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AIG, class warfare and cynical political opportunism

By Scott Tibbs, March 23, 2009

President Barack Obama blasted AIG last week, after it was revealed that the insurance giant had paid $160 million in bonuses to current and former employees. Obama and Congress are working to deny the bonuses, either by breaking the contract that guarantees the bonuses or taxing the bonuses at 90%. There is a lot of anger out there over these bonuses. I am also outraged about this scandal. However, my outrage is directed at the those who are shamelessly engaged in class warfare.

I am disgusted that Barney Frank (the Massachusetts representative perhaps best known for the brothel that operated out of his home) is demanding the names of all who got the bonuses despite the fact that a number of deranged lunatics are threatening to murder them. New York Attorney General Andrew Cuomo's demand that AIG turn over the names of the employees who got bonuses is nothing more than a political stunt. This is shameful. AIG is right to balk at the request and in the interest of protecting the lives of employees and former employees.

What is at stake here is whether legally binding contracts will be honored or whether they can be invalidated on a political whim. MarketWatch.com reports that the AIG bonus contracts were signed in April of 2008, nearly a year ago. The stimulus package specifically allows bonuses that were agreed to prior to February of 2009. If Congress is successful in imposing ridiculous politically-motivated punishment on these employees, it could have a disastrous affect on the confidence people place in the market and the contracts they sign. If Barney Frank can invalidate these contracts on a political whim with a massive and unreasonable tax, he can do the same thing to any bonus or compensation package.

This has nothing to do with recovering "public money" sent to AIG. This is nothing but class warfare. This is about finding a scapegoat to demonize, to take attention away from a number of blunders by the Obama administration. If you support these punitive taxes, ask yourself this: how is your life better because some executives at AIG were denied the bonuses that were mutually agreed upon by them and their employer a year ago? Does it improve the quality of your life at all to see someone punished? Does it increase the value of your home or investments? Does it increase your salary or help you pay down debts? Or are you just satisfied that "the rich" are getting shafted?

I expect this kind of class warfare nonsense from Democrats, especially from the likes of Barney Frank. The 85 "Republicans" (in name only) who voted to tax the AIG bonuses at 90% should be challenged in the next primary and defeated by Republican voters. This was an act of pure cowardice and cynical political gamesmanship. This is the time when Republicans should be standing on principle against big government, especially those who shamelessly demonize "the rich" to score cheap political points. Both parties should be ashamed of themselves.

There is another danger here. In times of economic stress, the door is open for demagogues to take power or expand their power. After all, had it not been for the hyperinflation and economic devastation experienced by Germany, the Nazi Party might not have had a foothold to gain power. No, I'm not saying that anyone on the national political scene is a Nazi. What I am saying is that by giving in to populist class warfare and whipping up public resentment against a specific class of people (in this case, "the rich") we are creating an environment where people are willing to cede more power and authority to government and that atmosphere is fertile ground for totalitarianism to develop. I'm much more concerned about government power than whether a private company squanders a tiny percentage of a bailout it never should have received anyway.