Why Taxpayers Should Pay the AIG Bonuses; Obama is Dead Wrong On This

Communists understand this.  If you lived under communism or studied their practices — you do too.

When my wife, who lived through the communist takeover in Vietnam, heard President Obama say the U.S. taxpayers should ignore legal contracts and not pay the AIG bonuses, she flew into a rage and said, “This is how it starts.  This is how the state sweeps away everything involved in legal free enterprise.”

The writer of the column below, Andrew Ross Sorkin, explained his thinking of the “Today Show” on NBC March 17, 2009.

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By ANDREW ROSS SORKIN
The New York Times

Do we really have to foot the bill for those bonuses at the American International Group?

It sure does sting. A staggering $165 million — for employees of a company that nearly took down the financial system. And heck, we, the taxpayers, own nearly 80 percent of A.I.G.

It doesn’t seem fair.

So here is a sobering thought: Maybe we have to swallow hard and pay up, partly for our own good. I can hear the howls already, so let me explain.


Andrew Ross Sorkin

Everyone from President Obama down seems outraged by this. The president suggested on Monday that we just tear up those bonus contracts. He told the Treasury secretary, Timothy F. Geithner, to use every legal means to recoup taxpayers’ money. Hard to argue there.

“This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.”

On that last issue, lawyers, Wall Street types and compensation consultants agree with the president. But from their point of view, the “fundamental value” in question here is the sanctity of contracts.

That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.

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.” (The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)

Read the rest:
http://www.nytimes.com/2009/03/17
/business/17sorkin.html?hp

Related:

Obama Tells “Turbo Tax” Geither To Get Back AIG Bonus Money
.
Grassley on AIG execs: Quit or suicide
.

Related:
Ultimate Hipocracy and Irony: Obama Wants You To Trust Markets and Government; But He Offers to Ignore AIG Contracts
.
AIG Bonus Caper Demonstrates Obama Administration Weak Thinking
.
Obama Plans to Charge Wounded Heroes for Treatment
.
Stimulus: Way Fewer Jobs Than You Thought

 Obama Tells “Turbo Tax” Geither To Get Back AIG Bonus Money; Dumb and Dumber

Obama: Really Want to “Fix Schools”? Try The China Or Singapore Model
.
Obama’s War On Banks: Backlash Stirring

From March 13:
Republicans: If You Can’t Agree On Core Values Now, Commit Harakiri

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One Response to “Why Taxpayers Should Pay the AIG Bonuses; Obama is Dead Wrong On This”

  1. utah1234 Says:

    I heard Sorkin on Morning Joe this morning and although he made some good points, I don’t agree.

    I believe the bonus payout excesses at AIG are just the tip of the iceberg of what is happening with the other Wall Street bailouts including Bank of America. Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world. Now the American taxpayers and our posterity will be forced to live a far lower standard of living with reduced prosperity and opportunities due to the accumulated national debt to fund the bailouts and once again we will pay the price.

    Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. I believe Washington plans to monetize the debt in future years while they tax and destroy our remaining wealth by depreciating the dollar.

    To stop this wealth attack, the Campaign to Cancel the Washington National Debt By 12/21/2012 Constitutional Amendment is beginning now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts

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