Monday, April 6, 2009

Pay for Performance

The AIG bonuses may have united the country in ways not conceived just weeks ago. Everyone thinks it absurd that people who contributed mightily to creations of the global financial meltdown are now getting retention bonuses to entice them to stay and clean up the mess.

But what to do about the bonuses is another question. The US House of Representatives in its infinite wisdom has rushed to judgment and adopted a 90% tax on the bonuses. And at the same time, they have established indirectly, and in an understated manner, a standard that says there should be a relationship between performance and pay. Strikes me that the Congress has crawled out on a very tenuous limb.

Let’s see now. Over the past several years Congress has:

  1. Adopted budget after budget that relied on deficit-spending to try to buy guns and butter simultaneously
  2. Refused, under both party’s leadership, to rein in Fannie Mae and Freddie Mac and in fact, even prodded them to expand the nonsensical home loans that created the current economic problem;
  3. Refused to seriously confront the gigantic problems inherent in the Social Security and Medicare
  4. programs that will soon dwarf the little mind-boggling problem now before us;
  5. Elevated tilting at windmills to a new high art by simultaneously calling for energy independence knowing such a status is not attainable.
  6. Especially if, at the same time you are refusing to facilitate the development of new nuclear generating capacity, environmentally sound exploitation of Alaskan oil, expansion of natural gas import facilities and the like
  7. Constantly undermined the one education reform that has produced meaningful improvement in the educational attainment level of millions of children so as to protect their education lobby friends
  8. Done nothing to put an end to the partisan bickering and get serious about developing strategies for resolving our national problems using sound factual analysis and decision- making, not populistic-sounding rhetoric.

In light of congressional performance and in the model established by the House for the AIG bonus recipients, it seems like it is time to either tax away the salaries of Congressmen and Congresswomen or cut them back to a level more in keeping with what real people are paid in this country.

That recommendation is only half-tongue–in-cheek. Seriously, can you think of anything worse than Congress setting, directly or indirectly, the salaries or bonuses of private-sector employees? Right now, the AIG crowd is a popular target; what about those overpaid lawyers who might be next, or the fat-cat doctors, the Hollywood movie and music makers, or maybe the Silicon Valley boys and girls who’ve made a killing inventing such stuff as cell phones and advanced medical tools? Do they really deserve six or seven or 10-figure incomes?

Oddly, those people, including the AIG culprits, are paid for performance. The Congress is not. They get their pay regardless of how well the country is doing. Maybe it is time to revisit the implementation of pay-for-performance in both the public and private sectors. Let’s give Members of Congress a bonus when the federal budget is balanced and when the debt is going down, not up.



  1. It has been suggested that we consider a $1Million bonus each year in a term for each House Member or Senator who votes with a winning majority in each body to produce a balanced budget and related appropriations that is recilciled and such reconciliation includes all entitlement transactions with trust funds. The maximum cost for 100% participation including delegates would be $537 Million. A veto proff majority would run about $290 Million. This year would save the expected deficit of approx $1.5 Trillion plus.
    Is that morally equivalent individually with "retention" bonuses in the private or public sector?

  2. Judge Even-Handed should run for Congress!



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