“Watchdog Or Lapdog”: Big Corporations And Wall Street Still Hiding CEO Pay Ratios
Corporations are obligated to disclose how much their CEOs earn compared to the average worker, thanks to Section 953(b) of the financial reforms of 2010 known as Dodd-Frank.
However, three years after that bill became law, some of the nation’s largest corporations are battling regulators to prevent such disclosure, according to Bloomberg.
“The fact that corporate executives wouldn’t want to display the number speaks volumes,” said Phil Angelides, who was the chairman of the Financial Crisis Inquiry Commission, which investigated the collapse that led to the Great Recession.
Angelides says that the attempt to block this provision is just one example of the “street-by-street, block-by-block fight” that corporations and Wall Street are waging against implementation of the modest reform package that passed only after it was weakened to garner Republican support in the Senate.
Groups including the American Insurance Association, Business Roundtable, National Investor Relations Institute, and the U.S. Chamber of Commerce have petitioned the Security and Exchange Commission (SEC), making the argument that “it is unclear how the pay ratio disclosure will be material for the reasonable investor when making investment decisions.” They claim that calculating such ratios is time consuming and almost impossible for multinational corporations.
Without obligated disclosure, there’s no clear way to assess CEO-to-worker ratio. In 2010, the Bureau of Labor Statistics reported large-company CEO compensation was 319 times the median worker’s pay. Currently the average multiple of CEOs to a typical worker is 204 — up 20 percent since 2009, according to statistics collected from workers’ compensation estimates.
Bloomberg‘s Elliot Blair Smith and Phil Kuntz point to Ron Johnson, the recently ousted CEO of J.C. Penney, who earned a whopping 1,795 times what a typical $8.30-an-hour JCP salesperson took home.
The AFL-CIO has been attempting to counter the corporate lobbying with an effort to make the SEC put in place what is already law.
“The impact of high levels of CEO pay on employee morale is particularly important in today’s weak economy, when workers are being asked to do more for less,” suggests an online petition it is circulating to pass on to the government regulators.
“Estimates by academics and trade-union groups put the number at 20-to-1 in the 1950s, rising to 42-to-1 in 1980 and 120-to-1 by 2000,” Smith and Kuntz write.
Even if corporations are forced to disclose how much their top executive is paid, there are a variety of ways for them to cloak compensation.
Still the Campaign for America’s future calls enforcing Section 953(b) a crucial test for new SEC chair Mary Jo White to find out if she’ll be a “watchdog or a lap dog for Wall Street.”
By: Jason Sattler, The National Memo, May 2, 2013
“It’s Official, The Tea Party Is Back”: Once Again, Fantasies Of A Pragmatic GOP Prove Illusory
Say what you will about Politico, but aside from the many bits of useful phenomenological data its vast minions gather each day, it serves as a sort of public utility in instantly and thoroughly expressing the shifting perspectives of the MSM. Today, having misinterpreted and buried the Tea Party Movement a thousand times, Politico (in this piece by Tarini Parti) now takes judicial notice of its return on Capitol Hill:
The Tea Party Caucus is back in action with a new strategy and a growing membership.
Roughly 20 House Republicans attended a closed-door meeting Thursday evening in the Rayburn House Office Building, along with staffers from nearly 40 congressional offices, including those of Senate Minority Leader Mitch McConnell and fellow Kentucky Republican Sen. Rand Paul.
It comes as conservatives continue to flex their muscle, making life difficult for GOP leaders in the House on issues like Obamacare, and as the debate on immigration legislation heats up.
Conservative mainstays such as Reps. Paul Broun (R-Ga.), Louie Gohmert (R-Texas), Tom Price (R-Ga.), Trent Franks (R-Ariz.) and Steve King (R-Iowa) were among those at the meeting. A source said the entire GOP House delegation from South Carolina was there as well.
Mike Shields, chief of staff to Republican National Committee Chairman Reince Priebus, spoke at the meeting – an indication that the GOP establishment is making an effort to work with the tea party lawmakers.
Also in attendance: Conservative radio talk show host Rusty Humphries and representatives from organizations including the Tea Party Express and U.S. Chamber of Commerce. TheTeaParty.net organized the meeting, which was closed to press.
The possibility that high attendance at the caucus meeting might reflect a continuing presence rather than a sudden resurgence was indirectly addressed by this quote from Louie Gohmert:
“I thought it was the energy we had when we first started things,” Gohmert told POLITICO after the meeting. “The Tea Party beliefs and movement never really went away. It was just that the caucus wasn’t really having meetings.”
True dat. You could make the case, in fact, that the relative quiescence of the Tea Party Caucus was attributable to its consolidation of power within the Republican “Establishment.” Now that strategic disagreements within the congressional GOP are re-emerging, it’s time to get loud and proud again. But the whole phenomenon shows how shallow all the talk about the GOP “rebranding” and “adjusting to new circumstances” really was–much less the fatuous chatter about “bipartisan breezes wafting through Congress.”
It’s entirely possible, not soon but in the foreseeable future, that the Republican Party and even the conservative movement can genuinely move beyond the “Spirit of 2010” and begin to act like a political party rather than a wrecking crew. But anyone who has paid genuine attention to the Tea Party Movement must understand that these are people who violently oppose the idea of “moving on” or “adjusting to circumstances.” The whole point of “constitutional conservatism” is the belief in an eternal, perhaps even divinely ordained, governing model that never, ever, goes out of season. Maybe they’ll lose influence in the GOP and the country as a whole, but they aren’t going away or changing. Their periodic rediscovery by the MSM when once again fantasies of a “pragmatic” GOP prove illusory is one of the maddening but abiding aspects of contemporary political journalism.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, April 26, 2013
“Because Corporations Lie”: Voluntary Political Transparency Is Just Not Enough
The Securities and Exchange Commission took a bold step in considering new rules that would require publicly traded companies to disclose political donations. This is a good idea because since the Citizens United decision, corporate entities have moved away from disclosed campaign committees, and instead have begun funneling cash into secret campaign funds, mostly 501c nonprofits.
Last year, The Nation published an investigation that debunked the idea that corporate money has flowed mostly to so-called Super PACs in the wake of Citizens United. Rather, big business has embraced nonprofit trade associations and issue advocacy groups to pour hundreds of millions into direct campaign advocacy. The distinction is important because Super PACs, for all their problems, at least disclose their donors and spending records; trade associations and issue advocacy groups do not.
To the credit of reformers, particularly the Center for Political Accountability and several investor groups, many large corporations have voluntarily adopted transparency measures. While we should applaud corporations that go beyond the letter of the law in disclosing these funds, a system based on voluntary participation does not come close to solving the problem of secret political slush funds. In some cases, voluntary disclosure actually obscures the truth.
Take health insurance companies. Aetna, Aflac and WellPoint are among several that have adopted voluntary disclose rules to provide the public and shareholders with a window into their giving patterns. There’s one problem: they aren’t truthful.
In 2009, the major health insurers, including the aforementioned companies, secretly funneled over $86.2 million to the US Chamber of Commerce, a trade association, using another trade association as a proxy to move the money, to run television and radio advertisements against health reform. Aetna’s disclosures that year only revealed $100,000 to the Chamber. WellPoint and Aflac failed to report those donations, as well. The following year, during the midterm elections, Aetna again secretly provided $7 million to “American Action Network,” a social welfare nonprofit used to run partisan attack ads against Democrats, along with the Chamber, which spent over $50 million on a partisan campaign to elect mostly Republicans that year. Again, Aetna’s voluntary disclosure report made no mention of the money, which became public through an inadvertent regulatory filing.
Similarly, several major oil companies have adopted voluntary disclosure guidelines that are fairly useless. ExxonMobil and Valero Energy are two examples: Both firms proudly produce annual reports on which candidates and political parties they fund. The problem? That data can be found already on the Federal Elections Commission website and related state-level disclosure websites, so there’s nothing new. As The Nation has reported, oil companies often work through secretive trade associations like the American Petroleum Institute, which has become more active in financing campaign-related advertisements and grants to other dark money groups.
As Senator John McCain and others have noted, the hundreds of millions slushing in secret money is bound to lead to another major scandal. And that scandal will likely to produce a lot of liability for the corporations involved. Moreover, as attorney Jerry Goldfeder noted in a letter to the New York Times this week, the I.R.S. has sent a questionnaire to 1,300 nonprofit groups questioning their tax exempt status. The increased scrutiny could lead to new questions that could increase liability for corporations: Are these groups being used to violate the Foreign Corrupt Practices Act, by funneling cash to foreign governments? Are consumer brands secretly funding ads that could harm the perception of their product (as was the case with Target and their donations to an anti-gay politician in Minnesota)?
Under the current system, only corporate executives, their lobbyists, and certain politicians really understand where the money is flowing. Shareholders, the public, and reporters have a right to know, too.
By: Lee Fang, The Nation, March 29, 2013
“The Corporate Predator State”: This Isn’t The Free Market, It’s A Rigged Market
Bipartisan agreement in Washington usually means citizens should hold on to their wallets or get ready for another threat to peace. In today’s politics, the bipartisan center usually applauds when entrenched interests and big money speak. Beneath all the partisan bickering, bipartisan majorities are solid for a trade policy run by and for multinationals, a health-care system serving insurance and drug companies, an energy policy for Big Oil and King Coal, and finance favoring banks that are too big to fail.
Economist James Galbraith calls this the “predator state,” one in which large corporate interests rig the rules to protect their subsidies, tax dodges and monopolies. This isn’t the free market; it’s a rigged market.
Wall Street is a classic example. The attorney general announces that some banks are too big to prosecute. Despite what the FBI called an “epidemic of fraud,” not one head of a big bank has gone to jail or paid a major personal fine. Bloomberg News estimated that the subsidy they are provided by being too big to fail adds up to an estimated $83 billion a year.
Corporate welfare is, of course, offensive to progressives. The Nation and other media expose the endless outrages — drug companies getting Congress to ban Medicare negotiating bulk discounts on prices, Big Oil protecting billions in subsidies, multinationals hoarding a couple of trillion dollars abroad to avoid paying taxes, and much more.
But true conservatives are — or should be — offended by corporate welfare as well. Conservative economists Raghuram Rajan and Luigi Zingales argue that it is time to “save capitalism from the capitalists,” urging conservatives to support strong measures to break up monopolies, cartels and the predatory use of political power to distort competition.
Here is where left and right meet, not in a bipartisan big-money fix, but in an odd bedfellows campaign to clean out Washington.
For that to happen, small businesses and community banks will have to develop an independent voice in our politics. Today, they are too often abused as cover for multinational corporations and banks. The Chamber of Commerce exemplifies the scam. It pretends to represent the interests of millions of small businesses, but its issue and electoral campaigns are defined and paid for by big-money interests working to keep the game rigged.
An authentic small-business lobby has finally started to emerge, as William Greider reports in the most recent issue of the Nation. The American Sustainable Business Council, along with the Main Street Alliance and the Small Business Majority, are enlisting small business owners to speak for themselves — and challenging the corporate financed propaganda groups such as the Chamber and the National Federation of Independent Business. Their positions often align with those of progressives. They loathe the big banks and multinationals that work to undermine competition.
Greider reports on the antipathy these small business owners have for the big guys. Camille Moran, president and chief executive of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, La., rails against the “Wall Street wheelers and dealers.” They knew, she argues, that they “ would get no sympathy saying that ending the high-income Bush tax cuts would hurt them, so instead they pretend it would hurt Main Street small business and employment. Don’t fall for it. . . . That’s a trillion dollars less we would have for education, roads, security, small business assistance and all of the other things that actually help our communities.”
ReShonda Young, operations manager of Alpha Express, a family-owned delivery service in Waterloo, Iowa: “We’re not afraid to compete with the biggest delivery companies out here, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab.”
Polls show these aren’t isolated views. The ASBC, the Main Street Alliance and the Small Business Majority sponsored a poll by Lake Research of small business owners. Ninety percent believe “big corporations use loopholes to avoid taxes that small businesses have to pay,” and three-fourths said their own businesses suffer because of it.
The ASBC and its allies have the potential to become what Jamie Raskin, a Maryland state senator, dubbed a “Chamber of Progress,” a small-business voice that is willing to take on the big guys that tilt the playing field.
The possibilities are endless. Wall Street argues for rolling back financial regulation on the grounds that it hurts community and small banks. What if community and small bankers joined the call of conservative Dallas Federal Reserve President Richard Fisher to break up the big banks?
Multinational executives have just launched the “LIFT America” Coalition to push for a territorial tax system that would exempt from U.S. taxes all profits reported abroad. ASBC and its allies could rally small businesses to demand closing down overseas tax havens and imposing a minimum tax on profits sitting abroad, so that they didn’t face a higher tax burden that their global competitors.
In today’s Washington, powerful corporate interests stymie progress on areas vital to our future. Can a right/left, small-business/worker odd bedfellows alliance emerge to counter the predatory interests? We can only hope so.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, March 26, 2013
“A Very Dysfunctional Party”: GOP Needs To Choose Between The Business Community And The Tea Party
How long will the major GOP-aligned interest groups, particularly business groups, stick with the Republican Party, if Republican tax monomania, and intransigence on the debt ceiling, threaten to tank the economy?
Barack Obama, in his interview today with Bloomberg, tried to exploit the business community’s apparent discomfort with Republicans when it comes to the debt limit. He noted that Republican efforts to crash the economy every time it is reached is hardly good for business:
Another thing that CEOs have mentioned is making sure that if we do get a deal done now, that we don’t have another crisis two or three months from now because of the debt ceiling, what we went through back in 2011. You know, the U.S. Chamber of Commerce, which is hardly an arm of my administration or the Democratic Party, I think said the other day, we can’t be going through another debt ceiling crisis like we did in 2011. That has to be dealt with.
Indeed, there really is a question here about the extent to which businesses will follow the GOP down the rabbit hole of another debt limit crisis.
Recall that in the health care debate, Republicans wound up losing several GOP-aligned special interests, including the doctors, because Republicans were far more interested in ideological extremism than in cutting deals to help Republican-aligned interest groups.
Will that happen again in the fiscal cliff negotiations? Note that many business interests are not nearly as interested in the tax-rates-above-all Republican negotiating position as they are in, well, avoiding a recession. It’s not as if the business community is going to suddenly turn into loyal Democrats. It’s just that the more the Republican Party’s positions are dictated by fear of being labeled “RINOs,” forcing them to adopt Tea Party positions, the less Republicans leaders will find themselves responsive to other normally GOP-aligned groups.
That’s a key question to look at not only in the continuing fiscal cliff talks, but really in every issue, from taxes to immigration, that will show up in Congress this year. Republicans simply can’t be a functional party if their politicians only care about possible primary challenges. Before this is all over, the Republican Party may finally have to make a critical choice between the pragmatic concerns of the business community and the fundamentalism of the Tea Party.
By: Jonathan Bernstein, The Washington Post Plum Line, December 4, 2012
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