Rage to Reform
Why policymakers need to hear the nation's anger.
A U.S. Capitol Police officer stopped me as I tried to make my way inside the House Financial Services Subcommittee hearing on AIG compensation last week wearing a sign pinned to my butt that read, "Bonus? My ass!" "I was told by the committee that you can't go in with signs that have profanity," the officer said. "So you'll have to take that off." Then, as I unpinned the sign from my skirt, he whispered, "Not that I don't agree with you."
Members of Codepink, or "the pink ladies," as Congressman Paul E. Kanjorski of the finance subcommittee called us, became a fixture in congressional chambers during the Bush administration, protesting the war in Iraq. We gave voice to the general public sentiment that had turned against the war long before Congress did. We embodied the public outrage that helped sweep Barack Obama into the White House.
Today, while Codepink still rallies and lobbies for an end to the wars in Iraq and Afghanistan, we've become vocal-and visible-opponents of Wall Street bailouts. Once again, we represent the public's anger, this time against the corporate profiteers who, in the words of Sen. Charles Grassley, are "sucking the tit of the taxpayer." We personally share in the anger: one of the women with us inside last week's hearing room was Cynthia Benjamin (no relation), a nurse for 34 years with a son serving in Iraq. She drove to D.C. from upstate New York to give Congress a piece of her mind.
"You're damn right I'm angry," Cynthia told a reporter during a break. "First they took my son, who is serving his second tour of duty in Iraq, and now they took my retirement fund and my 401[k]. What the hell is this government doing?"
Such expressions of public outrage are all too rare inside the halls of Congress or the D.C. Beltway. At public hearings in Congress, the gray-suited K Street corporate lobbyists pay poor people (known in the business as "line standers") to hold their spots in line so they can breeze into the hearings at the last minute, making it almost impossible for the public to get in.
But the public's anger at the corporate greed that spurred our economic crisis has pushed people to work harder to make their voices heard-from swamping the congressional switchboards with calls to camping outside a congressional hearing to guarantee entry. Back in their home districts, lawmakers are besieged by constituents demanding answers, demanding transparency, demanding solutions. Lawmakers need to hear this public outrage and will make better policy if they do. In fact, the one silver lining of this economic debacle is an opening for instituting populist policies that could rein in some of these corporate excesses.
The public has finally woken up to the obscene distortion of values in the corporate world, which includes salaries and bonuses that are simply out of whack. In 1980, CEOs at Fortune 500 firms were paid 42 times the average worker's salary. By 2007, they were being paid on average 364 times as much.
The public has figured this out, and has begun to figure out solutions, too-and demand them. Shareholders, the true owners of corporations, should have the right to vote on major business decisions, including executive compensation. The accounting loophole that allows companies to sequester stock options from regular expenses must be closed, and options should be accounted for in every company's balance sheet. Congress should also do away with the ridiculous tax loophole for managers of hedge funds-the ability to claim their income as capital gains and pay only 15 percent in federal taxes-and put a conclusive end to excessive executive pay by capping tax deductions for executive compensation at 25 times the salary of any company's lowest-paid employee. If that worker received the minimum wage, the deductible for an executive would be capped at $304,200. The company could pay the executive more, but would not receive a tax break for the excess. This would generate more than $5 billion in extra revenues while acting as a check on grossly excessive compensation.
But these solutions alone will not fix the underlying problems with the corporate system that forced us into this mess. We need to create a new legal and regulatory framework that aligns corporations with social needs, including giving greater power to shareholders. A system that requires boards of directors to include representatives of all major stakeholders-workers, government and communities-and enforces collective-bargaining laws that level the balance of power between workers and managers.
The economic crisis, and the public's furor over executive pay and behavior, has provided Congress with an opportunity not just to rein in CEO compensation but also to remake the out-of-touch, irresponsible corporate system. Until that happens, we'll keep wearing our signs.
© 2009 Newsweek