Candace

Talmadge

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March 20, 2009

AIG Bonuses: Feigned Outrage Fools No One

How stupid do they think we are?

Enough of Capitol Hill’s choreographed, scripted outrage over bonuses paid out by American International Group, Inc. Put the finger-pointing on permanent hold. It’s not fooling anyone except, perhaps, those who indulge in such manufactured melodrama.

AIG has received $170 billion in taxpayer rescue funds to date and has paid out $165 million in bonuses, some to executives who have already left the insolvent insurer. (So much for the presumed retention power of a bonus.) There are reports that other failed, bailed-out businesses also have mega-bonuses in the works, and that at least 13 of them owe back taxes. Surprise, surprise.

All along, it has been well within the incumbent and former presidents’ and Congress’s ability to keep tax dollars out of the personal accounts of the very executives who ran AIG, the rest of Wall Street and the world’s financial sector into the ground.

The previous and current administrations, along with Congress, abdicated their responsibility wholesale. The Federal Reserve reportedly even worked against attempts to rein in bonuses for bailouts. Now all of them profess to be shocked, shocked, that the very people who ran amok when freed from all regulatory restraint are stuffing their pockets with bailout money or buying up competitors instead of using their reprieves to make legitimate loans and get the economy moving again.

Heckuva job, folks. Between the two sides – failed executives and feckless politicians – it is impossible to determine which merits more disgust and disgrace. No doubt all those bankrupt financial giants are funneling many of their taxpayer rescue dollars right back into the campaign coffers of the very senators and representatives who are supposed to oversee and re-regulate them. Who thinks recycling doesn’t pay off handsomely?

Amid all of the hysterics and posturing, however, at least someone saw this coming and tried to do something about it. Sens. Ron Wyden, D-Ore., and Olympia Snowe, R-Maine, sponsored an amendment to the recent stimulus act that would have averted a great deal of trouble and saved taxpayers at least $3 billion, according to an analysis by Congress’ Joint Tax Committee.

The Wyden-Snowe provision would have forced all recipients of funds under the Troubled Assets Relief Program to cap bonuses at $100,000. Any bonus exceeding that amount would have been taxed at 35 percent. It would not, of course, have applied to the tax-dollar rescue funds AIG received outside of TARP at the behest of the Federal Reserve under the Bush Administration.

Wyden told The Huffington Post that his and Snowe’s provision passed the Senate version of the stimulus legislation but inexplicably died behind closed doors in conference committee with the House of Representatives. Where did all this new administration’s much vaunted transparency and accountability go?

The Oregon Democrat also said he tried to warn top members of Barack Obama’s staff that failure to include this type of provision would result in the very train wreck happening right now. He said they didn’t listen. What about now? Does the administration still aim for compromise and conciliation with liars and cheats?

Seizing the moment, Wyden and Snowe are back with an even stricter standalone bill that caps bonuses at $25,000 and applies not only to TARP money but to all bailout funds. Bonuses exceeding the new, lowered sum will be subject to a 35 percent tax. This new legislation also puts the same limits on 2008 bonuses at any firm that received taxpayer dollars.

Who now in Congress will stand against this legislation? Will this measure inexplicably expire in secret during the small hours of the night? Most likely it will arrive on the president’s desk so watered down that it, too, will be pretty much a total waste of time, effort and signing-pen ink.

Let’s not hold our breath under the foolish delusion that anything substantial will be done to rein in the excess or to re-regulate the financial sector effectively. Once again it will be all sound and fury, signifying nothing. Washington keeps fiddling while the rest of the country burns. And those most responsible for this economic conflagration most likely will never feel any degree of heat.

© 2009 North Star Writers Group. May not be republished without permission.

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