WHY SUBSIDIZE CEOs? By now, most Americans recognize—and resent—the fact that top corporations compensate their executives in ways that are simply indecent. Eye-popping salaries. Outlandish bonuses. Lavish stock options. Golden—nay, platinum—parachutes. What fewer realize about this obscene compensation is that we’re all paying for it. Literally.
A new blockbuster report by the Institute for Policy Studies exposes how taxpayers subsidize executive compensation and reveals some of the worst offenders. Those subsidies add up to more than $14 billion a year. That equals 12 percent of the planned savings from the deficit deal’s “sequester” in a span of five years, or 211,732 times the annual cost of hiring an elementary school teacher, or $46 for each American. As co-author Scott Klinger says, “Every man, woman and child in America is buying a CEO lunch.”
Equally disturbing: twenty-five companies paid their CEOs more in total compensation last year than they paid in taxes.
“No laws have been broken,” says Klinger of the numerous loopholes that IPS identifies, which include tax-deductible “performance-based” compensation. (Five companies alone gave out $232 million in such pay.) “And that in itself is very troubling, given the results.” Co-author Sarah Anderson says one goal of the report is to debunk the notion that the United States is broke. “We’re actually a very rich country, but so much of our wealth is being diverted into the pockets of top executives.”
Can the 99 percent take that wealth back? IPS sees cause for hope, citing the Occupy movement, which Anderson says “created new openness” to talk about inequality and corporate excess: “The moment majorities of people feel [loopholes] are no longer legitimate, that’s when you get the sense that real action and real change are possible.” IPS director John Cavanagh recalls how public outrage and political pressure led the IRS to crack down on corporate deductions for expenses like skyboxes and lavish lunches. More recently, Anderson notes, tighter tax treatment for specific industries was included in both Obamacare and the Dodd-Frank law.
Shareholders at fifty-five companies have already voted this year to reject proposed executive pay packages. Made possible by Dodd-Frank, the votes are advisory for now, but they show the breadth of discontent—and an increasing awareness that a CEO’s interests may not match those of his or her company, let alone the public’s. “We need to make these votes of shareholders binding,” says Klinger. Meanwhile, Representative Barbara Lee has proposed a bill to cap total deductible compensation at $500,000 or twenty-five times the pay of a company’s lowest-paid worker, whichever is greater. (Requiring companies to disclose their CEO-to-worker pay ratio is one of several executive pay rules included in Dodd-Frank that are currently stalled.)
Anderson says the GOP ticket also offers a unique opportunity: Mitt Romney won’t share the tax records that would reveal which loopholes have padded his wealth, and Paul Ryan won’t share the loopholes he says he’ll close to pay for his tax cuts for the rich. KATRINA vanden HEUVEL
OBAMACARE AND TRANS PEOPLE: Queasy patients cringe when they think about a trip to the doctor’s office, with its weigh-ins and blood tests and shots (oh my!). For transgender Americans, the situation is all the more extreme: the 2011 National Transgender Discrimination Survey found that one in four trans people has been verbally harassed at a doctor’s office or hospital, and 19 percent have been refused medical care based on their identity. Fortunately, a historic decision about the Affordable Care Act has outlawed healthcare discrimination based on gender identity.
On July 12, responding to a letter from a coalition of LGBTQ advocacy groups, including the National Center for Lesbian Rights and the National Center for Transgender Equality, the Department of Health and Human Services confirmed that the ACA’s Section 1557—which prohibits discrimination based on sex under Title VII—applies to gender identity. Now, people denied care or mistreated based on their identity are encouraged to file a compliant with HHS.
According to NCLR federal policy director Maya Rupert, the decision follows a trend in case law and federal policy. In April, for example, the Equal Employment Opportunity Commission ruled that transgender workers are protected under Title VII. These expansions not only benefit transgender people, Rupert emphasized, but anyone whose legal gender doesn’t stereotypically match up with that person’s behavior or dress.
For more on the ACA’s impact on transgender patients, read “What the ACA Means for Transgender People” at TheNation.com. MARISA CARROLL
A HARD BARGAIN FOR SOUTH KOREA: Months after his free-trade agreement with the US went into effect, South Korean President Lee Myung-bak, who calls himself a “CEO-style president,” has been assailed by corruption charges and accusations that he is suppressing political dissent. In July, Lee’s brother was charged with receiving $525,000 in bribes. Two former aides have been jailed.
The free-trade agreement had no provision discouraging domestic censorship, despite the fact that Lee’s government has blocked North Korean social media and censored bloggers. One Twitter user who cursed Lee online had his account blocked. The user’s screen name, linking him to the movement for economic equality, was “I am 99%.” A judge who wrote that Lee was out to “screw” online dissent was fired.
According to Reporters Without Borders, South Korea’s National Security Law prohibits “anti-statist groups,” “disseminat[ing] false news,” and the “exchange of electronic information that compromises national security or is deemed to be defamatory.” Such limits to dissent help explain why Internet users have been harassed, arrested and interrogated for posting comments opposing beef imports from the United States. Public protests against these imports in 2008 reached such a boiling point that they threatened to bring down Lee’s government. As a result, the free-trade agreement limited tariffs but has not yet entirely opened the country—with its enormous subsidies—to American beef.
With Park Geun-hye, whose father was the country’s former military dictator, running to replace Lee, South Korea is now torn between two opposing forces: corrupt neoliberal modernization and a nostalgia for order and unity. BRETT WARNKE