This entry by AFSCME President Gerald McEntee is cross-posted from The Huffington Post and Oxdown Gazette.

For years, AFSCME has been leading the fight to rein in the grotesque and excessive paychecks that unaccountable boards of directors have been giving too many of America’s CEOs. We’ve fought shareholder battles and taken our case to the media, arguing that directors who approve exorbitant salaries for executives cheat shareholders and workers. We created a network of institutional and individual investors that fights to get shareowners a voice on executive compensation packages and in the boardrooms of major corporations. But the CEOs want their sky-high pay guaranteed even when they fail, so they’ve fought us every step of the way, building thick walls of resistance to pay reform.

Finally, we’re beginning to knock down the wall. As unemployment reached a 30 year high this week, President Obama took the case to the American people. "We all need to take responsibility," the President said on Wednesday, "and this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves their customary lavish bonuses." The President called excessive pay and bonuses "the height of irresponsibility." More importantly, he laid the responsibility for our country’s economic crisis right in the hands of CEOs who have put greed ahead of the well-being of everyone else. "That’s shameful," the President said.

President Obama decried the "culture of narrow self-interest and short-term gain at the expense of everything else" that has produced countless tales of corporate irresponsibility. For example, Martin J. Sullivan ran AIG, the giant insurance and financial services firm, into the ground. He was fired, but walked away with a severance package estimated at $47 million. He wasn’t alone. At a time when taxpayers were handing over $700 billion to bailout failing banks, the top echelon of the banks collected more than $18 billion in bonuses.

Benefits and pay for most Americans are being cut to the bone, jobs are disappearing, health care costs are skyrocketing and working families are struggling to make ends meet. Yet, CEOs are paid an average of 344 times more than average workers. This madness has to end. Unjustified executive salaries are padded with generous benefits, bonuses and contracts with so-called golden parachute provisions. The boards of directors in their pockets even offer golden coffins, corporate death benefits that continue to be paid out years after the CEO has died. So much for pay for performance.

That’s why it was heartening to hear the President pledge that our taxes wouldn’t be spent to line the pockets of those who already get too much. "For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste – it’s a bad strategy – and I will not tolerate it as President." Yesterday, the Senate followed the President’s lead and passed two important amendments to the President’s jobs and recovery legislation. Senators adopted an amendment from Senator Claire McCaskill (D-MO), which imposes a $400,000 salary cap, what the president of the United States makes, on officers and directors at firms that receive bailout funding from the Treasury Department. This is an important first step in bringing some common-sense into the payouts we’re being asked to make to the country’s failing banks.

The Senate also adopted an amendment offered by Senator Christopher J. Dodd, (D-CT), chairman of the Banking Committee, to prohibit bonuses and other incentives for at least the 25 most highly paid executives at firms that receive bailout funds from the Treasury Department. Senator Dodd’s amendment would also require the Treasury Department to conduct a retroactive review of bonuses given out by the firms.

As the meltdown of the financial sector has illustrated, the perverse system of excessive pay, even for failure, created incentives for unwise risk-taking by major financial institutions that have contributed to the worst economic collapse since the Great Depression. The President’s announcement Wednesday and the Senate’s actions yesterday, signal a real and dramatic effort to fix the corrupt and broken system.

Now, for the first time in memory, our political leaders are taking action that can lead to accountability and reform. But more must be done. It’s time to stop rewarding corporate executives for failure. Shareowners must have a say on executive pay. It’s time for Congress to pass legislation that gives shareholders a voice in how top corporate executives are paid and a chance to elect directors who will represent shareholder interests. We need bold action to bring these rampant abuses to an end.

It’s no mystery. The economy is ailing, working families are fighting hard to make ends meet and this week alone, American companies reported as many as 65,000 job cuts.

You’d think that in these times of duress everyone would be tightening their belts and pulling together to jumpstart the economy, right? Well, not Wall Street bankers, that’s for sure. According to a report by the New York State comptroller, financial executives received a whopping $18.4 billion in bonuses for 2008.

President Obama condemned their behavior as the “height of irresponsibility,” adding that:

“It is shameful. And part of what we’re going to need is for the folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility.”

That’s right. We are talking about the same banks and investment firms that were bailed out last year to the tune of $700 billion because of their own financial irresponsibility. If taxpayers and shareholders take huge losses, there should be no bonuses. Period.

This is why for years AFSCME has spearheaded the fight to curb executive pay. Congress should give shareholders a “say on pay” on CEO compensation and “golden parachute” severance agreements. Not only is the compensation awarded to CEOs outrageous, but shelling out excessive amounts of money to a few greedy individuals genuinely damages the economy.

In the wake of our current financial crisis, the AFSCME Employees Pension Plan has announced its 2009 shareholder program with an emphasis on reasonable executive pay and more director accountability.

The AFSCME Plan is an institutional shareholder with more than $850 million in assets that works to ensure that the retirement benefits promised to public employees are safe and secure. In 2006, the AFSCME Plan was first to file “Say on Pay” proposals requiring shareholder approval of executive compensation.

In a statement released today, AFSCME President Gerald W. McEntee explained the importance of the 36 shareholder proxy proposals submitted for consideration at annual meetings this spring:

“The failure of boards to properly assess risk, coupled with an emphasis on short term results that produced sky high pay for executives has left us in the worst financial mess since the Great Depression. These proposals will encourage corporate executives to avoid the type of short-term decision-making that has wreaked havoc upon our financial markets.”

Proposals have been filed at: Abercrombie & Fitch; Allstate; American International Group; Ameriprise Financial; Apple; Bank of America; Bank of New York Mellon; Charles Schwab; Citigroup; ConocoPhillipsVS Caremark (CVS); Danaher (DHR); Dow Chemical (DOW); E*TRADE Financial (ETFC); Equifax (EFX); General Dynamics (GD); Honeywell (HON); Huntington Bancshares (HBAN); Ingersoll-Rand (IR); IntercontinentalExchange (ICE); JPMorgan Chase (JPM); Macy’s (M); Moody’s (MCO); Morgan Stanley (MS); Nabors (NBR); Northrop Grumman (NOC); Occidental Petroleum (OXY); Office Depot (ODP); Raytheon (RTN); Safeway (SWY); Tenet Healthcare (THC); Textron (TXT); Valero Energy (VLO); Vulcan Materials (VMC); Wachovia (WB); and Walt Disney Company (DIS).

Read the press release for more.

This entry by AFSCME President Gerald McEntee was originally posted on The Huffington Post.

Right-wing critics of public employee pensions will use any angle to convince folks that these plans are bankrupting states, cities and towns. In the Wall Street Journal this week, Steve Malanga blames pension plans for today’s economic difficulties and in the same piece urges governments to sell off their assets.

Malanga fails to mention that most public pension plans are in good financial condition and does not note that states built up rainy-day funds and cut taxes during this time. It’s a fact that most of us are required to contribute to our plans regularly, and our contributions, along with our employer’s, are invested to earn additional income. While the economic downturn has caused some dips in funds, estimates of the ratio of pension assets-to-liabilities for state pension plans indicate that they are in good shape. Most plans have diversified their investments so the impact of today’s market losses is softened. Over the last twenty years, most pension funds have had a good rate of return, even during downturns, because they keep fees low and use professionals to routinely beat market benchmarks.

Pension funds, with assets from employers and employees, are an essential part of this nation’s capital market, particularly at a time of economic crisis such as the one we are currently facing. Public employees have sacrificed pay increases and made contributions in order to ensure that their pension plans are adequately funded. And governments have also been prudent about building up their reserves — as of July 2007, state rainy day funds stood at 10% of total budgets, which would have been sufficient to deal with a moderate cyclical recession. Of course, what we’re seeing is far worse.

The truth is that in these times of real budget challenges, pensions make good economic sense. Pensions put money into the economy, offer real retirement security to workers, and allow government employers to recruit and retain a quality workforce to make the vital public services that America relies on happen. The investments made by pension funds have helped make America work and can help turn our economy around in the days and months ahead.

Most Americans recognize that today’s government challenges are the result of an economic downturn rivaling that of the Great Depression and a Bush Administration that willfully ignored the economic problems. Malanga himself acknowledges several times in the piece that “rapidly declining tax collections” are the cause of the states’ budget problems. Yet this fact is ignored in the diagnosis and prescription of the fiscal crisis we are in.

Malanga also argues for privatization of roads and other public goods. The solution is not privatization, which all too often means that the public pays more and gets lower quality services while public workers are laid off and corruption scandals make the news. Americans need quality public services and efficient governments that help achieve real progress for communities. While some view selling public assets like toll roads to private firms as a panacea for infrastructure investment, the public is fiercely — and rightly — opposed to selling our roads for the pursuit of private profit.

Public pensions are providing benefits for the economy, retirement security and taxpayers. As states find their budgets under pressure, it is important that states put in place procedures and practices that will mitigate against rosy projections regarding investment income and provide a means to pay for the benefits their employees have earned.

While improvements can always be made, pensions are not the problem. The economy is the problem, and the President and Congress need to take real steps to revitalize the economy and help the American people.

From the Economic Policy Institute:

The financial services industry paid its CEOs an average of $18,876,000 in 2007 – the highest of nine industries surveyed by the Hays Group for the Wall Street Journal. Oil and gas companies followed close behind, with average total compensation of $18,406,000 per CEO, according to an EPI analysis of the data. In contrast, the Social Security Administration reports that the average wage in 2006 (the latest year available) was just $37,078.

Said EPI President Larry Mishel: “Congress should make sure that the bailout does not further enrich these already overpaid and underperforming executives.”

Just kidding. Only Wall Street gets to write itself a check – and a $700 billion one at that. Yep, that’s $700,000,000,000 (11 zeroes!).

That’s what the Bush administration (i.e. Treasury Secretary Henry Paulson, himself a former Wall Street executive) is trying to ram down our throats. The Bush administration allowed Wall Street firms to act irresponsibly and do whatever they wanted. As a result, we now face the worst economic crisis since the Great Depression. Now the administration wants to hand over $700 billion dollars. What?

Wall Street firms got rich beyond belief in an era of deregulation and freewheeling greed. Now, average folks like you and me are being asked to foot the bill – and with no structural changes to the system that allowed for this to happen and with no oversight provisions.

What’s more, there’s been no help to our states and local communities that are facing historic budget deficits. Where’s our bailout?

No bailout for Wall Street without help for Main Street! The massive state budget deficits that will mean severe cuts to services and infrastructure that will affect all of us. Congress must not allow the Bush administration to bail out Wall Street without bailing out Main Street and helping working families.

Any bailout legislation passed by Congress must include some very basic, common sense principles:

• Aid to the States – An economic recovery and jobs package, including extended unemployment benefits, fiscal relief for state and local governments and a major investment in our nation’s crumbling infrastructure.
• Fairness – A moratorium on home foreclosures that gives homeowners a chance to stay in their homes by restructuring their loans;
• Protection – Strong public oversight and transparency at the agency created to oversee the bailout and ensure no purchase of assets at inflated prices.
• Accountability – An immediate strengthening of current financial regulations and a commitment to increase corporate accountability to protect the public’s money when it is given to private companies;
• Transparency – An independent public agency must administer the bailout plan;
• Restrictions on CEO Pay – No golden parachutes or rewards for the CEOs who caused this crisis.

To join AFSCME’s effort to stop the no strings bailout, go to: http://www.unionvoice.org/campaign/blank_check

Working families and Main Street businesses are suffering because of the misdeeds of Wall Street profiteers. We are seeing what happens when the government doesn’t adequately regulate financial markets and corporate boards are not accountable to shareholders. Eight years of increasing deregulation have exploded into a global financial crisis. This is why, for years, AFSCME has fought to make Wall Street more open, accountable and responsible.

The latest headline, an $85 Billion bailout of AIG is a good example of what went wrong. AFSCME sued AIG several years ago to force them to accept an independent director on their board. We won the court case, but the SEC stepped in and reversed our rights helping to lead to this mess. People with AIG insurance and other service products don’t need to worry because those businesses are safe and coverage will stay in effect. But individual and pension fund investments in AIG are basically wiped out. Pension funds can afford to absorb the losses, people relying on IRAs and 401k plan may be badly hurt.

Robert Willumstad, the latest AIG CEO who contributed to the crash of the company has just been paid an estimated $14 million golden parachute for three months of work. Martin Sullivan, the prior CEO of AIG, walked away with nearly $50 million. Because the system is out of control, big-time corporate CEOs get paid outrageous sums whether or not they do a good job. For them it’s the Heads-I-Win-Tails-I-Still-Get-Rich system.

AFSCME is fighting every day to protect the interests of working men and women. If you’d like to learn more about what working families should know about investments click here.

Richard Ferlauto, AFSCME’s Director of Corporate Governance and Pension Investment was interviewed addressing these issues in the Wall Street Journal.

The Supreme Court has just refused to hear a case that let major banks complicit in the Enron fraud off the hook from paying damages to investors hurt by the scandal.

As a story in The Washington Post said:

The ruling is a staggering setback to the movement to expand investor rights. Often, financial experts say, business partners and corporate advisers are the only deep pockets left to tap after a scandal-ridden company has succumbed to bankruptcy.

If this was not enough, only a few days earlier the court ruled that third parties can’t be held liable for damages in cases where they aided schemes to commit fraud. The case, known as Stoneridge Investment Partners v Scientific-Atlanta, is also bad news for working families.

Why?

It’s simple. Think about the mortgage crisis, for example. Mortgage brokers and investment banks built a system in which they generated huge fee revenues and then passed off risk to investors. These risky mortgages were packaged by Wall Street bankers to sell to investors like our public pension funds.

Now that there’s a mortgage crisis, our retirement funds could be hit by losses that would make Enron look pennyante. Meanwhile, the parties responsible have less to fear now because, just like the banks involved in the Enron scandal, they may be immune from litigation.

In the end, the failed CEOs who led these companies walk about with hundreds of millions of dollars as working people are left holding the bag. This is why the fight for investor rights is also our fights because, ultimately, it’s things like our mortgages and our retirement that are on the line.

The General Accounting Office has just released a study called “State and Local Government Retirement Benefits—Current Status of Benefit Structures, Protections & Fiscal Outlook for Funding Future Costs.”

Download the report here: http://www.gao.gov/new.items/d071156.pdf

State and local government employees represent 12% of the nation’s workforce. Nearly 7 million retirees or their families receive post-employment benefits.

The GAO found that most state and local pension funds are well funded. The GAO calculates that ongoing contributions to pensions should increase to (on aggregate) 9.3% of payroll from the existing average of 9%.

For retiree health care, if funding continues to be on a “pay as you go” basis, the cost, as a percentage of aggregate payroll, will rise from the current 2% of payroll to 5% of payroll in year 2050. The GAO estimates for retiree health care are hardly alarming. Governmental employers, on average, should have little difficulty absorbing a 3% (real) growth in payroll costs over the next 42 years.

The report also has an abundance of data about pension governance, prevalence of public sector Defined Benefit and Defined Contribution plans, and the legal protections of pension and retiree health care benefits.

Whether it’s inspecting highways, plowing snow, directing traffic, driving buses, or designing roads and bridges, AFSCME transportation workers keep America moving.

If only the Bush administration would see things the same way.

Over the last few years, transportation workers across the country have endured corporate takeaways, shrunken paychecks and terminated pensions. The present administration, which has never met a job it didn’t want to privatize or send abroad, has sat idly by as corporations do what they please.

It is time to tell the government and the privateers that enough is enough. In the spirit of solidarity with our sisters and brothers of the International Association of Machinists, thousands of union members and representatives will gather today at the National Mall in Washington, D.C. for a “Transportation Day of Action.” Presidential candidates and labor leaders including President McEntee and Secretary-Treasurer Lucy will be speaking.

AFSCME alone represents nearly 140,000 transportation workers. We have an opportunity to show them and thousands of others in the transportation sector our support. Let’s make sure their message is heard in the White House and in the halls of Congress.