Whatever your opinion of the propriety of the Obama administration’s decision to slash compensation for the top 25 executives at each of five major financial companies and two automakers, one lesson is indisputable: Government involvement means government management. It puts an entirely new spin on the president’s speech to an Ohio General Motors plant: “I didn’t run for president to manage auto companies. It wasn’t something on my to-do list. It wasn’t even something on my want-to-do list. I like driving cars — sometimes, you know, I can change a spark plug or change a tire, but I don’t know so much about cars that I wanted to be deeply involved in the car industry.”
Not only has the administration become deeply involved in the car industry, it has also jumped headfirst into banking and construction, through the Toxic Asset Relief Program and the $787 economic stimulus package, respectively. Clearly these are not areas where Obama touts particular expertise, but you wouldn’t know it from his policies. On Thursday, Kenneth Feinberg, Obama’s “pay czar,” unveiled an elaborate scheme by which his decision on what top executives earn is binding. This is what comes of handing corporations billions in taxpayer funds, as well as other government support.
Yet this is not a one-time deal, nor is it innocent. The same day that this plan came to light, the president pushed to make TARP funds more available to small businesses and the community banks on which they often depend. All the while, according to the Wall Street Journal, political donations are now increasing after a yearlong slump. In other words, government is in business, and business is good. But a recent report from the Government Accountability Office notes that despite government intervention, it “remains uncertain” whether the Treasury Department will ever recoup taxpayer funds spent on the program. Also uncertain is whether General Motors and Chrysler “will achieve long-term financial viability. …” Well, these are uncertain times.
Even accepting the false premise that the government is constitutionally permitted and sufficiently knowledgeable to set executive pay for these or any industries, there’s little evidence it will be competent. By mere coincidence, the president also approved funding last week for the Department of Veterans Affairs, even as its inspector general found the agency had inappropriately distributed millions of dollars in bonuses to executives there.
When it comes to government commanding the private sector, change must start at home.
