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.
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.