Sunday, March 22, 2009

Obama Wants to Regulate Salaries

On Drudge, there is the headline, “Regulate!

Obama wants to regulate executive pay of for all financial institutions, Wall Street firms, and other companies. This move could bankrupt an entire city.

“The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission.”

So, Obama now wants to control the salaries of executives of companies. He has commented that these CEOs and other executives receive too much money and are too wealthy.

Who is he to tell us who is too wealthy and gets paid too much? He is the government and hearing that from him is chilling. This something you would hear out of Communist Russia or China.

If they can “regulate” their salaries, who is next? Well, with their attempt at targeting the AIG bonuses has shown, anybody is next, including you. Remember what Thomas Jefferson said, “A government big enough to give you everything you want, is strong enough to take everything you have.

The government has been giving certain people everything with entitlements, bailouts, and the like. Now, it is time for the government to start taking something back. When the People give the government the power to do something, the People lose control over it. They lose that right or freedom.

By opening the door to these bailouts, the government took control over these companies and they lost their freedoms. The government, as it always does, is now expanding their power from the companies they control to all of them.

So, what is going to happen to these companies, if the government regulates their salaries? Well, the worst scenario is all the talent that would have taken these jobs will go elsewhere to find better salaries. So, the place that the economy needs the best talent at the most crucial time would not have it.

The other scenario, which is the most likely, is what happened in the 90s when Clinton regulated executive salaries. He made it that only up to $1 million of executive salary could be a tax deduction. Anything above that could not be deducted as a business expense. The strategy was that these companies would not pay as much. Fat chance.

This gave birth to the stock option and the executive compensation was still high. The market found a creative way to compensate the best talent to stay competitive and still get the tax deduction.

So, Obama’s plan will just force the market to find another creative way to circumvent the government and still compensate the best talent to stay competitive.

Now, there is always the unintended consequence to Liberal policies. What could be the problem here?

Remember a few weeks ago when New York City Mayor Bloomberg was going to create a bunch of new taxes but then suddenly stopped. He reported that they could not raise all the taxes, because it would scare off the taxpayers of NYC. It was revealed that only 40,000 of the over 8 million people of NYC pay the taxes for the entire city. If those 40,000 would leave, NYC would lose their entire tax base.

Who makes up that 40,000 that pay taxes, you may ask? It is not taxi cab drivers, waiters, and bellhops. It is not managers, salespeople, or accountants. Could it be executives of major companies, financial institutions, and Wall Street firms? Why, yes.

Good job, Obama. You lied and the economy died. Now, you regulate and eradicate, an entire city.

Hey Obama voters, is this the “change” you voted for, a bankrupt New York City?


  1. When you ask for a bailout from the taxpaying accountants, taxicab drivers, waiters bellhops, etc. after your private company has been mismanaged and run into debt, expect regulation and monitoring as a consequence. The teachers, salespeople, secretaries, etc. share too much of the burden of the over indulgence of the rich. It is now time for progressive taxes on the rich and an end to all bailouts.

  2. @ Joyce. Thanks for visiting and commenting. :)

    First, they would not have the bailouts, if the government had not offered them and said no when they were asked. The government put themselves in this mess and put our money in jeopardy for something they should not have and did not have to. If they mismanaged their company, then they should file for bankruptcy and learn, not get a bailout to do it again.

    The point here is that the teachers, secretaries, taxi cab drivers, bellhops etc don' t pay a lot of taxes. Most people who make below $50-70k per year don't pay taxes or very little. The wealthy do. According to the IRS, nearly 80% of total taxes are paid by the top 5% wages earners. So, in NYC, only 40,000 people pay the taxes. These are the top wage earners, not the teachers, secretaries, etc.

    The teachers, secretaries, etc are not burdened by the indulgences of the rich. We have the things today because of the rich. I have a job, home, car and etc. because of my wealthy employer, not by being over burdened by him.

  3. No Hope and No change. I knew he was full of B.S.
    and a socialist.

  4. Directive 10-289 covers it.

    It is in Part 2, Chapter 6.