Obama’s plan to regulate paychecks

Like I was say… you make too much!

No long ago in a speech, the president said that executives that receive bonuses in this economy is in bad taste and as president, he won’t stand for it.  Now, it seems reasonable to agree that executives and employees that work for companies that would have gone out of business except for large cash infusions from the tax payers should not receive bonuses.  However, back when I saw this I noticed that between the lines Obama wasn’t attacking those companies, but all companies.

Today I was reading an article that indicated that Obama was going to introduce a new plan that would call for increased oversight of executive pay at all financial companies and not just those that received taxpayer help.

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a plan to overhaul financial regulation, the New York Times reported.

The story mentions that the administration is currently debating how broadly they can regulate the pay of private companies.  Another worrisome fact is that they will not achieve this through legislation, but rather through regulation.

The changes could go into effect through regulations, not legislation, depending on the result of discussions on the issue.

The article goes on to report more troubling information:

The regulations would reportedly cover all financial establishments, not just those receiving federal bailout aid and would likely work to ensure executive pay was in line with the financial interest of the company.

So now, the administration that is running trillion dollar deficits, is filled with people that can’t figure out their tax forms, and is still “working” on a plan to rescue banks is going to be deciding how to best pay executives as private companies to ensure the companies are well run.

Regan said it best when he said something along the lines of “government isn’t the solution to our problems, it isthe problem”.  Now they are finding new and creative ways to be a bigger problem.  Our income tax system started as a way to limit the wealth of a few extremely wealthy individuals and then trickled down to the rest of us to the point that the government believes that it can take over 1/3 of our incomes.  I imagine that it will only be a few more years when depending upon what you do for a living, anything over what the government things is good for the company will be taxed at 90% or more.

Obama: Taking aim at Success

Like I was sayin… Life is so unfair.

Unless you live under a rock, you have heard that the Obama administration has put a cap on salaries for executives of companies that get a bailout from the tax payer.  This cap is currently set at $500k.

It would seem to make sense that if somebody so badly manages a company that the tax payers have to bail the company out, those managers shouldn’t be rewarded for failure.  Most people get rewarded when they do a good job and get penalized for a poor job.  I agree that those companies that need help should be penalized.

However, I am concerned about some of the things that Obama said during the announcement of the cap.  In part of the speech Obama says:

For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste — it’s a bad strategy — and I will not tolerate it as president.

This part of the speech is of particularly great concern.  It is aimed not at executives at failing companies, but executives at successful companies that have very generous compensation packages.  And as president, Obama will not tolerate it.

As a free market-capitalism loving American, I am very concerned about he ramifications of what can happen next.  I would hate to think that I live in a country that believes that if the economy is in recession, it is wrong for me to make a lot of money. 

Again, I don’t take issue with penalizing the managers of companies that need to be bailed out, but it would seem that Obama is indicating that further changes are needed to executive compensation in America.

Finally, these guidelines we’re putting in place are only the beginning of a long-term effort. We’re going to examine the ways in which the means and manner of executive compensation have contributed to a reckless culture and quarter-by-quarter mentality that in turn have wrought havoc in our financial system. We’re going to be taking a look at broader reforms so that executives are compensated for sound risk management and rewarded for growth measured over years, not just days or weeks.

“This is only the beginning of a long-term effort…”  It would seem as though Obama believes that the government should decide how executives are compensated rather than the owners of the companies.  Is this the first step in the long march toward the government deciding what pay scales are correct for which jobs?

We should all be concerned that one day the government may take an interest in how much each one of us makes each year and deciding what is fair.