Watching freshly minted Treasury Secretary John Snow, a longtime promoter of balanced budgets, hit the Hill this week to flack for the president's new red-ink-drenched budget, I felt like I had stumbled across a Richard Simmons infomercial pitching Big Macs. Or Colin Powell shredding the Powell Doctrine in order to sell the war on Iraq to the United Nations.
Of course, saying one thing and doing another is a way of life in the Bush administration -- so maybe Snow, as the "new guy," is just trying to fit in.
Take the president's outrageous assertion (there were so many to choose from) during his State of the Union address that one of the greatest accomplishments of his presidency was, yes, reforming corporate America.
"To insist on integrity in American business," said the president, "we passed tough reforms, and we are holding corporate criminals to account."
He didn't even burst out laughing, though I thought I could see Cheney struggling not to. Not only is the president not holding corporate Capones to account, he's putting them in his Cabinet. Maybe he wants them where he can keep an eye on them.
Exhibit A is Snow. During his 12-year tenure as chief executive at railroad giant CSX, our new guardian of the Treasury helped himself to a vast array of corporate indulgences. If CEO perks were pills, Snow would have OD'd a long time ago.
Let's start with the fact that he was paid a king's ransom -- $10.1 million in 2001 alone -- for doing a downright crappy job. With Snow at the helm, CSX's profits shriveled and its stock underperformed its competitors' by two-thirds since 1991. His reign is a case study in one of the greatest abuses of corporate America -- the anti-Pavlovian delinking of performance and reward.
Snow was also the lucky winner of a $24.5 million sweetheart loan from CSX -- precisely the kind of insider loan made illegal by the corporate responsibility bill signed into law by the president last summer. But Snow's gravy train of good fortune didn't stop there. You see, Snow, team player that he is, used the 24 mil to buy stock in CSX. When the stock, under his sure hand, plummeted in value, the company board, not wanting to see its fearless leader suffer along with its beleaguered shareholders, promptly forgave the massive loan. During his confirmation hearing last week, Snow decried as "offensive" CEO loans used "to go out and buy yachts." But, in a free country, the problem should not be what you buy with a loan but whether you repay it. If Snow had bought a yacht, at least he could have given some of CSX's shareholders a ride around the harbor for their money.
As if this weren't enough, Snow will also be rewarded for his mediocre tenure at CSX with an extremely generous pension agreement. No need to worry about him being forced to clip coupons on his $161,200 Cabinet salary -- CSX will pay him $2.47 million a year for the rest of his life. He also has the option of taking a $30 million lump-sum payment instead. Unlike most workers, Snow's benefits won't be based on his salary alone -- but rather on his salary plus his annual bonuses plus the value of the quarter-million shares of CSX stock the company board gave him. And his retirement windfall will be greatly enhanced by a pension accounting scheme that gives him credit for having put in 44 years at the company, even though he's actually been workin' on the railroad for 25. I suppose he was thinking really, really hard about the company during those other 19 years. Let's just hope his relationship to numbers improves at the Treasury Department.
Last year, at a conference on retirement savings, President Bush said: "What's fair on the top floor should be fair on the shop floor." I guess Secretary Snow didn't get the memo, quite likely because it never went above the shop floor. Indeed, at the same time Snow was stitching together his golden parachute, he was cutting the healthcare benefits of newly hired employees and, according to a lawsuit, revoking life insurance benefits for some CSX retirees. And it goes without saying that the average worker's pension at CSX is based on the antiquated "one year's work equals one year's pension" principle.
This two-track take on retirement benefits is no small matter, since one of Snow's first tasks as treasury secretary will be overseeing new pension rules the Bush administration wants to enact that could lead to a serious loss in benefits for older workers. Two Democratic senators, Tom Harkin of Iowa and Richard Durbin of Illinois, threatened to derail Snow's nomination unless the White House withdrew its proposal, but caved in when Snow promised the two senators that "fundamental fairness will be at the center of any policy." I can't wait to see what that means.
During his warm-and-cozy rubber-stamping (I mean confirmation hearing), much was made of the fact that Snow is giving up pay and benefits worth $15 million to, as Sen. Charles Grassley put it, "serve the people of the United States of America." I don't know about you, but the idea of a man with a reported net worth of close to $100 million being forced by government ethics rules to forgo a series of lavish, Jack Welchian retirement perks -- including lifetime country club memberships, annual physical checkups, free rides on the CSX jet, and special room rates at the Greenbrier, a company-owned resort in West Virginia -- doesn't exactly put a patriotic lump in my throat. Sorry, Sen. Grassley.
And Snow's "sacrifice" will be cushioned by a clause that he presciently had placed in his most recent contract making him eligible to receive an additional $3.3 million should he ever leave CSX to "fulfill an appointment to public office." And here I thought companies gave execs big bonuses to keep them from leaving. Unless, of course, they are leaving for a lofty position from which they can help enhance their former company's bottom line. In that case, all aboard!
It turns out the only executive task at which Snow truly excelled was ripping off the very same Treasury Department of which he is now head. Despite raking in close to a billion dollars in pretax profits since 1998, CSX paid no federal income taxes in three of the past four years -- magically making all of its profits "pretax." What's more, thanks to a combination of accounting gimmicks and tax shelters, the company was even able to score a hefty $164 million in tax rebates during that time. This tax-dodging approach was such a part of the Snow mind-set that it was enshrined in the company's 2001 annual report: "CSX," the report proudly proclaimed, "will pursue all available opportunities to pay the lowest federal, state and foreign taxes."
As the federal deficit spirals into the wild blue yonder -- now and for the foreseeable future -- is this really the kind of fox we want guarding the corporate henhouse? Do we really need more of Snow's special brand of little-guy-be-damned corporate arrogance around the Cabinet table?
Having John Snow, a world-class tax dodger and the lamest railroad man since Casey Jones, at the controls of our sputtering economy -- the Disorient Express -- has all the makings of a world-class train wreck. Mr. Conductor, let me off at the next stop.
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