WEST HOLLYWOOD — From Washington to Wall Street, Americans are talking bonuses, bonuses, bonuses, specifically the $165 million paid executives at American International Group, which is also the beneficiary of more than $170 billion in federal bailout funds. But like stem cells and social "wedge" issues, the outrage only distracts from the serious problems facing the economy.
$165,000,000 is a lot of money, and it seems outrageous that anybody receive a seven-figure bonus in order to stay in a job, especially in this economy. But relatively speaking, it is like finding pennies on the sidewalk. But in the grand scheme of things, the AIG bailout bonuses are minuscule when compared to AIG's--and the nation's--larger problems.
All the screaming and yelling over AIG's bonuses amount to crying over a dime when you've already lost a hundred-dollar bill. For each hour Congress spends demagoguing the retention bonuses paid at AIG, they'd have to spend more than a year focusing on all the money that went into the corporate insurance giant's pockets from the taxpayer.
Some back-of-the-napkin math renders easy comparisons. The bonuses that are getting all the media attention and Congressional scrutiny amount to one-one-thousandth of the bailout money paid to AIG, and just one-tent-thousandth of the Federal Deficit proposed by President Barack Obama for 2010.
If Congress spent proportionately as much time on its own financial mis-management, they'd have to start working on the budget for 2020, today. Which, come to think of it, that it might not be a bad thing!
It is tempting to wonder whether Congress would be upset if, say, union workers at a major automobile manufacturer received outrageously-disproportionate pay while their company was subsidized by taxpayer dollars. Would be the same scrutiny if the AIG bonuses were paid out under a union contract?
We - Congress, economists, elected officials of both parties - have been aware of a pending housing-prompted financial crisis for well over one year. The problem is not going away. When Bear Stearns collapsed one year ago this week, I called for prosecution on a grand scale--of Wall Street criminals and the Main Street criminals whose lies and irresponsibility toppled the house of cards that was America's housing bubble.
A year later, those we considered Wall Street criminals are getting billions in bailouts. Those people whose financial decisions and fraudulent mortgage applications got them into homes they couldn't afford are going to stay in those homes, with the help of taxpayers.
Recuperating the bonus bucks while turning a blind eye on the other 99.9% of dollars given to AIG is like putting a bandaid on s stab wound. Congress and the President are doing America a disservice by playing to populist principles the protect themselves from criticism that they may not have the right answers for fixing the economy.
But rather than address the fundamental problems in the economy, the Obama Administration and Congress following its lead, seem happy to distract us with the latest cultural or class warfare story-of-the-week. To borrow a phrase, that's hardly change we should believe in.
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