Bush: Mind CEO pay, change how Sarbanes-Oxley works
The president also reiterates support for free trade, low taxes, reduced dependence on gas, and more affordable health care.
NEW YORK (CNNMoney.com) -- On the heels of stronger-than-expected economic growth numbers and ahead of the Federal Reserve announcement on interest rates, President Bush on Wednesday told a Wall Street audience that a strong economy worthy of investors' confidence requires free trade, business regulation that's fair but not oppressive, and better transparency in terms of executive pay.
"Government should not decide the compensation for America's corporate executives. But the salaries and bonuses of CEOs should be based on their success at improving their companies and bringing value to their shareholders," Bush said in his "state of the economy" speech before a Wall Street audience in New York.
He called on corporate boards to pay more attention to the pay packages they approve. "You need to show the world that America's business are a model of transparency and good corporate governance," he said.
His remarks came as Congress considers a Senate bill that would, among other things, put limits on deferred compensation, a staple of outsized CEO pay packages. Critics of such measures note that Congress's last move to set limits on executive salaries created the explosion in stock option pay. Meanwhile, House Financial Services Committee Chairman Barney Frank (D-Mass.) has said he would propose a bill that would require shareholder approval of executive pay.
The president also commended the creation of Sarbanes-Oxley - a law passed in the wake of the Enron scandal to create more transparency in corporate accounting. But, he said, compliance with the law has proven very costly for companies and may discourage some from listing on stock exchanges.
"A strong economy rests on strong and flexible capital markets. ... Excess litigation and over-regulation threaten to make our markets less attractive to investors. .... We need to change the way the law is implemented," Bush said.
And as expected, the president reiterated his call for Congress to renew his fast-track authority to negotiate trade deals, which expires July 1. Fast-track authority means that any deal negotiated by the administration would not be subject to debate in Congress, just an up-or-down vote on the negotiated agreement.
The White House needs the Congress to approve at least a short extension of fast-track trade promotion authority to finish the Doha Round of global trade talks and most likely other trade deals with South Korea and Malaysia, which have fallen behind schedule.
Major trading powers this weekend said they would resume the Doha talks, which were suspended six months ago over the issue of farm subsidies.
Trade has been one of the most divisive issues in Congress since Bush took office in January 2001, with Democrats generally pushing for stronger labor and environmental provisions than Republicans have been willing to include in trade agreements.
Taxes, health, energy
The president has promised to offer a balanced budget proposal for fiscal year 2008 and eliminate the deficit by 2012 by reining in spending and promoting pro-growth policies.
As he noted in his speech on Tuesday before employees of construction and mining equipment maker Caterpillar in Peoria, Ill., Bush called for changes in energy and healthcare policies, and for preserving the tax cuts passed since 2001.
"The fastest way to kill a recovery is to raise taxes on those who created it," Bush said.
Some of the president's tax cuts draw bipartisan support, such as the higher child tax credit, the creation of the 10 percent tax bracket and increased marriage penalty relief.
But critics say making the tax cuts permanent - in particular the lower rates on capital gains and dividends - will only add to future budget woes. In coming years policy-makers will wrestle with an expected surge in costs from Medicare, Social Security, possible reform of the Alternative Minimum Tax, and the cost of the war in Iraq.
-- Reuters contributed to this report