Thursday, February 5, 2009

Buddy, Can You Spare a Million?

The global economic crisis is pretty much mucking up everyone's life right now, but once in a while amidst the gloom something funny shines through. Today was one of them.

Imagine working for one of the big US banks that needs government bailout funds. If you didn't get a pink slip last month, now you're finding out you can't make more than $500,000 this year. Life's tough, isn't it?

When Obama decided today that beggars can't be millionaires, it started some of TV's greatest comic moments. Analysts who last month were showing their great sympathy by applauding companies for cutting 10,000 jobs are now on air talking about what a mistake it is for the government to cap executive salaries at an amount most people only dream about. That amount, in fact, is 20 percent higher than the president himself makes (but then again, he gets room and board for the whole family thrown in).

One Wall Street "expert" was just on CNN saying that it is always a mistake when the government tries to control how business operates. On the surface that makes sense. Government does indeed screw up most things it tackles.

But when this guy says this pay cap will make these businesses run less well, he makes me laugh. These are the companies that were already so poorly run that they had to borrow taxpayer funds to buy a big enough beggar's bowl to hold the billions they needed from Washington. Surely even a Washington bureaucrat can't screw them up much more than their current crew has done. And if they do, at least we won't be paying them millions to do it.

The logic of Obama's proposal seems overwhelming to me. If you can't run your company well enough to avoid corporate welfare, then you can't make more than $500,000 a year. If anything, most people would think these folks are getting overpaid at that amount.

But the reaction has been hysterical. It is a challenge beyond even the best spinmeister to convince people to let these guys gorge themselves at the trough, when it's your money that filled up the trough in the first place. It is too early for polls right now, but I doubt that there will be too many people sympathizing with people who ONLY make half a mill a year.

The most interesting thing, though, has been the psychology of Obama's decision. He was visibly angry last week when he heard about the Wall Street bonuses going out to executives in companies receiving bailout funds. LK said it best, I think, when she heard about the pay cap proposal - "I don't think people are going to want to piss this guy off too much in the future."

Of course, for every yin there's a yang. I should add that the pay cap may not hurt these fat cats as much as some fear. Based on many of Obama's cabinet picks, it looks like he isn't too fussed about whether they pay their taxes on time.

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