Tuesday, March 17, 2009

Outrage and Acceptance

There is tremendous outrage over the $165 Million in bonuses paid to AIG executives using bailout money provided by taxpayers. Chris Matthews is fulminating about it on Hardball, David Schuster is ranting about it on 1600 Pennsylvania Avenue, Keith Olbermann is pontificating about it on Countdown, and Rachel Maddow is expressing outrage in her unique fashion on her show which merely bears her name. Congress is at a boiling point (Congress!), and even the President is angered by AIG’s outrageous behavior. A veritable Katrina of anger and emotion has erupted over this utterly heinous expenditure of taxpayer funds.

Outrage over $7.7 Billion in earmarks using taxpayer money, not so much.

We calmly accept, with nothing more than the most brief mention in passing, the unsupervised dispensation of $7.7 Billion of taxpayer money by individual members of Congress, but when AIG engages in a similar dispersing of a mere 2% of that amount we go completely crazy with righteous indignation. Earmarks are “business as usual,” while bonuses are “fraud” and “corruption” and “outright theft.”

Every single argument that was used to defend the earmarks in the recent spending bill could be used to defend AIG’s bonus payments. I’m not defending AIG, I’m pointing out the bogus nature of the earmark defense.

“This is last year’s business, let’s move on.” Guess, what. The bonuses are last year’s business too. They are being paid pursuant to business that was brought in prior to the bailout, based on promises that were made to the payees prior to the bailout and in agreement with contracts made prior to the bailout. Whether the business was profitable or not, whether or not AIG was smart to have made the promises, AIG told the traders “get these trades and we’ll pay you.” The traders got the business and now they are being paid.

“It’s only a tiny amount of the total.” Earmarks amounted to 1.9% of the total spending bill which is, admittedly, a very small portion. Not worth arguing about? The AIG bonus we are fulminating about is 1.0% of the bailout money that was provided to AIG. So we freak out when 1% of taxpayer money is questionably spent by AIG, but we calmly accept the questionable expenditure of 2% of taxpayer money by Congress.

“I know best how to serve the needs of my state.” Well, okay, given the state of their business it’s a little difficult to argue that AIG management knows best how to run its own business. I will only observe that serving the needs of individual states (or businesses) is not supposed to be one of the purposes of the United States government.

Should AIG bonuses be “unwound” forthwith? Sure they should.

So should be the corrupt and corrupting Congressional earmarking process.

Update: Tuesday, 4:15pm
My math was off. The bonus is only a tenth of one percent, so we're not comparing 1% against 2% for bonus to earmark, we're looking at 0.1% vs 1.9% which is an order of magnitude.

It's like stepping over $7.70 to pick up 16 cents.

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