Malloy Defends His Proposed State Budget at Town Hall Meeting
Being governor is not a game, it's a calling, Malloy said, and I’m trying to answer that calling.
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Saying he was a little bit nervous holding the first of 17 town hall meetings for his proposed 2012 - 2013 biennium state budget — not knowing how it would go or how he would be treated — Gov. Dannel P. Malloy told an audience in Bridgeport’s City Hall Annex Monday night that dealing with the state’s $3.2 billion deficit is not going to be easy no matter how it’s handled.
To put it in perspective, Malloy said, the deficit amounts to an obligation for every man, woman and child in Connecticut to repay $892.
And the state’s indebtedness on bonds, he said, amounts to approximately $70 billion, or $19,650 per Connecticut resident. Malloy’s appearance drew a crowd of perhaps three hundred people who overflowed the annex’s auditorium into surrounding hallways.
Introducing Malloy, Bridgeport Mayor Bill Finch, a fellow Democrat, asked the audience to be respectful of remarks made by the governor and members of the public, and the audience was mostly quiet, with only a few times when people verbally responded with boos or objections to what was said.
Providing an overview of the state’s fiscal situation, Malloy said it has been 22 years since the state grew jobs, and, “We’ve got to turn Connecticut into a job-producing state again.” Going forward in the budget process, Malloy said he'd enter into negotiations with the state’s employees’ unions hoping to bring about $1 billion in savings.
What’s happened in recent years, Malloy said, is that the state has borrowed to cover operating expenses and salaries, “mortgaging our future” while “starving off” its ability to borrow funds to invest in construction and infrastructure. As for providing new revenue, Malloy said his budget relies on a cross-section of revenue enhancements, including increased income and sales taxes.
Malloy said he’s proposed increasing the state’s sales tax to 6.25 percent, with the option for municipalities to collect an additional one-tenth of one cent on purchases. For Bridgeport, Malloy said, collecting that additional fraction of a cent could amount to about $1.25 million in additional revenue. The audience was then invited to ask questions, and a woman asked Malloy if his proposal to reduce the number of state agencies by combining them would result in reduced in state services.
Malloy said his proposal would result in more efficient delivery of services. “And I have to tell you something about Connecticut,” Malloy said. “We really – we don’t hold our government to very high standards, and so, if a government’s not performing what it’s supposed to be doing, we create another agency to do its job. That’s got to stop.” Malloy said Connecticut is competing with New York, Rhode Island and Massachusetts over where businesses want to locate.
Bill Dunn, a Norwalk resident, asked Malloy if Connecticut isn’t really competing with Texas and the southeastern and southwestern states over where to relocate, because, “no one in his right mind would move to (Connecticut, New York, Rhode Island or Massachusetts) because of taxes.”
Malloy said that over the last 20 years, most of the jobs transplanted into Connecticut have come from New York, so it’s important for the state to remain competitive with surrounding states.
Under his budget, Malloy said, “We will have substantially lower tax rates then New York, New Jersey, I believe Massachusetts, and Rhode Island, when everything’s said and done.”
“Being governor was never intended to be a game – it’s a calling,” Malloy said. “And I’m trying to answer that calling, and to do that, we have to create efficiencies over a long period of time.”
Saying he represented “the conservative grass roots,” Bob Mac Guffie of Fairfield asked Malloy why he didn’t embrace “liberating us from taxes, rather than increasing them.”
Malloy replied that Mac Guffie probably wouldn’t agree with him, but his plan is for the state to draw a line, establish its means, and stay within them. Malloy said that called for cutting spending by $1.8 billion, and, “That’s what our target is, I believe we’re going to get to it.”
Stratford resident Jerry Cunningham asked Malloy how taxpayers could take his call for spending restraint seriously when he’s proposed a “huge, expensive new taxpayer hand-out program” called the Earned Income Tax Credit? “That program is not a tax cut,” Cunningham said. “It is taking money from people who pay income taxes and giving it to people who don’t. New spending.”
Malloy replied that at about a $108 million total expenditure, the program is designed to accomplish a number of things, not the least of which is to help the families that need that help.
Cunningham then asked Malloy if he would “sunset” his tax increases, so they would end unless reapproved, and the governor replied that is up to the legislature. Malloy said that under his proposal, a suit of clothes priced over $1,000 would require payment of an additional three percent sales tax, as would a car purchased for more than $50,000.
The questions concluded with Stratford resident Maria Perez, saying she’s been a state employee for more than thirty years, listing the concessions she said state employees made two years ago to help the state close its budget deficit. Through her union, Perez said, employees agreed to seven furlough days, an increase in insurance premiums, an increase in medical insurance co-pays, and no raises for two years.
Also, she said, employees of five years or less had to make an additional contribution to their retirement plan of between three and five percent. “And now you’re asking us to give back more,” Perez said. “Please, Gov. Malloy, don’t try to balance the state’s problems in the deficit on the backs of state employees. We didn’t create the problem.”
Malloy replied by asking, if the state’s employee unions do not agree to concessions, should taxes be raised $2.5 billion or the state cut another $1 billion out of its “safety net” covering residents needing support?
If the state cuts those funds, Malloy said, there will be no safety net, and if the state lays off employees, “what good would that have done?”
“So all’s (sic) I’m saying is, I want to sit down and work with people,” Malloy said. “This is not personal. I don’t want to hurt anybody. I was elected governor of a state that has a $3.2 billion deficit and I’m trying to find the best course to balance that.”
Nick Lulka
6:20 am on Tuesday, February 22, 2011
He danced around the issue. I wish I had a retirement program like state employees. After seeing what is happening in Wisconson, as a small business owner in CT, I too am looking at relocating to Florida and letting 5 employees go and ask the state of CT for help. Democrats like Malloy fit the mold of helping everyone, anyplace, anytime at the expense of small businesses. IT HAS GOT TO STOP!
Chris Noe
9:39 am on Tuesday, February 22, 2011
Nick, It's unseasonalably warm the past few days in Daytona. The gentile 80 degree breezes are having and effect on my mental health. Silly me, I forgot to pack my snow shovel.
MPM
11:58 am on Tuesday, February 22, 2011
Florida may sound like a great alternative but think 2-3 times before moving to this incredibly cash strapped state and its equally down on their heels municipalities. Property taxes are going crazy - we lived there and our taxes quadrupled from one year to the next (in 2009 of all years). There is no personal state income tax, but there is an intangibles tax. You might not want to know more about that one.
Public schools are incredibly bad and you will GLADLY pay $30k+ per year to put your kids in a decent private school - IF you can get them in- at least they won't have to walk through a metal detector.
There is very little community due to its transient populace. The glut of available homes can change a neighborhood to a very different demographic with in a few weeks.
Insuring your home - assuming your insurance company will write you a policy in Florida - includes Home Owners, Wind and Hail Storm, and (usually Flood) Insurances. You can pay tens of thousands of dollars for these coverages. and they are not optional.
Traffic is monumental - This 2 week period of the year regularly saw commutes of 2 hours each way. On the highway.
Lastly - remember how everyone complained about the heat and humidity in New Canaan last June/July/ August? IT's like that for 9 months of the year in FL.
Good luck!
Chris Noe
9:33 am on Tuesday, February 22, 2011
The Smart Money is leaving and the losers stay. The is the obvious flaw in the plan.
Mr. Malloy promised the "Tough Choices" I don't see it. He is a Democrat so he won't throw the losers overboard or under the bus. They elected him.
Malloy had to make a balanced budget because the state can't borrow money.....period. If there was another short trem way it would have been done. His 17 city tour should be stopped, he has better things to do.
Look at retired cops for example. They all worked as much overtime as they could the last three years of employment so they could retire with what amounts to 'Full Pay' vs 50%. I don't care how it's done but all those retied cops pensions need to get reset to what their base pay was. Let this be an extension of their macho "Ultimate Sacrifice".
Mike
1:08 pm on Tuesday, February 22, 2011
Hey Chris you're wrong ...that's not how the pension is calculated it is the average of three last years and overtime is NOT included in the calculation.
Stephen Petri
10:48 am on Tuesday, February 22, 2011
The truth is, it has taken many years for the State's finances to get to this point and is also coupled with the worst economic downturn since the Great Depression. There are no simple solutions to this problem and it will not be solved overnight or without a good deal of pain.
Everybody wants more services and lower taxes, but you just can't have both. It's easy to stand on the sidelines, second guess. complain and to display your anger and disdain towards those not of your political party.
The State is in trouble. Give Governor Malloy some time and support to fix this mess. If you have some good ideas, send them to him and/or your State Senator. Be part of the solution not part of the problem.
Jennifer Hochberg
3:58 pm on Tuesday, February 22, 2011
I think that Governor Malloy is doing the right thing and holding the town-hall meetings in different parts of our state......I don't recall any governor in our state doing something like this in my lifetime. It gives us a chance to question what's what in the state budget proposal. Just because all the items in the budget proposal are there *doesn't mean* that they will be passed; I would not be surprised if the legislature will be picking apart the budget....just wait and see. I strongly encourage everyone to go to one of the town hall meetings that Governor Malloy will be at, and to contact your state legislators to express your concerns. I'm not happy with the budget proposal like a lot of folks but we as citizens need to make our voices heard.
Lastly, Gov. Malloy inherited this financial mess from the last 20+ years....at least he's putting something forward to attempt and try to fix the problem, not sweep it under the rug, PLUS having the town hall meetings such as the one in Bridgeport last night. Did our last two governors have anything type of town-hall meetings on the state budget? I don't believe they have. Give Malloy a chance! Thank you.
Roy A. Abramowitz
11:03 am on Tuesday, February 22, 2011
Really. Paying back your union cronies who got you in office, questionablywith hanky panky during the election is not a fix to the mess.
What is your plan? Here is a plan.
Lower taxes to put money into the economy and create jobs. Lower the sales tax do not raise them to attract out of state shoppers. Give business(es) incentives to relocae to CT. TOLLS ON I95 NOW THAT IS BRILLIANT. That will really spur the CT economy and bring visitors and businees here. Cap the outdated Defined Benefit Plans of the unions that voted Malloy in. Stop funding the sanctuary cities and underground economy that drains Ct's resources (aka California) and voted for Malloy. Yes Connecticut has the highet per capita debt of any state in the nation Stephen and your Democrats have controlled the State Senate and House throughout. Please look within "you and your party are the problem"
Chris
1:06 pm on Wednesday, February 23, 2011
You are 100% right...I recall a time when Governor Rell vetoed a BILLION dollar spending bill....guess what happened DEMOCRATS....it was overridden.....at the time Gov Rell stated that this was the wrong time to spend money we didn't have....this was the bill to move gateway college into New Haven....and other education upgrades.....the problem is that we have had a single party in unchecked control....and for whatever reason...CT keeps electing them.....Malloy is asking the state employees for concessions....how about ALL the unions - mirror the private sector....your retirement...needs to be like ours....you get the same....no better ...no worse.....your health and retirement contributions....will be the same....I bet the union goes mental hearing that fiscal sanity....Unions are through....
mysticcat
11:27 am on Tuesday, February 22, 2011
State emplooyees have made concessions two years ago to help with the state's finacial problems. This however has been changing over the years.Many believe that state workers are paid well, and have great benefits. These state agencies have seen layoffs, budgets cut, and no new hires for those who have left and some deptments all together eliminated. State employees are needed in this state to keep it running, even on the cuts backs and concessions already taken. To take away more will affect us all even more. People should remember who works for the state. Think long lines at Motor vehicle, state roads that aren't plowed, roads that aren't repaired, the frustrationing registations proceedures of state and community colleges, slow finacial aid to students, backed up highways and delays, slow response of state troopers at accidents, children welfare agencies slow to responed to neglect or abuse (just to name a few problems ). State employees will feel the same burdens as everyone else plus more. So when you're in line at motor vehicle and have to wait 2 hours, it was do to concessions from stae employees and budget cuts ect.
COJ
11:31 pm on Tuesday, February 22, 2011
I believe you are describing the current situation ?
Chris
1:12 pm on Wednesday, February 23, 2011
Can you imagine if they rewarded workers who deserved pay increases...omg...maybe....just maybe we wouldn't have the massive lines at motor vehicle...because there would be an incentive to work hard...more money....instead....the UNION won't allow that...and fights merit based pay every chance it gets....mirror the benefits and contributions of the private sector....period....we know there are employees who don't do their jobs everywhere....the union protects the bad ones....they can't be fired...next time you see a bad teacher at your childs school..think about the union standing behind them...not allowing a better teacher to replace them....and think how blessed we are to have Democrats passing more union friendly rules in this state.....time to clean the cabinets....2012 I believe....clean house...(and senate)
Tony Di Preta
12:44 pm on Tuesday, February 22, 2011
To bad ELLA or JODY, no longer making tough decisions in CONN, The road GOV,Malloy is headed strait to the bottom with his tax and spend policy,you most cut the state budget and make tough decisions just like your predecessors, Gov,Malloy mention that we most sacrifice?,{in the Danbury news times dated Feb 18,}Now i understood exactly what the Governor was saying? that we the taxpayers are the sacrificial LAMB?. ......... Any tax increases at this economy it will completely do us in?. PLEASE DEAL WITH THE STATE UNIONS THAT'S OUR PROBLEM,AND THE PORK BARREL.
ETP
12:46 pm on Tuesday, February 22, 2011
The state and municipalities would not have these enormous "unfunded pension liabilities" IF all state and local employees were on the Social Security system. The existing pension plans for government workers under age 55 should be tossed and replaced with Social Security. Why not? Taxpayers are enrolled; that helps put all citizens in the same boat.
max
10:03 am on Friday, February 25, 2011
Excellent. It is always best to have everyone rowing together. Get the Federal employess into this also. EVERYONE!
ken danyo
1:06 pm on Tuesday, February 22, 2011
I think the axiom in politics is "watch what they do, not what they say."
So far the only specific plans Malloy has identified, is to raise taxes and the Earned income credit. Which is another tax to pay for social spending.
So, while he talks about 'tough choices' , it looks like this guy will be the poster child for tax and spend democrat.
Max, state pension benefits are tax free at the state level, but taxable at the Federal level.
Malloy's idea to 'ask' for state worker voluntary givebacks (he is 'talking to them') is comical, given the pushback in Wisconsin, over the Wisconsin governor asking the workers there to actually contribute to their health care and other things...
Where I grew up in Brooklyn, I can go back to my neighborhood bar, and see all the retired cops (they retired at 42/44) and collect their pensions and ridicule how dumb everyone else in the world is. They make on average 70k a year in free money. They tell me, they put their lives on the line. Meanwhile, I was in the Marines, served 4 years active duty in Vietnam, and my veterans benefits are 640 a month. And, I actually did get fired upon and returned fire.
These Ct cops, who use the phrase "put my life on the line'--and then collect 70k for 40 years of their life, I dont get it. But the point is, if Malloy really thinks he is going to close the gap by asking for voluntarily cuts by public labor unions, he is delusional. Do we need a delusional governor?
ken danyo
1:10 pm on Tuesday, February 22, 2011
I also love how he proposes raising sales tax, and then in same breath, talks about attracting business to CT.
If you want a lot of retail business, try lowering the sales tax.
His proposal to tax cars more than 50k and suits that cost over 1000, sounds like a typical democrat move. Punish the rich!!! The problem is, that it will simply result in people buying their suits online and registering their car in Vermont or Fla. So we lose all the tax, and businesses are even more challenged. Great idea. Maybe malloy is not aware that people actually have choices.
You can do certain taxes on a federal level. Not on a state level, it just loses jobs --which ultimately costs way more taxes for all of us.
John Boulton
1:43 pm on Tuesday, February 22, 2011
Here's a suggestion. If you live south of I-95, drive over to your polling place TODAY - right now - and vote for Bob Kolenberg for State Senate. Until we get more Republicans in the legislature to push back against Malloy's tax-and-spend mentality, things will continue to get worse. Polls are open until 8pm.
The Hartford pols are watching these special elections like hawks. SEND THEM A MESSAGE!
Kara Glover Billhardt
3:19 pm on Tuesday, February 22, 2011
Who in Hartford called for this election during our school system's Winter Break.
Pretty strange plan.
Tony Di Preta
2:58 pm on Tuesday, February 22, 2011
IT'S pay back time governor for your UNION BUDDIES that supported you,In due time Malloy will stick it to the Connecticut blood sweat and tears tax payers, Voters you got just what you deserve? He will be forever in your wallet?. Soon home heating oil, gasoline prices by mid March 2011, we will pay $509 per gallon. LETS WATCH AND SEE??
Philip
3:37 pm on Tuesday, February 22, 2011
Their idea of a "tax cut" is a hair- "cut tax."
Having your haircut is a necessity and should be considered good Hygiene.
Join us in emailing the Governor and State Reps to vote "NO" to the "Hair Tax."
Roy A. Abramowitz
4:15 pm on Tuesday, February 22, 2011
Consider this. Under Malloy Stamford became a sanctuary city. Both the MTA and Stamford Police protect the non-documented workers who congregate by the Stamford Metro North Station by Exit 8. Well in order to pay the wages of these protectors of those taking jobs away from taxpaying Connecticut citizens and elleviate the State Budget Deficit let Malloy set up an area where the contractors and others hire these persons and institute a hiring tax per day per undocumented worker equivalent to the payroll taxes that a business pays the state, and an additional payroll tax equivalent to what a citizen pays on their wages for social security and medicare tax. This would then be remitted to the federal government to replenish the drain on the social security system by undocumented workers using our resources and stealing ur jobs during this time of economic turmoil. This would replenish the retirement system for those private sector workers who served in our armed forces and protected this wonderful country and gave us all our opportunities. But Iguess the Democratic Governor believes it is wiser to place tolls on the States roads, tax things like haircuts, raise the state gasoline tax, personal income tax, property transfer tax, impose a state real estate tax etc. Instead of Malloy we needed a Governor like they have in Wisconsin. Better gas up and get a haircut ASAP before the rates go up
Eli
4:16 pm on Tuesday, February 22, 2011
Governor Malloy is going to bury our fragile economic recovery if we aren't careful. The idea that we are only competing with MA, RI & NY is comical. Look at the amount of business that is done over the internet. Companies can sell to CT now without being located in state or anywhere nearby. His ideas to promote economic growth are juvenile. Oh and Maria while you were conceding some retirement benefits and pay raises several years ago the rest of us were having our pay rolled back or being laid off. If sacrifice is truly to be shared public unions will have to come to terms with the economic reality the rest of us live in. That means fewer public union jobs in 2011 than in 2010. Sorry just the cold truth.
Stan
9:09 pm on Tuesday, February 22, 2011
Tax & spend to support a bloated public sector and social programs hasn't worked in Europe and it won't work here. Even the Europeans have seemed to have finally realized this! When will the politicians here realize this? Or perhaps they do and just don't care, so long as they continue to get elected. For every dollar of increased tax Malloy thinks he will take in with this plan I bet he loses more from people avoiding the state. One step forward, two steps back. A nice start would be a 10% cut across the board, no state employee or division spared. And for anyone who voted for Malloy and is now surprised at this budget, I ask how.
Philip
11:27 pm on Tuesday, February 22, 2011
Eric Butterworth once said, "You cannot solve a financial problem with the same consciousness that created it." Using "old formula" politics to solve the problems of the new paradigm will likely leave us empty.
Peter Rowley
6:56 am on Wednesday, February 23, 2011
Malloy is off his rocker if he thinks increasing taxes and spending more will help the State budget deficit! What a tool!
Jon S.
8:15 am on Wednesday, February 23, 2011
I saw the part about increasing taxes, but I didn't see where the governor is also "spending more." Where was that?
Roger Sherman
8:21 am on Wednesday, February 23, 2011
You see he already has it figured out as a politician. Here is the sound bite "I will decrease general fund spending ......" but the reality is the overall budget still increases.
From the WSJ "Mr. Malloy said he would reduced the general-fund spending in his proposed budget. But the all-funds budget—currently at $19.2 billion—would actually increase spending by 2.4% each of the next two years. "
http://online.wsj.com/article/SB10001424052748703373404576148710878972194.html?mod=googlenews_wsj
Tony Di Preta
4:19 pm on Wednesday, February 23, 2011
NEW NAME, for the state of CT.Is............{GREAT TAX&SPEND STATE OF CONNECTICUT}
mark
1:44 pm on Thursday, February 24, 2011
The united states is in a class war supported by the same people who don't want to pay there fair share of taxes .They want small bus and unions to blame each other. when it should be directed at corporate america or big business
Roger Sherman
2:30 pm on Thursday, February 24, 2011
Mark - Yes in your dream world of a socialist America but in reality according to data from the Internal Revenue Service,1 the top 1 percent of income earners pay nearly 35 percent of the income tax burden; the top 10 percent pay 65 percent; and the top 25 percent pay nearly 83 percent. The bottom 50 percent of income earners, on the other hand, pay barely 4 percent of income taxes.
Eli
2:33 pm on Thursday, February 24, 2011
Brilliant analysis Mark. Unfortunately our government is in bed with big business. (Do you realize how much money GE donated to the Presidential campaign) and the public unions. It is small business and non-union employees who are getting hosed. Your support of large government is really support for corporate America who you think you despise. Just follow the money.
max
10:06 am on Friday, February 25, 2011
Mark, The basis to the poublic service union issue is the relative compensation ('all in' compensation) between private employment and public employment, adjusting for working conditions.
The spread and compensation has become too wide. Some glaring examples:
a. Guaranteed employment (vs constant layoffs, outsourcing and quiet age discrimination);
b. minimal contribution to health care vs. large cost sharing;
c. minimal contribution to retirement w/ outsized return;
d. defined benefit for public vs defined contribution for private (if at all);
e. relaxed working conditions (perceived or otherwise)
f. hours worked per year
g. sick day policy (carry over forever and get cash, vs use or lose).
h. Good pay regardless of performance.
To name few. Public employees are appreciated and to me should be fairly and adequately compensated, however there is a limit and I think that is the basis to the push back. Like private industry they have to do more with less, not less with more.
ken danyo
6:31 pm on Thursday, February 24, 2011
I think that by blaming corporate america, mark is saying that the haves and have nots have become too far apart.
Corporate CEO's in the 1960's took home 20times the average earner. Today they take home roughly 250 times the average worker. The average worker is not being treated fairly. Sure taxes are one angle to examine. But, Im sure most employees if they kept pace with CEO's (so multiply their earnings by 10) would gladly pay the taxes. Roger , you may be missing the point.
Big business is screwing their workers (and by extention 'america") Unions, government also guilty of screwing america by wasteful spending and in inability to take a hard stand. (why should they, when they just borrow more and pass on the burden to future generations. "Oh we have no money for the Salmon study that benefits a large donor or mine?? just borrow it and do the study.")
We need smaller government and actaully higher taxes on top earners. Either that or somehow impose some rule that limits the multiple allowed for CEO's of companies of larger than XXX employees . If you are a small business owner who invests all the money in a company , you can reap the benefits. But company's like GE --the CEO should not make 250 times the average worker. Either raise their pay, or lower yours. Then things would be more just.
Joe Burke
9:03 pm on Thursday, February 24, 2011
Higher taxes are a terrific way to grow the unemployment rate. Let's recall for a moment that the top 10% of wage earners pay 65% of the income taxes in our country- so they are paying quite a bit more than their fair share. Mark's comment is incoherent and does not warrant further comment. While your comment about CEO pay is not incorrect, it is intellectually dishonest as the overwhelming majority of their compensation is tied to stock grants which move up and down based upon corporate and CEO performance. I would suggest paying most employees the same way-giving them a reason to align their comp with the performance of their firm. Typical class warfare rhetoric like yours does not help the discussion
Roger Sherman
10:08 pm on Thursday, February 24, 2011
Ken,
Yes that is exactly what we need government doing, telling the board of directors of a publicly traded company how much they can pay their CEO. You don't like the compensation that a CEO is receiving then don't by the stock, as the escalation in CEO salaries trends to run up in the stock indexes. In 1960 the S&P500 was at 59, by 2008 it peaked at 1560. I own Apple stock, I do not begrudge Steve Jobs compensation, I relish in it, do you think the employees of Apple feel they are being mistreated? Many of the CEO generate enormous wealth for their stock holders, and now you want to tax them because they did their job?
max
9:55 am on Friday, February 25, 2011
This problem has been created in recent history. I can understand the thinking of workers and some unions (private industry, not public) when in the past they have given concessions and then a few short years later they are locked into lower compensation, the economy cames back and the top executives slap themselves on the back for being so smart and pay themselves huge bonuses. It is the difference in compensation that is the problem that most people have. There are no employees that are worth 3000x another. (Same problem with the public servant compensation issue, their compensation adjusted for working conditions has become too great relative to a comparable private sector worker.
On the other hand, I believe that owners (not employees) should be allowed to any and all outsized returns since the owners shoulder all of the risk.
ken danyo
10:21 pm on Thursday, February 24, 2011
hey rog....smart dude.... how much does apple pay steve jobs? Any idea smart guy? I ll tell you . 1 dollar. That is his compensation from the company. 1 dollar.
So, why not come back to me with an example of a ceo that actually is paying himself too much money.
Lets look at Enron stock. (congratulations on apple--you are so smart to own it by the way). You found the example of a stock that you own that appreciated. And i give you enron, or merrill lynch, or bear stearns , where stockholders didnt do too well. Im not talking by the way about "bying" stock. Im talking about corporate ceo levels. Take a look at a company like WPP--it's primary owner , Martin Sorrell makes tens of millions, let alone his stock appreciation ( and Jobs by the way owns 5 mio shares of apple. which is .6% of the outstanding shares...and has not received stock options for some time), while the people working in his ad company working 50 hours a week make 45,000 a year. They produce the ideas. They create the ads. They talk to clients. Martin makes the money. Tell me how that is justified in your mind, rog? If its stock appreication, fine. If its salary and bonus---not fine. Its not fair. Or tell me why it is? He bought all the ad companies --and now simply underpays all the workers. They cant go elsewhere--Martin owns most of them.
George Bernard
10:24 pm on Thursday, February 24, 2011
Ken, we disagree on many things, but here I find myself in rare agreement with you. Well said.
ken danyo
10:28 pm on Thursday, February 24, 2011
Joe,
Really?
So let me understand your logic. I have to go slow here.
Most CEO"S make their money through stock apprication. They are given stock, where the other employees are not. Then by not paying the employees, earning go up. Right? And higher earnings, then lead to higher stock prices. And that in turn leads to higher CEO pay. So which part is not honest?
are you saying that if the average worker pay were to increase, it would have no effect on the earnings of the company? Or that the earnings are totally independant of the stock price?
Im not sure who is being dishonest in our evaluation of the situation.
Can you clue me into how you conclude that restraining average worker pay, has no net effect on the pay of management? Either directly (though simply paying themselves more) or indirectly, (by reporting higher earnings, and taking your compensation in stock.) Thanks Joe.
Joe Burke
6:02 am on Friday, February 25, 2011
Ok Ken. It does not appear that you actually read my comment so I will try again. You stated the following "Corporate CEO's in the 1960's took home 20times the average earner. Today they take home roughly 250 times the average worker. The average worker is not being treated fairly.'
To which I responded 'While your comment about CEO pay is not incorrect, it is intellectually dishonest as the overwhelming majority of their compensation is tied to stock grants which move up and down based upon corporate and CEO performance. I would suggest paying most employees the same way-giving them a reason to align their comp with the performance of their firm.'
I am not sure where I suggested anything about restraining worker pay or made any comments about corporate earnings. I am suggesting that corporations provide an incentive to employees in terms of equity so that their comp is aligned with the performance of the corporation. Really- I am open to dialogue but read the comment first rather than try to put words in my mouth
ken danyo
10:38 pm on Thursday, February 24, 2011
I dont, by the way , consider lowering ceo pay from an average of 250 times to say 175 times to be indicative of 'class warfare rhetoric.'
I deem it to be a step towards achieving a better and fairer society.
I should also point out that Im only talking about major companies. If you are , for example, a hedge fund manager, and you were as smart as roger sherman and bought apple stock and your assets grew from 1 bio to 1.6bio dollars and your contract is to retain 20% of your return, I have no issue with that. In this case you are hurting no one. You actually earned what you earned. Take home 120 mio. Im not into capping earnings. Im into having those people who work for big companies and who often are the ones earning the money, make more money. Its not socialism or communism . I simply think 175 times is probably enough. (not that everyone needs to make the same...175 times avg worker seems not too limiting. If your avg worker make 55k then you can make 9.5 mio instead of 14 mio. IS that really so socialistic?
Roger Sherman
6:50 am on Friday, February 25, 2011
Ken,
Like I said I don't begrudge Jobs compensation, but seriously exactly what do you call putting a cap on compensation or look to redistribute wealth? As for Martin Sorrell, you are complaining about a man who fine tuned a strategy at Saatchi, took his own money and bought a wire basket company and turned into an advertising powerhouse? How much wealth did this man create for others along the way, how many jobs did he create, how much opportunity? This is your example of an evil CEO because he gets compensated for executing his strategy.
Explain to me what problem capping executive compensation actually solves? Does it create jobs, lower government spending, decrease taxes, improve services? Really Why do hate America?
max
4:36 pm on Friday, February 25, 2011
Roger,
THere should be some limits to employee compensation but unlimited returns for owners. I am not familiar with the example taht you site, but it sounds like as CEO Sorrell would be considered an employee, but it also sounds like is was (is?) a large shareholder (only?) and as such the shares should appreciate to reflect the results of all of the employees. These s/h returns should have little to no tax, as the shares could just as easily go to zero, and anyone that wants to pony up their own money can enjoy the same ownership returns.
max
7:15 am on Friday, February 25, 2011
I think compensation at public companies need review in two areas. There are many compensation programs that are hidden from view like differed compensation and special retirement programs that should be exposed and included in compensation, not hidden in foot notes. And I think that for public companies there should be ratios to adhere to or multiples not to be exceeded (like bond covenants).
e.g. 1. all in compensation of highest paid cannot exceed 20x lowest paid. 2. top 10% of company payroll (including all benefits) cannot exceed 20% of net profit for the year. 3. No bonus can ever exceed 100% of annual salary, 4. Bonus pool must be approved by 80% of employees.
Please ignore the numbers in these examples, I am just trying to highlight some concepts. It has been shown over time that usually board of directors are not good at providing adequate oversight on compensation issues. Whether it is covering the pension obligations or he man-hours for prosecution, when things blow out the public always has to shoulder added costs.
Eric Cameron
7:37 am on Friday, February 25, 2011
Great idea. Can we also put salary caps on athletes and actors? Lets not forget musicians and all other entertainers. Ah hell, why don't we just nationalize all these businesses. That has worked great in other places.
max
9:47 am on Friday, February 25, 2011
@Eric
Yes, athlete should be top of the list, since taxpayer dollars have been sunk into numerous stadium projects.
The problem that I have was created by the Clinton era ask for forgiveness is easier than asking for permission. The public in general has had a tremendous amount of money transferred from people that act right to people that do not.
If the public was not exposed to the bad decisions this would not be an issue, but since things have changed, then so has my thinking. The free market is no longer either.
Eric Cameron
10:09 am on Friday, February 25, 2011
I don't disagree with you on the issue of tax dollars going to stadiums. But I don't think the answer is to put government enforced caps on salary. Just stop giving them all the freebies with the stadium. If they can build the stadium on their own and still pay the big player salaries go for it. As long as it is not my money.
Eric Cameron
9:45 am on Friday, February 25, 2011
When did we stop being a nation of opportunity? This country was founded not on the belief that people from “the old world” made too much money and that wealth should be more equally distributed. Our founding fathers believed that the opportunities should be equally distributed. Ordinary people should be free to pursue prosperity and happiness rather than the old system where your opportunities were dictated by your families place in society. In other words, a class system with no class mobility.
Eric Cameron
9:47 am on Friday, February 25, 2011
I do not begrudge the CEO that earns many more times than I do any more than I begrudge Alex Rodriguez for making $33mm to play baseball. I wish I could play ball like these guys do and earn that kind of money. As long as they are not breaking any laws or getting the money from me I say more power to them. If we all decide that professional athletes make too much money it would be easy to fix. We just stop going to the games. In the case of Enron, they were not convicted of making too much money but of fraud. Arthur Andersen was reckless and turned a blind eye out of greed. They are rightfully no longer around. Steve Jobs may take home $1 in salary but also receives stock options as compensation worth about $1.5bn. Good for him. And good for all the people that own stock in Apple or have pension funds, 401k’s, or mutual funds that have invested in Apple. By the same token, if a private business fails…let it fail. We need to end crony capitalism with the “heads I win, tails you lose” mentality.
max
10:15 am on Friday, February 25, 2011
Eric, I used to think like you do, but it has become one time too many for me. Yes, Enron was fraud, but all of the money everyone made in the years before the sh!t hit the fan - they kept it all. ArtherAnderson, Bear, LEH, Computer Associates, and on and on everyone who overreached, fabricated sales data, borrowed future numbers for the current quarter, cooked the books, it all adds up to bonus that should have never been paid, stock options that should not have been in the money, and EVERYONE KEEPS THE MONEY. And I forgot, the repricing of options when they are underwater too long. More self dealing. I no longer believe.
Roger Sherman
10:56 am on Friday, February 25, 2011
Max,
So in 2002 Sarbanes-Oxley was signed into law, did you stop believing before or after the law was signed?
Eric Cameron
11:30 am on Friday, February 25, 2011
Sorry to hear that Max. I hope I never get to that point. I also hate when violent criminals seem to have more rights then their victims. But I would not want to trade our criminal justice system in for a police state. I would just fight for tougher treatment for those who break the law. Keep the faith
max
12:21 pm on Friday, February 25, 2011
@ rodger, Sarbox was stupid and it probably the beginning of the end for me. Huge waste of time and resources for nothing but propaganda for politicians to feed to the electorate.
Do you see it producing anything of value?
This mortgage mess is the clincher. People too out loans which they should have known were too big to handle (based on multiples of their income) with the stupid idea that the value would go up for ever. Some lied (stretched, whatever) on their applications. NO ONE takes any responsibility for their actions. I am not going to defend the banks, but the banks did not cause this mess, homeowners did. The banks need to deal with the lies they sold to investors of the paper they created out of this crap, but the banks did not force people to refi their house for way more than they paid and then live like they doubled their take home pay.
Yes, a little off topic, but it is a little related. The gov't allowed banks to use excessive leverage. Bankers got paid HUGE amounts of money and then when the sh!t hit (as it ALWAYS does) the risk did not exist for the 'risk takers' and they all kept their money. Yes, many lost jobs as firms failed and many lost retirement assets that were invested in the firms, but everyone keep all of the oversized pay check and bonuses that they received for all of the years leading into the disaster.
ken danyo
2:22 pm on Friday, February 25, 2011
eric,
you are confusing past compensation with 'this years compensation.'
But, you guys have also lost the plot a bit, in order to 'win the argument." You see, apple and steve jobs, falls under my defintion of CEO's that are fair. So, you chose an example that is simply proving my point.
Furthermore, the majority of his wealth comes from disney stock.
Pick out an example where the CEO makes 400 times average worker pay, and then we can discuss why its probably good for everyone.
ken danyo
3:41 pm on Friday, February 25, 2011
roger,
I understand that Sorell executed a strategy. I understand that it took capital and saavy. I get that. I also said he is certainly entitled to way more than the average worker.
I mean , you want to debate on a plane where you roll your eyes and point out various examples that allow for gross overcompensation. Ive tried to keep it on topic and on target. But, ill venture into your territory, and suggest that the sweat shops of the 20's were ok for you? That perhaps slavery was ok , because it used capital and a strategy and the farm assets of the slaveowner.
Just because Sorrell used money and a strategy, in my opinion , at some point, he holds his employees captive, because he owns half the advertising agencies in the world. Then he can underpay everyone---because where can they go? If you invested 150k in a college education, got a job in advertising, and are paid 45 k with no where to go, I think you might be singing a different tune. And , yes I understand people have some choices. But that doesnt mean that the situation is not wrong.
Furthermore, you seem confused by the difference of being an employee and being a stockholder.
I m not arguing for the equity owners--which is the sarbanes oxley issue--I m arguing that CEO's get paid too much relative to their avg worker. If you want to debate my point, then at least address the correct one.
Roger Sherman
4:08 pm on Friday, February 25, 2011
So Ken you want to solve the "Life isn't Fair" problem? So now you are comparing Sorrell to the owners of sweat shops? Yes last time I looked there were a number of indentured, underage advertising people working against their will in his agencies. Like Sorrell who left Saatchi to start his own company, employees of WPP can leave to start their own company, they are not captive workers and if they can offer the same service at a greater value then people will do business with them. Yes Sorrel exhibits all the characteristics of a slave owner all of those employees are working against their will. Really you have to be kidding me.
Listen you want to change how CEOs are compensated then buy stock in the company, go to the annual stock holder meetings, get a different board elected. But capping compensation because it isn't fair? Once again what do they call the redistribution of wealth or the arbitrary capping of earnings?
ken danyo
3:42 pm on Friday, February 25, 2011
eric,
in terms of actors , actresses etc. its funny, but I dont think they are the CEO's of huge companies. If you want to point out what you consider to be ridiculous conclusions, then at least make some sense. Ok?
ken danyo
3:47 pm on Friday, February 25, 2011
Eric,
I didnt mention that ceos of enron in the context of fraud and what they were convicted of. I mentioned enron in the context that sometimes shareholders lose. Roger's point was that if a ceo is paid highly as in apple, no one should complain as long as the stockholders are happy. enron management was an example of overly compensated management, and a strategy of inflating the stock so as to further boost their earnings.
apple is not the only company in this country. to use apple as your benchmark is.....silly.
ken danyo
4:28 pm on Friday, February 25, 2011
Im totally against public labor unions, who have benefitted when times are good, and now refuse to give back when times are tougher. When times are tough in companies, people lose jobs and compensation, and give back. Goverments , until now, generally dont go bankrupt. So they are , to an extent, protected. I think some munipalities are suggesting they declare bankruptcy to rid themselves of labor contracts. Of course bond ratings will be affected, but China is not buying Waterbury bonds anyway.
But , in as much as we can hope to address the overcompensation of public unions in our republican lives, I also think that Ceo's can look to examine their pay?
I understand the demographics on this site. So when we ask govt workers making 80k a year and we think they should contributure to their benefits, people agree. But when someone mentions management to also consider that they make too much, a huge pushback , and the introduction of "what this country was founded on , " etc is introduced.
I say , what is good for the goose is good for the gander. All compensation can be examined.
ken danyo
4:43 pm on Friday, February 25, 2011
Roger,
I find it amazing that you get it wrong with each post, yet act as though Im being ridiculous.
You told me about being fine with Steve Jobs salary. Yet he makes a buck. (and he received no stock options this year...).
You talk about shareholder interest , in response to a post about increasing average worker pay or lowering CEO pay. Again, you miss the point.
Then you talk about how employees should become stakeholders. Rog, old smart guy with the bizarrely superior attitude, can you tell me how many shares a person making 45k a year might be able to purchase? Give it ok, mate.
Then you are incapable of understanding the dynamics of what martin sorrell has achieved. I wont begrudge you , your ignorance, but tone down the attitude.
Maybe , in your infinite wisdom on the subject (googlewikipedia ) you can articulate clearly who the biggest advertisers are. what their criteria are for selecting agencies, and then again suggest that the employees making 50k a year , start their own agency.
Sorrell bought JWT for over 500 mio dollars. He didnt build the agency. He bought it. So your 'just do it his way employees' suggestion is simply ignorant. Again, tell me Rog , old boy, how these workers should attain the same level?
Hey maybe instead of joining a country club, I could just buy all the land and then build my own. Thats your suggestion there too. Right? Great---just give me the money. Oh, wait...thats the whole issue.
ken danyo
5:00 pm on Friday, February 25, 2011
And, no roger, i didnt compare martin sorrell to a slave owner.
I suggested that your attitude, that as long as owners make money, then all is fine, was similar to slave owners, or sweatshop workers.
You want to contrast where Im wrong, then please articulate.
Because your machievellian, "ends justify the means' mentality that as long as its not illegal, and owners are handomely paid, and to hell with everyone else attititude, to me is what those people thought as well. And I highly doubt you can actually articulate a stance that somehow effectively distinguishes your position from those.
Roger Sherman
6:02 pm on Friday, February 25, 2011
Kenny last time I checked when the CEO executed and the company was successful then the stock price went up, the employees were paid, their benefits paid and the were given opportunities to improve their position in the company and the stock holders benefit from a rising stock price. They are doing their job, the board set their compensation for doing it and they are getting paid. If I remember correctly the slave owners and the sweat shop owners were the only ones who benefited. There is your contrast.
Your only reason for limiting executive compensation is because its "fair". Please when did you get to decide that? Companies are making record earning, stocks are off their recent lows, I would think CEOs are doing their job, which last time I checked was to improve the value of the stock for the owners of the company.
I am not sure why you are so angry with Martin Sorrell with creating a wildly successful company but to each his own. He bought a wire basket company, used that to buy adverstising companies operating under the radar to build enough mass to take over WJT. Kudos to him. You sound jealous are you jealous?
The country club example you cited made no sense what so ever. It was never about giving money it was about earning it.
max
10:06 am on Saturday, February 26, 2011
@ Roger,
I would think that most CEOs are simply rising with the tide and that the industry trends drive their stock price more than the CEO's vision, strategy or execution of plan.
Additionally, I believe that for any given CEO there are many equally qualified that would do as good a job as the current one. Same on sports figures, very little difference between top pick an lower picks.
Finally it is the combination of all people involved (employees at a company, team members) that adds more overall value than one special person.
This sounds much more socialist than I believe myself to be, but I have always refuted the concept of the anointed one. It is nonsense.
mark
6:12 pm on Friday, February 25, 2011
I'll stick with my beliefs we are in a class war created by corporate america.I don't i agree with the compensation packages that many union employees receive and should be changes, but they and small business shouldn't be responsible for the states deficit. Corporate employee are over compensated and need to pay there fair share of taxes.
ETP
11:48 pm on Friday, February 25, 2011
Does anyone want to end the taxation nonsense? Anyone want to end the IRS?
Anyone want to end special tax tax breaks for lobbyists? Anyone want to redeploy a few billion dollars administering tax programs? How about ending new tax laws--hundreds every year? Can you keep up? Redeploy tax attorney's and CPA's to more tangibly productive jobs in industry?
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.
The FairTax Act (HR 25, S 13) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.
The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
go to fairtax.org
Take it a step farther and replace state tax > property tax? PAY AS YOU GO, JOE!
ken danyo
6:49 am on Saturday, February 26, 2011
Sorry Rogie,
But again your lack of understanding come through loud and clear. (Are you ever going to understand that you just simply get it wrong.)
In corporate america, the worker....blah blah blah. The General Accounting office , defines more than 1,000 businesses in the United States as sweatshops. They are run by (get this Rog) people who are trying to enrich themselves at the expense of other people.
Now, it's pretty clear , you have no idea how to calculate earnings from a company. Or what earnings do to the stock price. If you did know either of these elements to the argument, you would see that a company that for example has net revenues, before cost of labor, of 200mio dollars, and which pays its 1000 employees each minimum wage (35 hours X 8 dollars) , 290 a week or a total of 290,000 a week or rought 15 mio dollars a year, would then , after labor costs have a profit of 185mio. If there were 50 mio shares outstanding, then earnings per share would be 3.70 a share. Industry multiple is say 20 so the stock price is at 75or so. But Rog here is something you dont understand. If we give these people fair wages, say 25 dollars an hour, then labor costs escalate to 42.5 mio. Net earnings now 157.5 mio and the multiple drops to 3.25. Lowering the stock price to 65. Oh, but the CEO gets paid in stock. So , he doesnt want that. Get it? lower wages means higher income for our CEO. Now you get it?
Roger Sherman
9:35 am on Saturday, February 26, 2011
Kenny my internet connection is not that good from my ski house so I will be short. I am glad you passed econ 101 at community college, and now you are battling within a company at minimum wage. Ultimately the measure of success is the price of the stock for public traded companies. Your assumption is that they screw the workers to get a high stock price, so be it you sound angry and resentful - I can't help that but you can get therapy for it. While you are screaming about the "worker" I will be retiring at 50. Have fun on your soap box. BTW You never bothered answering my question - So what do you call the redistribution of wealth and earning caps?
ken danyo
6:58 am on Saturday, February 26, 2011
I am not jealous of Martin Sorrell. Its not too often , that Im jealous of someone I consider a pig.
YOu see, Rog, --I assume you work in a fast food restaurant. If I take hundreds of millions, and buy a vast majority of all fast food restaurants in the Connecticut and surrounding areas, and then lower the pay to all the workers from 10.50 an hour to 8.50 an hour--where would you work Roger? Thats your skill set. It might be advertising, or in your case filling up the sodas when I order, but the reality is, if I buy up all of the agencies, or restaurants, and then dont pay a fair wage, where would you work? You'd have to work for me---for 8.50 an hour.
And you know what Rogie--I think thats wrong. You can tip your hat to Martin Sorrell, or anyone who corners a market and then pays people less money now than they made 15 years ago. But, quite frankly I dont.
And Rog, in your typical 'i dont get it' lack of ability to understand---I didnt get to decide how fairly people are treated. You see, Rog...this is my opinion. Apparently you are incapable of understanding that I have an opinion that CEO's (and unions) need to look at the pay structure. You are of the opinion it all works well . (actually only the part about the CEO's --union workers, in your opinion, should take a pay cut. ) and you didnt "decide" that. You just believe that. You see? Thats what opinion forums are about. "last time i checked. " (to use your term)
John
9:16 am on Saturday, February 26, 2011
A Harvard MBA does reap Martin Sorrell dividends.
John
9:17 am on Saturday, February 26, 2011
Replace the income tax with a consumption tax.
Philip
3:45 pm on Saturday, February 26, 2011
Dear Roger Sherman:
In response to your comment;
"While you are screaming about the "worker" I will be retiring at 50. Have fun on your soap box. BTW"....
RETIRED AT 50 !!!!!!!!!!!!!!!
I can only conclude that you are either a public unionized, rubber stamping bureaucrat or former elementary school teacher, or a double "dipping" pension beat cop, as a real CEO would be too arrogant to take the time to respond.
ken danyo
1:18 am on Monday, February 28, 2011
Whats funny is that Roger admits that I understand economics.
And tries from some ridiculous arrogant viewpoint to talk about his ski house (or his apple investment).
Anyone who gets it wrong that frequently , and then brags about his income, is proving my point. If you actually are wealthy, you clearly have no business being wealthy.
Saying things like "the internet connection at my ski house is not very good"--is also just wrong.
What sort of internet do you get? You probably once stayed at a Motel 6 on vacation, and experienced unsatisfactory connection, because the wireless modem was far away from room 206.
Having internet in your house, is not the same.
Just proves once again, you just get it wrong.
I never saw a question by the way? Im happy to answer anything.
Here is my question Nicoli: how much did the CEO of Lehman brothers make for years 1998 to 2008? And then tell me he was worth it. You cant. because he wasnt. But thats not even the point. Stock prices do not reflect the success of a company with respect to its employees. You simply are not smart enough to grasp that rather simple concept. Its reflective a guy who misses the days of slavery and sweatshops. Those owners all were the richest men in their town. And according to you--that's all ok. Disgusting.
ken danyo
1:33 am on Monday, February 28, 2011
Ah, you asked, what do they call the capping of earnings.
Well, Im not capping earnings, Rog. Once again ( i think its everytime?? Yes, everytime) you get it wrong.
Its not a cap on earnings. Its a ratio.
Maybe you dont understand ratios?
In order for a CEO to make 10,000,000 of a large company (where the 'workers' are highly instrumental in the success of the company--not just 1 man) he would have to pay the average worker (not all workers --just want to make sure you are with me)---57,200 . That seems still unfair to me (but according to you, if I have an opinion, you might think I 'get to decide").
But to me this example shows how out of control this ratio has gotten. In present day corporate america he only is paying the average worker 39,000. I also took statistics at community college, so this would mean that some employees would be making under 20,000 full time, while the CEO is making 10,000,000? And your only measure of , if this is 'right,' is if the stock price is acceptable? How ridiculous. I know you want to win an argument, but at some point, even the most arrogant guy, has to see that this type of situation is not sustainable. Thats when you get revolts. Thats when government can and will step in. They want to limit health care premiums, they put limitations on drug use. They make you wear a seatbelt. Governments can get involved when things are not healthy for society. You just are not smart enough to understand.
Michael Dinan
7:38 am on Monday, February 28, 2011
Thank you for your comments on this story. This thread is now closed.