Cavuto on Business featured on-screen text that read: " 'Pay-For-Performance' Bill: Gov't dictating how much you'll make?" In fact, the bill would regulate compensation only for employees of financial institutions that have received federal assistance.
During an April 4 discussion of the House's passage of H.R. 1664, the Pay for Performance Act, Fox Business Network's Cavuto on Business featured on-screen text that read: " 'Pay-For-Performance' Bill: Gov't dictating how much you'll make?" In fact, the bill would not regulate pay for all workers but rather would regulate compensation only for employees of financial institutions that have received federal assistance -- a fact acknowledged by Cavuto and his guests during the segment. Moreover, the bill regulates pay for those institutions only during the period in which the public investment in them remains outstanding, and even then, it does not apply to institutions that have agreed to a schedule for the institution to repay the entire government investment, unless the company defaults on that plan.
As Media Matters for America documented, the March 31 edition of Fox News' Fox & Friends aired on-screen text that falsely claimed of the Pay for Performance Act: "Bill lets government set your salary."
From the text of H.R. 1664, as passed by the House:
"(1) PROHIBITION. -- No financial institution that has received or receives a direct capital investment under the Troubled Assets Relief Program under this title, or with respect to the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or a Federal home loan bank, under the amendments made by section 1117 of the Housing and Economic Recovery Act of 2008, may, while that capital investment remains outstanding, make a compensation payment, other than a longevity bonus or a payment in the form of restricted stock, to any executive or employee under any existing compensation arrangement, or enter into a new compensation payment arrangement, if such compensation payment or compensation payment arrangement --
"(A) provides for compensation that is unreasonable or excessive, as defined in standards established by the Secretary, in consultation with the Chairperson of the Congressional Oversight Panel established under section 125, in accordance with paragraph (2); or
"(B) includes any bonus or other supplemental payment, whether payable before employment, during employment, or after termination of employment, that is not directly based on performance-based measures set forth in standards established by the Secretary in accordance with paragraph (2).
An institution shall not become subject to the requirements of this paragraph as a result of doing business with a recipient of a direct capital investment under the TARP or under the amendments made by the Housing and Economic Recovery Act of 2008.
"(4) CONDITIONAL EXEMPTION. --
"(A) REPAYMENT AGREEMENT. -- Paragraph (1) shall not apply to a financial institution that has entered into a comprehensive agreement with the Secretary to repay the United States, in accordance with a schedule and terms established by the Secretary, all outstanding amounts of any direct capital investment or investments received by such institution under this title.
'(B) DEFAULT. -- If the Secretary determines that an institution that has entered into an agreement as provided for in subparagraph (A) has defaulted on such agreement, the Secretary shall require that any compensation payments made by such institution that would have been subject to paragraph (1) if the institution had not entered into such an agreement be surrendered to the Treasury.
Cavuto began the segment by saying to former General Electric CEO Jack Welch, "Jack, to this issue where Congress is hell-bent on dictating pay for everybody." Welch responded, "Well, for those who have received money from the -- " Cavuto interjected, "For now." Welch replied, "For now." Fox News business correspondent Dagen McDowell also acknowledged that the bill would only affect pay at institutions that have received federal assistance, while suggesting it may result in a "slippery slope." McDowell stated: "I thought, 'Oh, you know, it's to be expected that the government is going to try and control the pay of people -- of companies that took taxpayer money.' But you have to wonder if that slope doesn't become so slippery, they start going after companies that do a lot of business with the government, like the defense industry."
From the April 4 edition of Fox Business Network's Cavuto on Business (which subsequently re-aired on both Fox Business Network and Fox News):
CAVUTO: Jack, to this issue where Congress is hell-bent on dictating pay for everybody.
WELCH: Well, for those who have received money from the --
CAVUTO: For now.
WELCH: For now. And that's where they've gone, Neil. And the idea is insane. I mean, I'm an owner of this business, and the way they talk about the fact that these people can't go anywhere. They can go to foreign banks, they can go to hedge funds, they can go all kinds of places. I want my investment to have a return on it. And the idea that they're restricting the best players from dealing with my investment frustrates the hell out of me.
CAVUTO: Ben Stein, what's going on here, though, is bigger than just the big guys who might have brought on this calamity. By extending this to policing the pay of everyone at the company, you are opening a lot of doors, aren't you?
STEIN (conservative commentator and actor): Yeah, we have a big problem here. I mean, the problem was brought on by excessive pay on Wall Street and in many corporate executive suites. There's no doubt about it. They were begging for trouble because of the way they've been paying themselves and looting the stockholders for years. But the idea that government -- which is, again, not some genius; it's not Albert Einstein, it's somebody at the Department of Motor Vehicles wearing a different jacket -- is going to be capable of regulating pay is nonsense. This is a bill that essentially legitimizes envy and puts a law around envy and says that it's a public service.
CAVUTO: Can you imagine when Ben has to renew his license, how that's gonna go? Dagen, I guess what I found most offensive with the congressman and those who ultimately supported this is they're saying, "We will police objectionable pay right down to secretaries and assistants, but we won't tell you what objectionable is. We'll leave that in the hands of Treasury, political appointees all, who will ultimately decide on things that we're not fine-tuning right now." So they are going to write a number on a blank check backed by our money. That's the slippery slope I'm talking about.
McDOWELL: It's a slippery slope of that and also what Jack was pointing out, is not treating these investments like we're investments. They're not thinking about these companies as businesses that we want to get our money back from. Instead, they're just trying to hit all the people in terms of their pay. And I'm dead wrong about this. I thought, "Oh, you know, it's to be expected that the government is going to try and control the pay of people -- of companies that took taxpayer money." But you have to wonder if that slope doesn't become so slippery, they start going after companies that do a lot of business with the government, like the defense industry. If we let this keep happening, that's what will happen.
CAVUTO: Charles, I recently I spoke to -- I consider him a modern-day philosopher -- Don Imus on this very subject, a New York radio icon, who said, "Well, what's wrong here? We've given, you know, 180, $200 billion to, let's say, AIG. It's our money. We can decide how it's spent at the company." What do you think of that?