Buyer's Remorse
The government's phony outrage over the AIG bonuses
Here's an idea: If you stop nationalizing banks, there will be no need to engage in phony-baloney indignation over bonus payments anymore.
This cockamamie populism in Washington really hit its stride when Sen. Charles Grassley (R-Iowa), suggested that AIG execs who earned bonuses should "follow the Japanese example and come before the American people and take that deep bow and say, 'I'm sorry,' and then either do one of two things: resign or go commit suicide."
C'mon. If suicide were a proper penalty for piddling away taxpayer dollars, the National Mall would look just like Jonestown—after refreshments.
These same senators who voted to nationalize banks with nary a precondition are also, apparently, stupendously talented actors. After all, most of these senators voted for a bill that contained a provision that specifically protected bonuses that were agreed upon before Feb. 11 in the bank bailout legislation. It was put there by Sen. Chris Dodd (D-Conn.), who is the chairman of the Banking Committee.
How is it that all those who cast votes on this provision—because, we imagine, no trustworthy lawmaker would vote for legislation he hadn't examined vigorously—are threatening a "special" tax to snag AIG bonuses? It not only is dishonest but also means they, in a breathtaking abuse of power, believe using punitive taxation to appropriate someone's salary is a legitimate function of government.
President Barack Obama, meanwhile, has asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole," claiming it is all about "fundamental values."
You know what's a super-useful value? A guarantee that contracts entered into by individuals or parties are respected. Or is the state ready to throw that fundamental value out and bend to the will of the angry mob?
Those are only a few of the reasons the insincere contortions of politicians over $165 million are so pathetically transparent. How could a president who threw $700 billion of your money away in a Keynesian spending orgy feign moral indignation over a few bonuses? We now have $11 trillion, in effect, invested in various bailouts—with $170 billion going directly to AIG.
Grandstanding isn't going to make us "whole" again. Sorry.
AIG has been dreadfully run, obviously, or it wouldn't be a welfare queen. No one will pity it.
Yet making an assumption that every AIG bonus earner is, by default, a numskull, a bad actor or undeserving is also wrongheaded. Don't we want AIG to succeed and get off the government dole? What sort of employee would work for an entity that doesn't honor its contractual obligations? How many valuable employees would walk away from such a company?
Imagine if George W. Bush had dictated unilaterally to General Motors, after it took billions of bailout cash, to cut the salaries of union workers retroactively because their leadership had negotiated sweetheart deals earlier. A line worker makes a pittance compared with an executive, but the principle does not change.
I get the anger. It's real. It's deserved. The public pressure on AIG is wholly understandable. And with the kind of bailout and stimulus money we're throwing around, you can bet this won't be the last time you're upset.
Being upset is one thing. Permitting government to tear up legal contracts and tax away people's entire incomes, though they haven't broken any laws, are precedents we will regret in the end. Maybe even more than the bailouts themselves.
David Harsanyi is a columnist at The Denver Post and the author of Nanny State. Visit his Web site at www.DavidHarsanyi.com.
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