It’s bonus season in the city, and they’re bigger than they’ve been in years—about $15.9 billion, second only to 2000’s payout. But Representative Barney Frank, the head Democrat on the House Financial Services Committee, wants the plutocrats to know that they should feel guilty about it. Carl Swanson spoke with him.
What’s your beef with bonuses?
It’s not simply the offensiveness. Bonuses distort the system. They give perverse incentives. Your bonus depends on your company meeting certain short-term targets; that’s when we get into these accounting fusses because you play games. I’m now convinced that accounting practices in derivatives range between astrology and alchemy. If I do the accounting one way, I get a bonus, and if I do it another way, I don’t. Well, that shouldn’t be there.
But what about the trickle-down?
I’m a capitalist, and if you’re a capitalist that means you realize that inequality is a good thing. But I also believe that if you don’t have a government role, then inequality will get out of hand. If you notice retail sales this past year, stores like Neiman Marcus are doing wonderful. Wal-Mart is hurting. The rich are getting richer, and the working class are not. And that’s not just a matter of equity—you can have a problem if you don’t have the kind of consumption that drives an economy, and I think we’re on the verge of that. Henry Ford gave [workers] $5 a day because he said, “Who will buy the cars?” We’re running out of people to buy the cars.
What’s going to happen with Bush’s tax-cut proposals?
I think they will be able to go forward with it, but I think the public will say, “Wait a minute, we voted for that?” People are going to say, “Gee, I like the music, but I’m not crazy about the words.”
Apart from Wall Streeters, anyone else who made too much last year? Alex Rodriguez?
Athletes’ salaries are a major factor in why cable rates are so high—and we ought to try and deal with that. Everybody just passes along the salaries until the poor bastard pays his cable bill.