As corporations blow record sums repurchasing their stock to inflate CEO pay, Congress is advancing a tax aimed at curbing this harmful practice.
Even hypocrites can sometimes have a point. Take Jim DeMint, for instance, the U.S. senator — and Tea Party favorite — from South Carolina who may well be Capitol Hill’s most zealously single-minded budget-cutter.
Earlier this month, DeMint came out swinging against the defenders of federal funding for Big Bird, Elmo, and the rest of public broadcasting’s powers that be.
How dare the muckety-mucks of public TV and radio demand our tax dollars, DeMint roared in a Wall Street Journal op-ed. These muckety-mucks, he went on to expound, “are making more than the President of the United States.”
That happens to be true. PBS president Paula Kerger is taking home $632,233 in annual compensation, a hefty chunk of change over President Obama’s $400,000. Her counterpart at NPR, Kevin Close, came in at $1.2 million in 2009.
If public broadcasting can afford to shell out executive paychecks like these, Jim DeMint declares, “surely it can operate without tax dollars.”
So what makes DeMint a hypocrite here? If the good senator really believed that enterprises with lavishly paid executives can afford to do without taxpayer support, he wouldn’t be wasting his time ranting against public broadcasting. He’d be raging instead at Big Oil — or Corporate America writ large.
In 2009, CEOs at America’s oil and gas giants averaged $10.4 million each. These same executives happily accepted billions in U.S. taxpayer largesse, sums that dwarf the relative peanuts that go annually to public broadcasting.
Most of this largesse to Big Oil comes in the form of tax breaks, or “tax expenditures,” as budget experts label them. Our nation’s budget experts, the conservative Tax Foundation notes in a new report, consider these tax breaks “the equivalent of spending through the tax code.”
How much do U.S. taxpayers spend on the oil and gas industry? The Tax Foundation has identified $5.8 billion in targeted tax breaks set to go to oil and gas corporations over the next five years.
These oil and gas companies also, of course, benefit from various other corporate tax breaks not specific to the oil and gas industry. Overall, the Tax Foundation reports, these general-purpose corporate tax breaks will cost U.S. taxpayers $448.5 billion over the next five years, on top of the $54.2 billion U.S. companies will be reaping in industry-specific tax breaks.
The combined taxpayer outlay going to private corporations from these two revenue streams: over $100 billion a year, computes the Tax Foundation.
The annual taxpayer outlay last year for public broadcasting: $420 million, or less than one-half of 1 percent of what goes annually to private corporations.
America’s big-time private corporations all pay their top executives more — millions more — than the President of the United States. If these corporations can afford to pay their top execs more than the President, then — by Jim DeMint’s public broadcasting logic — they should be able to operate without our tax dollars.
Senator DeMint, predictably, isn’t making this logical leap. He’s confining his “outrage” against taxpayer subsidies for excessive executive pay to public broadcasting. That makes him a hypocrite. But DeMint’s original point, that our tax dollars shouldn’t be subsidizing excessive executive pay, remains a good one.
The President of the United States currently earns about 25 times more than the lowest-paid federal worker. What if we denied tax dollars — in whatever form they get delivered — to all enterprises that pay their top executives over 25 times their lowest-paid workers? What would happen then?
Public broadcasting enterprises would no doubt quickly reduce their top executive pay. Not too long ago, these enterprises operated efficiently and effectively with top-bottom pay ratios well within the 25:1 ratio.
Not that terribly long ago, back in the 1960s, most U.S. private corporations also operated successfully within — or quite close to — that 25:1 benchmark.
Executive pay in the United States really didn’t start skyrocketing until the early 1980s. In 2009, the latest year with full stats available, top CEOs took home 263 times more than their workers.
The gap between corporate executive and worker pay has, in short, essentially multiplied tenfold over the span of a single executive generation.
Has the value of CEO labor, over that time span, increased ten times faster than the value of the labor average workers perform?
Top corporate execs would rather we not ask this question too loudly, mainly because they know exactly how America’s taxpayers would answer. No one in their right mind believes that top corporate executives have become ten times more valuable than they used to be. Yet America’s tax dollars, year after year, are still feathering — at a furious pace — the cushiest of executive nests.
Senator Jim DeMint can see “no reason” why taxpayers should any longer “need to subsidize” overpaid public broadcasting executives. What reason can he suggest, we can all wonder, for having taxpayers continue to subsidize the far more lavish compensation of Corporate America’s finest?
Sam Pizzigati co-edits Inequality.org. Among his books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. His latest book, The Case for a Maximum Wage, will appear this spring. Follow him at @Too_Much_Online.