Since the 90% tax on AIG bonuses, proposed by the House of Representatives, looks set to fail in the Senate (with President Obama’s administration also backing away from it), members of Congress have been wondering what to do next. We at Dumbagent.com agree that the system does need fixing and we have previously listed what we believe are steps that can be taken in the right direction.
The House of Representatives, however, has been of a different opinion. Rep. Barney Frank, of the House Financial Services Committee, has proposed the “Pay for Performance Act of 2009″. This would give Treasury Secretary Timothy Geithner the power to “prohibit unreasonable and excessive compensation and compensation not based on performance standards” in all companies that have received money from the government. This applies not only to the people receiving the biggest bonuses, but to ALL employees of ALL firms involved. It also does not apply only to bonuses, but to ALL compensation. It will also be applied retroactively, so amounts already agreed upon can be rescinded at any point until the money is actually disbursed.
Needless to say, Geithner will be the person deciding what is unreasonable and excessive, and this will no doubt be swayed by which way the public anger and the media is swaying at the time of his decision. Rep. Alan Grayson from Florida wrote the bill. It will be voted on by the House of Representatives this week.
While bills such as these display a lack of even rudimentary knowledge of economics, they are pushed forward proudly regardless because they are seen as appealing to the public clamor for heads to be rolled. It is reminiscent of politicians denying evolution to garner easy votes in their districts.
Our question is, will voters be able to retroactively decide politicians’ pay based on performance? We obviously include ALL family members and employees involved in ALL their private endeavors as well.
Full text of the proposed Act here.
“Our question is, will voters be able to retroactively decide politicians’ pay based on performance? We obviously include ALL family members and employees involved in ALL their private endeavors as well.”
Hear hear!