The ITT List
Faux-Populist “Tea Parties” Ignore Tax Breaks for Overpaid CEOs
While the Fox News-fueled coverage of the "tea parties" has hoodwinked major media outlets into believing it's just a spontaneous protest against high taxes, it's actually been a well-orchestrated campaign driven by lobbyists and right-wing corporate front groups that are seeking to keep taxes low and preserve loopholes for wealthy CEOs and corporations. Both sets of tax breaks for the ultra-rich are targeted in President Obama's budget and tax reform plans, while the "Tea Party" activists ignored the real threats posed by a tax system geared to benefiting the rich. As reported by the Center for American Progress's The Progress Report and others:
Although spokesmen of the tea parties have made significant efforts to portray the protests as organic uprisings of like-minded citizens, corporate lobbyists have engineered much of the planning and execution of the events. The corporate front group FreedomWorks, run by lobbyist and former House Majority Leader Dick Armey (R-TX), had its staff organize the very first tea party on Feb. 27 in Tampa, FL, following CNBC's Rick Santelli's call for a Boston Tea Party-like upheaval to protest Obama's housing plan. Soon after, FreedomWorks began planning nationwide tea party protests and had their operatives help coordinate logistics, call conservative activists, and provide activists with everything from organizing tips to sign ideas...
In contrast, progressive groups and unions, such as US PIRG, the AFL-CIO and AFSCME, are seeking genuine tax fairness, closing of off-shore tax havens and greater pay equity for all Americans.
This week they unveiled new reports showing how the nation's tax system is rigged for the wealthy and a shocking AFL-CIO-backed website, 2009 Executive Pay Watch, demonstrating that most executives saw their pay and benefits jump as their businesses and the economy tanked through their reckless practices. Indeed, the CEOs of the top ten companies receiving federal bailout money, such as Citigroup and Bank of America, raked in an average of $25 million each during 2007, when the economic crisis began, before their companies were subsequently saved from bankruptcy by American taxpayers.
As summed up by the AFL-CIO Now blog:
Even as the U.S. economy went into a tailspin, the median salary for CEOs of 200 large corporations increased by 4.5 percent to $1.08 million. On top of that, these corporations keep plying executives with generous freebies, despite the public outcry over private jets and other executive perks.
The 2009 AFL-CIO Executive PayWatch site, which launched Tuesday, points out that the perks for executives rose on average by 12.5 percent in 2008 to $336,248--or nine times the median salary of a full-time worker. Even more appalling is the practice of rewarding executives who drive their companies into the ground.
For example, the site reports that in 2007--the year the financial crisis began to unfold--the top 10 recipients of the federal government's Troubled Asset Relief Program (TARP) collectively paid their CEOs a combined $242 million in total annual compensation. That averages nearly $25 million per CEO to run companies that might have gone bankrupt if not for billions of dollars in taxpayer assistance.
While today's tax-revolt tea parties railed against government spending, including the federal bailouts, they said virtually nothing about the tax system geared to benefit the corporate sponsors of their protests. The little-noticed progressive protests on this tax day, on the other hand, focused on "taxing the rich," and supporting President Obama's plans to end corporate loopholes. As one leftist news outlet reported:
Nicole Tichon, Budget and Tax Reform Advocate of the U.S. Public Interest Research Group (US-PIRG), said, "On the day that taxpayers are paying their taxes, facing our yearly responsibility to report all our earnings, we are reminding lawmakers that a lot of corporations are hiding their earnings."
US-PIRG, the American Federation of State County and Municipal Employees, the Association of Community Organizations for Reform Now (ACORN) and others in the coalition, she said, released a report charging that the U.S. Treasury loses $100 billion each year or $1 trillion each decade from U.S. corporations setting up P.O. boxes in the Cayman Islands and other offshore havens. "The cost of that loophole is made up by ordinary taxpayers like you and me," Tichon told the World in a phone interview. "Obama's budget would recoup this windfall by closing that loophole."
Among the corporations identified in the report are AIG, the insurance giant that has received $170 billion in taxpayer bailouts, American Express, Bank of America, Comcast, Coca Cola, Dell, Exxon-Mobil, Pepsi, and Pfizer.
Tichon said grassroots interest - more accurately, anger - has increased in recent months. "I think the financial meltdown has caused people to pay a lot of attention to where their tax dollars go, especially in light of the financial bailouts for the banks that their tax dollars are paying for. People are certainly engaged."
The Paywatch website will doubtless also fuel such outrage. "Americans are rightly angered by CEOs who haven't learned their lesson," said AFL-CIO Secretary-Treasurer Richard Trumka. "After driving the economy into the ground and gambling with the nation's retirement savings, these same corporations are giving out huge bonuses for bad behavior."
The data-rich pay monitoring website also underscores how CEOs can bargain with their corporate boards for pay raises and benefits, but they've got a double standard. By opposing the Employee Free Choice Act, they seek to prevent the workers in their firms from having the same right. As the AFL-CIO blog observed this hypocrisy at work in the virulently anti-union Wal-Mart's attacks on workers' rights:
Take Wal-Mart, one of the most active opponents of the Employee Free Choice Act and its workers' freedom to form unions. Wal-Mart went so far as to warn store managers not to vote for Obama last fall, and former Wal-Mart CEO Lee Scott summed up corporate opposition to Employee Free Choice like this:
"We like driving the car and we're not going to give the steering wheel to anybody but us."
When it comes to top executives, though, Wal-Mart has a different attitude about contracts. The mega-retailer offers generous health and retirement plans and promises two years' salary to executives who are fired. It's a sharp contrast to the low wages and lack of security provided to ordinary Wal-Mart workers.
So while average Americans are facing job losses, foreclosures and a weakened economy, and could benefit from the economic power union rights would offer them, the CEOs at the top bailout recipient firms literally made out like bandits. You can compare your pay with America's wealthiest CEOs through a nifty interactive tool on the Paywatch website, and, at the end of tax day 2009, gaze in disbelief at the pay given to those once called "Masters of the Universe" by Tom Wolfe, but who should now be called "Destroyers of the Universe" instead:
Company TARP Funds CEO 2007 Total Pay
*Citigroup $50 Billion Charles O. Prince $25,520,621
*Bank of America $45 Billion Kenneth D. Lewis $23,646,455
*AIG $40 Billion Martin J. Sullivan $13,960,382
*JPMorgan Chase $25 Billion James Dimon $28,887,532
* Wells Fargo $25 Billion John Stumpf $14,797,458
But there's a useful way to channel anger over corporate pay abuses and tax ripoffs that does far more than venting mindless anti-Obama, anti-tax rage at "tea party" rallies. Progressives are urging support for closing tax loopholes and, as the AFL-CIO asks, for reregulating the financial industry. That means, as the AFL-CIO observes:
To fix our broken system we must re-regulate our financial markets. Just as passing the Employee Free Choice Act is central to securing the economic future of America's working families, so is ensuring our financial markets are regulated.
The good news is that the framework for the needed financial services regulatory reform already is in front of us. The Special Report on Regulatory Reform by the Congressional Oversight Panel identifies the key principles essential for meaningful financial reform. The panel was established by Congress to monitor the bailout and to help ensure that aid to the financial sector is accompanied by meaningful market reforms. The report concluded that "the present regulatory system has failed to effectively manage risk, require sufficient transparency and ensure fair dealings."
The new rules we need can be put this way: No more gambling with public money, no lying and no stealing. Self-regulation is not acceptable. Any regulator of system wide risk must be a fully accountable body and should not have the power to override investor and consumer protections.
U.S. Rep Barney Frank (D-Mass.) and Sen. Christopher Dodd (D-Conn.), chairs of the House Finance Committee and the Senate Banking, Housing and Urban Affairs Committee, respectively, are working on new financial regulations right now. But banks, CEOs and their corporate lobbyists are working hard behind the scenes to make sure whatever new regulations are passed are toothless Band-Aids, designed to maximize PR benefit, not fix the system.
Take action today and tell Frank and Dodd we're counting on them to draft legislation that truly strengthens our financial regulations and begins curing the disease that has infected our economic system.
I wonder why we didn't hear anything like that today from the right-wing, corporate-funded Tea Party "protesters"? They're not really grass-roots, but, as Nancy Pelosi and Paul Krugman point out, they're "astro-turf."
Even so, these protests were being hyped (even though turnout was generally weak) while real reforms aimed at reining in corporate excesses still remain to be done.