New pay limit proposal

[madbaker]

Obama to Limit Pay for Wall Street, NFL, NBA, MLB

(2009-03-22) — With the debate over AIG executive bonuses nearly bringing official Washington to a standstill in the past three weeks, the Obama administration today expanded its plan to control Wall Street executive pay, adding provisions to limit compensation for star performers in the National Football League (NFL), National Basketball Association (NBA) and Major League Baseball (MLB).

"Some of these sports stars, like AIG execs, have negotiated sweetheart deals paying them millions of dollars, and yet they lose games," said White House spokesman Robert Gibbs. “The president shares the outrage of the American people at these obscene salaries and bonuses. There's nothing that makes the little people feel littler than the thought of these fat cats getting fatter just because that have specialized skills that are in high demand in a free-market economy."

Indeed, the White House released a recent poll showing that 75 percent of Americans answered 'Yes' to the following question:

"Do you believe President Obama should personally limit the compensation of anyone who earns a lot more than you do?"

"How hard can it be to show up on Sunday and toss a few passes?" said Mr. Gibbs. "The fact that some people earn a lot more money than others just demonstrates the savage inequalities inherent in a capitalist system, and explains why the president has taken deliberate action to end it."

Under the terms of the pay-limit plan, the president would appoint a panel of university economists, union leaders, and "ordinary American community organizers" to establish paycheck parity between average hourly-wage workers and the people "who have carved out for themselves an unequal portion of the pie."

"In America you can dream as big as you want, but everyone agrees we need strict controls on those whose dreams have come true," Mr. Gibbs said. "The people deserve a system in which there are no limits to your potential, only to your achievements."

Yes, it's satire. Plausible, though.

Comments

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[madbaker.livejournal.com]

Unfortunately, contracts that produce unpleasant outcomes still have to be honored.

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[albionwood.livejournal.com]

Tell that to the UAW.

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[madbaker.livejournal.com]

Bankruptcy is an exception to that rule.

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[albionwood.livejournal.com]

I don't understand - GM isn't in bankruptcy, is it?

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[madbaker.livejournal.com]

Nope. But the management threatened bankruptcy if the contracts weren't revamped. Negotiating with a gun to the union's head, which may have been the only way the UAW would ever give up some of its unsustainable benefits.

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[albionwood.livejournal.com]

How exactly is that different from the AIG situation? The executives aren't in a union, but I don't see a fundamental reason why they could not have been subject to bargaining. Indeed, it turns out they were; when asked, most of them gave up their unsustainable benefits. It's just that nobody thought to ask them before.

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[madbaker.livejournal.com]

For one thing, the amount of the bonuses given to AIG bonuses was $165 million. That's less than one percent of the bailout money that went to the company.

The UAW benefits represent a huge proportion of automakers' current outlays, if I remember right.

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[albionwood.livejournal.com]

Yes. So "contracts that produce unpleasant outcomes still have to be honored" is clearly untrue. (It appears to depend on who suffers the unpleasantness.)

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[madbaker.livejournal.com]

See the below comment "What I should have said first".

(frozen) What I should have said first...

[madbaker.livejournal.com]

The UAW is revising their contracts (with a metaphorical gun to their heads). It's "voluntary" negotiation.

Congress passing a bill of attainder targeting a specific group of people, taxing away 90% of legally contracted bonuses - however distasteful we may find them - is a different kettle of fish entirely. What's to stop them doing that for the next group that they dislike, such as tobacco executives... or sports stars?

(frozen) Re: What I should have said first...

[albionwood.livejournal.com]

Nothing to argue with there - I'm with you all the way on that. Congress is way out of line, and it is a frightening precedent. It's also deeply disturbing that Congress cannot seem to lead on anything - they are just reacting to public opinion or the latest headlines almost all the time.

There were (and are) much better ways to deal with this situation. Did it never occur to anyone, other than the AIG CEO, to find out if the execs would voluntarily renegotiate? Are unions really that much more reasonable than executives?