With the passage of the bill calling for a 90 percent tax on
the AIG bonuses, the three-ring economic, political and media circus
centered around the AIG bonuses has now officially entered the realm of
absurdity, and looks to be spending the remainder of its existence
And that circus is truly representative of everything that is
wrong with the discourse surrounding the financial crisis and the Obama
administration as of this moment, for in it one hears the dissonant
notes of envy, hypocrisy and cynicism all attempting forcefully to
obscure the crescendo of cronyism which currently dominates this
political symphony of Statism.
Despite the high-flown rhetorical false
dichotomy between Wall Street and Main Street, it is apparent that
neither Wall Street nor Main Street finds this tragic farce enjoyable
or productive, for coiled at its roots lies the dormant serpentine
force of totalitarianism.
Last Thursday’s Wall Street Journal features several different pieces on
the AIG scandal, bearing such encouraging, joyful titles as “Obama’s
AIG Panic,” “Washington Has Always Demonized Wall St” and “Spitzer
Spouts Off” (and yes, that Spitizer and no, not like that). In the first piece,
the author observes that “By shouting ‘greed’ in a crowded and panicky
Washington, our supposed
financial stewards thus gave license to everyone in the media and
Capitol Hill to see who could claim to be most shocked and appalled at
AIG.” And what a reaction it has been, especially from those who are
supposedly charged with keeping the banking community solvent!
Congressman Barney Frank, the supposed bank czar, has recently declared his intention
to ferret out the names of those who have received AIG bonuses, by
subpoena if necessary, and presumably to punish them viciously. Yes,
that’s right, in a time when executives at major companies are getting death threats for taking bonuses, a congressional leader wants to get their names on the public record.
If nothing else, this shows that the Democratic modus operandi in response to AIG fulfilling what even Obama advisor Larry Summers admitted
were legal obligations is to use the false dichotomy of the highwayman:
“Your money or your life.”
Congressman Frank certainly seems to have a
corner on their lives, so his colleagues have decided that it’s wiser
to try to use ex post facto taxation to save face by grabbing the money
which they voted to steal from taxpayers in order to give to AIG in the
first place! Among those suffering from this advanced form of thief’s
remorse is New York Congresswoman Carolyn Maloney, who apparently wants
to “tax it all.” That’s right – Congresswoman Maloney wanted a 100 percent tax
rate on AIG bonuses, because letting them keep even 10 percent of their
contractually obligated money is apparently an injustice. There must be
a lesson somewhere in the Congressional record about Indian giving,
because even Congresswoman Maloney’s compatriot, Charlie Rangel, is
deploring the usage of the tax code as a political weapon. Better late
than never, I suppose.
Now, setting aside the scandalous portrayal of the bonus scandal,
there is one interesting argument floating around for the taxation’s
effectiveness, and that comes from Congressman Ed Royce (R-CA) – one of
the few people brave enough, incidentally, to vote against the Troubled
Assets Relief Program that got us into this mess. According to
Congressman Royce, a vote for the AIG tax is a vote to show that
bailouts lead to negative consequences, thus teaching businesses like
AIG that trying to avoid failure by turning to politicians is the worst
option of all.
This is a fair argument, except that, given the excesses
of the past eight years, all it will do is reinforce the business
incentive to count on Republican corruption over Democratic corruption,
which in turn will push the Republican party further down the path of
indentured servitude to particular economic interests – something which
is toxic for both politics and for the Republicans themselves.
Moreover, the Democratic spin on this bill will only result in a more
generalized feeling of resentment, which may lead to Congressman
Royce’s admirable philosophy facing even worse violations.
As one terrifying example of that spin, one need only look at the
most recent column by Los Angeles Times columnist Michael Hiltzik, in
which Hiltzik celebrates
the American public’s supposed awakening to the idea that “so many huge
fortunes landed in the hands of the
undeserving rich,” some of whom “added little value to the economy but
merely moved money around in novel, excessively clever and ultimately
destructive ways” while “others are corporate executives who were
overpaid whether they succeeded or failed at their jobs.” Hiltzik’s
crypto-socialist broadside is simply the honest version of what really
lurks under the pleasant, hopeful image which the current
administration tries to project – namely, an overriding obsession with
punishing what FDR called the “malefactors of great wealth.” And all
this despite the fact that AIG’s employees received the bonuses because
of politicians who were either too lazy to fix the lack of provisions in TARP, or were too corrupt to care.
And so, to those few optimistic souls who believe this exercise of
raw state power can have a useful lesson, one can only issue this
warning: By the time you realize what your well-meaning actions have
done, there may be no one left to speak out for you.