April 2, 2009
by Chris Feeney
What if we all had employers that paid million dollar bonuses regardless of how dreadful we performed on the job?
By now we have all heard the horror stories of millions of dollars in tax-payer bailout money being doled out by insurance giant American International Group (AIG) to its executives despite its financial implosion that forced funneling of federal aid into the coffers to keep the company afloat.
Isn’t it funny that the folks responsible for making those pay outs possible are now pointing their fingers at the recipients and promising to get it all back. Don’t get me wrong, I’m as mad as the next guy about the millions of dollars in “retention contract money” that were paid out basically as salary bonuses to many of the company’s mid-level executives.
But do I think passing a law to tax executives with family incomes of more than $250,000 whose firms have received more than $5 billion in bailout at a 90% rate is fair? No I don’t. Besides I find it difficult to get worked up over $170 million in bonuses, when we wrote bailout checks of $130 BILLION to AIG. If we are dumb enough to shell out that type of money to “save” a company that drove itself to the brink of collapse, do we really have the right to gripe about excessive pay?
I have to agree with Senator Kit Bond who said, “The failed senior executives and the board of directors should have been fired when the government first had to step in and rescue the company. If any worker in Missouri or in any state across the nation drove their company into the ground – they would be fired.”
While I agree with Bond’s comments, what I found even more interesting was his assertion that President Obama and in particular, Treasury Secretary Tim Geithner were well aware of the bonus plans before the checks were mailed out.
Still the president took his case to television viewers on Late Night with Jay Leno and 60 Minutes. During his interview on the later, the president stated “we’re gonna have to take a look at this legislation carefully. Clearly, the AIG folks gettin’ those bonuses didn’t make sense. And one of the things that I have to do is to communicate to Wall Street that, given the current crisis that we’re in, they can’t expect help from taxpayers but they enjoy all the benefits that they enjoyed before the crisis happened. You get a sense that, in some institutions, that has not sunk in; that you can’t go back to the old way of doing business, certainly not on the taxpayers’ dime.”
Then the president went on to say however that “Now the flip side is that Main Street has to understand, unless we get these banks moving again, then we can’t get this economy to recover. And we don’t wanna cut off our nose to spite our face.”
To me this is a lot like setting up your own hero scenario. The president and his administration created the villainous situation by pushing through the $130 billion bailout for AIG, including the latest installment of $30 billion with no stipulations on how the money was used and very little oversight. Then when word hit the news about the executive bonuses, who rides to the rescue… the same people who gave them the money to pay out the bonuses with.
That’s sort of like me setting a fire so that I can rush in and save the person inside the home.
They set their own house on fire, so why not let it burn down and start from scratch to build a new home.
But if we insist on getting these bonuses paid back, I’d have to agree with Bill Wilson of Americans for Limited Government (ALG not to be confused with AIG). Wilson is leading the charge for lawmakers to pay back their “AIG bonuses” According to the group, the insurance giant contributed more than $650,000 to federal campaigns, including over $100,000 to the Obama campaign.
Senator Chris Dodd (D-CT) who Republican National Committee Chairman Michael Steele fingered as the man responsible for sneaking the provision into the bailout bill that made the AIG bonuses possible, also received more than $100,000 in contributions from AIG in 2008.
“Of the 314 members of the Congressional majority who voted to protect the AIG bonuses, a large number of them have taken money from AIG,” Wilson noted. “They took payoffs, short and simple. And now that they’ve been caught, it’s time for them to return their ill-gotten gains.”
Maybe if they refuse, we need to pass another addendum to the IRS code that calls for 100% tax on lawmakers with family incomes of more than $250,000 who have received more than $1,000 in campaign contributions from companies who have received federal bailouts.