ThinkProgress Logo

Economy

Romney Praises Poland’s Economy, Where Government Plays A Larger Role Than The U.S.

Visiting Poland for the final leg of his gaffe-filled trip abroad, Romney praised how the nation has “lifted the heavy hand of government” to become one of the fastest growing economies in Europe.

The problem with Romney’s speech, however, is that the the Polish government plays a larger role in its economy than the U.S. government plays here. The Associated Press noted that the reality of Polish government spending doesn’t match Romney’s rhetoric:

While it’s true that Poland is one of Europe’s fastest-growing economies and boasts dynamic entrepreneurs, Romney’s depiction of Poland as a place of small government is debatable. Even 23 years after throwing off a communist command economy, the Polish government continues to have a strong presence in people’s lives: it gives women $300 for each baby they have, doubling that sum for poor families; it fully funds state university educations; and it guarantees health care to all its 38 million citizens.

And while Poland’s economic growth has certainly been impressive in recent years, this is partly the result of economic redistribution in the form of subsidies that have been flowing in from the European Union since it joined the bloc in 2004.

In addition to praising higher government spending, this is also the second time Romney has inadvertently lauded universal health care — a far cry from his criticisms of the individual mandate. He first complimented universal health care in his comments on Israel’s relatively low health spending.

House GOP Tax Plan Raises Taxes On 10 Times As Many People As Democratic Proposal

Senate Republicans last week proposed a plan that would raise taxes on more than 20 million Americans, while maintaining the high-end Bush tax cuts. Letting those tax cuts on income in excess of $250,000 expire would affect just two million wealthy taxpayers, by comparison.

Now, House Republicans have adopted the same plan, and the effect is the same: roughly 24 million middle- and lower-class Americans will see their taxes raised so that roughly two million of the richest taxpayers can maintain a tax cut, as this chart from the Center for American Progress’ Seth Hanlon and Sarah Ayres illustrate:

Even worse, more than a third of families with children — a total of 18.6 million households, including 9.2 million single parents — would see a tax increase, according to Hanlon and Ayres’ analysis:

According to the analysis, roughly 11 million American families would lose some or all of the American Opportunity Tax Credit, which provides a tax break on college tuition payments, at an average cost of $1,100 each. About 12 million would lose part or all of the Child Tax Credit, costing them an average of $800, and about 6 million would lose all or part of the Earned Income Tax Credit, which saves each recipient an average of $500.

The Senate GOP plan failed last week, as the Senate instead adopted a Democratic proposal that would extend a tax cut on just the first $250,000 in income.

Former Dem Governor: GOP’s Tax Cut Ideology Is ‘Divorced From The Real World’

That the Republican Party refuses to give up on its fight to maintain the high-income Bush tax cuts shows that the party’s ideology is divorced from economic evidence, former Ohio Gov. Ted Strickland (D) said Tuesday.

Despite the fact that the GOP’s trickle-down policies have led to stagnant wage growth and skyrocketing levels of inequality, ballooning debt, and weak job growth, Republicans cling to the belief that next time will be different, defending the Bush tax cuts from expiration at the end of the year and promising even larger unpaid-for tax cuts for the rich in the future.

Republicans ignore the failures of “trickle down economics,” Strickland said in an interview with ThinkProgress, because they are “wedded to an ideology that is divorced from the real world”:

WALDRON: Why is the Republican Party still attached to these policies even though we’re going on now three decades of evidence that they aren’t helping the middle class?

STRICKLAND: Well, I think it’s being wedded to an ideology that is divorced from the real world, quite frankly.”

Watch it:

Strickland’s view is backed up by 40 economists recently surveyed about the GOP’s economic plans, who found that the the party’s positions on recent economic policies were ignoring reality. Others have made similar observations: a group of professors told CNN Money earlier this year that the proposals presented by Republican presidential candidates couldn’t pass an Economics 101 class.

The divorce from reality, Strickland said, contributed to the abrupt retirement of Ohio Rep. Steve LaTourette (R), who announced today that he would not seek re-election. LaTourette blamed, in part, polarization in Congress and his party’s move right, a point Strickland backed up. “I think what is says is there’s no place in the current Republican Party for moderate individuals,” Strickland said of LaTourette, who supported new revenues during last year’s debt fight and disavowed anti-tax advocate Grover Norquist. “If you are a moderate, even if you are a conservative but not a radical conservative, there’s no place for you in the Republican Party today.”

NEWS FLASH

Federal Housing Regulator Decides Not To Write Down Mortgages For Troubled Homeowners | The Federal Housing Finance Agency has decided not to allow Fannie Mae and Freddie Mac, the two government backed housing giants, to reduce mortgage amounts for troubled homeowners. FHFA acting director Ed DeMarco, whose agency regulates Fannie and Freddie, said in a letter to today that FHFA has concluded “that the anticipated benefits [of reducing mortgage principal] do not outweigh the costs and risks.” A recent FHFA analysis showed that taxpayers could save billions of dollars if mortgage principals were written down. In a letter to DeMarco, Treasury Secretary Tim Geithner said, “I do not believe [the FHFA's decision] is the best decision for the country.”

Climate Progress

Massive Blackout Leaves 600 Million Indians Without Power, Demonstrating Danger Of Relying On Outdated Coal System

Indian children read without power as a consequence of blackouts.

More than 600 million people in the northern and eastern parts of India lost power on Tuesday, putting roughly half of India’s population in the dark.

While the specific causes behind the mass blackouts remain unclear, the underlying cause is clear – India is reliant on an aging, inefficient government coal power monopoly that can’t meet the country’s energy needs:

Some analysts said public outrage over the widespread outages may force Prime Minister Manmohan Singh’s government to tackle reforms in the crisis-riddled power sector. Fuel shortages are crippling coal and gas-fired plants, forcing them to run below capacity or shut down for long stretches; state utilities have billions of dollars of accumulated losses; and, as has been on stark display, the nation’s creaky grid needs upgrading.

“Unless this government wants to commit political suicide, there’s no way they can ignore this,” said Abhey Yograj, managing director of Tecnova, a consulting firm that advises foreign companies on India.

While some are suggesting that increasing domestic coal production is the necessary next step in addressing India’s power problems, it’s not so clear that’s the case. One of the principal barriers to cheap coal production is environmental protection, and for good reason: The IMF estimates that coal pollution kills about 70,000 Indians per year and development of coal in India (and China) is undermining efforts to decrease global carbon emissions. Further, Indian coal development can create underground fires that cause houses to fall into the earth and fuels the corruption in the Indian energy sector that’s holding back meaningful reform. Solar power is actually less expensive than diesel in India and renewables more broadly are becoming increasingly plausible alternatives to expanded coal development.

In fact, the Indian government is pushing a National Solar Mission aimed at generating 12.5 % of India’s total electricity from renewable resources by 2020. By the end of 2012, the Solar Mission called for 810 megawatts of installed panels, but, according to a recently released report, India passed the 1 gigawatt mark in June of this year, a full 6 months ahead of the plan for 22 gigawatts by 2022. The report also found that India had only about 506 megawatts of installed capacity as recently as March, meaning that the country doubled its efforts in only two moths.

India has vast rural populations that often have limited access to electricity. The Solar Mission aims to provide more reliable sources of power to those citizens while reducing energy cost, decreasing reliance on foreign coal, and ameliorating the consequences of India’s economic growth for the environment.

Max Frankel contributed to this post.

Update

This post has been updated to reflect the fact that the post originally mistakenly used “coal” in place of “diesel.” Diesel fuel is more expensive than solar in India, while coal is cheaper than both.

NEWS FLASH

Fortune 500 CEOs Donate Four Times More To Romney Than To Obama | The presidential election is still more than three months away, but if fundraising is any indication, America’s top chief executives have already chosen their preferred candidate. The CEOs of Fortune 500 companies have given four times more to Mitt Romney’s campaign than to President Obama’s, according to an analysis by NBC News. Romney has taken $322,000 from those CEOs compared to Obama’s $75,500 according to the analysis. Perhaps Romney’s success with the CEOs is no surprise — he has promised massive tax cuts for both wealthy individuals and corporations should he become president, as well as a reform package that would make it easier for corporations to ship jobs overseas and hide foreign profits in tax havens.

Meet Mitt Romney’s Economic Advisers

Steven Perlberg contributed to this report.

In April, a Republican National Committee spokesperson said the Republican Party’s 2012 platform would focus on the same policies pushed by former President George W. Bush, “just updated.” In case anyone needs a reminder, Bush’s policies included massive tax cuts that led to exploding deficits and debt and a weak decade of job growth, the attempted privatization of Social Security, and deregulation of the financial industry that contributed to the 2008 financial crisis.

Despite that record, the party’s nominee seems to be chasing an agenda that truly is “Bush updated.” Former Massachusetts Gov. Mitt Romney’s economic advisers include two former chairmen of Bush’s Council on Economic Advisers and a veteran of Bush’s 2004 re-election campaign. The policies favored by those advisers include even bigger tax cuts, more deregulation, and support for dismantling Social Security. ThinkProgress compiled a look at each of Romney’s five economic advisers and the policies they have supported in the past, as well as those they hope to implement in the future.

Glenn Hubbard

Glenn Hubbard was the chairman of President George W. Bush’s Council on Economic Advisers from 2001 to 2003, during which time both pieces of Bush’s massive package of tax cuts became law. And while Hubbard now claims tax reform should target the wealthy, the ideas he has helped craft for Romney fail to do so. Hubbard is one of the major designers of Romney’s tax plan, which is four times larger than the Bush tax cuts and would explode the federal debt while giving the rich another huge break. Hubbard is also a fierce advocate of financial deregulation and, like Romney, supports dismantling the Dodd-Frank Wall Street Reform Act and the Consumer Financial Protection Bureau. In June, Hubbard criticized Obama on the editorial pages of a German newspaper and called for increasing Europe’s reliance on failed austerity policies. Hubbard reportedly takes the ideas of a Romney donor who supports more income inequality “seriously,” and he also supports the privatization of Social Security, a plan that would have decimated the retirement funds of millions of Americans in the latest financial crisis. But it’s not all bad: Hubbard has pushed a plan to offer mass mortgage refinancing to millions of America’s struggling homeowners, and he has slammed anti-tax activist Grover Norquist for his blanket refusal to consider revenue increases, which Hubbard supported as part of the Simpson-Bowles deficit reduction plan.

Gregory Mankiw

Greg Mankiw succeeded Hubbard as the chairman of Bush’s Council on Economic Advisers, during which time he was an advocate of Social Security privatization. He is a staunch defender of the Bush tax cuts and wrote an editorial in 2010 stating that, though he could afford higher tax rates, they would “make me work less.” The editorial was rife with problems and inconsistencies, as Mother Jones’ Kevin Drum and the Washington Post’s Ezra Klein noted at the time. Mankiw, who teaches at Harvard, also believes that income inequality is largely attributable to the fact that “some people care more about having a high income than others,” and uses that justification as a reason to oppose redistributive policies. Mankiw came under fire during his time in the Bush administration for making comments suggesting that outsourcing was good for the American economy; he later backed off those claims. Mankiw, however, has broken with conservative orthodoxy in key areas: he supported the Simpson-Bowles plan, which included revenue increases, and he is a proponent of instituting a nationwide carbon tax to fight climate change. He has also argued for higher inflation rates and he supported Federal Reserve action to bolster the economic recovery.

Read more

Study Shows Helping Homeowners Avoid Foreclosure Saves Taxpayers Money

The Federal Housing Finance Agency (FHFA), which is tasked with regulating government backed mortgage giants Fannie Mae and Freddie Mac, will soon make a decision regarding whether or not it will allow Fannie and Freddie to reduce mortgage amounts for troubled borrowers. Several analyses have shown that reducing mortgage principal is the most effective step for preventing foreclosures, and now an FHFA analysis shows that it could be a good deal for taxpayers as well:

As the regulator for Fannie Mae and Freddie Mac nears its decision on whether to approve debt forgiveness for troubled borrowers, a new analysis by the regulator suggests taxpayers could benefit from the move, according to people briefed on the findings.

Fannie and Freddie could save about $3.6 billion more than current loss-mitigation approaches by reducing balances for some borrowers who owe much more than their homes are worth, these people said.

As Center for American Progress housing analyst John Griffith explained, “Fewer foreclosures help more than just struggling homeowners. Local housing markets are better off, as each foreclosure decreases the value of every other home in the neighborhood. And since the average foreclosure costs more than $50,000 to the lender or investor, avoiding default often helps the books of Fannie and Freddie, which in turn benefits every taxpayer on the hook for their losses.” As former White House economist Jared Bernstein added, principal reduction “has proved to be an important resource for helping certain folks to stay in their homes, avoiding foreclosure and, as FHFAs new analysis shows, saving billions for the GSEs and thus the taxpayers who are still supporting these agencies.”

The FHFA has been waffling on principal reductions for quite a while, but this new analysis shows, once again, that providing help for homeowners has benefits for the wider economy.

STUDY: Companies With Women On Their Boards Perform Better

Sheryl Sandberg, recently named the first female member of Facebook's board of directors

A new report by the Credit Suisse Research Institute shows that businesses with women on their boards outperformed comparably sized companies with all-male boards by 26 percent, suggesting that a mixed-gender board provides an important boost for a business. According to the study:

Our key finding is that, in a like-for-like comparison, companies with at least one woman on the board would have outperformed in terms of share price performance, those with no women on the board over the course of the past six years. [...]

In the middle of the decade when economic growth was relatively robust, there was little difference in share price performance between companies with or without women on the board. Almost all of the outperformance in our backtest was delivered post-2008, since the macro environment deteriorated and volatility increased. In other words, stocks with greater gender diversity on their boards generally look defensive: they tend to perform best when markets are falling, deliver higher average ROEs through the cycle, exhibit less volatility in earnings and typically have lower gearing ratios. We can therefore conclude that relative share price outperformance of companies with women on the board looks unlikely to be entirely consistent, but the evidence suggests that more balance on the board brings less volatility and more balance through the cycle.

When it comes to the upper echelons of U.S. business, many barriers to women still exist. In one specific example, women make up more than half of the financial industry’s workforce, but fewer than 3 percent of U.S. financial companies employ a female chief executive. Overall, 36 percent of U.S. companies have no women on their boards of directors. Moreover, a female CEO makes only 69 cents for every dollar that a male CEO makes.

Steven Perlberg

Econ 101: July 31, 2012

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • Chrysler’s second quarter profit increased 218 percent over last year, when it paid back its loan to the federal government. [Detroit News]
  • The number of civil lawsuits related to the LIBOR rate rigging scandal is growing. [Washington Post]
  • The Eurozone unemployment rate held steady at 11.2 percent in June. [Bloomberg]
  • President Obama last night urged Europe to take forceful steps to address its economic problems. [Politico]
  • The European Central Bank is several weeks away from making a decision regarding controversial measures to quell the Eurozone crisis. [Reuters]
  • Corn prices hit a new record high yesterday as a result of a continuing drought. [CNN Money]
  • House Republican leaders are scrambling for votes to pass a stopgap farm bill. [The Hill]

NEWS FLASH

CHART: Nearly Half Of Complaints To New Consumer Protection Agency Related To Mortgages And Foreclosures | According to a report issued today, 43 percent of consumer complaints to the new Consumer Financial Protection Bureau had to do with mortgages and foreclosures. Of the mortgage complaints fielded by the Bureau, “54% involved borrowers who had problems with their loan modifications, a debt collection or foreclosure,” while 25 percent involved trouble making payments. As Firedoglake’s David dayen noted, “this is a pretty good barometer of whether or not the [mortgage] servicers have cleaned up their operations on foreclosures and loan modifications. And it’s pretty clear they haven’t.”

A History Of Paul Ryan’s Attempts To Dismantle Social Security

That House Budget Committee Chairman Paul Ryan (R-WI) supports the privatization of Social Security is well known. Ryan proposed $1.2 trillion in cuts and the partial privatization of Social Security upon taking control of the Budget Committee in 2011, and he has constantly warned about the supposed doom facing the program if major reforms aren’t enacted immediately.

But Ryan’s attempts to gut the most popular entitlement program in America go back quite a few years, as Ryan Lizza’s New Yorker profile of the conservative hero makes clear. Ryan’s fight against Social Security has been ongoing since he pushed President George W. Bush to privatize the program in 2005:

Under Ryan’s initial version, American workers would be able to invest about half of their payroll taxes, which fund Social Security, in private accounts. As a plan to reduce government debt, it made no sense. It simply took money from one part of the budget and spent it on private accounts, at a cost of two trillion dollars in transition expenses. But, as an ideological statement about the proper relationship between individuals and the federal government, Ryan’s plan was clear. [...]

Two weeks after Bush’s Inauguration, Ryan gave a speech at Cato asserting that Social Security was no longer the third rail of American politics. He toured his district with a PowerPoint presentation and invited news crews to document how Republicans could challenge Democrats on a sacrosanct policy issue and live to tell about it.

Bush ultimately went with a slightly less radical proposal that still failed in the Senate and caused Republicans massive losses in the 2006 mid-term elections. But Ryan, undeterred, told Lizza that the failure of privatization was simply due to marketing, not that the plan was unpopular:

What some might interpret as the failure of an unpopular idea Ryan insisted was mostly a communications problem. “The Administration did a bad job of selling it,” he told me. Bush had campaigned on national-security issues, only to pitch Social Security reform after reëlection. “And . . . thud,” Ryan said. “You’ve got to prepare the country for these things. You can’t just spring it on them after you win.” The lesson: “Don’t let the engineers run the marketing department.”

Aided by the mainstream media’s spreading of the lie that Social Security is “going bankrupt,” Ryan has been able to thrust Social Security “reform” back onto the table, and it was embraced during the primary by virtually every Republican candidate.

What Ryan and his Republican colleagues continue to ignore, however, is how easy fixing Social Security would be if they weren’t so insistent on protecting the wealthiest Americans from a single tax increase. By lifting the payroll tax cap that currently limits Social Security contributions to the first $110,100 in income, Congress could ensure the program’s solvency for the next 75 years — longer than the program has been in existence to this point.

That wouldn’t fit Ryan’s belief that the government doesn’t have a role in helping protect the financial security of the American people. But it would prevent millions of Americans from losing the much of their retirement savings, as they would have during the 2008 financial crisis had Ryan’s plan to privatize Social Security become law.

  • Comment Icon

As GOP Guts Food Safety Budgets, New Data Show Illnesses On The Rise

House Republicans have gone to great lengths to block implementation of a new food safety law, while also trying to cut the budgets of agencies that oversee food safety. But new data from the Center for Disease Control and Prevention shows just how foolhardy those moves are, as rates of foodborne illnesses are rising:

The most recent figures from the Centers for Disease Control and Prevention show that the rates of infections linked to four out of five key pathogens it tracks – salmonella, vibrio, campylobacter and listeria – remained relatively steady or increased from 2007 through 2011. The exception is a strain of E. coli, which has been tied to fewer illnesses over the same time period.

Foodborne illnesses sicken 48 million and kill roughly 3,000 Americans each year, and recently, a salmonella outbreak forced the recall of 30,000 pounds of Cargill-produced ground beef. Despite these numbers, the GOP budget made drastic cuts to the Food and Drug Administration in an attempt to prevent the implementation of the Food Safety Modernization Act, a law signed by President Obama last year that marked the first significant update to food safety law in a generation. The House farm bill, meanwhile, contains an amendment proposed by Rep. Steve King (R-IA) that would prevent states from regulating agricultural products.

Republicans, however, aren’t necessarily alone in their fight. Obama also sought cuts to the Food Safety Inspection Service in his budget plan, and his administration has thus far failed to meet required deadlines to implement new regulations. “Everyone was hoping that this new food safety law would be in place and we’d start seeing improvements by now,” Erik Olson, a director at the Pew Health Group, told the Washington Post. “What these CDC numbers show is that unless new protections are put into place, millions of Americans are going to continue to get sick from contaminated food.”

  • Comment Icon

PA Mayor Reaches Settlement With Unions To Pay Back Public Workers’ Wages

Scranton, PA Mayor Chris Doherty

After Scranton, PA Mayor Chris Doherty (D) reduced the pay of hundreds of his city’s public workers — including firefighters, police officers, and other safety workers — to minimum wage earlier this month, three unions challenged the cuts in federal court. In a deal reached today, the mayor has agreed to pay back the wages that the city owes to its public workers. In addition to restoring employees’ wages, Doherty will also award them with interest for the backlogged salaries, Reuters reports:

Mayor Christopher Doherty agreed that the city would pay approximately $750,000 in compensation owed to firefighters, police officers and public works employees, plus at least $5,100 in interest, said Tom Jennings, a lawyer for the employees’ unions.

In exchange, the unions said they would drop their bid to have the mayor held in contempt of court, according to the agreement, reached Saturday and presented to a judge on Monday.

Despite the fact that a federal judge issued an injunction preventing the city from decreasing workers’ pay to minimum wage, Doherty slashed the wages of hundreds of public employees earlier this month, claiming that Scranton could not afford to pay their full salaries.

John Judge, the president of Scranton’s firefighters’ union, said he remains “cautious” about the settlement’s good news for public workers, expressing hope that the city won’t hold workers’ living wages hostage in the future.

  • Comment Icon

Security

McCain Can’t Explain Why Military Spending Cuts Would Be ‘Devastating’

In their current campaign against automatic military spending cuts, Republican Senators John McCain (AZ), Lindsey Graham (SC) and Kelly Ayotte (NH) claim the reductions will be “devastating” to the U.S. military. But when asked to provide specifics on that claim on CNN this morning, McCain came up empty:

SOLEDAD O’BRIEN: Senator McCain, let’s start with you, if we can. The $500 billion cut over the next 10 years. You’ve had said that sequestration would be devastating. Give me a list of why?

MCCAIN: Well, first of all, it’s on top of another $460 billion that is already being cut. Second of all, it’s the view of Secretary Panetta and our uniform leaders who have used words like devastating, impossible to carry out our national security, challenge — meet those security challenges in the most graphic terms they have used as to the effects of these cuts.

And not to mention the job losses — the over a million jobs that would be lost and the billions of dollars also in defense industry so it’s a very serious situation.

Watch the clip:

Panetta does repeatedly say the military spending sequester would be “devastating” to the U.S. military but he has also failed to explain why. Panetta’s most specific remark on this point has been to say that the U.S. would have to reduce its presence in Latin America and Africa — i.e. hardly a “devastating” blow to the military or U.S. security. Moreover, a recent non-partisan Congressional Budget Office report found that the automatic spending cuts would bring the Pentagon’s budget back to what it spent in 2006.

As for McCain’s jobs argument, defense industry CEOs and other experts have said warnings that the military spending cuts will damage the economy and cause massive layoffs are “overblown.” And if you’re going to argue that federal spending is necessary to create jobs — a concept Republicans are now embracing in order to protect the nation’s bloated military budget — it’s probably better to, as one study has found, try to direct those dollars away from the Pentagon toward other domestic priorities.

  • Comment Icon

CHART: How State And Local Budget Cuts Are Holding Back GDP Growth

As ThinkProgress has noted on numerous occasions, the nation’s unemployment rate would be a full point lower were it not for budget cuts that have forced hundreds of thousands of public workers to lose their jobs. The last three years, in fact, were the worst on record for public employment.

This sort of austerity, of course, has negative implications for economic growth, which in the U.S. was a sluggish 1.5 percent last quarter. As the Tax Policy Center noted, “in 2011, the state and local sector contracted 3.4 percent, the largest decline since World War II.” Budget cuts have actually knocked several tenths of a percentage point off of national GDP in each of the last two years and in the first half of 2012, as this chart shows:

Europe is presenting a shining example of the effects that austerity has on a national economy. For instance, the UK has been in a double-dip recession for three quarters, while Spain’s youth unemployment rate is above 50 percent. Conservatives, however, have not stopped pushing for more European-style austerity.

  • Comment Icon

NEWS FLASH

Scandal Plagued Bank Sets Aside Billions Of Dollars To Pay Off Fines | Major British bank HSBC — which, according to a Senate report, laundered money for drug cartels and organizations with terrorist ties — has set aside about $2 billion in anticipation of fines and penalties resulting from this and other scandals. “What happened in Mexico and the U.S. is shameful, it’s embarrassing, it’s very painful for all of us in the firm,” said bank CEO Stuart Gulliver. In addition to $700 million earmarked for dealing with the laundering scandal, HSBC has set aside $1.3 billion to cover charges that it misled British customers.

Education

Predatory For-Profit Colleges Pay Executives Based On Corporate Profitability, Not Student Outcomes

According to preliminary findings of an investigation by Rep. Elijah Cummings (D-MD), the ranking member of the House Committee on Oversight and Government Reform, many for-profit colleges pay their executives based almost exclusively on corporate profitability, without taking into account student outcomes. Cummings’ office received documents from 13 for-profit schools, which showed just where the schools place their proirities:

The documents obtained during the course of this investigation indicate that the single most significant measure for determining executive compensation at these schools is corporate profitability, including factors such as operating income, earnings, profits, operating margins, earnings per share, net cash flow, and revenue. Companies use various combinations of these factors to determine the majority of executive compensation.

As discussed below, some companies provided no documents demonstrating links to student achievement when determining executive compensation, other companies provided documents with vague references to student achievement, and other companies provided documents that included specific compensation percentages linked to student performance measures. In all cases, however, the majority of compensation paid to company executives is based on measures relating to corporate profitability rather than student achievement.

As ThinkProgress has documented, predatory for-profit schools rely heavily on taxpayer dollars to produce revenue, yet leave many of their students buried in debt and without the education necessary to find a good job. They engage in aggressive marketing tactics, promising students employment opportunities that never materialize.

Meanwhile, CEOs of for-profit colleges make 26 times more in compensation than the heads of traditional universities. For instance, Strayer University CEO Robert Silberman was paid $41.9 million in 2009. (HT: Chris Kirkham)

  • Comment Icon

Econ 101: July 30, 2012

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • The Federal Reserve board will meet this week to decide if it will take new actions to boost the economy. [Reuters]
  • Treasury Secretary Tim Geithner is in Europe this week to meet with officials from Germany and the European Central Bank. [CNBC]
  • A new report reveals how for-profit colleges serve shareholders over students. [Washington Post]
  • About two dozen states are reforming the way in which they license teachers to de-emphasize testing. [New York Times]
  • The House is planning to vote on a one year extension of the 2008 farm bill this week. [The Hill]
  • Spain slid even deeper into recession last quarter. [CNBC]
  • The first wave of social media companies to go public has largely underperformed expectations. [Reuters]
  • Comment Icon

House Republican Bill Would Fast-Track Tax Cuts For The Wealthy And Corporations

House Republicans next week intend to vote on a plan that would both extend all of the Bush tax cuts — including those on income in excess of $250,000 — and fast-track “tax reform.” If the House GOP bill were adopted, tax reform legislation would “have special protections in the U.S. Senate, limiting the opportunities for lawmakers to use blocking tactics.”

But the GOP bill only calls for a certain kind of tax reform — specifically that which would benefit the rich and corporations. Under the GOP’s fast-track approach, a tax reform bill would have to consist of:

(1) a consolidation of the current 6 individual income tax brackets into not more than two brackets of 10 and not more than 25 percent;

(2) a reduction in the corporate tax rate to not greater than 25 percent;

(3) a repeal of the Alternative Minimum Tax;

(4) a broadening of the tax base to maintain revenue between 18 and 19 percent of the economy; and

(5) a change from a ‘‘worldwide’’ to a ‘‘territorial’’ system of taxation.

As Citizens for Tax Justice noted, these changes would massively benefit the wealthy and corporations, shifting the tax burden down the income scale. In fact, consolidation of the tax code in the way the GOP envisions would give millionaires a $187,000 annual tax cut, while likely increasing taxes on the middle-class and working families, due to the elimination of deductions upon which they depend.

Changing to a “territorial” system of corporate taxation, meanwhile, would boost the incentive to invest overseas and push jobs offshore. These are the sort of changes which Republicans want to protect from procedural shenanigans, even as they drive the use of the filibuster to unprecedented heights, including on legislation that could boost the sluggish economic recovery.

  • Comment Icon

Older

Switch to Mobile
ThinkProgress Signup Overlay Skip and Continue to ThinkProgress Skip and Continue to ThinkProgress

Sign Up