The Pay Czar Is Unconstitutional

Writing in the Wall Street Journal, Michael McConnell asserts that President Obama's pay czar is unconstitutional and that all of his acts and activities are in the violation of the rule of law in our nation. McConnell is a smart guy- professor at Stanford University Law School, director of its Constitutional Law Center, a senior fellow at the Hoover Institution, and a former federal judge on the 10th Circuit Court of Appeals- so he kind of knows his stuff.

Obama's "pay czar" Kenneth Feinberg recently called up top executives at private companies that work in the United States and told them that he had decided to slash their pay in half. Where does he get the just and legitimate power to do this?

As part of the hastily enacted and seldom-read legislation establishing the Troubled Asset Relief Program (TARP), Congress authorized the Secretary of the Treasury to "require each TARP recipient to meet appropriate standards for executive compensation." To carry out this task, last June the Treasury promulgated an emergency "Interim Final Rule," waiving ordinary requirements for a public comment period.

As part of this emergency rule, Treasury Secretary Timothy Geithner created the office of "Special Master" for compensation, delegated his TARP authority to set compensation standards to this officer, and appointed Mr. Feinberg (a lawyer and mediator) to this position, without obtaining Senate confirmation.

This is the government that will soon be deciding what is 'appropriate' energy use, 'appropriate' spending on healthcare, and 'appropriate' content for radio. Read the language of the kind of bills that Democrats are working to pass as laws in our nation- they are putting in unelected, unconfirmed bureaucrats who will run our lives for us. This is not protecting our freedom and property better- this is tyranny.

Therein lies the problem. The Appointments clause of the Constitution, Article II, section 2, provides that all "Officers of the United States" must be appointed by the president "by and with the Advice and Consent of the Senate." This means subject to confirmation, except that "the Congress may by Law vest the Appointment" of "inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments."

There is no doubt that Mr. Feinberg is an "officer" of the United States. The Supreme Court has defined this term (Buckley v. Valeo, 1976) as "any appointee exercising significant authority pursuant to the laws of the United States." Mr. Feinberg signed last week's orders setting pay levels for executives at Bank of America, AIG, Chrysler Financial, Citigroup, GMAC, General Motors and Chrysler. They have the force of law and are surely an exercise of "significant authority" pursuant to an Act of Congress. He is not a mere "employee," acting at the direction of a superior. That means his office is subject to the requirements of the Appointments Clause.

While somewhat more disputable, Mr. Feinberg's is probably an "inferior" officer, defined as one subject to supervision and removal by a member of the cabinet. Although he has substantial discretion and independence, Mr. Feinberg reports to the secretary of the Treasury, who can fire him any time for any reason. This means that Congress could, if it wished, vest the appointment of the pay czar in the secretary, without any need for Senate confirmation.

But Congress has not done so. On the contrary, it vested the authority to implement TARP's compensation provision in the secretary of the Treasury. The secretary may sub-delegate that power to someone else—but that someone must be an "officer" properly appointed "by and with the advice and consent of the Senate."

In other words, the pay czar in unconstitutional.

The power to set compensation at large American businesses is especially subject to potential abuse, favoritism, arbitrariness, or political manipulation. It is no reflection on Kenneth Feinberg, who has a sterling reputation and who appears to have approached these sensitive duties with a spirit of commendable integrity, to say that the checks and balances of the Constitution should be scrupulously observed. They were not. Because he is not a properly appointed officer of the United States, Mr. Feinberg's executive compensation decisions were unconstitutional.

You vote Democrat, you get a government that supports the violation of our constitution and a government that takes away liberty, property, and life. You get a tyrannical government, the kind that our founding fathers faught against.