Tag: CEO Pay

The SEC’s New CEO Pay Rule Is Useless and Dishonest

 

To match Special Report SEC/INVESTIGATIONSA party line, three Democrats vs. two Republicans vote of SEC commissioners has finalized a rule that will require companies to disclose the ratio of the compensation of their CEOs to the median compensation of their employees. This rule is required under the 2010 Dodd-Frank financial regulation law.

Like most progressive policies, this sounds good on its face to most people. “No more fat cats! No more too big to fail!” chants the collective liberal media and political establishment. But, again like most progressive policies, it’s not quite so simple.

People naturally grumble at the idea of some CEO making millions and millions of dollars each year while some employees at their given company are making minimum wage. This makes the idea behind the SEC’s new ratio rule politically popular and an easy sell. The problem is that proper perspective isn’t applied to the issue of CEO compensation. Let’s address a few key points that explain why CEOs are compensated so handsomely in many cases.

Is the US Economy Immoral?

 

shutterstock_259200614When Democrat Jerry Brown ran a long shot presidential campaign back in 1992, he snarkily referred to Bill and Hillary Clinton as “Bonnie and Clyde,” the Depression-era bank robbers. Brown, now the governor of California, thought he had a legitimate chance to win the nomination. He wasn’t going to let some delicate notion of political etiquette stand in his way.

Don’t expect that kind of tough talk from Bernie Sanders, another longshot Democratic presidential candidate challenging a Clinton. During his announcement Tuesday, all the socialist Vermont senator had to say about Hillary Clinton was that his campaign “is not about Hillary Clinton.”

That’s not exactly surprising. The socialist Sanders almost certainly doesn’t believe he will defeat the Clinton machine and be the Democratic Party’s next presidential nominee — much less America’s next president. So there’s no reason to play attack dog. More likely, what Sanders really wants is a big stage to highlight what he sees as the terrible unfairness and inequality of the modern U.S. economy, one where Americans have “a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.” In other words, the economy is just dandy at generating wealth, but that prosperity only benefits a few.

A Challenge for Hillary Clinton: Return to a JFK Growth Agenda

 

JFK 2_0When John F. Kennedy was elected president he surprised both Democrats and Republicans with a bold tax-cutting plan to solve the problem of a moribund economy. He had campaigned on “getting the country moving again,” and had set a 5 percent economic-growth target, but he never specified how he was going to do it. Then he opened everyone’s eyes with a plan to lower marginal tax rates across-the-board.

JFK’s advisors proposed a traditional Democratic approach: temporary targeted tax cuts. But Kennedy insisted on lower tax rates that would create much higher rewards for work, saving, and investment. And Kennedy argued that his lower tax-rate incentives would so expand the economy that after a few years his tax cuts would pay for themselves.

He was right.