It’s long past time to rein in large corporations and banks, as their activities are driving the U.S. economy into situations that will make the 2008 recession look mild. Today, we see corporations seriously viewed as a “person” by the U.S. Supreme Court, massive amounts of outsourcing of American jobs, banks operating with virtually no regulation, and corporate CEOs and directors beyond the control of shareholders or any legal restraints. The corporate culture of today was slow to develop, but is now upon us in full force.
It is said that if you forget history, you are doomed to repeat it. I am sure all history buffs remember reading about the “robber barons” at the beginning of our industrial revolution, who amassed great fortunes in manufacturing. Unfortunately, fortunes were made at the expense of American workers. In response, history saw the rise of labor unions, worker and child protection laws, and laws against monopolies stifling competition. Our early laws prevented the rise of one person controlling a particular segment of our economy and encouraged competition. Industry working with these new laws and labor unions created America’s wonderful industrial complex. Well-paid workers were able to buy new manufactured products, and America profited from the relationship.
In response to the Great Depression, the Glass-Steagall Act was passed, restricting banks to just holding your savings and lending the funds out for commercial loans, homes, cars, and other consumer items. They were not allowed to have in-house investment activities. This prevented risky investments with your money, as they unfortunately do today. Some banks were so large in 2008 after selling packaged risky mortgages that they were too large to fail. National disaster was avoided when taxpayers paid for the bailout. Today, no wall exists, as there should be, between your bank and investment banking, as the Glass-Steagall Act was repealed in 1999 through efforts by the banking lobby.
As time passed, these reforms and regulations protecting our economy have been slowly chipped away. A new report issued by the Institute for Policy Studies, titled “Executive Excess 2012: 19th Annual Executive Pay Survey,” shows us a picture of the corporate world of today. Unlike American workers, CEOs on average this year received a 23 percent increase in salary. When was the last time you, the average American worker, received a 23 percent increase?
The report found 57 CEOs who benefited with $1 million or more from the Bush-era tax cuts. The most interesting was Dave Cote, the Honeywell CEO, who had an income of $55 million last year. He saved $2.5 million in taxes from these tax cuts. He was a member of the Simpson-Bowles deficit reduction commission and was an outspoken advocate of reducing the deficit by cuts in Social Security and Medicare. He also pushed for low taxes on the wealthy and corporations. Honeywell is known for reducing its workforce by 5,000 in the United States. The Honeywell Corporation earned $2.5 billion income and got back $377 million in benefits under our tax codes.
Other CEOs topping the list included James Mulva of ConocoPhillips with income of $146 million with a tax savings of $6.7 million under the Bush-era tax cuts. Leslie Moonves of CBS had an income of $82 million and tax savings of $3.7 million. Richard Adkerson of Freeport-McMoRan Copper & Gold had an income of $77 million and tax savings of $3.5 million. Ronald Johnson of JC Penney had an income of $69 million and tax savings of $3.1 million. The list goes on and on.
In addition, CEOs get another tax break you and I don’t receive. When ordinary workers reach age 50, contributions to a 401(k) or IRA are limited to $22,000 per year, but CEOs have no limitation and all earnings grow tax free. Boy! What a deal! Six CEOs have created a nest egg of more that $100 million.
CEO retirement and Bush tax breaks for the wealthy need to stop. Banks should be prohibited from investment banking. Corporations that ship American jobs overseas need higher tax rates that encourage the creation of American jobs. Anti-monopoly regulations need to be strengthened and limits placed on the size of corporations to encourage competition so companies are no longer too big to fail. Who truly needs a tax break—those earning $30,000 to $50,000 or those earning $50 to $146 million per year?
It is time for all Americans to awake from the malaise they are now experiencing, focus on the corporate culture of today, realize they are repeating lessons they should have learned from history, and all in unison emphatically demand restraints and restrictions on large corporations!
Ken McCalip is a North Santa Barbara County native who holds bachelor and doctorate degrees in history, cultural geography, and law from various California universities. He can be reached at firstname.lastname@example.org. Send comments to Executive Editor Ryan Miller ar email@example.com.