The headline in my local paper today declared that President Obama has pledged to stop the payment of bonuses to current and former AIG employees. As I sat looking at the headline, I was temporarily paralyzed with fear as to the implications…
“What’s the problem with stopping the bonuses, we gave them that bailout money!” is the cry we hear in the media.
The problem is that President Obama is pledging to VIOLATE A LEGITIMATE CONTRACT– contracts enforceable by Law. See, the ironic part is that had the U.S. Government “bailed out AIG”, then AIG would have gone into bankruptcy protection (as it rightly should) and the bonus contracts would have been nullified as a primary obligation of the company. BUT, since President Obama and the Demospenders said “But AIG is essential to preventing bank failures!”, here we are… AIG is solvent (sort of) and so it is still obligated to pay the bonuses.
How would you feel if your employer owed you a bonus for work you did and then decided it was not good PR to pay you your bonus? You’d go to Court and sue your employer, I’m quite sure. You would never say, “Oh, well, it’s for the public good that I do not get my bonus, so that’s ok!”
Let me make my point crystal clear:
If President Obama and the Congress succeed in overturning LEGITIMATE CONTRACTS, then they have placed a massive nail of precedent in the coffin of the free market.
Our ENTIRE ECONOMY is dependent upon contracts being enforceable. You want to see credit get tight, see what happens if contracts can be voided by Congress and the President just because they are not popular…
It’s simple: The U.S. Government invested in AIG and it has to be responsible for the legitimate obligations of AIG to the extent of their “investment” — just like any other investor. They don’t get to change the rules just to suit their investment– at the expense of AIG’s employees.
Congress and the President cannot have their cake and eat it, too. Either they bail out AIG and pay the bonuses, or they let AIG go bankrupt to avoid it (and deal with the consequences either way).
When will people realize that the Government should never, ever tinker in the economy? The free market is self-regulating, but of course “reality” is not always politically correct.
Daily Dose of Reason
Obama’s Pledge to Stop AIG Bonuses is Bonechillling
17 March 2009 — Eriks GoodwinThe headline in my local paper today declared that President Obama has pledged to stop the payment of bonuses to current and former AIG employees. As I sat looking at the headline, I was temporarily paralyzed with fear as to the implications…
“What’s the problem with stopping the bonuses, we gave them that bailout money!” is the cry we hear in the media.
The problem is that President Obama is pledging to VIOLATE A LEGITIMATE CONTRACT– contracts enforceable by Law. See, the ironic part is that had the U.S. Government “bailed out AIG”, then AIG would have gone into bankruptcy protection (as it rightly should) and the bonus contracts would have been nullified as a primary obligation of the company. BUT, since President Obama and the Demospenders said “But AIG is essential to preventing bank failures!”, here we are… AIG is solvent (sort of) and so it is still obligated to pay the bonuses.
How would you feel if your employer owed you a bonus for work you did and then decided it was not good PR to pay you your bonus? You’d go to Court and sue your employer, I’m quite sure. You would never say, “Oh, well, it’s for the public good that I do not get my bonus, so that’s ok!”
Let me make my point crystal clear:
If President Obama and the Congress succeed in overturning LEGITIMATE CONTRACTS, then they have placed a massive nail of precedent in the coffin of the free market.
Our ENTIRE ECONOMY is dependent upon contracts being enforceable. You want to see credit get tight, see what happens if contracts can be voided by Congress and the President just because they are not popular…
It’s simple: The U.S. Government invested in AIG and it has to be responsible for the legitimate obligations of AIG to the extent of their “investment” — just like any other investor. They don’t get to change the rules just to suit their investment– at the expense of AIG’s employees.
Congress and the President cannot have their cake and eat it, too. Either they bail out AIG and pay the bonuses, or they let AIG go bankrupt to avoid it (and deal with the consequences either way).
When will people realize that the Government should never, ever tinker in the economy? The free market is self-regulating, but of course “reality” is not always politically correct.