Populist Claptrap Has Real World Consequences

Let's limit executive compensation (not retroactively and limited only to those companies that received substantial federal assistance - leaving the door open to a huge grey area of companies that received some aid but which will continue their compensation packages unaffected by the demands to limit them).

Let's keelhaul companies that received federal funds who then engage in corporate events around the nation, including in Las Vegas or Miami.

That's the chant coming from DC these days and many of those calls cut across the political spectrum.

Is anyone actually paying attention to what happens when those executives get high levels of compensation or companies spend on conventions in places like Las Vegas? Wells Fargo was going to have a corporate event in Vegas, but they've canceled it in the face of public pressure. Did anyone care that it would hurt the Vegas economy, which is already one of the hardest hit regions in the country as the real estate market there imploded? Hardly. The money spent by Wells Fargo employees in Vegas goes to restaurants, hotels, and all other ancillary services in Vegas - an economic stimulus that will now be absent courtesy of the "public outcry". How many millions of dollars of lost tax revenue will occur because Wells Fargo employees aren't renting cars or hotel rooms or spending their money on trinkets or food in Vegas to say nothing of lower casino revenues because there will be that many fewer people spending money in the casinos?

Airlines are suffering because business travel is being scaled back, which means fewer flights, and which in turn means that there's increased pressure to cut workforce that is being idled by lower demand.

Executive pay limits will sharply harm the New York metro economy warns Kathryn Wylde of the Partnership for New York:

Wylde says the Obama salary cap will lead to a critical brain drain – China and the United Arab Emirates have already come to poach Wall Street talent. She also says lower salaries in the financial industry will mean dramatically lower tax revenues for the city and state.

"We also depend heavily on the financial services industry to fund our economy and our tax rolls," said Wylde. "Last year 20 percent of our income taxes in the states – 12 percent in New York City came from Wall Street."

Limiting compensation means other countries will benefit from talent poached domestically, to say nothing of the actual loss of jobs around the city from people who benefit from those executives and those who receive bonuses from the financial services industry. The City and State are already billions in the hole because those financial services companies imploded and sharply limited bonuses as their companies went belly up or started conserving money to have more cash on hand.

At the same time, Congress has no such caps on its own compensation. It can vote itself a raise, even though it is completely undeserving of one. Congress regularly increases its own pay, despite having a rating lower than that of former President Bush. Yet, you have members of Congress demanding caps on compensation.

How about capping Congressional compensation at $75,000 as a sign that Congress can tighten its belt just like the rest of us who are struggling to make ends meet without getting crunched by a crushing tax burden? It's not like Congress is going to starve; there are more than a few millionaires and multimillionaires among the bunch, not counting those who evaded taxes and squirreled away money that no one knows about - Charlie Rangel, I'm talking about you.

How about we enact a law demanding that every politico and nominee is subjected to an IRS audit annually just to be sure who's reporting what and these pretentious politicos can call for tax hikes even as we learn that they're evading their tax obligations often for years at a time (Tom Daschle, I'm talking to you; Treasury Secretary Tim Geithner, you too!)

Rep. Barney Frank is complaining that President Bush did little to limit executive compensation, which tells you all you need to know about the disdain Frank and his fellow leftists have for the market setting compensation rates. He'd much rather have the government pick and choose the compensation. Frank is also seeking to impose the executive compensation restrictions retroactively.

People may be cheering about the idea that executive compensation will be limited, but why is the government any better at arbitrarily and capriciously setting compensation than it is at managing our roads, infrastructure, schools, or anything else that it has its hands on? It isn't. It is just another peg towards government intrusion into your pocketbooks and your liberty.