Get the Hell Out of My Way
March 19th, 2009 - 1:09 pm
We’ve got a corporation so out of control, that it thinks handing out bonuses while bankrupt is A-OK. We have a Congress so out of control, that it hands out billions of bailout dollars — with an implicit okdey-dokey for said bonuses. Our Congress then goes even further out of control, and passes a law taxing those bonuses at 90%.
Here’s a little tip for the congenitally clueless in Washington: Nothing destroys wealth creation like uncertainty, and you guys make the Three Stooges look like Kabuki theater.
Oh, Steve, you’re wildly off the mark on that first one. These were retention bonuses in order to keep people from leaving AIG when they were needed to help wind down operations. You might as well complain that employees of a bankrupt company continue to accept their salary.
Charlie –
I once worked for a company where management took an across-the-board 10% pay CUT when things got bad, before they’d lay off a single office or shop-floor worker. Bonuses? I don’t think so.
If a troubled company can’t ask management to tighten their belts when it’s management that got them into trouble, then the company has no business surviving. Or it should “retain” people with a little more faith in the company, and its employees.
End of effing story.
Charlie- Enron did the same. We see how that worked out. The Bill of Rights restricts Congress from passing any law aimed at only a certain group of people. So good luck with getting any of that money back.
I am most definitely not a lawyer, but how is this not a bill of attainder?
Will, it IS a bill of attainder, as well as an ex post facto law. However, I saw Tribe’s defense of such a thing. Essentially, if the government calls it something else, it won’t “be” a bill of attainder. I’m cynical enough to believe that the courts might go along with such claptrap.
So let me get this straight … the government gives the company money, Congress adds a retroactive condition that allows said company to use said money for bonuses, realizes that the normal people that pay for all of this don’t like it, express outrage over what they themselves allowed, and then tax it to get it back because of their mistake. Wow. Truth truly is stranger than fiction.
you guys make the Three Stooges look like Kabuki theater.Are you kidding? They make Bush and the Republicans look competent and honest.
And that takes some doing.
Yes, but Barak is on Jay tonight! It’s so exciting! And historic!
“Wow. Truth truly is stranger than fiction.”
Plus AIG stills owes the 165 million back to the government.
I’m no lawyer, but ex post facto restrictions just might only apply to criminal law. If the government wants to change last year’s tax rates, it just might be okay.
I have a hard time getting worked up over these particular millions of dollars when the number of billions involved in this bailout dwarfs it in ways that make remembering scientific notation come in handy. But I also have a hard time feeling any sympathy that total fuckups might have to worry about their million-dollar bonuses. I don’t feel any populist outrage over a spoiled athlete getting cut by a sports team, nor do I feel any remorse at the fact that multimillionaire speculators might not feel secure in their position after a spectacular fuckup that was spurred on by their own greed.
Frankly, I’m very nervous when Wall Street assumes it will always be raking it in. They’ve been investing in shit for too long, and the proof is that the wise consumers have stopped buying it by the spoonful. Main Street hates those people and is making them suffer, and I have a hard time figuring out why that’s unfair.
And it’s probably not a bill of attainder if the Federal money comes with strings. Although the money given probably didn’t say it couldn’t be used for that purpose, you can bet all future funds (and there will be future funds) will come with those strings and will punish companies for this kind of thing even if they don’t single out individual employees.
I think I’m with Charlie on this one.
From what I’ve read at PowerLine
(http://www.powerlineblog.com/archives/2009/03/023115.php)
the guys at AIG getting the bonuses aren’t the ones who made the mess,
but are people brought in to the sinking ship to try and plug the leaks.
The bonuses were to sweeten a deal that involved getting smeared with someone
else’s muck: if you want good people to come in and help at this point, you need
to offer something, because being associated with AIG isn’t a career boosting move right now.
People from Obama to the VodkaPundit are now lumping knife-wielding maniacs in together with the surgeons trying to save the victims: hey, they’re both guys with knives, right?
Mark –
I don’t blame the guys getting the bonuses. Somebody offers me money to stay on the job and, well, I’d probably take the money and keep the job.
But upper management has GOT to go. They’re spreading wealth that isn’t theirs, to preserve a corporation nobody thinks is worth saving, other than the politically well-connected.
Again, I point to the example (above) I know best, where profit-sharing (ie, bonuses) and salaries all suffered when the time came for belt-tightening. White-collar workers who won’t stick around (without bribes) when things get bad, aren’t worth keeping. And a company that can’t keep employees when things get bad isn’t worth saving.
If congress also put an ex post facto/bill of attainder 90% tax on the $10-20 hourly differential between UAW and non UAW wages associated with the Detroit bailouts, I might trust their motives, and maybe cut them some slack.
The auto bailout “bonus” numbers dwarf the couple hundred million bonus dollars at AIG. But an extra $30k per year for 40 years or so for 80,000 plus auto workers just doesn’t make for a good headline.
How many of those autoworkers cost their company or taxpayers millions or billions of dollars with their work? Get a better analogy, please. Also, the non-UAW worker figures don’t make an apples to apples comparison, as the other car company workers haven’t worked long enough to have the number of retirees the UAW hourly figure involves. Operating cost comparisons can look pretty damning, but they don’t tell the whole story.
jon,
We’re talking about bail out dollars here, not some nebulous “cost to society” number.
And those 50-60 year old retirees pulling in $80K per year are most certainly part of the problem.
Jon –
As I’ve written several times before: If you listed GM’s five biggest problems in order, the UAW would rank only fourth or fifth. That’s not great, mind you, but management still takes the top three places at a minimum.
Stephen -
I am glad it’s not my call, but if I had to choose between bailing out AIG and letting it go bankrupt, then I am with you and we let it go bankrupt. This cuts whatever assets and people are still viable from a management structure that clearly is compromised.
But…
If the administration does feel that bailing out AIG is the right thing to do, it seems that throwing the current management under the bus in this way is a little counterproductive. If they want AIG to pull out of this death spiral, become solvent, stave off a worldwide financial meltdown, or whatever it is they’re expecting, who do they want to do it? Oh, sure, they’ll restaff AIG with knowledgable top talent right after they fill more than one of the score of empty deputy secretary positions at Treasury.
And then, sweet lord, the administration and congress toy with invalidating the contracts by fiat, get cold feet, then resurrect bills of attainder… showing no courage of their original conviction to pay the bonuses, now that it seems unpopular, instead erecting a smokey trail of who knew what when…
… if you wanted to push the economy over the cliff by maximizing uncertainty, what would you do differently?
“Nothing destroys wealth creation like uncertainty, and you guys make the Three Stooges look like Kabuki theater.”
What does that even mean? Have you ever seen a Kabuki performance?
Stephen, agreed. And jaymaster, the retirees did what they were asked to do at the price the management agreed to. In a few years, the price at the non-UAW plants will be nearly as high when the plants are dealing with their current workers’ salaries and retired workers’ pensions. Then the difference will be much less stark. And the UAW has actually renegotiated contracts so that newer workers get much less than older ones, so it’s not as if the unions haven’t done anything. The car companies got slammed when consumer taste changed, not because the unions wouldn’t budge.
“White-collar workers who won’t stick around (without bribes) when things get bad, aren’t worth keeping. And a company that can’t keep employees when things get bad isn’t worth saving.”
I understand the sentiment, but after the death threats against the children of employees and this outrage being generated over less than 1/10 of 1% of the money dumped into AIG, you’d have to pay extra for anyone you need to either wind the company down, or make a profit on your original 175 Billion dollar investment. You make it harder to attract and keep people, those jobs go unfilled and do not get done.
Oh well, its just taxpayer money. Who cares if the morons in congress trash a company they just dumped a ton of cash into and create a hostile work environment?
Is it just me or is $165 million starting to sound like peanuts?