You're watching...
Former FDIC Chair Sheila Bair argues Congress would run better if lawmakers were paid based on performance.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- football Coach Kyle flood is getting some major attention these days David his salary.
Is 750000.
Dollars were saying just seven -- up 750000 dollars because Louisville's Coach.
With the same -- -- -- record in the big east makes more than two million dollars but there is some incentives for -- -- what to make more money.
But.
Cruz wins ten games he gets 45000 -- named big east Coach of the year 25000 -- national -- here 50000 so there are actually enough incentives.
That a hundred grand do is pay.
And we've got someone who says congress could learn a thing or two from the sports world in the private sector.
By instituting pay for performance joining us now is Sheila Bair she is former FDIC chair.
Wow what an idea IB you know everybody scrambling around Friday -- -- you gotta get congresses to do better they get more things don't.
Let's explain for folks who haven't read your piece exactly are -- members of congress now make about a 180000 dollars year.
You would split that into two parts 90000 cash because they need some cash for living expenses.
And how would they get the other 90000.
They're actually -- in and ten year treasury bonds so which they would have to hold the maturities of those bonds they would have to think about what those bonds.
Their -- -- at the end of ten years to try to make them think about it long term.
Interest and I would also condition granting those bonds on certain economic performance.
Metrics having GDP growth about 3%.
Having -- labor force participation rate about 66% a number of people have jobs are looking for jobs.
And then also I have a say on pay so that voters -- get to vote.
On how the president and the congress collective way.
Are working has served the country and and they wouldn't get part of -- bonds they would have to have access say on pay vote via by the general population.
Listen were also paper for for performance here especially when it comes to our our leaders in politics but.
Yeah look let me just play devil's advocate aren't treasuries and the value of treasuries subject to things not just.
That can be controlled by the US economy and what congress may or may not accomplish but also say for example.
Headline disasters overseas the Chinese -- a lot of our debt not helps our bonds sometimes right.
Well -- and short term market.
Movements in the value of the treasury bonds wouldn't matter they would have to hold those bonds of maturities so again.
They would be having a look at ten years down what would they be worth and so I think that would did take a longer view not short term swings that.
Longer term how stable is our economy how stable is our tax base how how stable and controllable is in play India is inflation -- which would be.
Very cheap and it courts issue they would issue -- your new bus would be -- -- fluctuations in interest rates -- reflected in the new law.
Issuance of treasury bonds that they would have to hold the maturity they'd have to look ten years out I think that's the important feature of this the short term fluctuations wouldn't matter.
Well that that means that they'd also have to be worried about inflation which is somebody that they -- excited -- -- that is should be worried about exactly there -- their their money -- I forgot what I it.
Well exactly I mean I think if we continue on this unsustainable.
Fiscal path.
We are going to have to have more severe problems with inflation and potentially attention straight volatility to if investors overseas as Chinese investors -- wherever -- -- debt now lose confidence.
Interest rates despite which would also lower -- the value of the bonds -- -- -- bonds so.
I think there's a lot of guilt innocence and -- combined with economic performance metrics.
The good help maybe get our members of congress are present on the track.
Of improving our fiscal -- and improving our economic -- let me give you hypothetical.
If -- your -- were in place for paper for perfect for performance.
Right would anybody come out a winner as we head toward the fiscal cliff do you -- -- Sheila hello.
Heat -- you don't believe we're gonna see a resolution here.
Well I think that if we had this trip this pay for performance.
Framework it would help again as -- avoid the fiscal -- on how we go over the fiscal cliff.
I think it may help it will hurt our economy to which -- internal -- there -- tax -- will also impair.
The perception of the government of the federal government as as credit worthy so -- at.
We need to avoid the fiscal cliff fully also need to start making some tough decisions about how we're going to put herself on a sustainable path in -- our fiscal our tax and spending policies.
You know the president has said he wants to reach out like he apparently didn't in the first term -- to people from the other party and some people of actually thrown your name -- Into the mix is a possible Treasury Secretary.
But there's this idea which is probably radioactive inside the -- that's like.
As -- this this process diminish your chances of becoming treasuries and.
Hello hello -- you know I decided -- while back and at this stage in my career in my life and we have so many problems and there is so many things -- is very concerned about 2008 crisis magazine did this start speaking out.
And outlook do I think this a proposal has traction I don't know maybe bits of that like say on pay would.
But I really just want to simulate a public discussion about this and hopefully congress and the president will think harder to about what their incentives are.
MI appears that the government really is being managed selects and selection and it's all about the short term election prospects and not really about the business of governing and and that's where we need to get our.
Folks in Washington refocus well of Timothy Geithner the current Treasury Secretary word is that he will be very much a part of negotiating the fiscal -- discussions.
You've been critical of him in the past do you have faith that he might be able to negotiate a in a positive way.
Well I don't know I I think added the -- depends it.
I guess I -- wish everyone well and those specials including secretary Geithner.
We need to get a good agreement and good solid fiscally responsible agreement out of out of this claim that congress we sure do.
Do we do it with the -- perhaps better with a new Treasury Secretary.
Well I do you think it's an important point anywhere over the next Treasury Secretary is says should be one who can work with congress on a bipartisan basis and actually get agreements someone who can.
Yes compliment the president says skills in this area but has credibility and stature so -- like on the -- -- Yes I -- -- I've known him for years I think you'd be very good -- Treasury Secretary.
Very evenhanded he's.
Bowles Simpson was something I supported a lot of people to -- And he announced Simpson and throughout the country you know on their own dime promoting fiscal responsibility educating the public -- -- very committed public servants -- acres and would be great Treasury Secretary absolutely Sheila Bair pushing ahead with pay for performance for congressional members and even the president it's an interest -- idea we like -- hectic I help my clients and Angela get eventually.
Sheila Bair -- the former FDIC chair.
