I repeat myself. A lot. But I've said that before.
AIG, America's favorite socialist whipping boy, is back in the news. Let's go over the particulars, shall we? I'll not use the names of presidents as there has been more than one involved and picking one or the other always seems divisive -- and they're both equally stupid on the matter. Let's use the name "Congress" where the real blame falls.
Congress is all bent out of shape that AIG is handing out bonuses "with the taxpayers hard earned money." Odd that they think it's our money now... and not so much when they were handing it out. So the fix? Tax the bonuses at 100%. Forget for a moment how stupid and convoluted our tax code is.... and how the complexity of it is generally what makes people mad and what makes people exploit the system. The real issue here is that the government is bent out of shape on the execution of contract law. These bonuses were put in writing BEFORE the Congress stupidly plopped down our hard earn cash for a failing business. Contract law is just a gentlemanly way of making an agreement -- putting it in writing we all understand so that the government will help us enforce it if one side backs out. Contract law is a byproduct of a civilized government. So why the hell would a "civilized government" want to stop it with an unconstitutional ex post facto law?
Before you answer, remember this: let's think about how "normal" businesses do big buyouts. In most business dealings where big sacks of cash are handed around, folks do a little research. Congress should have known (and most likely did) that these contracts were in place. So if there is outrage here, it is not AIG that deserves it, but the members of Congress themselves. They either knew these bonuses existed and are pretending to be outraged (which makes them hypocrites) or they didn't do their due diligence (which makes them incompetent).
And now they'll haul the CEO in and spank him for the mistakes they made. Oh, gee, we're all so impressed you're working so hard to save us. I'd rather see a Congressional hearing where they drag in the members of Congress and grill them. I'd like to see Nancy Pelosi tear into Nancy Pelosi.
Let me point it out in a singsong, I-told-you-so sort of voice. There was a way to avoid these outrageous bonuses. ('Was' is an important word as it denotes past tense. But don't get bogged down in that, because the trend here shows this will happen again. Learn from it.) Okay, I am going to give it to you -- a totally legal way these stupid damn bonuses wouldn't be paid: the bankruptcy and absolute total failure of AIG. That's right, if the company doesn't exist and the courts divvy up it's assets like a Christmas goose -- then they don't owe a dime under contract law. See -- simple. Now, when the next AIG or GM or Chrysler or Citigroup pops up -- you know how to handle it in a non-controversial, non-outrageous manner.