Bonuses, Bailouts, and Babies: The Politics of Excess
Thursday, February 5, 2009
When did our nation's mentality change? What happened to change it? We once were a nation of savers. Americans knew the value of a dollar and were committed to keeping some greenbacks for a rainy day. I recall my grandfather telling me, "A dollar saved is a dollar earned." I was given a piggy bank before I started kindergarten. In first grade, I was taken to a local bank to open a savings account. We spent within our means. I had one pair of shoes for school and one pair for dress-up occasions. When I wore out my shoes or grew out of them, another pair would be bought.
I contrast that with today's announcement by President Barack Obama that he's imposing a limit of $500,000 on the annual compensation of top executives at companies receiving millions and billions of our taxpayer money. Our hard-earned money is being turned over to AIG, Citigroup and Bank of America to rescue them from the black hole of bankruptcy or even annihilation. None of these businesses could be praised for their thrift. In fact, after Citigroup was granted $45 billion of the taxes you turned over to Uncle Sam to keep our government running, its CEO used that money to buy a new toy, a $50 million corporate jet . This was an excessive and inappropriate action, according to our political leaders.
Last year, Wall Street companies, with many of them on the receiving side of your money from the federal government, gave out $18 billion in bonuses to their executives. The president called the situation "the height of irresponsibility" and said " it was shameful ," and then he punished that excessive payout with the $500,000 cap. As expected, Wall Street was appalled, never acknowledged the excess, but contended that limiting bonuses could discourage high performers from staying with their companies. How much income is enough? Can political clout control excessive income? Incidentally, the new rules are not retroactive, so the current transgressors can apparently keep their eight or nine figure salaries .
In fact, how much bailout is enough? We all know that last year's TARP bailout under the guidance of former President Bush's Treasury Secretary Henry Paulsen was $700 billion of taxpayer money, half of which went to financial institutions like the bank where my childhood dollars once were deposited. But even the Congressional Oversight Panel can't find out how those funds are being used, how they are being tracked, and what impact they are having on the companies they are supposed to help save. Unfortunately, all those billions clearly are not enough. Hundreds of billions more may be needed . The Congressional Budget Office agrees with Federal Reserve Chairman Bernanke that weakening banks will suck up more of our tax money . Can political leaders put the brakes on excessive bailouts?
Finally, speaking of excess - when is a bountiful harvest of children enough? After delivering six children over 5 years, thanks to in vitro fertilization, the mom wanted a few more. Eight embryos were implanted in her uterus. Fourteen children later, she is looking for book deals and TV contracts with which to share her experience, and perhaps earn enough to pay the hundreds of thousands of dollars that the procedure, the deliveries, the hospitalizations, and all that will follow will cost. No politics here, but plenty of excess.
But then, I decided that a puny two were enough for me.
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