By Deal Journal
There is only one thing more outrageous than the outrageous $450 million AIG bonus payout.
And that would be the hysterical, bloodthirsty ravings of our politicians over the matter.
It’s too bad Robespierre is dead. Iowa Senator Chuck Grassley’s suggestion that the AIG execs kill themselves would have made him proud.
For those of you that enjoy this kind of populist hurly-burly–and it appears, that is most Americans, there is good news. The revolution will live on! As long as Washington can’t help itself from tinkering with our economic destiny, the outrages will keep coming.
Of course, the AIG bonus saga promises to get even better. Soon we’ll have a constitutional amendment to clawback all Wall Street bonuses. And in our fine nativist tradition, there are bound to be hearings on why all those bad European banks ended up with AIG’s good American money.
The highly anticipated Washington and New York State investigations of John Thain’s farewell bonus payments at Merrill Lynch are now underway. And you can count on an almost never-ending political brouhaha and mediafest over “appropriate” behavior by the TARP banks.
The John Kerry bill to kill golf sponsorships and Christmas parties and the Chris Dodd amendment to curb bonuses were just the start. Wait until Washington really clamps down on Wall Street pay.
It will go on and on.
But soon Wall Street’s outrages will have competition as Washington turns its attention to the doomed U.S. auto industry. The Presidential auto task force may be making noises about delaying the tough decisions on GM and Chrysler. But rest assured, there eventually will be outrage here, too.
Like AIG, we are talking big numbers. Mark Zandi at Moody’s estimates the total taxpayer price tag on a Big Three bailout to run to $75 billion to $125 billion. And certainly there is negligence and incompetence. After all, the U.S. car industry has been dying for decades.
But expect a more nuanced drama in Detroit than on Wall Street. For one, it’s harder to pick out the villains. Will it be the evil CEOs? The intransigent, greedy bondholders? The naysaying Republicans? Or perhaps, even the lazy, overpaid workers?
In a Senate hearing room, the outrage could take almost any direction. Look at Chrysler. The company is owned by a bunch of rich folks. It is run by a rich CEO. A rich guy who once was Treasury Secretary now lobbies for its bailout money.
And now the rich folks, with the UAW’s blessing, have joined hands with a second rate, cash-starved foreign car company. And together, they want to bilk the U.S. taxpayer of another $10 billion or $15 billion to churn out cars nobody wants.
Now, that’s an outrage.
But the Washington populists ought to tread carefully. It’s one thing to stir up the mob, it’s another to control it. Eventually, the public will tire of the old outrages and look for new ones. And suddenly some of the things down in Washington will start to look pretty outrageous, too.
Like Senator Ted Stevens, a convicted felon, receiving $122,000 a year from a government pension. Like Congressman Charlie Rangel, the man most responsible for the U.S. tax code, failing to pay taxes on his Dominican vacation home. Like Rep. Maxine Waters doing favors for a bank in which her husband was a stockholder and former board member.
And like President Obama vowing to rid Washington of earmarks before signing a bill that had almost 9,000 of them.
La revolution devore ses enfants, said French revolutionary leader Georges Danton, before he was guillotined by Robespierre. Three months later, Robespierre himself was executed.
Senator Grassley, please take note.