Obama Drops Plan to Cap Salaries, in Today's News 06.10.09

Obama Drops Plan to Cap Salaries. WSJ: "The Obama administration is dropping its plan to cap salaries at firms receiving government bailout money, leaving them subject to congressionally imposed limits on bonuses. The move is likely to end months of confusion on Wall Street about separate pay directives from the White House and Congress."

This is Obama retreat number two. (For a commentary on retreat number one go here.) Yesterday the Obama people dropped one of the key cryptocracy mandates. Today's retreat is of a different character. Salary caps were definitely not a cryptocracy directive. Salary caps are just a liberal fantasy about trying to look important, like good socialists. Imposing caps was never really a serious consideration. The caps basically provided a militant-looking cover for the liberals' abysmal deference to the cryptocracy. It was inevitable that a retreat would occur. Now we wait for congress to water down its proposal.

But, it is now possible to generalize that Obama has come up against the reality of hard Washington politics.  He is being forced to tone down some of his more extreme plans. 

Saving face becomes prominent, "The push to revamp compensation practices at all financial firms suggests the administration hasn't dropped its goal of making far-reaching changes to how banks pay employees. But this element of the plan will likely come in the form of recommendations, which may raise questions about how effective they can be."

In other words, they are abandoning the pay-cap ship.