Friday, March 20, 2009

This Time It's Personal

A couple of days ago Sara asked me if I was going to write about AIG, the giant, multiple bailout-fund-receiving insurance company. I said I wouldn't, in part because I'm so sick of hearing about it, but also because I'm sick of writing about the "bailout".


Yesterday, the House of (not so representative) Representatives passed a bill that, on the surface, was aimed at recovering most of the retention bonus money paid to AIG personnel. I was not comfortable with this from the moment I heard about it. I think the first, and natural, reaction to AIG bonuses is for people to feel violated in some way - since taxpayers are funding the bailout and it can be argued that the bonuses were paid with bailout money.


It is not like that bonus money was awarded arbitrarily to the big wigs or given without merit. The money was given to people like you and me as part of their compensation arrangement. It is no different than another business that has to dip into a line of credit in order to meet payroll. The bailout funds are a loan to the recipients. Our government extended that loan. You and I only agreed to it to the extent that we participated in the election process that now allows the clowns to run the circus. If we're going to be mad at somebody, it should be our elected officials -not AIG - and definitely NOT the employees of AIG.

How can I say such a thing? Now, as more details are surfacing, I have discovered that I, too, would be effected by the AIG legislation. The bill stipulates that bonus recipients from any company that received more than $5 billion in bailout money will have to pay a 90% tax. Without going into detail, this legislation would directly penalize me.* I'm just an average worker toiling in the trenches. I am part of the 95% of Americans that were promised no increase in taxes. The bill isn't targeted at some small, elite group of greedy corporate scumbags, as we are being led to believe. The bill effects real people. A lot of real people. It effects your neighbors, your friends, your relatives, and your favorite blogger. 

Think about it - a 90% tax on anything. $19 for two $5 Footlongs at Subway. Ten cents on the dollar is what you get to keep. Work ten years, get paid for one. How is that going to help the economy recover - taking more money out of the wallets of consumers? If you are a tithe-payer as I am, that doesn't leave anything left over to pay bills, feed the family, or buy a hybrid so that I can get President Obama's tax rebate on said automobile. It would be no different than not working at all.

Earn $100, $90 to the government, $10 to the Church = $0 for me
Earn $0, $0 to the government, $0 to the Church = $0 for me

I guess it just seems wrong to me that everyone appears to be so much more upset about $200 million (give or take) spent by AIG than they are about the $3 trillion spent by our government. I mean, when the government loaned money to AIG, what did it expect the company to do with it? AIG used some of their $185 billion, $200 million of it, to honor employment agreements. If we're going to start tearing up contracts - and since I won't have any money left after taxes anyway - can I request to have the note on my house shredded as well? (Will that 90% tax revenue be deducted from the total that AIG must one day repay? Or is it in addition to?)

I think the crux of the issue lies in the term "bonus". A bonus is not free, unexpected money, like winning the Power Ball. Bonuses are an important part of an employee's total compensation. Under these rules, An employee that earns $100k in straight salary would not take a hit, but an employee that earns a salary of $50k plus the potential for $50k in bonuses would. The latter would get to keep just $5,000 of his bonus. I would go so far as to argue that "pay for performance" (i.e. bonuses) is in the taxpayer's interest moreso than guaranteed salaries. 

Makes no sense - like a lot of things nowadays.

* I may need to retract this claim at a later time. One source is telling me the House version would only apply to those making more than $250k, which would not include me. However, all of my other sources state otherwise. The jury is still out.


At least one thing went right this week. The TSA successfully identified a very real threat to our national security and subjected the individual to extra security measures at PDX. Enjoy your flight, Congressman.


I'm cutting myself off here. I could go on for hours. This is why I didn't want to blog about it in the first place.


SMDStudio said...

I sincerely hope that a lot of people read your blog because it is so good and so timely. You need a talk show, or a column in the New York Times, or the Wall Street Journal. I'm not kidding.

Ducheznee said...

I appreciate that you find my rants at least a bit worthwhile. I'm still trying to figure out what readers like me to write about. Your feedback helps a lot.

The best ways to spread the word are by linking to specific posts or the main page, and by voting for my blog with services like Technorati or Digg.