It’s music to my ears that President Barack Obama is proposing a salary cap for executives of firms that are receiving some of that $700 billion in federal bailout money. The cap is reported to be $500,000; it would apply to companies that got “exceptional assistance,” such as American International Group Inc., Citigroup Inc. and the Big Three automakers.
“If the taxpayers are helping you, then you’ve got certain responsibilities to not be living high on the hog,” President Obama said. Amen, amen, amen. The companies run by these executives would be going under without government help, so they should be lucky to even have a job. Keep in mind that not every financial institution or automaker is in this precarious position. Just those that were horribly mismanaged to begin with.
Predictably, those who want to make the fat cats immune from feeling the pain of their own bad decisions are starting the spin. A story posted on MSNBC said that compensation experts in the private sector have “warned” that meddling in such things might discourage participation in the rescue program, thus slowing down the financial sector’s recovery. Come again? Obama can’t cap CEO pay from its obscenely high levels, lest he risk that companies teetering on the edge of fiscal insolvency say “no” to a pile of federal cash?
Don’t look for moral support on this issue from the Senate’s top Republican, Mitch McConnell of Kentucky, who says, “I really don’t want the government to take over these businesses and start telling them everything about what they can do. Then you truly have nationalized the business.” That’s another scare tactic: No one’s telling these businesses “everything” about what they can do, nor have those businesses officially been nationalized. They’re simply being given the terms of agreement to a loan, the same as you would when you sign on the dotted line. Don’t like the terms? Then don’t take the money.
Personally, I don’t like the “welfare state” that allows these lazy, underperforming executives to stick around, sucking at the government teat. If this were a group of welfare mommas lining up for big government assistance, the political right would issue a mighty hue and cry, saying it’s time they learned to stand on their own two feet. Instead, we have McConnell urging restraint.
I would urge the boards of directors of those companies to further cut costs by utilitizing the same free trade pacts that have cost millions of regular workers their jobs. Surely there has to be a really sharp MBA candidate in Mexico or China who would gladly run AIG or Citigroup for $500,000 per year, maybe even less. How come nobody’s found him or her yet?
What Obama is saying about executive pay is something you’d never get past a Republican president’s lips without using forceps and a suction device. This is the type of change we need. Go, Obama!
I totally agree with you and President Obama when he said, “If the taxpayers are helping you, then you’ve got certain responsibilities to not be living high on the hog,
Although, for a brief minute, I thought he was talking about our state and federal politicians like Murtha, Specter, Casey, Rendell, DeWeese, Mahoney, Kasunic, Shuster or Kula.
Obama could be demanding Congress to tighten their belts a bit, but he won’t.
Rendell annouced today that he is cutting funding for many education programs like a school for veterans’ children and a school for deaf kids, but I didn’t see any where that he was cutting his salary, paying for his own health care, driving himself in a Prius instead of being driven in a Caddy by troopers or where he proposed a pay cut for our “esteem” state representative and senators or even forcing them to drive their own cars, buy their own gas, pay for their health insurance, or give up their millions in walking around money.
Maybe, our 3 reps and senator will show some testicular fortitude and introduce the above during the budget meetings.
Nope, I doubt it. Kula and Mahoney will sit in the back of the room half asleep making solitaire on their laptops hearing “CHING! CHING! CHING!” as their pays continue to go up and people of Fayette continue to lose their jobs and homes as taxes go up along with Mahoney and Kula’s salary.
Obama needs to show some backbone with Congress and stop giving billions to ACORN in the stimulus package.
How many jobs will be created by giving $5 billion dollars to ACORN, unless they are forced to hire Obama’s illegal immigrant relative at about a billion per year.
By: CJ on February 4, 2009
at 7:19 pm
The current mess in the private sector economy is a perfect argument for re-regulation. I know, the rich, elite, capitalist class doesn’t need any stinkin’ big government watching them. They wouldn’t be able to commit legal larceny. Besides they went to better schools and know better then we do how to run this country. If we don’t allow them to continue making 100 times what their employees make and to give them bonuses for messing up the economy, Porky and Petunia won’t be able to add the eighth bathroom to their house and keep up with the Madoffs.
At least in the public sector, if the top man messes up and the board of directors doesn’t fire him, I have a chance to fire the board of directors via the ballot box and my new board can make changes I want. I can’t even try to do that with Porky, the CEO of Ideal Bank and Distrust. As long as Porky steals enough to make the board of directors of Ideal B & D rich and happy, he stays–investors and public be damned!
I don’t want the government messing with my private life, but I also don’t want this to become a country of have and have-nots due to a lack of regulation.
By: JBG on February 4, 2009
at 11:01 pm
Well said, JBG. The damage that sheer greed has caused the economy is in some respects beyond calculation. Here’s some food for thought: Why is it that auto workers have long been told that they need to compete with the Japanese production method — including a lower-cost (read that “non-union”) wage structure — but the head honchos running those companies don’t embrace that same notion? According to an article I read a few years ago, the people running Toyota earn far less than their Big Three counterparts. The article said they are also far more interested in the company’s long-term viability and growth than in short-term financial gain.
By: paulsunyak on February 5, 2009
at 5:10 am
Much of the Union vs Non-Union brew haha is centered on the North vs South, Mason Dixon line mentality. Today in the south, the number one industry across the south is Foreign Automobile manufacturing. Toyota, BMW, and or course, casinoes. The south is expierencing an influx of housing capital from the industrial cities migrants, leaving Chicago, Detroit, Erie, Flint and Cleveland. Many of the Detroit residents, who walked away from thier second mortgage homes, were Auto Workers and retirees, who knew what was coming down the pike, so to speak! They took the money, returned down south, back to where thier elders left from 2 generations ago. and started over! Many purchased low cost homes, and simply walked away from the north.
It’s no wonder, Southern Representatives are so resistant to support US Auto Makers, things are going to well in thier communities, why screw up a good thing.
So to speak!
By: Fred Williams on February 9, 2009
at 9:35 am
Mr. Sunyak,
Regarding the comments you made above on February 5, 2009, you are factually correct that the management of the Big 3 Automotives have historically made more money than their Japanese counterparts (at least as of 2006). It will interesting to see what happens to their compensation after going to Washington and pleading their cases for “bailouts”
Ahh, but who is to “blame” for this difference? Well, the Compensation Committees of the Boards of Directors set the “Packages” for these executives. These “packages”, as they are structured, give incentives to Executives as to where the Board believes the focus should be applied.
If, as a stockholder, you are displeased with what these Committees produce, you go to Stockholder Meetings and raise a fuss. This can also include backing new Board Members that agree with you.
Admittedly, this can be difficult but the “rules” provide for “relief”.
The bigger point is that the differences between UAW contracts and the labor packages provided by “transplants” to their employees is HUGE and would NOT be equalized by equalizing the pay of the management.
Granted, the “politics” of having “equal pay” for management between the Big 3 and the transplants would “play well”. But, it would not come close to doing anything other than placating some folks (it would NOT solve the profit disparity)
The answer is Stockholder Activism. It can work. Witness the departure of the former CEO of Home Depot, Bob Nardelli.
By: Jess Ball on March 19, 2009
at 5:48 pm