Wow. Finally, there is outrage. $165 million in bonuses to AIG employees! As appalling as the bonuses are, the outrage is misplaced. Our elected officials – the root cause of this debacle – are working hard to divert our attention.
Until the American public wakes up and redirects its outrage to the right target, the waste of precious taxpayer dollars, the mismanagement of our resources, and the bankrupting of our nation will continue while real problems go unattended and the real needs remain unmet.
Senator Grassley (R-Iowa) suggested that AIG executives do the honorable thing: apologize to the American public and then commit suicide. President Obama, accusing AIG of reckless greed, pledged to stop the bonus payouts. Senate Minority leader McConnell called the bonuses “appalling.” Rep. Phil Hare (D-Ill.) said, “Clearly, the ‘G’ in AIG stands for greed. It is outrageous that taxpayers are subsidizing bonuses as much as $6.5 million at a time when working families are struggling to make ends meet.”
Yes, AIG received $170 billion from taxpayers to shore up the insurance commitments. How? Last October, at the urging of the previous Administration, Congress pushed to “immediately” enact what became known as the Troubled Assets Relief Program (TARP) – a $700 billion bailout that few if any elected officials read. Adding insult to injury, Senator Dodd (D-Conn) added language to the subsequent $787 stimulus bill passed by Congress that allowed the payment of bonuses to AIG executives. This was not a mistake on his part; he did it specifically to ensure that the AIG bonuses would be paid. Dodd and Obama received huge campaign contributions from AIG – more than $100,000 each. Where is the outrage?
If any legislator has serious genuine concerns about TARP, all that needs be done is to amend the bill to address the concerns. Not a single elected official has suggested doing so. Why?
The housing crisis did not happen simply because of greed in the private sector. “Good intentions” on the part of Congress directed that Fannie Mae and Freddy Mac approve loans that were known to be unsound.
Wall Street greed did not simply happen. It was Congress that passed the laws to permit investment banks to do what they ended up doing. Congress itself removed the barriers that had been in place to prevent what happened.
While the President expresses outrage and rails against “recklessness and greed,” he privately signed the biggest spending bill in history filled with billions of dollars in “earmarks.” Earmarks are taxpayers dollars allocated to special interest projects in congressional districts. In short, they are political payoffs to curry favor in exchange for votes to keep elected officials in office.
Rep. Hare spews the proper rhetoric when he notes it is outrageous that taxpayers are subsidizing bonuses when working families are struggling to make ends meet. However, he voted for the billions in earmarks in the most recent spending bill, ALL of which is “subsidized” by families struggling to make ends meet.
There is no need to bailout any business or industry. Contrary to the rhetoric, if these entities failed, we would not be worse off; we would be better off. The taxpayers should not be underwriting private businesses that were poorly managed and operated. Such entities should go out of business; that is the efficiency of capitalism. Those that fail to meet the market demand or fail to operate productively fail. Those that produce what the market wants and are well run succeed.* Government bailouts reward failure and penalize taxpayers. * Elected officials are attempting to save entities that have failed. Unfortunately, they are doing it with our money, not their own. They are doing so either because they are incompetent or corrupt; they have no idea what they are doing, or they are so arrogant and self-serving they will do anything (with someone else’s money) to wield power they do not deserve.
Where is the outrage for these developments? Senator Grassley is right about the need for those who have harmed our economy to apologize to American taxpayers and then commit “political” suicide by resigning. Senator Grassley should set the example – apologize and resign. He should be followed by every congressman and woman who voted for TARP, the “earmark” filled spending bill, or who allowed Wall Street to become bankers, or who directed Freddie Mac and Fanny Mae to buy sub-prime loans, or who signed on to the community reinvestment act. This is a first and a necessary step if we are to clean up the heavy burden that has been placed on American’s taxpayers and families. Unfortunately, our elected officials seem to have effectively diverted attention away from the real cause of this financial debacle – themselves.
This column is copyright by Robert L. Hale and the Fitzgerald Griffin Foundation,* http://www.fgfBooks.com. All rights reserved.
Robert L. Hale received his J.D. in law from Gonzaga University Law School in Spokane, Washington. He is founder and director of a nonprofit public interest law firm. For more than three decades, he has been involved in drafting proposed laws and counseling elected officials in ways to remove burdensome and unnecessary rules and regulation. For a complete biographical sketch, see http://tinyurl.com/cejlwg.
By Robert L. Hale