Long before the AIG bonus scandal erupted this month, Rep. Brad Sherman (D-Calif.) was at the forefront of (failed) congressional efforts to install stricter pay limits for employees of bailed out banks. Sherman was an early critic of the Troubled Asset Relief Program, arguing last fall that it didn’t go nearly far enough to prevent bailed out executives from paying themselves handsomely with taxpayer cash. He emerged again in January when House Democrats pushed legislation that would have capped executive bonuses but not salaries. (That bill passed the House but the Senate, heeding the Obama administration, never took it up.) And more recently, he was critical of a bill — which passed the House this month amid the AIG outcry — that would have taxed the AIG bonuses at 90 percent, but only for firms accepting more than $5 billion in bailout funds.
Now he’s back with a new proposal to stick a 70 percent tax on all executive pay above $1 million for firms accepting more than $500 million in bailout money. It also fills a gaping loophole found in the other bills: “My bill deals with all compensation, whether it is called a salary, bonus, retention payment, commission, employee of the week prize, or whatever,” Sherman said in a statement introducing the bill.
How far will it get? Well, when Sen. Claire McCaskill (D-Mo.) attached a provision to the stimulus capping executive pay at $400,000, the White House stripped it right out.