"Taxpayer Money" Nonsense: Right Or Left, They're Confused About AIG

Whether coming from the right or from the left, from conservative talk radio or from liberal blogger land, you have heard some form of the following:

AIG has taken "taxpayer" money and given it away in ridiculous bonuses. Such avarice is unconscionable. American taxpayers have bailed out a company that deserved to fall into bankruptcy or receivership; this whole scandal is the rewarding of failure and incompetence. The American people now own 80 percent of AIG, and hence should be entitled to dictate how AIG is to spend taxpayers' hard-earned cash. America is sick of keeping such companies afloat, companies that flagrantly disregard the expectations of those who have come to their rescue.

With all due respect to the American "taxpayer," let me gently admit that I have never heard such abject lunacy. The whole world has indeed gone mad, losing both a sense of proportion and the rudiments of logic. Right-wing nutjobs believe that AIG should have just failed, that AIG had no right being bailed out by "taxpayers" in the first place. Left-wing moonbats rage at AIG's alleged greed and crass materialism, and denounce the distribution of "taxpayer" funds for unjustifiable compensation.

Please let me point out something so apparently ridiculous no one else is saying it: AIG -- and all its American employees -- are taxpayers! Over the years AIG has paid the US Treasury billions if not trillions of dollars in taxes; if anything, AIG, and companies like it, have been keeping the United States government afloat for decades. The common taxpayer, that man or woman who is not the owner of a massive Blue Chip company, is able to pay taxes to the Treasury -- the very taxes used to help struggling companies like AIG -- because he or she has earned money as an employee of a company like AIG: it's businesses that make taxation even possible. The American "taxpayer" is nowhere if someone is not generating wealth that creates the jobs that enable that "taxpayer" to pay taxes.

Moreover, AIG, being a taxpayer, also is a member of that taxpaying set that has paid for the bailout: AIG is also a shareholder in that "80 percent" of Americans who "own" AIG. In other words, AIG has bailed out itself, and it owns both public and private stock in its own company.

The shrill cry that AIG is somehow holding cash that is not its own but entirely someone else's is simply ludicrous. Yes, one can argue that AIG is holding some cash that belongs to the American people, but it is absurd to construe this bailout scenario as if AIG is neither a taxpayer nor essential to the viability of the Treasury and the American people. Lost, too, is the very real fact that Barack Obama is bailing out these companies in large part because he knows -- as all thinking Americans know -- that the government does not make wealth that is then returned in taxes: private business and industry provide the Capitol with capital, so to speak. All of Barack Obama's budgetary plans are contingent on thriving businesses: the bailouts are designed to stimulate the economy so the government can collect MORE revenue through taxes from businesses and employed citizens. This proves that economies and markets are not contingent on the state; the state is contingent on economies. The chicken and egg riddle is easily answered here: the state DOES NOT come first. Simple history proves this: the American government was not first established and then economies and wealth followed. The markets and economies of this continent were vibrant and potent, and hence provided the infrastructure upon which a government could be built. The American people, living freely, privately and in personal contract, produce the wealth of this country, the very wealth Washington seeks. Washington is the result and not the cause; Washington is the recipient and not the source of wealth.

So, in short, we have before us a strange, paradoxical riddle: AIG has bailed out itself. Thus, it should be allowed to do with its bonus money as it sees fit.

But listen to the Democrats rush toward punitive, confiscatory taxes to take back money they believe they "loaned." That rushing sound is the true sound of incompetence, failure -- and greed.

Amazing. And sick.

Peace through dissent.

[Addendum: It's time that the talking heads set, the talk radio set (including the "heavyweights" like El Rushmo), and the blogging set quit this insanity. (I have not heard Rush Limbaugh, Michael Graham, Jay Severin, Sean Hannity, Bill O'Reilly, Glenn Beck, Greta Van Susteren, Laura Ingraham, or anyone else, get this right.) The common locutions, like "taxpayer money," "your hard-earned tax dollars" and "our money," need to stop. Such phrases and terms are fine for fomenting outrage and envy; they make for great radio ratings and political boilerplate. But they are intellectually embarrassing. Ayn Rand is screaming from her grave, and this despite the fact that she denied any afterlife. Seriously, this whole manufactured outrage over AIG is embarrassing enough to stir the atheistic dead.]



©2009/Contratimes. All Rights Reserved.

Contrabamadiction

Those nasty AIG bonuses have just stuck themselves in nearly everyone's craw. While I have no problem with them, countless others do. But the math is really interesting, and so is a glaring contradiction.

If we accept the numbers as given, we know that AIG has received $190,000,000,000 in government loans and has distributed $175,000,000† in bonuses. Hence, we can rightfully conclude that the total amount of money distributed as bonuses is less than one thousandth of that $190 billion, at .00092 or .092 percent. In strictly percentage terms, the amount given to employees in the form of bonuses is utterly trivial.

Barack Obama and his fellow Democrats (and a few Republicans) are fomenting outrage over this infinitesimal distribution of "taxpayer" money. But compare this current outrage to Mr. Obama's own defense of alleged pork in his stimulus bill; read what he said on February 3, 2009, in an interview with Katie Couric. Mr. Obama rebuffed critics who claimed his bill was filled with "pork":

So, what's happened, and this is what tends to happen in this town is people have plucked out this program or that program that doesn't look particularly stimulative, the contraceptives issue being a primary example. If you add all that stuff up, it accounts from less than 1 percent of the overall package. Now that doesn't mean that the package can't improve and that's what I said to the leadership last night, "Let's improve it. Let's make this a package that is big enough for the moment, and is really focused on the American people." But I also wanna make sure that people don't get some notion which I think has been systematically promoted out there that this is full of silly spending 'cause it's not.

In other words, Mr. Obama is content overlooking trivial amounts of "taxpayer" money used for porky or pet projects. But he is not so tolerant when someone else tries to get away with something similar, even if one factors in the very real fact that AIG IS A TAXPAYER! All AIG is doing is distributing its own tax money -- refunded in a set of loans -- to its employees (who will then be taxed on it). Yet Mr. Obama has a problem with that.

No doubt such absurd behavior by a government leader is precisely "what tends to happen in this town."


Peace through dissent.

†It is reported that the Connecticut attorney general has determined that the total amount of the bonuses is $218,000,000. But this hardly changes the math.
©2009/Contratimes. All Rights Reserved.

Do You Have A Problem With That?

AIG is under fire for distributing some of its cash "borrowed" from the US treasury in huge bonuses to its chief executives. Do you have a problem with that? I don't.

Of course, the neo-Marxists among us do have a problem; they are driven by implacable envy. Allow me to take a moment to show you how wrong they are for taking such umbrage with AIG's private decision to give bonuses. But first, this necessary admission: In strictly American terms, I am not a wealthy man, so I am not protecting any personal fortune in what follows.

1. AIG has been described over the past few days as being "kept afloat by the American taxpayer." The insinuation, of course, is that AIG should be more circumspect in its behavior: it should treat the American taxpayers' money with respect, distributing it equitably.
   
2. Since AIG is billions of dollars in the red, the distribution of bonuses and the bailout of AIG have both been described as "rewarding failure" or "rewarding incompetence."
3. Taking points 1 and 2 together, it is easy to note what is so readily and intentionally overlooked: Companies like AIG, GM, Chrysler, Ford, and all the truly big wealth producers (AIG does not actually fit this set directly), have been keeping the American government afloat for decades. The amount of tax revenue generated by these companies is astounding: the coffers of the US Treasury have been filled by these corporate giants, making America's governing successes possible. Moreover, these companies, who are now profoundly in the red, have been underwriting and rewarding incompetence and failure every time their corporations and employees pay their taxes: The American government -- even under Clinton -- is ALWAYS in the red; it is always living larger than life and beyond its means. The current administration is emblematic of corporate excess: the Obama administration is grotesque in its wastefulness and incompetence.
   
4. What is clear is nearly Reagan-esque in import: The government bailouts are an admission that tax cuts work. What do I mean? Each time the government dispenses money to a struggling industry or corporation, it is tacitly admitting that it does not need that money, at least at the moment. Hence, if it does not need that money, it need not have collected it. Giving corporations sweeping tax cuts would have the exact same effect on things as a loan, except for one thing: granting tax cuts precludes the government from attaching controls on business, whereas loans permit such attachments. In a very real sense then, tax cuts are actually a more effective stimulus than a loan since government loans necessarily require government spending -- bloat -- to "micromanage" the bailouts.
   
5. The Obama administration seems unable to understand the simple processes of taxation: If AIG takes $150,000,000 and disburses it to its top-tier executives as bonuses (for argument's sake let's say AIG's top ten workers), those bonuses will be taxed at a high rate. Though I am no accountant, it is clear that 10 people making $15,000,000 each will each pay -- at least -- $6 million in taxes. Hence, about $60,000,000 of the $150,000,000 will be immediately returned to the Treasury. However, if AIG DID NOT distribute this money and instead chose to purchase $150,000,000 in Swiss stationery and letterhead, we'd hear nothing about such a transaction -- even though NONE of that money would be recovered in tax revenue. Finally, if AIG chose to distribute $150,000,000 to all its lowest-paid workers, the part-timers and low-tiered full-timers in the lowliest service departments, it is likely that, since these folks pay NO income tax, that NONE of the $150,000,000 would be recovered by the Treasury.
6. Hence, it is clear that the hue and cry coming from the whiny Obama administration and Congress over the AIG bonuses is born of envy -- these folks themselves generate no wealth nor do they know how -- and incompetence. Plus, these are the folks who distribute annual raises to -- and provide the best health and retirement plans for -- themselves; AND they redirect federal funds to groups that support their "just causes."
7. And there is one more aspect of envy that is overlooked: the administration rebukes the excesses of those in the private sector largely to keep the envious eye away from themselves: Barack Obama is fabulously rich -- and will be when he leaves office (think of the speaking fees!) -- and yet he does not want his constituents to envy him: he's doing this work for them, after all. He's "giving back." Hence, he's entitled to his fortunes because they were "earned" nobly -- he became rich doing nice things, like his civic duty. Therefore, his wealth is purer, and hence is safe from censure. But don't envy him: Look at those guys over there. They make too much!

Peace through dissent.

©2009/Contratimes. All Rights Reserved.

The Bionic Country

This is what the President will say tonight, in part:

While our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before.

I am sorry, but isn't this incredibly overwrought? "We will rebuild" reminds me of the "Six Million Dollar Man": We can rebuild him ... we have the technology. How dreadful.

Note the hyperbole in this excerpt:

"The weight of this crisis will not determine the destiny of this nation. The answers to our problems don’t lie beyond our reach. They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth. Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.

What? Is Mr. Obama suggesting we were not taking responsibility until he gave his speech? Were we not taking responsibility yesterday, the day before, or last year?

What vapidity. Seriously, if you want to read excerpts chock-full of Democratic boilerplate, then go here.