His recent assault on House Budget Committee Chairman Paul Ryan’s alternative Republican budget is a blunt example. In his speech at the annual Associated Press luncheon in Washington, D.C., Obama dished out a barrage of the liberal clichés. Ryan’s budget was “social Darwinism,” trickle-down economics,” “radical” and “right-wing extremism.”

In fact, it’s none of those things. Ironically, Ryan’s plan — which spends $5 trillion less than Obama’s — has been criticized by the Club for Growth as a “disappointment for fiscal conservatives” because it doesn’t balance the budget in the next 10 years. That’s why two  Republicans voted against it in committee.

That Obama regards this as radical speaks volumes about his poor excuse for a budget, which didn’t win the vote of a single Democrat when it was rejected unanimously in the House. (Last year, his budget went down 97-0 in the Senate.) He offers no serious fiscal plan. It’s a campaign strategy, irresponsibly kicking the can down the road. Even Treasury Secretary Timothy Geithner told the Senate that the Obama path for entitlement spending and interest on the national debt is “unsustainable.”

When testifying before the House Budget Committee, Geithner was asked directly by Ryan if the administration had a long-term plan for deficit and debt reduction. His reply was, “We’re not coming before you to say we have a definitive solution to our long-term [deficit] problem. What we do know is that we don’t like yours.”

On page 58 of the “Analytical Perspectives” section of the Obama budget is this passage: “Long-Run Budget Projections — In 2011, the three major entitlement programs — Medicare, Medicaid, and Social Security — accounted for 44 percent of non-interest federal spending, up from 30 percent in 1980. By 2035, when the surviving baby boomers will be 70 or older, these three programs could account for more than 60 percent of non-interest Federal spending … . The policies in the 2013 Budget would stabilize the budget outlook over the next 10 years by generating $3 trillion in additional deficit reduction.”

When Obama says he’ll “stabilize” the budget outlook, he really means he’s doing nothing to reverse the trend. The so-called $3 trillion in “additional deficit reduction” isn’t a reduction at all. It’s just a deceitful way of saying that the cumulative deficit over the next 10 years will be $7 trillion instead of $10 trillion in the baseline estimate. In other words, the national debt will increase by $7 trillion.

Accompanying the written analysis is a chart showing the growth of publicly held federal debt. This is especially harrowing. In 2008, it was 40 percent of GDP. By 2013, after four years of Obama, it will grow to 77 percent of GDP. It hovers at about that level through 2022, then begins to skyrocket, exceeding 200 percent of GDP by 2085. The president’s budget acknowledges that this will “far exceed its previous peak level reached at the end of World War II.” (In fact, it’s about double that.) This is national bankruptcy territory. Think Greece.

Then there’s this gem: “The policies in the 2013 budget will allow more time to develop long-term policies to address the persistently rising debt.” Translation: “It’s an election year, so we’re not doing a thing about addressing the long-term unsustainable social spending problem because it might make us unpopular with millions of Americans on the receiving end. Instead, we’ll savage Rep. Ryan’s plan, which does offer some serious proposals to reign in runaway spending.”

This is what Obama calls leadership.

The troops will and should face discipline. Yes, the enemy has done far worse in videotaping beheadings of civilian hostages. But this is not who we are, so these troops have to face punishment.

Still, when considering penalties, the military brass and their civilian bosses should keep in mind the impossible world our young men in uniform inhabit. They fight a brutal insurgency war where the enemy gives no quarter, our “ally” in Kabul hamstrings our successful military tactics and Afghan civilians resent us for the collateral casualties inherent in this difficult war. And far too many U.S. soldiers are on third and even fourth deployments in war zones.

And how’s that war going? Not so well if you consider that just this past weekend the Taliban succeeded in launching seven simultaneous attacks in Kabul and three provinces. Thankfully, Afghan forces did most of the fighting.

Victory keeps getting defined down. Our goal now is to hand this mess over to the Afghan army in 2014. Is that a goal worth dying for? Why wait? A decade of war is enough. Next month’s NATO summit in Chicago offers an opportunity for the Obama administration to craft a face-saving strategy to declare that the Afghan army proved last weekend it can handle Taliban attacks and that we can bring our troops home — now.

President Barack Obama hopes to win re-election with populist appeals for “fairness,” meaning raising taxes on the highest earners regardless of whether it makes economic sense.

His presumptive GOP opponent, former Massachusetts Gov. Mitt Romney, has spent the past year pandering to the tea party and now has endorsed a House Republican budget that practically eliminates federal investment in human capital.

What the nation needs is a third-party candidate who’ll advocate tax and entitlement reform and a leaner, performance-based government that invests smartly in education, research and infrastructure.

That candidate could borrow good ideas from both parties — such as the “premium support” Medicare plan proposed by Rep. Paul Ryan (R-Wis.) and Sen. Ron Wyden (D-Ore.) — but ought to campaign for real on the problem-solving, “bring us together” promise that Obama (and George W. Bush) ran on, then abandoned.

I’m hoping that someone with political credibility will step up and run for president using the 50-state ballot access that the Americans Elect organization is in the process of securing for its ticket.

Say, former Indiana Sen. (and Gov.) Evan Bayh (D), who by the Americans Elect rules would have to choose a Republican as his running mate. Say, Sen. Olympia Snowe (Maine).

I cite those two because they’re experienced and denounced the dysfunction of government as they announced their exits from public office.

Alas, so far only a passel of no-names or near-no-names has declared candidacy on the AE website — led by former Louisiana Gov. Buddy Roemer (R) and former Salt Lake City Mayor Rocky Anderson (D).

Bayh and Snowe are among 300 or so “draft” candidates who have been proposed by others, along with some other worthy possibilities including New York Mayor Michael Bloomberg, former Utah Gov. Jon Huntsman and former Comptroller General David Walker, who seems most likely to actually run.

As one of the nation’s leading advocates of fiscal sanity and government reform, Walker could be a strong candidate — if he could attract the funding to establish widespread name recognition and get his message across.

All third-party candidates in the past have failed to win, of course, but some have moved — or scared — the major parties into addressing issues they were otherwise avoiding. And that’s the great benefit that a credible AE candidate could perform in 2012.

This year, it’s not one issue that needs addressing — it’s a whole series of problems that Republicans and Democrats can’t or won’t solve because they are so ideologically divided.

The problems start with getting job creation started again, which includes investment in education, research and infrastructure (which Obama favors) and tax reform (which both candidates merely give lip service to).

They include tackling the massive federal debt, which will increase under Obama’s budget from 80 percent of gross domestic product now to a crushing 124 percent by 2050, according to the Committee for a Responsible Federal Budget.

The House Republican budget drafted by Ryan and declared “marvelous” by Romney reduces the debt to just 10 percent of GDP, according to the Congressional Budget Office. But it achieves this by slashing domestic discretionary programs — everything from the FBI and Border Patrol to education and national parks — to less than 1 percent of GDP from the present 4 percent, according to figures from the Committee for a Responsible Federal Budget.

A centrist energy policy would be a true “do it all” approach — drilling now, researching alternatives and gradually raising carbon taxes.

Neither Obama nor Romney has even addressed the most immediate threat to the American economy — the “fiscal cliff” we’re approaching at the end of this year thanks to the two parties’ repeated refusal to make policy choices in a timely manner.

At the end of the year, the Bush tax cuts expire. So do “patches” protecting middle-class taxpayers from paying the alternative minimum tax, the 2 percent payroll tax holiday and expanded unemployment benefits.

Doctors will see reimbursements for Medicare patients cut by 22 percent, or $40 billion. And the automatic spending sequester imposed when the Congressional super committee failed to agree on budget cuts last summer will reduce defense outlays by 10 percent and non-defense spending by 8 percent for a total one-year drop of $160 billion.

According to the Committee for a Responsible Federal Budget, those hits “would be roughly equivalent to taking 3.5 percent of GDP out of the economy.” The Congressional Budget Office estimates that the unemployment rate will rise by 1.1 percent next year.

On top of all this, the current extension of the federal debt ceiling expires at the end of the year. Failure to raise it would lead to the default narrowly avoided last year.

My guess, my hope, would be that a centrist candidate would propose Simpson-Bowles as the answer to most of the issues involved with deficits and debt — the 4-to-1 spending-cut/revenue-increase formula recommended by Obama’s debt commission in 2011 and promptly abandoned by the president.

While Obama appeals to a base of liberals (20 percent of the electorate) and Democrats (31 percent) and Romney appeals to Republicans (27 percent) and conservatives (40 percent), a third-party candidate could draw from independents (40 percent) and moderates (35 percent).

It would be a worthy fight to wage.

Through a mandate issued by the Department of Health and Human Services, nearly all private insurance plans must fully cover the abortion-inducing drug ella.

But instead of listening to the people (or the Constitution) and abandoning the ill-advised mandate, the Obama administration and HHS seek to blunt the criticism, in part by claiming they are merely following the “marching orders” given by the “independent Institute of Medicine”  — the organization tasked with advising HHS on what should be included as “preventive services” in the mandate. In other words, HHS is claiming the allegedly independent and unbiased IOM made it include life-ending drugs in the mandate.

Considering the breadth of this anti-life mandate, which applies to nearly all insurance plans and eliminates life-affirming choices from the market, it is important to examine the IOM panel, whose recommendation HHS feels so obliged to follow.

Independent? Maybe.

Unbiased? Hardly.

The biographies of the committee members convened by the IOM to make a recommendation to HHS on what constitutes “preventive services” reads like a “who’s who” of the abortion lobby. While perhaps independent from HHS, the IOM panel has deep connections to the abortion industry and its anti-life ideology.

The groups that the IOM panel invited to present testimony to help the IOM make its “evidence-based” determination likewise had a clear abortion bias.

At the first IOM meeting, Planned Parenthood, the nation’s largest abortion provider, represented “women’s issues,” along with other abortion-advocacy groups. As a distributor of contraceptives and life-ending drugs, Planned Parenthood stands to gain if insurance plans are required to fully cover the drugs and devices it dispenses. Of course, that financial stake was never disclosed as a conflict of interest. Rather, Planned Parenthood’s Dr. Carolyn Westhoff bluntly started her presentation by saying: “I’m just going to jump ahead — pregnancy is dangerous.”

Though the deck seemed stacked from the beginning, pro-life groups still mounted an effort to keep coverage for life-ending drugs and devices from being forced on nearly all Americans perversely under the guise of necessary “preventive” health care for women.

Never formally invited by the IOM to present, pro-life organizations — including Americans United for Life — attended and spoke up during the public comments portion of every open IOM committee meeting to urge the panel against including life-ending drugs and devices in the mandate.

At every meeting, the IOM panel was reminded by AUL and others that the “preventive services” provision was, as its author Sen. Barbara Mikulski (D-Md.) stated, “strictly concerned” with “preventing diseases.”

Further, the IOM panel was reminded that Mikulski made assurances on the Senate floor that, under her provision, abortion would not be covered “in any way.”

And at every meeting it was explained to the IOM panel that ella, newly approved by the Food and Drug Administration as a “emergency contraceptive,” is — just like the abortion drug RU-486 — a selective progesterone receptor modulator. By blocking progesterone, ella, like RU-486, can end even an “established” pregnancy. Thus the IOM committee was well-aware of the facts: Ella does not prevent disease. Its mandated coverage not only fails to “fit” with the stated intent of the law, but, as an abortion-inducing drug, its inclusion directly violates Mikulski’s assurances.

Despite this knowledge, in July 2011, during the IOM committee’s press conference announcing the release of its report, Chairwoman Dr. Linda Rosenstock explained, unequivocally, that the drug ella was included in her committee’s recommendation. Though Rosenstock stated her committee considered “every” comment that was presented before it, the IOM report utterly failed to address the serious concerns repeatedly presented at the meetings about ella’s abortion-inducing quality. Nowhere in its 250-page report did the committee even mention ella’s mechanisms of action.

Also absent from the 250-page report was any mention that other FDA-labeled “contraceptives,” including intrauterine devices and Plan B, can work to prevent implantation of an already developing embryo — another fact presented at every meeting, a fact the FDA notes in its labeling of the drugs and a fact that even HHS has included in its information on birth control methods.

Still not convinced that the IOM’s recommendation was based on an agenda, rather than an independent, evidence-based review? Dr. Anthony Lo Sasso, a member of the IOM panel, dissented from the recommendation because of its lack of transparency and subjective advocacy.

In addition, the IOM’s own report acknowledged that the panel would have considered surgical abortion as a “preventive service” even had it not felt otherwise constrained by the Affordable Care Act.

Certainly, HHS can cite the IOM panel as recommending including ella and other life-ending drugs and devices in the HHS mandate that is being forced on nearly all Americans. However, it is indefensible to omit the important fact that the anti-life recommendation was, as Lo Sasso describes, “filtered through a lens of advocacy” — a lens so warped, it would equate destruction of human life with disease prevention.

Rather than support its creation, the evidence demands that HHS repeal its mandate.

Environmentalists shed few tears over oil behemoth Exxon Mobil’s demotion, but after a two-part New York Times exposé in January, labor advocates and human rights defenders wondered whether Apple co-founder and CEO Steve Jobs’ tech legacy deserved the accolades it was receiving. As reported in the Times, Apple has about 63,000 employees worldwide, with 20,000 of them working abroad. For a company with a giant global reach, that’s not an unexpected ratio.

But Apple also depends on a contractor workforce of 700,000 people to design and assemble its iPads, iPhones and computer equipment, and almost none of them reside in the United States. Although it has a large retailing operation in this country, like many other high-tech companies, it does its manufacturing almost exclusively in Asia.

Eight months before Jobs died, President Barack Obama asked him why Apple couldn’t bring that kind of work back home. Reportedly, Jobs simply said, “The jobs aren’t coming back.”

The Times examined the reasons behind Jobs’ blunt answer and reported that the cost of labor was the least of them. But you would never know it, based on the drumbeat of public condemnation of Chinese assembly plants run by Foxconn and the alleged abuse of employees.

Without question, Foxconn is the human-interest part of the story, and Apple, along with other high-tech manufacturers, has the obligation to try to remedy any abuse. But the focus on the labor issue has masked the far more troubling problem facing American innovators: the hollowing out of the supply chain.

Designing, engineering and assembling an iPad is a far more complex task than manufacturing clothing. A man’s shirt or a woman’s blouse requires little more than cloth and buttons. An iPad has myriad parts, ranging from the most advanced semiconductor processing chips, flash memories, liquid-crystal displays, touch screens, lithium-ion batteries and miniature circuits that enable Wi-Fi, Bluetooth and GPS to the most mundane hardware components, such as screws, aluminum sheet, power cords and electrical connectors.

The parts must be developed and fabricated, and they must be available when they are needed for assembly. Two decades ago, we had the capability to do all that. Two decades ago, we still led the world in scientific discovery, innovation and advanced manufacturing, and we still had a reasonably skilled technical workforce. We don’t anymore.

Simply put, the rest of the world has vastly outpaced us, and at the same time, we’ve allowed our capabilities to decay. Even if Apple were willing to reduce its profits or increase its prices to accommodate American labor costs, it probably couldn’t build the iPad in the United States today. The supply chain and technical workforce Apple needs are no longer here.

We are still at the top of our research and development game, but if Greg Tassey, senior economist at the National Institute of Standards and Technology, is correct, the clock is ticking down on that as well. Tassey has examined the relationship between manufacturing competency and investments in R&D and has concluded that a vibrant R&D enterprise requires a vibrant manufacturing enterprise.

The proposition that we can maintain a strong economy by doing high-tech research at home and allowing manufacturing to continue to move offshore is wrong, Tassey says. Basing our economy on services and expecting R&D to thrive is also folly.

Innovation is an ecosystem we must nurture. It is the driver of the American economy and job creation. But it is only as strong as its weakest link.

We must step up our public and private investments in science and engineering research. We must revamp our education system to encourage students to become more proficient in science, engineering and math. But, just as importantly, we must provide an affordable path for students who want to pursue high-tech vocational careers. And we must ensure that education and retraining are available for people in the labor force throughout their working lifetime.

Finally, we must enforce our trade laws to prevent “dumping” and violation of intellectual property rights. And we must rewrite tax laws to encourage industry to make R&D investments at home and move manufacturing back to our shores. We must make the research and experimentation tax credit permanent, lower corporate tax rates and eliminate loopholes that encourage companies to manufacture their goods overseas.

If we don’t address these issues soon, our innovation ecosystem will fail and our economic future will be bleak.

Just a few months ago I was feeling some hope about Europe. You may recall that late last fall Europe appeared to be on the verge of financial meltdown; but the European Central Bank, Europe’s counterpart to the Fed, came to the Continent’s rescue. It offered Europe’s banks open-ended credit lines as long as they put up the bonds of European governments as collateral; this directly supported the banks and indirectly supported the governments, and put an end to the panic.

The question then was whether this brave and effective action would be the start of a broader rethink, whether European leaders would use the breathing space the bank had created to reconsider the policies that brought matters to a head in the first place.

But they didn’t. Instead, they doubled down on their failed policies and ideas. And it’s getting harder and harder to believe that anything will get them to change course.

Consider the state of affairs in Spain, which is now the epicenter of the crisis. Never mind talk of recession; Spain is in full-on depression, with the overall unemployment rate at 23.6 percent, comparable to America at the depths of the Great Depression, and the youth unemployment rate over 50 percent. This can’t go on – and the realization that it can’t go on is what is sending Spanish borrowing costs ever higher.

In a way, it doesn’t really matter how Spain got to this point – but for what it’s worth, the Spanish story bears no resemblance to the morality tales so popular among European officials, especially in Germany. Spain wasn’t fiscally profligate – on the eve of the crisis it had low debt and a budget surplus. Unfortunately, it also had an enormous housing bubble, a bubble made possible in large part by huge loans from German banks to their Spanish counterparts. When the bubble burst, the Spanish economy was left high and dry; Spain’s fiscal problems are a consequence of its depression, not its cause.

Nonetheless, the prescription coming from Berlin and Frankfurt is, you guessed it, even more fiscal austerity.

This is, not to mince words, just insane. Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression. And because investors look at the state of a nation’s economy when assessing its ability to repay debt, austerity programs haven’t even worked as a way to reduce borrowing costs.

What is the alternative? Well, in the 1930s – an era that modern Europe is starting to replicate in ever more faithful detail – the essential condition for recovery was exit from the gold standard. The equivalent move now would be exit from the euro, and restoration of national currencies. You may say that this is inconceivable, and it would indeed be a hugely disruptive event both economically and politically. But continuing on the present course, imposing ever-harsher austerity on countries that are already suffering Depression-era unemployment, is what’s truly inconceivable.

So if European leaders really wanted to save the euro they would be looking for an alternative course. And the shape of such an alternative is actually fairly clear. The Continent needs more expansionary monetary policies, in the form of a willingness – an announced willingness – on the part of the European Central Bank to accept somewhat higher inflation; it needs more expansionary fiscal policies, in the form of budgets in Germany that offset austerity in Spain and other troubled nations around the Continent’s periphery, rather than reinforcing it. Even with such policies, the peripheral nations would face years of hard times. But at least there would be some hope of recovery.

What we’re actually seeing, however, is complete inflexibility. In March, European leaders signed a fiscal pact that in effect locks in fiscal austerity as the response to any and all problems. Meanwhile, key officials at the central bank are making a point of emphasizing the bank’s willingness to raise rates at the slightest hint of higher inflation.

So it’s hard to avoid a sense of despair. Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy – and their society – off a cliff. And the whole world will pay the price.

• Alive and Centrist.
• FAA and Drones: A Bad Match.
• Japan’s Challenge.

IRS Loses: what’s good for the gander is good for the goose. The IRS is bound by its own stipulation.

Inside the IRS: When the IRS rejects your offer in compromise. How does the formula work and what does it mean? How do you pay and negotiate with the IRS. Don’t buy the “pennies on the dollars” offers you see on TV or hear on the radio.

In April 2009, Sen. Arlen Specter (Pa.) left the Republican Party for the Democratic Party, giving President Obama a filibuster-proof majority in that chamber. Specter said that the GOP had left him behind, that it was Republicans who had changed —he. not

But Specter’s decision was as much about political survival as about his beliefs. In his announcement, Specter conceded that he was unlikely to win a Republican primary and said that he was “unwilling” to have his “29-year record judged by the Pennsylvania Republican primary electorate.”

Yet more mainstream media reports focused on what Specter’s exit supposedly said about the GOP than on his electoral calculation. Journalists ate up Specter’s argument and likened centrist Republicans to dinosaurs — politically extinct relics.

More recently, the announcement by Sen. Olympia Snowe (R-Maine) that she would not seek a fourth term sparked claims of “proof” that centrist Republicans are gone.

To paraphrase Mark Twain, reports of the demise of centrist Republicans are greatly exaggerated. Olympia Snowe is no Arlen Specter, and centrist Republicans are alive and well. By “centrists,” I do not necessarily mean “moderates” but refer instead to members who are willing to work across the aisle to find common ground with partisan opponents to achieve tangible results. There are indeed still members of Congress who recognize that the perfect should not be the enemy of the good and that some incremental change can be preferable to no change.

The Republican Party has certainly become more conservative, in the same way that the Democratic Party has become more liberal. Centrists are pragmatists who are willing to compromise to get things done and work across party lines. Working across the aisle wasn’t as difficult in previous Congresses, because there were Republicans who held views to the left of some Democrats, and vice versa. Compromise wasn’t always needed because it’s not compromise if the position is already something you support. In today’s political environment, however, compromise is a prerequisite to accomplishing anything — one need look no further than the votes to avoid the U.S. credit default last summer, to avoid a government shutdown or to prevent taxes from being raised on working families.

Centrist Republicans make up a critical voting bloc in the House.

When Bureaucrats go wild. Can you say who’s going to Vegas?
Citi’s Day on Pay Day.
Nation Needs to be Proactive in Cyber Security. Also see Protecting America From Cyberattacks.

IRS Loses – What would happen if you ignore the court? Listen to how the IRS lost this case.
Inside the IRS – Examination of off-shore bank accounts get the IRS’ attention. Who is the IRS investigating now??? How can you hide your money safely?

There is no national standard for cyber-security and no national policy for defending against cyber attacks. While thousands of daily threats are identified and successfully defeated by governmental and private entities, it is time to coordinate these efforts, share appropriate information, and establish uniform reporting procedures.

This is not a job for the government to do unilaterally. It is a job for the government to help synchronize and oversee.

Legislation has been introduced in the United States Senate which will begin this process. The Cyber-security Act of 2012 is designed to help protect us against, in the words of Sen. Jay Rockefeller (D-West Virginia), “Hackers stealing from Fortune 500 companies, breaking into government and  security agencies’ networks, and towing with the networks that power our economy.”

As this bill makes its way through the legislative process, there are several principles that should be adhered to:

First, the legislation must help the private sector thwart cyber attacks, not dictate a set of one-size-fits-all regulations. To do this, they should look closely at what the major broadband providers have put in place to protect their networks and their customers’ systems and data. It should expedite sharing best practices among industry sectors as well as with all other stakeholders in the Internet ecosystem.

The legislation should facilitate information sharing by removing archaic legal barriers to the collection, use and sharing of appropriate information while establishing appropriate privacy protections especially for consumers.

The Cyber-security Act of 2012 should avoid adding to the regulatory burden of the communications-related infrastructure. The “light hand” approach to regulating the Internet has paid enormous dividends over the past 16 years since the adoption of the Telecommunications Act of 1996, and we must take care that cyber-security legislation is not used as a tool to force new, unnecessary regulations into a remarkably successful system.

There are a number of public-private organizations which are already in place to provide on-going advice and collaboration in this fast-changing technological environment.

The legislation must not interfere with the industry’s flexibility to implement those measures they deem suitable to secure their networks and protect their customers. Avoiding a tangle of requests, proposals, amendments and approvals is crucial to avoid choking innovation in the name of cyber-security.

Some elements of our information infrastructure are critical. Remote sensors at power plants, the FAA’s national flight control system, and many local, state and federal security organizations fall within this designation. Care must be taken not to extend the “critical” tag too broadly to avoid the government seizing security control over an entire industry or network when it is not necessary.

As a starting point for all of this activity, the federal government should streamline and clarify its cyber-security structure. Cyber-security should be centralized into one coordinating agency which might also have the authority to centralize a government-wide acquisition policy to best protect the government’s networks.

The government should upgrade and expand federal civilian training and certification in cyber-security – a policy which would give the private sector a benchmark against which to measure itself.

Finally, the government must be a leader in research and development to help design and deploy hardware, software, and policy defenses against cyber attacks both internally and from foreign entities.

We are looking to the Cyber-security Act of 2012 to help launch a serious, ongoing discussion about how best to proceed to protect this most critical of America’s infrastructure.

But Congress made “say on pay” part of the 2010 Dodd-Frank financial reform law; and on Tuesday, 55 percent of Citigroup’s shareholders voted against a 2011 compensation plan that awarded CEO Vikram Pandit $14.9 million. Citigroup was the first big bank and the largest company, by market capitalization, to get a thumbs down. As such, the vote debunked some of our original worries and confirmed others.

The broad goals of “say on pay” are to invigorate shareholder participation in corporate governance, to rein in unjustified and excessive CEO pay and to help reduce executives’ incentives to chase short-term profits. On balance, “say on pay” does appear to be jump-starting a much-needed conversation between corporate boards and their shareholders. The fact that the votes are non-binding is less important than the fact that they take place at all, because few companies can afford the negative publicity of a “no” vote, even if, legally, they may ignore it. Knowing that they will be heeded, institutional investors now employ compensation analysts to advise them on how to vote, which puts them on an equal footing, information-wise, with boards.

The net result is that prudent companies must invest in communication with their shareholders and their compensation analysts, thus enriching the data upon which they ultimately base their decisions, and making the companies more likely to satisfy investors. The fact that only 41 out of the Russell 3000 companies suffered “no” votes last year suggests that the system is working.

Citigroup’s mistake was to try to pay Mr. Pandit and others more than could be justified by the company’s recent performance. A raise was understandable, since Mr. Pandit had agreed to work for $1 a year in 2009 and 2010. But the fact remains that Citi flunked the Federal Reserve’s most recent bank stress test, and its total shareholder return was down 44 percent over the last year. The new pay plan offered top Citi execs millions in bonuses for meeting only modest profit targets.

Nevertheless, the jury is out on whether “say on pay” reduces CEO incentives to take risks in pursuit of short-term profits — the major threat that high pay might pose to the financial system. Shareholders, and the analysts they rely on, continue to emphasize companies’ stock prices as a benchmark of executive performance. A leading advisory firm, ISS, evaluates executive compensation against total shareholder returns over a one- to three-year period, though it recently tweaked that to add a somewhat longer-term metric.

Meanwhile, another unintended consequence of “say on pay” has been lawsuits against companies that exercised their statutory right to enact pay plans despite “no” votes. Most of those suits failed; but they cost money to defend, and at least one settled out of court for more than $1.75 million.

More experience with the rule should help both boards and shareholders work out the bugs in the system. So far, though, “say on pay” appears to be promoting better corporate governance.

Welcome to everyone listening!

The IRS Loses – Sideline expenses are deductible when they produce income.

Inside the IRS. – The most efficient way to obtain a tax related criminal conviction. Payroll taxes can get you in trouble.

We recently accepted two new sponsorships. both come from the Social media world, and I highly recommend both of them. Although Robert hasn’t used Dashter, he is familiar with Hootsuite.

I use both of them on a regular basis. In short, this is what they do:

• Dashter – Helps you curate topics and conversations by using your Twitter account. It truly is amazing. To check out Dashter click on any Dashter banner, or anytime you see the linked word Dashter. Dashter will be covered in an upcoming episode of Social Media Apps. If you want to see a post created with Dashter, check out my “made with Dashter” posts on my personal blog. Social media management built for bloggers. Create original posts from fresh Twitter content. Get the plugin today!
  
• Hootsuite – Helps you manage your day to day conversations in Social media. It’s a Social Media Dashboard and it can manage Twitter, Facebook, Linkedin, Flickr and much more. Professional versions have great team management features as well as bulk upload and scheduling. This has been talked about before in the show. Sign up for a Free 30 Day Trial of HootSuite Pro.
• BlogtalkRadio – BlogTalkRadio allows anyone, anywhere the ability to host a live talk radio show online, simply by using a telephone and a computer. Easily Create an Online Radio Show & Reach Millions Today! Get Started with BlogTalkRadio, FREE for 30 Days!