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A Victory for Populism

from Greg Mankiw's Blog by Greg Mankiw
The Wall Street Journal reports:
The giant stimulus package that cleared Congress Friday includes a last-minute addition that restricts bonuses for top earners at firms receiving federal cash -- including those that already received it -- more severely than the Obama administration's previous pay limits....As word spread Friday about the new and retroactive limit -- inserted by Democratic Sen. Christopher Dodd of Connecticut -- so did consternation on Wall Street and in the Obama administration, which opposed it. The administration is concerned the rules will prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness. Both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, had called Sen. Dodd and asked him to reconsider.
This story is one sign about what concerns me about the direction of economic policy. President Obama has appointed some outstanding economic advisers. But policy will be determined largely by Congressional leaders whose instincts are more populist and less informed by solid economics.
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