President Bush takes message to the Street
By ROBERT TRIGAUX
Published February 1, 2007
In many ways, it was a day tailor-made for a sweeping State of the Economy speech on Wall Street by President Bush. The Dow just missed a record close at 12,621.69 Wednesday on the same day that the government reported the economy grew a respectable 3.5 percent in the fourth quarter and the Federal Reserve decided to keep key interest rates unchanged at 5.25 percent.
When it comes to economic data, few presidents have been so lucky.
The good news is the president chose to tackle inflated CEO pay packages in his remarks, saying corporate boards must "step up to their responsibilities" and tie compensation packages to performance.
The bad news is Bush made his remarks before a Wall Street crowd infamous for outsized compensation schemes, where 2006 year-end bonuses of $10-million are not uncommon and even individual payouts of more than $100-million that resemble the GDP of smaller countries did, in fact, take place.
Bush's audience did not applaud this part of his remarks but cheered any mention of tax cuts.
Beset by criticism over the Iraq war, Bush did his best to send a message that the U.S. economy in many ways is positively humming, even as he acknowledged some people lacking competitive educations were clearly being left behind while the gap between rich and poor continues to widen. And he defended his steady endorsement of tax cuts.
"There's a lot of political debate about these tax cuts," he said in his remarks.
"But here are some of the facts: Since we enacted major tax relief into law in 2003, our economy has created nearly 7.2-million new jobs. Our economy has expanded by more than 13 percent. That expansion is roughly the size of the entire Canadian economy."
For the record, Florida has created more of those 7.2-million jobs in the past four years than any other state.
If there was an echo in Bush's speech, it harkened back to the summer of 2002, when he spoke to a Wall Street crowd in front of a curtain emblazoned with the words "Corporate Responsibility." This was back in the heyday of the Enron and WorldCom scandals when Bush was pushing for a clampdown on business practices gone wild.
In that speech, Bush called for more of an "ethical compass" from corporate America, tougher SEC oversight, more jail time for corporate fraud and the immediate creation of a federal "financial crimes SWAT team" to root out wrongdoing.
It is telling that Wednesday's remarks focused, again, on excessive CEO pay. But this time he sided with those executives who have decried recent federal crackdowns on corporate accounting as too harsh. The Sarbanes-Oxley law - created in response to Enron and Worldcom wrongdoing - should be toned down, Bush concurred.
Robert Trigaux can be reached at trigaux@sptimes.com or 727893-8405.
Fast Facts:
What he said
Highlights from Bush's bullish speech in New York on Wednesday:
- He challenged corporate America on lavish salaries and bonuses paid to CEOs, saying pay should be tied to how much they help companies' shareholders.
- Acknowledged people's nervousness about their own finances. Said some workers are being left behind in booming economy while disparity between rich and the poor continues to grow.
- Noted unemployment is near an all-time low.
- Cited Dow Jones setting market records 26 times in last four months.
Fed rate holds
Citing a strengthening economy, the Federal Reserve Board voted Wednesday to leave the federal funds rate, interest banks charge each other, at 5.25 percent.