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.