by Deb Cupples | For years, the False Analogy has been a key tool for media personalities like Rush Limbaugh and the folks at Fox to persuade working-class folks that they benefit from supporting politicians who promote the interests of hyper-wealthy folks while (ironically) giving the shaft to their working-class supporters.
Apparently, the False Analogy's popularity has not declined at the same rate as the Republican Party's. For example, the Washington Examiner published a piece yesterday with this title: "Beyond AIG: a Bill to Let Government Set Your Salary."
It sounds as though Congress is just itching to reduce the already-low salaries of secretaries, teachers, store clerks, and policemen nationwide. But that's not what the article -- or the bill -- is actually about, as reflected by a few paragraphs in the Examiner article:
"[I]n a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
"The purpose of the legislation is to 'prohibit unreasonable and excessive compensation and compensation not based on performance standards,' according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac." (Washington Examiner)
So, what's wrong with that? Why the alarming, albeit inaccurate, title?
If we taxpayers are going to send billions of dollars to businesses, why should the folks running (or even merely working for) those businesses be allowed to funnel masses of money to their personal bank accounts?
The Wall Street bailouts were not meant to be a massive redistribution of wealth from us taxpayers to the relative-few folks who ran our nation's big businesses into the ground: they were meant to save our economy for all Americans' sake.
Obviously, some of the folks running the bailed-out firms didn't understand that. It wasn't just AIG that funneled hundreds of millions of tax dollars to a relative few employees in the form of pay or bonuses.
Despite several years of major losses, despite having received billions in bailout funds, Merrill Lynch's Board of Directors decided to funnel about $3.6 billion (or 36% of the $10 billion that we taxpayers gave to Merrill) into employees' personal bank accounts in 2008.
Reportedly, that amount is 22 times larger than the bonuses that the AIG folks got.
As late as November -- after being tagged to receive TARP money -- Goldman Sachs and Morgan Stanley each set aside more than $6 billion for employee bonuses.
Meanwhile, hundreds of thousands of Americans have been losing their jobs each month and tightening their belts. Many of them would be downright grateful to have jobs, even with reduced salaries.
Moreover, some of those jobs could have been saved if executives at big companies had simply cut their own bonuses.
The Pay for Performance Act of 2009 (H.R. 1664), a bill drafted by Rep. Alan Grayson (D-FL), who commented as follows:
"This bill is based on two simple concepts. One, no one has the right to get rich off taxpayer money. And two, no one should get rich off abject failure.... An economy in which a bank executive can line his own pocket by destroying his company with risky bets is an economy that will spiral downwards and a government that hands out money to such executives is a government that fails to protect the taxpayers."
I doubt that the bill's purpose is to reduce even a $50,000 a year employee's salary -- given that secretaries, janitors, and other ordinary staff members aren't the ones who've been massively looting the shareholders' money pot. You can read the bill's text here (it's not even 2 pages).
Of course, I'd like to see ordinary employees expressly protected in the Pay for Performance Act.
Because of the habitual looting by executives of shareholders' money pots -- even in the face of company losses -- I think the government should limit how much execs can take from publicly held companies (though not privately held). At this point, the government doesn't seem to have the power to do that.
My feelings about the broader issue aside, the government certainly should have the power to limit how businesses spend the cash that the government provides.
The logic is like that of a parent dealing with a rebellious teenager: as long as your in my house and I'm paying the bills, you'll follow my rules.
If they folks running big businesses don't want to abide by such limits, they should try finding cash from someone other than us taxpayers. I doubt that private sources would be lining up to hand over money, without strings, that executives and managers could simply funnel to their own bank accounts.
Apparently, House Republicans [except at least Leonard Lance (R-NJ), who co-sponsored the bill] are against the Pay for Performance Act. No surprise there: congressional Republicans, minus a few exceptions, devote most of their focus to enriching corporate players at the ordinary taxpayers' expense. About that, Down with Tyranny points out:
"Grayson has gotten less campaign donations from the financial services
industry than anyone else on the Financial Services Committee and, in
fact, less than any other member of Congress. The main opponents to his
legislation have taken immense amounts of bribes from the banksters,
especially ranking Republican Spencer Bachus (R-AL- $3,789,474), Scott
Garrett (R-NJ- $1,156,599), GOP House whip Eric Cantor (R-VA-
$3,121,188), GOP minority leader John Boehner (R-OH- $3,045,809), GOP
lunatic fringe caucus head Jeb Hensarling (R-TX- $2,111,371), Jim
Gerlach (R-PA- $1,578,152), Paul Ryan (R-WI- $1,555,321), and Michele
Bachmann (R-MN- $756,740, a cheap date for any lobbyist representing
"You can certainly understand why banksters are uncomfortable with Grayson-- and why ordinary working families see a real champion in him."
Memeorandum has commentary.
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