What would you think about the government cutting the paychecks of
executives running those bailed-out banks to about, or even less than,
what teachers earn? Make that what retired teachers receive in pensions.
Americans probably would say, "Wow, what a great idea. Teachers deserve
a lot more money. And those bozo executives should be punished for
nearly pushing America into the financial abyss."
My mind admittedly works in strange ways. So when I saw last week's news that the Federal Reserve
Board and Ken Feinberg (the federal executive compensation czar) were
moving to limit top executive salaries at a bunch of banks, my mind
slipped to something else I saw then: The eighth annual study by
National Taxpayers United of Illinois of the state's top 100 government
It reveals that scores of administrators or
teachers in the state public education and higher education systems
could receive larger retirement checks than the senior executives
carrying the burden of repairing the nation's banking system.
this is a vague and challengeable comparison, partly because the
numbers cited by the feds are vague, if not mysterious. Feinberg is in
charge of setting compensation for 175 executives at seven companies
still using money from the Troubled Asset Relief Program (TARP): Citigroup, AIG, Bank of America, General Motors,
Chrysler, GMAC and Chrysler Financial. Some of those salaries he said
could be cut by 90 percent; top salaries at AIG's financial products
division could be limited to $200,000. Feinberg said in most cases the
cash salary would be capped at $500,000. They still could make more
with stock grants and bonuses tied to company performance, but even
those deals face new restraints.
Since the taxpayers have such
a large investment in these companies, tying compensation to
performance sounds reasonable. Even though the banks will be challenged
to find and keep the talent necessary to do the job.
part, the Fed is focusing on 28 banks, reviewing their executive pay
practices, hoping that they'll set a precedent that'll spread through
the entire banking system. The Fed argues that because it regulates the
banks, it has the authority to conduct such reviews and, presumably,
force the executives into lower pay brackets. What the review will be
based on isn't clear, at least to me.
As for the retired
Illinois school administrators and teachers, here are the numbers:
3,597 retired government employees of all types (including educators)
reaped more than $100,000 in pension benefits for fiscal year 2009,
ending June 30. All but three of the top 100 are educators. The top 49
got more than $200,000, putting them perhaps in the lower ranks of the
nation's highest paid bank executives, as determined by the Fed and the
Obama administration. Tapas K. Das Gupta, a retired University of Illinois at Chicago medical professor, headed the list, last year receiving $390,716, or $32,560 a month.
to make too much of the comparisons, but one can ask: If the public has
a right to cap outrageous private sector salaries, then why shouldn't
it be likewise able to cap outrageous retirement benefits? Yes, I said
outrageous. For all the good work performed by educators, why are they
entitled to earn two, three or four times more in retirement than what
the average working stiff in Illinois makes punching the clock? That
would be about $54,000 in 2007, according to the Census Bureau's 2009
Public pensions are at the heart of what ails so many government budgets, and Chicago and Illinois are clearly no exception. Mayor Richard M. Daley's
disastrous 2010 budget notes that in 2010, 43.3 percent of the city's
general tax levy, or $345 million, will be used to fund pension
contributions for city employees. National Taxpayers United of Illinois
notes that the average suburban public high school teacher retires at
age 55 with a salary of $100,000 a year, plus health benefits.
state constitution protects existing pensions, but the taxpayers group
suggests several steps to reduce the future pension burden on the
public and help raise the state out of its financial crisis. Among
them: increase the employee pension contribution by 5 percent, and
require public employees to start paying for at least some of their
retirement health benefits, say 3 percent of their paycheck and $250 a
month in retirement.
Such suggestions will shock some government
employees, naive in their belief that they are not exceptionally well
treated and comfortable thinking that they are getting everything that
they deserve. Humbly, I'll raise my own voice to suggest that taxpayers
This column also appeared in the ChicagoTribune