Executive Compensation Caps

While announcing his policy to cap the salaries of executives in the companies that receive federal bailout funds, President Obama declared the same disgust that I have for the activities of the "bad guys" that I mentioned in my Tuesday posting. Thank you, President Obama, for acknowledging the need to prevent the misdeeds of the "bad guys."

The ultra-right-wing critics are screaming, "socialism," of course. But they need to understand that if you live in your parents house, and accept an allowance from them, you must obey their rules. People involved in education and health care have known this for years. When schools accept money from the Government, they can expect that the Government will place constraints on the content of their courses and on school activities. If you don't want Government control, don't accept Government money.

Rightfully, the cap policy extends only to a few very high-paid executives of some large corporations, the greediest offenders. CEO's of many small banks and companies will not be impacted, nor should they be. As much as I would like to "nail" the specific "bad guys" I mentioned in Tuesday's post, I understand that legal complications make a retroactive order impractical.

But I am not sure the order reaches far enough. Many brokers and salesmen who get absurdly high salaries and bonuses are not included in the order. Bonuses and golden parachutes are not just received by executives; they are also distributed by executives, often to people who are equally incompetent or equally guilty of shoddy practices. And nothing is done to prohibit luxurious office remodeling and other gifts such as "retreats" at luxurious resorts.

It appears that President Obama has a reasonably good understanding of the current financial problems and their solutions. He has established a policy to curb executive greed. Unfortunately the policy seems more symbolic than effective.

The president also needs to be more active in steering Congress toward a truly effective stimulus bill, as opposed to the current collage of government spending on programs and activities that do little to create jobs for people.

Merely pumping money into our economy will not resolve our financial problems. We must implement projects that create many jobs for workers in many disciplines. We must aggressively act to eliminate the greedy, selfish, and foolish practices that created the problems in the first place.

The sources of the financial mess are bi-partisan. One party encouraged the use of unsound credit practices in order to allow people who could not afford homes to purchase them. The other party insisted on less and less regulation and oversight of financial activity. One party insisted on spending more and more money of federal give-away programs and pork-barrel projects. The other implemented tax cuts, loopholes, and tax-dodges for the greedy billionaires.

So the solutions to the problem must also be bi-partisan. The time has come for members of Congress to stop blaming each other and to accept ownership of both the problems and the solutions. The current Democratic Party leadership in Congress appears both unable and unwilling to do that.