March 10, 2011

End Subsidies To Corporate Fat Cats

Marc Comtois

Contrary to what many think, most conservatives actually don't approve of "corporate welfare" (see: GM, Big Agriculture, etc.) and think it's ridiculous when a company receives government subsidies when it pays salaries like this:

• Four vice presidents and producers pulled in more than $300,000 — and another 10 took home more than $200,000 — in pay and benefits;

• 145 of...950 employees — about 15 percent — earned more than $100,000.

• Ex-...president Henry Becton Jr. — now the station’s vice-chairman — made $160,873 in total compensation for working just 24 hours a week.

• Top brass pocketed more than $200,000 in bonuses.

[The] $425,000-a-year CEO, Jonathan Abbott, defended the salaries, saying he hasn’t had a raise since taking the helm in 2007 and that [the company] has to compete for talent with the country’s leading media companies.

“We also benchmark all of those salaries to comparable salaries at media and nonprofit organizations in this area and nationally,” Abbott said. “If you look at my compensation relative to . . . my peers in Boston or in this country, I am . . . paid a fair wage.”

Of course, I'm talking about WGBH, the Public Broadcasting station that "received $11.5 million in federal money this year— about 8 percent of its $156 million operating budget." Obviously, that's a crucial 8%. Keep those pledges comin'!!!!

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The 8 - 10% of public funds usually claimed can be deceptive. WGBH produces a lot of programming which is then sold to other public stations. Those other public stations pay fees for use of that material. Many of the smaller stations could not afford those fees except that they are subsidized by another government agency. In truth, probably 30-40% of WGBH's imcome originated from the public coffer.

I recall that, many years ago,I watched a GBH program on ocean exploration. At the end various of the participants discussed matters. I particularly recall that one of the participants said "we have just as much claim on the public treasure as anyone else".

None of this is news. A few years aqo my daughter worked there as a film editor. This was some sort of temporary/internship job. It paid $50,000. Her friends, in similar work, made fun of her for "being on the gravy train".

Posted by: Warrington Faust at March 10, 2011 11:03 AM


Excellent post. Every few years there's some public radio or television station that sparks a scandal by disclosing its appallingly-high internal salary levels. As a consequence of these occasional disclosures, I've always considered the fund-raising appeals to be at best disingenuous and tasteless ("please contribute now or the lights will go out"). If people really knew what NPR and PBS stations paid their employees, the majority of their would-be contributors (most of whom earn far less) would likely stop giving -- and perhaps would stop watching and listening as well.

Posted by: Bill at March 10, 2011 11:58 AM

"Contrary to what many think, most conservatives actually don't approve of 'corporate welfare'..."

And we'd even believe that if you guys paid half as much attention to the billions of subsidies paid to big business (who coincidentally fund Republicans with piles of campaign cash) as you do the tiny subsidy paid to Public Broadcasting.

First they came for Elmo and I said nothing because I wasn't an adorable puppet...

Me, I say keep up the good work. The soccer moms really love the idea of defunding the one readily available station with decent educational programing.

Posted by: Russ at March 10, 2011 2:26 PM

Russ, please provide traceable facts (not spurious allegations in wild-eyed Lefty blogs) to support your allegation about corporate welfare to business and Republican contributions.

Most of the stories I have read in the past few years have been about subsidies to Democrat-leaning companies: Goldman Sachs and other banks who are major Democrat contributors, GE, the entire "green energy" industry, General Motors (a gift to the UAW), and Fannie Mae to name a few.

And don't base it all on ethanol, which is a bipartisan scandal whose leading proponent is the Democrat-dominated environmental lobby.

Posted by: BobN at March 10, 2011 2:38 PM

If your point is that both major parties are compromised by being awash in corporate cash, I'm with you. Let's admit thought that historically Republicans have been the prime beneficiaries, as is the case now according to one of my favorite leftist sources...

Corporate Political Giving Swings Toward the GOP

Posted by: Russ at March 10, 2011 3:10 PM

8% of $156 million is $12.5 million. The pay and benefits mentioned in the bullet points, plus the CEO's salary, comes to at least $18.3 million.
Can you see some cuts? I can. Just sayin'. All you need is 16% overall assuming that you simply can't increase support from elsewhere. I don't buy that assumption or the one that all staff is essential either.

Russ, you are a caricature. 1) CTW makes beaucoup bux on Elmo and the gang. 2) educational programs are not limited to PBS and NPR the way they were half a century ago. 3)btw, are Fawlty Towers and Are you Being Served? representative of educational content? 4) big bidness backs winners, Demo or Repub, or splits bets on real races. Don't pretend otherwise. See especially Wall Street in 2008.

Posted by: chuckR at March 10, 2011 3:17 PM

No, Russ, you failed to answer my question. That article may talk about corporate PAC campaign contributions (perfectly legal and no less proper than union or leftist PAC giving), but that is only one-half of the equation you assert. What evidence do you have to support your allegation of "billions in subsidies" in exchange for supposedly improper campaign contributions?

Posted by: BobN at March 10, 2011 3:40 PM

Here you go!

The 2010 U.S. congressional elections saw an unprecedented boom in campaign spending – $4 billion in all, with about $1.12 billion coming in the form of individual contributions to candidates, according to the Center for Responsive Politics.

But it’s companies that are reaping the most recognizable benefits. Ovtchinnikov said firms located in areas where individual contributors most intensely targeted “economically relevant” politicians saw positive changes in return on asset (ROA) and market-to-book ratios. The bottom-line boost that comes from campaign donations is similar to investing in a new research-and-development or capital-expenditure project.

Further, the economic benefit to firms strengthens when donations come from areas that have high unemployment rates, even if the politicians on the receiving end don’t live in that district.

The new study also finds that political contributions flow disproportionately from companies’ home districts to key members of congressional committees with jurisdiction over their industry.

“What you’re seeing is the ability for people to reach politicians with dollars when they can’t reach them with votes,” Ovtchinnikov said.

The net result is that a significant amount of political donations come from narrow geographic clusters. Between 1991 and 2008, for example, three small areas around New York, Chicago and Washington, D.C., accounted for 11.7 percent of all campaign contributions -$425.9 million – even though they represented less than 2 percent of the population.

But wait, there's more!

While the most recent study examined individual donations, a previous study by Ovtchinnikov and others published last year in the Journal of Finance shows a correlation between corporate political donations and higher stock returns.

“Our results . . . suggest an extremely high rate of return for firms participating in the political contribution process,” Ovtchinnikov and his co-authors write. “Alternatively, it is possible that politicians find it most beneficial to grant favors to large firms because those are the firms that generate the largest amount of tax revenues and jobs.”[my emphasis]

In a similar Vanderbilt study, David Parsley, E. Bronson Ingram Professor of Economics and Finance at Owen, found that money spent on corporate lobbying is positively correlated with the firm’s subsequent financial performance...

For his part, Ovtchinnikov says these studies, by demonstrating that campaign and lobbying expenditures have positive effects on corporate performance, open up intriguing new lines of inquiry for researchers.

"We have shown that firms are benefiting,” he said. “Now, we need to begin to ask why they benefit.”

Posted by: Russ at March 10, 2011 4:36 PM

Russ, "the corporations" donate to whomever they think will win. Do we really need to pull up the 2008 contributions to Senators Clinton and Obama during their Presidential campaigns? The banks and corporate law firms chose very wisely that year.

Posted by: Dan at March 10, 2011 5:33 PM

Is that the best you can do - some weakly correlated, long-distance statistics based on stock-market returns? Then you have utterly failed to support your baseless accusation.

Posted by: BobN at March 10, 2011 8:38 PM

WGBH should voluntarily give up the 8% of their funding. Then they could truly be independent.
99.9% of their donors are lefties, I am sure they can dig a little deeper

I love WHJJ, I watch it on the net,

Public TV out here in Arizona is like Fox News...lying right-wing scum 24/7

Posted by: Sammy at March 10, 2011 10:13 PM

Sammy in Arizona..

it was 90 degrees here, i spent the day by the pool

Posted by: Sammy at March 10, 2011 10:22 PM
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