The first week has become the worst part of each month. That’s when bad economic news gets worse—or at least when the bad news is first announced. On Friday, February 6, the Bureau of Labor Statistics reported a loss of 598,000 jobs in January, bringing the total to 3.6 million since December 2007.

The collapsing economy is creating more and more “have nots,” as in those who don’t have a job. If you’re not a “have not,” you’re probably worried about becoming one.

In this atmosphere, it’s no surprise that the biggest “haves”—Wall Street CEOs—are coming under heavy fire for their exorbitant pay packages. They raked in enormous bonuses while their companies lined up like individual Oliver Twists asking for hundreds of millions of federal bailout dollars.

They’ve made themselves inviting political targets. On February 4, President Barack Obama took aim by issuing an executive order that would limit executive pay to $500,000 annually at financial institutions that seek “exceptional assistance,” as opposed to TARP (Troubled Assets Relief Program) capital injections, from the government in the future. 

The only addition to that base pay would be restricted stock options that only vest when the government is paid back. In addition, golden parachutes would be limited for the top 25 executives.

As he has done frequently in his short time in office, Obama used the bully pulpit to make his point. He excoriated the Wall Street crowd, calling the disbursement of “customary lavish bonuses … the height of irresponsibility.” He was just warming up. “That’s shameful,” Obama said. “And that’s exactly the kind of disregard for the costs and consequences of their actions that brought about this crisis: a culture of narrow self-interest and short-term gain at the expense of everything else.”

Wall Street executives have become fodder for many Democratic causes. Rep. George Miller, D-California and chairman of the House Education and Labor Committee, used CEO pay as a rhetorical device in promoting his favorite legislation, a measure that would make it easier for employees to form unions.

In a Capitol Hill rally on February 4, Miller said the bill would give workers leverage to raise their wages and increase their benefits, making it possible for them to gain their fair portion of gains from their productivity that are now going to “corporate elites” like CEOs and shareholders.

But there is hope yet for the embattled Wall Street CEOs. Just as the executive pay rules included in TARP last fall did not put a crimp in the compensation spigot, the new ones may not shut off the cash flow either.

For one thing, the executive order only applies to companies that ask for “exceptional assistance” in the future. Those that sought it last fall—including American International Group, Bank of America and Citigroup—are not affected.

In addition, the rules apply only to people at the top of the financial firms, leaving the door open for many other multimillion-dollar bonuses farther down the corporate ladder. Critics quickly pointed out the shortcomings of the plan.

Some assert that Wall Street leaders have the insight, financial acumen and leadership ability to deserve every penny of the tens of millions—or even hundreds of millions—of dollars they receive. Of course, the disastrous shape most of their companies are in creates at least an embarrassing if not devastating counterpoint to this argument.

Quite apart from their talent, though, the executives have something else just as important going for them—their collective political war chest. The pilgrimage to Wall Street for political donations each election cycle is a bipartisan phenomenon.

Obama did quite well trolling the Street. He raised $14 million of his $750 million from the “securities and investment” industry, according to the Center for Responsive Politics. Companies that received federal bailout money last fall made $37 million in federal campaign donations.

Contributing money to a candidate is not inherently corrupt. In fact, it’s a form of free speech that should be defended—as long as the sources of campaign cash are transparent.

But it does pay to follow the money in politics. Politicians might nip at the hand that feeds them. But they probably won’t chomp down with executive pay laws that have real teeth.

Of all the cameras covering Capitol Hill hearings this week, it’s a wonder that not one of them belonged to the Food Network.

Congressional Democrats—and some Republicans—did so much filleting and grilling of Wall Street executives at two meetings of the House Oversight and Government Reform Committee on October 6 and 7 that I expected Emeril Lagasse to stride up to the dais and explain how best to serve hapless millionaires.

The oversight panel’s exercise was illuminating and cathartic. The committee is known for obtaining thousands of pages of documents from its quarry in advance of their public floggings. Chairman Henry Waxman, D-California, did not disappoint.

On Monday, October 6, he pressed Lehman Brothers chairman and CEO Richard Fuld Jr. on why the investment firm’s compensation committee had recommended $20 million in “special payments” to departing executives four days before Lehman declared bankruptcy.

On Tuesday, October 7, Waxman revealed that the compensation committee of the giant insurer AIG gave CEO Martin Sullivan a bonus of more than $5 million for 2007, a year in which AIG lost $5 billion in the final quarter. This is a firm that received an $85 billion federal bailout in September and another $34 billion from Washington this week.

These egregious examples of excessive Wall Street pay will no doubt inspire Congress to press for executive compensation reform next year that goes beyond the strictures placed on firms that sell their toxic mortgage-based assets to the government.

But the oversight committee won’t be doing the legislating because it does not write bills. Elsewhere on Capitol Hill on Tuesday, it was possible to see the beginnings of a legislative response to the economic downturn caused by collapsing financial markets.

At a hearing of the House Education and Labor Committee that afternoon, there was more marinating than grilling on the topic of retirement security.

The thoughtful, lively discussion included only one Republican. Attendance in general was down at the hearings because Congress is in recess. And Republicans are sensitive about the hearing series becoming political theater.

But the members who were present heard Peter Orszag, director of the Congressional Budget Office, deliver some sobering news. He said that pension funds—public and private—lost roughly $1 trillion, or 10 percent of their assets, between the second quarter of 2007 and the second quarter of 2008.

Rep. Yvette Clarke, D-New York, said that her Brooklyn constituents are “reeling from what is happening to them. They are in a state of shock.”

Their dwindling 401(k) accounts may make them rethink their retirement plans.

“One dimension of the response may be in longer working lives and later retirements,” Orszag said.

Another witness, Teresa Ghilarducci, a professor of economic policy analysis at the New School for Social Research in New York, offered an idea to help people who have seen their 401(k) savings evaporate. She proposes a federal program that would swap toxic 401(k) assets for government bonds.

Labor committee Chairman George Miller, D-California, doubted the ability of 401(k) accounts to bounce back from the recent pounding they’ve taken.

“My sense is that this is somehow different,” he said. “I don’t know how you get well tomorrow the same way you did yesterday. This starts to look very catastrophic for middle-class families.”

The hearing was a preview of how Congress will review retirement policies next year, giving larger Democratic majorities a chance to make their imprint.

Rep. Robert Andrews, D-New Jersey and a labor subcommittee chairman, said that a new balance must be found between a dynamic economy and a strong safety net. He said President Theodore Roosevelt did it with antitrust regulations; President Franklin D. Roosevelt with the New Deal; and President Lyndon Johnson with the Great Society.

“It’s our time to answer that question now,” Andrews said.

It’s hard to assess whether the Richter scale registered higher in Washington or New York after the financial earthquake on Monday, September 29.

The House of Representatives’ narrow 228-205 rejection of a rescue package for the financial markets sent the Dow Jones industrial average down 777 points. The tremors in Washington were even stronger.

Enough House Democrats and Republicans in competitive re-election bids rejected their party’s leadership—and for Republicans it also meant dissing the White House—to deliver a potential body blow to the economy. The kind of bipartisan cooperation surrounding the bailout measure rarely fails.

Proponents said the grave problems facing financial institutions would impact Americans’ daily lives. Americans would no longer be able to get auto, car or business loans, for instance. Their retirement savings would be at risk.

That argument didn’t work. What members of Congress—especially those in vulnerable seats—heard from constituents was anger. It was the raw, amorphous frustration that often lights up the phones in Capitol Hill offices.

The primary focus of Main Street’s ire was wealthy Wall Street CEOs who richly benefit even when their firms crash. Americans struggling through the sluggish economy just don’t accept that outcome. 

“People have an image that this money is going to support executives on Wall Street, and what we’re really trying to do is to fix a systemic problem in our economy,” said White House spokesman Tony Fratto in a September 29 briefing.

Initially, Fratto’s boss didn’t even want to put executive compensation into the bailout package. The first proposal from the administration was three pages.

Congress quickly rejected the idea of authorizing with no strings attached up to $700 billion in tax dollars for the purchase of bad mortgage-based assets. After more than a week of negotiations, the bipartisan legislation grew to 110 pages.

It now includes congressional and judicial oversight, relief for homeowners and assurances that the government would be able to profit from the sale of assets that regained their value.

One of the most politically persuasive additions to the measure was limits on executive compensation for firms participating in the bailout.

“The party is over,” House Speaker Nancy Pelosi, D-California, said at a September 28 Capitol Hill press conference. “The era of golden parachutes for highflying Wall Street operators is over.”

Congressional leaders vow that they will try again to pass a rescue package. Rest assured that it will contain executive pay restrictions.

The business community is wary. They argue that boards of directors should make the decision on remuneration based on industry factors and market signals. They say that pay parameters would add a regulatory burden and make U.S. companies less attractive for the best global executives.

If that talent is so valuable, then Wall Street needs to do a better job of demonstrating how it helps Main Street. It has to link high 401(k) returns to brilliant decisions made by leaders of financial companies.

Once again, this is a situation where the cloistered corporate mentality has to loosen up—communicate with everyday Americans about why the CEO is so important.

If companies don’t make this case, then the executive pay reform in the bailout bill is just the beginning. Next year, expect Congress to take another bite out of exorbitant corporate paychecks.

Workforce Management editor John Hollon and I will have to agree to disagree about the level of political engagement of the American people.

In criticizing the enormous number of hours and column inches devoted to Tim Russert’s untimely death, he slammed “Washington’s fixation and over-fascination with all things political.” He concluded: “The rest of America just isn’t as interested as you are.”

As Workforce Management’s Washington correspondent, I am one of those capital denizens who is fixated and fascinated by politics.

But I have a lot of company outside the Beltway. Thanks to the fierce battle for the Democratic presidential nomination this year, ratings for political coverage are sky high. Print stories are likely also on the rise. Just look at The Wall Street Journal for evidence.

The Society for Human Resource Management has taken advantage of this trend to raise its profile. Last fall, the organization became a sponsor of CNN election coverage as well as on Fox News and Fox Business Network.

Ads for SHRM also appear in BusinessWeek, the Harvard Business Review and on National Public Radio’s Marketplace Morning Report and Conversations from the Corner Office.

The effort to increase SHRM’s exposure has been more successful than anticipated. SHRM numbers indicate the total impressions (i.e., one person’s single viewing) from January 5 to May 31 was 1.692 billion across all media—television, radio, print, online. CNN had guaranteed 124,237,000 impressions from people 35 and older, according to SHRM. It delivered 215,716,000.

SHRM won’t disclose the amount of money it has spent on this advertising campaign. It is taking the funds from its reserves, which are expected to total $160 million this year. SHRM officials say the reserves are used for investments that advance the HR profession.

My guess is the rotation for SHRM ads costs millions of dollars, based on my modest knowledge of political advertising buys. SHRM says it’s worth it because they’re educating non-HR people about the field.

“The value of engagement is far greater than the price we paid,” says China Miner Gorman, SHRM’s chief operating officer and soon-to-be acting CEO.

The departing CEO, Susan Meisinger, has received positive feedback from members. “They love the message that is with the ads,” Meisinger said at a media availability to open the SHRM Annual Conference and Exposition on June 22 in Chicago.

There is anecdotal evidence that the ads helped bolster the meeting, which drew 13,435 paid attendees in the teeth of an economic downturn and climbing gas prices.

Mike Losey, former SHRM CEO, says that one person he talked to got sponsorship for a trip to Chicago only after her boss saw a SHRM ad on CNN.

“I’m not an advocate for spending all that money,” Losey says. “But maybe it is a strategy.”

Whether advertising investment directly benefits the profession is debatable. But one thing is certain: SHRM’s timing is good. This year, more than ever, most Americans are obsessed with politics.

During this election season, we can add one more certainty to life in addition to death and taxes: Democrats will maintain control of the House and Senate.

Republican retirements in the House and the number of competitive GOP seats in the Senate ensure that Democrats will continue to lead Capitol Hill until at least 2011.

That means that Democrats will advance their agenda, Republican filibusters in the Senate notwithstanding, in two ways: through legislation and oversight.

Corporate executives experienced the latter on March 7. At a hearing of the House Oversight and Government Reform Committee, panel Democrats grilled three current and former financial firm leaders on what they believe is the incongruity of their generous pay packages at a time when the subprime mortgage meltdown is roiling the economy.

It was the second oversight committee hearing on executive pay in three months. A previous session focused on alleged conflicts of interest in pay consulting. Democrats are trying to make the political point that executive remuneration is out of whack with the economic struggle most of their constituents face.

The atmosphere for the latest hearing was made more uncomfortable for the executives by a majority staff report released the previous day.

It included e-mails from Angelo Mozilo, founder and CEO of Countrywide Financial Corp., to the Countrywide board regarding an executive compensation specialist he hired as his own representative as well as an exchange about his wife’s usage of a corporate jet.

During the hearing, Democrats pressed Mozilo for answers about those messages. They also demanded from Richard Parsons, chairman of Time Warner and chairman of the personnel and compensation committee at Citigroup, an explanation of why Charles Prince, former chairman and CEO of Citigroup, received a $10 million bonus on his way out the door last year.

On that point, the politicians had the upper hand. Del. Eleanor Holmes Norton, D-District of Columbia, bored into Parsons. She wanted to know whether the Citigroup board had in fact only spent 20 minutes deliberating about the bonus.

Parsons was no match for Norton. He tried to explain that Prince’s base salary was $1 million. Citigroup would then routinely add a bonus to make his pay more competitive with prevailing rates in the financial industry. His deliberate response lacked the drama that Norton conveyed in posing the query.

Rep. Elijah Cummings, D-Maryland, also made a visceral point about how his constituents face threats to their homes while the CEOs earned tens—or hundreds—of millions of dollars. “Something doesn’t smell right,” Cummings said.

And that’s the point of oversight. The committee has very little legislative jurisdiction. So, it won’t produce an executive pay bill. But the panel can air its grievances and apply moral suasion to any issue it chooses.

By doing so, it might build momentum for legislation introduced by other committees, like a bill that would allow shareholders to vote on executive pay packages.

Or the heat produced by oversight might forge changes in corporate practices. “The bottom line is there needs to be better … accountability” from executives to avoid “economic disruptions,” said Rep. Henry Waxman, D-California and chairman of the oversight committee.

Republicans assert that the committee shouldn’t be meddling in corporate affairs. They say that Democrats are simply scoring political points and providing discovery for potential lawsuits.

Corporate leaders may agree. But if the Democrats stay in power—and they will—the business community had better find a way to address the party’s concerns about executive pay. Otherwise, they should prepare to be hauled up to Capitol Hill for more prickly hearings.