Show Me the Money

So President Obama announced his salary cap for executives at companies receiving financial assistance from us, the taxpayers. $500,000. Of course, there is a loophole of sorts. Companies that already received money are grandfathered. While on first look most people will view this as a good thing, I don't. And I'll explain why it's not "fair" like Obama claims it is.

First of all, I understand why we have this animosity towards executives at the Wall Street firms, banks, and auto makers for getting huge bonuses, going on junkets, sponsoring Superbowl "Fan Experiences", and flying to Congress in their private jets with "hat-in-hand." I get it. Some of these things are just boneheaded. However some of these cannot be changed due to the contractual obligations of the companies involved. And while many people feel taking the company jet being wasteful, it was more wasteful for those Big-3 Auto execs to drive themselves cross-country (in 3 different vehicles by the way), than to decide to jet pool. That travel time probably cost their companies more than taking a jet.

Anyway, the problem I have with this is it's changing the rules in the middle of the game. We gave these bozos $700mil dollars of our money with effectively no oversight. Thanks, Hank. So why are we upset that they decided to use it however they felt was appropriate for the survival of themselves, er, I mean their companies? The problem is we gave them the money in the first place, instead of playing hardball by telling them to slash their payrolls without laying off people. Take commercial flights. Cancel the junkets, parties, etc. Focus on cost-cutting, building your brand, advertising, and making products that people want to and can afford to buy.

But, no. We were sold a bill of goods. It was so bad that we were on the verge of collapse if we didn't pass this bill on that day day, at that hour. If we waited even just another week, we would see rioting in the streets. No offense to the Europeans already experiencing this. We let the same bunch of crooks that got us into the mess decide how much money was going to be doled out and to whom. They all know each other, worked for each other, and therefore will take care of each other. And now, we need to spend another $800mil - $1tril?

So back to this salary cap. It's on future help to companies. OK, fine. So when Acme, Inc. decides it needs help and Joe Executive makes $5mil, his VPs make $2mil ea, and some other execs make $750k, maybe if they just did their own cost-cutting of the highest paid guys they could weather some bad times? Of course, they don't and just do freezes on raises for everyone. That means the 50%+ employees making minimum wage or just above get screwed at trying to stay even, and Joe Executive still gets his money.

Of course, the more money you have, the more money you spend. In general. Joe Executive is no different than Six Pack Joe. Just that Joe E. buys more expensive beer. No Natty Light for him, only Samuel Adams Utopias will do. Joe E. doesn't live in a double-wide, he lives in one of several 10-room mansions. But I'm not faulting Joey E. It's his money, and he can spend it, or not spend it, any way he wants.

My issue with today's announcement is the government coming up with a maximum wage. Yeah, it's only tied to government aid. Buy why $500k? Why not, $250k, $1mil, $100k? We already have a minimum wage. We need a maximum? Didn't I warn about Obama taking us down the path of Socialism a couple months ago?

It starts with this, then government contractors who are financially stable, then large businesses, and finally little Joey E. who has that lemonade stand on the corner. They tie the maximum wage to a company's gross revenue. So little Joey E. has a hard time expanding and getting ahead in his personal life, because he doesn't sell enough lemonade for him to upgrade from a 3-speed to a 10-speed bicycle.

I feel that a person should be compensated for his or her work. If you want to add a bonus based upon some kind of score or performance level, fine. But it shouldn't be something that is automatic. The bonus (or commission) should be reasonable.

If Acme, Inc. decides that it's CEO is worth $22mil, then they should be able to pay him that. If the company underperforms and their CEO isn't performing, either fire him or cut his pay. But it should be the market doing this, not government.

Here is what should have happened with the bailout money. An oversight committee of some sort should have been created. Any company requesting assistance should have been audited to explore what cost-cutting measures (including payroll reductions, but avoid layoffs initially), should be implemented first. This allows the company to do everything it can to trim the fat short of firing employees.

If a company has already done that, give them the money. But let them know it comes with restrictions. You don't necessarily need to tell that company it's capped at $500k for its executives. Some smaller companies might not pay their CEO that much anyway. And those that pay their CEO tens of millions may not realistically be able to cut that CEO's salary to $500k. Use the model of those credit counseling companies. Make arrangements on how to reduce your debt and if you break that arrangement, then you're stuck with your debt.

The key is, there should have been conditions to being able to get this money, and penalties for abusing the aid. But Paulson and his cronies figured that they could just give away the money and the public wouldn't get outraged. Now the Congress is red-faced in embarrassment and outrage for being duped. And so John Q. Public.

Get rid of this salary cap. It's a bad idea. It's only there to make us "feel good" about sticking it to these evil executives. We gave them the money with no stipulations. If they screw up, then let them. Let the companies that use the money wisely come out ahead, and the companies that don't fail or get bought out.

If not, then have all of us just make $500k/yr regardless of our job. If you want fairness, then everyone just gets paid the same amount of money. We don't own anything. The government gives us our homes. We get rations of food. Oh wait, didn't someone already try that a few times? Communism anyone?