20 Mar 2009

Congress Plays Class Warfare on the Titanic

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Glenn McCoy

Charles Krauthammer puts into perspective the scale of the AIG bonuses which have occasioned such histrionics in Washington. Targeting executives as overpaid is a handy way of diverting the public’s attention from the really significant looting going on at the hands of Congress itself.

A $14 trillion economy hangs by a thread composed of a comically cynical, pitchfork-wielding Congress, a hopelessly understaffed, stumbling Obama administration, and $165 million.

That’s $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. Now, in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It’s less than one-tenth of 1 percent of the bailout money given to AIG alone. …

[A] contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress summarily cancels contracts?

Even worse are the clever schemes now being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution. We’re going to overturn that for $165 million?

Nor has the president behaved much better. He too has been out there trying to lead the mob. …

It is time for the president to state the obvious: This recession is not caused by excessive executive compensation in government-controlled companies. The economy has been sinking because of a lack of credit, stemming from a general lack of confidence, stemming from the lack of a plan to detoxify the major lending institutions, mainly the banks, which, to paraphrase Willie Sutton, is where the money used to be.

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