Tag Corporations

Weathering the economy’s soft patch

Kate Linebaugh and James R. Hagerty, Business Abroad Drives U.S. Profits, Wall St. J., July 25, 2011, at B1:

While the U.S. economy is struggling, U.S. corporations aren’t. A third of the way through the second-quarter reporting season, earnings at companies in the Standard & Poor’s 500-stock index are the highest in four years, according to S&P analyst Howard Silverblatt, who predicts the second half will be even stronger. Yet there is little indication that the strong results will jump-start the U.S. economy and get the millions of Americans idled by the recession back to work…. Corporate profits — one of the few areas of strength in the limp U.S. recovery — appear to be weathering the economy’s soft patch.

According to a study by Northeastern University economists titled The ‘Jobless and Wageless Recovery’ From the Great Recession of 2007-2009, “corporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1 percent.”

But “even as the economy limps along, more of the nation’s wealthier families are cutting out the car ride and chartering planes to fly to summer camps” according to Christine Haughney, To Reach Simple Life of Summer Camp, Lining Up for Private Jets, N.Y. Times, July 25, 2011, at A1:

Gov. Paul LePage of Maine happened to be waiting for his flight at Augusta State Airport on a recent Saturday when the weekend crush began.

A turboprop Pilatus PC-12 carrying Melissa Thomas, her daughter, her daughter’s friend and a pile of lacrosse equipment took off for their home in Connecticut, following the girls’ three-week stay at Camp All-Star in nearby Kents Hill, Me. Shortly after, a Cessna Citation Excel arrived, and a mother, a father and their 13-year-old daughter emerged carrying a pink sleeping bag and two large duffel bags, all headed to Camp Vega in Fayette.

“Love it, love it, love it,” Mr. LePage said of the private-plane traffic generated by summer camps. “I wish they’d stay a week while they’re here. This is a big business.”

More on LePage’s economic ideas here.

NYT: Executive Pay at Big Companies Rose 23% Last Year

Pradnya Joshi, We Knew They Got Raises. But This?, N.Y. Times, July 3, 2001, at BU3.

It turns out that the good times are even better than we thought for American chief executives.

… The final figures show that the median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009. The earlier study had put the median pay at a none-too-shabby $9.6 million, up 12 percent.

Total C.E.O. pay hasn’t quite returned to its heady, prerecession levels — but it certainly seems headed there. Despite the soft economy, weak home prices and persistently high unemployment, some top executives are already making more than they were before the economy soured.

… The preliminary and final studies put Philippe P. Dauman, the chief executive of Viacom, at the top of the list. Mr. Dauman made $84.5 million last year, after signing a new long-term contract that included one-time stock awards.

Leslie Moonves, of the CBS Corporation, got a 32 percent raise and reaped $56.9 million. Michael White of DirecTV was paid $32.9 million, while Brian L. Roberts of the Comcast Corporation and Robert A. Iger of the Walt Disney Company each received pay packages valued at $28 million.

NYT: Corporate Taxes Enter Debt Debate

From the NYT Caucus blog:

The Obama administration is preparing to inject an unpredictable new variable into its economic policy clash with Republicans: a plan to overhaul corporate taxes.

Economic advisers have nearly completed the process initiated in January by the Treasury secretary, Timothy F. Geithner, at President Obama’s behest. That process, intended to make the United States more competitive internationally, has explored the willingness of business leaders to sacrifice loopholes in return for lowering the top corporate tax rate, currently 35 percent.

The approach officials are now discussing would drop the top rate as low as 26 percent, largely by curbing or eliminating tax breaks for depreciation and for domestic manufacturing.

… Balancing deficit concerns with its desire to improve relations with businesses, the Obama administration wants any corporate tax overhaul to be “revenue neutral” — that is, a new system should bring in no more or less money from businesses than the old one did. Thus some sectors with comparatively few major deductions could win big, including Wall Street. Others paying lower “effective rates,” like domestic manufacturers, could lose.

… Proposing to cut the top rate for corporations poses the risk of aggravating unease among Democrats as they negotiate with Republicans over spending cuts in the monuments of modern liberalism: Medicare, Medicaid and Social Security. The recent revelation that the nation’s largest corporation, General Electric, paid no federal tax for 2010 despite $14.2 billion in worldwide profits makes a business tax-rate reduction an even tougher sell.

The Twilight Zone

David N. Bossie and Theodore B. Olson, A victory for independent speech, Wash. Post, Jan. 21, 2011, at A19.

One year ago today, the Supreme Court issued its landmark decision in Citizens United v. Federal Election Commission. It upheld the First Amendment rights of individuals acting through corporations and labor unions to participate in our political process, and it struck down an oppressive thicket of statutes restricting – and even criminalizing – their political speech.

… Today, thanks to Citizens United, we may celebrate that the First Amendment confirms what our forefathers fought for: “the freedom to think for ourselves.”

David N. Bossie is president of Citizens United. Theodore B. Olson was lead counsel for Citizens United in its lawsuit against the FEC.

NYT: Los Angeles Schools to Seek Sponsors

Jennifer Medina, Los Angeles Schools to Seek Sponsors, Dec. 16, 2010, at A22.

The football field at a public school here, in the second largest school district in the country, soon may be brought to students by Nike.

Facing another potential round of huge budget cuts, the Los Angeles school board unanimously approved a plan on Tuesday night to allow the district to seek corporate sponsorships as a way to get money to the schools.