Fix The Debt, the group pushing Congress to do something about runaway deficit spending, is loaded with highly compensated CEOs who know more about prosperity than austerity.
They want to close tax loopholes, but they haven't yet mentioned that part of the tax code that encourages their companies to pay them millions in performance-based pay each year.
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"Before they start calling for cuts that will have a huge impact on ordinary Americans, they should look at the ways they've been contributing to the deficit," said Sarah Anderson of the Institute for Policy Studies in Washington.
Ms. Anderson is one of the authors of a study that her group released Thursday (May 2) called, "'Fix The Debt' CEOs Enjoy Taxpayer-Subsidized Pay."
Fix the Debt is a bipartisan campaign co-founded by Alan Simpson, a former Republican U.S. senator from Wyoming, and Erskine Bowles, a former member of the Clinton administration. The group wants to cut spending, raise revenues and reform entitlement programs such as Social Security and Medicare. In addition to its big corporate backers, it counts 2,700 small businesses as members, and it has accumulated more than 350,000 individual signatures on a petition.
Ms. Anderson's study calculates that 90 corporate members of Fix The Debt paid their CEOs and their next three-highest paid executives more than $6.3 billion between 2009 and 2011. For shelling out this largesse, these companies received tax breaks worth as much as $1.6 billion over that same period, the study estimates.
However one crunches these numbers, one thing is certain: These guys won't be needing Medicare or Social Security. What is not certain is whether their performance-based pay is truly taxpayer subsidized as the study claims. This, I think, is a matter of perspective.
A little history: Generally, all businesses have been allowed to deduct what they pay their employees and executives. This, after all, is a cost of doing business. But what happens when a company pays its executives astronomical sums of money? Hundreds of times what ordinary workers get paid? Is this a real cost of doing business? Or is it just part of that little game executives and their crony boards play to convert shareholders' money into their own money?
In 1993, Congress answered this question by passing a law that capped the deductibility of executive pay at $1 million. Companies could still pay their CEOs any ridiculous sum they could jam past their shareholders, but anything over $1 million was not going to give the company a tax break.
There was, however, a loophole. Any compensation that could be deemed performance-based pay remained fully deductible. Naturally, the flurry of stock options, stock awards and multimillion-dollar bonuses has never ceased since--accelerating the crazy boom and bust cycle of American business.
Ms. Anderson argues we should get rid of this loophole. Corporations might then pay their executives more appropriately, or at least they would pay more in taxes and help "Fix The Debt."
Others say we should just get rid of the 1993 law altogether.
"It was a terrible mistake," said Charles Elson, a finance professor and director of the Weinberg Center for Corporate Governance at the University of Delaware. "It was an attempt to lower executive compensation rates. In fact, it had the opposite effect."
Remember that before 1993, all CEO pay was deductible. After 1993, there was a $1 million cap. Taking this chronology into account, Mr. Elson argues it's unfair to call the loophole around the 1993 cap a taxpayer subsidy. All compensation is a cost of doing business and should be deductible, he argues.
Rhetoric, however, is just another part of the political process. Some people argue that the deductibility of interest paid on home mortgages is a subsidy--and in a sense, it is. Mr. Simpson and Mr. Bowles have proposed toying with this cherished deduction--inflicting pain on anyone who would finance a home. So why not sting a few overpaid CEOs, too?
Jon Romano, a spokesman for Fix The Debt, said it's easy for groups like the Institute for Policy Studies to take pot shots while Congress fails to come up with a solution for the nation's spiraling debt, beyond a forced sequester.
"We say pretty clearly that we have to take a hard look at tax loopholes," he said. "Our job as a campaign is not to craft the legislation. ...Our mission is to raise awareness on these issues and to challenge members of Congress to pass a comprehensive debt deal."
Still, Ms. Anderson raises a fair question as to whether the CEOs on Fix The Debt's bandwagon could ever feel the pain they propose for a nation.
UnitedHealthcare Group's Stephen Hemsley made $199 million in total compensation between 2009 and 2011, her study notes, estimating that the company got a $68 million tax break for paying him that much. David Zaslav of Discovery Communications received $114 million during that period and the company got a $37 million tax break, according to the study.
The list goes on, but you get the idea. There's a sweet revenue stream right under everyone's loophole-hunting eyes. And when it comes to saving a debt-ridden nation, you can't just rule it out.
"Every single one of these people has acknowledged that they are going to have to make sacrifices," Mr. Romano said. "There is going to be pain with passing a comprehensive debt deal. Every option is on the table. We have not ruled out anything."
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at firstname.lastname@example.org or tellittoal.com)