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

[DaemonSeid]

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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[epchick]

Is Guiliani for reals?

Originally Posted by Rudy Guiliani

"If you somehow take that bonus out of the economy, it really will create unemployment...It means less spending in restaurants, less spending in department stores, so everything has an impact."

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.

[SWTXBelle]

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?

[Munchkin03]

Originally Posted by epchick

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.

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.

[epchick]

Originally Posted by Munchkin03

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

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.

[Munchkin03]

Originally Posted by epchick

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.

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.

[epchick]

Originally Posted by Munchkin03

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.

[deepimpact2]

Originally Posted by Munchkin03

Granted, I don't think they should have been using taxpayer money, but to say that bonuses are inherently evil is lazy thinking.

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

[CrackerBarrel]

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.

[Senusret I]

Originally Posted by CrackerBarrel

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.

[DaemonSeid]

Originally Posted by CrackerBarrel

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.

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

[CrackerBarrel]

Originally Posted by DaemonSeid

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?

[DaemonSeid]

Originally Posted by CrackerBarrel

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.

[CrackerBarrel]

Originally Posted by DaemonSeid

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.

[Kevin]

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!