Fuzzy Math: Bush & Congress Abuse Accounting Standards
Reward Corporate Supporters, Punish Unions

When the Enron and Worldcom scandals broke, America’s unions were at the forefront of the effort to reform the broken accounting system that allowed greedy executives to fleece regular shareholders and jeopardize the retirement security of millions of workers. Thanks in large part to the efforts of unions like BAC, Congress and the SEC have been forced to introduce common sense regulations to curb corporate excess.

But now, the Bush Administration and its allies in Congress are seeking to turn back the clock. One of their main goals is to gut a measure crafted by the neutral Financial Accounting Standards Board (FASB) to reform executive compensation by requiring corporations to report stock options as an expense.

Although corporations are supposed to annually report all payments made to their employees, for many years they have been able to bend the rules to get richer while hiding corporate losses by pretending that these stock options – special deals given to executives that allow them to buy shares at less than the market rate – aren’t compensation. By funneling executive pay into stock options, corporations have been able to underreport executive pay and keep it off the books.

In an apparent payback to their supporters in the business community, the Bush Administration and Republicans in Congress are working against the FASB proposal, which would correct this situation.

Unfortunately, this kind of interference with accounting standards is nothing new for the Bush Administration. Last year they interfered with basic accounting practices in order to impose unjustly heavy burdens on the labor unions that stood up for shareholders against Enron’s Ken Lay and his band of corporate crooks. It’s clear from this latest action that the Bush Administration won’t let common sense and appropriate accounting practices stop them from rewarding their big business friends at the expense of working families.