By Mary Kate Cary, Thomas Jefferson Street blog
I've been avoiding writing about the AIG bonuses, because my children need a mother. Really, I've been taken aback at the level of vitriol this week on TV, in newspapers, and in the blogosphere: the calls for Treasury Secretary Geithner to resign over what he knew about the AIG bonuses and when he knew it; the anger at Senator Dodd for allegedly inserting the loophole that allowed the bonuses in the first place. On Tuesday, there was the appalling statement by one Republican senator that AIG executives should resign or "go commit suicide." Then, CEO Ed Liddy told lawmakers yesterday he'd gotten E-mails suggesting AIG leaders be executed "with piano wire around their necks." Take a look at the language in Maureen Dowd's most recent column on the subject of the "arrogant, greedy creeps who knee-capped capitalism." Columnist Tom Friedman said the anger among Americans "is reaching a 'Bonfire of the Vanities,' get-out-the-pitchforks danger level." The amount of grandstanding on Capitol Hill and in the press is approaching demagoguery.
"The desire for culprits at times like this is strong," former Labor Secretary Robert Reich told the New York Times in the understatement of the week. He's a short list of culprits in the crosshairs these days: AIG's Ed Liddy, CNBC's Jim Cramer and Rick Santelli, Secretary Geithner, radio host Rush Limbaugh, Merrill Lynch's John Thain, and countless hedge fund managers. (Not to mention the top 10 percent of taxpayers, but that's a blog for another day.)
That same Friedman column is the best thing I've read lately. In it, he explains what he thinks the administration will propose to fix the toxic assets problem. Friedman also mentions that as aggravating as these AIG bonuses are, the fact remains that they are part of signed contracts agreed to between two legal entities. And under our system of law, a signed contract is a binding legal promise. We believe in the rule of law, and if the government goes around abrogating contracts, Friedman points out, no one will ever invest in the United States. A contract is a contract.
So as much as these bonuses make us all angry, I think it's time to get back to what's important here. Am I the only one struck by the fact that these bonuses total $165 million—a drop in the bucket when we're talking on a daily basis about billions and trillions of taxpayer dollars? They're infuriating, but in the scheme of things they pale in comparison to what's at stake here. We've got to let them go. In the words of the country song, they're whiskey under the bridge.
With the Fed stating that we remain in a severe recession yesterday as it announced it was purchasing another trillion dollars' worth of bonds to pump money into the economy, we might want to direct our energy toward the larger questions here—like whether that move will lead to inflation and higher consumer prices, or whether it will encourage more economic activity and lower interest rates. We should be debating the proper role of the Fed in a crisis and the level of federal intervention in our markets we want as a society. We should figure out how to prevent this from ever happening again. We need to focus on things like how to get people back to work, how to revive our economy without bankrupting America, and most importantly, how to rescue the banks. You can't tell me that fighting over pay for executives at one company is a top priority right now.
It seems President Obama feels that way. He stepped up to the plate yesterday and took responsibility for the AIG bonuses, in an effort to close the book on that one. Then he held a town hall meeting in California to explain his economic proposals; I caught the tail end of it and thought he did a great job. I'm not crazy about his going on Jay Leno tonight, but holding a second town hall meeting today with Republican Governor Schwarzenegger is a good idea. So is his prime-time press conference scheduled for next week. Time to get the American people to put down the pitchforks and talk about the important stuff.
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