Don’t Hate the Player, Hate the Game

I can’t speak for everyone but I am getting sick and tired of the feigned outrage coming from Washington.  Last year Congress passed and President Obama signed the “Emergency Economic Stabilization Act of 2008”.  This act allowed the Federal Reserve to make loans to financial institutions that were in danger of going under.  One of the largest financial groups was AIG.  AIG has received 170 billion dollars of tax payer money since this bill’s passage.  Recently it became public knowledge that this very same firm has given out 165 million in bonus money to executives and traders.  Some members of Congress are outraged.

Senator Chuck Schumer (D-NY) has said “It boggles the mind” and has promised that he will fight to tax these bonuses up to 100%.  Senator Mitch McConnell (R-KY) has gone on record calling this an outrage.  And Senator Dick Durbin said “I’ve had it!”  Though my personal favorite line came from Chuck Grassley (R-Iowa) when he suggested the people who received these bonuses should “commit suicide.”  The public outrage has also began as people feel like they are being robbed of their tax dollars so these failed executives and traders can get paid.

I too am outraged, but not by the bonuses the people received, but by my government and by the men I listed above.  There is something that Senators Schumer, McConnell, Durbin, and Grassley have in common, other than their flare for hyperbole, they all voted to give AIG the money.  Even President Obama, who signed the bill giving them the money, was quoted as saying “”It’s hard to understand how derivative traders at AIG warranted any bonuses”. 

Let me help you understand it then, these were NOT performance based bonuses.  These were “retention” bonuses, meaning that when these people were hired they signed a contract that stated if they were employed beyond a certain date then they got a certain amount of money from the company.  They were not paid this because of how they performed but because they simply existed and were employed.  And these are not unusual in employment contracts.  I work for a state agency and I have these types of bonuses in my employment contract.  These cannot be rescinded due to performance.  The person can be fired due to performance and therefore they might not reach the required date, but that was not the case in this instance.

Now do I like the fact that people who performed poorly at their job are being given tax payer money?  No.  But then again I did not agree to give the company tax payer money with these contracts in place, the Senators I mentioned above did.  They knew where the money was going and they were well aware these types of contracts were in place and are now choosing to be shocked and appalled by it.  They are anything but shocked and appalled, they are however always running for re-election.  Once news of these bonuses hit the air they had to come out against them. 

The public, who are suffering through an economic downturn are angry, and they should be.  But the Senators, as well as the people in the House of Representatives and the President want us to be angry at the people receiving the money, not at them who authorized the funds.  I do not blame someone for accepting money they were contractually obligated to receive.  This is the classic bait and switch technique used by politicians all the time.  Give the public an easy target and they will be so distracted they won’t ask “Hey, who gave them the money in the first place?”  It’s perfectly reasonable to be mad at the traders and AIG, but we should not let our representatives off the hook; they are the ones who gave a company posting over 60 billion dollars in loses your money.

I want to focus on two of the statements made by Senators Schumer and Grassley.  Chuck Schumer stated that he will seek to tax these bonuses up to 100%.  Basically Senator Schumer is saying that these men should have to pay a “I sucked at my job tax” because they appear to have sucked at their job and they are receiving tax payer money.  I will agree with him under one condition, that this applies to everyone who sucks at their job and receives tax payer money as compensation.  Now the Senate as of this year, according to the USA Today/Gallup poll have a job approval rating of 19%.  That sounds like to me that they suck at their job, and I believe they receive tax payer money as compensation for their work.  So go ahead and pass that law Senator Schumer, I’ll wait for your check in the mail.  I mean it must be preferable to Senator Grassley’s suicide idea.