Public outrage over the AIG bonus payments has reached a crescendo, and rightfully so. Many in Congress, particularly those already concerned about the sweeping government invention into private markets, share that outrage.
It is incomprehensible that a company that has received some $170 billion in taxpayer funding — the same company that recently posted the largest quarterly loss in U.S. corporate history — would pay its executives $165 million in bonuses. I don’t know of any small business in Minnesota’s Third Congressional District, which I represent, that pays bonuses to employees who bring in record losses.
The Obama administration and Congress should pass legislation requiring the Treasury Department to immediately recover this funding. We should not accept the notion that the government is unable to do anything about this matter and should look the other way.
More importantly, we need to prevent this type of abuse from taking place again. Along with preventing future bonuses from being paid by AIG, Congress should quickly enact policies requiring the U.S. Treasury to approve any future contract that involves bonus payments from companies receiving taxpayer assistance.
Some people believe this issue is merely a drop in the bucket when it comes to bailouts and government intervention in private markets. In the grand scheme of $700 billion in total bailout funding, it could certainly seem like a small amount. However, $165 million is an awful lot of money to my constituents — and it could be better spent on investments in roads or tax relief for job creators or paying back the Treasury.
The larger concern is that these bonuses not only send the wrong message but are symptomatic of a much bigger problem. It is clear that both the Bush and Obama administrations, as well as Congress, have failed to include adequate oversight of taxpayer dollars being spent through the Troubled Asset Relief Program.
The good news is that Congress is acting on this issue. Just last week, the House Financial Services Committee advanced legislation creating broad authority for a special inspector general to oversee any remaining spending of TARP funds.
Specifically, this bill would provide the inspector general with the authority to conduct, supervise and coordinate an audit or investigation of any action taken with regard to these funds. This represents a major break from the past.
Perhaps the most glaring need we have is for an exit strategy to end sweeping government intervention in the private sector. The revolving door of government bailouts has led to the United States now having an 80 percent ownership stake in AIG — and that’s just one example.
When government becomes more and more involved in private enterprise, the more opportunities there are for abuse, waste and corporate dependency.