Senator Proposes Pay Cap: If You Make More Than 400K, You Make Too Much
 

WASHINGTON (CNN) -- One day after President Barack Obama ripped Wall Street executives for their "shameful" decision to hand out $18 billion in bonuses in 2008, Congress may finally have had enough.

"You can't use taxpayer money to pay out $18 billion in bonuses," an angry Sen. Claire McCaskill says.

An angry U.S. senator introduced legislation Friday to cap compensation for employees of any company that accepts federal bailout money. Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee would be allowed to make more than the president of the United States.

Obama's current annual salary is $400,000.

"We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer," an enraged McCaskill said on the floor of the Senate. "They don't get it. These people are idiots. You can't use taxpayer money to pay out $18 billion in bonuses."


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Is Guiliani for reals?

So these people will be making $400,000 a year, yet they won't be able to go to restaurants, buy clothes or anything like that because they won't be getting their bonuses? And it's gonna drive up unemployment? GET REAL.

It's not the taxpayers fault if these a-holes decide to live above their means.

Here's an idea - don't take the bonus out of the economy - use it to pay someone further down the corporate ladder a salary!

And I'm a little bit miffed at all the outrage by politicians - what did you think would happen when you basically wrote them a blank check?

They aren't living above their means, not at all. Where did you get that idea?

Bonus time is a big deal in NYC, as crazy as it sounds. Imagine if you got a check for $1 million dollars, or even $100,000--in addition to your baseline salary. New homes are purchased, and renovations begin like crazy. The premium car dealers on Park Avenue bring out all their new Maybachs and Maseratis, and they sell like hotcakes. Major charitable donations are made. We knew a family who was able to pay for their four kids' Ivy League tuitions with one bonus check. People in the fur industry make enough around this time to sustain them throughout the year. All of this spending at the tippy top has a trickle down effect.

So, Giuliani is right in that the bonuses are responsible for injecting a major amount of $$$ in the NYC economy. Granted, I don't think they should have been using taxpayer money, but to say that bonuses are inherently evil is lazy thinking.

If they can't eat, buy clothes, etc on their $400,000 paycheck (without bonuses, incentives etc) yet they are buying expensive houses, expensive cars--all which you couldn't really do on their paycheck alone. That is living about their means.

I don't think anyone believes that bonuses are inherently evil. It's the AMOUNT of the bonus coupled with other issues.

Again, who said that they couldn't eat? Giuliani said "less spending in restaurants, less shopping at department stores." These people are still making good money, and they're still shopping. They just wouldn't buy AS much as they would under normal circumstances.

The folks in finance that I know here all live within their means. The bonuses just allow them to inject even more money into the economy once a year or so.

Well most people are spending less, but they don't get a yearly bonus. Why should it be different for these people, especially when the head honchos asked for money to keep them afloat?

The way I read it, it sounded as if Guiliani meant to say it as a do-or-die scenario. That if these people don't get their bonuses the economy is gonna go down even more, and that unemployment is gonna skyrocket.

I read it more as Giuliani talking about the trickle-down scenario that Munchkin described (I think, quite accurately).

Dumb idea. There are executives out there that are worth what they're being paid. If you enforce an artificially low salary and ban bonuses these companies are going to wind up in even worse shape because the talent at the top will leave to go to companies that don't have the restrictions (be it non-bailed out firms, foreign firms with major US presence, etc.). An exodus of management isn't going to help anyone.

I agree with that.

The word "socialism" popped into my head when I first heard about this, and whether I am applying the word properly or not, that's what I thought.

Pretty much immediately, everyone who made any kind of money and didn't have a lot of savings would have to declare bankruptcy. Want another huge group of bad loans? Pass this legislation!

Exactly...what about the people that carry a debt load appropriate for someone who makes $1 million+, but not for $400,000? Do we expect them to sell everything they currently own and re-buy at their new salary level? Who will buy the $5 million homes?

If the Wall Street execs are idiots then what does that say about the politicians that voted to give those idiots billions of dollars?

Where are they gonna go when supposedly there are no jobs to be had?

There are always jobs at the top if you're one of the best at what you do. If top talent at that level becomes available you do what it takes to get them, so while there may not be a whole lot of hunting for new young talent, if someone becomes available as a lateral hire and has good, proven credentials I guarantee you they won't be on the job market for long.

Another way to look at it: when firms want to save money in tough economic times they cut production and layoff at the bottom. When's the last time you heard of a company announce that in the interests of cutting cost they were eliminating their corporate governance positions?

Well don't be surprised when you start hearing this now.

It'll be the same way it always been, you may some changes in who holds the positions as people are replaced if the company is struggling or top of the line talent becomes available, but as long as the company exists that's a pretty stable job market. There aren't more executive positions being created and there aren't executive positions being eliminated, its how corporations are structured and the only changes are which individuals hold which jobs. And if struggling companies are restricted to paying less, their top talent will be hired up at companies which are faring better. The proposed solution here would be about equivalent to a sports league assigning a salary cap to the worst teams in the league but letting the front runners keep on spending with a big budget. All that happens is the good talent which was on the struggling teams will be hired up at the teams which can pay them what they're worth.

The $400,000 is fine as long as they are also payed with stock. This way the success of the company is tied to how much money they make.

I agree with my Theta sister on this point. There should be limits on bonuses to companies who took bail out money. They should be accountable to the American people.

However, I cringe at the thought of the government mandating a salary cap . If we do it on one bill, even if it is warranted, what is going to prevent Congress from making it law for anyone to make over 400,000?

Socialism here we come...

that's kind of what i was thinking

our country is screwed

Look, when you think about cars, clothes, food. Do you seriously think the president pays for any of this. He doesn't have bills, he has perks too. He has a staff that could probably use a few less people, but no, we're paying for those. I'm surprised we don't have a white house ass wiper.

These guys are where they are at because they are really good at what they do. These guys run the biggest companies in the world, they're running multi-billion dollar companies, if they got a cap, they wouldn't have much motivation and most of them would end up quitting because that's like pennies to them.

Plus, they are paying taxes on these bonuses, which I know the argument will be well if taxpayer money is helping pay them, but if we didn't bail them out, they wouldn't be able to pay these execs, and there, a budget shortfall.

Great point. I wonder how much the President's salary would be if all these were taken into consideration. Certainly in the tens of millions...

Obama's book deal is going to be worth hundreds of millions.

And, now we actually get this piece of idiocy...
http://apnews.myway.com/article/20090204/D964VSP00.html


And it is apparently a slippery slope indeed:
What better way to try to get poor people excited than sticking it to the rich, even if doing so has no discernible benefit for the government (these firms don't have federal funds anyways, and from another standpoint you are actually harming total tax revenues because even if the funds are instead paid to everyday employees, the executives are in a much higher tax bracket and would be paying a higher percent of that money to the government in taxes).

But hey, guess it's time we "spread the wealth around".

Isn't using bailout money for bonuses kind of, if you pardon the neologism, uncapitalistic. If the companies that failed and need the bail out (already sign of not the greatest organization) and used it for other purposes besides bonuses, it would, presumbly result in a "brain drain" where the best talent moves on to bigger and better things, allowing their previous companies to hire somebody who is maybe inexperienced, etc, some how less qualified. The company being backed by the government. But, if the companies use the bailout money for bonuses, then no one will move on with their careers, everyone will be in place and it's basically like the government is paying to maintain the status quo.

I feel that the totally free market companies that surived on their own should get the best people, not the ones being bailed out, which is most of them, I guess.

I guess now all policy decissions will be based on public opinion.

I can't even process that article right now. My head hurts.

What the hell?

Has, dare I say it, socialism? This is getting ridiculous.

I'd love to see Obama's portfolio, which company does he hold that he's trying to bolster with this stimulus to make himself rich? That's too much power put in the hands of the president and he needs to stop before everything this nation stands for is gone.

That made me think of this....Comrade Update

That's amazing. Saw it on Drudge earlier today.

If you were the best at what you do, your company wouldn't need bailout money. The bailout money was given to ease the credit crunch that was going on. Banks did not start lending more money and instead gave it to their own employees as bonuses. That's BS.

However, it's also BS to cap salaries, especially for companies that didn't need bailout money. If you're going to ask for a handout, you better be prepared to answer how that money is going to be used. The auto companies had to do that and for them, it was a loan. The banks were just handed money with no request for plans of any kind.

I'm not a fan of the bailout/loan money, for either the banks or the auto industry, so I'm fine with the pay caps. I do, however, have a problem with limiting salaries for heads of companies that are not taking any government aid (either in the forms of loans or other bailout money).

So when is the government going to start appointing CEOs, Board of Trustees, Janitors, it has to end somewhere.

Agree