AIG executive resignation letter - must reading for every American.

Every American should read this resignation letter from one of the AIG officers receiving the famous retention bonuses.

This country is in serious trouble. Too many partisan politicians seek only immediate political advantage from taking simplistic, emotional positions that get the attention of the media regardless of their effect on the economy or the country in the long run.

When word of the retention bonuses got out, politicians tripped over themselves trying to get in front of cameras to attack the bonuses, their recipients, AIG and anyone who had anything to do with the bonuses. Their merit in the scheme of things mattered not in the slightest. The particular circumstances of the actual recipients of the bonuses mattered not at all.

This would create enough problems if it were the only case of such demagogic conduct. Unfortunately, it only exemplifies the normal conduct of the American political class today.

George Will: The Toxic Assets We Elected

George Will made some good points in "The Toxic Assets We Elected":

With the braying of 328 yahoos -- members of the House of Representatives
who voted for retroactive and punitive use of the tax code to
confiscate the legal earnings of a small, unpopular group -- still
reverberating, the Obama administration yesterday invited private-sector
investors to become business partners with the capricious and increasingly
anti-constitutional government. This latest plan to unfreeze the financial
system came almost half a year after Congress shoveled $700 billion into the
Troubled Assets Relief Program, $325 billion of which has been spent without
purchasing any toxic assets.

Referring to members of the House of Representatives as yahoos is overly insulting - to the true yahoos of the country, wherever they are. Barney Frank and his cohorts grow ever more disgusting as they struggle to get face time on TV news by making ever more outrageous claims about the AIG bonuses and American business in general.

After week after week of attacks on the private sector for its greed, Obama and the Congressional Democrats now beg the private sector to save their bacon by investing in the toxic assets. If the toxic assets turn out to be not so toxic, will the Democrats then demand a 90% tax on the profits?

George made a mistake in one of his comments. He said that "TARP funds have, however, semi-purchased, among many other things, two automobile companies" while even the Swedes say that Saab is on its own and "The Swedish state is not prepared to own car factories."

Actually, the American government isn't purchasing the car companies. They're simply providing the cash so the companies can continue the UAW contracts to pay off the union for its campaign contributions and votes for Obama.

Of course, they'll be needing another installment soon because nothing has been done to make the companies competitive.

President Obama and the Democrats are getting what they wanted - AIG executives are bailing.

Reuters reports that some AIG executives are bailing from the company. The attacks by the President of the United States and the Congress on their retention bonuses and very real concerns about the safety of their families undoubtedly influenced their decisions.

According to the article:

A handful of senior executives working within American International Group
Inc's controversial financial products unit have resigned, said a company
spokeswoman late on Monday.

The division is at the heart of the financial problems that brought AIG to the brink of bankruptcy last September, saved only by a taxpayer bailout that has now swelled to as much as $180 billion.

The spokeswoman declined to specify the exact number of resignations, noting they
were expected to be "manageable," and said there were indications that more will
follow.

The purpose of the bonuses was to retain people who knew the business. Our political leaders have retroactively set aside the retention bonuses and insulted the recipients. Undoubtedly, more will leave as they find new jobs or simply go "John Galt."

Will anyone remain who can sort out the complexities of the derivatives to salvage some of the assets the taxpayers now own? Thanks to our political class for their stupidity. Will they learn from this fiasco? I doubt it.

John Hinderaker: "Are We a Banana Republic?" With these last two months, that may insult banana republics.

Mr. Chief Justice John Marshall recognized long ago in McCulloch v. Maryland that the "power to tax involves the power to destroy."

John Hinderaker at Power Line asks, "Are We a Banana Republic" in regard to the Democrats' proposal to tax at 90% or more the bonuses given by AIG to retain certain of its critical employees. With some of the events in Washington these past 2 months, one might find this characterization to be an insult to banana republics.

Many people are undoubtedly shouting, "Right on" to the proposal to tax the AIG bonuses at confiscatory rates. That is why demagogues take such positions. They know they can whip up support for their policies.

That is the very reason that the founders enacted the Constitution - to limit the powers of the demagogue to gain temporary support for policies that hurt the country in the long run. John says it well:

I would have considered it a bright line rule that the government can't
identify a class of unpopular people and impose a special tax on them. What's
next? A 100% income tax on registered Republicans, retroactive to last year? If
Pelosi's bill passes muster, why not?

If Congress can pass a confiscatory tax on the AIG bonuses, no contract is safe in this country. Who will be next? Why stop with AIG? The Treasury obviously needs a tremendous injection of income, why not look at other unpopular salaries in the country?

A lot of people think our star athletes are overpaid. Why not pass a 90% tax on all athletes' compensation above $400,000 per year? While we're at it, why not apply the same tax to our college and professional coaches? Why should the football coach at the University of Texas make such a huge salary?

Now that we're on a roll, we can include the news readers and political pundits in the tax. Also, we should apply it to all contributions to political campaigns and all politicians' personal income. Uh oh. I think I've gone from preaching to meddling, haven't I?

The Dems want to tax the AIG bonus today. What will their target be tomorrow?

The blog JustOneMinute tells truth to power when it says, "I deplore this confiscatory tax aimed at whoever Congress is mad at today. Right now it's AIG and Fannie Mae; later it will be Merrill and Citibank, and eventually it will be defense contractors, profiteering oil executives, or whomever the Congressional Dems single out as their whipping boy du jour."

Everyone may be mad about the retention bonuses to be paid to AIG management, but that does not justify confiscatory taxes to appropriate the bonuses. Today it may be applied to AIG, tomorrow to the new enemy of the day.

When government sets aside contracts they don't like, no contract is safe. This introduction of uncertainty into economics discourages all investors from risking their money in the economy.

Does Senator Dodd really think he reassures the public by saying he didn't know what his legislation was doing?

AP reports:

On Wednesday, Sen. Chris Dodd, D-Conn., acknowledged that his staff agreed
to dilute the executive pay provision that would have applied retroactively to
recipients of federal aid. However, Dodd said he was not aware of any American
International Group Inc. bonuses at the time the change was made.

No, Senator Dodd, your staff did not agree to anything. You are the Senator. You propose legislation. You offer amendments to legislation. You vote and speak on the floor of the Senate. Your staff does none of those things.

Senator, you say that you weren't "aware of any American International Group Inc bonuses at the time the change was made." Is this supposed to reassure us somehow? Why do you think the amendment was suggested? Would you have supported such bonuses for some of the companies bailed out, but not AIG? Why? Did you not try to understand the purpose of the amendment that you were asked to offer? Do you carry legislation that you do not understand and vote for legislation that you don't know the effect?

In fact, the AIG bonuses are probably quite defensible even though too many of our political leader would rather demagogue them than show real leadership. Would AIG and the taxpayers really be better off if the people who understand the various instruments had left AIG for other jobs rather than stay for the retention bonuses?

If the taxpayers are going to bailout companies, they need to be prepared to analyze salaries and bonuses in hard business terms, not in simplistic, emotional ways. Instead, our Senators and Congresspersons would rather grab a torch and pitchfork to lead the mob.