We all know there’s been shouting and anguish aplenty in these parts about huge (by most wage earners’ standards) bonuses having been paid out to already high-paid execs of companies that have received bailout funds underwritten by you and me. As stated in today’s NY Times, the Obama administration actually wasn’t especially thrilled with the exec pay caps inserted by Senator Dodd into the stimulus bill that was passed last night. Of course, these provisions, which will certainly be applauded by those of populist bent (as most of us here are to one degree or another), will nevertheless be signed into law with the rest of this much-needed legislation.
The article suggests that the restrictions, as currently written, may not prove to serve our best long-term interests, as they may encourage talent needed for the task of keeping these giant ships afloat to head for the life rafts. To use my own analogy, these provisions may be somewhat like, in the middle of a war, telling your officer corps "By the way -– we’ve decided that until further notice, no one gets promoted -- for anything. Don’t like it? You’re free to go!" I don’t know if that argument is right or wrong. I also suspect that Congress doesn’t have much of a clue, either, as there really hasn’t been much time for it to gather and weigh evidence on this highly charged issue. Once in a while, legislation that gets cobbled together in haste proves a blessing; more often, it creates as many problems as it solves.
Once the stimulus bill is signed, the appropriate committees ought to hold extensive hearings with testimony from all interested parties, including compensation experts, and examine whether these rushed-through compensation provisions need a second look. Maybe they do; maybe they don’t, I’m not pre-judging. I'm not hosting any pity party here for the top-1% club. But there’s that old expression, you know, about cutting off your nose . . . . let’s make sure we’re on solid ground with this, that’s all; last I heard, that's what "good government" is all about.