Anger at AIG bonuses misplaced?

Hans A. von Spakovsky, in his article Misplaced Anger on AIG at National Review Online, argues that it is not only pointless to confiscate the controversial AIG bonuses, but it is counterproductive. His essay is directed at visitors to NRO, specifically conservatives who want to learn about the A.I.G. controversy. Von Spakovsky has some credibility on the matter. He is a former commissioner on the Federal Election Commission, and for a time was the in-house counsel for an insurance company that went through major financial difficulties.

Von Spakovsky claims that lawmakers do not understand people's careers or how the economy works. He describes his experience at the insurance company he worked for and what happened when it ran into trouble. He states that in a struggling company, employees will find jobs at other companies for fear that theirs will fail and they will be unemployed. He says that in such situations, bonuses are necessary to keep the employees that are needed to run a business. Von Spakovsky uses this point to argue that a 90% tax on bonuses at companies such as A.I.G. will "drive out" the "top talent" and important employees that should be working to make the business profitable. If it fails to be profitable, taxpayers will "never recover their $150 billion investment" in A.I.G. He fails to mention, however, that A.I.G. bonuses were paid to employees in A.I.G.’s financial products unit, which is the part of the company that got them into trouble in the first place. It doesn't make much sense to be trying to retain the people at least partially responsible for the current problems.

Von Spakovsky at first would seem to be making a good point, and it is true that the amount of money paid in bonuses is a small fraction of the bailout money given to A.I.G. His argument that the bonuses are necessary, however, is ultimately not very convincing. For example, there is no suggestion that his own company actually benefited materially by retaining him and his coworkers with financial incentives.

David Brooks on Obama

In his article "The Uncertain Trumpet," which appears in the New York Times, columnist David Brooks criticizes President Obama's recent policies, focusing on Obama's handling of health care reform. Brooks is a credible source, as an experienced author, editor, and commentator on "The Newshour with Jim Lehrer". He is a conservative, but respects Obama and does not criticize him just because of party differences. His essay is aimed at readers of the New York Times who are interested in Obama's policies and health care reform.

Brooks argues that Obama has not been as involved in policy-making and reform as it would seem based on his address on Tuesday, and gives several examples. He suggests that Obama has not fully left behind old Washington habits, saying that he "enthusiastically perpetuates the myth" that average Americans can enjoy health care and other government spending while letting the top 2% of the population pay for everything. In my opinion, with the economy in its present state many Americans cannot afford to pay more taxes, but when the economy is stabilized, perhaps the current tax breaks on middle-class citizens can be repealed. This will help pay for such things as health care and reduce the deficit.

Brooks comments on "a weird passivity emanating from the White House," saying that Obama shows "deference to the Washington establishment" and isn't exercising his authority to enact his policies. His most effective example is about health care. The Obama administration is giving Congress a lot of control over the health care reform bill, providing only eight "general principles" and leaving the rest up to the legislators. Brooks contends that so much freedom should not be given to the "Congressional Old Bulls." He argues that the process would be full of Congressmen and lobbyists struggling for influence and trying to push their own agendas, and that the Obama administration should have written a plan before sending it to the legislature.

While some of Brooks' points are less successful than others, overall he makes a fairly effective case that Obama could be more aggressive on policy and reforming the usual proceedings in Washington.

Stimulus bill passes the House

The House of Representatives on Friday passed the $787.2 billion stimulus package with a vote of 246-183, reports Deborah Tedford in an article at npr.org. The bill was voted against by all House Republicans, and seven Democrats. House GOP Leader John Boehner argued that the stimulus plan “falls woefully short,” and House Speaker Nancy Pelosi, of course, supports the plan. In addition to merely relaying the event, Tedford describes some of the ways the stimulus money will be spent. I would recommend it for the article itself, which is interesting, and also for the access it provides to more detailed information for those who are interested. It includes the link to a more comprehensive chart of the proposed spending, and a link to the House Rules Committee website.

http://www.npr.org/templates/story/story.php?storyId=100685976