Perceptions and symbolism factor greatly in this economic recession. A lack of confidence in the economy by consumers compounds the very real financial hardships many individuals and businesses are experiencing, creating a vicious cycle of spending cutbacks that serves to deepen the recession.
Feeding the lack of confidence, cynicism and anger about the nation's economic outlook are the outrageous salaries, bonuses, perks and severance packages that leaders of failed financial institutions have received. Whether it's Citibank's corporate jet, John Thain's $80,000 carpet in his Merrill Lynch office, or AIG's lavish retreats before and after it received bailout money, there have been plenty of headlines to leave ordinary Americans feeling like the only people being rescued by the government are the rich and connected. That lessens confidence in the economy, and the government's ability to fix it.
Which is why President Obama's imposition Wednesday of an executive salary cap was absolutely the right thing to do - even if its impact is more symbolic than practical.
Obama on Wednesday declared it time to end a system of "executives being rewarded for failure." So he imposed a $500,000 cap on senior executive pay for financial institutions receiving taxpayer bailout money. The president also said massive severance packages will be eliminated.
There are loopholes, of course. The cap isn't retroactive, meaning it doesn't apply to institutions that already have received bailout funds. And it only applies to those most distressed banks that are negotiating bailout agreements with the federal government. Other banks can exceed the $500,000 for executives as long as they publicize their plans to shareholders.
But it's safe to say that most ordinary taxpayers support a cap on CEO salaries. Since it's taxpayer dollars that are rescuing these institutions, the government has a right - a responsibility - to restrict spending that most Americans would qualify as wasteful and excessive.
Feeding the lack of confidence, cynicism and anger about the nation's economic outlook are the outrageous salaries, bonuses, perks and severance packages that leaders of failed financial institutions have received. Whether it's Citibank's corporate jet, John Thain's $80,000 carpet in his Merrill Lynch office, or AIG's lavish retreats before and after it received bailout money, there have been plenty of headlines to leave ordinary Americans feeling like the only people being rescued by the government are the rich and connected. That lessens confidence in the economy, and the government's ability to fix it.
Which is why President Obama's imposition Wednesday of an executive salary cap was absolutely the right thing to do - even if its impact is more symbolic than practical.
Obama on Wednesday declared it time to end a system of "executives being rewarded for failure." So he imposed a $500,000 cap on senior executive pay for financial institutions receiving taxpayer bailout money. The president also said massive severance packages will be eliminated.
There are loopholes, of course. The cap isn't retroactive, meaning it doesn't apply to institutions that already have received bailout funds. And it only applies to those most distressed banks that are negotiating bailout agreements with the federal government. Other banks can exceed the $500,000 for executives as long as they publicize their plans to shareholders.
But it's safe to say that most ordinary taxpayers support a cap on CEO salaries. Since it's taxpayer dollars that are rescuing these institutions, the government has a right - a responsibility - to restrict spending that most Americans would qualify as wasteful and excessive.
