Heard Off the Street: Research group targets Fix the Debt
Share with others:
When it comes to resolving the national debt crisis, the line between national interest and self-interest is being blurred a little too much to suit the Institute for Policy Studies.
The left-leaning research group issued two reports last month targeting CEOs who are supporting the Campaign to Fix the Debt, the institute's amply funded Washington, D.C., neighbor whose co-chairmen include former Pennsylvania Gov. Ed Rendell.
Fix the Debt's other luminaries include former U.S. Sen. Alan Simpson and Erskine Bowles, who led a deficit-fighting commission appointed by President Barack Obama in 2010. Their divided National Commission on Fiscal Responsibility and Reform proposed a series of painful spending cuts and tax increases that proved unpalatable at first, but that are regaining currency as Congress and the White House talk past each other on their canter toward the fiscal cliff.
The Simpson-Bowles remedy included lower corporate tax rates and changes to Social Security and Medicare, suggestions that strike the Institute for Policy Studies as self-serving and hypocritical.
The institute's Nov. 13 report characterized Fix the Debt's solution as "a Trojan Horse for massive corporate tax breaks."
The 63 public companies associated with Fix the Debt's CEO Fiscal Leadership Council at that time stood to gain as much as $134 billion in tax benefits if they no longer had to pay federal income taxes on foreign earnings, according to institute estimates. The biggest winners would be General Electric, which would receive an estimated benefit of $35.7 billion, and Microsoft, which would pay $19.4 billion less, according to the institute's researchers.
Moreover, of those 63 CEOs, two dozen of them received more in compensation last year than their companies paid in federal corporate income taxes, according to the report.
Eight more CEOs of publicly held companies had enlisted in Fix the Debt by the time the institute issued a second report Tuesday. The second missive took aim at proposed cuts to Medicare and Social Security, comparing the price that senior citizens are being asked to pay in relation to CEO retirement benefits and how well executives honor pension promises to their own workers.
Of the 71 companies, only 41 provide pension plans for workers. But only two of those 41 companies have enough money in their pension fund to pay the benefits promised, according to the institute. The remaining pension plans are underfunded by an average of $2.5 billion. General Electric is the farthest behind with a $22 billion pension deficit.
However, when it comes to their own retirement security, the 71 CEOs have average retirement savings assets valued at $9.1 million. A dozen of them have more than $20 million in individual company retirement accounts, enough to give each CEO a monthly check of $110,000 for life once they turn 65, based on the institute's use of an online calculator to estimate how much of a monthly annuity their savings could buy.
Honeywell chairman and CEO David Cote sports the biggest retirement package. The institute estimated the $78 million that he has in Honeywell retirement accounts would give him a $428,000 monthly check at 65.
The institute's observations will no doubt make many less likely to objectively evaluate any CEO-backed deficit reduction plan, much less embrace it. If they perceive CEOs are bringing their self-interest to the bargaining table, why shouldn't other special interest groups view budget deliberations through the prism of "what's in it for me?"
But "what's in it for me?" is what's got us where we are today: stalemated amidst a cacophony of bleatings from special interest groups representing companies, the retired and other segments of the nation's oppressed taxpayers as well as hamstrung because Grover Norquist holds Republican law givers hostage with his Svengali-like no-tax-increase mantra.
To former U.S. Comptroller General David M. Walker's way of thinking, we're facing a Greek-like financial crisis in two or three years unless we address the budget deficit and unfunded future liabilities related to Social Security and Medicare.
"We're not as great as we think we are," Mr. Walker said during a stop in Pittsburgh in September. "We must make tough choices. We need to make them starting in 2013."
Mr. Walker's "$10 million-a-minute" tour highlighted the fact that between the $16 trillion federal budget deficit and unfunded liabilities for Social Security and Medicare, our fiscal hole is deepening at a rate of $10 million a minute.
Mr. Walker, who served under presidents Bill Clinton and George W. Bush, put the size of that hole at $70 trillion. In an op-ed piece in The Wall Street Journal last week, former Securities and Exchange Commission Chairman Christopher Cox and former House Ways and Means Committee Chairman William Archer put the burden at nearly $87 trillion, or 550 percent of the U.S. economy.
When it comes to numbers, you can take your pick. Either way, there will be enough pain to go around and no special interest groups -- whether they be privileged CEOs or suffering seniors -- should be exempt. At least on a theoretical basis, we're all in this together.
First Published December 2, 2012 12:00 am