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“Throwing Their Own Under The Bus”: CEO’s With Massive Retirement Fortunes Push Social Security Cuts

With budget negotiations on the horizon, a buzz is building around Social Security, from Elizabeth Warren and other Democrats calling for an expansion of benefits to The Washington Post arguing that seniors must be sacrificed for the good of the “poor young.”

Two of the biggest players in the debate are largely behind the scenes: Business Roundtable and Fix the Debt, corporate lobbies that use deficit fear-mongering to sell benefit cuts. These groups are made up of CEOs of America’s largest corporations—people with retirement accounts that are more than 1,000 times as large as those of the average Social Security beneficiary.

Each of the 200 executives of Business Roundtable has retirement savings averaging $14.5 million, according to a new report from the Institute for Policy Studies and the Center for Effective Government. That’s compared to the $12,000 that the median US worker near retirement age has managed to put away. Once Business Roundtable CEOs start drawing Social Security themselves, they’ll be cashing a monthly check that is sixty-eight times larger than an ordinary retiree’s, ensuring that they’ll never bear the burden of the cuts they’re advocating.

“I find it hypocritical to see CEOs sitting on massive retirement fortunes of their own saying that the solution to the country’s fiscal challenge is to put an even greater burden on retirees, many of whom already struggling,” said Sarah Anderson, director of the Global Economy Project at IPS and one of the report’s authors.

One of those CEOs is David Cote, the vice-chair of Business Roundtable and a member of the steering committee for Fix the Debt. After eleven years at Honeywell where he’s now the chief executive, his retirement assets are worth $134.5 million. That means that as a retiree he’ll draw a monthly pension of nearly $800,000.

Cote is a deficit hawk, and claims to be worried about the long-term stability of Social Security. A member of the Bowles-Simpson commission and President Obama’s debt committee, Cote has called for $3 to $4 trillion in spending cuts over the next decade, “especially when it comes to entitlements.”

To make some of those reductions via cuts to Social Security, Business Roundtable has proposed raising the retirement age to 70, restricting benefit growth and changing the way inflation is calculated in a way that amounts to a benefit cut for seniors. (Read George Zornick on why this change, called Chained CPI, is a bad deal.) At the same time, Business Roundtable and Fix the Debt are calling for more corporate tax breaks.

“If Congress approves of proposals like ones that Business Roundtable are pushing, we could see severe cuts that could mean the difference between any kind of dignified retirement and absolute poverty,” Anderson said. Two-thirds of retired Americans rely on Social Security for the majority of their income, and more than 40 percent would be in poverty without those benefits.

These CEOs aren’t just trying to short the average American retiree; they’re throwing their own under the bus. While raising alarm about the federal debt, Business Roundtable CEOs have run up massive deficits in their employees’ pension funds. According to the report, ten companies led by members of Business Roundtable have shortfalls in their employee pension funds of between $4.9 and $22.6 billion. The largest of those belongs to General Electric, run by Business Roundtable and Fix the Debt member Jeffrey Immelt, the prospective beneficiary of a $59.3 million retirement fund.

GE stopped offering traditional pension plans for new employees in 2011, forcing workers to switch to 401(k) plans. Many other companies have shifted the burden of retirement savings to their employees in this way in recent years, and that’s been a significant driver of the retirement crisis. Just 18 percent of workers can expect traditional pensions today, compared with 38 percent in 1985. Instead of getting a fixed check, retirees are at the mercy of the market—making the assurance of Social Security benefits even more essential. But Business Roundtable continues to put the responsibility for the retirement crisis on retirees themselves. “[T]rue retirement security will be achieved only if Americans save more,” reads the group’s 2013 CEO Growth Agenda.

Saving more is an increasingly unworkable solution for the millions of workers whose wages and benefits are being undercut by some of the same CEOs directing them to do so. As the report lays out, many of the most effective ways to strengthen Social Security involve asking more of executives, not employees. Eliminating the cap on wages subject to Social Security taxes (currently set at $113,700) would eliminate 95 percent of the projected shortfall for seventy-five years, according to the Congressional Research Service. That’s three times the deficit reduction achieved by raising the retirement age to 70. Subjecting stock-based compensation to Social Security taxes would raise billions more.

Don’t expect to hear about those proposals from Business Roundtable, however. “I do think that it is a real weakness of these corporate lobby groups, that they’re making the public face of the agenda to cut Social Security these CEOs that are sitting on massive nest eggs of their own,” said Anderson. “It undercuts their credibility and influence in these debates, and I’m hoping it will make it difficult to achieve the cuts they’re proposing.”

 

By: Zoe Carpenter, The Nation, November 19, 2013

December 1, 2013 Posted by | Corporations, Social Security | , , , , , , , | 1 Comment

“Hostages Are A Pre-requisite”: Coming To Terms With The Normalization Of Republican Extortion Politics

President Obama spoke yesterday to the Business Roundtable, and used some language to describe Republican tactics that raised a few eyebrows — not because he was incorrect, but because his word choice was provocative.

In his remarks, Mr. Obama accused what he called “a faction” of Republicans in the House of trying to “extort” him by refusing to raise the nation’s debt ceiling unless the president’s health care plan is repealed.

“You have never in the history of the United States seen the threat of not raising the debt ceiling to extort a president or a governing party,” Mr. Obama said. “It’s irresponsible.”

Mr. Obama called upon the business leaders to try to convince lawmakers to avoid the kind of “brinksmanship” that would lead to promises of “apocalypse” every few months. “What I will not do is to create a habit, a pattern whereby the full faith and credit of the united states ends up being a bargaining chip to make policy,” he said. “I’m tired of it,” he added. “And I suspect you are too.”

For the president to publicly reference Republican “extortion” tactics struck some as excessive. That’s a shame; Obama’s right.

Let’s step back for a moment. A traditional, transactional method of governing was in place in Washington for generations, and it worked fairly well. In some cases, policymakers would rely on intra-policy cooperation (“I’ll go along with some of the provisions you want if you go along with some of the provisions I want”), and in other cases it’s been inter-policy cooperation (“I can help move that bill you like if you help me move this other bill that I like”).

The transactional model was never easy, of course, and parties that were supposed to disagree usually did, but governing happened. Bills passed. Policymaking and compromises existed. The nation did not simply bounce from one self-imposed, manufactured crisis to the next.

In the wake of the radicalization of Republican politics, the system broke down, largely because GOP officials came to believe they can no longer accept concessions on anything, and anyone who dares compromise with those they disagree with deserves to lose in a Republican primary.

What matters, of course, is what’s replaced transactional politics.

I tend to describe it as extortion politics, which we may be getting used to, but which has no modern precedent in the American system of government.

Consider an example from earlier this year. House Republicans approved a budget plan and challenged Senate Democrats to do the same, assuming they’d fail. The GOP miscalculated and Senate Dems approved their own budget plan in the spring.

From there, lawmakers were supposed to enter bipartisan, bicameral negotiations, which is what always happens when the House and Senate approve competing budget blueprints. But a funny thing happened — Republicans refused to enter the budget talks they said they wanted.

It hasn’t generated much attention, but it’s important to understand why. GOP lawmakers couldn’t go to the negotiating table because that would mean … negotiating. Republicans weren’t prepared to compromise on anything, so why bother with budget talks? What GOP officials wanted instead was to wait until the fall when they might at least try to claim leverage in an extortion plot.

In other words, hostages have become a prerequisite to Republican governance.

We’ve actually reached the point at which the GOP seems genuinely and literally confused about the meaning of the word “compromise.” Consider this item from a week ago:

One group of conservatives on Thursday pressed what they called a compromise: a one-year stopgap spending bill that would raise the debt ceiling for a year, delay all aspects of the health care law for a year, and give back some of the Pentagon cuts as a sweetener. Backers insisted on Thursday that it was a package Mr. Obama should be able to accept.

Got that? In this approach, Republicans would get the health care delay they want and the spending levels they want. What would Democrats get? Nothing except the relief that comes with knowing that the hostage the GOP was threatening would live to see another day.

This, in the delusional minds of congressional Republicans, is not only a “compromise,” it’s the kind of deal the White House might actually go for.

This has become the norm in every major legislative fight since January 2011. Faced with a challenge, Republicans won’t compromise or consider possible concessions; they’ll instead reach for the nearest hostage and start making threats. The nation shifts from one crisis to the next, not because we have to, but because Republicans have made it their m.o. In the last Congress, Republicans created a debt-ceiling crisis and three separate shutdown threats. In this Congress, we’re only nine months in and we’re already facing a shutdown crisis this month and a new debt-ceiling crisis next month.

In each instance, the GOP approach is the same: so long as our demands are met, and we don’t have to compromise, we won’t have to hurt anyone on purpose.

So before the Beltway gets too bent out of shape over Obama using the word “extort” in a speech, I have a question: can anyone think of a more apt description of what’s tragically become the new status quo in Washington?

 

By: Steve Benen, The Maddow Blog, September 19, 2013

September 21, 2013 Posted by | GOP | , , , , , , , | Leave a comment

“An Issue Of Fairness”: Suddenly America’s Top Corporate Leaders Are Shunning Tea Party Extremism

Leaders of the American business community, who have long indulged the Republican far right as an instrument toward their own ends, seem to be growing weary of its political excesses. Recognizing the public verdict of last month’s election, corporate officialdom is moving toward moderation on taxes and other issues, showing support for the Obama White House and edging away from congressional Republicans.

The latest top executive to endorse the president’s position on rescinding the Bush tax cuts for the top two percent is Fred Smith, CEO of Federal Express and a former economic advisor to Senator John McCain — who denounced as “mythology” the notion that raising the top rate would damage the U.S. economy.

Smith joined a lengthening queue of business leaders from all sectors who have stepped up over the past week to voice their acceptance of increased taxes as part of a budget agreement to break the stalemate on Capitol Hill — not only to avoid the so-called fiscal cliff on December 31, but because fairness requires the wealthy to pay their fair share. Randall Stephenson, chief executive of AT&T, the nation’s largest telecom company, told Business Week that higher taxes and more revenue must be part of any budget agreement. So did Lloyd Blankfein, the CEO of Goldman Sachs. And so did a group of defense industry executives from companies such as United Technologies, RTI International, TASC and Northrop Grumman.

Income tax rates “need to go up some,” said David Langstaff, the CEO of TASC, at a Washington press event organized by the Aerospace Industries Association, a defense lobby. “This is a fairness issue — there needs to be recognition that we’re not collecting enough revenue. In the last decade we’ve fought two wars without raising taxes. So I think it does need to go up.”

Indeed, the president was warmly received this week when he visited the Business Roundtable, a powerful Washington lobbying group that officially prefers Republican policy on maintaining the Bush tax cuts unchanged. “This room likes a winner,” said Roundtable chairman James McNerney, the CEO of Boeing, as his members applauded the president, who worked the room as if among old friends. They didn’t seem terribly upset when the president told them that tax rates — their tax rates — would have to go up, and in fact, they are reportedly supporting him on the need to avoid another destructive struggle with Congress over the debt ceiling. Evidently they won’t go along with the kind of blackmail game that congressional Republicans played with the debt ceiling in the summer of 2011, leading to a credit downgrade and slower growth for months afterward.

The suddenly sensible sounds emanating from the business community are astonishing when contrasted with the anger displayed toward the president by many of these corporate suits only weeks ago, when they berated Obama as “anti-business” and loudly yearned for a corporate-style Romney presidency. Resoundingly rebuked by the electorate, which overwhelmingly favors Obama’s positions on taxes and entitlements — and stands ready to blame the Republicans if no budget agreement is achieved — the business leaders are backing ever so subtly away from their traditional alliance with the GOP.

These brand-conscious executives suddenly have realized that the Republican brand, especially at the congressional level, is politically toxic. And they would rather not be too closely identified with it at this dangerous moment.

Remarkably, the Tea Party Republicans have now alienated their party’s most important constituency — the upper echelon of the business community. It is a profound irony that the issue raising friction between these politicians and their erstwhile backers is a fanatical partisan determination to defend the tax benefits enjoyed by those same wealthy executives.

The president’s opponents are backing themselves into a corner where even their own old friends cannot defend them. Meanwhile Obama may finally have learned that if he stands firm and refuses to negotiate with himself, he can win over public opinion and break the partisan obstructionism.

 

By: Joe Conason, The National Memo, December 7, 2012

December 8, 2012 Posted by | Politics | , , , , , , , , | 4 Comments

“Territorial Tax System”: CEO’s Of Tax Dodging Corporations Push Congress To Cut Corporate Tax Rates

Several corporate CEOs representing the Business Roundtable, a lobbying group, were on Capitol Hill today to unveil a set of measures that they claim will boost the economy. Not surprisingly, some of the high-profile items are a cut in the corporate tax rateand shifting to what’s known as a territorial tax system:

Fresh out of a meeting with members of the Blue Dog Coalition, dozens of CEOs in town for a series of Business Roundtable policy and lobbying meetings today unveiled proposals to boost the economy.

The plan, billed as “Taking Action for America,” calls for a balanced federal budget, a reform of federal regulations and a lower corporate tax rate based on a territorial tax system, among others.

A territorial system, as well as cutting the corporate tax rate without raising more corporate tax revenue, are both misguided proposals. But the interesting thing about these particular CEOs pushing this particular policy prescription is that several of them already run corporations that pay little to nothing in taxes.

For instance, Boeing CEO Jim McNerny is part of the group calling for corporate tax cuts, despite the fact that his company has a negative federal tax rate for the last decade. Only twice in the last ten years has Boeing had federal tax liability in a given year, and between 2008 and 2010, the company made $9 billion in profits without paying any federal corporate income tax.

Andrew Liveris, president and CEO of the Dow Chemical, also joined the lobbying party, even though his company received nearly half a billion dollars in tax refunds in 2010. Proctor & Gamble’s CEO also participated, while heading a company very fond of exploiting loopholes to avoid taxes.

Corporate tax rates are already at a 40 year low. As billionaire investor Warren Buffett explained, “it is a myth that American corporations are paying 35 percent or anything like it…Corporate taxes are not strangling American competitiveness.” Yet corporate CEOs whose companies already pay literally nothing think driving rates down further is the answer to boosting the economy.

 

By: Pat Garofalo, Think Progress, March 7, 2012

March 8, 2012 Posted by | Corporations, Taxes | , , , , , , , | Leave a comment

   

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