Administration: Rein in pay in US private sector
Obama administration: Executive pay needs curbs, better management, across US private sector
Jim Kuhnhenn, Associated Press Writer On Thursday June 11, 2009, 10:40 am EDT
WASHINGTON (AP) — The Obama administration says executive compensation must be better managed to prevent the sort of risk-taking that jeopardizes the economy.
http://finance.yahoo.com/news/Administration-Rein-in-pay-apf-15500519.html?.v=6
If you wish to call this socialism, fine, but I like it.
Our corporate boards of directors have rewarded CEO’s outrageous salaries, bonuses and golden parachutes, even when they have failed, thus using stockholder’s money unwisely.
What leverage does a small shareholder like myself have on this behavior. Answer: The government!
Now that said, there are limits that must not be exceeded, because the government should not place itself in a position where salary/bonus/retirement caps become common practice. My hope is that a few caps will send a message that intolerable behavior will not be tolerated, that you folks are being watched. That’s prudent and reasonable, in my view.
Actually, the tag line and title are wrong. It’s a march to Fascism. BO wants total control. If you like that, Cuba is your place to go. They practice wage controls.
Just as Obama has proclaimed that he doesn’t want to run the auto industry and that he has no desire to run the nation’s banks…he has also proclaimed that he has no intention of meddling in the nation’s businesses.
Obama has proven to be a prevaricator of massive proportions, “banking” on the success of his class envy campaign.
The now openly fascist POTUS has removed any lingering doubts of his ambitions to destroy the capitalistic economic system.
Total, unsubstantiated garbage, Gretchen!
Obama inherited your greedy messes. Most agree that strong government action has been required to stave off another great depression.
Obama has said that he does not want the government running private businesses. The big banks are already turning back their bailout loans, thus lessening governmental influence. However, on an oversight basis, I want the government to be diligent, don’t you?
With GM and Chrysler, the tax payers currently have a stake in both, therefore deserve to have a say re policy. That’s the outcome of extremely poor management of both companies. Obama is hoping to revitalize both, and save jobs. That’s laudatory!
Why not give the man a chance to see if he keeps his word, instead of trying to tear the man down, especially with inflammatory words like “fascist”?
It’s not socialism – look up the definition some time. If Yorkshire wants to call it fascism, he can – but he’s just engaging in reflexive squawking.
The problem is as follows:
i, Executive compensation in the US is relatively higher than anywhere else.
ii, Said compensation bears little or no relation to actual results.
iii, These two factors encourage a management approach detrimental to the economy and country as a whole.
The proposed solution:
would be counted as solid right-wing elsewhere, a sign of a weak government afraid of offending business. A rational government addressing the problem would be interfering more directly.
Yorkshire is, of course, an idiot – the kind of person who squawks fasicism about this, but is perfectly happy about the government having the power to kidnap and hold without trial US citizens – as long as they’re Muslim.
Obama has said that he does not want the government running private businesses.
Perry, do you write for Letterman? If Obama doesn’t want to run private business, why is he wanting to control wages of businesses where the government hasn’t interjected itself, that is yet to interject itself.
Next thing we’ll hear is BO is cutting taxes.
Yorkshire is, of course, an idiot
Sorry, but insults go nowhere with me. This where I stopped reading. If you want to make a point, be civil, or don’t reply. And we hear the Left doesn’t hurl insults. Might be my best laugh of the day.
Perry, I disagree. I label Obama a fascist, because he fits the definition: Fascism is a social and political ideology with the primary guiding principle that the state or nation is the highest priority, rather than personal or individual freedoms. That describes Obama’s approach to governance thus far.
You speak of the return of funds by the banks. The banks that have been allowed to return some of the money have tried to return for some time. Some of those banks were forced to accept money under pressure.
The “Obama inherited” chant needs to be stated with caution. Indeed, he did inherit a recession, but in only six months, according to Bloomberg, Obama has managed to spend his way into disaster. “For the fiscal year that ends Sept. 30, the CBO forecasts the deficit to reach a record $1.845 trillion, almost four times the previous fiscal year’s $454.8 billion shortfall.”
I doubt if any of us can even comprehend what a “trillion” is and yet, in spite of talk about reining in spending, there seems to be no end in sight.
Obama’s use of so-called czars should frighten all Americans. Those czars answer to no one but Obama. They carry out his orders diligently, without the hassle of having to have those orders debated.
I will be the first to congratulate you if your trust in Obama’s plans for GM and Chrysler live up to your expectations, but I do not share your confidence.
During the campaign, Obama used the expression “words, just words” several times. He has demonstrated no end to his words, but has shown absolutely nothing as a result of those words except skyrocketing deficits, record unemployment, threats from North Korea and Iran, and growing distrust from Israel.
I do not intend to tear the president down. I expect, though, for the president to put the country ahead of his ideology, something he has failed so far to do, in my opinion.
Perry, I disagree. I label Obama a fascist, because he fits the definition: Fascism is a social and political ideology with the primary guiding principle that the state or nation is the highest priority, rather than personal or individual freedoms. That describes Obama’s approach to governance thus far.
Riiiiiiight -
That’s big time scary there – however will the Republic survive?
Next thing we’ll hear is BO is cutting taxes.
I got a tax cut. Those who don’t work might not have gotten one but I certainly did. I could reprint the corporate email I received detailing exactly how much if you all would like.
If Obama doesn’t want to run private business, why is he wanting to control wages of businesses where the government hasn’t interjected itself
Shorter Yorkshire: Tax money shoveled into the private sector with no questions asked = capitalism. Asking for something in return = socialism.
Of course, Yorkshire writes about economics on a blog shown to have little if any grasp of even the most basic economic principles. In fact, chin-stroking Art Downs stated once that Alaska wasn’t socialist “because the people of that state have a widely held belief that the profits made off of public resources should go back to the citizens”. Dana thought that the prime lending rate referred to credit scores. Rovin thinks that the government creating artificial demand is a free market principle and on and on and on.
And why don’t you get off of your high-horse, Yorkshire? Any time somebody throws an invective at you right wing fanatics you wail like a little girl with a skinned knee. I thought you guys were the rough and tough, mugged by reality, individualists? You yourself demean the discourse when you cry SOCIOCOMMUNOLIBRULFASCIST!!!! any time you think it appropriate to get indignant over policy you clearly don’t understand.
Didn’t BO also tell us if the Porkulus Bill wasn’t apssed immediately, unemployment would go past 8%. Well, it was passed, and unemployment is over 9%. Where are the jobs??? Or was that just talk?
mike g:
Next thing we’ll hear is BO is cutting taxes.
I got a tax cut.
Ummmm Mike, your withholding was reduced, but your tax rate remained the same. There was no tax cut.
You speak of the return of funds by the banks. The banks that have been allowed to return some of the money have tried to return for some time. Some of those banks were forced to accept money under pressure.
Those banks that didn’t want funds were doing so in an attempt to make public which financial institutions were failing in order to cause a run on them in the hopes of instigating their demise. It was judged prudent at the time that to stave off complete collapse vis-a-vis a bank run all would receive TARP funds and all would pay them back anonymously.
Those goalposts heavy, Yorkshire?
Pho says”Instead, the administration plans to seek legislation that would try to rein in compensation at publicly traded companies through nonbinding shareholder votes and less management influence on pay decisions.”
It will be interesting to see how much response from shareholders they get on this. If the response is small I’m afraid management and the board of directors of the public companies will just ignore it. Aflac just recently instituted this.
“A rational government addressing the problem would be interfering more directly.”
In a capitalist system, private ownership rights would most likely trump government rights.
Yorkshire is correct; this is a march toward Fascism, by most common definitions – control of corporations, control of the distribution of information. The ONE realizes that taking control with dispatch is critical; he must catch us sleeping, and we must be diligent.
Yorkshire might be right, mike g. Especially if you have 2 workers in your family, your cut may not be as big as your increase in take-home pay, because the IRS screwed up the withholding tables. You are probably entitled to less than the $400 / $800 reduction in withholding.
And it is not a tax cut. It is a tax rebate. Your tax rate on your AGI will be the same as last year, and the year before, it just that the tax paid will be reduced by a rebate you are getting now. Look for a giant screw up on the 1040′s for tax year 2009.
Of course, Obama’s seeing one of the problems clearly here – the reckless risks financial managers took were often encouraged by the fact that the managers, if they screwed up, would still leave town with enough money to keep them high on the hog for the rest of their lives. They suffered little to no personal risk for their errors, and reaped all the rewards. That’s a recipe for recklessness right there.
But government is not the way to solve that problem. Shareholder assertiveness is.
But government is not the way to solve that problem. Shareholder assertiveness is.
Nice ideology – so, uh, why hasn’t it worked so far? Under the laissez-faire policies of the last few decades, CEO salaries have spiralled up and up – and their decision making has gotten worse.
“Barbarians at the Gates” is well worth reading just to remind you of recent history.
Wonder if this applies to Union Leaders too??? HAHAHAHAHAHAHA, and the Libs miss a payday in their Union Contributions???
Gretchen, let’s look at the facts, that describe where are current $1.2 trillion deficit comes from. You will note from the chart that the majority is inherited from Bush!
http://www.nytimes.com/interactive/2009/06/09/business/economy/20090610-leonhardt-graphic.html
From the NYT article by Leonhardt that accompanies this chart:
“There are two basic truths about the enormous deficits that the federal government will run in the coming years.
The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.”
http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.html?_r=1
So, if you want to fault Obama, fault him for not yet having a realistic plan for eliminating the deficit. That’s fair.
Gretchen, this piece is a must read. It is a short piece with a lot of meat, outlining the many serious challenges we face with our current and future economic woes, together with our fiscal and monetary policy challenges. This is not just government, it is each one of us who are going to have to undergo a belt tightening the likings of which have not been seen in the post WWII period. It has already begun!
Again, please read this David Leonhardt piece, which has nothing to do with partisan politics, only to do with laying out the facts and challenges we face therefrom.
BUT BUT BUT THE NEW YORK TIMES IS PART OF THE LIBRUL MEDIA MSM CONSPIRACY!!!!
Perry,the Leonhardt info is interesting and appreciated. I agree with many of the premises presented by Leonhardt. As I stated before, I do not argue that many of the spending troubles facing the country today were “inherited,” not only from Bush, but also from Clinton…as the article points out. However, Leonhardt also reminds us that it is ridiculous for Obama to continue his “I inherited much of the deficit” when his own administration is not only maintaining many of the programs put in place by Bush, but also increasing his spending on continuation of those programs.
If Bush’s programs were so bad, why is Obama complaining about them on one hand, but not only keeping them in place, but also increasing the spending on those programs? Sorry, Obama, you can’t have it both ways.
Some here know that I am not a supporter of big government spending, regardless of which party is in the White House. I railed against Bush’s refusal to veto a single spending bill during his first term and I am cyber-hoarse from demonstrating my anger at the continued runaway pork barrel spending by too many in Congress on both sides of the aisle. It is just as disingenuous of Obama to turn a blind eye to pork-laden bills as it was when Bush did the same thing.
My biggest complaint against Obama is his obvious grab for federal control of what should be left in the domain of private enterprise…as I discussed earlier. His actions epitomize the actions of a fascist. Obama has made many claims/promises on which he has made 180 turnarounds. His most loyal followers blow off the alterations to Obama’s promises as being nothing but “dealing with the reality of the situation,” but a growing number of people, many of whom voted for him, see Obama’s broken promises as indications that he is not a man of his word. He says he doesn’t want to run the auto industry or the banking industry or any US industry…but his actions speak louder than his words.
Perry responded:
This, unfortunately, will be a common response, and President Obama has found a fine populist wedge issue. We common people really don’t think that the top CEOs, especially in companies which have not been profitable, deserve to be so highly paid, especially when we common folk are struggling.
But this is something that ought not to be any of the government’s business! If people are pissed off that GM pays its executives so highly, they can not buy GM cars — which is exactly what they’ve done!
Perry, the leverage a small shareholder has is to become a larger shareholder.
Mr G wrote:
You did? Amazing, since the Congress hasn’t passed one since 2003. Tax rates are set by law, requiring an act of Congress to change.
Now, you have probably seen your federal withholding decrease by a few dollars, because the Administration changed the federal withholding tables; that could be done by the executive branch alone. But, come the time you file your federal income taxes, unless the Congress changes the law before then, you’d owe for 2009 just what you owed for the same taxable income in 2008.
There is, however, some slight adjustment of the tax rates for inflation, which the Treasury Department makes, but those adjustments are specified by law, and determined by the legally-defined inflation rate; the Administration doesn’t have the authority to somehow say that the adjustments for inflation should be 10%. This effect shows up at the point of bracket increase, so at the margins, there will be a few dollars saved. However, this has been part of the tax code since the Reagan Administration.
In the meantime, President Obama has said that he might agree with Senator Max Baucus (D-MT), who has suggested that employer contributions for health care insurance ought to be a taxable benefit. Currently, if your employer pays $10,000 toward your health insurance, you do not see that $10,000 reflected on your Form W-2 as a taxable benefit to be reported on Form 1040. Senator Baucus wants to see some or all of that taxed, and now the President, who harshly criticized Senator McCain for suggesting such a thing during the campaign, has agreed to consider it.
There is no actual agreement on this proposal yet, and several varying percentage of the benefit to be subject to taxation floating around, but if is agreed to in any form, it will constitute a tax increase.
We common people really don’t think that the top CEOs, especially in companies which have not been profitable, deserve to be so highly paid, especially when we common folk are struggling. But this is something that ought not to be any of the government’s business!
It is when it affects other people.
You’ll notice no-one is complaining about Bill Gates’ comepnsation. That’s because Gates gets his weath from the value of Microsoft – he produces something of value to others and gets a percentage of that as profit.
CEOs who arrange to raise their own salaries as a status symbol, who pump up paper profits in the short term, and leave before the long term damage is apparent do not provide value. They are a danger to the company and, en masse, to the economy as a whole.
The salaries of the CEO are not related to results, and shield them from accountability. Such things as the banks resorting to derivatives to pump up short-term profits are the result.
“We common folk” used by wingnuts is code for “too lazy to even consider the argument”.
The cure of government control of compensation is far, far worse than the disease. In populist terms, it is simply the manipulation of class envy for political gain. That’s not part of the idea on which the United States was founded, nor is it consistent with liberty.
The Phoenician wrote:
In one sense, that is correct. I really don’t seriously consider arguments that we are better off with greater government control over the economy, because greater government control over the economy is the antithesis of freedom. I do not seriously consider arguments that it is for the good of society and the economy in general that we control executive compensation, because that is completely opposed to liberty.
I really don’t seriously consider arguments that we are better off with greater government control over the economy, because greater government control over the economy is the antithesis of freedom.
This is the Heritage Foundation/WSJ’s list of the “economically free”:
1 Hong Kong 90
2 Singapore 87.1
3 Australia 82.6
4 Ireland 82.2
5 New Zealand 82
6 United States 80.7
7 Canada 80.5
8 Denmark 79.6
9 Switzerland 79.4
10 United Kingdom 79
11 Chile 78.3
12 Netherlands 77
13 Estonia 76.4
14 Iceland 75.9
15 Luxembourg 75.2
16 Bahrain 74.8
17 Finland 74.5
18 Mauritius 74.3
19 Japan 72.8
20 Belgium 72.1
Do you consider people in Hong Kong to be substantially freer than you?
I do not seriously consider arguments that it is for the good of society and the economy in general that we control executive compensation, because that is completely opposed to liberty.
You’re an apologist for torture and the forced incarceration of prisoners without rights. You’re not in a position to talk about liberty; I’m surprised you’re not ashamed to speak the word.
That so many people do not care about Barry O’s fascist (yes, the definition does fit) takeover of the American economy tells us the precarious state of liberty. We have forgotten what the word means and do not bat a collective eye when the chief executive declares himself the master of the American economy. It is a sad state when Europe is moving to the right and we have a party in charge that is determined to make every mistake that ruined western Europe.
edgycater.blogspot.com
I think it’s funny as hell that the government even remotely thinks it is in any way qualified to determine anyones pay or compensation.
How about movie stars who get paid ten mil for a movie that is a bust? Or an athelete who gets 5 mil a year and fumbels the ball?
“Perry, the leverage a small shareholder has is to become a larger shareholder.” I’d also add: or no shareholder at all. If I don’t like the way a company is being run, I don’t buy their stock. Why would anyone buy shares of a poorly run company?
You’re an apologist for torture and the forced incarceration of prisoners without rights. You’re not in a position to talk about liberty; I’m surprised you’re not ashamed to speak the word.
Pho, you are a pathetic individual.
JohnC insults: “Pho, you are a pathetic individual.”
The truth hurts, doesn’t it JohnC? Phoenician’s statement is practically a quote of Dana’s stated position, which hardly exemplifies the love for liberty that he proclaims over and over again. His (and your?) idea of liberty is mighty selective indeed!!!
Answer – sell your stock, and buy some in a company that is run more to your liking. Keep the gov’t piggies out of it!
Fixed that for Pho.
A second-generation political hack in Delaware got a position as an educational administrator. By getting his friends to vote himself huge raises, his salary is approaching $400,0000 per year and he will get nearly that much in retirement pay.
This is an affront to the taxpayers, but since it involves a sacred cow, we must be muted.
There are some people who got platinum parachutes after ruining a private sector company. This was wrong. Yet what of the $90 million ripoff by the politically-connected Franklin D. Raines? Why no punishment for his ‘book cooking’? Was he obliged to regurgitate any of his ill-gotten gains? Any threat of jail time? Was he not a potential Secretary of the Treasury had Kerry slithered into the Presidency?
More moral pomposity from a guy who supports Partial Birth Abortion.
Eric: “More moral pomposity from a guy who supports Partial Birth Abortion.”
First of all, in legal language there is no such term as “partial birth abortion”. It is an inflammatory term made up by the “fascists” who want to control women’s choice. Excuse me for throwing some of your inflammatory language right back in your face. Now I’ll take it back, having made my point.
Secondly, I do not support abortion, as I have said here a number of times, Eric, so stop your falsification of my position.
Art: “A second-generation political hack in Delaware got a position as an educational administrator.”
I agree, Art, this is an intolerable situation which must be addressed by the DE General Assembly. The irony here is that Del Tech turns out to be a very well run institution, a great value to our state, which is one reason why nothing will be done.
I also agree with your remarks about Raines. His behavior was well known during the Bush second term, and nothing was done. Now we have the Obama team, and nothing has been done. The man should be investigated with the intent to prosecute if warranted!
What about the games played by corporations such as the WaPo and NYT? Do any stockholders who are not family members get a vote?
The arrogance of the Liberal Elite is a bit much.