Saturday, January 31, 2009

Setting Pay Caps for Bailed-Out Executives

On Friday, Senator Claire McCaskill (D-Missouri) stepped onto the Senate floor and introduced a bill to cap pay for executives of private companies receiving federal bailout money. And I did a litle dance. The Chief Executive Officer Pay Act of 2009 would mean that total annual compensation for executives of corporations getting bailout funds could not exceed the salary of the President of the United States: $400,000. 

Here she is introducing the bill:

Some of the highlights from the transcript:
If you want taxpayers to help you survive...then you're going to have to limit every one's pay at your company to the same salary the President of the United States makes. Is that so unreasonable? It's eight times the median household income in the United States of America...

So every executive, going forward, cannot make more than $400,000 a year. And they'd have to limit that executive compensation for everyone in their company until they pay back every dime to the taxpayers....
And here's my favorite part:
And if any of them think it's a hardship to take the salary of the President of the United States, I dare them to say so out loud right now.
Hell yes. Any corporate CEO out there wanna raise your hand and explain why our public money should subsidize your obscene pay?

Tactically, this is good timing on McCaskill's part. Her announcement follows the news about Citigroup--which has taken $45 billion in bailout funds--reversing plans to by a $50 million corporate jet, after prodding from President Obama. And it follows news that more than $18 billion in bonuses were paid to Wall Street employees last year, which Obama called, "shameful," "outrageous," "the height of irresponsibility."

McCaskill's bill is great start, but it doesn't go far enough. The concept that the use of public money requires public responsibility should be applied more broadly, beyond the bailout. For instance, the federal government should deny contracts or subsidies to corporations with exorbitant executive compensation. What qualifies as exorbitant? That's a national discussion we need to have. A bill introduced in 2007, the Patriot Corporations of America Act, would deny federal contracting preferences to companies that compensate any executive more than 100 times the income of the company's lowest-paid full-time employee. (As McCaskill might ask, is that so unreasonable?) That would attack the problem from the top and the bottom, giving a company incentive to pay its executives less and to pay it's wage-earners more. 

The government already requires corporations to meet our standards for racial and gender equality before we'll do business with them. Why should we not also require them to meet our standards for decency in pay?

Hopefully, we'll tackle these things in the next couple of years. First we need to pass Claire McCaskill's landmark bill. 

You should:

2. Tell Senator McCaskill you are behind her. She will now be a prime target for the business community. It takes guts to propose bold legislation like this. Especially for a relatively new Senator (she was elected in 2006). And especially for a red-state Democrat. If a Senator from Missouri can hold her ground on this issue, it will say a lot about how much the political climate has changed. 

3. Witness the revival of heartland progressivism.


Mark said...

Landreiu and Vitter of Louisiana have recieved notices.

Phyllis said...

How did I not hear about that Act before?

Thanks for telling me. My Blue Dog won't do anything, though.

Better Than Machines said...

Mark, very cool. Cardin and Mikulski heard from me.

Phyllis, this bill from McCaskill is brand-spanking-new. She just introduced it on Friday and apparently she didn't really coordinate with Congressional leadership or the White House. One interview made it sound like she just got fed up, told her staff to draft the bill, and walked onto the floor and announced it.

delaine said...

I heard McCaskill tell MSNBC tonight that her phone was ringing like crazy with support for her bill. At least she is trying to do the right thing. All the GOP guys can do is pout and try to stop the will of the people. They have totally lost all resemblance to the "Party of Lincoln" as far as I can tell. I appreciate your progressive fervor.It is much needed !

Camp Papa said...

I've been out of the loop for awhile. I can read blogs on the iPhone but can't comment. So, to sum up my comments for the last several of your posts: The survey results are in and you are officially, "Da Man." Keep up the good work.

Phyllis said...

I should have been more specific.
I meant:

A bill introduced in 2007, the Patriot Corporations of America Act, would deny federal contracting preferences to companies that compensate any executive more than 100 times the income of the company's lowest-paid full-time employee.

That would have been a wonderful thing for America.