With the passage of the bill calling for a 90 percent tax onthe AIG bonuses, the three-ring economic, political and media circuscentered around the AIG bonuses has now officially entered the realm ofabsurdity, and looks to be spending the remainder of its existencethere.
And that circus is truly representative of everything that iswrong with the discourse surrounding the financial crisis and the Obamaadministration as of this moment, for in it one hears the dissonantnotes of envy, hypocrisy and cynicism all attempting forcefully toobscure the crescendo of cronyism which currently dominates thispolitical symphony of Statism.
Despite the high-flown rhetorical falsedichotomy between Wall Street and Main Street, it is apparent thatneither Wall Street nor Main Street finds this tragic farce enjoyableor productive, for coiled at its roots lies the dormant serpentineforce of totalitarianism.
Last Thursday's Wall Street Journal features several different pieces onthe AIG scandal, bearing such encouraging, joyful titles as "Obama'sAIG Panic," "Washington Has Always Demonized Wall St" and "SpitzerSpouts 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 panickyWashington, our supposedfinancial stewards thus gave license to everyone in the media andCapitol Hill to see who could claim to be most shocked and appalled atAIG." And what a reaction it has been, especially from those who aresupposedly charged with keeping the banking community solvent!Congressman Barney Frank, the supposed bank czar, has recently declared his intentionto ferret out the names of those who have received AIG bonuses, bysubpoena 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 admittedwere legal obligations is to use the false dichotomy of the highwayman:"Your money or your life."
Congressman Frank certainly seems to have acorner on their lives, so his colleagues have decided that it's wiserto try to use ex post facto taxation to save face by grabbing the moneywhich they voted to steal from taxpayers in order to give to AIG in thefirst place! Among those suffering from this advanced form of thief'sremorse is New York Congresswoman Carolyn Maloney, who apparently wantsto "tax it all." That's right - Congresswoman Maloney wanted a 100 percent taxrate on AIG bonuses, because letting them keep even 10 percent of theircontractually obligated money is apparently an injustice. There must bea lesson somewhere in the Congressional record about Indian giving,because even Congresswoman Maloney's compatriot, Charlie Rangel, isdeploring the usage of the tax code as a political weapon. Better latethan never, I suppose.
Now, setting aside the scandalous portrayal of the bonus scandal,there is one interesting argument floating around for the taxation'seffectiveness, and that comes from Congressman Ed Royce (R-CA) - one ofthe few people brave enough, incidentally, to vote against the TroubledAssets Relief Program that got us into this mess. According toCongressman Royce, a vote for the AIG tax is a vote to show thatbailouts lead to negative consequences, thus teaching businesses likeAIG that trying to avoid failure by turning to politicians is the worstoption of all.
This is a fair argument, except that, given the excessesof the past eight years, all it will do is reinforce the businessincentive to count on Republican corruption over Democratic corruption,which in turn will push the Republican party further down the path ofindentured servitude to particular economic interests - something whichis toxic for both politics and for the Republicans themselves.Moreover, the Democratic spin on this bill will only result in a moregeneralized feeling of resentment, which may lead to CongressmanRoyce's admirable philosophy facing even worse violations.
As one terrifying example of that spin, one need only look at themost recent column by Los Angeles Times columnist Michael Hiltzik, inwhich Hiltzik celebratesthe American public's supposed awakening to the idea that "so many hugefortunes landed in the hands of theundeserving rich," some of whom "added little value to the economy butmerely moved money around in novel, excessively clever and ultimatelydestructive ways" while "others are corporate executives who wereridiculouslyoverpaid whether they succeeded or failed at their jobs." Hiltzik'scrypto-socialist broadside is simply the honest version of what reallylurks under the pleasant, hopeful image which the currentadministration tries to project - namely, an overriding obsession withpunishing what FDR called the "malefactors of great wealth." And allthis despite the fact that AIG's employees received the bonuses becauseof 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 ofraw state power can have a useful lesson, one can only issue thiswarning: By the time you realize what your well-meaning actions havedone, there may be no one left to speak out for you.