This is a contention point which will have difficulty finding agreement. The idea of putting more of our tax dollars in the pocket of politicians seems a bit distasteful. Nonetheless, in the broader context of improving the value and image of Congress it starts to make sense. Let’s look at it this way, if we want the brightest minds of the world working to improve our country, not making money for Bank of America or Google we need to pay them a competitive salary. We need to make it worth their time. The CEOs of the world should look at being in the United States Congress as the epitome of success. There are many ways to do this and one is to make sure their time spent in office is worthwhile financially.
Congress can also be brought out of the ashes of ineptitude, inaction, corruption, and vitriol by other means of reform than just throwing money at them through actions such as limiting their stay and more. We plan on running a whole series on reclaiming the higher principles and moral conduct of Congress. We’ll keep you posted.
Congressional Salaries
The current salary of your average Congressperson (both Senate and House) is $174,000. It even gets a bit nicer with the minority and majority leaders in both the Senate and House receiving $193,400. The Speaker of the House gets $223,500 as the person on top. At first we might look at this and laugh at what we would do with all this money. Unfortunately, this mass sum of money doesn’t match up well with industry standards. To provide context, according to PayScale the average salary of CEOs in the US during 2011 ran upwards of $268,000 which includes benefits (commission, profit-sharing, and bonuses), while PayWatch marks the S&P 500 CEOs with salaries averaging over $9,000,000 in 2009.
My suggestion is this, even the pay scales between the private industry and Congress in exchange for term limits. It’s a compromise, which benefits all. Raise congressional pay to $250,000 (equivalent to an average CEO). The majority and minority leaders will get a raise to $268,000 and the Speaker of the House will receive a salary of $271,00 (just over that of your average CEO). Now this still doesn’t match up to the S&P 500 CEOs, but let’s call them of the more presidential caliber. The president’s salary of $481,000 can be talked about at another time. He is the ruler of the free world after all. With these pay raised congressional salary would go from approximately 3.6% of the budget to approximately 5.2% percentage of the budget. A worthwhile incentive to help bring in the best of the best to run our country. These adjustments should keep with the standards of inflation and the average yearly salary for CEOs in the US. The suggestion above is a starting point for the creation of a system which would factor in the organic nature of our economy.
To sweeten the deal more, we might need to throw in better retirement benefits, but let’s not let them get too greedy.
Monetary Incentives & Penalties
If we are going to think of government as a business we need to treat our employees running with that in mind. It is our tax dollars that are paying them after all. We should have a program in place which provided yearly bonuses to Congress for GDP growth over 2%, unemployment below 5%, ranked at least in the top three in the world for education, poverty rate below 5%, and zero debt. Each one of these factors will result in a bonus equal to 2% of their income. This could result in a bonus of up to $25,000 for the pay scale suggested above.
On the flip side, there should be consequences to inaction, ineptitude, and ineffectiveness. Penalties should incur if the United States of American has a GDP reduction of over 2%, unemployment over 7%, ranked below 10nth in the world for education, poverty rate above 10%, and a federal deficit above 5% of GDP. The result will be a temporary pay reduction in the salaries of Congress for the following year (even if you’re a newcomer) by 2% for each factor below the penalty threshold. As you might have guessed this could result in a pay cut of $25,000 or $50,000 in potential lost revenue because they didn’t receive the bonuses.
This incentive program will help our government officials fight for what is best for our country on a whole, not just what suits their individual needs.
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I am totally disheartened. I am a single mother of three, work for the Federal Government, make less than 34,000 a year and was told by “MY” congress that I cant have a raise because >>>>>> I forget. BUT, did “MY” congress receive raises to their take home pay recently? Did “My” congress say, No thank you, I’ll take that increase at a later time because there is a need for all to tighten the belts and buckle down”? I don’t remember that story running.
I am one of those voters who actually look at who is running for congress or senate and I also actually dive into whatever information there is on who voted for what, what reason they gave etc…. This is all while I am looking at my governor, mayor and Presidential candidates. You disappoint me – I can’t afford it. Stop It!
I’m sorry I disappoint you. I do believe congressmen and congresswomen should be paid competitively according to market trends matching the caliber of candidates we desire.
Keep in mind, I’m also suggesting that we enact mandatory pay cuts for politicians when the economy goes sour based on specific factors. This will incentivize progress towards economic reform, helping us get out of messes like the one we are in now. In your situation and thus the one we are in now Congress would get pay cuts not raises, which is probably more to your liking.
Thank you for comments and let me know if you have any other ideas on how to improve this solution.
Interesting article.
You state toward the beginning: “The CEOs of the world should look at being in the United States Congress as the epitome of success.” But frankly, I don’t want CEOs, lawyers and bankers running the government. I’m sick and tired of big business monopolizing the political sphere. These individuals have consistently proven that their main concerns are personal profit and corporate cronyism, not the general welfare of the people.
Government of the people, by the people and for the people is the alleged principle of our system. So maybe a handful of the current lot could remain in charge. But I want the bulk of my politicians to be secretaries and farmers and teachers and single parents and nurses and whatever amalgam that effectively represents the country. After all, there are just as many smart, creative and “high caliber” persons in these fields as there are in legal and corporate environments. The fact that none of them ever aspire to be corporate sharks may say more about their integrity as human beings than their quality of leadership.
Simply put, I just disagree that high compensation is necessary to attract good candidates. For better or worse, politics is power; and I believe there would be no shortage of people willing to take less money at the opportunity to have greater power. That’s the negative side to reality.
Positively, however, I suspect that there are also many, many capable persons who would lead this country, not taking an exorbitant compensation package, only for the honor of serving, of giving back to society. I don’t think politicians should be starved to death on meager wages, but the compensation ought to be a secondary consideration. And I’d like to have leaders who hold a similar value.
Related to all of this is the fact that it is expensive to get into politics. Your average citizen, though he/she may be very capable of top-notch leadership, simply cannot spend the money that millionaire CEOs, lawyers and bankers can. As such, the system of high compensation only promotes greater division between those who have the wealth and those who don’t, with the “haves” controlling access to their ranks through commercial presentation, glossy campaigns and the like. So this doesn’t mean better people are getting elected, only the wealthier ones (who just keep gaining more wealth and more power). I mean, can you honestly say that the likes of Dan Quayle, the George Bushes and Michelle Bachmann have been the best of the best? These are clear cases where high compensation did not attract heaven’s brightest stars.
Finally, good compensation is one thing. But providing our leaders with health care, pensions and other benefits that most people can’t even dream of achieving is obscene. Representative leadership should be just that: representative. If we give our politicians decent health care and other benefits, these things should be provided to all people. In fact, I’d be willing to pay each of them a million dollars per year, and do so without a thought of begrudgement, if they set up universal health care and paid social security recipients fairly rather than cutting them off at the knees.
Your idea of compensation penalties when things sour in the society, that is a good start. But beyond that, the compensation as it exists is outrageous and needs to be restructured so that we can lose the bulk of CEOs, lawyers and bankers once and for all.
Scott,
You make some really good points. My intent with this proposal is to suggest a pay system which fluctuates with the successes and failures of our government. You are right in that pay should be secondary to the honor of serving. Frankly, I would serve for free it I could feed my family (though I don’t hold public office). As for creating a competitive system to attract the likes of corporate CEOs, I believe it has it’s benefits. Not all CEOs are driven towards power and money. Many small business owners make as much if not more than members of Congress. I believe we should try to attract the best of the best and pay them appropriately for their service. Ultimately, the pay scale will not significantly influence who runs our country. Rather, creating a system to publicly finance federal elections that is mandatory, would go much further, but that is for another post. As for universal healthcare, again for another post.
Again, thank you for your thoughts and feel free to comment on any other posts you find interesting.
Why don’t they balance the budget by starting with cutting their wages. I am on social security $8000 a year and they want to cut Medicare to balance the budget and that is only one program tax payers have funded they want to cut. When I paid my Social Security I paid for my medicare also. It really really bothers me that they want to balance the budget on the backs of the poor. With Obama Care, You will find that elderly people will be put down like a horse when it breaks a leg. I made the mistake of voting for Obama once, I will not do it again
I completely agree that part of any recession should include cuts to congressional salaries. Why the American people give raises to the officials in office when they are cutting the benefits to everyone else? There should be consequences for the state of affairs.
As for Obamacare (The Affordable Care Act), it will actually greatly help someone in your situation by adding additional people to the insurance people who are in their youth and not adding to the cost of healthcare, but still paying for it due to the mandate. This will bring down the cost for everyone else, especially a person like yourself who is on Medicare. The negative media about the Affordable Care Act is primarily the result of advertising dollars by they the health care industry who doesn’t like the idea of getting less money from you. The bill isn’t perfect, but it is a huge step in the correct direction.
I concur with your anger about all the focus politicians seem to give on cutting Medicare and Social Security. Indeed, it does seem as though they want to balance the budget on the backs of the poor.
But I think you go awry in your reasoning against President Obama and The Affordable Care Act. Judah’s response to you is spot-on; the negative hype in the news is mainly fueled by insurance companies, pharmaceutical firms and the like because the act curbs their profits in favor of actually giving service to the people who need it. For example, in the past, insurance companies spent a substantial portion of the dollars received from consumers on administrative costs and profits (including executive salaries, overhead, and advertising). Now, because of “Obamacare,” 80 to 85 percent of money received by insurance companies *must* be spent on medical care and health care quality improvement, rather than on administrative costs.
Personally, I believe you should re-think your position on voting for President Obama. The Republicans–and particularly, the ones currently seeking the Presidency–have a lousy track record when it comes to the issues you address. Look at who wants to cut medicare and SS, at who wants to balance the budget on the backs of the poor, and at who has been standing on the side of the insurance industry for keeping their profits over truly helping the people in need: the Republicans.