Thanks to WPRO’s Matt Allen for the heads-up about the “Pay for Performance Act of 2009” bill that got voted out of Elmer Fudd’s … er, Barney Frank’s committee last week. Byron York at the Washington Examiner reports.

But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the “Pay for Performance Act of 2009,” would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place.

NewsBusters’ Tom Blume points out why this bill is a really bad idea.

Geez, it wouldn’t be much of a stretch to extend Geithner’s reach to:
– Any company with a Small Business Administration loan.
– Any university with students who have borrowed money from the government to attend (i.e., almost every institution of higher learning in the US).
– Any company whose employees use government services (i.e., an interstate highway or a subsidized mass-transit ride) to get to work.
That is, it’s not a very far trip to controlling everyone’s earnings.

So, responding to this amazingly bad idea, Matt Allen this evening proposed a trade: we allow the government to void those contracts and retroactively set those wages; in exchange, we get to open all state and local collective bargaining contracts touched by TARP or stimulus money and adjust the compensation therein.
I would go one step further. No trade is necessary. If Barney’s bill (did I mention what a bad idea it is?) does become law, it enables exactly what Matt proposes. We could reach back and retroactively adjust public employee contracts. And not just contracts that get TARP or federal stimulus money. State and municipal contracts are funded with public tax dollars, the same type of funds as TARP and stimulus money. Barney’s Law could become the precedent for all states and municipalities to unilaterally revisit their contracts across the board. No trade, bankruptcy or court order needed.
As Matt said, “Who’s in?”