Senators Barbara Boxer, Chuck Grassley (R-IA) and Jay Rockefeller (D-WV) today applauded Senate passage of their Commonsense Defense Contractor Compensation amendment to the National Defense Authorization Act, which would lower the maximum amount taxpayers reimburse defense contractors for their salaries.
The measure is also co-sponsored by Senators Al Franken (D-MN), Claire McCaskill (D-MO), Daniel Akaka (D-HI), Sherrod Brown (D-OH), Jon Tester (D-MT), Amy Klobuchar (D-MN), Bob Casey (D-PA) and Debbie Stabenow (D-MI).
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The Senators’ amendment would limit the taxpayer reimbursement for defense contractor salaries to the amount of the President’s salary – currently $400,000. The measure would also extend the cap to all defense contractor employees.
Currently government contractors can charge taxpayers $693,951 for the salaries of their top five employees, based on an executive compensation benchmark last amended in 1998. Employees of government contractors outside of the top five can and do earn taxpayer-funded amounts in excess of the current benchmark.
Senator Boxer said, “Taxpayers should not be on the hook for exorbitant government contractor salaries. This amendment ensures that no defense contractor will make more in taxpayer funds than the President of the United States, who is the commander-in-chief.”
Senator Grassley said, “We can’t afford to waste increasingly limited defense dollars. This amendment goes after an unnecessary expenditure by containing runaway spending in a type of contract used extensively by the Department of Defense.”
Senator Rockefeller said, “The Senate took a step in the right direction by deciding to cap excessive salaries for corporate executives and other government contractors. It’s not fair to ask taxpayers to pay private sector workers more than we pay anyone else, especially when many families in West Virginia and across the country are struggling to make ends meet.”
The salary benchmark has nearly doubled in the last twelve years. From 1998 to 2010 the benchmark has grown 53 percent faster than the rate of inflation. According to a study from New York University, in 2005, the most recent year for which statistics have been compiled, there were 7.6 million government contractors, including 5.2 million defense contractors.
The proposed taxpayer salary reimbursement limit is still double the $200,000 salary that Cabinet Secretaries earn. Additionally, the amendment would in no way limit employee compensation from non-government revenue streams.
A final vote on the National Defense Authorization Act is expected tonight.