American anger over the deteriorating economy has finally found a scapegoat: American International Group Inc.
The insurance giant has received more than $180 billion in bailout funds from the federal government -- taxpayer money -- but still saw fit this month to pay $165 million in bonuses to top officials at the firm. News of the AIG bonuses sparked an angry reaction echoed by pundits, Congress and even President Obama, who declared his anger in a news conference and pledged to recover the money.
Should the Obama administration have the bonuses withdrawn? Or does the company need to retain executives to dig out of the mess it's in? Joel Mathis and Ben Boychuk the RedBlueAmerica columnists, jump into the fray.
JOEL MATHIS
Time to put the torches and pitchforks away, folks. The AIG bonuses are maddening, yes, but the energy spent soaking on righteous anger should be put to more productive use.
Sure, it's irritating that a business that is receiving billions of taxpayers' dollars uses some of that money to further enrich its employees. Sure, it's unfair that the blue-collar employees of Detroit auto industry are forced to make wage concessions to earn an auto industry bailout while financial titans somehow get richer amidst failure. Sure, the idea of paying bonuses to the employees of a failing business seems to subvert the whole idea of "bonuses."
And sure, AIG's execs are pretty shameless about the whole thing; AIG's Chairman Ed Liddy said in a letter the money was needed to retain the company's "best and brightest" employees, in a bit of phrasing that deserved the derisive laughter it got.
At the end of the day, however, the $165 million is a drop in the bucket next to the hundreds of billions spent trying to bail out Wall Street and the broader economy. The outrage is disproportionate to the offense -- which is never unusual in Washington, but seems a luxury at this moment of economic distress.
Obama and Treasury Secretary Tim Geithner should be spending their energies figuring out how to set the financial system back on its foundation by fixing the banks and getting the credit markets flowing again -- acts that are necessary for the economy to resume growth. Instead, they're (belatedly) trying to lead a populist uprising against actions taken on their watch.
It smacks just a bit of Nero fiddling while Rome burns.
BEN BOYCHUK
The U.S. government pours hundreds of billions of dollars in bailout money into a company economists and policymakers say is "too big to fail." Taxpayers currently hold an 80 percent stake in American International Group, which lost more than $60 billion in the fourth quarter of 2008. This company, which is at the epicenter of the financial crisis, has distributed the vast majority of that bailout money to Bank of America, Goldman Sachs, Barclays, Deutsche Bank, and other big banks caught up in the subprime mortgage meltdown. And now this company, which is nothing more than a ward of the state, sees fit to give huge bonuses to fewer than 200 of its employees.
So ... who's to blame? Congress. And Obama.
Congress -- specifically Sen. Christopher Dodd, D-Conn. -- saw fit to include an amendment in February's $750 billion economic stimulus bill that explicitly approved the AIG bonuses. President Obama, who said that the stimulus was vital to the national interest, happily signed the law.
AIG executives undoubtedly exercised poor judgment in distributing enormous bonuses to their employees at the same time they are receiving billions in tax dollars -- contracts notwithstanding. But the real lesson here is that when government gets in the business of bailing out banks, insurers or other companies deemed "too big to fail," this is exactly what you get.
America is experiencing another populist moment. Good, hard-working people are angry at businessmen who drove the economy into the ditch and yet somehow manage to live large on the public's dime. It's a righteous anger. But it needs to be directed at the Democratic politicians who are colluding with businessmen to feather their own nests. Bottomline: The bailouts must stop.
Ben Boychuk and Joel Mathis blog daily at http://www.infinitemonkeysblog.com and http://politics.pwblogs.com/.
(Ben Boychuk and Joel Mathis blog daily at www.infinitemonkeysblog.com and joelmathis.blogspot.com.)
REDBLUEAMERICA
Post new comment