The revelation that some executives from embattled insurance company AIG received seven-figure bonuses dominated the news cycle last week. Upon learning of the bonuses, President Barack Obama told Treasury Secretary Timothy Geithner to “pursue every legal avenue to block these bonuses and make the American taxpayer whole,” according to The New York Times.
It is infuriating to think of executives receiving any kind of bonus when AIG is at the heart of the economic crisis facing the country.But what is more troubling is the power the federal government applies in recouping the taxpayers’ money.The government has used money collected from taxes to purchase enough stock in AIG to effectively own 80 percent of the company. This process of buying up stocks was couched in terms like “capital injection” and “investment” in an attempt to rename what the Bush administration began and the Obama administration is trying to carry out to its natural conclusion — nationalization.AIG is no longer a private company. The government owns it — and now the government is trying to run the business.Rep. Barney Frank, D-Mass., is one of the most outspoken proponents of the government using its ownership powers to control the future of AIG and its employees.”We can’t keep them from getting their bonuses, but we can keep some of them from continuing in their jobs,” Frank said on The Today Show.There was a time when government ownership of a private corporation was unthinkable. But those days ended when former President George W. Bush said he abandoned the free market to save it.Fiscal conservatives’ worst nightmares are being realized as a result of the firestorm these bonuses have generated.There is a sentiment among the Washington establishment similar to that of French revolutionaries. Executives at companies like AIG claim some politicians are out of touch with reality like Marie Antoinette was when she proposed to feed her starving people with cake. And, like the French radicals, politicians in Washington are eager to whip out their guillotines.The Washington elite are trying to use any means they can to strike a blow against corporate America in favor of the “taxpayer.”Sen. Charles Schumer, D-N.Y., gave a chilling speech about the power of the federal government to control the economic engines sustaining this country.”We will take this money back by taxing virtually all of it. So let the recipients of these large and unseemly bonuses be warned, if you don’t return it on your own, we’ll do it for you,” Schumer said.Bowing to pressure from the kingmakers on Capitol Hill, Edward Liddy, the newly installed CEO of AIG, told a House subcommittee he would ask AIG employees “to step up and do the right thing. Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments.”Implicit in the outrage over these bonuses is the notion that bonuses should be performance-based. Since AIG is struggling and nearly brought down the entire financial sector, executives should not be rewarded.The government employees who occupy the hallowed halls of Congress are experts at underperforming.And while outrage directed toward executives of failing businesses who receive bonuses is appropriate, the taxpayers should save some of their indignation for the bloated paychecks received by arrogant congressmen.It was Congress — acting first under the “conservative” Bush administration and later under the Obama administration — who paved the way for this incendiary set of events.The taxpayers’ dollars never should have been on the line. Had the government preserved free market principles, AIG would be gone and the contracts at the center of this controversy would have been nullified.Drew Walker is a 24-year-old philosophy senior from Walker.—-Contact Drew Walker at [email protected]