By Hallie Ivester
The American Insurance Group, a multi-billion empire that covers 38 million life and retirement insurance policies for Americans, was given billions of dollars in bailout money. The money was intended to protect them and the failing American economy—not the extravagant lifestyles of high-end executives. Unfortunately, as the government failed to put regulations on how the money was to be used, AIG took advantage of this opportunity and paid out $165 million in bonuses. The highest individual bonus was $6.4 million, and several executives received $4 million.
Chris Dodd, the man who inserted the amendment into the stimulus bill that allowed AIG executives to receive these bonuses, had received roughly $100,000 from AIG for his campaign. And yes, Obama did know about this amendment before signing it, even dubbing it the “Dodd Amendment.” Now, however, Obama is retracing his steps, and no one can admire him for this. Clearly, paying out $165 million of the people’s tax money is wrong. I don’t care who tried to cover up for writing the amendment or who didn’t read the bill before signing it—the fact of the matter is that this shouldn’t have happened and, whether it was a mistake or not, the money needs to come back. This isn’t a Republican or Democratic issue; it’s just an issue about common sense.
Using government money, money that we paid in taxes, to offer bonuses to AIG executives, is just disgusting. To pay these executives with American citizens’ tax dollars doesn’t make sense. Obama asked in one of his speeches, “How do they justify this outrage?” To answer this question, there are only a few counterarguments. Some people say, “These bonuses were necessary because if AIG loses their top guys, then the company will crumble and it would be impossible for the government to recover its investment. AIG needs to keep its best employees.” My response: If these are AIG’s best employees, they need serious help. If they had smart people to begin with, they wouldn’t be in such a mess. Who cares if everyone leaves? Those in the financial sector of the company couldn’t have done any worse, helping to hasten one of America’s worst economic collapses in history. According to a poll done by USA Today, 46% of Americans think that the AIG management alone is most to blame for the fact that the AIG bonuses were paid. Only 7% blame Obama.
Others may argue that these bonuses are justifiable because the company donated so much money to Obama’s campaign. But that’s as bad as blackmailing: saying we did this for you, now you let us get away with these bonuses. The fact that the company gave money to the Obama campaign is irrelevant to their poor decision-making and cannot be used as an excuse to rationalize their actions. It was their decision to donate to his campaign, and Obama—as the leader of the free world—cannot and should not bypass scandals simply to return the favor. That would be falling to the lowest level of the game of politics.
Obama has recently remarked that he hopes to get this money back from AIG’s bonus receivers. The treasury department plans on using a $30 billion infusion into the company, in an effort to convince the business to repay the bonuses. Obama sums up the situation well when he says, “All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules.” It’s only fair that these AIG employees give back what they were given—and if they quit so be it. From what it seems, they’re not that brilliant anyway.
Thankfully, even the top executives that received these absurdly large bonuses have some morals: according to the March 24th issue of USA Today, 15 executives plan on returning more than $30 million of the bailout money. The House of Representatives also passed a bill that would place a 90% tax on employee bonuses in companies receiving more than $5 billion in bailout money, although Obama’s administration is becoming more doubtful of this tax strategy. Either way, even the AIG businessmen, along with 69% of American citizens, disagree with the decisions of the company and believe all of the money should be returned. The “greed is good” values that have long been characteristic of Wall Street and elite economists have never been good, and this scandal has put this in the limelight. It’s time that this country re-evaluates our fundamentals, and how money should be used. Buying another house for an AIG executive is probably not the best way to save a failing insurance company or protect a weakening economy.