….. and make sure it has LOTS of zeroes.
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Richard Breeden was Chairman of The Securities and Exchange Commission (SEC) from 1989 until 1993.

I hope he demonstrated a better basic knowledge of mathematical relationships when he was at the SEC than he did in a recent interview with CFO.com about the costs of complying with Rule 404 of the Sarbanes Oxley law (bold is mine):

Another former chairman, Breeden, downplayed the compliance costs resulting from 404. “The cost of 404 in the aggregate, from every single public company, is probably one ten-millionth of the cost of executive compensation. I don’t hear anybody saying we should get rid of executive compensation,” he said.

Now don’t get me wrong, executive compensation is very high, and is all too often is either undeserved, not based on achieving real results, or both.

But I have seen no evidence that Mr. Breeden made his statement in jest, and he is laughably, hysterically wrong with his numbers:

• The total costs of compliance with Sarbanes Oxley (not just Rule 404) are running at an estimated $6 billion per year, according to AMR Research (HT Line56.com via Sox First). For what it’s worth, I believe the $6 billion figure is a woeful underestimate, but that it is probably a good estimate for the cost of just complying with Rule 404. so we’ll stick with it for this post.
• This CNN link refers to research done by Lucien Bebchuk, a Harvard Business School professor who studies executive pay, showing that “From 1999 to 2003, the top five execs at the 1,500 largest public companies, as a group, took home $122 billion in salary, bonus and stock.” That’s roughly $24 billion per year for the five-year period Bebchuk compiled.
• Since Bebchuk looked at only the 1,500 largest companies and not every one of the roughly 3,300 listed on NASDAQ or the estimated 2,800 listed on the New York Stock Exchange, let’s double his figure, and use $48 billion as the total annual pay for the top 5 officials at all listed companies (smaller companies don’t pay their execs nearly as much as the big ones do).
• AMR’s estimate of Sarbox compliance costs is only one-eighth (not “one ten-millionth”) of the estimated $48 billion figure for executive compensation. Breeden’s statement was off by a factor of 1.25 million.
• For Breeden’s statement to have been correct, annual compensation of company executives would have had to have been (get ready) ……

  $60,000,000,000,000,000

  The number “60″ followed by 15 zeroes is 60 quadrillion dollars, a figure that is about 5,000 times bigger than the United States’ Gross Domestic Product of roughly $12 trillion (figure at Wiki is for 2004; the US GDP for 2005 was a bit higher than $12 trillion).

Mr. Breeden believes that Sarbanes Oxley should be applied uniformly to all public companies regardless of their size. I’d like to know why I should give any weight at all to the opinion of this mathematically-challenged man.

Following up on a pre-State of the Union BizzyBlog suggestion (ha, ha; 1st question at link), the AP reports that President Bush is going to propose “line-item veto” legislation to allow a president to veto specific items in a bill without having to veto the entire bill, which is the constitutional requirement today.

This is potentially good news for porkbusters, but there are lots of obstacles:

Both Republican and Democratic presidents have sought the power to eliminate a single item in a spending or tax bill without killing the entire measure.

President Clinton got that wish in 1996, when the new reform-minded Republican majority in the House helped pass a line-item veto law.

Two years later, the Supreme Court declared the law unconstitutional because it violated the principle that Congress, and not the executive branch, holds the power of the purse.

It’s also impossible not to notice that the President has not exercised his veto power even once while in office. So it’s reasonable to ask if he would ever exercise a line-item veto.

Any new line-item veto bill needs to somehow address the shortcomings cited by the Surpreme Court in 1998. That decision was made on a vote of 6-3. The two newest court members, who might (emphasis “might”) be expected to have sympathty for a line-item veto, are replacing one who voted with the majority to declare it unconstitutional (Rehnquist) and one who dissented (O’Connor). Some other judge besides the four “expected” to support the line-item veto needs to be persuaded to change his or her vote from last time. And there’s always uncertainty about what the Court will do: Most probably would have thought that Rehnquist’s and O’Connor’s votes would have been the opposite of what they actually were, which is why predicting whether ANY line-item veto legislation will pass Supreme Court muster is an iffy proposition.
________________________________

UPDATE: A later AP report (HT QandO) by Nedra Pickler describes how the bill hopes to jump the constitutional hurdle:

Instead, Bush is proposing that he be allowed to send Congress proposals to strike earmarks from spending bills and special interest tax breaks and that Congress be required to bring them to a vote. Constitutional scholars say this version should pass muster with the Supreme Court.

The “required to bring them to a vote” is the key language. Without that, they would just sit on anything the president sent back. Based on the excerpted description, it looks like the president would get only one opportunity to send back a bill with his proposed deletions.

QandO also notes a high possbility of flip-flops by senators and congressmen from their previous votes in 1996 on Bush’s proposed legislation for opportunistic and partisan political reasons.

The point was made unanimously:

Court Upholds Campus Military Recruiting

WASHINGTON (AP) — The Supreme Court ruled unanimously Monday that colleges that accept federal money must allow military recruiters on campus, despite university objections to the Pentagon’s “don’t ask, don’t tell” policy on gays.

Justices rejected a free-speech challenge from law schools and their professors who claimed they should not be forced to associate with military recruiters or promote their campus appearances.

….. Many universities forbid the participation of recruiters from public agencies and private companies that have discriminatory policies.

If the schools feel so strongly about the issue, they should simply have given up their federal aid so they could do as they please. But no, they wanted to have their cake and eat it too:

The court’s decision upholds a law that requires colleges that take federal money to accommodate recruiters.

….. College leaders have said they could not afford to lose federal help, some $35 billion a year.

Too bad, folks. If you want to be free of federal interference in such matters, you’ll have to do what Hillsdale College in Michigan did (relevant info is at the bottom third of the link). Some institutions, like Harvard, with its $26 billion endowment (last item at link), could certainly afford to do that. Unless and until they are willing to break free of government constraints, universities’ complaints about conditions imposed on them in exchange for aid are empty.
_________________________________

UPDATE — Other Blog Reax:

• Strata-Sphere — “This is an enormous blow to the anti-war folks who have tried to close their academic fantasy world off from the reality they exist in America.” ….. “So, let’s see how firmly these colleges believe in their principles. Are they willing to sacrifice money for principle? Don’t count on it.”
• Harry Callahan at Ace’s place — “The fact that it also will enrage all manner of leftist college professors and moonbats is icing on the cake. Excuse me while I go have a celebratory cup of coffee.”
• Ann Althouse has effusive praise for Justice Roberts — “I want to express my deepest thanks to Chief Justice Roberts for gathering the Justices onto one clearly written opinion. There is no blather or hedging in the prose. He has obviously taken great pains to put every sentence in plain English. He deals with all the precedents, handling most of the cases in one or two crisp sentences. You may not appreciate how beautiful this thinking and writing is, but I do, and I think generations of law students will.”
• Michelle Malkin has great quotes from the opinions and great comments from e-mailers.
• ScotusBlog — “The ruling rejected all of the law schools’ First Amendment claims.”
• QandO Blog — “it seems those who oppose it will have difficulty blaming the decision on the ‘conservative court.’”
• IowaVoice — “Aid and grants are not a right, they are at the discretion of those giving out the aid. If the recipient does something the donor doesn’t like, then the donor has every right to stop donating.”
• Stop the ACLU can’t resist a snarky comment — “It is a bit suprising that Ginsburg voted with the majority in this. One has to wonder if she was actually awake for the vote.”
• Others weighing in — Sister Toldjah, ACSBlog, and Volokh.

UPDATE 2: Outside the Beltway notices that a number of people believe that “…. the unanimous court ruled that Congress could simply order schools to admit recruiters even if the schools were not receiving federal funds.” UPDATE 2A: Atlas Blogged clarified this for me: “…… this decision does not threaten that schools will have to accept recruiters even if they do not receive federal funds. This decision says very clearly that if they want to ban recruiters, they can do so by refusing the money. SCOTUS simply noted that the only reason this is an option for the schools is because of the way Congress has chosen to structure its current attempt to raise an army, and that Congress could in the future pass legislation that would change the recruitment method to something that was not linked to funding… something the schools could not ban.”

UPDATE 3: Protein Wisdom — “Finally, a victory for the kind of ‘diversity’ that truly matters. The decision is a defeat for the anti-military holdover contingent among academics who have held (disingenuously, in my opinion), that they were simply promoting a form of free speech by excluding the ‘intolerant’ speech-act of the military……”

UPDATE 4: Taranto in Best of the Web: “Under current law, this claim of “coercion” is nonsense. Yale takes taxpayer money, which comes with strings attached; but it is free to pass up the money if its principles demand. And of course the university is free to show its contempt for America in other ways, for instance by admitting former Taliban officials. The worst of which the Yale and other faculties can complain is bribery: The government is offering them money to act against the professed principles. Will any institution of higher education respond to the Rumsfeld ruling by declining to accept federal funds? The answer to that question will show us all how much those principles are worth.”

In one of those pieces you wish The Wall Street Journal hadn’t locked behind its subscription wall, David Bandurski and Lin Hui describe the after-the-fact players in Mainland China’s censorship apparatus (yep, subscription required):

When the Chinese government closed down Freezing Point, the highly regarded weekly supplement of the China Youth Daily, China-watchers were shocked. What few outside observers understood, however, is that this move was not purely a throwback to a past era of censorship. Rather it was part of a relatively recent effort to reinforce the culture of self-censorship within an increasingly vibrant media sector. Spearheading this effort is a shadowy group of Communist Party officials entrusted with tremendous power and almost no accountability.

Known as the News Commentary Group (NCG), this is an elite team of about 10 retired propaganda czars, who wield influence far above their administrative rank. Many are regional editors in chief brought to the capital to clean house at major newspapers. They have crafted quaint monikers to describe themselves: “invisible teachers,” “stewards of the forest,” even “woodpeckers” (who dig out parasites). Their criticisms suggest a fondness for Cultural Revolution rhetoric: “These two articles contain serious political errors”; “We cannot promote economists who attack Marxism”; “We cannot promote a watered-down ideology that denies the media’s role as mouthpiece of the party.” Phrases like these may seem out of step with a globalizing China, but Deng Xiaoping, Jiang Zemin and Hu Jintao have all used extreme leftist elements to clamp down on “bourgeois liberal” tendencies. The agents of the NCG were behind many of China’s most notorious media crackdowns of recent years — the closure of upstart weekly Xin Zhou Bao, the jettisoning of Southern Weekend’s top editors, the recent takeover of Beijing News.

In fact, the NCG represents a new vision for propaganda work. Beijing is pursuing this strategy because of, not in spite of, market reforms. When the NCG celebrated its 10th anniversary in 2004, the deputy heads of the Propaganda Department issued a congratulatory statement on behalf of Politburo member Li Changchun, China’s top propaganda czar, and Liu Yunshan, head of the Central Propaganda Department (CPD): “Creating a system of news criticism was a reinvention of censorship for a new era.”

China’s present system of media censorship is unlike that employed by the Kuomintang in the early decades of the last century. The Kuomintang carried out advance checks on content: Officials pored over reports before they hit the presses. By contrast, China uses fewer advance checks but controls the media by enforcing self-censorship. The orders and bans issued by the Propaganda Department are a compass by which editors navigate. The NCG squad adds an important, unofficial layer of after-the-fact policing that some officials see as critical in an era of exploding media diversity.

….. Within the formal party structure, the NCG is an anomaly. It operates — nominally, at least — under the News Bureau of the Central Propaganda Department. It is comprised, however, almost exclusively of retired propaganda officials working on a temporary basis rather than formally employed, and despite its amorphous character, its influence far exceeds that of the various departments of the News Bureau. The reports of the NCG bypass standard reporting channels; they may rise to the upper echelons of the party or travel directly to propaganda offices or media in the provinces. In either case, criticisms can result directly in disciplinary action. With written instructions appended by the CPD, they might bring editorial shake-ups like the Southern Weekend case in 2001. Passing through ministries and commissions or provincial-level leadership, they might bring the closure of publications and the firing of editors, as with the closings of Freezing Point, Guangdong’s Tong Chuan Gong Jin magazine and Hubei’s Xin Zhou Bao newspaper.

The overall point, of course, is that government censorship is alive and well in China. As noted previously, the government makes sure before publication that media executives know “what news they should keep off their sites and what items they should highlight in the week ahead.” Combine that with what the Star Chamber-like NCG does to punish publications and journalists after the fact if they stray from party orthodoxy, and it becomes very clear that the government has very effective controls over the flow of news in place.

And if that’s not enough, don’t forget the search results censorship instituted by BizzyBlog Internet Wall of Shame member Google, the assistance with Internet security systems provided by fellow Wall of Shame member Cisco, and the willingness of yet another Wall of Shame member, Yahoo!, to cooperate with the police in apprehending and jailing dissident journalists. Behind the friendly veneer lies a government that still exercises a near-ironclad control of its people with, to their everlasting shame, the active assistance of Western technology companies.

Free Links:

• Retails sales increased only 2.9% in February, which is understandable, given how good January was.
• Ex-CNN Anchor Aaron Brown Makes a “Startling” Revelation — “The News is a business.” And, in a demonstration of contempt for his former audience, he says it’s OUR fault that we’re not interested in the right type of news.
• Something I learned while researching something else — The State Department issues a “comprehensive status report on Iraq (that) provides weekly updates in the eight key areas identified as pillars of U.S. Government policy.” A page with all reports for this quarter is here. The latest report (PDF) is here.
• Following up on this February 10 post (”You Might Be Surprised at What Some in the Mainstream Media Call ‘Theft’”), newspapers continue to contend that Google is “infringing on their audience and revenues,” and should pay for the privilege (HT Techdirt) of listing their articles in Google News results. Jeff Jarvis at BuzzMachine says, fine — “If you want to boycott search and links, then you will die on paper.”
• A partial answer to the question, “What are the Chinese doing with all that hard currency they’re piling up?” — The country increased its military budget 14%.
• Another English language controversy — Here’s a situation that has echoes of the “For Service Speak English” civil rights dispute here in Mason, Ohio. This time it’s in Colorado, where “Arapahoe County is threatening to fire a veteran Public Works employee for promoting the fact that he is an English speaking American”:
  

  The problems began last spring. (Mike) Gray, 50, owns a lawn service business on the side. He was routinely driving to work in his pickup truck towing a trailer that he uses to carry lawn mowing equipment for his business. On the side of his trailer, the married father of two affixed a sign that reads “Lawn Services Done With Pride!! By An English Speaking American.”

  The sign also gives Gray’s phone number and the lettering is over a background of an American flag.

  “There are a lot of people in the lawn service that are non-English speaking,” Gray said. “Customers and different people were telling me that they have a hard time trying to communicate with them about the work they want done on their yards. I just want to let people know they at least can communicate with me when I do work on their property.”

  Gray also wore a hat to work that says “U.S. Border Patrol,” which he says was a gift from his son.

  Arapahoe County officials told Gray the sign and hat must go or else.

  Sounds to me like he just wants to make his customers and potential customers aware of his competitive advantage.

What he did cost his cross-country skiing team a medal at the Winter Olympics, yet he is getting no grief from his fellow citizens in Norway (link requires registration; HT S.O.B. Alliance member Conservative Culture):

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