Barney Frank (D-VT) wants the federal government to decide how much Wall Street executives (and all other executives of private companies) are paid. Barney also wants the government to decide how they are paid. Legislation to ban incentive-based pay for private corporations has been approved by the House Financial Services Committee.
I don't know where in the U.S. Constitution the federal government thinks it obtains the authority to do this, but, hey, we don't use that musty old Constitution thingy anymore anyway. The notion of limiting centralized governmental power (federalism) envisioned by the founding fathers is as outdated as bell bottomed jeans. These days, we seem to be climbing all over ourselves to give the federal government all the power it wants (totalitarianism). The statists are on the march, making all the same false promises the statists always make, the false promises that never quite seem to materialize (FYI – health care reform = forcing all Americans to buy health care insurance and then having the government determine what medical procedures you are allowed to have, in case you haven't figured that out yet).
Here is Barney's rationale for limiting executive pay:
"The problem with executive compensation is essentially, from the systemic standpoint, that it gives perverse incentives," said Frank, a Democrat. Without penalties for bad bets, the system means "heads you win, tails you break even," he said.
Perverse incentives. That means people shouldn't be rewarded for driving their companies into the ground. They should be held accountable instead. I think we can all agree with that, if not with the idea that the federal government should dictate people's salaries. That is so……Soviet.
Let's continue with these ideas of accountability and perverse incentives. As of July 31st, 2009, the federal debt stood at $11,617,400,889,464.57. That's over $11.6 trillion. As soon as I write these words, they are outdated, because the national debt is now higher. The debt has increased by $3.89 billion PER DAY since September 2007. In addition, the federal government is projected to run nearly a $2 trillion deficit in 2009. We paid $451 billion in interest on the federal debt in 2008. This year it will be much higher. The interest on the debt is money flushed down the toilet (or sent to a foreign government, like China) that could easily pay for any imaginable health care reform we could dream up. Instead, our federal government has burdened every American citizen with roughly $38,000 in debt. The federal government is the poster child for incompetence.
This means the federal government, if viewed as a corporation (FedCorp), would be the worst run corporation in the entire history of the world (with the possible exception of those defunct Soviets we're trying to emulate). So, how are we holding FedCorp accountable ? Why, we're about to hand the entire health care system over to them !!! We're going to reward the worst company ever, FedCorp, by handing it control over 16% more of our economy. Talk about perverse incentives. This is equivalent to handing the entire energy sector over to Enron. FedCorp has shown NO ability to be responsible managers of taxpayer dollars, so, naturally, let's keep giving them ever more and more. That's the ticket. And never mind that the part of health care FedCorp already controls, Medicare/Medicaid, has such massive unfunded liabilities that it is threatening to destroy our economy down the road. If not addressed, the unfunded entitlement liabilities will hit our economy with such an economic tidal wave that the current recession will look like a ripple in a pond by comparison.
While we're on the subject of salaries, FedCorp is holding itself accountable for it's putrid mismanagement by…..giving all FedCorp's civilian employees a 2.9% pay raise in 2010. This is after Congress voted itself a 2.8% pay raise in January 2009, with the country in the depths of the recession. Apparently, accountability and perverse incentives don't apply to FedCorp, only to that horribly greedy entity known as the private sector (the sector that produces all our goods and services). FedCorp is spitting directly in your faces, Mr. and Mrs. Taxpayer. YOU tighten your belts. THEY get raises.
There are so many examples of the federal government throwing away taxpayer dollars that I could never list them all. This post would be a thousand pages long if I tried. Go to the website YouDontKnowJack to see some examples of how just one Congressman, Jack Murtha (D-PA), aka, the King Of Pork, throws YOUR money around to his cronies and special interests. It's disgusting.
And it wasn't that much better when the Republicans were in charge. During the Bush years, with Republicans controlling Congress, government spending STILL skyrocketed. Federal spending went from $2 trillion to $3 trillion per year during Bush's tenure (and those guys were supposed to be conservatives ??? I don't think so). The only way the Bushies were conservative is if you compare them to Obama and the Democrats, who are trying to match Bush's 8-year federal spending increase total ($1 trillion) in their FIRST YEAR. If Bush was the frying pan, Obama is the fire. I find myself longing for the return of Bill Clinton and his Republican Congress. At least those guys realized the economy was EVERYTHING. Those guys look like geniuses compared to Bush and Barry, and even Clinton ran net deficits and added $1.5 trillion to the debt. Things have been so bad since then that Clinton and his GOP'ers seem like the good old days.
Our federal government is so far out of control that I barely know where to start. This post is only a drop in the bucket in trying to describe it. FedCorp is like a bunch of crack addicts with our money. They can never get enough. With an addict, there's only one cure. You have to MAKE them stop. WE have to make them stop. WE have to get rid of the whole bunch of them. WE have to vote them all out of office and start over. That's the only way WE can make a difference, the only way WE can make the federal crackheads stop. Barring that, WE are screwed. Barring that, America, the land of the free, will very soon be OVER. There is only so much money that FedCorp can spend. There are only so much taxes that FedCorp can take from us. We're on the express train to poverty as long as this continues. Wake up, America. Your country is disappearing before your very eyes.
{ 33 comments… read them below or add one }
The period we're living in has some of the lowest tax rates in the last 100 years.
Given this fact….King, like those Swartzenegger Californians,…..argues exclusively for spending cuts.
Talk about myopia.
King speaks of his preference for the days of Clinton…..apparently oblivious to the higher tax rates during Clinton's tenure. Would King argue for a return to the Clinton tax rates? And if not, why not?
Rev, can you compare the tax rates with the borrowing rates of the present government? I just wondered if you knew where they have been getting their money, up to now. I say up to now because the Chinese seem to have decided that they have to slow that bleeding somehow.
King it is terrible that we think that the Congress, who decides what their salary will be, wants to bring business executives down to their level. Somehow, I don't think that Barney Frank is worth over $174,000 when I look at the work he does.
King, do you really think that if they can spend as much the next 6 months as the first 6 they can reach Bush's 8 year total? I sure do and I believe they intend to go after stimulus 2 long before anything helps from stimulus 1. They just aren't likely to give up unless they are broken completley apart after they finally get their health insurance bill passed.
Have you heard one of the worst of the bad guys who has been heading up Kennedy's committee, Chris Dodd, make his announcement that he has prostate cancer? He said that all men over 50 should have annual physicals, which he gets free since he is in the Senate. I wonder how may months ahead of time I would have to schedule that checkup in order to get it from being so old. Yes, I am wondering about lots of things that Medicare has taken care of for me that won't be handled by them with the $500 billion cut from Medicare.
Mr. King,
By "these days" I assume that you talking about our entire lifetimes. Our last president, you'll remember, expanded the power of the state over the individual to an unprecedented level and there were no objections from the Federalists. And once again, I'll remind you that he referred to the Constitution as "just a goddam piece of paper".
The Rev is right to remind you of Clinton's singular success, he balanced the budget by raising taxes on the wealthy. Even with what was incorrectly called "the greatest tax increase in history", the top rate was still half of what it was before Reagan.
Executive compensation is out of control. Many CEOs sit on the boards of numerous corporations. They know that they can count on their fellow board members to vote for raises. When 1 years' salary is more than most people can spend in their lifetimes, something's wrong. Most of us work to live. These CEOs obviously live to work, with the money only being like a rating of their place among other executives. I don't know if there is a legal remedy, but I think it is past time that we begin to consider this kind of behavior as the product of narcissism and meglomania. People who deem themselves worthy of compensation in the millions and billions should be seen as mentally ill.
You know that although we differ on most things, we share the abhorrence of the government deficit spending. Neither party has the balls to address the core problems of the economy. Both parties still push the "free" trade policies that have destroyed the manufacturing base along with the middle class. With the loss of the middle class jobs, we have lost the country's tax base, at the same time underwriting the rise of our closest rival, China, which has used the gains from "free" trade to buy our debt. That debt, like oil, now has to be considered as a strategic weakness. A good portion of that debt was caused by the upper rate tax cuts. The Laffer Curve failed when Reagan tried it. It took about 15 years to restore some semblance of fiscal integrity. Then Bush tried it again and predictably, it failed again. Yet the tax cuts for the wealthy remain.
The comparison between the federal government and corporations is a false one. Corporations exist for one thing, to turn a profit for their investors. Governments have a much different agenda. They do not seek a profit. Where companies address opportunities, governments address problems.
I'd say tou could take care of what ever problem actually exists by a more heavily graduated income tax.
I've thought for some time that most CEO's are grossly overpaid. How much does the Pres. of Toyota make?
Trying to regulate certain kinds of income seems stupid; loopholes spring up all over the place.
frank, congrats, I've never seen such a beautifully written pile of bul!shit.
frank, I'm not picking on you. I'd just like to point at the the purpose of government is supposed to be to protect the citizens of a country, not solve our problems. Government has been overstepping its constitutional boundaries for a long time, and that has created an environment where the government thinks it's okay to tell corporations how much their executives can be compensated. I'm sorry, but that's wrong.
In our country (probably most countries), I don't think that any of the politicians are at all concerned about that purpose. I believe that politicians are in it for a sense of importance. Meglomania for the most part, Republicans and Democrats alike.
I'm not saying that it's right to be rewarded for failure, so please don't read into that. But, what's next? Is the government going to also tell my boss that paying me $15/hour is too much for what I do? That I can't enjoy profit sharing if it's going to raise my income to more than $35K per year? It's a slippery slope to tell a private business what it can or cannot pay its employees, and it's totally unconstitutional.
Mr. pdt 1420,
Thank you. From your posts, I can tell that you're an expert in bullshit. Coming from you, sir, I consider it high praise.
Ms. Bug,
No offense taken, but I think you misinterpreted my remark about governments addressing problems. I didn't mean that government had to solve everybody's problems, I meant that the government deals with problems such as the economy, terrorism, and in general, dangers to our country as opposed to businesses' smaller task of achieving profit. In other words, the comparison between how a business is run and how a government is an apples and oranges type of comparison.
As I said in my post, I don't know if there is a legal remedy, perhaps it should be considered a conflict of interest to serve as a member of the board of directors for more than one company. I know that every company that I have worked for would have fired me if I tried to work for more than just them. My point about executive compensation is that it exists outside of the normal world of supply and demand of labor, and when bailout money is used for bonuses, it is wrong.
People work multiple jobs all the time, frank. And members of boards are appointed precisely because they have connections.
Rev says, "The period we're living in has some of the lowest tax rates in the last 100 years. Given this fact….King, like those Swartzenegger Californians,…..argues exclusively for spending cuts. Talk about myopia."
First of all, I didn't "argue exclusively for spending cuts," and we most definitiely don't have "some of the lowest tax rates in the last 100 years," but if we don't get spending under control, our country won't recover for several decades. It astounds me that some people don't see the doubling of the size of the federal government in a little over a decade as a problem. Apparently, you're one of those. We'll soon be in an almost constant state of recession/depression. Our national debt is almost 100% of GDP, and our household debt isn't in much better shape. If you add in unfunded liabilities (money committed to spend but not paid for. That increased by over $6 TRILLION in 2008), then each American household is in debt to the tune of about $680,000. The only myopia would come with NOT seeing spending as a very serious problem. Spending borrowed money is the ultimate economic illusion of our time. It's creates a false prosperity that is about to come crashing down around our ears.
I think you would agree with me that federal deficts, the national debt, and unfunded liabilities are taxes incurred but not yet paid. We have to pay them sometime, and when we don't pay them, the debt piles up, and we have to pay interest in addition to the principal.
If you add the federal debt on top of our tax revenues (the real amount of taxes incurred), then you'll see we have the HIGHEST tax rates incurred in history. We just aren't paying them. We're leaving them for future taxpayers to deal with. In essence, we are spending future taxpayer dollars so we can live better. Pretty immoral, don't you think ? See the following chart on the Tax Freedom Day website for a graphical representation of what I'm talking about.
http://www.taxfoundation.org/taxfreedomday/
Cutting spending is job one, but nobody is currently doing that job. We are only adding to our problems. We are continuing down that unsustainable fiscal path like lemmings heading toward the cliff. It takes a wilfull act of blindness not to see it.
Although it's my opinion that we are already overtaxed, I wouldn't have a big problem with returning to the Clinton tax rates under the circumstances, until we get our financial house in order. Unfortunately, the Clinton tax rates won't come close to covering the gap. Spending has to be slashed, or else.
Roy,
I didn't know that Dodd has prostate cancer. He's as corrupt as they come, but I wouldn't wish that on anybody.
I'm thinking that if I reach the age to receive Medicare, it probably won't look anything like it does now. The boomers are going to swamp the system.
frank,
I certainly didn't exclude the Bush administration from blame. I even singled Bush out as an example of the problem.
And how exactly did the Reverend "remind me of Clinton's success ?" I also singled Clinton and his GOP Congress out as an example of more fiscally responsible government. Did you even read my post, or are you just answering on liberal autopilot ?
I'm in agreement with you about how bad deficit spending is (especially when it's institutional and occurs every year), but when the government doubles in size, as it has under Bush and Obama, I have a difficult time blaming it on 10% tax cuts. If we were paying for all our deficits, we'd have the highest tax rates in American history right now, as I mentioned to the Reverend.
Tax increases aren't a permanent solution to our problem. We can't double the size of government and then just propose simple-minded solutions like "let the rich pay for it." Continual tax increases will bring down the economy just like continual government spending increases will. The only answer is to get government under control.
I agree with most of Frank's piece. The last couple of lines are a little shaky. Yes. corporations are after the bucksm, and never pass up a chance to $tick it to us. But the problem with the government is it's run by civil servants. The boss – call him, Secretary, Director, Czar, Chief, is politically appointed as is his Under/Deputy/Vice/Assistant/deputy assistant/vicedeputy assistant boss, and each of them, has a nephew, in-law, drinking buddy, lover etc who needs a good job with a secretary, administrative assistant, receptionist, driver and file clerk ( for all the files they're going to generate).
Not sure I follow the Rev re Myopia. Should low taxes be accompanied by high spending?
Tory,
Good point. I'd add that for the government to solve all our problems, they'd have to take away all our money to do it.
frank says, "The comparison between the federal government and corporations is a false one. Corporations exist for one thing, to turn a profit for their investors. Governments have a much different agenda. They do not seek a profit. Where companies address opportunities, governments address problems."
I disagree. Government and corporations are very similar. It's just that government is bigger, a lot bigger.
I think government creates as many problems as it solves. for example, SS/Medicare addressed problems, but also created the massive unsustainable liability problem we have, and entitlements are now about 60% of the budget that we have to support via higher taxes (another problem). Not to mention that SS is a criminal operation. Plus, government is force. Corporations don't force you to buy their products. It's YOUR choice.
Corporations do exist to make a profit, but corporations solve all kinds of problems. Our food, cars, gas, houses, clothing, jobs, etc. It was industry that made America the strongest nation on earth. It wasn't government that did it (though government has a legitimate role in planning and oversight. That's why it's called 'government' in the first place). The genius of our country was in limiting government and promoting liberty (ideas we seem to be abandoining).
larry d.,
The problem with interlocking boards of directors is that they all tend to vote for each others compensation package. They're loyalty belongs to each other and not their respective companies.
Mr. Frye,
Thank you, but I think that the major problem with government is that Congress has to whore themselves to accumulate campaign funds. So what we get is hacks with no principles who are in over their heads on most of what they vote about. As to the civil servants who actually do the day to day running of the government, my concern is the revolving door between government and the very institutions that they are supposed to regulate.
Mr. King,
Sorry that I forgot to tell you that I appreciated the balance in you post, you were indeed as critical of the Republicans as the Democrats. I am also glad that you have acknowledged the difference in size between corporations and government. But there is also a difference in their missions. Businesses have a singular mission, to make profit. Government has a multitude of missions to fulfill, all at the same time. So government is not only bigger, but infinitely more complex.
Of course, I can't let your remark about SS being a criminal operation. There is nothing wrong with SS. SS has functioned as designed and its funding is sound, still bringing in more than it spends. The problem is that the deficit spending of the government has diverted SS surpluses to the general fund. Of course when Gore called for securing SS funds in a "lockbox" during the 2000 campaign, he was derided. Now the government finds itself in the position of parents who have spent their children's college funds, having to repay for its profligacy.
frank,
I don't really want to get into another SS discussion. We just did that on another thread.
But..I…just…can't…let…this….pass……
"The problem is that the deficit spending of the government has diverted SS surpluses to the general fund"
What SS surpluses ? There aren't any. There haven't been any. SS funds have been going into the general fund and being spent practically forever, by design. That's the whole problem. No trust fund, just an SS payroll tax (regular income tax) and a welfare program. No trust fund, no investment for retirement, nada. It's criminal, just like what Bernie Madoff was doing was criminal. It's the exact same thing Madoff was doing, as a matter of fact.
And you know Gore was just kidding. The last thing the Dems want to do is put SS funds in a lockbox. That would expose the scam they've been running on Americans for decades (along with exposing more of the true size of the deficit). The GOP proposed legislation within the last couple years to put SS in a lockbox, and the Dems voted it down.
Mr. King,
I…just…can't…let…this…pass…either. Prior to the 1982 reform, SS was a pay as you go system with the present working generation paying for the present retiring generation (what you call a criminal Ponzi scheme). From year to year there were small surpluses and deficits. In 1968, LBJ began the accounting fiction of counting the surpluses as government assets. With the 1982 reform, the money coming to SS more than doubled. By continuing the accounting fiction during the deficit spending years of Reagan/Bush I&II, the true size of the deficit was disguised and the federal government obligated itself to repay the SS funds it spent. SS has worked like it is supposed to, it is the federal government that is/has the problem. My only concern is that SS funds be repaid from the general revenue, not by raising SS taxes or decreasing benefits.
p.s.
SS still runs a surplus. By the way, how did you determine that Gore was just kidding about the lockbox?
Your getting closer, frank. That part about "accounting fiction" describes SS perfectly.
But why do you keep going on about 1982 reform, which changed NOTHING really ? Yes, the government keeps raising the payroll tax rate. It HAS to, to cover up the scam. Government has raised the payroll tax rate many times. That should tell you right there that something is seriously amiss with SS. If SS funds were actually invested, they'd be earning interest and the payroll tax rate could be kept low. That's what happens with every other trust fund in existence. Instead, we're being ripped off.
Looking at it from your viewpoint, SS is still in surplus, because the payroll taxes still exceed the payouts to retirees. You call that pay-as-you-go, but it's really just Ponzi, because, for the twentieth time, the government SPENDS THOSE SURPLUSES as general revenue. Again, there's no reserve, no trust fund, no nothing, except IOU's (future claims on taxpayers in the form of T-bonds).
I can't even believe we're arguing about this. SS is Ponzi 101.
Presidential candidates lie about all sort of things, frank. It's called campaigning. Gore was the VP for eight years. Why wasn't SS put in a lockbox then ???????
It's like Obama on the campaign trail saying he wasn't going to force people to buy health care insurance. Now, of course, he's going to force people to buy health care insurance.
To say SS is working perfectly except the federal government mucks it up is a little baffling to me.
Mr. King,
Ok. I'm goofing off today so I'll spend a little more time. I believe the 1982 reform rate is still in effect, and the cap has raised slightly in accordance with the reform schedule.
No, I don't call it pay as you go. It was pay as you go before 1982, with the rate and the cap adjusted yearly to equalize SS the amount paid out in benefits and the amount it took in taxes. The rate was half what it now is and it didn't take a huge income to hit the cap where tax deductions stopped sometime in the second half of the year. When I got my first paycheck after the reform, I thought the change was pretty drastic.
I know all that money has been spent previously, but since SS invested the money in T bills, SS is due the return from the federal government, just as any investor. In fact, since SS benefits help predominantly lower income Americans, perhaps they should be first in line.
No doubt politician's lie, but when Gore was speaking of the "lockbox", the government's budget was in surplus. I'd give him the benefit of the doubt and assume he thought it would be a good time to head off an impending problem. But you didn't answer my question. How did you know that Gore was just kidding?
King, if this supposed Health Care Bill passes you will never get on Medicare. According to the bunch in the White House, only those who are 65 at the time it goes into effect will be on Medicare and they won't live very long so we won't have to worry about Medicare long. Ah yes, The Man has said this is how they get rid of Medicare.
Now remember that the last people to get the Swine Flu shots will be those on Medicare. Does that not sound like a good way to get rid of many Medicare people? Ah yes, these clowns have it all figured out, even how to thin the ranks faster than new ones hit the age.
frank says, "but since SS invested the money in T bills, SS is due the return from the federal government, just as any investor"
And where does the "return from the federal government" come from, frank ?
We're almost there.
roy,
It's the new patriotism. Old folks will have to do their patriotic duty and die.
Change You Can Believe In.
Mr. King,
The money will come from the same place as other government expenditures. Conservatives are fond of cutting government spending, and I can think of a lot of things that could be cut, can't you? However, it seems that the only time we actually worry about where the money comes from is when we talk about public health care, and repaying SS. The American people have been paying over twice the amount necessary to maintain benefit levels for 27 years now. Its past time for our country to reduce our global footprint, reduce our imperial garrison of foreign military bases, and attend to the obligations owed its people first.
and frank, Obama has promised to increase our global footprint by $1T over the next decade. Just a $1,000,000,000,000.00 plus the 25% of the UN money we pay to support the world. Plus, Plus. You are right about mispent cash but those bases keep us and our allies secure.
averagejoe5,
Now you know why I'm no big Obama fan. By keeping Gates at Defense, appointing Panetta, and blocking every effort to hold anyone in the past administration accountable, Obama is basically kissing every butt he can in the military/intelligence field. Perhaps he is trying to avoid Carter's mistake, perhaps he's afraid that once an investigation is started, it will show both parties as systemically corrupt.
average says…"those bases keep us and our allies secure." Like they did on 9-11?
Ain't nobody secure….never have been….and never will be.
Two things here. One is the priority thing. Policing the world or attending to the needs of Americans? Which is more important to Americans? We need to reduce defense spending by half over ten years and increase capital gains taxes, income taxes on the rich, payroll taxes on the rich and I wouldn't even be against going back to all the income tax rates of the Clinton era.
And secondly, King, you can say what you will about SS, but at the end of the day the U.S. government is legally bound to pay for those T-bills. You don't like it because, eventually, when those T-bills are cashed, it will be on borrowed money. But it's just like any other country cashing in the T-bills they own…..what are we going to do? renege?
America has plenty of money to right the ship…..there's just no will, no balls.
frank,
I assume your response to my question 'where does the "return from the federal government" [for SS T-bonds] come from ?" is an admission that the taxpayers are paying for SS TWICE, even though you didn't admit that, for some reason.
S-C-A-M.
R-I-P-O-F-F.
That's SS.
The only remaining question is, why do Democrats support a scam ripoff like SS ?
Mr. King,
Inasmuch as the SS money ended up subsidizing income tax cuts, I think it is appropriate that it be replaced with money from the income tax. The people at the top bracket got the biggest slice of the SS money and will pay more of their income to replace these funds. The people at the lower end of the income scale, received less, and would pay less in income tax to replace the funds. The only ripoff would be if SS is again reformed to make its recipients and payees bear the cost of replacing what was used as tax cuts for the rich. Once again, SS is not the scam. The scam was supply side economics, underwritten by SS surpluses.
p.s.
I'd still like to know how you determined that Gore was kidding about the "lockbox"