Missouri Sen. Claire McCaskill wants to limit total compensation for employees of companies receiving government “bailouts” to $400,000 annually — because nobody should make more money then Barack Obama:
Going forward, you want taxpayers to help you survive? You want the people at your financial institution to have a job tomorrow? Then you are going to have to limit everyone’s pay at your company to the same salary the President of the United States makes. Is that so unreasonable? It is eight times the median household income in the United States of America–$400,000 a year. I don’t think that sounds like a bad deal. Should these people be making more than the President of the United States? Now, really, should they? They should not be making more than the President of the United States. So every executive going forward could not make more than $400,000 a year, and they have to limit that executive compensation for everyone in their company until they pay back every dime to the taxpayers.
Note that McCaskill speaks of the president’s $400,000 “salary,” conveniently ignoring the smorgasbord of other compensation and benefits the sitting president receives. The blog Dealbreaker offered a conservative breakdown of Obama’s total compensation package:
Cash Compensation:
Salary: $400,000Room and Board:
55,000 square foot mansion, in historic Washington, D.C.: @ $100/sqft: $5,500,000/yr
Personal Chef / Kitchen Staff: $300,000 / year
Other Servants / Attendants: $500,000 / yearDiscretionary Use Of Private Aircraft:
(One of 2 Boeing 747-200Bs “Air Force One”):
Annual Costs: 120 hours @ $65,000/hr: $7,800,000
Annual Costs: 700 hours @ $65,000/hr: $45,500,000Helicopter Fleet:
Annual Costs: 50 hours @ $5200/hr: $260,000Other Personnel:
Personal Driver On Retainer (Defensive Tactical Driving Trained) @ $300/day $109,500
Personal Body Guards 35 @ $500/day $6,387,500
Use Of Personal Car 60 days @ $2000/day $120,000Annual Benefits Total: $59,077,000
Four Years of Same: $236,308,000
Pension And Related Benefits:
Present value of Pension Benefits ($200,000 per year): $2,251,556
Total Benefits: $238,559,556
Average Annual Benefits: $59,639,889
There several more items one can add to this list: Discretionary use of the “presidential retreat” at Camp David; the White House political staff, including a small army of press and communications officers; a $50,000 expense account; a $100,000 nontaxable travel account; a $19,000 official entertainment allowance; and upon retirement, a presidential library maintained by the federal government. Dealbreaker also failed to account for redundancies in certain benefits — i.e., the president always travels with a “backup” plane and two “decoy” helicopters.
And unlike the private sector, there’s no possible “pay for performance” standard for the presidency. A president who runs up a massive deficit for “stimulus” or “liberating Iraq” gets compensated no differently then a president who pursues peace and prosperity. (The president’s base salary cannot be diminished while he’s in office, under the Constitution.) Indeed, total compensation tends to increase in less bad times when the president’s “security” demands even more benefits in the form of additional Secret Service, military equipment, etc.
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Don’t forget unlimited no-expense-spared health care, completely for free…bodyguards for life, completely for free…trained killers at his beck and call…how much would stuff like that cost to a private citizen, if he could get them at all?
Taxing all that income ought to make for a nice revenue stream to the treasure… oh wait.
“Should these people be making more than the President of the United States? Now, really, should they? They should not be making more than the President of the United States.”
What a brilliant argument. Well, I’m convinced.
“Should these people be making more than the President of the United States? Now, really, should they? They should not be making more than the President of the United States.”
I also concur. I collapsed at the force of this argument and fell prostrate in front of my laptop. Sen. McCaskill’s formidable logic is simply overwhelming. I am still picking up the pieces of my shattered reasoning skills as I type this.
Fantastic. And that’s just on the books.
Let’s see what happens when a price ceiling is set: a shortage.
Here we are in an economic recession and we have the Senator suggesting the equivalent of creating a shortage of people with the skills to efficiently allocate resources.
It’s politicians who want to allocate resources because they are ego-driven interventionists but apart from their corrupt motive they are economic imbeciles! And for this incompetency the Senator makes how much? Now we know who’s overpaid!
A lot of this is misleading. For example, while the White House is 55,000 square feet, my understanding is that only about 3,000 square feet is living quarters for the President and his family, the rest being office space. Concerning transportation, bodyguards, etc., much of this is arguably a benefit to the country and the military rather than personally for the President. The personal safety of the President is of much greater concern to the country than is the security of, say, the CEO of GM– or it would be if corporations were truly free-market entities.
Since modern large corporations are, for all intents and purposes, agencies of the Federal Government, it would be more apt to compare, for example, the compensation of the CEO of GM and that of the Secretary of Education.
Gee, so it’s only a couple of millions, not tens of millions. A real altruist, that oh so important “president” is…
whittaker —
I don’t see how the security of the president is that beneficial to the country. Unlike most corporations, there are detailed succession plans for the president, not to mention periodic elections and term limits. Furthermore, most presidential “security” only serves to advance the appearance of the office rather then protect the individual.
” ‘We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer’ by taking multimillion-dollar bonuses, McCaskill said. ”
Isn’t the irony just flabbergasting. Leave it to yet another do-nothing, public blowhard who hasn’t the common sense to refrain from stone-throwing among the glass houses of not just Wall Street, but Pennsylvania Avenue and Capitol Circle.
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People should be charged to be President, not paid a salary. See my post Taxing Astronauts and the President.
Yes, yes, but how come Wagoner kept his job? And all the rest of the multi $m CEO’s who have all lost so much? Citi, AIG, etc etc etc
I have a way to cut Wall Street bonuses and salaries, stop giving US taxpayer money to them.
The incompetent and fraudulent banks and businesses would go into bankruptcy and that will end the gravy train for them. Either they get reorganized which generally gets the management fired or they go out of business which certainly gets the management fired.
Wait a minute – the congresswoman may not be articulating it well, but she may be onto something.
These Wall St. execs used economic models given to them by “experts” and based on faulty assumptions to destroy their companies. The President is in the process of using economic models given to him by “experts” and based on faulty assumptions to destroy the country. Those duties sound shockingly similar to me, so maybe they should be paid the same!
Also, I disagree that the best talent is needed to turn around the banks. As they are being nationalized as we speak, all we need to run them are bone-headed bureaucrats who typically earn (salary and benefits) less that $150k. The best talent needs to be in the private sector busily outsmarting them.
Next, consider the level of incompetence these execs have shown so far. They are lucky they are being considered for any responsible position at any salary. I would prefer they were doing something like picking oranges rather than managing money if I were doing the hiring.
Finally, she is only talking about the execs of companies that are on the dole (for now) not execs at private sector companies.
To Messrs. Oliva and Kinsella:
You seem to be saying that the President’s compensation/benefits package is excessive and unwarranted. OK, fine. But then why are you using it as a benchmark to justify CEO packages?
“But then why are you using it as a benchmark to justify CEO packages?”
I did no such thing.
Right, and if my proposal were implemented–to pay the President no salary at all–it would be even more obviously absurd to try to use this as a model for normal jobs.
The senator’s complaints might carry more weight had she been on record as opposing bailouts.
I do believe a lot of management abuse their positions and receive outlandish salaries and bonuses, but it is the shareholders who should be holding them accountable, not politicians.
This is actually a great idea. Prevent companies that are only surviving off of welfare from attracting competent execs, drive them out of business even sooner. Sounds good to me!
I would argue the calculation argument is flawed…
Banks – especially those propped up – have no way to truly quantify the relation between effective taxpayer robbery and sound banking anymore, any bonus system should be thus abandoned.
Maybe that message doesn’t come across very well.
“Prevent companies that are only surviving off of welfare from attracting competent execs, drive them out of business even sooner. Sounds good to me!”
So in your mind, the execs’ humongous compensation plans prove that they are highly competent?
‘ “But then why are you using it as a benchmark to justify CEO packages?”
I did no such thing.’
Then may I ask, what was the point of your original post? The senator says that no [bailed-out] exec should make more than the President; you respond with a list of non-cash compensation items that the President gets. I inferred that you wouldn’t mind using the President as a comparison, as long as the non-cash items were included. If this was not the conclusion I was supposed to draw, then what was?
whittaker
The personal safety of the President is of much greater concern to the country than is the security of, say, the CEO of GM
This is the same despicable mindset that implies the life of a police officer is of such great concern that we need different (and more stringent) laws concerning assaults on police officers as compared with ordinary citizens.
Personally, I do not have much concern for the safety of the president. If the country functioned as advertised, the life of one single individual should be of no consequence to the functioning of society.
If the CEO of GM were able to increase profits by say $500 million, it would be reasonable and prudent for GM to pay that individual say $100 million. Hey, if he could increase my income by $500 million I’d pay him $100 million.
The question is whether political hacks and bureaucrats should be squandering public money. Should these same miscreants be in a position to dictate how much compensation a corporation should be allowed to pay an employee? The unforeseen consequences of limiting employee compensation might be to make the corporation less competitive with other entities.
It’s funny how its just assumed that the president’s services are more valuable than, say, Apple’s, or Google’s, etc. Those who actually create values (rather than destroy them, like the state) deserve to be rich.
Truthfully, if there were no state protectionism (in the form of bailouts or otherwise), businesses that overpay their executives would either have to raise prices above market value (thus losing customers to competitors) or underpay their workers (thus losing employees to competitors).
To Lowell Sherris:
Regarding presidential security, I was really not defending the President’s pay/perks, and am not taking a stand one way or the other about whether his compensation is excessive.
My far bigger concern is the thousands of grossly overpaid executives in this country siphoning resources from the productive economy. As you say,
“If the CEO of GM were able to increase profits by say $500 million, it would be reasonable and prudent for GM to pay that individual say $100 million.”
but the problem is there’s no guarantee of that performance, and very frequently execs make huge salaries and bonuses while presiding over MEDIOCRE or POOR company performance. If the exec thinks he can increase profits by $500m, why not just pay him a much more modest salary, say $500K, and tell him to use all his disposable income to buy call options on the company stock?
If the CEO presided over a $500m LOSS, should he be required to pay $100m from his own pocket as partial recompense to the company?
And about the U.S. President, my question remains about why we are comparing corporate compensation packages with his, and where this comparison is taking us.
whittaker –
I take no position on what CEOs “should” be paid. In a free market, that’s determined through the market process. In the current economy, however, there are obviously multiple layers of intervention that thwart the market process.
As for the presidential “benchmark,” I only reported what Mrs. McCaskill and Dealbreaker said. I don’t endorse any such benchmark myself. But the larger point of my original post was to note the president receives millions in total compensation without any accompanying measures for performance. As a senator, McCaskill should be more concerned with that then what employees of particular companies earn, bailout recipients or not.
Constitutional Question for Stephan
Under the original version of the constitution were the President and the Congress paid? What was the intention of the Founding Fathers?
whittaker
My far bigger concern is the thousands of grossly overpaid executives in this country siphoning resources from the productive economy.
It’s none of our business if corporate executives are overpaid. It is the business of the stockholders of these corporations.
Even in our partially free economy the value of GM stock has rightly plummeted. GM deserves to go out of business. It’s executives deserve to be unemployed. The fact that the government is rewarding incompetence by saving the company and allowing the executives to continue employment is the real problem. GM didn’t fail because of excessive executive compensation. They failed because they were poorly run. They failed because they agreed to union contracts with deferred liabilities (pension and medical benefits) they could not afford. They failed because they built cars that were inferior to those of the competition.
The overpayment to thousands of executives does not siphon money from the economy. The economy is not a fixed pot of money. If competent businesses are not prevented from coming into existence, the wealth of the country will grow.
but the problem is there’s no guarantee of that performance…
The human condition is one of uncertainty. If there were guarantees of performance it would be easy to predict the future and know which stocks to buy. That is the evenly rotating economy, not reality.
“It’s none of our business if corporate executives are overpaid. It is the business of the stockholders of these corporations.”
Corporations, especially large ones, are grossly inefficient socialist entities and are de facto agencies of the state. They owe their entire existence to a state charter and to reams of byzantine regulations that can take a lifetime to parse. They derive endless small and large benefits from their close association with the government: the enormous bailouts and executive pay packages are only the most visible examples.
As long as this is a government “of the people”, and corporations are creatures of the government, executive pay is our business. Do I like this state of affairs? No. But until we can repeal corporation laws and charters altogether, we have to try to keep these beasts restrained as best we can.
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