Inflating Congressional Perks

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Members of Congress and the Administration who have been overly enthusiastic in pushing to stoke the fires of populist anger into an out of control inferno should be careful what they wish for. Whether in committee hearings or in TV interviews, you can sense the politicians excitement when they rant about how TARPed financial companies are abusing taxpayers’ money by hosting conferences at lavish resorts and paying excessive compensation to their top executives when working families are losing their jobs and struggling to make ends meet.

Their concerns are valid but hypocritical. While wages stagnate and the “official” unemployment rate approaches 10%, Democrats and Republicans found one thing they could readily agree on: a pay raise. Last month the House and Senate voted themselves a $4,700 cost-of-living pay raise, increasing their annual salaries to $174,000. (House Speaker Pelosi and other House Democratic leaders will nobly forgo an increase next year; Senate Majority Leader Reid has said Senate Democratic leaders “plan to.”)

If politicians and the public are questioning the logic and outright audacity of Wall Street bestowing big bonuses after receiving taxpayer assistance in a climate of frugality, shouldn’t Congress be setting an example of showing some personal fiscal restraint and shared sacrifice as well? What Wall Street and Washington have in common is the ability to increase their compensation without restraint. Washington just votes themselves one, and Wall Street appoints people to the company’s Board of Directors who the managing executives know will not say no to them. And as the largest shareholders, the mutual fund companies are happy to vote how the company wants in order to maintain the company’s highly profitable retirement benefits business.

Politicians can rant all they want in front of the cameras about American International Group (AIG) hosting a resort retreat for its top sales people, but if you want to reach Senators later this month, you’ll need to head to the Sunshine State. Democrats will take up residence at the Ritz-Carlton Golf Resort in Naples, famed for its two Greg Norman-designed golf courses. And after a strenuous day of golf, Senators can retreat to the spa for a 50 minute sports massage for $150. Republicans will forgo any thoughts of fiscal restraint at The Breakers in Palm Beach, “escaping to an oasis of idyllic luxury where indulgence is the only rule.”

Members of Congress will claim that these retreats are “work-based,” and you can all about their recent resort spa retreats in an article in today’s Wall Street Journal. Politicians love to defend the costs for these retreats by assuring the public that most of the costs are defrayed by campaign contributions and corporate funding. After the media leaves the room, the vilified corporate donors invitations of indulgence are eagerly accepted by Congress. Now it’s time for the pork to be ground. This is why even the most fiscally conservative Republican really does not want to eliminate the tax code in favor of a flat tax or consumption tax. Campaign and lobbyist reform laws will always have enough wiggle room to keep the members of Congress living in the lap of luxury regardless of economic conditions.

As millions of Americans lose their jobs and their health insurance and are unable to afford COBRA coverage even with a stimulus bill subsidy join the ever rising millions of people who cannot buy an individual medically underwritten policy at any price, the public should ask why Congress needs to visit a “wellness spa” when their medical care is footed by the taxpayers?

Beyond the Congressional junkets is an even bigger question. If the Federal Reserve is keeping interest rates around 0% and is pumping all this liquidity into the economy because Bernanke is so afraid of deflation, why does Congress need a $4,700 cost-of-living increase? This tells us that Congress itself does not believe there is no inflation, so why should we?

No Disclosures.

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