Pizzigati, AlterNet 649974 at http://www.alternet.org Economy Economy bush mccain ceo pay paulson bailout Outrageous CEO Salaries Are a Nationwide Scandal -- Where Are the Politicians? http://www.alternet.org/story/96199/outrageous_ceo_salaries_are_a_nationwide_scandal_--_where_are_the_politicians <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Obama and McCain are both taking whacks at overpaid CEOs, but their solutions fall short.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->During the political party convention season that begins this week, you won't hear much disagreement on one issue: executive pay.<br /><br />Politicians from both parties finally appear to be seeing which way the wind is blowing on this one. Last year, a Financial Times/Harris poll revealed that 77 percent of Americans think chief executives "earn too much." And that sentiment has likely intensified in 2008, with one banker after another walking away from the mortgage mess with overflowing pockets.<br /><br />The presidential candidates have responded to public outrage over bloated CEO pay by promising to boost shareholder power over executive pay packages. Barack Obama is the sponsor of a Senate bill that would grant shareholders a nonbinding advisory vote each year. John McCain has suggested he'd like shareholders to have veto power.<br /><br />This reform, widely known as "say on pay," could shame some boards away from offering truly obscene pay packages. But when shame goes up against corporate greed, we all know which one usually prevails.<br /><br />The candidates should be giving more attention to proposals that focus on eliminating the various tax loopholes that currently subsidize excessive executive pay.<br /><br />Obama is supporting a fix for just one of these, the "carried interest" loophole. This is the one that lets buyout kings like KKR's Henry Kravis (personal net worth: $5.5 billion) pay a lower tax rate than their secretaries. Private equity managers get away with this by claiming the profit share portion of their compensation as capital gains, a neat maneuver that cuts their tax bill from 35 percent to 15 percent.<br /><br />When financial royalty like Kravis don't pay their fair share, the rest of us common taxpayers get stuck with the bill. The annual cost of that particular loophole: $2.7 billion, according to Congress's Joint Committee on Taxation.<br /><br />And that's just one of numerous tax loopholes that shift the financial burden for our country's infrastructure, education and other needs from the ultrarich to the middle class.<br /><br />According to a new report by my organization, the Institute for Policy Studies, and United for a Fair Economy, average U.S. taxpayers subsidize executive compensation to the tune of more than $20 billion per year.<br /><br />Other beneficiaries include guys like Kenneth Griffin, the head of Citadel Investment Group, who made $1.5 billion in 2007. Like most hedge funds, Citadel has a subsidiary in a tax haven, in this case, Bermuda. Such offshore investment vehicles make ideal locations for fund managers to stash boatloads of money in tax-deferred accounts.<br /><br />While ordinary Americans have strict limits on how much they can set aside in 401(k) plans, hedge fund executives can funnel unlimited amounts into these offshore pots, where their dollars grow and grow, untaxed, until they start withdrawing from them.<br /><br />Congressional research shows that this widespread tax avoidance scheme costs taxpayers more than $2 billion annually.<br /><br />Griffin hasn't revealed how much he personally might have shielded from the IRS through his offshore subsidiary, but the multibillionaire admits that his work ethic would whither without low taxes. "I am proud to be an American," he told the <i>New York Times</i> last year. "But if the tax became too high, as a matter of principle, I would not be working this hard."<br /><br />To defend their preferential tax treatment, Griffin, Kravis and other magnates have dispatched armies of lobbyists to Capitol Hill. Griffin is also hedging his political bets, hosting fundraisers for both presidential candidates and acting as a "bundler" to collect more than $50,000 for each.<br /><br />So far, their "Save our Subsidies" campaign is working. The five key bills to plug executive-friendly tax loopholes are all languishing. In part, this may be due to the fact that members of Congress know they would face an almost certain presidential veto. In 2009, with a new face in the White House, prospects for this legislation could change.<br /><br />The bipartisan attacks on runaway pay are encouraging. But if the candidates are serious about change, they should vow to plug every single loophole that allows our tax dollars to flow into the pockets of top business leaders. Surely, in these troubled economic times, we can find better ways to spend our nation's wealth. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson is a co-author of "<a href="http://www.ips-dc.org/reports/#623">Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay</a>," published by the Institute for Policy Studies and United for a Fair Economy. </div></div></div> Sun, 24 Aug 2008 21:00:01 -0700 Sarah Anderson, AlterNet 649242 at http://www.alternet.org Economy Election 2008 Economy obama mccain ceo pay At the Height of an Energy Crisis, Fat-Cat CEOs Still Litter the Skies with Private Jets http://www.alternet.org/story/89691/at_the_height_of_an_energy_crisis%2C_fat-cat_ceos_still_litter_the_skies_with_private_jets <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The private-jet perk is -- literally and figuratively -- a high-profile sign of an executive reward system out of control.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->If shareholders, corporate watchdogs and consumer groups would like to know just how weak the oversight of corporate management is in America, they need to check out the abuse of corporate jets.<br /><br />The private jet industry has more than doubled its sales in the past five years, and corporate executives form the backbone of its clientele. In addition to legitimate business trips, many executives and their families have access to the company jet for personal use, an expense picked up by their companies' other stakeholders, including shareholders and employees. And the rest of us pay a price in diminished air quality as a result of these heavily polluting jets.<br /><br />Private jet owners probably have noticed that wholesale fuel prices have increased 418 percent over the past five years, adding $5,000 to a Gulfstream jet flight between New York and Los Angeles. But this is small potatoes for a high-flier who shelled out 10,000 times that amount or more to buy the plane in the first place. At a time when both major-party presidential candidates are vowing to give shareholders greater influence over executive compensation, the private-jet perk deserves special attention.<br /><br />Stakeholders now can get a better look at jet usage among corporate titans, because new rules require the disclosure of all perks valued at more than $10,000. Personal use of corporate jets was the most common perk among 386 of the largest companies on Standard &amp; Poor's 500. A Corporate Library study found that more than half of the 215 companies surveyed allowed or required executives to use company aircraft on personal trips, with a median cost to shareholders of $182,929.<br /><br />The companies with the highest fliers include Abercrombie &amp; Fitch, which gave CEO Mike Jeffries $1.4 million worth of corporate jet time over the past two years, and Starwood Hotels, which spent $866,178 in 2006 flying CEO Steven Heyer back and forth between his Atlanta home and corporate headquarters in New York.<br /><br />Sometimes it's the CEOs' relatives who benefit. Tyson Foods Chairman John Tyson is allotted 120 hours per year of corporate jet time, which he can parcel out to friends and family whether or not he accompanies them on the trip. In 2007, Qwest Communications ponied up several hundred thousand dollars so that new CEO Edward Mueller's wife and stepdaughter could use the corporate jet to commute between Qwest's Denver headquarters and a home in California.<br /><br />It's the norm these days for the largest firms to require CEOs to use private jets for all travel, including personal vacations, citing concerns for their executives' security. New York University School of Business professor David Yermack says this arrangement "is like telling the CEO: 'We insist that you eat at a five-star restaurant for your own nutrition, and we insist that you drink $800 champagne for your health.'"<br /><br />When corporate boards are approving such outrageous perks, you have to wonder what else they might be signing off on. Indeed, in virtually every recent case of corporate corruption, private jets have played a role. Countrywide Financial's Angelo Mozilo, under investigation for his role in the subprime mortgage meltdown, threatened to resign in 2007 unless the company let his wife fly with him and cover his personal taxes for the perk.<br /><br />The private-jet perk is -- literally and figuratively -- a high-profile sign of an executive reward system out of control. It's time for corporate stakeholders, including institutional investors, to intervene to help CEOs break the habit. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies. Sarah Anderson is a fellow at the institute and director of the Global Economy Program. They are co-authors of the report <a href="http://www.ips-dc.org/reports/#461">"High Flyers: How Private Jet Travel Is Straining the System, Warming the Planet and Costing You Money."</a> </div></div></div> Fri, 27 Jun 2008 21:00:01 -0700 Sarah Anderson, Chuck Collins, The Baltimore Sun 647807 at http://www.alternet.org Economy Economy ceo pay private jets ips Busting Paranoid Right-Wing Fantasies of Dissolving the Mexico-U.S.-Canada Borders http://www.alternet.org/story/81361/busting_paranoid_right-wing_fantasies_of_dissolving_the_mexico-u.s.-canada_borders <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">It&#039;s time to call BS on the idea of a mythical North American Union.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->This month, President Bush will host the leaders of Canada and Mexico to advance the Security and Prosperity Partnership (SPP), a project Lou Dobbs has predicted will "end the United States as we know it."<br /><br />Lou sounds downright blasé, though, compared to all the online ranting and raving on this subject. And while there are plenty of reasons for progressives to be up in arms over this effort to expand the North American Free Trade Agreement, the xenophobes have clearly cornered the market.<br /><br />In their paranoid fantasies, the three North American executive powers are secretly plotting to surrender everything they hold dear about the good ol' USA. The U.S. borders, the flag, and even the almighty American dollar would disappear as the country is submerged into a North American Union with Mexico and Canada.<br /><br />Check out <a href="http://amerocurrency.com/buyameros.html">amerocurrency.com</a>, whose creators are convinced that while the SPP hasn't replaced the dollar with a North American currency just yet, the switch is right around the corner. To raise alarm bells, these folks have gone ahead and designed our future money themselves. The cost of purchasing uno "amero": $10.<br /><br />From the always imaginative <a href="http://aobs-store.com/store/page44-ss5.html">John Birch Society</a>, you can order a poster featuring our future North American Union flag, a collage of the three countries' current emblems with -- gasp! -- the socialist maple leaf dead center.<br /><br />After an intro image of North America bursting into flames, <a href="http://stopspp.com/">Stopspp.com</a> offers screeds by anti-immigrant Minutemen about how the SPP will fling open U.S. borders to terrorists, drunken Mexican truck drivers and tens of millions more illegal immigrants who will infect us all with tuberculosis.<br /><br />The video "<a href="http://www.youtube.com/watch?v=vuBo4E77ZXo">North American Union and Vchip Truth</a>" cranks things up another notch. Viewed more than 4.8 million times, it presents the SPP as a big step towards a single world government, with David Rockefeller preventing any resistance by implanting us all with Vchips. We can only hope this is satire, but the 10,000 comments by Youtubers suggest that many viewers aren't getting the joke.<br /><br />All this would be simply entertaining if it weren't for the fact that the SPP truly is a dangerous initiative -- but not for the reasons cited by the xenophobes.<br /><br />Launched in 2005, the SPP is an ongoing process of negotiation between the three countries' executive powers to change regulations and other policies to boost business and support the U.S. War on Terror. Twenty SPP working groups on everything from financial services to intelligence cooperation hammer out details in between the annual presidential summits.<br /><br />In Mexico and Canada, progressive activists are already highly mobilized on the SPP. And while the far right has dominated the U.S. discourse, this is beginning to change. A half dozen U.S. progressive groups organized a strategy meeting in Washington, D.C., in March with activists and legislators from all three countries. Together with local activists in New Orleans, the site of the fourth SPP Presidential Summit on April 21-22, they are planning a Peoples Summit and a trinational meeting of energy sector workers.<br /><br />Here are 10 reasons why progressives are paying attention to the SPP:<br /><br />1. No democratic oversight. Although elected officials in all three countries have demanded transparency, they continue to be excluded from the SPP Presidential summits, ministerial meetings and working groups. Legislators have formed a <a href="http://www.peterjulian.ca/page/599">trinational task force</a> to stop the SPP.<br /><br />2. Secrecy. The SPP excludes civil society organizations and the media from all meetings. During a peaceful demonstration outside the last summit in Canada, the government sent in undercover agents posing as rock-wielding protestors. After being confronted with <a href="http://www.youtube.com/watch?v=St1-WTc1kow">video footage</a>, authorities <a href="http://www.cbc.ca/canada/story/2007/08/23/police-montebello.html?ref=rss">fessed up</a> to the scheme.<br /><br />3. Only big business has a voice. Wal-Mart, Lockheed Martin, and 28 other corporations and business associations are part of an official SPP advisory body called the <a href="http://www.uschamber.com/issues/index/international/nacc.htm">North American Competitive Council</a>. The council made 51 proposals to SPP negotiators in February 2007 on issues as varied as taxation and patent rights. Six months later, they <a href="http://www.uschamber.com/publications/reports/07_nacc_report.htm">boasted</a> that "all three of our governments have committed themselves to taking action on many of our recommendations."<br /><br />4. Expansion of failed NAFTA policies. Even though the lifting of trade and investment barriers under the trade pact has failed to create good jobs, the SPP is further chipping away at remaining economic regulations. For example, at the last SPP summit, the three leaders announced (<a href="http://www.epa.gov/hpv/pubs/general/statement-declaration-en.pdf">PDF</a>) a weakening of NAFTA's "rules of origin" to allow products with a lower level of national content to receive preferential tariff treatment. This will undermine domestic industries by making trade in products from third countries like China even more profitable.<br /><br />5. Privatization. SPP agreements announced thus far show a clear bias in favor of an expanded role for corporations. Two examples: 1) a North American Plan for Avian and Pandemic Influenza intended as a model for private sector and military involvement in emergency management and preparedness and 2) a Trilateral Agreement for Cooperation in Energy, Science and Technology that reflects the NACC's recommendations (<a href="http://canadianlabour.ca/updir/NACC_&amp;_SPP_MontebelloSummit-RP44.pdf">PDF</a>) to promote energy privatization in Mexico, where there has been strong resistance to opening up to U.S. oil companies.<br /><br />6. Energy grab. Progressive activists in Canada and Mexico are particularly concerned about the likelihood that the U.S. government will use the SPP negotiations to push for greater control over its neighbors' resources, under the guise of a "North American integrated energy market." Common Frontiers, the Council of Canadians, and other groups point to an <a href="http://www.commonfrontiers.ca/Campaigns/SPP_docs/SPP_petroleum_v2.pdf">SPP workshop</a> that envisioned a fivefold increase in environmentally destructive oil production from tar sands, with most of the increase to be exported to the United States.<br /><br />7. Pipeline proliferation. The Sierra Club and others have raised alarm bells about the SPP's Transportation Working Group, whose mandate includes facilitating "multimodal corridors" that could include massive water and oil pipelines, with serious costs to the environment and communities. The <a href="http://afd-headlines.blogspot.com/2008/03/spp-supercorridors-linking-mexico-us.html">Alliance for Democracy</a> is calling for public hearings on the issue.<br /><br />8. More border baloney. The SPP is focusing on facilitating transit of "legitimate people" and expanding border surveillance infrastructure, rather than addressing the root causes of migration or the rights of undocumented workers. There are also worrisome implications for civil liberties, as Mexico and Canada have agreed to share vast amounts of information with the U.S. government, including the fingerprints of refugees and asylum seekers.<br /><br />9. Militarization. Mexico and Canada are enlisting in the U.S. War on Terror by creating a North American security perimeter and joining forces against not only external but also "<a href="http://www.spp.gov/report_to_leaders/index.asp?dName=report_to_leaders">internal threats</a>." Some fear a U.S. multibillion-dollar military aid package for Mexico, supposedly to combat drug cartels, may also end up being used to suppress political dissidence and immigration flows.<br /><br />10. Polarization. The zany anti-SPP xenophobes may be amusing at times, but their hysteria shows how government secrecy and exclusion can fan the flames of a racist movement and push us further away from any rational response to migration.<br /><br />Having the leaders of our three deeply interconnected nations getting together to talk is a positive thing. The problem is with what's on the agenda -- and what's not. Rather than a misguided NAFTA expansion, they should be addressing people's real needs and planning a sustainable future. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Manuel Pérez Rocha is an associate fellow of the Institute for Policy Studies, where he is leading an initiative on the Security and Prosperity Partnership. Sarah Anderson directs IPS's Global Economy Project. </div></div></div> Tue, 08 Apr 2008 21:00:01 -0700 Sarah Anderson, Manuel Pérez Rocha, AlterNet 645901 at http://www.alternet.org Economy ForeignPolicy Economy nafta nau conspiracism spp