Did Obama's Big Apology Turn the Salary Cap into a Magician's Hat?
Making sense of the latest headlines requires a big thinking cap and maybe some sedation.
Salary cap spankings for execs at bailed out giants. The President of the United States confessing "I screwed up" on national TV after years (maybe decades or more) of an administration unwilling to concede any "mistakes were made," even in the passive voice. Record numbers of tanking high level political appointments in the first 16 days of the new regime.
This is shocking. But shocking good or shocking bad? PR or substantive? Symbolic gestures or practical policy? Valuable or not valuable to the national interest and psyche? If enough people believe something does that make it true?
I feel like a pinball in a machine where Travis Bickle, in his more caffeinated mohawk stage, is working the levers. I don't know what to think, which is in keeping with the general unreality of our financial mess at the moment.
I had lunch this week with a friend who's one of the most long-term, successful businessmen, civic leaders, and philanthropists in San Francisco. "You know what this reminds me of?" he posed about the economic calamity. What? "Nothing. I haven't seen anything like this in my lifetime." This lion of the community makes important business decisions every day but even he concedes that "the underpinnings have come out from under us. I don't really know what or who to believe any more." Another high level psychological victim of the Madoff syndrome. "There's a worldwide de-leveraging going on in which everything that seemed strange or unusual, was."
Does that include Mr. Obama's latest actions?
Plenty of people seem to feel good about a commander in chief who admits his imperfection to Anderson Cooper, then serially apologizes on the major networks. Taking responsibility is walking the walk, goes that view, instead of the doublespeak, spin and finger pointing that we're used to from both top Democrats and Republicans going way back. And what can you say to someone who confesses they're guilty? Further accusation and criticism seems unnecessary and ungenerous.
But what's the cost of the "crime"? Should there be a sentence for "screwing up" or an accolade?
See what I mean about confusing? And I don't think I'm alone.
But I do know that a high-level guilty plea, however cathartic for all of us, doesn't by itself fix what was broken.
The same questions come up around the salary cap policy. Bold, absolutely. Dramatic, yes indeed. Sends a message, absolutely. And it's red meat for the vast majority of people in the country who are royally pissed at the regal lifestyles of CEOs running ruined companies. But what practical effect does it have? Is it a gun to the heads of these people or, like SF Mayor Gavin Newsom marching with striking hotel workers a few years ago, is it just a PR popper that has no practical effect 60 seconds later?
I know I'm overusing question marks, but that's an accurate reflection of the questions hanging out there in the culturesphere.
Treasury Secretary Timothy Geithner shared the podium with the president in announcing the cap-no-trade approach. Not to pile on, but didn't he have a little glitch in his own tax background and some hand in the current catastrophe as former president of the NY Federal Reserve?
Another friend who's a hard-working and highly respected plaintiff's labor law attorney notes that a fair number of mega-executives have, as part of their contracts, clauses that would let them claim many millions or tens of millions of dollars in severance payments if their salaries are diced back to a paltry $500k. So not only could they kick off their beleaguered businesses, but under the Obama plan, they might still get ginormous payouts anyway. (I haven't seen the contract terms for the head of AIG or Citigroup, so I don't know if it applies to them. But there probably are more than a few loopholes.)
Public confidence is a big component in the success of our government and our economy; that was one of the major pluses of Barack Obama's ability to inspire. Maybe even symbolic gestures still create that good feeling and good will that will lead us to better lives. One of life's most fascinating and mysterious concepts is the placebo effect. For some percentage of people, sugar pills cure them.
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Obama: Wall Street Bonuses "Shameful" (VIDEO)
President Barack Obama responded Thursday to a front page story in the New York Times which reported that Wall Street handed out $18.4 billion in...
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Bonus Greed May Be In Wall Streeters' DNA
NEW YORK (Reuters) - Why do CEOs need extravagant perks even when they are firing staff and pleading for taxpayer bailouts? It may just be...
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CEOs: Bonus Culture Faces Major Overhaul
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Obama Caps Executive Pay Tied To Bailout Money (SPEECH TRANSCRIPT)
WASHINGTON — President Barack Obama imposed a $500,000 pay cap on some senior executives whose firms receive government financial rescue money, a dramatic intervention into...
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Puttin' On The Pay Cap
The $500,000 limit on executive pay may seem like a lot of money to people, but in actuality, for a banker, you might as well be offering a salary of $1 per year.
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Obama's Wake-Up Call
Even as unemployment hits 7.6 percent and shows no signs of slowing any time soon, the GOP is falling over itself to protect the ostentatious privileges and prerogatives of a few financial potentates.
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Obama Reins in Wall Street Excess
President Obama has taken an important step towards bringing fairness and a dose of reality to Wall Street. In this same vain, I will be re-introducing the Income Equity Act.
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Capitalists, Socialists, and OPM
There's nothing wrong with Wall Streets's "eat what you kill" mentality. Except the bankers must remember that, in the wild, if the Tribe doesn't survive, no one eats at all.
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Wall Street Bonuses Are an Outrage
Just a mere $18.4 billion in Wall Street bonuses, and suddenly the entire country is screaming for revenge on money power that has done us so wrong while rewarding itself so generously.
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Dear Mr. President: About Those Bonuses...
We in the business community are behind you 100% in your efforts to save our economy. But as you go, please be sensitive to the human cost that you may exact from those who can least afford to bear it.
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The Real Shame of Wall Street Bonuses
Obama's calling Wall Street bonuses "shameful" and citing Wall Street's actions as the "height of irresponsibility" may signal a significant shift in the government's tone towards corporate culture.
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Congress Should Not Cap CEO Pay, But Look at the Deeper Problems of Corporate Governance
It needs to be said: The Congress of the United States has no business setting the terms of executive compensation.
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Finally, a Plan I Can Bank On
Seeing the many billions of dollars are going to banks with utterly no requirement of fiscal responsibility, I am announcing today my personal expansion into finance.
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No one has any idea where this economic implosion will lead us. What we do know is that things will cycle through and that some new structure will come to pass.
Part of what lead up to all of this was a form of magical thinking.
Wall Street, President Bush, the GOP led Congress and Senate, the Lobby's that fed them, all believed, each one, their own little contribution couldn't hurt.
-a "little bit" of larceny could be overlooked...
-"New Speak" Patriotism meant 'never having to say you're sorry about torture, or anything else"
- bipartisanship meant "my way or the highway"...
-a little bit of moral "slippage" wouldn't be a problem...
-a little "rip off" was character building...
President Obama's call for change was a huge call to the emotional bedrock inside all Americans- even the ones who didn't vote for him. That change is more about the way we do business.
The problems facing us are obviously too overwhelming for just one person to fix. Obama is counting on everyone to pick up some slack.
Mostly though it's all about integrity. And we all have to find our moral compass again to get us out of this mess. Finding "true North" with an economic hangover, won't be easy.
Another way to look at the cap on pay could be, any thing after 200, or 300, or whatever, could be taxed at 99.9%. That would bring in revenue for a ailing government. Seems to me 200,00 dollars is a lot for companies who have used personal greed to bankrupt companies and effect the WORLD finances.
We all understand presidents are NOT gods, but human beings. I for one am delighted we have a president who can admit he is not perfect. We can only hope President Obama continues to be honest and candid with the American people. It has NOT helped in 8 years of Bush not owning up to his actions. Thank you President Obama for that honesty and integrity.
Phil, I'm wondering if you purposefully left out what Obama was saying he screwed up about, in order to make it seem like he was apologizing for suggesting pay caps.
This is the second time since the innauguration that I've read one of your articles and wondered who's paying you. Just sayin.
The answer to the constructive termination severance payments mentioned above is to require them to agree to amend their contracts before their companies get the money.
President Obama admits he makes mistakes. That is a distinct concept from "guilt" which accurately describes lying a country into a war, not making an honest error.
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And what can you say to someone who confesses they're guilty?
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I say, "water boarding IS torture, Dick, regardless of what you paid your personal legal counsels to tell you."
Too bad we have to start thinking for ourselves instead of having it spooned into our heads in neatly packaged sound bites.
Is the cap on salary or compensation? Most of the heavy hitters get 80% of their compensation in bonuses. Capping their salary would just be a gesture.
Uh oh, that almost sounds like Obama is selling a bill of goods. But we all know that can't be true.
The entire political process is one giant placebo for the ills that have befallen history. The fact of the matter is, no government has the power to do as much as they want to claim credit for. It won't be the government, or this silly litttle stimulus package that gets the economy flowing again. it will be the American people who, once the fear has subsided, and people realize we haven't reached the apocalypse (yet), that things will get back to "normal" and we will all take back the responsibility we own for pushing this country and its economy further forward.
Edward Liddy of AIG already has capped his salary for this year and next to $1.00.
Yes, some actions are 99% for show...BECAUSE much of this is about our psyches, and because there is no sure-fire answer to so many of the problems we face. Regardless of how hard Obama tries, there is absolutely nothing he can do to magically fix everything. But, perception does matter, at at least he gets that (and it now really fighting).
In some cases, placebos do work, and when you don't have a magic pill that fixes EVERYTHING, the placebo is worth the effort!
I am sad and disappointed that Tom Daschle withdrew. Obama is correct to apologize, but I am hoping we can go forward without more of these maudlin mea culpas. For heaven's sake, Tommy Geithner was a worse mistake, and he is far less stellar or singular in his credentials than Tom Daschle. The fact that Daschle disqualified himself when he could have survived, but Geithner made the President put his own neck on the line to save his job, shows who was the better man. Geithner should have gone and Daschle should have survived. What a shame.
I hope Gov. Ed Rendel has paid all his taxes because he would be a reasonable choice.
A question that's occurred to me while watching the news for the last couple of days: Why is the Justice Department pursuing Barry Bonds and Roger Clemens when all these crooks are roaming around still doing damage to the economy?
Amen to that. There are much bigger fish to fry. Bonds and Clemens have no effect on the average persons' life
Ca-ching! Cash cows...that's why.
An apology is always better than skirting the issue and letting it grow larger and larger.
I think this is the first time I've ever heard a president apologize for anything, and I commend President Obama for doing so.
BUT, I personally blame Daschle and not the president.
Our president deserves a better congress and senate - they, in the end, will be his downfall.
The democrats did the republicans a favor by adding all the non-stimulus stuff to the stimulus bill, and the more Obama tries to get the bill passed the worse it makes him look.
There will never be bipartisianship in Washington, never. Too many different ideas, too many of the "old school" still hanging around doing the same old same old.
Obama is going to have to be firm with the democrats in order to get his agenda through - he has excellent ideas and his fellow democrats will use and abuse him until his ratings plummet.
I fully support him, but do not support Pelosi and Reed and a few other of the spineless democrats.
And I support NONE of the republicans - they have turned into Joe McCarthy and are misleading the Americans at every turn.
Right on.
It seems to me that if the companies were to make good on these backdoor clauses, then they would no longer be eligible for the bailout money that had received. By meeting their "obligation" to the CEO, they would break their obligation to the government.
It just doesn't seem like Obama's justice department would let them weasel out so easily.
We'll all know soon enough, that's for sure.
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