One of the first items of business before the new Senate will be the confirmation of John W. Snow, President Bush’s choice for Treasury Secretary. Snow presently serves as chairman, president and chief executive of CSX, the freight and transportation conglomerate that operates the largest rail freight network in the eastern United States and several ocean-going cargo ships. Vice President Cheney led the search team that selected Snow.
Snow is a former chairman of the Business Roundtable and has been active in the Business Council. He held high-level positions in the Department of Transportation under President Gerald Ford where he lobbied aggressively for deregulation and championed legislation limiting the amount of damages accident victims could collect.
More recently Snow was one of the speakers at Bush’s Economic Summit and was one of the few corporate executives to meet with Energy Secretary Spencer Abraham while the administration was fashioning its energy policy last year. He is a long-time advocate of a balanced budget and, in 1995, was appointed by House Speaker Newt Gingrich to a GOP tax panel aimed at developing a “simpler” tax system.
During Snow’s reign, CSX was cited by federal authorities for “significant” track safety violations. Snow has been described as a “poster child for all the things that are wrong about our pay-to-play system of financing campaigns” by Public Campaign, a campaign finance reform group. Nick Nyhart, the group’s executive director, said Snow’s appointment to the Bush Cabinet marks the beginning of a “perfect storm” of special interest greed and policy paybacks, as a Congress and White House more beholden to wealthy special interests than any in memory comes under pressure to deliver on a host of anti-consumer and anti-environment measures.
Nyhart’s criticism is well founded. Under Snow’s leadership CSX has achieved the dubious distinction of being one of the 100 biggest overall campaign contributors to federal candidates and parties, shelling out $5.9 million between 1999 to 2002. Seventy-two percent of that total went to Republicans, including $25,750 to the Bush-Cheney campaign in 2000. In addition, Snow kicked in $75,000 to various federal campaigns.
But he could afford it. During his 12-year tenure at CSX Snow received more than $50 million in compensation. Last year, he made $10.1 million in cash and stock grants and received stock options valued at $8 million. According to a Corporate Library survey, Snow is the third highest-paid chief executive among the CEOs of the nation’s l37 largest transportation companies.
Snow has also been the beneficiary of two of the questionable corporate practices that came to light in recent months. In the first, CSX loaned Snow $24.5 million to purchase company stock valued at $32.3 million. But after the stock price dropped the company forgave the loan. Snow also benefited when he sold 120,000 shares of CSX stock this year less than a month before the company announced that its third-quarter outlook was not as rosy as had been predicted.
Although the stock price dropped, Snow, knowing what was coming, dumped his stock in time to avoid losing approximately $750,000.
In what many call the “eternal wealth syndrome,” Snow’s made out like one would expect of any self-respecting CEO these days when it comes to pensions: He will receive credit for 44 years of service despite the fact that he was on the CSX payroll for only 25 years. Moreover, his benefits will be based on his salary together with his bonus and the value of 250,000 shares of stock given him by the CSX board of directors. When it’s all added up, Snow will collect nearly $2.5 million a year for the rest of his life.
Snow not only made CSX into a cash cow for Republican candidates, he also made it into a champion corporate tax dodger by fulfilling its motto to “pursue all available opportunities to pay the lowest federal, state and foreign taxes.” As a result of those efforts, CSX paid no federal income tax at all in three of the four years between 1998 and 2001. Instead, CSX supplemented its $934 million in pretax U.S. profits over those years with $164 million in tax rebates from the federal government.
Snow has another credential for a seat in Bush’s cabinet. Until he resigned after being nominated for Treasury Secretary, Snow maintained his membership in Augusta National, the posh Georgia golf club under fire for discriminating against women. Snow’s confirmation hearing will take place before the Senate Finance Committtee chaired by Iowa Senator Charles Grassley.
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