Tuesday, April 08, 2008

Rush, Be Fair to Senator McCain

Rush Limbaugh again today castigated the Republican nominee for president, Senator John McCain, this time for suggesting that the government should "do something" about the excesses of CEO pay compared to the pay of the average worker.

There were two things wrong with this: in the first plaee, John McCain in no way suggested government action in interfering with a company's right to determine the pay of its workers - including its chief executive. The only politicians running for president who have favored such action are Barack Obama and Hillary Clinton. The news item reproduced near the end of this post reports that McCain actually said that "a light should shine on this unfair practice".

In the second place, Rush should realize that even conservatives like me think that the disparity in pays is a national disgrace, and that American companies should police themselves to reduce the disparity

Actually, particularly starting around the year 2000, people have been shining a light on this ratio and pressuring companies to reduce it - and this seems to have been paying off. From a peak in 2001, the ratio has actually been declining. In my opinion, it still has a long way to go.

In 2006, CEOs of major U.S. companies collected as much money from one day on the job as average workers made over the entire year. These CEOs averaged $10.8 million in total compensation, according to an Associated Press survey of 386 Fortune 500 companies, the equivalent of over 364 times the pay of anaverage American worker. “Executive Excess

As disproportionate as this seems, the ratio has been improving in recent years, although not steadily.

In 2004, the ratio of average CEO pay to the average pay of a production (i.e., non-management) worker was 431-to-1, up from 301-to-1 in 2003, also according to "Executive Excess," an annual report by the liberal research groups United for a Fair Economy and the Institute for Policy Studies.

That's not the highest ever. In 2001, the ratio of CEO-to-worker pay hit a peak of 525-to-1.

Even though the ratio for 2006 was down, it still ranks on the high end historically. In 1990, for instance, CEOs made about 107 times more than the average worker, while in 1982, the average CEO made only 42 times more.

McCain wants to shine light on huge CEO pay-aide

By Caren Bohan, Tue Apr 8, 2008, Reuters
CHICAGO (Reuters) - Republican presidential candidate John McCain has spoken out about lavish pay packages for corporate chiefs, but his top adviser said on Monday the senator wants to shine a light on the issue and is not offering specific new proposals to rein it in.

"Job No. 1 of the president is to use the bully pulpit to shine a light on behavior that is less-than-exemplary," McCain's top economic adviser Douglas Holtz-Eakin told Reuters in a telephone interview.

"That's certainly the case here," Holtz-Eakin said, referring to the issue of huge chief executive officer pay packages.

Holtz-Eakin said McCain would like to see shareholders and boards of directors take the initiative to ensure that pay packages for CEOs are reasonable and in line with performance. "We'll see what the response is," he said.

Lawmakers have expressed outrage over huge pay for executives at firms that were leading players in the subprime mortgage lending crisis, such as Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) and Countrywide Financial Corp (CFC.N: Quote, Profile, Research).

McCain added his voice to those expressing concern about the vast compensation earned by the executives of those companies at a time when their firms performed disastrously and most shareholders lost millions of dollars.

The disparity comes at a time when the ripple effects of the home mortgage crisis are leading to financial ruin for some middle and lower-income families unable to pay their mortgages.

"I think it is outrageous when someone who is the head of Bear Stearns cashes in millions and millions of dollars in stocks," McCain told reporters in Arizona on Saturday. "I think it is unconscionable when the guy who is the head of Countrywide and his co-conspirators make huge amounts of money when Americans face the threat of losing their homes.

"If there's ways we can motivate shareholders and boards of directors to punish these people we should do it," the Arizona Republican said. "If there's ways we can prevent this from happening again, we should exercise those options."

As the presumptive Republican nominee, McCain will run in November against either Sen. Barack Obama, an Illinois Democrat, or Sen. Hillary Clinton, a New York Democrat.

Obama, who leads Clinton in the delegate count, introduced "say-on-pay" legislation in the Senate last year to give investors more influence on the pay packages of executives.

Clinton supports the Senate bill. She has called the multimillion-dollar pay packages offensive and wants to eliminate tax breaks enjoyed by some Wall Street money managers.

Obama's aides have said that if the say-on-pay bill is not enacted into law this year, he would champion it as president.

In a speech last week to the AFL-CIO, Obama cited Countrywide as an example of a U.S. financial system that he said is in need of overhaul.

"There was this news story about the top two executives at Countrywide Financial, a company that's as responsible as any firm for the housing crisis we're facing today," Obama said in the speech in Philadelphia. "And what we learned is that when Countrywide was sold a few months ago, these two executives got a combined $19 million."

"So millions of Americans are facing foreclosure. Our economy is in turmoil. And the guys behind it all are getting bonuses for their bad behavior," the Illinois senator said.

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At 5:34 AM, Anonymous Joe said...

I think that there are a lot of people in this country who hate Rush Limbaugh, and would go as far as to vote for one of the two Democratic candidates if he were to endorse McCain. It just could be that Rush is doing McCain a big favor by running him down. The people who like McCain are going to vote for him, and the voters who really know the score with these other two political hacks, like you and I, will also vote for McCain,--but it's those undecided voters that are going to need convincing. It could be that Rush is using a little reverse Psychology. I know that Rush truly has a dislike for McCain as I do, but his common sense has to prevail.


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