Let's
be clear: President Barack Obama inherited an economy in freefall and
could not possibly have turned things around in the short time since
his election. Unfortunately, what he is doing is not enough.
The popular urge
to claw back the bogus bonuses paid by American International Group is
irresistible and fully justified, but should the Treasury someday
retrieve every single bonus dollar, that total of $165 million will
make no difference to anyone except a few disgruntled traders. From the
jaded perspective of the financiers, the uproar over the AIG bonuses
may provide a welcome distraction from far more important (and
lucrative) abuses in the world's offshore tax havens.
Frank Rich is right. Firing Treasury Secretary Timothy Geithner won't
get us out of the economic disaster we're in. But at this time of
righteous rage, deploying Geithner and Lawrence Summers as the
administration's chief economic messengers displays an astonishing
tone-deafness. These are men who, as Rich puts it, " are too marinated
in the insiders' culture to police it, reform it or own up to their
past complicity with it."
Over the weekend The Times and other newspapers reported leaked details about the Obama administration's bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy - specifically, the "cash for trash" plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.
This is more than disappointing. In fact, it fills me with a sense of despair.
Whenever a politician or commentator bloviates about the brokers at AIG who are getting bonuses, we should all be remembering Lynndie England and Charles Granger. AIG brokers are to the financial meltdown what England was to the Iraq war.
The
awarding of $165 million in bonuses to AIG executives has dominated the
news in the last week. There has been widespread outrage over the idea
that taxpayers' dollars are being used to reward the people who
effectively bankrupted AIG and cost the government more than $160
billion in bailout funds to meet the company's obligations. This primer
addresses some of the issues raised by both the bonuses and the much
larger sum going toward the AIG bailout.
Democrats from Andrew Cuomo to Barney Frank to Barack Obama are
demanding that the 418 AIG employees who received bonuses give them
back. Sure, it's outrageous that the very people who drove AIG off the
cliff, along with a whole lot of other financial firms, walked away
with million-dollar bonuses paid with taxpayer bailout money.
Wth due deference to George Orwell, all contracts are equal. But some contracts are more equal than others.
Contracts entered into by the hotshots at American International Group for $165 million in bonuses, signed just months before their web of financial cunning unraveled, are inviolate. Contracts entered into by shop-floor workers at auto plants must be renegotiated, so that the taxpayers who bail out the industry don't coddle supposedly overpaid union members.
