The Heritage Foundation

The Morning Bell


FRIDAY, OCT 23, 2009

The Unaccountable Obama Czar State

Yesterday the United States Department of the Treasury Special Master of Compensation Kenneth Feinberg announced a wage control scheme for the 175 executives of the seven companies that have received the most funds from the taxpayer funded Troubled Asset Relief Program (TARP). At first the Obama administration denied any involvement in Feinberg’s decision. Politico reports:

 In fact, sources within the administration say the decision to cap corporate pay was Kenneth Feinberg's, and his alone. A senior administration official tells POLITICO that Obama did not sign off on the pay master’s decision. Feinberg didn't even brief the White House on it, the official said, but he briefed Treasury officials instead.

But after yesterday’s announcement that the Federal Reserve released its own plan to control how banks compensate their employees, the New York Times reported:

The announcement was choreographed to coincide with the decision by the Obama administration this week to cut the pay of many high earners at the seven companies that received the most taxpayer help. Both decisions were announced amid growing public outrage over large pay packages at many of those companies.

So which is it? Are the new wage control schemes launched by the Pay Czar and the Fed the acts of independent experts, or are they the closely controlled policy decisions of the Obama White House?

The answer to that question goes to the core of the very real constitutional problems that the proliferation of czars in the Obama administration creates. Obama appointed Feinberg to be his Pay Czar without any input from the American people and without any approval from Congress. Heritage fellow Matthew Spalding explained the problem in his recent testimony to Congress:

The issue is not whether the proliferation of “czars” amounts to a usurpation of power by the executive branch. Rather, the fundamental issue is how the rise of modern administrative government has put us in an unsolvable dilemma: whether policy should be made by technical experts, insulated from public accountability and control, or whether policy should be made by our elected representatives in Congress and the executive branch. The rise of government by bureaucrats–due to the delegation of power from Congress to administrative agencies, combined with the removal of those agencies from the President’s control–has given rise to efforts by Presidents from both parties to get the bureaucratic state under control through various mechanisms. The rise of “czars” in the current administration is just another manifestation–albeit, an unfortunate one–of this phenomenon.

If the American people did want hold the Fed and the Pay Czar accountable for their wage control decisions, right now there is no way for them to do so.