Bailouts and CEO pay rates.

Three thoughts in case you don't want to read the whole post:

First, a little math on the bailout. And man does it suck for rich people.

Second, CEO pay, as high as it is, is not necessarily too high.

Third, I wish I had the nerve to write like this guy.

You are wrong, TPI, and I was wrong. Perhaps this isn't a socialist government like I thought. A better definition would be an oligarchy. Defeat of the $700 billion bailout would be the single greatest act of righteous indignation in my lifetime. But it will inevitably pass, and my children will wonder why their parents were so fiscally irresponsible. Well, my generation is the "Debt Generation" anyway.
But the sheer size of the bailout is what really offends me. I first heard 2 Trillion, at which point I just laughed. Then I heard Bush say something about $500 billion. The newest numbers are around $700 billion.
Let's just examine that number for a minute. Given the 350 million Americans, it's easy to come up with the quick figure that each American will be out $2,000 dollars. But that's an oversimplification. For fiscal year 2004, there were 131 million tax returns filed. Of those, approximately 42.5 million were awarded enough credits and deductions to equal no tax liability for that year. That means roughly one-third of Americans that filed tax returns don't have to pay a dime, because of low income and deductions. Also, an estimated 15 million households earned some income but did not file a tax return because they knew their tax liability was zero. Estimates of the household size, when added with these numbers generates the conclusion that approximated 40% of Americans are outside the eligibility for the Federal income tax system.

Therefore, only 210 million Americans would be picking up the $700 billion bill. The amount each taxpayer pays suddenly surges to $3300.
But this number is also misleading. Statistics show that the middle third of America, those that make enough to pay a small amount of income tax but don't make enough to contribute very much income tax don't significantly contribute at all to the national chest. The Congressional Budget Office estimates that those who make $43,500 a year or more pay 99.1% of all federal income tax. That's approximately 40% of the U.S. population. Further, those that make 83,700 (the top 10%) or more pay 70.1% of the nation's income tax. This is why when liberal democrats promise tax breaks to the middle and lower class I just shake my head at the idiots who vote for them on that premise, and I get angry at the idiots who vote against the conservative incumbents who gave tax cuts to the upper class. THE UPPER CLASS IS PAYING ALL THE TAXES!
Anyway, TAE makes enough that a quick calculation reveals that I'll be paying about $5,000, assuming each tax-paying American has to eat an equal share of this $700 billion weekend bender that Paulson thinks we should go on.
The irony here is that (as I showed in an earlier post) the mortgage crisis was in large part caused by banks financing people who were not making enough to afford a house payment, to minorities, and to people with small down payments and low credit ratings. Classically, these groups of people are the ones not paying income taxes.

So the bottom line is that the upper class is gaining an even greater tax burden to bail out those that have no tax burden whatsoever.

Second point: CEO pay is not really unfairly high. Let's pretend a large company like Fannie Mae is a professional football team, and the board of directors is the VP of Hiring Personel. Now, it would be a gamble to recruit an awesome quarterback out of college, because often quarterbacks are a bust. But he had amazing numbers in college and the crowd will follow him to the NFL games in which he plays.
So the team makes him an offer for 80 million over 7 years, with 5 million guaranteed per year and the rest tied up on performance based bonuses. He laughs and says another football team has offered him 105 million over 6 years with 5.5 million guaranteed per year, and a signing bonus of 11 million. So the first company counter-offers with $110 million over 6 years with a 12 million dollar signing bonus and a "gift" of $500k for each playoff game the team is in, plus another $250k for each playoff game they win. The football player accepts.
When the Associated Press finds out how much the quarterback will be making, the paste it all over espn.com and everyone reads about it and speculates whether he'll be a bust. Pre-season ticket sales for the team go through the roof, the stadium is packed and you hope the player does well. If he does, great, the seats stay packed, the player gets great stats, and your team profits by getting endorsements, televised games, etc. etc. If the player does poorly, well, you've already make a boatload of money off him, and at the end of the season you can probably trade him to another team and bank a good draft pick.
This is how CEO hiring goes in large business. CEO's are recruited by different companies competitively, and part of the reason their pay is so high is because they bring with them the allure of a new, highly touted CEO that will draw new shareholders and new business to the company. The performance of the CEO, while important, is not so important as the ability to advertise the company's fresh face to gain more revenue. Further, the exorbitant, hundreds of millions the CEO makes is chump-change to a corporation with billions in revenue.
The problem is that some CEO's get paid huge amounts and then don't take their company to the Superbowl.

What people need to understand is that there are 31 teams in the NFL each year that don't win the superbowl. But they pay their top performers huge sums to keep the seats filled, to keep the game exciting, and most importantly, to keep the team profits high.
CEOs that turn out to be total busts are just like the Ryan Leafs and Heath Shulers and Eric Crouchs of the NFL, players that came with high expectations, high pay, and ended up a bust.
But for every Ryan Leaf, there is a Peyton Manning, just like for every Herb Allison there is a Muhtar Kent.
Saying that CEO pay needs to be regulated or reduced sounds a lot like whining. If you don't like how much a CEO is making, then don't invest in a company. The fact is, when a CEO makes $125 million in a year and the company's stock price plummets, people cry foul play. But when a CEO makes $125 million in a year and the stock price goes up 16% and shareholders see a 5% return on their dividend, people call the CEO a genius. How could the company have known which CEO would be a boon or a bust? How could they have predicted the market atmosphere in which the CEO would have to work? Most likely, all a company can do is aggressively recruit the finest CEO that their money can buy and hope for the best.