Bread & Circuses (& Bonuses)

The distraction might not work this time.

Democrats in Washington will do anything to draw attention away from their massive $787 billion giveaway to special interests.  The latest tactic is to blame AIG for handing out bonuses.  Nevermind they knew about them all along and that AIG not only had the bonuses in place before taking public money but also are contractually obligated to award them.  Facts, the truth, and reality enter into their own vortex in Washington and when you are trying to cover yourself politically for plunging the U.S. further into debt anything is a welcome distraction.  Will the American people buy this lie as well or will they finally get smart about it?

According to the New York Times:

As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts.

If government officials were to break the contracts, they would be “breaking a bond,” Ms. Meyer says. “They are raising a whole new question about the trust and commitment organizations have to their employees.”

Tens of billions of taxpayer money were sunk into AIG because the company was deemed “too big to fail” since AIG was involved in many other company’s investments and provided policies for those investments:

Taxpayers have already put up $173 billion, or more than a thousand times the amount of those bonuses, to fund the government’s AIG “rescue.” This federal takeover, never approved by AIG shareholders, uses the firm as a conduit to bail out other institutions.

Since September 16, AIG has sent $120 billion in cash, collateral and other payouts to banks, municipal governments and other derivative counterparties around the world. This includes at least $20 billion to European banks. The list also includes American charity cases like Goldman Sachs, which received at least $13 billion.

$787 billion vs. $165 million.

Everything that AIG did in terms of securing investments was legal and, thus, overseen not only by the Senate banking committee but also by the Executive Branch – George W. Bush and, now, Barack Obama.  Are Democrats in Washington now claiming that they were amiss in their roles as overseers of financial institutions?  If this is the case, where does the true fault lie?

Said President Obama yesterday, “This is a corporation that finds itself in financial distress due to recklessness and greed.” That’s true, but Washington doesn’t want you to know that various arms of government approved, enabled and encouraged AIG’s disastrous bet on the U.S. housing market.

It’s not like all of the taxpayer monies that were given to AIG (a substantial amount under the previous Bush Administration, too) was a secret.  Do you think the U.S. government “gives” tens of billions of dollars without going over the details?

“In the last six months AIG has received substantial sums from the U.S. Treasury,” Obama said after allegedly hearing about it for the first time. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”

Well, they justify it by saying they had the administration’s permission. The New York Times reports that AIG executives said they never would have proceeded with the bonus payments before getting approval from the Treasury and the Federal Reserve.

“We would never make any important business decisions without discussing them with our government managers and owners,” one AIG executive is quoted as saying.

The $165 million in bonuses were not the first bonuses to be paid. According to the Times report, Treasury and Fed officials said they knew AIG had paid $55 million in bonuses in December.

Clearly, the Obama Administration is “off message” and out to lunch.  With many important posts in the Treasury Department left unfilled (more than a few applicants had skeletons in their closets), who is really running the government?  Americans should be angry at the $787 billion stimulus package, not AIG bonuses of $165 million.  Before the bailout even made it to the White House some Republicans tried to prevent the bonus situation from getting to this point:

Other Republicans said Democratic leaders last month killed a plan that would have forced financial institutions to compensate taxpayers if they paid their executives large bonuses after receiving federal bailout money.

Sen. Olympia Snowe, R-Maine, a co-sponsor of the amendment to Obama’s stimulus bill, said striking it “left open an escape hatch of golden parachutes for top executives on Wall Street.”

Roman leaders paid for circuses to distract the population when times got tough and, it seems, Obama and the Democrats are throwing bonuses out for the same purpose.

Is this change in which we can believe?

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