Friday, July 18, 2003

The War Dividend

Isn't it hell the price we pay for war, the sacrifice?  Well not for everyone.

I have done a lot of interesting things in a multi-faceted career, among them almost a decade on Wall Street working, often directly, for the fabled Sandy Weill.  To the surprise of many, perhaps even including himself, Sandy announced his phased retirement earlier this week.  Stepping aside is not quite in his nature, but I guess the past couple of years have not been that much fun.  Needless to say, there was a lot of ink expended on the Citigroup Chairman and his career.  It's a great story, but it was one little line in the Times that caught my attention.  It seems, with more than 22 Million shares in hand, many of them acquired through a super generous option program, Sandy will be looking forward to more that $30 Million in annual dividend income.  Now let's not get into the coincidence that Citigroup had announced a 75% dividend increase just two days earlier, a change that materially effects his post retirement income.  What really struck me, perhaps more concretely than anything else I've seen on the subject, was the total one-sided absurdity of the recent cut in dividend tax rates.

Sandy will be pay only 15% on this enhanced dividend.  That comes to a hefty $4.5 Million or so, but far less than the $12 Million he would have paid just a year ago.  So here we are, spending $1 Billion a week in Iraq (with wonderful results), mired in a recessionary environment in which 3 Million Americans have lost their jobs (income), watching a growing number of military families losing their loved ones and we're paying stockholders like Sandy a huge tax dividend.  So much for sacrifice.  Now don't get me wrong, I own a few shares of Citigroup and am happy to have both the increased payout (good for Sandy, albeit vastly less, good for me) and reduced tax burden.  But Sandy's windfall, along with those of all the other Sandy's, just shows how absurd and wrongheaded is this so-called economic policy. 

In the aggregate, I don't think too many ordinary Americans (that's 99% of us) have benefited from the Bush tax cuts.  This doesn't mean their benefits aren't being touted on the Treasury Department's website -- our taxpayer dollars used for thinly veiled partisan spin.  We're all seeing the bill for War as will our kids and grandkids, but none of these specially targeted benefits.  Those youngsters at risk on the killing fields come from small town America, off Main Street not on Wall Street.  Sandy Weill's retirement in affluence is assured, while most of America's pensions have been decimated or eliminated.  And they say with a straight face that this is not a benefit for wealthier Americans.  But of course, they also said the still illusive WMD's were a present and imminent danger.  Can you believe just yesterday these same people sanctimoniously impeached Bill Clinton for lying about his personal and private sex life?  The theater of the absurd, which sadly is the stage on which we play every day.  What has happened to our national sense of balance not to mention of outrage?

No matter, I want my dividend too.  We all do.

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