The march of the big government Statists
It was nearly two weeks ago that the House of Representatives, acting in a near-frenzy after the disclosure of bonuses paid to executives of AIG, passed a bill that would impose a 90 percent retroactive tax on those bonuses. Despite the overwhelming 328-93 vote, support for the measure began to collapse almost immediately. Within days, the Obama White House backed away from it, as did the Senate Democratic leadership. The bill stalled, and the populist storm that spawned it seemed to pass.
But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
The purpose of the legislation is to "prohibit unreasonable and excessive compensation and compensation not based on performance standards," according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.
The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.
In addition, the bill gives Geithner the authority to decide what pay is "unreasonable" or "excessive." And it directs the Treasury Department to come up with a method to evaluate "the performance of the individual executive or employee to whom the payment relates."
The bill passed the Financial Services Committee last week, 38 to 22, on a nearly party-line vote. (All Democrats voted for it, and all Republicans, with the exception of Reps. Ed Royce of California and Walter Jones of North Carolina, voted against it.)
The legislation is expected to come before the full House for a vote this week, and, just like the AIG bill, its scope and retroactivity trouble a number of Republicans. "It's just a bad reaction to what has been going on with AIG," Rep. Scott Garrett of New Jersey, a committee member, told me. Garrett is particularly concerned with the new powers that would be given to the Treasury Secretary, who just last week proposed giving the government extensive new regulatory authority. "This is a growing concern, that the powers of the Treasury in this area, along with what Geithner was looking for last week, are mind boggling," Garrett said.
Rep. Alan Grayson, the Florida Democrat who wrote the bill, told me its basic message is "you should not get rich off public money, and you should not get rich off of abject failure." Grayson expects the bill to pass the House, and as we talked, he framed the issue in a way to suggest that virtuous lawmakers will vote for it, while corrupt lawmakers will vote against it.
"This bill will show which Republicans are so much on the take from the financial services industry that they're willing to actually bless compensation that has no bearing on performance and is excessive and unreasonable," Grayson said. "We'll find out who are the people who understand that the public's money needs to be protected, and who are the people who simply want to suck up to their patrons on Wall Street."
After the AIG bonus tax bill was passed, some members of the House privately expressed regret for having supported it and were quietly relieved when the White House and Senate leadership sent it to an unceremonious death. But populist rage did not die with it, and now the House is preparing to do it all again.
That sound you here are the boots of the Statist in the background, on the march for money they have no claim to. This bill is so unconstitutional, and illegal, it's not funny. Where is it in the Constitution that the Treasury Secretary has the power to tell a company what their employees can and can't make? Yes, we know it's companies that have received TARP funds, but still what this bill is designed to do is literally illegal.
A contract is a binding agreement between two parties. One side agrees to pay or compensate the other for a delivery of goods and/or services. The only ways that a contract can be broken is either through a court, where the judge can break it. Or, in the case of a company having a contract with an employee they may file Chapter 11 to break a contract.
Byron York, above, states that this will be applied retroactively, and that it would trump any contracts existing right now. The Congress, despite the fact they have lent the money to the companies, has no authority to alter any existing contract. But take a look at the rhetoric the Democrats are using in defending this measure. They're trying to gin up anger and resentment, just like they did with the AIG bonuses.
Don't buy into this, folks. Don't get mad at the people who work for these companies. Get mad at the federal government and it's hard Left overreach. Ever since the Congress reconvened in January, and the president was inaugurated the Democrats have engaged in the largest expansion of the federal government that anyone -- even if you are someone who lived through the Great Depression -- has ever seen. The Democrats are doing what they do best -- taking power away from the private sector or the people -- for themselves.
Also, I'd like to close on the constitutional grounds argument I'm making. This is a violation of the Fourteenth Amendment. Let's take a look at what the amendment says:
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
The laws passed must be equal and equitable to all that they affect. The government can't arbitrarily target one group or another because they disagree with what those people are doing, or how much money they make. Additionally, the government can't deny the freedoms enumerated above (life, liberty, or property) without due process. Liberty, in essence is exactly what the government is denying those employees. The government is telling them that they don't care what contract you have. If you're a janitor, and you make $35,000 a year working for a company that has accepted TARP funds, the Treasury can say that is considered "excessive" and alter your contract.
Memo to the Supreme Court: You are the guardians of the US Constitution. Care to wake up and start slapping down some of this garbage coming out of the Congress? The high court did it to FDR and many of his New Deal ideas. I think it's time Chief Justice John Roberts step up and start getting his colleagues to do their job, which is to protect the people -- to protect the nation -- from this illegal and unconstitutional power grab.