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It’s Washington’s Fault!

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It never ceases to amaze me how the U.S. government can make a huge mistake, blame it on others, and have a large portion of the American people either believe it or just not care. This past week, with grand theatrics, official Washington raised a huge fuss over the spending by AIG of $165 million of taxpayer bailout funds for bonuses to top executives. On NBC’s Today Show Rep. Barney Frank (D-MA) charged that the decision by the economically impaired AIG to pay millions in executive bonuses amounts to "rewarding incompetence." On 60 Minutes, Fed chairman Ben Bernanke stated, “It makes me angry. I slammed the phone more than a few times on discussing AIG. It’s – it’s just absolutely – I understand why the American people are angry.” House Speaker Nancy Pelosi assured the public that Congress was working on legislation that would correct this injustice quickly. And of course the Administration weighed in with a guarantee that the financially feeble insurer would be forced to repay the U.S. taxpayers before it gets the next $30 billion from taxpayers approved on March 2. All of this and several dozen quotes from lawmakers that all included the word “outrage” in its various conjugations and you have good theater coming out of Washington.

Let’s make one thing perfectly clear, if you are angry with AIG for using your hard earned tax dollars to pay millions out to incompetent executives in the form of bonuses then your ire is severely misplaced. The “retention” bonuses were contractual agreements that had to be honored by AIG. They were not performance bonuses like Congressman Frank through his “rewarding incompetence” remark would like us to believe. They were bonuses paid to people who put in the time and effort to finish a task. Under our system of government, contracts cannot be arbitrarily broken. I give kudos to AIG for upholding that long standing American tradition.

Your anger and vengeance (peaceful of course through the ballot box)  should instead be directed toward official Washington. As we are all well aware, the Federal Reserve, Congress, and two administrations have been very generous with our money by giving huge amounts of it to many failed banks. Of course, they had neither the constitutional nor logical authority to do so. The AIG bonus scandal is just the beginning of many to come because of the government’s reckless spending. AIG has already given almost half of what it has received to Goldman Sacs and several foreign banks for financial obligations. Executives at other financial firms receiving bailout money have also been paid bonuses — these firms include Merrill Lynch and Morgan Stanley. Fannie Mae, one of the largest culprits in the whole financial crisis, is expected to pay retention bonuses using taxpayer funds worth between $470,000 and $611,000. Freddie Mac also has bonus plans not yet announced. Citigroup is going to use $10 million of taxpayer funds to build a new office building and according to Rep. John Lewis (D-GA) at least 13 firms that have received or will receive taxpayer funds owe a total of more than $220 million in back taxes. These are the outrages we know of. Certainly there will be more announced in the future.

Of course, if Washington had not appropriated the money in the first place we wouldn’t be talking about any of this. As this columnist has maintained all along, these irresponsible firms should have been left to fail. Bankruptcy would have been the efficient way to clean up the mess they made. Mal-investment in the economy would have been avoided as productive firms would have purchased the good assets of the failed banks at market rates and taxpayers would not be on the hook for what will eventually amount to trillions of dollars in new debt spent on failed enterprises. The integrity of the dollar and the future purchasing power of American consumers would have been preserved. Yes, some folks would have suffered, but we are not supposed to be living in a communist society. The government has no legal or moral right to take from one to give from another. If that were true than why doesn’t Uncle Sam right the injustices to investors caused by Madoff and Stanford?

This week’s events in Washington amount to nothing more than a smokescreen by policymakers to cover their own butts. They gave our money to AIG and did it with no strings attached. Paulson, Bernanke, Geithner, Bush, Obama, and any member of Congress who has voted for these bailouts should be held to answer for their actions. In terms of Congress, hopefully by the next election cycle there will be enough Americans who blame them and care enough to make that happen. .

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About Kenn Jacobine

  • Arch Conservative

    It’s amazing watching scumbags like Barney Frank and Stephen Lynch from MA who voted to spend trillions of tax dollars lecturing the new CEO of AIG who had nothing to do with setting up the bonuses or the shoddy leadership of the company.

    The founding fathers dropped the ball big time when they did not include term limits for US Senators and Reps in our Constitution.

    Now that king Barry has had his little spending spree he’s too busy making March Madness picks, cracking special Olympics jokes on the tonight show and having cabinet meetings to decide how to attack Rush Limbaugh to provide any real leadership.

    1325 days until the joke is over. Count it down with me folks.

  • bliffle

    As near as I can tell, Archie is still in thrall to the wierd anything-goes unregulated “Free” markets (i.e., markets freely dominated by the big players) craziness that started up with Reagan and was raised to the nth degree by GWBush. Until Archie renounces his psychosis he’s not a reliable witness. He’s gotta swear off the sauce and Come To Jesus. When are you going to Come To Jesus, Archie?

    Kenn is exactly right when he says:

    “This week’s events in Washington amount to nothing more than a smokescreen by policymakers to cover their own butts. They gave our money to AIG and did it with no strings attached.”

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Bliffle,

    You’ve got to read the discussion of the AIG fiasco on the DemocracyNow! website.

    I posted this link on another thread already, but am doing so here as well.

    Plenty of excellent points. Do make sure and read it.

  • http://www.it-takes-work.com J.D.

    It’s amazing to me how surprised and outraged we become when things like the AIG bailout happen.

    We put these guys in Washington. They gave AIG a chunk of money for which there were little or no stipulations or guidelines. Much like the other bailouts, it just continues to show a lack of governmental control over spending.

    Why are we surprised?

    Dr. Seuss Explains The Bailout.