Shelby, Frank Back Pay Cap; Will Obama Balk?
Congress' inclusion of a stringent pay cap for executives of companies receiving government aid in the stimulus legislation passed Friday was a major topic on CBS News' Face The Nation Sunday.
"I believe this provision in the stimulus bill is going in the right direction, as far as protecting the taxpayer," Shelby told host Bob Schieffer. "I am totally against us being involved in private companies … but where taxpayers' money is involved, Bob, we better make sure that this money is spent wisely."
Frank differed with Shelby, who said he believed the government should interfere with private companies' executive compensation only when taxpayer money (such as the billions in TARP funds that have gone to teetering banks) is at stake. Frank said that such unstable situations (where private companies come for handouts of public money) should be prevented from happening by changing the ethos of no-risk rewards, which Frank said provide "perverse incentives.
"You know, this problem didn't start in September," he said. "The way the compensation is structured for a lot of these companies, if they take a gamble and it pays off, the top people get a lot of money. If they take a gamble and it backfires, they don't lose any money. Heads they win, tails they break even."
Frank supported rules to reduce risk-taking that puts government money (such as funds insured by the FDIC) at risk, which he believes would reduce incentives for companies to take unnecessary gambles.
Earlier on the program, White House Press Secretary Robert Gibbs did not seem to wholeheartedly support the bill's executive compensation provision. However, he was adamant that the President will sign the legislation Tuesday.
"Many of the provisions in this bill are modeled after things that the president outlined in his plan," Gibbs said when Schieffer asked why the White House had contacted Members of Congress asking them to back off on this part of the bill. When asked by Schieffer if the president planned to modify the legislation before signing, or would choose not to enforce any of its provisions, Gibbs replied, "We will sign this bill into law Tuesday."
Shelby later said that Gibbs "seemed to me that he was waffling a little bit" in his response.
Frank predicted the Obama administration would not try to avoid carrying it out the bill's provisions. "This is not an option. This is not frankly the Bush administration where they are going to issue a signing statement and refuse to enforce it. They are going to enforce it."
More from Face The Nation (2.15.09):
