The Obama administration acknowledged on Sunday that its top economic officials had expressed concerns to Congress that the sharp restrictions on executive compensation included in the stimulus package could be counterproductive. Moreover, they did not rule out the possibility that the president could loosen the restrictions.
In an appearance on Fox News Sunday, chief strategist Axelrod said that the President and Congress shared the same "outrage" over the "spectacle of gaudy bonuses for executives at firms that are getting extraordinary assistance from American taxpayers." But he also acknowledged "concerns" that the restrictions in the stimulus went too far. Critics of restrictions believe they will encourage top-officials to leave their companies or persuade banks to not participate in the TARP program.
"Well, obviously, Secretary Geithner and Mr. Summers had concerns about that," said Axelrod. "And they expressed those concerns. But the concerns are at the margins and the goal is one we share."
The president has said he favors capping compensation. But in the final version $787 billion package, Congress also put restrictions on the size of bonuses that bank executives could receive, and expanded the pool of impacted companies beyond what President Obama and Treasury Secretary Geithner announced in early February.
Here is the transcript:
CHRIS WALLACE: It now turns out that buried in the economic stimulus plan that was passed this week by Congress is a measure that would sharply restrict bonuses for top earners on Wall Street. The White House is reportedly worried that this could result in a brain drain from the firms. That some firms may pay the money back more quickly than they responsibly should so they don't have those restrictions. Is the white house going to try to soften that set of restrictions on pay?
AXELROD: Let me say the President's been very clear that he shares the outrage that most Americans feel about the spectacle of gaudy bonuses for executives at firms that are getting extraordinary assistance from American taxpayers. It's not right. It shouldn't move forward. He's announced his own guidelines for how we should restrict that. In some ways they're tougher than the ones that the Senate passed. They have a hard cap, for example, on compensation. And in other ways they differ. So we're going to work with them... with Senate and the House -- to come up with an appropriate approach to this.
WALLACE: You're saying what was passed by the Congress in the economic stimulus bill is not the last word.
AXELROD: I'm saying we all have the same goal. We all have the same sentiment and we want to do something that's workable and we'll work with them to get to that point.
WALLACE: And do you worry that what they've passed in the economic stimulus could be counterproductive?
AXELROD: Well, obviously, Secretary Geithner and Mr. Summers had concerns about that. And they expressed those concerns. But the concerns are at the margins and the goal is one we share.
UPDATE: Looks like Congress isn't too willing to revise the stimulus. As picked up by Think Progress, Republican Sen. Richard Shelby and Democratic Rep. Barney Frank -- appearing on Face the Nation -- both backed the executive pay caps in the bill.
SCHIEFFER: So, even though you voted against this bill, you sound like you're very much for this provision.
SHELBY: I -- I am. I think we need that. [...]
FRANK: Let me be very clear. Mr. Gibbs may not like it, but it's gonna be enforced. ... This is not an option. This is not, frankly, the Bush administration where they're going to issue a signing statement and refuse to enforce it.