Darryl Cherness asked:


As election day draws near, it appears extremely likely that Barack Obama will be elected the next President of the United States. In addition, there is a general consensus, even among Republicans, that the Democrats will pickup seats in congress and may even obtain a “filibuster proof” majority in the Senate.

Currently, the Democrats have 49 seats in the Senate. In addition to those 49 seats, there are 2 independents, Joe Lieberman and Bernard Sanders, who caucus with the Democrats, effectively giving them a 51 seat majority. However, in order to get anything done in the Senate, 60 votes are needed to break Republican sponsored filibusters, the process of talking a bill to death and preventing action on urgently needed legislation.

There is general agreement, given the state of the economy, that 2008 will be a Democratic year. If Democrats pick up 5 seats in the Senate, the minimum they are projected to win, they will have 56 votes and will only need 4 Republican votes to break a filibuster. However, if the Democrats pick up 9 votes, difficult but not impossible, they will be able to shut off debate without crossover Republican votes.

What will it mean for the labor movement to have a filibuster proof, Democratic majority in the Senate?

First and foremost, it means that the Employee Free Choice Act will be enacted into law. The Democratic congress will vote for the Employee Free Choice Act and send that legislation to President Barack Obama who will sign it into law. Once the Employee Free Choice Act becomes law and management can no longer manipulate company based representation elections, it is a safe bet that there should be a significant increase in the number of union represented employees in the United States.

In addition to the passage of the Employee Free Choice Act, a strong Democratic majority in congress can be counted on to periodically raise the federal minimum wage for the working poor. Hopefully, the days of having to wait nine years for small increases in the minimum wage should become a relic of the past.

Other areas where significant changes can be anticipated include revisions in NAFTA to make it more labor friendly, the elimination of tax incentives to encourage American businesses to relocate overseas, greater regulation of the home loan industry to prevent a reoccurrence of the “subprime” housing debacle, and tax breaks for middle income wage earners.

Another significant change will come in the area of job creation. Unlike George Bush, Senator Obama has made it clear that he intends to spend significant sums of money on promoting renewable energy such as wind, solar, and geothermal energy. The expenditure of these funds should create thousands of new jobs for working men and women.

Finally, it is my belief that it is absolutely inevitable that the Democratic congress and the new Democratic president will allocate significant resources for “public works” projects; i.e. repair of infrastructure such as roads, bridges, sewers, water treatment plants, etc. Rather than rely on the marketplace to generate wealth that will “trickle down” to the masses, Obama and the Democratic congress will take direct action to stimulate our economy and return our nation to prosperity by means of these job creating projects.

I believe that the next four years may very well be recorded by historians as labor’s new “golden age.”

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Alain Tanugi asked:


I think it was the Financier Leo J. Hindery Jr who once said: ‘I think there are people, including myself at certain times in my career, who because of their uniqueness warrant whatever the market will bear.’ But the questions beg HOW much is too much? and Should macroeconomic woes slow CEO pay growth?

I recently read in the Associated Press that even as the economy slowed down in America “CEO pay still chugged to yet more dizzying heights last year.’ The top 10 highest paid CEOs took home a total of more than $500 million, but half of those companies saw huge drops in profitability at their companies.

One of the most exasperating things to shareholders and the public is when a CEO receives millions or tens of millions of dollars of compensation regardless of performance. This practice goes fundamentally against the culture of rewarding on the basis of ability and merit that underpins the free market system. Recent examples include: Marriott International chief J Willard Marriott Jr – his 2007 pay was $44m, up 22%, just six percentage points lower than Marriott’s stock price drop or Stan O’Neal, Merrill Lynch’s former boss, left with $159m after losing $8 billion.

Shareholders and politicians are advocating bringing in rules for companies that would allow shareholders to vote on executive pay. Executives in Europe have home far less compensation than their American counterparts in the past. But with leadership compensation in Europe on the rise, these pay increases have citizens in European nations deeply unsettled. The public indignation on both sides of the Atlantic has contributed to a unique political debate over what to do about excessive executive pay. Executive pay figures in Asia are still not as widely accessible as in Europe and America and it is difficult to compare. A recent study conducted by the CFA Institute Centre for Financial Market Integrity said that reporting compensation of executives on an individual basis is the practice in the United States, Britain and Australia and is advocated by institutional investors worldwide. Prevailing regulations and practices in Hong Kong, Japan and Singapore however leave much to be desired.

Jean-Claude Juncker, president of the European Commission’s “Eurogroup” of finance ministers, recently called excessive pay a “social scourge” and demanded action. When L’Expansion, a French business magazine, calculated that pay for the country’s bosses went up 58% in 2007, the finance minister, Christine Lagarde, said it was “scandalous” and threatened regulation. Nicolas Sarkozy, president of France, and Horst Köhler, president of Germany, have also denounced high pay.

New legislation the Netherlands will see the law setting EU500,000 as the level of annual salary or severance payment at which extra taxes must be paid. Germany’s Social Democratic Party is calling for legislation to curb pay, though its partner in government, Angela Merkel’s Christian Democratic Union, has so far resisted. At the same time the European Commission is working on a response to the Eurogroup’s complaint.

Just how extreme IS executive pay in Europe? As European firms compete for global talent it certainly has risen substantially in the last 10 years. Foreign executives now run seven of the firms in France’s CAC 40 index and five of Germany’s DAX 30. American-style bonuses and long-term incentive plans are now commonplace.

However European firms still pay a fraction of what is paid to their counter parts in America. According to Hay Group, a management consultancy, the median European executive earns just 40% as much as his equivalent in America. It’s also notable that both American presidential candidates – John McCain and Barack Obama – have been making compensation a campaign issue.

There is an important difference though companies in Europe seem to be more determined than American ones to link compensation to performance. In America share grants are often not tied to performance, whereas European firms usually attach performance criteria to any share grants, typically depending on a comparison with a peer group. Dan Vasella, boss of Novartis, a Swiss pharmaceutical giant, and a favourite target of pay activists, earned SFr17m ($14m) in 2007, down 33% from 2006, because he missed his targets.

The extreme rise in European executive pay has sparked an intense debate in countries that have been characterised by a relatively strong sense of economic solidarity and impartiality in the past several decades. A July 2007 Financial Times/Harris public opinion poll found that over 60 percent of those surveyed in the UK, France, Italy, and Spain would like to see their government set caps on top business executive pay. In Germany, a 47 percent plurality supports pay caps.

In America, only 32 percent of the public supports an outright pay cap on executive earnings a recent poll shows. However 77 percent of Americans say corporate executives ‘earn too much.’ Some members of Congress have responded by introducing legislation to curb excessive pay through tax reform and giving shareholders the right to vote on pay packages.

I recently saw an interview with Sarah Anderson, who compiles the Executive Excess report on CEO pay on a yearly basis. She discusses some of the issues raised in this column in her interview and I recommend that you take some time to view it. (www.youtube.com/watch?v=X2lKfRFhG0M.)

From what I have read and heard in the last year signs point to a strong possibility that meaningful reforms to rein in excessive executive compensation could be a prospect, as many political leaders in Europe and the United States seem to be finally catching up to the public uproar. It has to be said though that compensation is a complex issue. Different circumstances and industries dictate different packages and even severance pay may be justified if a change of control is the end goal. One would hope though that politicians would reject laws about pay, which are too widespread to be useful. Strict legislation might well compel leaders away from listed companies and create compensation packages even more complex-and so much more difficult to monitor.

Cathy D. Christiansen asked:


Jerry Erickson

Published: July 1, 2009

The U.S. immigration system is “broken and needs fixing.” So confirms President Obama after meeting with Republican and Democratic leaders last Thursday. Although there is no consensus yet in terms of what a restructuring of the immigration system will include, the process has now begun in earnest to adopt a comprehensive plan. President Obama acknowledged that the broken immigration system is “one of the most critical issues” that our nation faces.

In his remarks following the meeting, President Obama said: “My administration is fully behind an effort to achieve comprehensive immigration reform. I have asked my Secretary of the Department of Homeland Security, Secretary Janet Napolitano, to lead up a group that is going to be working with a leadership group from both the House and the Senate to start systematically working through these issues . . .”

One of the key issues that must be dealt with early in the immigration discussion concerns border security. At this point the American public is just not persuaded that the borders are secure. Until the borders are secured, it is unclear whether there are enough votes for the passage of comprehensive immigration reform.  Senator Mel Martinez (R-Fla.) said “I think the votes in the Senate are a little dicey at the moment. I don’t think it can pass today.” Developing an intelligent plan that clearly articulates the steps to make the border more secure will go a long way in getting the necessary votes.

President Obama is clearly aware that the road ahead will be bumpy. In his statement he said: “We all know that comprehensive immigration reform is difficult. We know it’s a sensitive and politically volatile issue. One of the things that was said around the table is the American people still don’t have enough confidence that Congress and any administration is going to get serious about border security, and so they’re concerned that any immigration reform simply will be a short-term legalization of undocumented workers with no long-term solution with respect to future flows of illegal immigration.”

It seems that the president has hit the nail on the head. In order to come up with a meaningful immigration policy that will serve our nation long-term, the government must come up with a solution to secure the borders. Assuming this can be accomplished, then the many issues associated with immigration reform can be debated.

On the eve of last week’s bipartisan meeting with the president, Senator Charles Schumer (D-N.Y.), who chairs the Senate’s main immigration subcommittee, offered that one of the ideas being considered is a requirement that all U.S. workers verify their identity through fingerprint or eye scan. As reported by The Washington Post, Schumer said that a national system to verify work authorization is necessary because Congress hasn’t cracked down hard enough on unscrupulous employers and illegal immigrants with fake documents. Schumer shows he gets the key issue when he says: “The American people will never accept immigration reform unless they truly believe their government is committed to ending future illegal immigration.” In a nutshell, that is the issue. Control the borders, and then fix the broken system.

There are approximately 12 million illegal immigrants in the U.S. Schumer expects legislation to be enacted that will secure the nation’s borders and require those here illegally to register with the government and “submit to a rigorous process to convert to legal status,” or face immediate deportation.

Done right, there is the opportunity to achieve some real long-lasting benefits here, not the least of which is the securing of our borders, having millions of non-tax paying people come out of the shadows and onto the tax rolls and developing a process to ensure that the work force is legitimate.

President Obama has conceded that “It’s going to require some heavy lifting; it’s going to require a victory of practicality and common sense and good policymaking over short term politics.” Here’s to the effort; let’s hope that all involved have the clarity and foresight to address the obvious first — securing our borders, and then the muscle to see through the remaining challenges.

 

The above information is provided for informational purposes only.  The information should not be construed as legal advice and does not constitute an engagement of the Szabo, Zelnick & Erickson, P.C. law firm or establish an attorney-client relationship with any of its attorneys.  An attorney-client relationship with our firm is only created by signing a written agreement with our firm.

 

 

 

Chad asked:

President Barack Obama says requiring people to get health insurance and fining them if they don’t would not amount to a backhanded tax increase. “I absolutely reject that notion,” the president said.

Blanketing most of the Sunday TV news shows, Obama defended his proposed health care overhaul, including a key point of the various health care bills on Capitol Hill: mandating that people get health insurance to share the cost burden fairly among all. Those who failed to get coverage would face financial penalties.

Obama said other elements of the plan would make insurance affordable for people, from a new comparison-shopping “exchange” to tax credits.

Telling people to get health insurance is absolutely not a tax increase, Obama told ABC’s “This Week.”

“What it’s saying is, is that we’re not going to have other people carrying your burdens for you anymore,” said Obama. “Right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase.”

Obama faces an enormous political and communications challenge in selling his health care plan as Congress debates how to pay for it all.

He told CBS’ “Face the Nation” that he will keep his pledge not to raise taxes on families earning up to $250,000, and that much of the final bill — hundreds of billions of dollars over the next 10 years — can be achieved from savings within the current system. Coming up with the rest remains a key legislative obstacle.

Obama put his support behind the idea of taxing employers that offer high-cost insurance plans.

“I do think that giving a disincentive to insurance companies to offer Cadillac plans that don’t make people healthier is part of the way that we’re going to bring down health care costs for everybody over the long term,” Obama said on NBC’s “Meet the Press.”

Obama’s network interviews were taped Friday at the White House. He became the first president to appear on five Sunday network shows in the same morning, an extraordinary effort to build public support for his top domestic priority.

The goal is expand and improve health insurance coverage and rein in long-term costs.

Yet despite so many weeks of speeches, town halls and interviews, Obama said he has found it difficult at times to make a complex topic clear and relevant.

“I’ve tried to keep it digestible,” Obama said. “It’s very hard for people to get their arms around it. And that’s been a case where I have been humbled and I just keep on trying harder.”

Obama told Univision’s “Al Punto” (”To the Point”) that the strong opposition to his plan is part of a political strategy.

“Well, part of it is … that the opposition has made a decision,” he said. “They are just not going to support anything, for political reasons.”

Senate GOP leader Mitch McConnell of Kentucky said Obama doesn’t understand Republicans’ opposition.

“I don’t know anybody in my Republican conference in the Senate who’s in favor of doing nothing on health care,” McConnell said. “We obviously have a cost problem and we have an access problem.”

But he told CNN’s “State of the Union” that the Democrats’ plan is simply too rushed.