September, 26 2008, 03:17pm EDT

For Immediate Release
Contact:
Sarah Anderson, Director of the Global Economy Project
saraha@igc.org, tel: 202 234 9382 x 227
Executive Pay Experts Critique Latest Details of Financial Bailout
Institute for Policy Studies Analysts Warn Against Giving Treasury Secretary Power to Decide What’s “Excessive”
WASHINGTON
This week, Treasury Secretary Henry Paulson gave up
his
opposition to including executive pay restrictions in the proposed $700
billion
financial sector bailout. But serious weaknesses, note executive
compensation
experts with the Institute for Policy Studies, remain in the proposals
that
Democratic leaders in Congress are advancing.
Democratic Leadership Proposals
Draft proposals from Rep. Barney Frank (D-Mass.), chair of the House
Financial
Services Committee, and Sen. Chris Dodd (D-Conn.), chair of the Senate
Banking
Committee, would allow Treasury Secretary Henry Paulson to determine
what
qualifies as "inappropriate or excessive" executive compensation.
(See Section 9 of the Frank
proposal and Section 17 of the Dodd
proposal.)
"Secretary Paulson amassed a personal stock stash worth over
three-quarters of
a billion dollars as the CEO at Goldman Sachs," says IPS analyst Sarah
Anderson. "He hardly strikes us as the appropriate arbiter of what's
excessive
and what's not."
The nation, Anderson
adds, needs clear and strict limits on CEO pay "so that taxpayers won't
have to
worry about their money flooding into the pockets of top executives and
encouraging another round of reckless behavior."
The Democratic leadership executive pay proposals do contain laudable
provisions to ban over-the-top severance deals ("golden parachutes") as
well as
clawback mechanisms to recoup compensation based on inaccurate earnings
reports. But these proposals don't speak to what ought to be job one of
executive compensation reform: ending windfall pay incentives.
"The most fundamental problem isn't what boards of directors pay CEOs
who
fail," notes IPS Associate Fellow Sam Pizzigati, "The problem is what
boards
pay CEOs to get them to succeed. Outrageously high rewards give
executives an
incentive to behave outrageously."
"If the bailout lets corporate boards continue to float mega-million
rewards as
incentives, Pizzigati explains, executives will continue to do whatever
it
takes to grab those rewards."
Other Congressional Proposals to Cap
Executive Pay Levels
Several members of Congress have proposed tougher executive pay
restrictions
than those that appear in the Dodd and Frank proposals.
On the Presidential campaign trail, Sen. John McCain (D-Az.) has called
for
capping compensation for bailed-out executives at the current
compensation of
the federal government's highest-paid employee. That employee, the
President,
currently makes $400,000.
Rep. Henry Waxman (D-Calif.) has proposed a$2 million cap,
while Rep. Brad Sherman (D-Calif.) has advocated a $1
million cap on "plain vanilla" salary compensation.
Sen. Max Baucus (D-Mont.), chair of the Senate Finance Committee, has
promoted
a measure
in the financial bailout legislation that would place a cap on the
corporate
tax deductibility of executive pay at all companies participating in
the
bailout.
Under the Baucus proposal, companies would not be allowed to deduct
over
$400,000 from their corporate income taxes for each of their top five
executives.
The Baucus proposal would be a good first step toward ending taxpayer
subsidies
for excessive CEO pay. His initiative reflects the pending Income
Equity Act
(HR 3876), legislation introduced by Rep. Barbara Lee (D-Calif.) that
would
deny tax deductions to all companies, across the board, for any
executive pay
over 25 times what a company's lowest-paid worker makes.
The $400,000 deductibility cap in the Baucus proposal amounts to 25
times the
pay of a worker making $16,000.
The downside to the Baucus proposal: If not combined with other
restrictions,
this deductibility cap would allow companies to continue paying their
executives whatever they please. That's not what an American public
outraged by
CEO pay excess expects to see.
Institute for Policy Studies Proposal
Ideally, the IPS CEO pay analysts believe, Congress should approve a
bailout
package that includes both the Baucus proposal to cap the tax
deductibility of
executive pay as well as a ceiling on total compensation.
For both measures, IPS executive pay experts favor a ratio approach
over a
fixed dollar amount. They are calling on lawmakers to set the bar for
excessive
executive pay as any compensation over 25 times the pay of a firm's
lowest-paid
worker.
Peter Drucker, the founder of modern management science, believed that
companies that pay their executives over 25 times what their workers
make risk
endangering enterprise morale and productivity, as this
recent appreciationof Drucker's work in Business Week makes
plain.
In the end, the IPS executive pay experts emphasize, the bailout
package
lawmakers adopt will only discourage future reckless executive behavior
if the
package includes clear and concrete restrictions on executive pay, be
these
restrictions set as a ratio or at a fixed dollar figure.
Any bailout that leaves the definition of executive excess up to
Treasury
officials, IPS notes, will leave CEO pay practices nearly as
dysfunctional and
dangerous to our economic well-being as they have been.
Footing the Bailout Bill
IPS analysts have also been focusing on a related bailout question: Who
will
pay the bailout bill?
"The U.S.
public wants Wall Street speculators and wealthy CEOs to pay for the
mess they
have created," points out IPS senior scholar Chuck Collins. "We should
institute a securities transaction tax, a surcharge on incomes over $5
million,
and press for full financial disgorgement of responsible parties. We've
identified $900 billion worth of revenue-generating proposals."
The Institute's ten-point plan to pay for the bailout appears online at
www.ips-dc.org/article/740#.
Includes: $40 billion for financial
discouragement: $100 billion from Securities Transaction Cost; and $20
billion
by eliminating taxpayers subsidies for excessive CEO pay.
Contacts:
Sarah Anderson is the Director of the Global Economy Project at the
Institute
for Policy Studies and a co-author of 15 IPS annual reports on
executive
compensation. Contact: saraha@igc.org, tel: 202 234 9382 x
227. Cell:
202 299
4531.
Chuck Collins is a senior scholar at the Institute for Policy Studies
where he
directs the Program on Inequality and the Common Good. He was a
co-founder of
United for a Fair Economy, and his latest book, the co-authored The
Moral
Measure of the Economy, appeared earlier this year. Contact:
chuckcollins7@mac.com,
617 308 4433.
Sam Pizzigati is an Associate Fellow of the Institute for Policy
Studies and
the author of Greed and Good: Understanding and Overcoming the
Inequality That
Limits Our Lives (Apex Press, 2004). He edits Too Much, on online
weekly on
excess and inequality. Contact: editor@toomuchonline.org,
301 933 2710.
Institute for Policy Studies turns Ideas into Action for Peace, Justice and the Environment. We strengthen social movements with independent research, visionary thinking, and links to the grassroots, scholars and elected officials. I.F. Stone once called IPS "the think tank for the rest of us." Since 1963, we have empowered people to build healthy and democratic societies in communities, the US, and the world. Click here to learn more, or read the latest below.
LATEST NEWS
US Led 'Unprecedented' Surge in Global Military Spending in 2024
"As governments increasingly prioritize military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come," said one expert.
Apr 28, 2025
Military spending worldwide soared to $2.718 trillion last year, meaning it "has increased every year for a full decade, going up by 37% between 2015 and 2024," according to an annual report released Monday.
The Stockholm International Peace Research Institute (SIPRI) has tracked conflict, disarmament, and weapons for nearly six decades. Its 2024 spending report states that "for the second year in a row, military expenditure increased in all five of the world's geographical regions, reflecting heightened geopolitical tensions across the globe."
In a Monday statement, Xiao Liang, a researcher with the SIPRI Military Expenditure and Arms Production Program, highlighted that "over 100 countries around the world raised their military spending in 2024."
"It was the highest year-on-year increase since the end of the Cold War."
"This was really unprecedented... It was the highest year-on-year increase since the end of the Cold War," Liang told Agence France-Press, while acknowledging that there may have been larger jumps during the Cold War but Soviet Union data is not available.
Liang warned that "as governments increasingly prioritize military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come."
The United States—whose Republican lawmakers are currently cooking up a plan to give even more money to a Pentagon that's never passed an audit—led all countries, with $997 billion in military spending. The report points out that the U.S. not only allocated "3.2 times more than the second-largest spender," but also "accounted for 37% of global military expenditure in 2024 and 66% of spending by North Atlantic Treaty Organization (NATO) members."
In the second spot was China, with an estimated $314 billion in spending. Nan Tian, director of the SIPRI Military Expenditure and Arms Production Program, raised the alarm about spending in Asia.
"Major military spenders in the Asia-Pacific region are investing increasing resources into advanced military capabilities," said Tian. "With several unresolved disputes and mounting tensions, these investments risk sending the region into a dangerous arms-race spiral."
In third place was Russia, with an estimated $149 billion in spending. Russia remains at war after launching a full-scale invasion of Ukraine in February 2022. Rounding out the top five were Germany ($88.5 billion) and India ($86.1 billion).
They were followed by the United Kingdom, Saudi Arabia, Ukraine, France, Japan, South Korea, Israel, Poland, Italy, and Australia. The report says that "together, the top 15 spenders in 2024 accounted for 80% of global military spending ($2,185 billion) and for 79% of the total increase in spending over the year. All 15 increased their military spending in 2024."
"The two largest year-on-year percentage increases among this group were in Israel (+65%) and Russia (+38%), highlighting the effect of major conflicts on spending trends in 2024," the publication continues. Israel has been engaged in a U.S.-backed military assault on the Gaza Strip—globally condemned as genocide—since October 2023.
"Russia once again significantly increased its military spending, widening the spending gap with Ukraine," noted SIPRI researcher Diego Lopes da Silva. "Ukraine currently allocates all of its tax revenues to its military. In such a tight fiscal space, it will be challenging for Ukraine to keep increasing its military spending."
Russian President Vladimir Putin on Monday announced an upcoming three-day truce to celebrate the 80th anniversary of the end of World War II in Europe. In response, Ukrainian President Volodymyr Zelenskyy called for an immediate monthlong cease-fire.
All NATO members boosted military spending last year, which SIPRI researcher Jade Guiberteau Ricard said was "driven mainly by the ongoing Russian threat and concerns about possible U.S. disengagement within the alliance."
"It is worth saying that boosting spending alone will not necessarily translate into significantly greater military capability or independence from the USA," the expert added. "Those are far more complex tasks."
Another SIPRI researcher, Lorenzo Scarazzato, highlighted that "for the first time since reunification Germany became the biggest military spender in Western Europe, which was due to the €100 billion special defense fund announced in 2022."
"The latest policies adopted in Germany and many other European countries suggest that Europe has entered a period of high and increasing military spending that is likely to continue for the foreseeable future," Scarazzato said.
As for the Middle East, SIPRI researcher Zubaida Kari said that "despite widespread expectations that many Middle Eastern countries would increase their military spending in 2024, major rises were limited to Israel and Lebanon."
In addition to slaughtering at least tens of thousands of Palestinians in Gaza over the past nearly 19 months, Israel has killed thousands of people in Lebanon while allegedly targeting the political and paramilitary group Hezbollah. Kari said that elsewhere in the region, "countries either did not significantly increase spending in response to the war in Gaza or were prevented from doing so by economic constraints."
Keep ReadingShow Less
Not Just for the Battlefield: Rights Group Warns of Dystopian World Where Killer Robots Reign
"To avoid a future of automated killing, governments should seize every opportunity to work toward the goal of adopting a global treaty on autonomous weapons systems," according to the author of the report.
Apr 28, 2025
In a report published Monday, a leading human rights group calls for international political action to prohibit and regulate so-called "killer robots"—autonomous weapons systems that select targets based on inputs from sensors rather than from humans—and examines them in the context of six core principles in international human rights law.
In some cases, the report argues, an autonomous weapons system may simply be incompatible with a given human rights principle or obligation.
The report, co-published by Human Rights Watch and Harvard Law School's International Human Rights Clinic, comes just ahead of the first United Nations General Assembly meeting on autonomous weapons systems next month. Back in 2017, dozens of artificial intelligence and robotics experts published a letter urging the U.N. to ban the development and use of killer robots. As drone warfare has grown, those calls have continued.
"To avoid a future of automated killing, governments should seize every opportunity to work toward the goal of adopting a global treaty on autonomous weapons systems," said the author behind the report, Bonnie Docherty, a senior arms adviser at Human Rights Watch and a lecturer on law at Harvard Law School's International Human Rights Clinic, in a statement on Monday.
According to the report, which includes recommendations on a potential international treaty, the call for negotiations to adopt "a legally binding instrument to prohibit and regulate autonomous weapons systems" is supported by at least 129 countries.
Drones relying on an autonomous targeting system have been used by Ukraine to hit Russian targets during the war between the two countries, The New York Timesreported last year.
In 2023, the Pentagon announced a program, known as the Replicator initiative, which involves a push to build thousands of autonomous drones. The program is part of the U.S. Defense Department's plan to counter China. In November, the watchdog group Public Citizen alleged that Pentagon officials have not been clear about whether the drones in the Replicator project would be used to kill.
A senior Navy admiral recently toldBloomberg that the program is "alive and well" under the Department of Defense's new leadership following U.S. President Donald Trump's return to the White House.
Docherty warned that the impact of killer robots will stretch beyond the traditional battlefield. "The use of autonomous weapons systems will not be limited to war, but will extend to law enforcement operations, border control, and other circumstances, raising serious concerns under international human rights law," she said in the statement
When it comes to the right to peaceful assembly under human rights law, which is important in the context of law enforcement exercising use force, "autonomous weapons systems would be incompatible with this right," according to the report.
Killer robots pose a threat to peaceful assembly because they "would lack human judgment and could not be pre-programmed or trained to address every situation," meaning they "would find it challenging to draw the line between peaceful and violent protesters."
Also, "the use or threat of use of autonomous weapons systems, especially in the hands of abusive governments, could strike fear among protesters and thus cause a chilling effect on free expression and peaceful assembly," per the report.
Killer robots would also contravene the principle of human dignity, according to the report, which establishes that all humans have inherent worth that is "universal and inviolable."
"The dignity critique is not focused on the systems generating the wrong outcomes," the report states. "Even if autonomous weapons systems could feasibly make no errors in outcomes—something that is extremely unlikely—the human dignity concerns remain, necessitating prohibitions and regulations of such systems."
"Autonomous weapon systems cannot be programmed to give value to human life, do not possess emotions like compassion that can generate restraint to violence, and would rely on processes that dehumanize individuals by making life-and-death decisions based on software and data points," Docherty added.
In total, the report considers the right to life; the right to peaceful assembly; the principle of human dignity; the principle of nondiscrimination; the right to privacy; and the right to remedy.
The report also lists cases where it's more ambiguous whether autonomous weapons systems would violate a certain right.
The right to privacy, for example, protects individuals from "arbitrary or unlawful" interferences in their personal life. According to the report, "The development and use of autonomous weapons systems could violate the right because, if they or any of their component systems are based on AI technology, their development, testing, training, and use would likely require mass surveillance."
Keep ReadingShow Less
'Absolute Insanity': Right-Wing Activist Asks If Trump Will Suspend Habeas Corpus to Expel More Migrants
"Anyone advocating for suspending the writ of habeas corpus because they don't like due process is spitting on the legacy of those who fought and died for this country and our Constitution," said one policy expert.
Apr 28, 2025
With the Trump administration making space in the press briefing room for right-wing podcasters and other conservative "new media" content creators, viewers of briefings since President Donald Trump took office have seen his press secretary field questions about the Ukrainian president's clothing during an Oval Office meeting, compliments about Trump's "fitness plan," and attacks on reporters who have long reported from the White House.
On Monday, the first question of the briefing was derided by one Democratic politician as "absolute insanity," as right-wing commentator and influencer Rogan O'Handley—also known by the handle "DC Draino"—was given the floor to ask whether Trump will suspend the writ of habeas corpus in order to circumvent several judges' rulings and "start shipping out" undocumented immigrants without due process.
"Can you please let us know if and when the Trump administration is planning to suspend the writ of habeas corpus to circumvent these radical judges?" asked O'Handley after accusing federal judges of "thwarting [Trump's] agenda with an unprecedented number of national injunctions."
O'Handley shared some familiar right-wing talking points—saying federal judges have provided "more due process to violent MS-13 and Tren de Aragua illegal aliens than they did for U.S. citizens who peacefully protested on January 6"—as he suggested the administration should abandon the legal principle under which people who are detained are permitted to challenge their imprisonment in court.
"You have got to be kidding me," wrote Sara McGee, a Democrat running for the Texas House of Representatives.
His question came amid escalating attacks by Republicans and the administration on judges who have ruled against the White House. A Republican congressman said last month that Chief Judge James Boasberg of the U.S. District Court in Washington, D.C. should be impeached for issuing an order against Trump's invocation of the Alien Enemies Act to expel hundreds of undocumented immigrants to El Salvador. Last week, the FBI arrested Milwaukee County Circuit Judge Hannah Dugan for allegedly helping a migrant evade arrest by escorting him out of her courtroom.
Aaron Reichlin-Melnick, a senior fellow with the American Immigration Council, noted that O'Handley and press secretary Karoline Leavitt also repeatedly cited at least one statistic that was "completely made up"—that the Biden administration allowed 15 million undocumented immigrants into the United States—as they suggested Trump should take legal steps to force all of them out of the country without the input of the judicial system.
The undocumented population in the U.S. in 2023 was 11.7 million, according to the Center for Migration Studies, down from the peak of 12 million, which was reached in 2008.
"They've been pushing this on the right for about a week now," said Reichlin-Melnick of the push to suspend habeas corpus for undocumented immigrants. "Anyone advocating for suspending the writ of habeas corpus because they don't like due process is spitting on the legacy of those who fought and died for this country and our Constitution."
Leavitt responded to O'Handley's question by saying while she has "not heard such discussions take place... the president and the entire administration are certainly open to all legal and constitutional remedies" to continue expelling people from the United States.
Several cases of undocumented immigrants who have been sent to El Salvador's notorious Terrorism Confinement Center have made national headlines in recent weeks, including that of Maryland resident Kilmar Abrego Garcia; Merwil Gutiérrez, a 19-year-old who federal agents acknowledged was not who they were looking for during a raid; and Andry Hernandez Romero, a makeup artist who was accused of being a gang member solely because he had tattoos.
O'Handley's suggestion that the bedrock legal principle be suspended for undocumented immigrants—hundreds of whom have already been forced out of the country without due process—came ahead of Trump's scheduled signing of two new immigration-related executive orders.
One would direct the departments of Justice and Homeland Security to publish a list of sanctuary cities and states—those where local law enforcement are directed not to cooperate with Immigration and Customs Enforcement as it seeks to arrest undocumented immigrants.
The other, Leavitt said, would "unleash America's law enforcement to pursue criminals." The New York Postreported that the order would be related to providing local police agencies with military equipment and legal support for officers accused of wrongdoing.
Keep ReadingShow Less
Most Popular