BloggerRadio.com: Walking The Platinum Plank

Yeah OK, the news about some Wall Streeter [ex-Morgan Stanley executive Stephen Crawford] bagging a cool $32-Mill for doing a shitty job, over only 90-days, is a few days old now, but it took time to get my Joe Sixpack head around the absurdity of it all. I mean c'mon, that's more Filthy Lucre than even Tiger Woods pulls down for a quarter, and Tiger is the best at what he does! Not a loser like this dude Crawford [albeit a "loser" laughing all the way to the bank; joke courtesy of Morgan Stanley].

The title for this post originates from the text of a NYT editorial about this same insanity: The Wages of Failure on Wall Street. Here's an excerpt [emphasis/insertions added]:

"Mere groundlings juggling finances at their neighborhood A.T.M.'s [or PayDay Loan-Shark franchise] must pause slack-jawed at how Wall Street insiders are so ludicrously compensated for plain failure at steering their companies."

Most of the reports I've read on this news has focused on the sheer shock & awe of the numbers. But, below is a press release [emphasis added] that provides an actionable item. Those of us who count ourselves amongst the great unwashed masses should bring this latest legislative proposal, and our support for it, to the attention of our own Congress-persons:

Congressman Martin Olav Sabo (D-MN) has introduced "Income Equity Act of 2005" legislation which would limit government subsidization of excessive executive pay by eliminating tax deductions for compensation that exceeds 25 times the company's lowest paid full-time employee. For example, if the lowest paid, full-time employee in a firm was paid $20,000, then the highest salary deduction that could be claimed by that firm would be $500,000.

Here is the entire Sabo press release [emphasis & links added]:

Washington, D.C. – Flanked by pay equity advocates, Congressman Martin Olav Sabo (D-MN) introduced his legacy legislation, the Income Equity Act. Sabo intends to further expose the gap between the incomes of America’s highest- and lowest-paid workers, which continues to grow as recorded by the U.S. Census Bureau.

As a way to illustrate this growing disparity, Congressman Sabo revealed that 11,660 U.S. workers could have been paid the minimum wage for a full year with the 2004 pay of $120.1 million of Yahoo Inc.’s CEO. A minimum wage worker would have to work 11,660 years to earn $120.1 million.

“Instead of such high ceilings and such low floors for compensation in American business, my legislation encourages companies to review how they are paying all of their employees,” Congressman Sabo said.

Sabo’s bill would limit government subsidization of excessive executive pay by eliminating tax deductions for compensation that exceeds 25 times the company’s lowest paid full-time employee. For example, if the lowest paid, full-time employee in a firm was paid $20,000, then the highest salary deduction that could be claimed by that firm would be $500,000.

“Full-time working Americans should make enough money to get by without government assistance,” Sabo said. “My bill does not tell companies what they are allowed to pay top executives, but it intends to make them think about the top and bottom pay within a company and how they relate to one another. In many cases today, there is no correlation at all.”

“Henry Ford was concerned about how to compensate his employees at Ford Motor Company. His philosophy was that his factory workers should be able to buy the product they were making,” Congressman Sabo said.

In the wake of corporate scandals and continued high-dollar severance packages for failing CEOs who are forced out, income inequality is as problematic as ever. BusinessWeek magazine recently reported that CEO pay is up 15 percent, while average worker pay is up only 2.9 percent. Even as the economy grew 4.4 percent last year, real wages have fallen due to the increased costs of consumer goods at 3.3 percent.

“When we lay before our executives grotesquely huge incentives as rewards for performance, we should not be surprised when executives, to win those rewards, behave grotesquely,” said United for a Fair Economy’s Sam Pizzigati.

In addition to compensation trends, the Bush Administration tax policy has included repealing the estate tax and slashing taxes for millionaires. As a result, the gap between rich and poor continues to grow. The Congressional Budget Office confirmed that President Bush's tax cuts do favor the wealthy, with one-third of the Bush tax cuts going to the top 1% of households (those with an average income of $1.1 million per year).

On the issue of the Social Security Trust Fund solvency, the Economic Policy Institute recently testified before the U.S. House Committee on Ways and Means that increased wage inequality and wage growth stagnation since 1983 account for nearly 60 percent of the actuarial shortfall in Social Security. [BloggerRadio adds: rescind the tax-cuts to the wealthy, mentioned in the paragraph just above, and increase the federal minimum wage (stagnant for nearly a decade now) and presto, no SS shortfall! Duh!]

“Today's CEOs make approximately 300 times what the average American worker earns," explains Brandon Rees of the AFL-CIO Office of Investment. "Working families' retirement savings are invested in these companies, and excessive CEO pay comes at the expense of America's retirement security.” [BloggerRadio adds: hell, these are the same corporate types who advocate shirking their promised employee pension commitments, shifting that burden onto the backs of working-class taxpayers! Can you say robber-barons?]

In the 1980s and 1990s, Congress enacted legislation on executive compensation. In 1984, Congress passed a “golden parachute” law that defined severance packages as excess payments, making them non-deductible and imposing a 20 percent excise tax on recipients. In 1993, Congress limited the deduction for executive compensation to $1 million per executive. Rep. Sabo’s legislation would take the next common sense step to limit deductibility to an amount that correlates to a company’s existing pay scale.

Please urge your Congressional representation to do both the right thing, and the common-sense thing. Call yours toll free at: 1-877-762-8762, ask for the office of your Rep, and ask them to co-sponsor / support Congressman Sabo's Income Equity Act of 2005.

The title for this post originates from the text of a NYT editorial about this same insanity: The Wages of Failure on Wall Street. Here's an excerpt [emphasis/insertions added]:

"Mere groundlings juggling finances at their neighborhood A.T.M.'s [or PayDay Loan-Shark franchise] must pause slack-jawed at how Wall Street insiders are so ludicrously compensated for plain failure at steering their companies."

Here is the entire Sabo press release [emphasis & links added]:

Washington, D.C. – Flanked by pay equity advocates, Congressman Martin Olav Sabo (D-MN) introduced his legacy legislation, the Income Equity Act. Sabo intends to further expose the gap between the incomes of America’s highest- and lowest-paid workers, which continues to grow as recorded by the U.S. Census Bureau.

As a way to illustrate this growing disparity, Congressman Sabo revealed that 11,660 U.S. workers could have been paid the minimum wage for a full year with the 2004 pay of $120.1 million of Yahoo Inc.’s CEO. A minimum wage worker would have to work 11,660 years to earn $120.1 million.

“Instead of such high ceilings and such low floors for compensation in American business, my legislation encourages companies to review how they are paying all of their employees,” Congressman Sabo said.

Sabo’s bill would limit government subsidization of excessive executive pay by eliminating tax deductions for compensation that exceeds 25 times the company’s lowest paid full-time employee. For example, if the lowest paid, full-time employee in a firm was paid $20,000, then the highest salary deduction that could be claimed by that firm would be $500,000.

“Full-time working Americans should make enough money to get by without government assistance,” Sabo said. “My bill does not tell companies what they are allowed to pay top executives, but it intends to make them think about the top and bottom pay within a company and how they relate to one another. In many cases today, there is no correlation at all.”

“Henry Ford was concerned about how to compensate his employees at Ford Motor Company. His philosophy was that his factory workers should be able to buy the product they were making,” Congressman Sabo said.

In the wake of corporate scandals and continued high-dollar severance packages for failing CEOs who are forced out, income inequality is as problematic as ever. BusinessWeek magazine recently reported that CEO pay is up 15 percent, while average worker pay is up only 2.9 percent. Even as the economy grew 4.4 percent last year, real wages have fallen due to the increased costs of consumer goods at 3.3 percent.

“When we lay before our executives grotesquely huge incentives as rewards for performance, we should not be surprised when executives, to win those rewards, behave grotesquely,” said United for a Fair Economy’s Sam Pizzigati.

In addition to compensation trends, the Bush Administration tax policy has included repealing the estate tax and slashing taxes for millionaires. As a result, the gap between rich and poor continues to grow. The Congressional Budget Office confirmed that President Bush's tax cuts do favor the wealthy, with one-third of the Bush tax cuts going to the top 1% of households (those with an average income of $1.1 million per year).

On the issue of the Social Security Trust Fund solvency, the Economic Policy Institute recently testified before the U.S. House Committee on Ways and Means that increased wage inequality and wage growth stagnation since 1983 account for nearly 60 percent of the actuarial shortfall in Social Security. [BloggerRadio adds: rescind the tax-cuts to the wealthy, mentioned in the paragraph just above, and increase the federal minimum wage (stagnant for nearly a decade now) and presto, no SS shortfall! Duh!]

“Today's CEOs make approximately 300 times what the average American worker earns," explains Brandon Rees of the AFL-CIO Office of Investment. "Working families' retirement savings are invested in these companies, and excessive CEO pay comes at the expense of America's retirement security.” [BloggerRadio adds: hell, these are the same corporate types who advocate shirking their promised employee pension commitments, shifting that burden onto the backs of working-class taxpayers! Can you say robber-barons?]

In the 1980s and 1990s, Congress enacted legislation on executive compensation. In 1984, Congress passed a “golden parachute” law that defined severance packages as excess payments, making them non-deductible and imposing a 20 percent excise tax on recipients. In 1993, Congress limited the deduction for executive compensation to $1 million per executive. Rep. Sabo’s legislation would take the next common sense step to limit deductibility to an amount that correlates to a company’s existing pay scale.