United Liberty

It seems this reaction from Washington over the AIG bonuses is nothing than an act, considering the Obama Administration knew about them well in advance:

For all of the furor since details of the bonuses became public over the last several days, the issue of retention payments to A.I.G. employees globally has been percolating publicly since A.I.G. was bailed out in mid-September. About $1 billion in retention payments for 2008 and 2009 are in question, but the controversy involves about half of that, about $450 million over two years, that was intended for employees of A.I.G.’s financial products unit. That unit was the source of the financial derivatives blamed for the near-collapse at the heart of the economy’s downturn.

The Treasury and Federal Reserve officials said they had known about the bonus program as far back as last fall.

And it turns out that the provision to protect the payouts was inserted into the “stimulus” bill last month by Sen. Chris Dodd (D-CT). Not surprising, considering the amount of money Dodd has received from AIG. Dodd also received a ton of money from Freddie Mac and Fannie Mae, who have now put taxpayers on the hook for $400 billion (at a minimum).

If the AIG bonus aren’t anything new in Washington, then you have to assume the Obama Administration is attempting to create an FDR-like animosity towards business. Otherwise, why would you suddenly get your panties in a wad, even throwing out the idea to tax these bonuses at 100%, about something you’ve known about for awhile?

The false furor over AIG bonuses is causing other corporations to take notice:

The firestorm over bonuses paid by insurance giant American International Group has triggered alarm at other financial firms, threatening federal efforts to draw private investors into economic recovery programs.

It is a critical juncture for the Obama administration. Officials at the Federal Reserve and the Treasury Department are increasingly worried that the controversy could discourage investors from joining a new government effort to revive consumer lending as well as a separate plan that relies on private money to buy toxic assets from banks, sources familiar with the matter said. Treasury officials planned to outline that second program as early as this week.

The attack by lawmakers on AIG pay has provoked renewed complaints from some financial company executives that federal involvement in business decisions is making it difficult for struggling firms to return to profitability. In particular, executives say they need to offer bonuses to keep and motivate their most valuable employees and are already seeing an exodus of talent.

I was angry over the AIG bailout, but I also understand that this phony outrage is going is going to hurt these companies, as the last paragraph points out.

Why work for a company if you’re going to be trashed by populist politicians that will make sure you become fodder for their re-election campaign? Why work for a company where you have no incentive to succeed.

Doug Bandow makes a great point:

Duh, how could anyone in business not expect federal interference? The government constantly meddles even when it is not bailing out everyone hither and yon. But if it’s paying the corporate bills, how could anyone expect it not to get involved?

I have a novel idea. Maybe business should stop going to Uncle Sam hat-in-hand asking for taxpayer alms.

AIG brought it on themselves. They were “too big to fail” and now that they have become a talking point, good luck getting anyone in there to turn the company around.

H/T: The Liberty Papers