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CEO Daily Brief – Dec. 14, 2010

Federal Judge Says Obama Health Insurance Law Violates Constitution CEOs who don’t want to see health insurance mandates got an inkling of good news this week after a federal judge ruled that part of the Obama health insurance reform is unconstitutional. Many businesses have also complained that the law puts too many burdens on employers, …

Federal Judge Says Obama Health Insurance Law Violates Constitution

CEOs who don’t want to see health insurance mandates got an inkling of good news this week after a federal judge ruled that part of the Obama health insurance reform is unconstitutional. Many businesses have also complained that the law puts too many burdens on employers, and may be part of the reason that large numbers of organizations are reluctant to hire additional employees. This week’s decision does not unravel the health insurance reform law, since the federal judge’s ruling will likely be appealed. But many Republicans were happy to hear about the ruling.

“Today’s ruling is a clear affirmation that President Obama’s health care law is unconstitutional,” Virginia Rep. Eric Cantor, the likely next House majority leader said in a statement, as reported by The Wall Street Journal. The likely House Speaker, John Boehner (R., Ohio), called the ruling “an encouraging sign for families and small business owners,” reports The Journal.

Most of the most expensive requirements of the health insurance reform package do not take effect for a couple of years. Republicans may try to repeal some if not all of its major provisions.

U.S. District Judge Henry E. Hudson said the law’s requirement that most Americans carry insurance goes against the U.S. Constitution.

Hudson did not approve an injunction to block implementing the law. His ruling was narrower in focus. “At its core, this dispute is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it’s about an individual’s right to choose to participate,” Hudson said in part.

The issue may end up being decided by the U.S. Supreme Court. The Obama administration says the government has the authority to require Americans to carry insurance because of Congress’s ability to regulate interstate commerce. For more from The Wall Street Journal about the ruling on health insurance, please click here.

Free Trade Agreements Would Help U.S. Businesses

The recent progress on refining a proposed trade agreement between the United States and Korea has led to a document that is more likely to be approved by Congress. There are many benefits to the agreement. U.S. Ambassador Ron Kirk says the tariff cuts alone in the proposed U.S. – Korea trade agreement will increase exports of American goods and services by $10 to $11 billion. In addition, U.S. officials say the agreement will create over 70,000 new jobs for Americans. In addition, the agreement may likely increase the number of American jobs in the auto sector by improving market access in Korea. It will give American companies the chance to build their business there. American agricultural companies may also gain from the U.S.- Korea trade agreement. In 2009, Koreans spent almost $4 billion on American agriculture. The agreement would eliminate duties on wheat, corn, cotton, cherries, pistachios and other crops.

But the agreement is just a starting point. There is a pending free trade agreement with Colombia. Many Democrats have been reluctant to support it because of concerns with the Colombian government’s record on workers’ rights and other issues. The fact is that the trade agreement between the two countries would create more jobs for workers in both countries.

For more about the U.S.-Korea trade agreement, please click here.

Salaries for CEOs of Public Companies in Israel Have Doubled

CEOs in the United States are not the only ones who are getting their salaries scrutinized. The salaries of CEOs of companies, which are traded on the Tel Aviv Stock Exchange, have doubled in 15 years, according to the Bank of Israel.

The average salary of the Israeli CEO in the study grew 104 percent between 1995 and 2009.

The Israeli companies whose CEOs had the highest salaries were: banks, insurance companies and financial services companies.

As Israel’s economy becomes more competitive and individual businesses grow, the demands placed on the CEOs are greater. It is no accident that CEO salaries increased. Much like the United States, Israeli CEO salaries were influenced by the size of the company, earnings and performance.

In case of Israel, CEOs were not rewarded for the business’s long-term performance, but for short term (up to two years) performance. Israel’s high-tech sector, like the one in the United States, is fueling much of the economy’s growth. These sectors need to compensate chief executives appropriately.

For more about CEO salaries in Israel from Israeli Diamond, please click here.

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