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Corporations reward their employers with bonus compensation and salary increases relative to how well they perform.  In sports, New York Yankee’s third baseman Cody Ransom earns $450,200 per year, while teammate Alex Rodriguez earns 73 times as much ($33 million) to play the same position. President Obama is a supporter of merit pay for teachers, and said recently “It’s time to start rewarding good teachers, stop making excuses for bad ones.”

These are examples of incentive based pay, and it is the way our nation, and much of the world, works.  The idea is that if you reward someone for the value they are adding, it motivates them to add as much value as they can.  The concept is as old as the hourglass and distilled liquor.

This paper proposes that our lawmakers, our representatives in government, receive incentive based compensation.  It investigates a formula for and calculates a new salary for the current 99 sitting Senators.

Why it Might not Work
Elected officials are constantly plagued by rumors of corruption, quid pro quo, and backroom deals.  Their motivations and usage of power are frequently called into question, most recently and most publicly by the stories of the exorbitant expense claims by members of the UK Parliament.  If anyone should be rewarded for their level of effectiveness and public dedication, certainly it should be those chosen to work on behalf of the people.

But there are several reasons why this may be a misguided strategy.  For one, salary is not the reason most lawmakers take the job on, and they’ll be sure to make that known in an interview.  Many members of state and federal congress are attorneys who could otherwise be earning large salaries, including 60% of US Senators in 2007.  Many Congressmen have already earned their large salaries, as 62% of US Senators and 39% of US House Representatives were already millionaires in 2007, according to an October 2008 post at opensecrets.org. This is in contrast to their constituency, where 1% of the American adult population are considered millionaires.

Still the most disheartening reason why dangling a $5000 carrot in front of these horses will not make them walk the most honorable track is that those who are dishonest are able to wield their power to achieve benefits far more valuable than a $5000 salary bonus.  But let’s imagine that this concept of merit pay was to catch on, and the public demanded it.  How would the reward system work?

The Formula
Much like the ongoing debate about merit pay for teachers, rewarding lawmakers appropriately based on the value they add proves to be difficult because quantifying the value they add is difficult.  Based on their common titles, representative and lawmaker, we should probably try to reward those that best represent their constituency, and those that make the best laws.  The country also looks toward elected officials as model citizens, patriots, and sources of inspiration, and so those soft skills should be rewarded if possible.

The recent financial crisis in America has the public outraged by corporations who have rewarded their executives handsomely even when the company has failed to turn a profit.  While Congress is not directing the country, it does create the budget.  If Congress has created a budget that has led the country to a large(er) deficit, perhaps they should be penalized via their compensation for it.  This can quickly become gray area is it may directly incent Senators to put their salaries ahead of the best interest of the country.  Activities that are more quantifiable are easier to relate to a compensation formula, so we start the investigation with bills.

Let us consider the number of bills that a Senator sponsors.  As law-makers, literally, can we say the most valuable maker-of-laws are those who make the most laws? According to opencongress.org, in 2009, Diane Feinstein (CA) has sponsored 40 bills, David Vitter (LA) has sponsored 38, and Daniel Inouye (HI) has sponsored 29 to lead the category.  However, most of these bills have not passed (yet), so it may ultimately be better to look at the bill-to-law success rate when considering compensation.  A bill that doesn’t actually become a law is in effect wasting taxpayer money.

It also seems logical that a Senator who is a member of many committees is doing more for the country than a Senator who sits on fewer, so perhaps those doing more should be rewarded. A sitting Senator today is a member of four committees on average, not including subcommittees, so our formula will provide bonus compensation to those who are serving on more than four committees.   Of course, it is worth considering that spreading one’s self too thin does not add value for the American public.

Voting History
Senators are followed for decades by the history of the votes they’ve cast, and their traceability is a reason for that.  Voting history is a conveniently quantifiable way to track a Senator.

If a Senator votes frequently with bills that ultimately pass, and infrequently with bills that ultimately fail, one could say that Senator should be rewarded.  They must be either convincing others of their opinions, or have an innate ability to gauge a bill that makes sense to a majority.  In these cases a Senator should be rewarded.  However, a Senator who frequently votes with the ultimate outcome of the bill could also identify a Senator who only has courage to vote with the majority.  In this case the Senator should be penalized in their compensation.

Perhaps a Senator should be rewarded for each time they were in the minority. This could mean that they are representing the under-represented, those who need representation the most.  After all, very few decisions are unanimous.

Certainly Congressman should be rewarded if they are voting on the issue, and not simply along party lines.  Opencongress.org tracks the frequency with which Senators voted with their party, and while voting with his or her party is not necessarily wrong, if it happens too frequently (more than 96% of time) they are penalized in our compensation formula.

Those Senators who run for President miss many votes on the floor, and while they had the country’s best interest in mind, they certainly did not add value to the Senate on the campaign trail.  Abstaining on a vote when actually present for the vote can also be seen as a political tactic that should not be rewarded.

Debatable
A Senator who is active in debates is surely considering all sides of arguments, the sign of a valuable lawmaker. The Sunlight Foundation has created capitalwords.org, an application that tracks and analyzes the congressional record and creatively illustrates the most spoken words by our representatives: “health”, “credit”, and “care” top the list this month.  It also tracks the most verbal lawmakers over the last 60 days, led currently by Senator Durbin (IL) and Representatives Steve King (IA, 5th) and Shelia Jackson-Lee (TX, 18th).  The quietest lawmakers have been Representatives Jo Emerson (MO, 18th), John Deal (GA, 9th), and Jose Serrano (NY, 16th).

Perhaps the most verbal ten should receive a bonus, and the quietest ten should suffer a pay deduction.  Or maybe we should reward those, as Socrates advises, who hear and see more than they speak. This information did not make it into our compensation formula because the data was not readily available for all Senators, but otherwise would have.

Earmarks
Earmarks are a controversial topic, where by lawmakers bury specific funding for their state or district inside larger bills.  Earmarks in general are frowned upon by citizens, except those who are in receipt of the roads, bridges, or hospitals that the funding has gone on to improve.   Deciding whether earmarks should be rewarded or penalized is difficult.  Since a Congressman ultimately must answer to his electorate, does a state view a Senator who brings in large earmarks as one who is succeeding, or one who is crooked?

According to numbers published by Taxpayers for Common Sense, Senators Byrd (WV) and Cochran (MS), head the list of solo earmarks by sitting senators in 2008 (the numbers including combined sponsors are different), while dozens of representatives did not earmark a dollar.  Our formula rewards those without earmarks.

Representing
To be acknowledged as a good representative, a Senator must be in tune with his or her constituents.  While this is difficult to measure, surely statistics can be compiled.  A representative that meets with the most citizens during a term is probably sponging the most sentiment, and should be rewarded as the most in-touch representative.  A Senator who is most available to their constituency, and not just at fundraisers, should receive bonus compensation. While there is no website (yet) that tracks the number of handshakes made by a Senator, it can be assumed that a state is happy with the job being done if the state decides to reelect the Senator.

Simply put, if a Senator is adding value, they win reelection.  If the citizens feel that a Senator is corrupt, misguided, or not representing the interests of the state, they choose someone else to do the job.  And so our formula views reelection as a nod from the people that everything is ok, and the Senator should be compensated for passing that reevaluation.

With that in mind, perhaps an elected official is already working a merit based job, whereby they are allowed to keep their job only if they add value.

The New Salaries
A Senator in 2009 will earn $174,000 under the existing system (party leaders receive a $20,000 bonus).  We will begin our formula giving Senators a base salary of $130,000.  Please note this is not an exercise to trim the budget by cutting salary of Congressmen.  The total salaries under this proposed formula are about the same as they are under the current system.  The goal here is to reward those who are adding the most value.

Also note that for future formula revisions, it would be a symbolic gesture to start each Senator’s base salary at the median household income level for the state they represent – about $50,000.

From our base salary, our formula:
•    Adds 10k for each re-election
•    Adds 10k for each committee over 4, subtract s 10k for each less than 4
•    Adds 1k per bill sponsored over 5, subtracts 1k per bill fewer than 5
•    Adds 10k if they voted with party less than 96% of the time, subtracts if they voted with their party more than 96%
•    Adds 10k if they had zero solo earmarks (2008), subtracts 10k for each $100 million in solo earmarks

The result is that the longest serving Senators like Snowe (ME), Akaka (HI), Wyden (OR) and Schumer (NY) top the list with new salaries of about $240,000.  This is rewarding them for proving to their constituency 10 separate times that they are doing a good job.  First term Senators are all near the bottom of the earnings list, with Senators like Begich (AK), and Burris (IL) earning $115,000.  They have not sponsored a bill and sit on only 3 committees each.

Senators Feinstein (CA) and Vitter (LA) receive considerable bonuses for sponsoring so many bills (40 and 38, respectively).  Their new salaries would be above $200,000.

Senators Byrd (WV) and Cochran (MS) are heavily penalized for their extremely high earmark requests, and so have received only modest raises even though they are very senior Senators.

While this formula is not ready to pass both houses of Congress as it is written today, it does provide a starting point.  A Senator has a difficult job, and gets pulled in many different directions. The right incentives would help to keep the Senator’s personal motivations aligned with those of the citizens they represent.

The complete list is available here, and a sortable spreadsheet is available here.