Posted on 02/05/2009 6:35:52 AM PST by shortstop
It’s ironic that on the same day the president set a $500,000 cap on executive pay, his campaign manager signed a book contract for more than $1 million.
Actually, it’s more than ironic.
It’s hypocritical.
When a president who – in 2007, the last year he was truly employed – made $4.2 million in a year, says that others are greedy for getting more than $500,000, it’s a pretty good example of “do as I say, not as I do.”
Barack Obama’s pick for secretary of Health and Human Services – Tom Daschle – had to step down because he had unpaid tax on free car service that totaled $128,000. If that was the tax on it, how much was it worth? When you have an unpaid tax bill – for your limousine and chauffer – that’s three times the national median income, you’re not really one of the “common people,” are you?
And it is odd that an administration of millionaires is attacking people for being millionaires.
More importantly, it is stunning that in the United States – a supposed land of liberty, checks and balances, and a free economy – the president can, by simple declaration, set a maximum wage.
It’s a Marxist’s dream come true.
The background, of course, is that the president has been very indignant about what he calls the excesses of corporate executives. They travel in private jets – like he has for the last two years – and they make more than a million dollars a year – like he does – and they get bonuses for their jobs – like his wife did at her last job.
And they’re wrong.
The worst part, he says, is that the executives of banks and companies taking money from the government are sometimes getting bonuses. To stop that, he has put a cap on their compensation. Unless it’s some stock option or deferred payment that’s put off until every dime of government money is paid back, no big boss at any of those companies can make more than $500,000 a year.
Which makes a lot of people happy.
But it shouldn’t.
Because of its practical impact, and its theoretical implications.
Let’s take the last part first.
Karl Marx taught that those who make little should envy those who make much. Much of current American politics is based on that principle, that we should hate the rich – which is anybody who has more than we do – and we should believe that they have what they have because they stole it from us.
That’s why CEOs are the current villains of American society. Instead of being admired or congratulated on their success, they are vilified and held up as boogie men, the scapegoats of our economic angst.
So the president caps their salary.
No executive order, no resolution from Congress, no bill passed and signed into law – nothing whatsoever that can be challenged by due process – just the word of the president. “Thus saith the Lord” had been trumpeted across the land and the cap is set.
Which sets a precedent that any wage can be capped. The free market has been decapitated.
And everybody is glad.
Because it is immoral for anyone to make that much money in times like these.
Which ought to be big news to the NBA and the NFL, and to all the Hollywood blowhards who bankrolled this president’s campaign.
In America, wages are supposed to be determined by what the market will bear. Typically, those who administer multi-billion-dollar companies are paid handsomely. Not many people know how to do it, and it takes years to develop the ability.
Doctors make huge amounts of money, architects make huge amounts of money. Both those professions take years and years to acquire. Business owners whose companies are successful make a lot of money. Inventors of useful and marketable items make a lot of money.
But now American business has a wage ceiling. And the various bailouts – passed or planned – will spread into so many areas of the economy that this cap almost becomes nationwide. In one fell swoop, the president has capped the salaries – and consequently limited the impact – of a group of people who mostly didn’t vote for him.
That’s some nasty payback.
And it is going to have some nasty consequences. Right when American needs experienced business people and bankers to help it dig out of a potentially monumental mess, the president has decided to punish them. He has also created a situation that will push some of them to foreign companies. If American companies have a wage cap, and a foreign business or bank comes offering more, what is an executive going to do?
And why would a skilled banker or businessperson push to get to the top of their profession when it contained a wage cap? Most Washington lawyers make more than $500,000 a year, most former-politician lobbyists make more than $500,000 a year, so why would a very talented person want to stay in the corporate world?
And finally, given that the largest portion of New York's state income tax comes from Wall Street salaries, the attack on bonuses and the cap on wages kills a revenue stream for a state that is teetering on the far side of bankruptcy.
At the same time the president is pushing a $900 billion package of pork for his Democrat colleagues and constituents – a bonanza of liberal special-interest money that will feather Democrat nests for years into the future – he is feigning indignation at people who are making just about the average of his cabinet members’ pre-government salaries.
This isn’t change, it is demagoguery.
Last week he attacked Wall Street bonuses, though he clearly must know that those are merely commissions, a conventional part of compensation for lower-level brokerage employees. This week he attacked banker salaries, knowing that almost all CEOs who have asked for public money have already lowered or eliminated their salaries and ended all perks.,p>
It’s grandstanding.
And it’s a dangerous precedent.
Because the last major country to have a salary cap was the Soviet Union.
If a CEO has to take a pay cut to receive Federal assistance, why doesn’t a welfare recipient have to work for the government (or go to school) to receive Federal assistance?
Just askin’...
I can't really agree. What if that rule is applied to ALL entities that take public money - not just those in the spotlight now because of "bailout" money? That would include universities, federally underwritten insurance companies, every state government, any company that wins a government contract, banks that use the FDIC, any business that recieves a federal grant, . . . Where would this end? How many industries do NOT use federal money to some degree?
Other than the Soviet Union, what was the last major country to have maximum wages? Is that distinction ours now?
When any entity takes money from the Feds, strings are attached. Ask the public schools. Ask the various highway state highway departments. Even universities have strings. This is how the Feds enforce their noxious policies like affirmative action. How stupid are the banks and other companies to think that they would be exempt from the Feds’ overweening attentions?
I may be confused, but it was my understanding that the cap was applicable only to those whose company was taking bailout packages. In which case, I see the cap as a control mechanism placed on those who have demonstrated a zeal for high living, poor managerial decision making, and zero culpability.... with John and Jane Taxpayer picking up the tab. I can see where the fear of similar controls being expanded upon, and becoming commonplace outside the venue of bailout package recipients comes from, but that can only happen if we let it.
Here's to vigilance.
how about a salary cap for congress people since their rating is so miserably low and they have been only successful in making millions of peoples lives miserable with impotent worry?
IMHO
I agree. This is nuts.
“Sixth, how will TARP companies compete for the best talent to replace existing execs if they are limited in the compensation offer?”
They won’t, so they will fail. Then all the people who are all for this - including many freepers because the companies are spending our tax money - will get screwed again because the TARP funds will never be paid back. Of course, they never were going to be paid back anyway.
What’s scary is the precedent this sets, namely that salary caps are good. The left is already talking about caps for everyone, recipients of fed money or not. The reasoning is that this will prevent flight of talent to non-capped companies. The reality is that this wil utterly kill what is left of the economy...
Bravo! Talk about putting one in the 10 ring! Well said!
"I know, but I had a better year than Hoover." -- Reported reply when a reporter objected that the salary Ruth was demanding ($80,000) was more than that of President Herbert Hoover's ($75,000).
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.