When Did John McCain Become More Liberal Than Barney Frank on Executive Compensation?

Re-assigned temporarily from the Obama campaign to Capitol Hill this week to cover the debate over the Wall Street bailout bill (HERE'S our "Good Morning America" look at the negotiations, so far), I have been struck by the debate over whether or not there should be any limits on executive compensation for those who work for firms receiving U.S. government aid.

The position of Sen. John McCain, R-Ariz., in his own words: "The senior executives of any firm that is bailed out by Treasury should not be making more than the highest paid government official."

I double-checked with the McCain-Palin campaign that McCain was referring to (a) federal government employees (as opposed to the well-compensated football coaches at state universities) and (b) salaries, not contract employees, such as the men and women from Blackwater.

I was told, yes, McCain was referring to the president, who makes $400,000 a year.

But this is not the position taken by the senior Democrats negotiating with the Bush administration on this bill.

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, and Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, are pushing for three provisions for firms that receive government aid:

1) no golden parachutes;2) a "claw back" provision so that any bonuses awarded based on fraudulent or incorrect earnings reports are returned; and3) no rewards for excessively risky business behavior.

This means executives of these firms can continue to receive huge salaries and immense bonuses.

Why? Why are liberals like Frank behind only these modest steps that allow Wall Street execs to continue to draw huge salaries?

Four basic reasons:

1) Democrats on these committees say they recognize that, even if they were to enact salary and bonus limits, a shell game would result and executives would find ways to pay themselves a lot of money, regardless; 2) Democrats on these committees say that these executives have hard jobs; 3) Democrats on these committees say this problem isn't going to be solved by chasing experts out of the industry; and 4) there is no way the Bush administration would sign off on the kinds of compensation limits McCain is talking about. Even these modest steps are meeting with great resistance by Treasury Secretary Henry Paulson.

Does McCain not share these views of Barney Frank and the like?

The National Review's David Frum calls this "cheap demagoguery" by McCain.

To the contrary, it might be smart presidential politics. Obama's only articulated position on executive compensation is that there should be no golden parachutes; McCain wants to be seen as standing up for "the little guy," and his position has a certain emotional appeal.

And on that level, in the gut, many people personally might have no problem with the government confiscating these Wall Street executives' Lear jets and Hamptons mansions and selling them off, proceeds to go to the Treasury.

But in the real world, the McCain executive compensation position is a political non-starter and, therefore, an unserious proposal.

"I don't know who the conservatives are and who the liberals are," Rep. Ron Paul, R-Texas, just said during a congressional hearing.

I hear ya, Congressman Paul.

- jpt

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