AIG and the Bonus Boondoggle
Most Americans are flabbergasted over the thought of AIG employees receiving 1.6 million dollars in bonuses after the company received billions in taxpayer-funded aid from the federal government. Disregarding the (in my opinion, correct) argument that the speculative arm of AIG should never have received bailout money in the first place (the insurance divisions are still profitable), any government action that moves to force the return of any of the bonus dollars is entering into dangerous territory.
Perhaps the slightly smarter thing to do would have been to ask to renegotiate the bonus contracts, given that the company is on the edge, but that’s up to Edward M. Liddy, not Congress, and it appears he’s trying to do the right thing.
I think it’s important we step back from this issue for a moment and consider the bigger picture. More government intervention is only going to create more dangerous precedents. As we expected with President Obama’s Big Government liberal agenda, the size of our government is about to increase yet again.
There are a few things we must consider here. First of all, private companies should always be able to set their own compensation plans. This is not the responsibility of the government, nor should it be. The idea here is that, if said compensation is unreasonable, the company will suffer, and changes will be made. This, of course, hasn’t happened, since our beloved federal government keeps doling out the dough. Second, Government should never have the ability to interfere with private contracts, at least in this sense. When did it become reasonable for Senators to legislate the compensation of workers of a private (read: non-governmental) corporation, regardless of whether said company (AIG) has received federal assistance? If we allow Congress to determine executive pay and limit the amount employees may be paid in bonuses, we have become that which we most feared, perhaps moving even farther left than the “socialist” moniker. Thirdly, this idea of “punitive taxing” must die. Sen. Chuck Schumer (D-NY) has publicly stated that Congress will work to tax 100% of these AIG bonuses if the employees refuse to return the money. Why is it all the sudden right or fair for Congress to single out one group of Americans to tax? If we continue down this path of selective taxing, who knows where we’ll end up. How about a tax on 67-year-old grandmothers of three who drive Ford Grand Victorias just because we can? That, in my opinion, equates to a Bill of Attainder, something prohibited under the United States Constitution, Article 1, Sections 9 and 10.
This power grab by the federal government is scary, folks. Perhaps the idea of “sticking it to ‘em” in regard to the returning of the bonus dollars sounds good on paper, but this is a matter that needs to be handled without the reckless hand of the federal government. It does seem tasteless to dole out huge bonuses when everyone is suffering, I agree, but isn’t that just like saying, “I’m mad at the world, so the world should be mad, too!” It’s the same as that friend everyone has who gets upset but feels vindicated by shooting daggers at anyone who even appears to be happy. “Misery loves company.” As a society, we seem to feel at the moment, that if things aren’t going our way, they shouldn’t be going anyone else’s way, either.
As a warning, I must stress that we do not know the whole story. It is true that at least a great percentage of all bonus-receiving employees worked in the hard-hit “speculative” division at AIG, how do we know those same employees aren’t the ones keeping it limping along as it is?
Now, of course I’m all for protecting taxpayer dollars being protected, that’s why I’m a Conservative Republican, but this is not the way to protect those dollars. We gave AIG money to stay in business, since it was “too big to fail.” It was not the original intent of the first AIG bailout to take control of the insurance giant, but to get it back on its feet. These bonus contracts were signed between AIG and its employees in 2007, and the company was legally and contractually obligated to honor them. In other words, had AIG not awarded said bonuses, their actions would have constituted a breach of contract. Being a good bailout recipient, AIG disclosed this information to the Federal Government before the money was awarded. (Obama + Geithner = hypocrites much!) It’s AIG’s job to pay their employees the previously agreed wage and we shouldn’t be trying to interfere. The short term results seem a bit smelly, but the long term effects reek of a week-old fish market. Hold your nose, and let the bonuses pass; they’re not the real problem. Most of these people are not the ones that caused the problem; they earned this money. The Federal Government’s usurpation of power is our real fight.
Update March 25, 2009 at 12:27 p.m.
The resignations of many AIG employees has begun in response to the Congressional madness occurring in Washington. This article, a resignation letter written by Jake DeSantis, a soon-to-be-former AIG-FP employee, to AIG CEO Edward M. Liddy, provides a good perspective on the whole mess.
