Strange Legacy

Let’s Get Over AIG

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The news cycle has been consumed lately by the scandal of $165 million dollars in bonuses going to American International Group (AIG) executives. AIG has received over $100 billion in federal aid to remain solvent, and the very executives who are receiving these bonuses share a large portion of the blame for our current economic predicament. To call this a travesty is something of understatement. And yet, as outrageous as this abuse of our tax dollars is, it’s time for us to get over it. Before anyone accuses me of sympathizing with rich and corrupt executives, please hear me out.

$165 million dollars is a lot of money. That is, until you compare it to the complete $750 billion dollar Troubled Asset Relief Program (TARP). This program was instituted by the Bush administration to stabilize large financial institutions like AIG, and has given AIG over $100 billion to prevent its meltdown. Economic advisors in both the Bush and Obama administrations have predicted dire consequences if large financial companies like AIG fail. A little math reveals that $165 million is less than on half of one half of one percent of TARP. Yes, the executives at AIG are crooked, incompetent, and absolutely undeserving of bonuses of any kind (let alone their jobs). But our economy is in serious trouble, and we need to be focusing on larger issues than how a tiny fraction of our TARP money was abused.

Speaking of abuse, we need to accept the reality that you can’t throw a trillion dollars around without some of that money going to people who shouldn’t have it. During better times we might have the resources and energy to properly investigate each instance of abuse and hold the perpetrators accountable. These are not the circumstances in which we find ourselves. The time that our politicians are wasting on Congressional investigations into AIG – investigations that will almost certainly accomplish nothing beyond public spectacle – could be better spent fixing a broken system and closing the gaping chasm into which our tax dollars are haphazardly falling.

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This is one unfortunate example of how our democratic system of government can actually work against the interests of its people. Americans are outraged by the bonuses given to AIG executives and by the economic bailout in general. As average citizens are losing their jobs and homes, the notion of tax money helping the very executives whose greed and incompetence have brought us to the brink of a new depression is intolerable. Politicians who fear for their jobs and don’t want to end up on the wrong side of rising populist rage are doing everything they can to prove they understand our pain. Nevertheless, their efforts to recover the $165 million given to AIG executives – even if they are successful – will do absolutely nothing to heal our wounded economy.

The simple litmus test for how our leaders should be using their time is this: does this activity have a reasonable chance of significantly improving the economy? If the answer is “yes”, then it is worthy of their time and attention. If the answer is “no”, they need to move on. It’s really just that simple. During periods of serious crisis a proper focus on priorities is essential for survival. We don’t have the luxury of being angry right now – we need to be smart.

Even without the bonuses going to undeserving executives there are still a lot people who disagree with the very existence of the TARP program. This is a complex issue with many different viewpoints and no easy black-and-white solutions. Americans have a duty to carefully study the problems we’re facing and reach thoughtful opinions concerning the best way forward. We should spend our time on this type of study and debate, rather than wasting our energy on a torch and pitchfork tirade against AIG. We owe it to ourselves, and especially to our children who will ultimately reap the consequences of how we handle this crisis.

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