Our view: Obama must close big business loopholes

DKS Editors

Sometimes it seems as though big government and big business work hand-in-hand. Now big businesses are faltering, trying to catch themselves on the pavement and instead winding up with wounds on their hands and knees. They’re begging for Band-Aids and the government, like a good mother, is willing to help them heal – if they promise not to run anymore.

Big business, like any child, is too mischievous to stop running exactly. They’re skipping or hopping instead of walking.

Always looking for a loophole.

So here we are: The businesses have asked for the Band-Aids, and so far half of all the bailout money has been shelled out, with no questions asked and no real words of advice. As the government prepares to hand out part two of the money, it’s decided it will also deal out some warnings and guidelines.

“Don’t run.”

According to a Feb. 4 article in The New York Times, President Barack Obama’s plan would set a “$500,000 cap on cash compensation for the most senior executives, curtail severance pay when top executives left a company, restrict cashing in on stock incentives until government assistance was repaid and prod corporate boards to closely scrutinize luxury perquisites like private jets and country club memberships.”

In essence, the government doesn’t want big business executives to be rewarded for their companies’ failing. It makes sense. Why should the people in charge of a company’s demise continue to be paid outrageously high amounts? It’s well above the average cost of living, and the working man who keeps the company grinding day to day is laid off with hardly a fraction of what the bigwigs get.

The problem is, these companies have managed to find plenty of loopholes to still get the money they believe they deserve or – more accurately – the money they’re used to having for the lifestyles they’re used to living.

The largest participants in the first half of the bailout program paid chief executives, according to the most recent figures in 2007, an average compensation of $11 million, reported the New York Times. This includes salary, bonus and benefits. The bulk of that figure is actually in stock rewards – $7.4 million.

These new rules set by the government only apply to businesses seeking this second half of the bailout money. If companies from the first half decide they need more, they will now have to abide by these salary cap restrictions.

Obama was sure to point out that he is not trying to keep anyone from the American Dream by cutting their salaries – but it is no one’s dream to lose his or her job while the executives are still sitting pretty. It is time for the businesses to become responsible for their actions.

And let’s be honest, $500,000 is nothing to sneeze at.

The plan forces companies to think hard about whether they wish to ask the government for money. Since executives don’t get to receive their old paychecks until they return the money they borrowed from taxpayers, there’s lots of incentive to fix their companies’ problems.

Let’s hope businesses play by the rules and don’t find ways to keep their paychecks high while the stocks remain low. Let’s hope they walk when the government tells them not to run.

The above opinion is the consensus of the Daily Kent Stater editorial board.