Comrade Obama's salary cap

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I'm going to be posting and linking to an article from The Free Republic. I'm fairly certain that this website is way too conservative for many of the members here, so bear that bias in mind while reading. What the article is about is Obama setting a $500,000 salary cap on executives that work at companies who are seeking "bailout/stimulus" money. For the record, I am dead set against the stimulus bill as I don't think it will stimulate anything except a depression and is nothing but a "pork" payout to his Democrat supporters.

However, I do believe Obama setting the salary cap may be the smartest thing I've seen him do so far. This of course is causing me internal strife. I am a free market guy and believe that people should be paid whatever someone is willing to pay them. I also agree with the article that it "class warfare" and hypocritical of the administration. But, on the other side, if these companies are going to be using "my money" then I should get paid back before they enrich themselves.

Also the title of this thread is the title of the article I'm about to post, so don't go bashing me

Enjoy

 

Hmmm, it is way too conservative for me. The thing about Obama earning $4.2 million last year.... Yeah, so what? How was he responsible for the market crash? Did he have any part in it? No?

As for the salary limit..... I like the idea, but I dont think its the right way to go about it. These guys took huge risks, did things that shouldnt really be allowed, and got paid lots of money for it. What we should do is regulate the market, keep these guys under control. You can pay them whatever you like, just as long as they dont screw the economy up.

Anyone who thinks free market = win, look at what just happened. Its precisely because of too little regulation that this crisis happened in the first place. The unfortunate thing about the idea of a free and fair market is that it doesnt take into account human greed. Humans are greedy, and the capitalist system only encourages more greed. So dont be surprised when they act on their greed, and do anything they can, illegal, immoral, or not, to get their hands on more money.

 

While I will concede that it is unjustifiable to have some of these CEOs making tens of millions of dollars - especially because in many cases they ran their companies into the ground - limiting their salaries to half a million dollars really won't solve anything. That's because while their salaries may not be justifiable, it's not their salaries that caused the recession we are currently experiencing. If you took the top executives of all the Fortune 500 companies and added their salaries together, you'd get what? Maybe a few billion dollars?

In the past year, we've seen the Bush administration pass a $900 billion tax rebate, we've seen the Bush administration engineer a $700 billion insurance and banking industry bailout, and now we have the Obama administration working on a stimulus package that is going to be somewhere between another $800 billion and $900 billion.

Limiting executive oay may be a good public relations strategy, and makes for a nice "feel-good" story, but really, executive pay is a drop in the bucket. After shelling out around $2.5 trillion in the last year to get the economy moving again, I'm not getting worked up over a poorly spent few billion.

 

Did Obama have something to do with the market crash? Yes! Well, insomuch as he was a member of Congress and, along with all the others, could have done something to stop it. Also, he helped one of the organizations that promoted it (ACORN) years earlier (it was still promoting it, though). The market crash wasn't due to free market, as we weren't in a free market. It was due to bad controls being placed on the market by people who didn't really understand the consequences of their actions. Would free market have avoided it, or been better? I don't know. Maybe, maybe not. Would proper controls have done so, yes.

Anyway, as to the article:

This is somewhat encouraging. One of the things I was worrying about is how exactly they define executive pay. Do they include stock options? Do they include bonuses? Do they include corporate services? How about gifts? I still see plenty of loop-holes, but at least this indicated that the people in charge are seeing some of them as well. As to setting a maximum pay just by his say so, well, he hasn't. What he's actually done is set a maximum pay, just by his say so, on who get's the government's money (which in this case is, I believe, his to administer). Guess what, you can do the same thing with your money. You can decide not to give money to anyone who earns more than X a year. It's your money.

 

I can't answer all of those questions, but I do know that stock options were mentioned as part of compensation. You ARE allowed to give out stock options, but the executives cannot exercise those stock options until after they pay back the funds they received from the government. Which I actually think is a good idea, because it is kind of like an incentive program. If you do a good job, get the company back on its feet, and pay back the bailout, you would be handsomely rewarded.

 

A salary gap might increase investing if it means that in the times to come stock options are the way to get the same level of income the ceo's have had before the maximum wage limit...


edit: ...and at the time I was writing this Aldeth made the same point...heh...

 

Perhaps I'm a trifle simple, but if a company is going to the government with their hands out and saying "Give us money or we'll have to fire all our workers, which would really screw the economy" and then said company turns around and pays an ungodly sum to its loser CEO and other upper management types who put the company into such a poopy position to begin with, I really have no respect for that company at all. Or the CEO who is basically screwing the population twice -- once the workers, twice the taxpayers in general. As a short term policy I think it is great.

You know, I read Lee Iacocca's autobiography in the 80s. When he was hired on at Chrysler to fix the company, the first thing he did was slash corporate salaries. He said (and I paraphrase here) that you cannot in good faith ask the line worker to take a pay cut and expect him to accept it with good grace when the suits upstairs aren't taking a cut either. The principle here is the same -- those companies asked the American Taxpayer to take a cut (diverting money that could be used for other things) and so the executives have to show they are willing to make sacrifices too.

And if you can't survive on $500,000 a year, you're an idiot.

 

I have no problem with making the difference up with stock options. An option is a portion of stock set aside at current stock rate which can be exercised at some future date. If the CEO turns the company around and increases stock values then he/she gets a sizable award. If, on the other hand, they wallow in mediocrity and the stock value remains stagnant or drops, the options are worthless.

I have a problem with the CEO from one company sitting on the Board of another company and voting huge pay raises, stock incentives and golden parachutes -- only to have the favor returned by the same individuals sitting on his or her Board. This 'good old boy' network to inflate the CEO's worth should be made illegal.

 

I was hoping someone would post something like this. It's high-time that all these "free market" pretenders get called on what they are: nothing more than a bunch of corporate elitists, who are basically freeloaders on the American taxpayer and our economy. For 8 years the Republicans have been spending our money like it wasn't worth the paper it was printed on. These fine "patriots" were essentially stealing money from American taxpayers and giving it out by the truckload to companies like Halli and Blackwater and whomever else they wanted to "reward" for the phony "War on Terror." There was no "free market" in Iraq, the Republican laboratory experiment in nation building. I still remember the Bush plan to stimulate the Iraqi ecnomony, simply by taking money from the taxpayer here and just handing out that money to the Iraqi people to get their economy moving after our invasion, oh sorry -"liberation" - destroyed pretty much everthing there. How does that strike you, "comrade?"


These same fine Republicans can now been seen, ranting about the stimulus/recovery package where the taxpayer money would actually do something for those being hit by the collapse of Wall Street. Remember those fine "fiscal conservatives" who have been in office for the last 20 or 30 years? Now they are all "concerned" that the government is spending too much money (ha-ha). But you know, these are programs for the people. But wait, didn't they just give 750 billion dollars to Wall Street? Well, not really. It turns out that the government "forced" them to take all those billions. IMAGINE that (and it takes a lot of imagining). These same guys voted against the bailout of the auto industry and they now want to stop the stimulus package. So both of these would have given relief to the workers, but not enough to the...rich...like say the TARP money did. I'm searching for a "term" here...but I'm sure it will come to me somewhere in this rant.


Remember the Bush plan for Social Security? Where was all that retirement money going to be invested? Why with all those fat cats on Wall Street, of course - corporate crooks, like Madoff. All these same fine "free market" types who are actually complaing about WHAT? The compensation that these guys, who just trashed the American economy, should receive. Maybe we should give them all our money. They are entitled to pretty much everything, since it takes real talent to bring down an economy like ours, built upon the backs of the people who do "real" work out there in America Land. Which brings us to the real issue: Class Warfare (yes, the term I was searching for).

You know, that lovely meaningless catch-phrase that is supposed to be a conversaion stopper. It is the "war" that seems to move in only one direction (like government bailouts). It is only when someone from the lower income classes complains about how much those at the top are paying themselves - yes, paying themselves. yet, why do all those "free" market types complain about entitlement programs? Why isn't that "class warfare? Because the people of the nation, that 99.5 percent of Americans, want to pay themselves back for their hard work with lower taxes? That's not really "freedom" though that's "socialism." So political freedom isn't really freedom? But here I thought that "socialism" was government supported business (like the 750 billion for TARP). Maybe I'm really wrong about that. No wait, socialism is really "taking from the rich and giving it to the poor," you say. Just ask any bonehead on Fox "News." And so what do call it when the rich steal from the poor? We already know it can't be "class warfare" because the war only moves in the opposite direction. So when the rich steal from the poor, it must be something else. That would be the "free market." Oh, yeah, I get it now.

 

Don't beat around the bush, Chandos, tell us how you really feel!

Fact is, you're right. It boggles the mind that people can seriously say "we should give money to dorks who made huge mistakes because the little guy will be hurt" and then turn around and say "we can't give anything to the little guy because that's socialism and smacks of the USSR."

Responsibility starts from the top. If the corporate executives want us to take their apologies for screwing the economy seriously, then they have to SHOW it with their actions. Show us where it counts -- financially.

 

Hmmm, the same No-Bid Contracts that Clinton gave those same companies in afghanistahn. No wait,only them darned republicans did that, right? Right? No.

You mean the Bill obama lobbied for & voted yes for? The one he just got the 2nd $350 Billion released so that he can spend it? That one? http://abcnews.go.com/Politics/Economy/story?id=6654133&page=1
Who is in charge of the House financial services committee? Thats right Democrat Barney Frank.
Who is in charge of the Senate Banking Committee? Thats right Democrat Chris Dodd.
The ones who, once they were in charge, stated "oh there is no problem".
Who ran Fannie Mae? Prominent Democrats.

So, sorry to say chandos but the Democrats own as much(or more) of the blame as the Republicans.

 

For Iraq? Democrats got us involved in Iraq? Democrats started the War on Terror? That's what Chandos addressed in his previous post... Sure both parties are responsible for the bailouts, but without the GWoT, chances are we wouldn't be this far into debt in the first place...

 

Martaug - Those are certainly valid points. Nevertheless, those postions the Dems fill in Congress have only been over the last few years. The Republicans are the ones who have pushed for much of the spending on Iraq since 2003, when they controlled all those committees. Democrats have only controlled Congress since Jan. 2007.

Edit - I see Aldeth already made much of that point.

Personally, you may be more consistent on this point, yet many conservatives were having a cow over how much the auto workers were paid, but have no problems with executive pay. I'm not saying you are one of those, only that it's a strange thing to hear some conservative commentators up-in-arms about a cap on executive pay, yet complaining about regular workers making too much. Class warfare?

Edit - I would also comment that the team Bush, Paulson & Comapny, directed where much of the TARP money went. And they had no problem changing that allocation after Congress approved it. Team Bush at work:

http://www.msnbc.msn.com/id/29041955/

 

Maybe I'm being naive, but I don't see what Iraq and Afghanistan have to do with the economic crisis. It wasn't government debt or spending that caused the financial meltdown, it was the policies put in place that allowed the writing of bad mortgages and the financial schemes that were created around them.

 

You are right in that there is no direct relation, but while Bush was happily blasting away at those two countries and cheerfully giving tax money out to cronies while doing it, the economy melted around him. If he and his Republican friends had focused more on domestic issues, and shored up lax regulatory laws (said laws are the result of both Republican and Democratic stupidity) then things might be better off. I mean, seriously, how much has been spent on Iraq and Afghanistan? Could the money have been put to better use? The possibility exists that maybe it could have.

That doesn't mean that the whole Iraq and Afghanistan missions are totally bad -- I don't think that at all. Helping the less fortunate is a great idea -- if it's done smart. Particularily in Iraq, it wasn't done smart.

It's time for corporate rapists to quit giving the high hard one to their shareholders, their employess, and the public in general. They need to be cut off from the trough. High bonuses should be awarded for success, not just for breathing while the company implodes.

 

While I'm not quite sure I agree with you about "giving tax money to cronies" I was pleasantly surprised to see you give some of the blame to the Democrats.

 

You mean the GWoT that was started by Clinton?
You know, with Operation Infinite Reach, after the bombings of us embassies in tanzania & kenya back in '98 for which we conducted bombings in afghanastahn & sudan.
So yes the democrats DID start the war on terror.

Oh, & ~40% of democrats voted to invade iraq, so yes they must take part of the blame.

 

By simple declaration? Simple declaration? The writer probably isn't an idiot. It therefore follows that he thinks his readers are. He thinks it would never occur to us that, y'know, the reason Obama can do this is related to nationaliza--er, The Bailout.

No, seriously. The most salient point of this article is that it insults the reader's intelligence. "Marx taught that..." wrong. By simple declaration...wrong. Sets a precedent...wrong. Wages are supposed to be determined...well, yes. Unless you've just been nationalized. In which case, wrong.

My favorite: "it is demagoguery" followed by "the last major country...was the Soviet Union".

The article does contain a few legitimate complaints. But they're all obscured by the author's assumption that you and I are stupid.

 

Utter crap. Obama's senate seat paid him $165,000 in 2007 and the other 4 million or so was made primarily from book royalties. To call him a hypocrite just because a lot of people bought his book is, quite frankly, stupid.

 

martaug,
that particularly silly post deserves a complete rebuttal, and, Snook has a point in this regard, in a thread of its own, no less.