Most federal employees are paid in accordance with the government’s GS pay scale. Most are paid on the scale from GS-1 to GS-15. This is what we have agreed to pay federal employees.

If this is what we agree employment by the taxpayer is worth, then why don’t we apply it to all instances where federal funds are involved?

If the administration decides to bail out a major bank with federal funds, the pay scale of that bank would immediately become the GS scale. The president of the bank could not have a salary in excess of GS-15 ($201,000). All other executives of that bank would be adjusted accordingly. If the executives don’t want their salaries reduced to the GS scale, they don’t get government funds. Their salaries don’t revert from the GS scale until all federal funds are repaid.

There are exceptions to the GS system. If the salary of the four-star admiral responsible for the entire United States Navy is $600,000 per year, can a bank president or CEO be worth more? No.

Let’s extend this idea to nonprofits, which, by definition are supported by taxpayers. Excusing the tax burden of the nonprofit imposes a financial burden on taxpayers. All nonprofits, because of this taxpayer support, should be bound by the GS pay scale.

This will probably not affect most nonprofits as their executive salaries probably fall far below GS limits. However, many health care institutions declare themselves to be nonprofit, yet pay their executives millions of dollars. If a hospital or health care consortium doesn’t want their executives to be constrained by GS limits, then they should not have nonprofit status.