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Capping President Obama’s proposed pay caps

Posted 05 Feb 2009 in bailouts, Barack Obama, class warfare, economy, socialism, Twitter

As you’ve probably already heard, President Obama is proposing a $500,000 annual cap on pay for top executives at companies receiving taxpayer funds. And he’s tempering his class warfare message with a token nod at achievement.

“This is America, we don’t disparage wealth. … What gets people upset, and rightfully so, is executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers,” he said.

The president won support in Washington, with some Republicans who were critical of the financial sector bailout praising the move. But Wall Street critics said the compensation cap was a political gambit that could prompt a talent flight from affected firms.

Obama, a Democrat who succeeded Republican George W. Bush two weeks ago, said his administration would not allow public money to be wasted on payouts to CEOs whose businesses helped spur the financial and economic crisis.

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

I got into a spirited exchange on Twitter yesterday with a gentleman who welcomed Obama’s attack on capitalism, saying “FINALLY!!! Someone with balls enough to stand up to corporate America!!! gO-bama, gO-bama.” My sarcastic retort earned a response stating basically that unless I am getting a taxpayer-funded bailout, I should have nothing to worry about.

While his argument makes sense on its face and appeals to my inclination toward Libertarian-style thought, I think the issue goes way deeper than that. Just because it makes sense that government money comes with strings attached doesn’t mean it’s Constitutional to do so.

Fact is, the president has NO authority to limit the salaries of private individuals because it’s not within government’s enumerated powers to do so. Specifically, President Obama’s proposed salary caps are a violation of the Contract Clause in the United States Constitution, Article I, section 10, clause 1.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

To wit, neither the President nor Congress can go back and alter an executive’s contractually-agreed compensation. That is ex post facto and clearly forbidden. Companies have provisions to recover performance-based compensation (some “clawback provisions” require a CEO to return compensation to shareholders if promised results aren’t delivered), but the government has no right to do so by executive fiat.

In addition, I think it sets a dangerous precedent. Or rather, given the torrent of bailouts our government has indulged in, it takes a dangerous precedent even further. If President Obama can appeal to the masses’ envy to curtail achievement in the name of “fairness”, where will it end? Will he next go after professional athletes and team owners, who rake in multi-million dollar salaries for playing a game “in the midst of this economic crisis”? Will he tell the Hollywood elite that they are no longer allowed to earn millions of dollars for every movie they make “in the midst of this economic crisis”? Will he take on Union bosses’ salaries and limit the amount trial lawyers can charge “in the midst of this economic crisis”?

Socialism and nationalization are terms that have been thrown around a lot recently with the discussions about “universal healthcare.” Nationalization is the process by which the government assumes control of a private industry and its assets. And isn’t that exactly what’s happening with these bailouts? Having the government demand results for its investment seems to make sense. But the point is, our government shouldn’t be having a say in these private companies’ payroll because they shouldn’t be wasting our money by propping up their failure in the first place!

Under Democrat leadership, the federal government continues to rapidly insert its tendrils into more areas of our lives. And in so doing, extends its control beyond its legal limits. It will continue to do so until we demand an end to this creeping socialism.

The notion that I shouldn’t care if President Obama limits executive pay reminds me of the well-known poem by Pastor Martin Niemöller:

When the Nazis came for the communists,
I remained silent;
I was not a communist.

When they locked up the social democrats,
I remained silent;
I was not a social democrat.

When they came for the trade unionists,
I did not speak out;
I was not a trade unionist.

When they came for the Jews,
I remained silent;
I was not a Jew.

When they came for me,
there was no one left to speak out.

Just because I’m not a top executive pulling down a multi-million dollar salary doesn’t mean I think it’s ok for the government to start telling people what they are allowed to earn. Before you know it, they’ll be coming for your salary, under the guise of “fairness” and “in the midst of this economic crisis.”

Mr. President, if you don’t want to tolerate the idea of failed executives receiving the compensation for which they’ve previously negotiated, then don’t get involved with it. Let those businesses fail. These ships of industry will right themselves without your help. Infusing them with taxpayer cash not only rewards and perpetuates failure, it expands the scope of government. And that is something I will not tolerate as a taxpayer.

If the government truly doesn’t want to reward failure and believes in capping salaries, how about we start by tying their compensation to their approval rating?
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UPDATE: Judge Andrew Napolitano likened President Obama’s executive pay limits to the government putting speech restrictions on welfare recipients…“You can have your welfare check but are forbidden from criticizing the government.” (h/t: The Minority Report)

Posted by FullMetalPatriot
12th gen. American, Constitutionalist, Harley-riding Texan, gun owner & NRA member, blogger, illustrator, Florida Gator alumnus. #TCOT

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