- The Washington Times - Sunday, March 28, 2010

Emboldened by the passage of health care legislation, the Obama administration will set its sights on a new target - regulating how much money you can make.

Recipients of federal bailout money already face regulations designed to rein in “excessive” corporate salaries. Since the administration has proclaimed this first step a success, it is only a matter of time before it seeks broader control over private-sector compensation.

The administration gave itself a pat on the back for a job well done after “only” 16 of 104 senior corporate executives quit when their salaries fell under the pay czar’s knife. The administration takes this as indisputable proof that high salaries are not needed to keep executives in their jobs.

The evidence, however, is far from compelling. Most executives are not going to abandon their companies instantly, and the cuts only went into effect in the last few weeks of 2009. While the salary reductions were substantial - on average a 74 percent cut compared to 2008 levels - there is no way to know whether companies are promising to make up the losses to their executives in the future because they think the regulations will be lifted eventually.

Kenneth R. Feinberg, the special master for executive compensation, is a lawyer with no experience running a business. To him, losing 15 percent of company leaders might seem to be an acceptable loss, but it is a different matter to the operations suddenly deprived of management experience and talent. Those firms have a financial stake in the outcome of their decisions. When pay is cut, will the executives be as careful? Will they work as hard? Will they retire sooner?

Such questions need not trouble a government regulator like Mr. Feinberg, who now wants to go after the 25 highest earners at each of 416 companies to slash their salaries. That could affect more than 10,000 high-level corporate officers, and it represents a massive government intervention into the marketplace. The notion that the government is going to decide how much people can earn is shocking, and the damage to the economy will be incalculable.

After taking over General Motors and the entire health care industry, it must seem like a small move to begin micromanaging the internal decisions of another 416 companies. The administration still hasn’t learned the lessons from the last century: Central planning does not work.

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