Thursday, March 19, 2009

The AIG Bonus Outrage

The outrage here is that people are outraged. The government response is particularly outrageous.

I don't know the details of whether these bonuses were deserved in some moral sense, but the fact is these bonuses are contractually obligated and should be paid. If the government had a problem with paying large amounts of compensation to employees in order for them to stay and clean up the mess they created, it should have raised the issue when AIG was teetering on the edge of bankruptcy. After all, the bonuses would not be paid in the event of bankruptcy, so the government had some leverage to demand that employees take a pay cut. But it is too late for that now.

Personally, I don't even have a problem with paying smart, hard-working people a lot of money to try to mitigate the damage. It seems rational to pay them to stay if they can do a better job than their potential replacements. The fact that these same employees were responsible for losing a lot of money is irrelevant. I think the administration was getting a bad rap for this, and its initial instincts were correct.

Now, though, the administration and congress (and I include Republicans here) are acting like tyrants. It is completely unacceptable -- morally and constitutionally -- for them to try to pressure people to give up their contractual rights based on popular outrage, or worse, to pass taxes aimed at punishing them. The tax bill just passed by the House is essentially a bill of attainder, which is specifically proscribed by Article I of the constitution.

Any congressman who voted for this bill is guilty of a violation of his sacred oath to uphold and defend the constitution. We'll soon see if Obama also violates the oath he took just two short months ago.

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