The federal government is paying a whole bunch of corporate executives' salaries, up to $763,000 a year and soon to be as much as $950,000 a year, because the executives work for federal contractors. President Obama is—again—calling on Congress to limit that to $400,000 a year, the amount the president himself is paid. Think about it: Exorbitant executive pay is being included in what the government pays contractors. Meanwhile, there are 2 million workers at federal contractors being paid
poverty wages.
The president's proposal to cap federal payments for executives to $400,000 is not going to strangle any companies or leave any executives in the poorhouse. The Office of Management and Budget's Joe Jordan explains that:
Importantly, the proposal provides for an exemption to the cap if, and only if, an agency determines such additional payment is necessary to ensure it has access to the specialized skills required to support mission requirements, such as for certain key scientists or engineers. And to be clear, nothing in the proposal limits the amount contractors pay their executives. The cap only limits how much the government will reimburse the contractors for the services of those executives. Taking these steps has the potential to save taxpayers hundreds of millions of dollars over what they would have to pay if the cap remains unchanged.
Got that? Federal contractors can pay their executives whatever they want, the federal government just wouldn't directly reimburse them for it. Isn't that, uh, capitalism? But the president of the Professional Services Council, a trade association for government contractors,
objects, because:
He argued that many government contractors do business solely with the federal government and would lose their profit margins if they had to pay top executives at market rates without reimbursement.
Hey, if you've restricted yourself to one client and this is what that client is willing to pay, you have some choices: accept that cut to profit margins, have your executives take the pay rate your one client is offering, or get more clients. The idea that we shouldn't be talking about the federal government "only" paying $400,000 of the salaries of executives at private companies rather than forcing them to make those choices just boggles the mind. Yet considering the broken Senate and Republican House, it probably won't be too long before the government is paying well over $1 million in salary for these executives.