Tag: Economy

While CEO’s are rolling in more money than any average workers could imagine in a lifetime, raising their taxes and closing the tax loop holes that allow then to pay even less or, in some instances, nothing at all. According to a USA Today analysis, CEO’s pay went up 27% in 2010 while workers’ pay rose only 2%.

Paychecks as Big as Tajikistan

By Gretchen Morgenson

WHEN does big become excessive? If the question involves executive pay, the answer is “often.”

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Answers to that question come fast and furious in a recent, immensely detailed report in The Analyst’s Accounting Observer, a publication of R. G. Associates, an independent research firm in Baltimore. Jack Ciesielski, the firm’s president, and his colleague Melissa Herboldsheimer have examined proxy statements and financial filings for the companies in the Standard & Poor’s 500-stock index. In a report titled “S.& P. 500 Executive Pay: Bigger Than …Whatever You Think It Is,” they compare senior executives’ pay with other corporate costs and measures.

It’s an enlightening, if enraging, exercise. And it provides the perspective that shareholders desperately need, particularly now that they are being asked to vote on corporate pay practices.

Let’s begin with the view from 30,000 feet. Total executive pay increased by 13.9 percent in 2010 among the 483 companies where data was available for the analysis. The total pay for those companies’ 2,591 named executives, before taxes, was $14.3 billion.

That’s some pile of pay, right? But Mr. Ciesielski puts it into perspective by noting that the total is almost equal to the gross domestic product of Tajikistan, which has a population of more than 7 million.

Warming to his subject, Mr. Ciesielski also determined that 158 companies paid more in cash compensation to their top guys and gals last year than they paid in audit fees to their accounting firms. Thirty-two companies paid their top executives more in 2010 than they paid in cash income taxes.

The report also blows a hole in the argument that stock grants to executives align the interests of managers with those of shareholders. The report calculated that at 179 companies in the study, the average value of stockholders’ stakes fell between 2008 and 2010 while the top executives at those companies received raises. The report really gets meaty when it compares executive pay with items like research and development costs, and earnings per share.

Using Disney CEO, Robert Iger and workers at Disney World in Florida as an example, Time looks at the ever widening income gap:

Disney’s Robert Iger got a 45% bigger bonus in 2010

The corporate PR teams are defending these bonuses by saying that the executives deserve the pay because stock prices and earnings are up. A Walt Disney spokesperson says that shareholder return at the company was up nearly 24%, substantially more than the Standard & Poors 500. But haven’t we already learned, through bubble after bubble, that stock prices are a poor indication of anything. They are irrational, give us false positives, and crash.

But here’s what is the real problem. Yes, if higher profits and a higher stock price warrant better pay for CEOs, why doesn’t the same ring true for the average employee. Workers at Disney’s Florida amusement park Walt Disney World fought for months last year and early this year for higher wages. What they finally ended up getting, in a new contract settled earlier this month, was an annual raise of 3% to 4% over the next three years. The workers will get a bonus, too, of $650, a mere 20,769 times less than Iger’s bonus. As long as it remains that only a small segment of our population will be rewarded for better performance, while the rest of us do more and more work for the same pay, the wealth gap in America is certain to get worse.

It is very evident that the White House, Congress and many state governors and legislatures have not learned that tax cuts for the wealthy will not improve the economy or create jobs. They have done nothing to reverse the trend of the widening income gap. They have dug themselves and us into a hole so deep that they cannot hear rational ideas for even stopping the spiral into a economic morass.

In case anyone on the left hasn’t noticed, Pres. Barack Obama is not a liberal, progressive or anything that even resembles a left wing politician. He is a neoliberal, or more obvious to some of us on the true left, a right wing corporate conservative. To see him as anything else is a delusion and Tim Geithner is proof. It starts with this Washington Post article:

Geithner finds his footing

By Zachary A. Goldfarb

By early last year, Geithner was beginning to gain the upper hand in a rancorous debate over whether to propose a second economic stimulus program to Congress, beyond the $787 billion package lawmakers had approved in 2009.

Lawrence Summers, then the director of the National Economic Council, and Christina Romer, then the chairwoman of the Council of Economic Advisers, argued that Obama should focus on bringing down the stubbornly high unemployment rate. This was not the time to concentrate on deficits, they said.

Peter Orszag, Obama’s budget director, wanted the president to start proposing ways to bring spending in line with tax revenue.

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The economic team went round and round. Geithner would hold his views close, but occasionally he would get frustrated. Once, as Romer pressed for more stimulus spending, Geithner snapped. Stimulus, he told Romer, was “sugar,” and its effect was fleeting. The administration, he urged, needed to focus on long-term economic growth, and the first step was reining in the debt.

(emphasis mine)

I’m not an economist but from what I do understand is that you cannot “reign in the debt” without including revenue and JOBS. If the private sector, after all the tax cuts and loop holes, cannot be urged to create JOBS then it must fall to the government to provide the STIMULUS.

A tip of the hat to Jon Walker at FDL who asks, rightly How Does Geithner Still Have a Job?. He concludes:

The most amazing thing about the entire article, of course, isn’t that it shows Geithner has been a destroyer, that should have been clear from his role in the financial melt down and HAMP. Rather it is simply that Geithner can be so constantly wrong yet still keep his job. He defines failing upward.

(emphasis mine)

At Salon, Andrew Leonard notes from the same WP article by Goldfarb, there are some glaring holes in Geitner’s plan:

Geithner was and is the primary architect of the Obama administration’s pivot from the economy to the deficit.

Furthermore, since Geithner now reigns supreme on economic policy, there is zero chance of any change of direction in the next year. All the advocates for greater attention to boosting economic growth and job creation in the short term — Christy Romer, Jared Bernstein, Austan Goolsbee, and even the much-hated-by-progressives Larry Summers — are gone. Geithner is what we’ve got.

Geithner’s stated position is that without long-term action on the deficit, the government will not be able to continue to support social welfare programs.

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But the electoral problem for Obama may not hinge on whether or not the president has the actual power to make manifest his will on job creation, but rather on whether he is perceived to be trying. Is he giving it his best shot? Is he making it clear to the general public what constraints have been placed on him by the opposition party and external events?

The answers are no, and no. And judging by Goldfarb’s Geithner profile, the White House is fine with that. It’s going to be a tough platform to run on, if the economy continues to slump as the campaign heats up.

The conclusion by Joe Sudbay at AMERICblog is the truth that the Democrats have not yet faced:

If this nation doesn’t start creating jobs, Obama and Geithner run the risk of losing theirs. And, as the latest Washington Post/ABC News poll showed us yesterday, the numbers on the economy are really ugly:

   By 2 to 1, Americans say the country is pretty seriously on the wrong track, and nine in 10 continue to rate the economy in negative terms. Nearly six in 10 say the economy has not started to recover, regardless of what official statistics may say, and most of those who say it has improved rate the recovery as weak.

The Republicans destroyed the economy. They weren’t held accountable and are not getting the blame. It’s Obama and Geithner’s economy. And, what happens with their economy is going to have a huge impact on the 2012 election.

I’m not optimistic.

Continuing economic policies  the have failed is flat out stupid. Proposing to not only continue with those policies but to reinforce them by making them worse is economic and political suicide. It is the path that the Obama administration and Congress have taken us down by renewing the Bush Tax Cuts until December 2012. Some of the GOP candidates would like to cut taxes even further, so much so that it would cripple the government and widen the socio-economic gap of the haves and have-nots.

June 7th was the tenth anniversary of the Bush tax cuts that were enacted on the promise as a  necessary economic stimulus that would boost job creation and a stalled economy by the Bush regime who said the “deficits didn’t matter”. Bush promised that result would be that the Federal debt would be paid in 10 years that was in 2001. At the end of 2008, the national to over $10 trillion dollars, 69% of the GDP and the highest it had been since 1955.

Think Progress compiled a concise video with graphics and music that demonstrates how the Bush tax cuts drove up the deficit and will continue to make matters worse over the next 18 months.

Yet, we still have the right wing pundits and GOP candidates for president repeating the with most of the talking heads nodding in acquiescence. Lawrence O’Donnell was the exception last night comparing the ignorance of Sarah Palin to the out right lies about tax cuts by GOP presidential hopeful, ex-Gov Tim Pawlenty. If elected, Pawlenty would propose cutting the business tax rate and wipe out the capital gains tax, interest income tax, dividend tax and the estate tax.

It’s estimated that Pawlenty’s proposals would triple the size of the Bush tax cut costing another $7.8 trillion over the $2.5 trillion the current extension is costing. Meanwhile, the other GOP contender, ex-Gov. Mitt Romney, follows the Bush/Cheney economic theory that deficits don’t matter with his endorsing a “federal spending at 20 percent or less of the GDP and finally, finally balance the budget” without mentioning the other side of the equation, revenue.

With Obama caving on just about everything, his word that he will not extend the Bush tax cuts again doesn’t hold much water. His economic policies and thus his re-election is in the inept hands of a Wall St. shill, Treasury Secretary Timothy Geithner and his Chief of Staff, former Morgan Stanley bank executive, Bill Daley. If Ben Bernanke expressed less than a rosy economic outlook, it understandable that the markets worldwide are taking a tumble.

The GOP staged a debt ceiling “stunt” vote by presenting a clean bill to the floor of the House under suspension of the rules. Suspension of the rules requires a 2/3 vote, allows only 40 minutes of debate and prohibits amendments. Chris Hayes, an editor at the Nation sitting in for Lawrence O’Donnell, discusses the House vote on this not so funny “joke” with Rep. Earl Blumenauer (D-OR).

Jon Walker at FDL observes

This move is the ultimate expression of political kabuki, and goes beyond just a show vote. Even if there were a majority of the House that supported voting for a clean debt ceiling increase, due to suspended rules, they now have no incentive to actually vote for the bill. After all, voting to raise the debt ceiling isn’t very popular, so knowing this bill can’t get a two-thirds vote, individual members have no reason to take an unpopular vote that will end up doing nothing.

Boehner isn’t having a vote on a clean bill to prove it can’t pass without major concessions, he has preordained the bill’s failure, taking away members’ reasons to actually vote for the bill, therefore assuring the final roll call will look very bad. Boehner will then point to this big failure he himself guaranteed as somehow justifying his making even more demands.

The hostages takers are demanding even more ransom and they won’t be satisfied until all the hostages are dead.

The Republicans in the House have been so busy with the really important issue of finding new ways to restrict a woman’s right to choose that creating jobs were left to wait until now.

On day 141 since the GOP took control of the House Republicans finally released their jobs plan. It was a minor distraction from their laser-like focus on your uterus. Racel Maddow takes a look at waht they’re trying to do in the House and states like Louisiana, Georgia and Florida.

Sen. Tom Coburn (R-OK), he of the Sen. Ensign “put your pants on” club, has departed in a huff from the latest government attempt to come to a budget agreement on the backs of those who can least afford it. Coburn walked out when Dick Durbin refused to accept Coburn’s demand for $130 billion in Medicare benefit cuts for current beneficiaries on top of the $400 billion in savings already on the table. That half a billion is on top of the cuts already passed in the Obamacare bill. If enacted, these cuts would dismantle Medicare.

From Greg Sargent at the Washington Post:

The “Gang of Six” talks on deficit reduction broke down after Senators Dick Durbin and Tom Coburn got locked in a heated yelling match over Coburn’s demand for extremely deep cuts in Medicare that Durbin thought would “destroy” the popular program, a Senate aide familiar with the talks tells me.

The episode could prove at least somewhat reassuring to liberals who have worried that Durbin is open to a “grand bargain” that would include serious cuts in the popular program, which would undercut Dem efforts to draw a sharp contrast with Republicans on the issue. Durbin has insisted he’s at the “Gang of Six” table mainly to protect liberal priorities.

The episode also is a reminder of how much Republicans will insist on in Dem concessions as conditions for any deal.

Coburn apparently has been bringing up new issues at every meeting, or demanding to reconsider old ones and asking for sharper cuts to Social Security than had been previously agreed to even as the group appeared to be reaching a consensus. On Monday he threw the gauntlet down, like the loyal corporate puppet that he is, and when he couldn’t get his way, took his ball and went home to C Street. I give Durban some small iota of credit for not caving but considering the recommendations that will come from this right wing/blue dog packed “gang”, that is damning praise.

This video of an interview with Dean Baker, co-director for the Center for Economic Policy and Research, discussing the debt ceiling and holding the federal budget hostage is a good discussion of what could happen if the debt ceiling is not raised. Baker  clearly in the side of raising the debt ceiling but if it comes down to a choice of default and Social Security, he would choose saving Social Security.

There are those who are convinced that the GOP will not allow a default to happen and there has been a lot of pressure from Wall St and banking lobbyists to not play games with this. There is a lot of mistrust that Obama is playing some game that will end up slicing deeply into Social Security and Medicare to make it look as though he had no choice. He does have a choice to insist on a clean bill to raise the debt ceiling and take Social Security and Medicare off the bargaining table. If he doesn’t, as Paul Krugman said, “he might as well move out of the White House, and hand the keys over to the Tea Party.”

Did you know that the Federal government hit the debt ceiling? Did you know that the US government owns 70% of the state of Utah? Did you know that the US government also still has lots of gold in Ft. Knox? The right wing Tea Party Republicans, who now hold the country hostage, have suggested we hold a “garage sale” and sell off assets to pay the ransom.

Many conservative Republicans in the House of Representatives, especially those affiliated with the small-government Tea Party movement, say that Geithner and the White House are trying to panic them into raising the debt limit.

They also contend that the Treasury has other options to continue meeting the country’s obligations, such as selling assets including gold reserves and government land.

“There is no certain day,” said congressman James Lankford, a member of the fiscally conservative Republican Study Committee. “It’s a moving target. Even if Aug. 2 is passed, Treasury has the tools in its back pocket to keep us from defaulting.”

Lankford added: “Treasury has done a good job of trying to increase the panic, rather than giving us solutions.”

Dennis Ross, a House Republican and a member of the Tea Party caucus, told Reuters: “I don’t think Treasury has been up front with us. I am not convinced the sky will fall in on August 3.”

Ross added: “I’m not an economist, but I have maintained a household. The federal government owns 70 per cent of Utah, for example. There are federal buildings. If you need cash, let’s start liquidating.”

If they decide to sell off chunks of Nevada, I want first dibs on Area 51.

President Obama in his Saturday address to the nation, announced another cave to the right

. . the administration would begin to hold annual auctions for oil and gas leases in the Alaska National Petroleum Reserve, a 23-million-acre tract on the North Slope of Alaska.

. . accelerate a review of the potential environmental impact of drilling off the southern and central Atlantic coast and will consider making some areas available for exploration. The move is a change from current policy, which puts the entire Atlantic Seaboard off limits to drilling until at least 2018.

. . provide incentives for oil companies to more quickly exploit leases they already hold. Tens of millions of acres onshore and offshore are under lease but have not been developed.

Not one of these actions will lower the price of gas at the pump or create jobs or cure our dependency on foreign oil, most of which comes from our northern neighbor, Canada. The cost of gas at the pumps is under direct control of the oil companies that are still being subsidized by tax payers even as they rake in billions in profits and use tax loop holes to pay no US taxes, instead they are receiving refunds. Crude oil prices are manipulated by speculation on the open market with little regulatory control by the government or the SEC. That so-called “revolutionary” Financial Regulation Bill is a sham. Just look at rising banking fees and your credit card bill, look at your shrinking pay check and the rise in cost of food, clothing and health care. I suggest you have a bucket handy.

Yes, tax payers are angry about the price of gas but we are also opposed to more drilling for limited resources that will not solve the immediate problem. Long term, we need to be investing in green energy, renewable solutions not investing in the oil companies. Short term, rein in the oil companies and speculators.

Americans are angry at the President for not regulating the speculators and oil companies. Americans are angry at for gouging at the pump.

Asked who is to blame, most Americans point to speculators and oil companies for the recent increase in gas prices, and three-quarters say that oil companies profits are too high.

Sixty-one percent of respondents say oil companies deserve a great deal of blame for prices, while 27% say they deserve some blame. Oil speculators also figure prominently in the blame game, with 59% saying they deserve a great deal of blame, while 31% say they deserve some blame.

Americans are angry with President Obama because again caves to the right and corporatists while ignoring what the American people are telling him and congress. Ignore us at your peril.

GRAPH: An Average CEO At America’s Big Corporations Earns 200 Times The Salary Of A Navy SEAL

   In the wake of their successful assault on Osama Bin Laden’s hideout, ABC News did a short feature on the Navy Seals. The report tells us that the people who hold this highly demanding and dangerous get paid about $54,000 a year. It then adds that:

   “The base salary level [of Navy Seals] is comparable to the average annual salary for teachers in the U.S., which was $55,350 for the 2009-2010 school year, according to the Digest of Education Statistics.’ That is one possible comparison. There are other possible reference points. For example, the CEOs of Goldman Sachs and J.P. Morgan both pocket around $20 million a year.

GRAPH: Income Inequality In U.S. Worse Than Ivory Coast, Pakistan, Ethiopia

Exxon Makes $30.5 Billion, So GOP Votes Unanimously To Give Them Tax Breaks

The War on the Middle Class

Former Clinton labor secretary Robert Reich shares is thoughts on the rise in pay for CEO’s and the rise in unemployment number