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| Economy |
| A bill to let Big Government set your salary |
| 2009-04-01 |
| It was nearly two weeks ago that the House of Representatives, acting in a near-frenzy after the disclosure of bonuses paid to executives of AIG, passed a bill that would impose a 90 percent retroactive tax on those bonuses. Despite the overwhelming 328-93 vote, support for the measure began to collapse almost immediately. Within days, the Obama White House backed away from it, as did the Senate Democratic leadership. The bill stalled, and the populist storm that spawned it seemed to pass. But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies. The purpose of the legislation is to "prohibit unreasonable and excessive compensation and compensation not based on performance standards," according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac. The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds. In addition, the bill gives Geithner the authority to decide what pay is "unreasonable" or "excessive." And it directs the Treasury Department to come up with a method to evaluate "the performance of the individual executive or employee to whom the payment relates." The bill passed the Financial Services Committee last week, 38 to 22, on a nearly party-line vote. (All Democrats voted for it, and all Republicans, with the exception of Reps. Ed Royce of California and Walter Jones of North Carolina, voted against it.) The legislation is expected to come before the full House for a vote this week, and, just like the AIG bill, its scope and retroactivity trouble a number of Republicans. "It's just a bad reaction to what has been going on with AIG," Rep. Scott Garrett of New Jersey, a committee member, told me. Garrett is particularly concerned with the new powers that would be given to the Treasury Secretary, who just last week proposed giving the government extensive new regulatory authority. "This is a growing concern, that the powers of the Treasury in this area, along with what Geithner was looking for last week, are mind boggling," Garrett said. Rep. Alan Grayson, the Florida Democrat who wrote the bill, told me its basic message is "you should not get rich off public money, and you should not get rich off of abject failure." Grayson expects the bill to pass the House, and as we talked, he framed the issue in a way to suggest that virtuous lawmakers will vote for it, while corrupt lawmakers will vote against it. "This bill will show which Republicans are so much on the take from the financial services industry that they're willing to actually bless compensation that has no bearing on performance and is excessive and unreasonable," Grayson said. "We'll find out who are the people who understand that the public's money needs to be protected, and who are the people who simply want to suck up to their patrons on Wall Street." After the AIG bonus tax bill was passed, some members of the House privately expressed regret for having supported it and were quietly relieved when the White House and Senate leadership sent it to an unceremonious death. But populist rage did not die with it, and now the House is preparing to do it all again. |
| Posted by:Fred |
| #10 They pay us for showing up to vote. I believe that's how Murtha set up his district. |
| Posted by: Procopius2k 2009-04-01 14:05 |
| #9 Can we set congress' salary? They pay us for showing up to vote. |
| Posted by: DarthVader 2009-04-01 11:04 |
| #8 Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. Speaking of slobbering idiots. Please, Massachusetts turn this guy out to pasture next time. Be patriotic and do the rest of the country a huge favor. |
| Posted by: JohnQC 2009-04-01 10:51 |
| #7 Seems like a good idea for Congress tu3031--the part about Congress being fvcked. Doubt it will happen. Time for term limits. Don't leave them in long enough to steal or screw us. |
| Posted by: JohnQC 2009-04-01 10:47 |
| #6 The new legislation, the "Pay for Performance Act of 2009," Hmmmmmm. So if this is the new standard, I guess Congress is fucked? |
| Posted by: tu3031 2009-04-01 10:37 |
| #5 Too bad Al Capone wasn't so creative. Protection racket by another name - create a problem then 'tax' them to hold off on its application. Capone bought local government. Back then the Feds never had the amount of power and intrusiveness we take for back ground noise today. That they got him on tax evasion [Cabinet level material there!], is also indicative how unique even federal income tax was to masses back then. Capone would be a Senator from Illinois today. |
| Posted by: Procopius2k 2009-04-01 09:13 |
| #4 Government creates the problem and proposes to provide the solution. For a fee. In the $trillions. Too bad Al Capone wasn't so creative. |
| Posted by: ed 2009-04-01 08:40 |
| #3 Can you set my salary at $100,000 and adjust it for inflation, Big O? /My check's in the mail, $2,200 max, right? |
| Posted by: Raj 2009-04-01 08:24 |
| #2 This action must be viewed in Barry's perspective to be fully understood. Consider similar to Zakat, which is essentially everything that benefits Muslims or Muslim goals and of course, brings them closer to Allah. Zakat is an institutionalized and enduring fundraising mechanism within Islam that is capable of raising considerable sums of money on an annual basis. Rough, conservative, calculations for potential zakat funds annually available for warfighting within a geographic area can be determined by computing 2.5 percent of the GDP-per capita of the employed labor force and dividing the product by eight (8). For Iraq , the annual warfare funding through zakat may be estimated at $96,500,000. For Afghanistan , $46,875,000. |
| Posted by: Besoeker 2009-04-01 07:29 |
| #1 It occurs to me that the real target of this legislation is the defense industry, ultimately. |
| Posted by: no mo uro 2009-04-01 07:14 |