U.S. Senators Barbara Boxer (D-CA) and Chuck Grassley (R-IA) this week introduced the Commonsense Contractor Compensation Act of 2012, S. 2198, which would lower the maximum amount taxpayers reimburse all government contractors for their salaries.

The Senators’ bill would limit the taxpayer reimbursement for government contractor salaries to the amount of the President’s salary – currently $400,000. The measure would also extend the cap to all government contractor employees.

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Currently government contractors can charge taxpayers $693,951 for the salaries of their top five employees, based on a federal executive compensation benchmark. Employees of government contractors outside of the top five can and do earn taxpayer-funded amounts in excess of the current benchmark.

The new bill would build on a previous measure by Senators Boxer and Grassley – which was passed as part of the National Defense Authorization Act in December – that set limits on taxpayer-funded salaries for defense contractor employees. It extended the $693,951 salary cap to all defense contractor employees, not just the top five.

“As Senator Grassley and I made clear in December, we will keep fighting to rein in exorbitant taxpayer-funded salaries for contractors,” Boxer said. “There is simply no reason that taxpayers should fund government reimbursements for private contractor salaries at a rate more than three times what Cabinet Secretaries earn.”

Grassley added, “The direct taxpayer-funded salaries of government contractors clearly need to be contained, and this legislation is designed to do so. There’s no justification for these payments to be higher than the salary of the President of the United States.”

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 provided by private companies out of their own revenue streams.