Executive compensation

Emergency Economic Stabilization Act of 2008

hmoroz — Fri, 03 Oct 2008 17:44:58 -0400

Legislation

The middle class

Opposes

Video Summary

Injustice Facts

Amount authorized for the Treasury Secretary to use to buy troubled assets: $700 billion

GDP (PPP) of Taiwan in 2007: $695.4 billion

Percentage increase in foreclosure filings from August of 2007 to August of 2008: 27

Likelihood that a U.S. household received a foreclosure filing during August of 2008: 1/416

Number of foreclosures expected to occur in late 2008 and throughout 2009: 2,164,000

Estimated number of foreclosures that the mortgage restructuring provision for primary residences, not included in this legislation, would prevent: 600,000

Decrease in home values caused by nearby subprime foreclosures in late 2008 and throughout 2009: $352 billion

Overview/Summary

Middle Class Position Analysis

Middle Class Opposes. Middle-class Americans, no matter how far removed from Wall Street, will be adversely affected by the crisis in finance and credit that now grips our economy. After a prolonged period of stagnant wages and economic growth that benefited primarily the wealthiest, middle-class Americans rely heavily on credit to purchase everyday necessities, pay medical bills, and fund college educations. Epic stock market declines have eaten away at the retirement savings of senior citizens who have no other source of income. If the government does not act to make more credit available, credit for the loans that finance payrolls and state and local government operations will dry up, increasing unemployment. Government action is absolutely necessary to ensure that middle-class Americans’ standard of living does not suffer gravely from the credit crisis.

Yet, the Emergency Economic Stabilization Act of 2008 is not the action middle-class Americans need. Instead of a top-down bailout, credit markets should be stabilized from the bottom up. To the extent that a direct investment in the financial services industry is made, it should fully complement large-scale mortgage restructuring and foreclosure prevention efforts and the re-regulation of the financial services industry. This would not only benefit struggling homeowners, but is widely understood to be part of an effective strategy to aid financial markets through stabilized payment streams.

The nation’s first priority should be to repair the damage done to the housing market and to the lives of working- and middle-class Americans.

Any proposed remedy for the financial crisis must begin with assistance for struggling homeowners. This should come in the form of a longer-term, government-led commitment to reshape the mortgage landscape of this country. One promising model is the Home Owners’ Loan Corporation (HOLC). Originally established during the New Deal, HOLC made more than 1 million loans to refinance mortgages in distress, which constituted a fifth of all mortgage loans. At present, this would represent about 10 million loans, with the total value of mortgages held by HOLC in 1937 approximately equivalent to the total of all subprime mortgage loans. HOLC helped about 80% of homeowners who refinanced stay in their homes.
Bankruptcy protection for primary residences is critical. This measure would allow bankruptcy judges to rewrite mortgages on first homes (as is now possible for second homes and yachts) on terms struggling homeowners could afford. The change could prevent as many as 600,000 foreclosures.
A moratorium on foreclosures would provide an immediate opportunity for homeowners to work out loan modifications with lenders.

The financial crisis is serious and will affect the lives of middle-class Americans immediately and significantly. At the same time, only financial rescue legislation that includes significant assistance for homeowners can initiate a full, long-term recovery from the current crisis.

Despite the inclusion of several special-interest tax breaks in the Act, the tax changes added to the legislation are generally very important to the middle-class. The energy tax credit expansions and extensions are part of a long-term strategy to alleviate high gas and heating costs, make the country more energy efficient, and ensure that the economy retains jobs in renewable energy and technology. Changes to the child tax credit would make 2.9 million additional children eligible for the benefit and would increase the benefit for 10.1 million more. Temporarily raising the Alternative Minimum Tax exemption ensures that middle-class Americans are not overwhelmed by a tax that they were never intended to pay.

Finally, the mental health and “substance use disorder” parity provisions of the Act not only do much to remedy the discriminatory practices of insurers, but will increase access to mental health care services for middle-class Americans already struggling with high health care costs.

While these last-minute additions to the bailout package are positive for the middle class and should become law, they are not relevant to this bill and should be enacted separately. Ultimately, these provisions do not outweigh the substantial shortcomings of the financial bailout.

Quotes from Experts

Beyond this Bill

Additional Resources

Harvard Law Professor Elizabeth Warren on Bankruptcy Reform and the Housing Crisis

Center for Responsible Lending on Court-Supervised Loan Modifications

A History of the Home Owners’ Loan Corporation from the Center for American Progress

Renewable Energy and Job Creation Act of 2008

hmoroz — Thu, 22 May 2008 17:49:06 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percentage of the benefits of the child tax credit that went to families in the top 40% of the income distribution in 2005: 60

Maximum percentage of the benefits of the child tax credit that went to families in the lowest 20% of the income distribution in 2005: 1

Estimated number of children that the child tax credit provision in the legislation would benefit: 13 million

Estimated number of children who would become newly eligible for the child tax credit under the legislation: 2.9 million

Estimated industry revenues from renewable energy and efficiency in 2006, in dollars: 970 billion

Estimated lost investment if federal tax credits for solar and wind energy are not extended, in dollars: 19 billion

Estimated jobs in the renewable energy and efficiency industry in 2006: 8.5 million

Estimated number of jobs that could be lost if federal tax credits for solar and wind energy are not extended: 116,000

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. While politicians are proposing short-term band-aids to deal with rising fuel costs, middle-class Americans are increasingly feeling the effects of an energy policy that harms the environment and favors large oil companies. The energy tax credit expansions and extensions in the Renewable Energy and Job Creation Act are part of a long-term strategy to alleviate high fuel costs, make the country more energy efficient, and ensure that the economy retains jobs in renewable energy and technology. Indeed, a recent study demonstrated that failure to extend energy tax credits for solar and wind power could result in the loss of 116,000 jobs. With the middle class already feeling the effects of weak employment, Congress must strengthen a renewable energy and energy efficiency industry that benefits both the environment and the economy.

Aspiring middle-class families with children are in a particularly difficult situation in an economy of high food, fuel, and health care costs. The Renewable Energy and Job Creation Act’s changes to the child tax credit would make 2.9 million additional children eligible for the benefit and would increase the benefit for 10.1 million more. Expanding the income floor for the credit means that very low-income aspiring middle-class families, who currently benefit less from the credit than higher-income families, will receive the support they need to make ends meet.

The revenue raising provisions of the Renewable Energy and Job Creation Act not only make the legislation fiscally responsible, but make the tax code fairer by eliminating loopholes exploited wealthy executives and multinational corporations.

Quotes from Experts

Beyond this Bill

Additional Resources

“Greener Pathways: Jobs and Workforce Development in the Clean Energy Economy,” from the Apollo Alliance

“Taxation and the Family: What is the child tax credit?” from the Tax Policy Center

“Families Helped by the Child Tax Credit Expansion Work Hard in Low-Paying Jobs,” from the Center for Budget and Policy Priorities

Shareholder Vote on Executive Compensation Act of 2007

atraub — Wed, 26 Sep 2007 16:47:03 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Total 2006 profits of California tech company Synnex Corp.: $51.4 million

Approximate ratio of every dollar Synnex earned that went directly into the pocket of CEO Robert Huang, according to the Los Angeles Times’s California Executive Pay Report: 1:7

Amount that Huang’s outsized pay package reduced the value of each company share, according to the Los Angeles Times: $2.90

Proportion of Americans who say CEOs are overpaid: 8 in 10

Average percentage of company profits paid to the top five executives at U.S. companies in 1993: 5

Average percentage paid to the top five executives in 2003: 10

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. Today nearly half of Americans own some stock, with many middle-class families relying on 401(k)s and other investments to finance their retirement security or help their children afford college. Workers with traditional pension plans, including many public employees, also have a stake in the long-term financial performance of companies their pensions are invested in. As a result, the retirement security middle-class Americans work a lifetime to earn can be thrown into jeopardy by lavish CEO pay and retirement packages that reward executives with hundreds of millions of dollars even if they perform poorly or behave unethically. Excessive CEO pay not only cuts into the company’s bottom line, but can also provide incentives for CEOs to manipulate earnings or encourage mergers that pump up their compensation packages but are unprofitable for the company as a whole – directly undermining shareholder value.

Simply put: when CEOs get sumptuous rewards for inferior or mediocre work, middle-class Americans get short-changed on the retirement benefits they’ve earned. Yet so far there is little shareholders can do to curb the excesses of companies in which they have a vital stake. This bill would introduce an important element of accountability, giving all shareholders “a say on pay” in the form of a non-binding advisory vote to the Board of Directors. Although the vote is non-binding, knowing they have option to vote increases shareholders’ scrutiny of CEO pay and provides regular shareholder feedback to Boards of Directors. The mechanism of a non-binding vote on compensation has been used successfully in Britain, Australia, and other countries to put the brakes on questionable compensation plans and tie CEO pay more closely to performance. Some U.S. companies, such as the health insurer AFLAC, have also voluntarily adopted a shareholder vote on executive compensation, which they regard as a “best practice” in corporate governance.

Quotes from Experts

Beyond this Bill

Additional Resources

"What International Markets Say on Pay: An Investor Perspective,” from Institutional Shareholder Services

“Executive Pay Watch,” from the AFL-CIO

“Executive Compensation,” from CorpWatch

Executive compensation

Emergency Economic Stabilization Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Renewable Energy and Job Creation Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Shareholder Vote on Executive Compensation Act of 2007

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources