Government Control of Spending

As an update to my post around Senator Claire McCaskill's proposed legislation around caps for executive compensation in companies which had accepted federal bailout funds, it looks like President Obama is going to move forward with his own version of the legislation. Consistent with my previous post, I commend him for putting action behind his words, though I may disagree with the wisdom of his actions.

I can understand the anger in response to seeing large bonuses being paid to those in the financial services industry, especially in light of the large bailout packages that some, not all, received. But do we really want the government to mandate how companies choose to invest their funds, whether through human capital (i.e. salaries to retain and attract the best talent) or otherwise? Will companies which accepted bailout money need signed government approval for any major capital expenditures or strategic initiatives greater than $10 million? How about line item approval for anything in the company operation plan that seems unwise or excessive? Is this fear of unintended consequences of compensation caps (e.g. the loss of the best talent in the company) going to dissuade companies from taking federal money, as Senator Mitch McConnell points out?

To what degree should the government intercede in the stewardship decisions of groups or individuals? To draw a parallel, pretend that every welfare recipient was forbidden to go on vacation or purchase anything "entertainment-related" (e.g. television, audio electronic equipment, music, digital media, outside dining, expensive clothes). On some calculating, albeit cold-blooded, level, that might make sense - hard-working taxpayer money should be used to put clothes on a welfare recipient's family and food on the table, not buy the family cable television service, a weekend vacation, or new Nike sneakers; after all, they can listen to a radio for entertainment, visit local parks for a getaway, do their food shopping at Dollar Tree, and do all their clothes shopping in Salvation Army Thrift Stores. Do we really want government assistance to have those sort of strings attached?

Should good stewardship be encouraged? Absolutely, and that should be the case whether a company is public, private, receiving bailout money or not. What I get concerned about is how rigidly this is enforced and mandated by the government, and whether such principles are applied evenly. For those who want both the executive compensation caps and mandatory-purchasing at Salvation Army Thrift Stores for welfare recipients, at least you're consistent.