Tuesday, October 27, 2009

Those greedy corporate CEOs
and their absurdly high salaries

Corporate CEO salaries have been a target of criticism for a long time, and that criticism increased during the mortgage banking collapse, when bank CEOs also became targeted for doing a lousy job.

The heads of large companies do make huge salaries, as shown by this sample from the 2008 AFL-CIO CEO Pay Database: Robert A. Iger, The Walt Disney Company, $51 million; Lloyd C. Blankfein, The Goldman Sachs Group, Inc., $42.9 million; Mark V. Hurd, Hewlett-Packard Company, $34 million; and Rex W. Tillerson, Exxon-Mobil Corporation, $32 million.

There are a few reasons for this criticism, including envy and not understanding how businesses work. However, some people who understand perfectly well how businesses work also think CEOs are overpaid. People wonder how CEOs can be worth multi-million dollar salaries.

The short answer is that this is America – at least for a little while longer – and people are able to make as much as they can. Businesses want the best talent they can find, and they’ll pay what they must to get the right person to run the company.

Here’s one example:

Rex Tillerson’s company, Exxon-Mobil, is the world’s largest publicly traded company, the world’s largest refiner and marketer of petroleum products and also among the world’s largest chemical companies. It provides a job for 30,000 Americans and 80,000 people worldwide.

Exxon-Mobil had total income of $477.3 billion in 2008, and spent $395.6 billion on operations and other expenses. Some of the same people who get upset with CEO pay also get upset with the amount of money Exxon-Mobil earned in 2008, and for the same reasons. The company’s profit was $45.2 billion, which is a lot of money. But considering that Exxon-Mobil had $477 billion in income, $45.2 billion really isn’t excessive; only about 8.9 percent.

The company paid taxes of approximately $120 billion, more than twice its profit, and paid its shareholders $40 billion in dividends. Mr. Tillerson was in charge of the company and responsible for its performance. He did his job well. How much is that performance worth to shareholders?

If you still think Mr. Tillerson and his fellow corporate heads are overpaid, remember that corporate CEOs are not the only ones making a lot of money, even though they are the ones whose incomes are most frequently criticized. So do professional athletes, entertainers, and TV personalities, including some news anchors.

The top five athletes last year, for example, were also highly paid, and because of their success attracted lucrative endorsements from product manufacturers: Golfer Tiger Woods earned $100 million; boxer Oscar De La Hoya, $43 million; golfer Phil Mickelson, $42 million; auto race drivers Kimi Raikkonen and Michael Schumacher, $40 million and $36 million.

Salaries in the world of entertainment also boggle the mind. Take movie actors: Matt Damon made $26 million for The Bourne Supremacy; Johnny Depp takes home $20 million per film; Nicole Kidman gets up to $17 million per film; and George Clooney routinely collects more than $15 million per film.

On television, the highest-paid person on the 2008 prime-time series list is Charlie Sheen at $825,000 an episode, and with money he gets from owning a stake in his show, he makes nearly $20 million a year. David Letterman gets $40 million annually, and American Idol’s Simon Cowell’s annual pay is $36 million.

We even see that some of the people that deliver the news have seven- and eight-figure annual salaries, like CBS Evening News anchor Katie Couric at $15 million; Matt Lauer, NBC Today co-anchor, $12 million; ABC News’ Diane Sawyer makes $12 million; Meredith Vieira, NBC Today co-anchor, $10 million; NBC Nightly News anchor Brian Williams takes home $8 million, Anderson Cooper of CNN is paid $5 million; and MSNBC’s Keith Olbermann gets $4 million.

These CEOs, athletes, entertainers and news people are among the best in their respective fields. Their pay is not based entirely upon their performance, however, because some CEOs drive their companies into the ground; some athletes make horrible mistakes and lose instead of win; some movies and TV shows do not do well, despite the stars that appear in them; and news anchors often produce lousy ratings. Some high earners in every career field have notoriously bad personal problems, and some have committed crimes.

Because of the expectation of high levels of performance, these folks are in high demand, hence the high paychecks, sometimes in spite of embarrassing personal problems or criminal involvement.

Tampa Bay Rays owner Stuart Sternberg sees no problem with big salaries in sports. "People should be able to make what they make," he said. That idea applies equally to everyone in America, even CEOs.

Maybe we should make thoughtful judgments about the value of what each of these people produces. Which of them contributes the most to the society at large; which is the more valuable: a movie, a television program, a winning team or athlete, a news program or a business that provides useful products or services, jobs and that pays taxes to support government activities?

Viewed in that light, a CEO running a successful business deserves more than contempt and resentment.

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Friday, October 23, 2009

Confused: Sen. Leahy has forgotten about
the U.S. Constitution

According to, “Senate Judiciary Chairman Patrick Leahy (D-Vt.) would not say what part of the Constitution grants Congress the power to force every American to buy health insurance – as all of the health care overhaul bills currently do.”

That actually is not quite accurate: Leahy, who has been in office far too long to remember why he is there, could not say what part of the Constitution authorizes the unauthorizable.

CNS continues: “Leahy, whose committee is responsible for vetting Supreme Court nominees, was asked by where in the Constitution Congress is specifically granted the authority to require that every American purchase health insurance. Leahy answered by saying that “nobody questions” Congress’ authority for such an action. "Where, in your opinion, does the Constitution give specific authority for Congress to give an individual mandate for health insurance?"

Sen. Leahy: "We have plenty of authority. Are you saying there is no authority?" "I’m asking--"

Sen. Leahy: "Why would you say there is no authority? I mean, there’s no question there’s authority. Nobody questions that." tried a second time to get an answer, “Leahy compared the mandate to the government’s ability to set speed limits on interstate highways – before turning and walking away.” "But where, I mean, which–"

Sen. Leahy: "Where do we have the authority to set speed limits on an interstate highway? "The states do that."

Sen. Leahy: "No. The federal government does that on federal highways."

Here’s the exchange:

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Tuesday, October 20, 2009

Washington, DC: Chicago on the Potomac
and the Land of Make Believe

The Land of Make Believe. Those words form the title of a great song and the name of some amusement parks. But they also describe President Barack Obama’s perception of the health care reform process.

Mr. Obama recently announced from The Land of Make Believe that all of the objections to the health care reform plan have been heard: "This is another milestone on what has been a long, hard road toward health insurance reform. In recent months, we’ve heard every side of every argument from both sides of the aisle."

He is right about one thing: Many arguments against the dangerous features of the dominant Democrat proposals have been voiced. But our elected leaders had their fingers in their ears so they couldn’t hear them.

"The approach that is emerging includes the best ideas from Republicans and Democrats, and people across the political spectrum," Mr. Obama continued.

That, ladies and gentlemen, is manifestly false. The best ideas of Republicans have been rejected out of hand, such as medical liability reform to encourage speedy resolution of claims, and deter junk lawsuits that drive up the cost of care; letting families and businesses buy insurance across state lines; that individuals, small businesses and other groups should be able to join together to get health insurance at lower prices, the same way large businesses and labor unions do; and that insurers should be able to offer incentives for wellness care and prevention. These beneficial and practical ideas are regrettably absent from the several radical Democrat plans.

"In fact, what’s remarkable is not that we’ve had a spirited debate about health insurance reform,” the president continued, “but the unprecedented consensus that has come together behind it," including the nation’s doctors and nurses.

Well, no. Some doctors and some nurses support the Democrat proposals, but not nearly most doctors and nurses.

A White House Rose Garden meeting with doctors was touted as a summit of physicians. While the doctors looked impressive in their spiffy white lab coats, it was an invitation-only event of doctors who were and are Obama supporters. This Chicago-style propaganda is what the president terms “consensus.”

Now, it is true that the American Medical Association supports the president’s vague plans to reform the health care system, but it does so despite the fact that some of the most important of its seven critical elements of reform are ignored in the various Democrat plans. The AMA’s support does not mean that most doctors support the plan, because only about 20 percent of practicing physicians are members of the AMA. The truth: most doctors oppose the reform measures.

A poll of more than 1,300 randomly selected practicing physicians conducted by mail by Investor’s Business Daily and TechnoMetrica Institute of Policy and Politics found that 65 percent of participants oppose reform measures and, far worse, some 45 percent said they will consider leaving the practice of medicine if Democrat reform measures become law.

Having willfully distorted the support of physicians, Mr. Obama next proudly announced the support of two former Republican Senate Majority Leaders: Bob Dole and Dr. Bill Frist.

This, too, stretches truth past the breaking point. Bill Frist supports certain aspects of the reform effort, but there are several he doesn’t support. He thinks, for example, that reform proposals don’t do nearly enough to bring costs under control, and believes the plans would fall far short of providing universal coverage, leaving millions out.

Bob Dole’s support is also equivocal: He said that he “supported the Democrats’ attempt to overhaul the health care system.” (Emphasis added.) He and former Democrat leader Tom Daschle issued a joint statement that said, in part: “The current approaches suggested by the Congress are far from perfect, but they do provide some basis on which Congress can move forward.” (Emphasis added.)

So, while the president plays fast and loose with the truth, many Americans believe him when he says that there is bi-partisan consensus, despite their natural suspicion of the health care reform measures. That is a highly dishonest tactic. One vote by one Republican on one measure in one committee of one house of Congress does not a consensus make.

The president’s comments are the sort of deliberate distortion and outright misstatement of fact that prompted South Carolina Representative Joe Wilson to shout an unkind comment at Mr. Obama during the address to the Congress not long ago. Rep. Wilson’s behavior was wrong, and he expressed regret for it.

The president, on the other hand, misrepresents the truth with impunity and without shame or regret and, indeed, is ably assisted in his deception by a compliant, discredited and dishonest national media that has replaced its professional ethics with adoration for and allegiance to the person who, more than any other individual, ought to be the focus of its objective scrutiny.

The health care reform “plan” is a bunch of bad ideas cobbled together with duct tape and bailing wire, with the reluctant participation of insurers and providers pressured into subservience by the threat of something far worse if they don’t get on board.

This is the hope and change we elected last November.

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Sunday, October 18, 2009

Strange bedfellows:
Senators Kerry and Graham join forces for …

Many people reading the op-ed piece in The New York Times co-authored by Sen. John Kerry (D-MA) and Sen. Lindsey Graham (R-SC) titled “Yes We Can (Pass Climate Change Legislation)” might scratch their head at this odd alliance of political personalities.

Some would give up reading after a couple of paragraphs, since the article proceeds from the deeply flawed premise that man’s activities produce harmful air pollutants in sufficient quantities to negatively affect Earth’s environment. Those who listen to only one side of the climate change argument hold this position. They accept as fact a theory with at least as many disbelievers among climate scientists as proponents.

Even though Graham and Kerry are wrong about humans causing climate change, the odd couple makes some points later in the article that are right on target. They acknowledge, for example, that “for the foreseeable future we will continue to burn fossil fuels.” While emphasizing the need for environmental sensitivity and protecting the right of coastal states, they acknowledge that in the near term we should focus on breaking our dependence on foreign oil by harvesting oil and natural gas reserves off shore and from within US boundaries. This piece of common sense escapes most liberals.

They even go so far as to acknowledge the need to pursue clean coal technologies, and to stimulate research with financial incentives, because the “United States should aim to become the Saudi Arabia of clean coal.” Kerry and Graham also endorse the increased use of nuclear energy. Still more common sense.

But they have a na├»ve idea of what the proposed cap and trade system will produce: “… we are advocating aggressive reductions in our emissions of the carbon gases that cause climate change. We will minimize the impact on major emitters through a market-based system that will provide both flexibility and time for big polluters to come into compliance without hindering global competitiveness or driving more jobs overseas.”

Those two goals are, of course, mutually exclusive: it is not possible to aggressively reduce emissions without creating economic problems both for businesses that burn fossil fuels and for the people who purchase their services and products. Even President Obama recognizes this and has commented on it. During the campaign, candidate Obama told the San Francisco Chronicle that “under my plan of a cap and trade system electricity rates will necessarily skyrocket.” And so will the price of everything relying upon and using electricity. Acknowledging this reality, but with a tremendous amount of understatement, Graham and Kerry say, “We recognize there will be short-term transition costs associated with any climate change legislation, costs that can be eased.”

The two senators warn that we had better pass whatever measure they develop, because, “If Congress does not pass legislation dealing with climate change, the administration will use the Environmental Protection Agency to impose new regulations … [which] are likely to be tougher and they certainly will not include the job protections and investment incentives we are proposing.”

The warning about the excessive actions of the EPA is a very real concern. Just ask the people of Virginia and West Virginia, where the federal agency’s manic war against coal mining promises to wreck local and state economies. The EPA has been aggressive against coal mining projects for years, and since the U.S. Supreme Court ruled two years ago that carbon dioxide is a pollutant under the Clean Air Act, and encouraged the EPA to regulate this essential and naturally occurring gas, things have not improved.

However, just because an out-of-control federal agency, acting on an over-reaching court ruling, may take the opportunity to itself over-reach, that is not a reason to hurriedly enact legislation that is only slightly less dangerous to the national economy than what the EPA would do.

Perhaps it’s progress of a sort that two senators who still believe in manmade climate change do at least recognize the necessity of fully utilizing conventional energy sources by opening up currently closed areas for oil and natural gas production, and pursuing clean coal and nuclear technology, at least until new alternative sources are developed enough to make a noticeable contribution to the nation’s energy needs.

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Tuesday, October 13, 2009

U.S. losing economic freedom

What do Hong Kong, Singapore, Australia, Ireland and New Zealand have in common? An odd assortment, to be sure, they share the fact that each of them has a greater degree of economic freedom than the United States.

The Index of Economic Freedom is an annual analysis of world economies, now totaling 183 countries. It is a collaborative effort of The Heritage Foundation and The Wall Street Journal. The rankings are an average of 10 components analyzed during the last half of 2007 and the first half of 2008, on a 100-point scale, with 100 representing the highest degree of economic freedom.

The components of economic freedom are: Business Freedom, Trade Freedom, Fiscal Freedom, Government Size, Monetary Freedom, Investment Freedom, Financial Freedom, Property rights, Freedom from Corruption, and Labor Freedom.

The Heritage Foundation describes economic freedom as “the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.”

Heritage tells us that the U.S. economy “is the world's largest. Services account for more than 70 percent of economic activity, but the U.S. is also the world's largest producer of manufactured goods and fourth-largest producer of agricultural products. The United States is the world's oldest constitutional democracy, and its size, culturally and ethnically diverse population, and republican form of government that reserves significant powers to the state and local levels all promote a competitive atmosphere in which a variety of economic policies and strategies can be pursued.”

To achieve its 6th place ranking, the U.S. scored 80.7, which is three-tenths of a point lower than last year, due to declines in five of the 10 economic freedoms. We scored 90 or more in three of the 10 components, Business Freedom, 91.9; Property Rights, 90.0; and Labor Freedom, 95.1.

The two lowest scores were in Fiscal Freedom and Government Size, where the U.S. scored below the world average.

In terms of Fiscal Freedom, we scored 67.5, seven-plus points below the average of 74.9. “U.S. tax rates are burdensome,” according to the Heritage. “Both the top income tax rate and the top corporate tax rate are 35 percent. Other taxes include a property tax, an estate tax, and excise taxes, and additional income and sales taxes are assessed at the state and local levels. In the most recent year, overall tax revenue as a percentage of GDP was 28.2 percent.”

No surprise to proponents of small government, the United States’ score of 59.6 for Government Size was the lowest of the 10 components, and below the world average of 65.0. “Total government expenditures, including consumption and transfer payments, are high” Heritage said. “Government spending has been rising and in the most recent year equaled 36.7 percent of GDP. Stimulus measures passed in the second half of 2008 promised to push government spending significantly higher,” the report noted. No doubt the 2010 ratings will be downwardly affected by the events of late 2008 and early 2009.

Heritage acknowledges this: “Presidential and congressional elections in 2008 raised serious questions about the overall direction of future economic policies, particularly with respect to trade liberalization, regulation of greenhouse gas emissions, taxes, and the role of government.”

The Economic Freedom ranking is less a goal to achieve than a measure of how we are doing, and while the U.S. made progress in past years, for the last two years we’ve been moving in the wrong direction. Last year, the U.S. ranked 5th, and in 2007 it was 4th. We are losing economic freedom.

The Heritage analysis identifies high taxes as a major factor in our loss of economic freedom, yet today, in the midst of a deep recession, the administration and Congress are pursuing health care reform and a plan to reduce greenhouses gases, and both will increase taxes and costs on businesses and on individuals at all income levels.

Furthermore – and more to the point – neither of those is the most serious problem facing Americans today; unemployment is the paramount concern.

But instead of stimulating job creation and easing the financial burden on the Americans by cutting taxes, our leaders piddle around trying to jam through highly controversial and unpopular measures that will take us in the wrong direction.

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Tuesday, October 06, 2009

Citizens deserve faithful service from lawmakers
and public employees

As if Michigan isn’t having enough trouble with the effects of the recession and the ailing auto industry, some of its citizens are suffering under laws and enforcement policies that simply defy common sense.

Each morning before the school bus comes to pick up kids in Irving Township, Lisa Snyder allowed the children of three of her friends to come to her house about an hour before school to wait for the bus. “Well, we can’t have that sort of thing going on,” state Department of Human Services employees said, and sent her a letter telling her that she was in violation of a law against operating an unlicensed day care center, which prohibits anyone from caring for unrelated children in their home for more than four weeks each calendar year unless they are a licensed provider.

Obviously, this action frightened Ms. Snyder and has angered her friends, but it also got the attention of Governor Jennifer Granholm and some state legislators, who are now at work fixing this legislative folly, and hopefully correcting the idiotic bureaucratic thinking that drove the state agency to persecute a woman for helping her friends.

But Michigan is not alone in having goofy laws and dopey bureaucrats. Vermillion County, Indiana, Prosecutor Nina Alexander said that she is proud to be "enforcing the law as it was written" by prosecuting a grandmother for buying two boxes of cold medication in less than a week. Horrors!

Sheriff Jon Marvel of neighboring Vigo County took the opportunity to show his concern: “I feel for [the grandmother], but if she could go to one of the area hospitals and see a baby born to a meth-addicted mother …” she would what? Not buy the cold medicine she needs?

Cold medications of the type that grandmother Sally Harpold purchased can be used to make methamphetamine, as it turns out, and there is a law that prohibits anyone, even someone with a cold, from purchasing two boxes of it in less than a week, a legal concept that has several logical fallacies.

Ms. Alexander admits that Ms. Harpold had no intention of making meth with the medicine, but, hey, so what? Everyone knows that the way to prevent babies from becoming addicted to meth is to arrest grandmothers who buy cold medication.

"The public has the responsibility to know what is legal and what is not, and ignorance of the law is no excuse," Ms. Prosecutor said. But does the public not also have a reasonable expectation that laws will be rational and bureaucrats will use common sense?

And, if the ingredients in cold medicine are potentially harmful, wouldn’t it be more effective to regulate them on the sales side rather than prosecuting innocent grandmothers, who probably have no idea they are doing something illegal when they buy two packs in one week?

Many stupid laws are on the books in most every state. In Huntington, W.Va. for example, it is legal to beat your wife so long as it is done in public on Sunday, on the courthouse steps.

In Massachusetts, an old ordinance declares goatees illegal unless you first pay a special license fee for the privilege of wearing one in public. And, all men must carry a rifle to church on Sunday.

Animals are banned from mating publicly within 1,500 feet of a tavern, school, or place of worship in California, a state that also prohibits a vehicle without a driver from exceeding 60 miles per hour.

Such laws are routinely ignored by law enforcement agencies, as they should be, because most public servants employ common sense, unlike the aforementioned ones in Michigan and Indiana.

How do you explain the creation of carelessly designed laws such as those cited, and the mindless behavior exhibited in their enforcement? There seems to be an epidemic among public servants, many of whom have forgotten that they exist only to serve the best interests of the citizenry.

Most laws, even the goofy and intrusive ones, are written with good intentions in mind, but as we have seen over the last forty-plus years of increasing government intrusiveness, good intentions often produce undesirable results, because the public good is not uppermost in the minds of public servants.

Overzealous lawmaking is not limited to the individual states, however, and one of many examples of federal malfeasance is the effort by Congress and the administration to devastate the existing health care system because it serves only 90 percent of our legal population adequately. The examples of legislative impropriety in this exercise are legion. One proposed component of this unwarranted government intrusion would fine or perhaps jail anyone who does not purchase health insurance.

That is both absurd and intolerable. What aspect of the history of how and why our country was established inspires a lawmaker to even imagine such un-American ideas?

Public servants need to be reminded of their sworn duty to uphold their oath of office and to serve the interests of the people. Examples of failure in these areas abound, and it may take a few of them being driven from office to get their attention.

Nominations, anyone?

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Thursday, October 01, 2009

Democrats continue to mislead on the energy issue

Our government still has not figured out what to do about the dependence on foreign oil that everybody agrees is an unacceptable situation.

The sensible thing to do, of course, is to produce more oil and natural gas from sources within the United States and off the coasts, and the sooner, the better. “Drill here, drill now” is not just a slogan; it’s a prescription for energy independence.

The 30-year old ban on offshore drilling along the Atlantic and Pacific coasts expired a year ago, and yet the federal government has sat on its hands, allowing time to pass without moving to reduce the need to buy oil from countries that are unfriendly to us by opening up these areas for exploration.

Instead, our elected representatives have busied themselves with other things, including an unrealistic focus on immature “green” and alternative energy sources, while accessible oil and natural gas supplies lie undisturbed within our reach.

Both the House of Representatives and the Senate each have bills that would not just delay sensible development and progress, but punish the American people needlessly. The House put forth the Waxman-Markey bill last summer which passed by a thin seven votes, and just this week the Kerry-Boxer bill was brought forth. Both are cap-and-trade measures that will cause enormous problems.

American Petroleum Institute President Jack Gerard issued the following statement on the Kerry-Boxer climate bill: “Unfortunately, the Kerry-Boxer legislation is beginning to look a lot like the House’s Waxman-Markey bill and a loser for American consumers. We can do better. If the Kerry-Boxer approach mimics the House bill, as early indications suggest, it will undermine our energy security by making American consumers more reliant on foreign sources of refined products, kill jobs and increase fuel costs.”

While the leadership in Washington plays politics and ideological football with energy policy, the people they work for languish. Either of these bills will place significant pressure on the existing job levels in the oil and natural gas industry, which supports nearly 10 million jobs today, will also push the costs of fuel higher, and will increase, not reduce, our dependence on foreign oil.

Conversely, increasing domestic oil and natural gas production will create jobs and keep prices low, and has the added advantage of having no detectable effect on global climate change/global warming/global cooling.

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