Press Release of U.S. Senator Barbara Boxer

Boxer, Grassley, Rockefeller Introduce Measure to Limit Taxpayer-Funded Salaries for Defense Contractors  

Washington, D.C. – U.S. Senators Barbara Boxer (D-CA), Chuck Grassley (R-IA) and Jay Rockefeller (D-WV) today introduced the 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) and Sherrod Brown (D-OH).  

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, “Especially in these difficult economic times, there is no reason taxpayers should fund government reimbursements for private contractor salaries that are over three times the pay earned by Cabinet Secretaries. Contractors are free to pay their employees whatever they want, but there must a commonsense limit on how much they can earn when taxpayers are footing the bill.”  

Senator Grassley said, “Government contractors shouldn’t be allowed to featherbed their contracts at taxpayer expense. We need to get a handle on these expenditures so the taxpayers aren’t fleeced.”  

Senator Rockefeller said, “It’s inexcusable for taxpayers to foot the bill for excessive salaries for corporate executives and other government contractors. Too many families throughout the country and West Virginia are still struggling to make ends meet, and it’s just unfair and wrong to insist that they pay for the salaries of private sector workers who are making more than 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.  

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.

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