Now that the Pay for Performance Act has passed the House, what are its prospects in the Senate?
The last time the House passed something similar — two weeks ago, when lawmakers rushed through the 90 percent tax on many AIG bonuses — the Senate gave their colleagues in the House the big brushoff. The tax bill, which a number of senators of both parties suspected might be unconstitutional, died a quiet death.
In some ways, the new Pay for Performance Act, shepherded through the House by Democratic Rep. Barney Frank, goes even farther than the AIG measure. It would impose government controls on the salaries and bonuses of all employees — not just top executives — of companies that have received capital investments through the Troubled Asset Relief Program and other federal initiatives. It would give Treasury Secretary Timothy Geithner the power to determine whether those salaries or bonuses are “unreasonable” or “excessive.” And it would give Geithner the authority to draw up a set of “performance standards” that the covered companies would be required to use to calculate bonuses and retention payments.
The original AIG tax bill was passed in a populist frenzy. It was driven by majority Democrats, but Republicans were swept up, too; half of the GOP members of the House, including Republican whip Eric Cantor, voted in favor of the 90 percent tax. This time around, though, Republicans were a different story. Just ten GOP lawmakers voted for the Pay for Performance Act — and 163 lined up against it.
So now it goes to the Senate. And the chances are, just like the AIG bill, it will go nowhere.
That will be literally true for a while. In the midst of this nearly unprecedented economic crisis, senators are heading home for a two-week Easter break. There won’t be any bills passed, or any other business done, until nearly the end of April.
But even then, Pay for Performance doesn’t have a bright future. Just as he did with the AIG bill, Senate Majority Leader Harry Reid hasn’t shown any sense of urgency in dealing with a controversial pay bill. “We’re going to take a look at it when we get back from recess,” a spokesman for Reid told me. “The Senate Banking Committee will study the House’s proposal, and Sen. Reid will also be looking at this idea and others over the next few weeks, as well.”
That doesn’t sound like a fast track.
On the Republican side, senators are skeptical for a bunch of reasons. They’re afraid that Pay for Performance is too broad — does it have to cover every employee at the companies in question, as opposed to just the top executives? They’re concerned that it vests too much power in the Secretary of the Treasury. And they believe that the House has, again, acted in haste, without enough thought.
“Now that the Senate has a little bit of perspective, pulled back from the heat of the moment, if they decide to do something, they’ll do it in a more deliberative manner,” one well-connected Republican aide told me. “Right now, the chances are pretty slim.”
Members of the Senate also weren’t particularly edified by the manner in which the House acted. The Pay for Performance measure was passed Wednesday after a raucous debate on the House floor, one in which Frank characterized Republican opposition to the bill as a manifestation of “a psychological disorder” and compared GOP lawmakers to “kids who have had a toy bear or a security blanket” taken away.
Before that, members of the House Rules Committee had a testy exchange over the suggestion by the Democratic author of the bill, Rep. Alan Grayson of Florida, that any Republican who would vote for it would be “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.” In an interview with The Examiner, 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.”
So now the whole messy matter heads to the Senate. The Founding Fathers conceived the Senate as a place where hastily-passed, ill-conceived legislation could be stopped. And that’s what will likely happen this time.
Byron York, The Examiner’s chief political correspondent, can be contacted at [email protected]. His column appears on Tuesday and Friday, and his stories and blog posts can be read daily at ExaminerPolitics.com.
