Edwards Campaign Press Release - Edwards Introduces Bold Proposals For Restoring Corporate Responsibility And Strengthening Retirement Security For The Middle Class And Working Families

As part of seven-day "Stand Strong" campaign, Edwards calls for updating the social compact with hard-working Americans to protect them from abuse by corporations

Des Moines, Iowa – Today, as part of his national seven-day "Stand Strong" campaign, Senator John Edwards outlined a bold plan to stand up for hard-working families by restoring corporate responsibility and helping families achieve financial security in the new economy. Over the course of the 20th century, America built the strongest middle class in history due to a basic bargain among government, businesses and families, but today, big corporate interests and Washington insiders have put narrow interests ahead of the middle class. During a speech in Des Moines, Iowa, Edwards called for a renewal of the social compact between business, government and families.

"In America, we have a grand social compact – anyone who is willing to work hard and do the right thing should have the opportunity to share in our nation's prosperity," said Edwards. "But our social compact is falling apart. The statistics say our economy is growing, but the truth is, it's only growing at the top. While corporate profits climb and the wealth of the very wealthiest grows, instead of protecting the compact of equal opportunity and shared prosperity, Washington protects corporate profits and hoards prosperity.

"We don't need any more empty promises. We need to restore one promise – the promise of America, the social compact that built the greatest economy in the world. It takes strength to say 'no' to the lobbyists and special interests – but I will never compromise my principles for the sake of politics. I believe if we stand together we can change this country and restore the social compact, moving us ever closer to the America of our ideals."

The challenge of building a strong, larger, more secure middle class is at the heart of Edwards' campaign to build One America. He has laid out an ambitious agenda to guarantee universal health care, invest in future prosperity through education and energy innovation, reform tax laws to reward work, and establish smarter trade policies. Today, he announced new efforts to renew the social compact between business, government, and families by:

• Modernizing the social contract with universal health care and retirement savings accounts that follow workers from job to job.
• Holding corporations accountable for serving the interests of workers and customers, not just corporate insiders, with stronger corporate responsibility law and consumer protections.

During the week-long "Stand Strong" campaign, Edwards has been traveling across Iowa and New Hampshire to highlight his bold and detailed proposals for health care reform, smart and safe trade policies, ending the war in Iraq and restoring America's moral authority in the world. Edwards grew up in small, rural towns and is running for president to represent hard-working families, like the ones he grew up with.

"Real strength comes from standing up for the millions of American families who don't have a voice," said Edwards. "We need a leader in the White House who has the strength and courage to stand up and fight for regular Americans rather than someone who defends the lobbyists that are destroying the better America we all believe in."

Further details of Edwards' plan for "Restoring Corporate Responsibility and Rebuilding the Middle Class" are included in the fact sheet below.

Restoring Corporate Responsibility and Rebuilding the Middle Class

Over the course of the 20th century, America built the strongest middle class in history due to a basic bargain among government, businesses and families. Millions of workers were able to earn job security, upward mobility, and benefits like health coverage and a secure retirement. While not everyone was given the same opportunities, prosperity was widely shared and we did better together. But over the past generation, that bargain has broken down. Globalization, technology and demographic change have transformed our economy, corporate insiders have put their own interests first, and Washington has put narrow interests ahead of the middle class. A few at the top in Washington and in the corporate world believe that the values that built our nation – opportunity, rewarding work, and a strong community – can now be discarded.

The challenge of building a strong, larger, more secure middle class is at the heart of John Edwards' campaign to build One America. He has laid out an ambitious agenda to guarantee universal health care, invest in future prosperity through education and energy innovation, reform tax laws to reward work, and establish smarter trade policies. Today, he announced new efforts to renew the social compact between business, government, and families by:

• Modernizing the social contract with universal health care and retirement savings accounts that follow workers from job to job.
• Holding corporations accountable for serving the interests of workers and customers, not just corporate insiders, with stronger corporate responsibility law and consumer protections.

Modernize the Social Contract

We need to modernize the basic bargain supporting a strong middle class, giving hard-working families more security and the opportunity to get ahead. To renew the social contract at work, John Edwards will:

Create Retirement Benefits that Move from Job to Job

Americans who retire with a pension have nearly twice the annual income of those who depend only on Social Security and personal savings, but few families are saving enough and nearly a third of workers are not saving at all. Meanwhile, even profitable businesses are cutting back their pension benefits promised to workers. [PRC, 2007; Aspen, 2007]

• Create Universal Retirement Accounts: Edwards will require employers to offer a new universal retirement account to all workers without another pension. Businesses will be encouraged to automatically enroll workers in a 401(k)-type portable retirement account, with automatic paycheck deductions and employer contributions. Workers will be able to build up these savings accounts over the course of their careers, regardless of how many times they change jobs. Worker contributions will be matched up to dollar for dollar on the first $500 by a new Get Ahead tax credit, which will be far more valuable than the 10 percent or 15 percent tax deduction that many workers get on retirement savings today. Edwards will also create opportunities for workers to convert their savings into government-sponsored annuities, offering fixed monthly payments for the rest of their lives and ensuring that retirees do not outlive their savings. The new annuity fund will charge minimal fees and be operated by the existing federal retirement savings plan or the Social Security Administration at no cost to the government. [Gale, Gruber and Orszag, 2006]
• Honor Pension Promises: Over the past two years, nearly one in five workers has experienced cutbacks in their pensions, and nearly two-thirds of companies have frozen their plans. While overly stringent restrictions on pension plans could backfire by encouraging companies to drop them, Edwards believes that rank and file workers are entitled to rely on the promises of secure retirement that companies choose to make. He will prevent unfair special treatment for executives when pension benefits are cut or the company enters bankruptcy. He will reform bankruptcy laws to give pensions a higher priority when companies go under and give workers a claim for lost pensions, like lost wages. Finally, he will prevent corporations from stripping workers of accrued pension benefits through corporate reorganizations, like Halliburton did, and stop companies from misclassifying regular workers as contractors in order to shortchange them on pension benefits. [WSJ, 4/13/07; EBRI, 2007]

Create Universal and Affordable Health Insurance

Universal health care coverage should have been a part of the social contract since it was first proposed by Harry Truman. Instead, most middle-class families get health insurance from their jobs, but the percentage of firms offering coverage has fallen from 69 percent to 61 percent since 2000 and businesses have shifted more costs onto workers. Premiums have grown by 87 percent to $11,500 for an average family since 2000. Worker mobility discourages insurers from investing in care that would prevent later, larger costs for chronic illnesses like diabetes and heart disease. Workers who lose their jobs may lose their health care at the same time, and a short spell without insurance can become permanent for someone with a preexisting condition. In addition, small businesses struggle to find affordable insurance and one sick employee can result in dramatically higher health care costs. Meanwhile, businesses spent $16 billion in 1999 administering their own benefit plans, an inefficient and duplicative process. [KFF, 2007; Woolhandler et al, 2003]

• Guarantee Coverage to Every American: Edwards will guarantee affordable coverage to every man, woman and child in America. Under his plan, businesses will have to either cover their employees or help them purchase coverage in the Health Care Markets. All Americans will be required by law to have insurance. Health Care Markets will create new choices at group rates for small businesses and individuals who do not get coverage through their job. Coverage offered through Health Care Markets will follow workers and their families when they change jobs, and they will keep coverage even if they lose work due to new reforms and subsidies.
• Reform Health Care to Get Better, More Affordable Care: Edwards will also take on the insurance and prescription drug companies to get better health care at a more affordable price, reducing reduce the cost of an average family policy by as much as $2,500 a year. He will reform insurance laws by banning discrimination against preexisting conditions and requiring at least 85 percent of premiums to go to patient care. He will stop misleading drug advertising and allow the safe reimportation of cheaper drugs from Canada. He will also expand preventive and chronic care to promote health and bring down costs, require the use of electronic medical records to reduce errors and redundant testing, and provide doctors with independent information on effective treatments.

Demand Corporate Responsibility

A crisis in corporate governance has left our economy vulnerable to abuse by corporate insiders. In 2005, the average CEO was paid more in one workday than the average worker earned all year. While some CEOs generate large returns and deserve rich compensation, one analysis found that executives at the worst-performing large companies were paid the most. Corporate boards are supposed to represent shareholders but directors are often hand-picked by management from the same pool of insiders. Businesses have also stepped up their campaign contributions and lobbying to persuade Washington to dismantle consumer and worker protections that conflicted with their bottom lines. Large corporations' role in our economy and society has increased but transparency and accountability have not. [EPI, 2006; Daines, Nair, and Kornhauser, 2005]

Corporations should not be run exclusively for the benefit of insiders, top executives and directors. John Edwards believes that they also have responsibilities to shareholders, workers, and the public. He has already proposed steps to expand saving opportunities for regular families and expand stock ownership. He will reform corporations from the inside by strengthening the voices of workers and shareholders. And he will also reform them from the outside by limiting excessive executive compensation, increasing transparency and strengthening consumer protections.

• Modernize Labor Laws to Give Workers a Voice: Unions helped ensure that regular workers were part of the social contract in the last century, but today the right to unionize is poorly enforced and routinely violated by employers. Private sector employers illegally fire workers in at least 25 percent of organizing drives. The share of workers covered by union contracts has fallen by nearly half since 1978. To help the 60 million workers who would join a union if they could, Edwards will pass the Employee Free Choice Act to let workers unionize when a majority of them sign cards, and make penalties for breaking labor laws tougher and faster. He will also ban the permanent replacement of strikers to give workers the leverage to demand their fair share of rewards for their work and protect the Davis-Bacon Act requiring prevailing wages on federal contracts. [Bronfenbrenner, 1999; EPI, 2007; Hart, 2006]
• Grant Shareholders New Rights: As more American families and institutions own stocks, there is the potential for increased democratic accountability. But despite a growing shareholder democracy movement, conservative shareholder laws and regulations are blocking better corporate governance.
  • Strengthening shareholder rights: Edwards will give shareholders the right to render an advisory vote on executive compensation, call a shareholders' meeting, recall a limited number of directors at a time and have proxy access to the candidate slate for boards of directors. To ensure that these policies facilitate accountability, not hostile takeovers, Edwards will require the participation of long-term investors in these efforts.
  • Enforcing fiduciary duties of institutional investors: Institutional investors like mutual funds and pension funds have a responsibility to act in the best interests of the families whose savings they manage. Edwards will require them to justify failures to take shareholder action on governance and executive pay issues. He will also increase the government's enforcement of conflict-of-interest and negligence charges against mutual funds and other institutional investors.
• Cap Unfair Levels of Executive Pensions: Even as more corporations deny retirement benefits to regular workers, they are offering millions in tax-free deferred compensation pensions to their top executives. This gives executives in effect unlimited IRAs or 401(k)s, without the limits that apply to other workers. Edwards will limit the amount of money that can be put into these funds to $1 million a year. [Washington Post, 1/18/2007]
• Create Public Accountability through Transparency: Today, corporations have to disclose very little to shareholders or the American public about what they do beyond delivering products, even though these activities can have profound effects on our economy and society. Because businesses aggressively cultivate their public images, sunshine will be a powerful disinfectant for corporate malfeasance. Edwards will enact a new "Corporate Citizen" disclosure law requiring all businesses to disclose in annual reports to shareholders, their regulators, and the public:
  • Their social impact, including lobbying, political contributions, taxes paid, government contracts and subsidies, and environmental impacts.
  • Their business practices, including their governance structure, the pay and demographics of directors and top officers, conditions in foreign supply chain contractors, and foreign criminal investigations.
• Protect Families from Abusive Financial Products: In recent years, banks and other financial institutions have created higher-cost mortgages, payday loans and high-interest credit cards that have saddled Americans with debt they cannot escape. Families' outstanding credit card debt has tripled since rates were effectively deregulated in 1978. Interest on payday loans average over 400 percent. A crazy-quilt of five federal regulatory agencies share oversight responsibility but neglect consumer protection. Edwards will create a tough new regulator, the Family Savings and Credit Commission, to protect consumers by reviewing all financial services products marketed to families, from six-figure exotic mortgages to $30 bank overdraft fees. Edwards will also eliminate the Office of Thrift Supervision to avoid additional bureaucracy. [Demos, 2006; Federal Reserve, 2007; CLR, 2004; Warren, 2007]
• Ensure the Safety of Imported Food and Drugs: Food imports more than doubled in the last decade. Americans now eat 260 pounds of imported foods a year. However, the General Accountability Office recently classified our nation's food safety system as "high risk." Edwards will restructure our food inspection responsibilities and increase Food and Drug Administration inspections. He will enforce mandatory country-of-origin labeling laws to let families choose the origin of their food. He will also require the FDA to certify that a foreign nation's food safety systems are equivalent to our own before its producers can sell food to America. [AP, 4/16/07; NY Times, 4/30/07; GAO, 2007; The Hill, 4/7/05]
• Strengthen Toy and Other Product Safety: Nearly 80 percent of children's toys are made in China, and recently Fisher-Price recalled almost 1 million toys made with high amounts of lead. Edwards will raise penalties for safety violations, examine possible independent testing requirements, and ban government regulators from accepting travel paid for by the industry. [Toy Industry Association, 2007]
• Protect Families from Toxic Substances: Americans have no information on the toxicity of at least 60 percent of the most common and pervasive chemicals, even those suspected to cause cancer or birth defects. Edwards will expand the right to know about toxic and potentially carcinogenic substances in communities and consumer products, reversing a Bush rule shielding polluters from increased disclosure. He will also strengthen the EPA and FDA's power to require testing and labeling of potentially toxic chemicals in foods and consumer products. [CPR, 2007; GAO, 2007]