The nation is outraged that insurance giant AIG, 80 percent owned by taxpayers, paid out $165 million in bonuses to executives while drawing down $173 billion in public money.
The public’s outrage is a signal to President Barack Obama and to Congress that they, too, should be outraged. And they are. House Democrats directed three committees to come up with legislation to recover bonus money paid to beggar-companies. Sen. Charles Grassley (R-Iowa) thought suicide would be an honorable way to show remorse and accept responsibility, though he backed off that suggestion on Tuesday.
Among the thundering herd of the outraged is the chairman of the Senate Banking Committee, Christopher Dodd (D-Conn.). Yet, Dodd himself may have played a large role in preventing any recovery of the bonus money. Fox News reports that Dodd amended the $787 billion stimulus bill to include language that restricted executive compensation, but the final bill contained an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009.”
Dodd denied the pre-Feb. 11 clause was his. “I can tell you this much, when my language left the Senate, it did not include it. When it came back, it did,” he told Fox. “Because of negotiations with the Treasury Department and the bill Conferees, several modifications were made,” Dodd’s spokesman said.
Dodd, according to the Center for Responsive Politics, was the largest single recipient of AIG’s campaign contributions in the 2008 election cycle at $103,100.
The bonuses are bad public relations — and most likely are, too, the tipping point in taxpayers’ tolerance for bailouts. Had AIG been allowed to go belly-up, a bankruptcy judge could have dealt with contracts and bonuses as warranted. Once politicians and bureaucrats are making the decisions, they do as Congress and the Obama Administration has done. They sign off behind closed doors — and run to the microphones to express their outrage when they see the angry mob. Change looks an awfully lot like Yesterday in Washington.