Big Dogs House

What Is The Big Deal About AIG Bonuses?

Mar 16, 2009 Political

Today the world is in turmoil because AIG is paying out 165 million dollars in bonuses that it is contractually obligated to pay. People are being whipped into a frenzy about this because AIG received about 170 BILLION dollars in taxpayer money as part of the bailout. The problem is, the government placed no restrictions on the money and now wants to dictate terms over existing contracts. If the government had provided proper oversight instead of handing out money like candy at Halloween then there would be room for this indignation but since it did not, oh well.

To be fair, the deal was made by the Bush administration and Obama inherited it but it was crafted by a Democratically controlled Congress. Many of the members of Congress (from both parties) who worked on this are still there and this is on them.

Barney Frank is claiming that the bonuses amount to rewarding incompetence. I think Frank’s pay is a reward for incompetence because he was instrumental in giving us this mess. In fact, nearly all of Congress gets rewarded for incompetence because people keep reelecting them.

The New York Attorney General, Andrew Cuomo, wants the names of all people getting bonuses. Cuomo is going to investigate whether any of the recipients had anything to do with the decline of the company. What does it matter? They had contracts and contracts are legally binding.

Barack Obama said this can’t be justified. It can if you go by the rule of law and see that Congress and the Bush administration allowed Hank Paulson to write the rules and gave him blank checks to hand out. These are the same people that forced solvent banks to take the money so that the ones who needed it would not be singled out as failing thus causing more problems. Wells Fargo paid lower dividends and owes a fortune in interest because money they did not need was forced upon them.

Regardless of all this I want to know what the big deal really is. My understanding is that the companies have to pay back the bailout money. If that is the case what does it matter how they spend it especially if there were no rules?

Additionally, I have heard a number of members of Congress defend the earmarks they added (to the stimulus and the omnibus) by stating that they are a small percentage of the overall sum. Commenters at this site have made the same claim in justifying the spending. If that is the case, the money AIG spent on bonuses is only a small percentage of what it received in bailout money and it is even a smaller percentage of the overall amount spent to bailout all banks.

If the Congress can justify 9000 earmarks by claiming they are a small amount of the total package why can’t AIG do the same with regard to the bonuses?

The bottom line is, both expenditures involve taxpayer money. There is no reason AIG should not be able to live by the same rules that Congress sets for itself.

The other reality is that Congress did a poor job of overseeing this. For all their whining about oversight and checks and balances, they certainly dropped the ball on this one.

Of course, they dropped the ball in the first place and that allowed the collapse to happen. Thank the indignant banking queen Barney Frank and his partner in crime Chris Dodd for that. The subprime problem and Freddie and Fannie toppled the financial world. The other problems were collateral damage.

Suck it up Obama, Frank (maybe that is not the right phrase to use with Frank) and the rest of you whiners. I did not like the idea of the bailouts to begin with and your lack of oversight in the process makes it even worse.

But, those folks had contracts and since you did not address them then it is unlikely you will be able to address them now.

A contract is a contract and all the bluster from Obama, Frank, and Cuomo can’t change that. They can say it amounts to rewarding incompetence but who allowed it to happen? Not providing proper oversight is the definition if incompetence.

As an aside, the government has given AIG the bailout money in about four installments. Do they expect us to believe that they could not have set some kind of rules on any one of those occasions?

Tags: aig, bailout, barney frank, bonuses, cuome, incompetence, Obama

Will Homeowners Who Default Need To Have A Plan?

Feb 19, 2009 Political

Or for that matter, will Congress?

The big three auto makers went to Capitol Hill last year and begged for money. They were excoriated for using corporate jets to get to the meeting by people in Congress who use military jets to get around the world on the taxpayer dime. Nancy Pelosi is in Europe this week and she went there in an Air Force plane. She also took her family with her. I wonder who paid for that?

Congress spread a little money around and told the automakers that they needed to come back with a detailed plan that clearly laid out how they were going to conduct business. Congress wanted to ensure the companies had a methodology that would make them profitable and enable them to pay back the money. We can’t have these big shot executives spending money when they are going bankrupt. We can’t have them using hard earned tax dollars on half baked schemes. No, they need detailed plans that Congress can scrutinize.

It is an interesting concept and one worth exploring. Before I start, I was not and am not in favor of a bailout for the auto industry (or any other industry). I think that the market should sort it out and if a business goes under than another will come along to take its place. It is survival of the fittest. For a group of people who believes in evolution, this concept seems to escape their grasp.

Why is it that Congress is not placed on a plan? How is it they are able to spend over a TRILLION dollars in a spending bill that they did not read on things that will not stimulate? How is it that we are 10 TRILLION dollars in debt and they can still spend a TRILLION more as if it were nothing? Congress should have to submit a plan to the American people that clearly outlines how they intend to cut back. They should have to show how they are going to become responsible with our money just like the auto makers. I know Obama said he would go through the budget line by line but that was a lie in the ranks of “Its only a cold sore.”

He has not gone through the budget line by line. He has not looked at different government agencies to see which can be closed or downsized. He did not even go through the bill he signed line by line. He could not have considering all the other things he was doing while it sat on his desk (figuratively speaking).

Today though, Obama was in campaign mode once again. He prefers that because he is pretty good at it. We have seen him try the leadership thing over the past 4 weeks and he sucked at that. He got his head handed to him until he started campaigning again. He could not lead a group of people out of a burning building.

Unless you include his followers who blindly follow him like rats behind the Pied Piper.

In his campaign stop today Obama introduced his plan to reward irresponsible people. Obama unveiled his $275 BILLION dollar plan to assist people with their home loans. Obama will increase funding to Fannie Mae and Freddie Mac so they can lend money. That is what got us into this mess. At least some of his friends can get rich working there. Fannie and Freddie went from nearly $70 a share to 70 cents a share and their reckless actions helped fuel the collapse.

In addition, Obama will use the money of responsible taxpayers, the ones who pay their bills, and work to get the mortgages reduced in both principle and interest rate. Yes, Obama wants to readjust the principle people paid for their homes (lower the cost) and he wants to have banks refinance them at a much lower rate. It seems to me that the loan taken out on homes is a contract and both parties are obligated to live up to the agreement. That means if a person agreed to buy a house for a certain price then he is obligated to pay that price. The government does not belong involved.

If people bought homes that they could not afford then they need to suffer the consequences. If the government steps in and helps them out then the bad behavior is reinforced. You get more of what you subsidize and if the government starts reworking bad loans there will be even more of them. People will not learn and they will continue to do the same stupid things. What about those of us who pay our bills on time? What about those of us who did not buy more house than we could afford? We will have to pay the amount we agreed to pay and at the interest rate that was also agreed upon, as well we should. Everyone should have to pay what they agreed or they should sell their houses or have foreclosure take place. Too bad, so sad, sucks to be you. Why should the rest of us pay for YOUR mistakes?

What I want to know is what kind of plan do homeowners have to come up with? I mean, the auto makers had to make a plan to show they would be responsible and do better financially before they can get federal money. What do people who are helped with taxpayer money for their home mortgages have to do that is equal to what car makers have to do?

I think they should have to present a plan that details how they will ensure they will not get behind again and how they will not overspend or enter into foolish contracts again. The plan should include giving up cell phones, cable TV, FIOS, or Satellite. They should be forbidden from eating out at any restaurant including fast food joints. They should have to give up tobacco and alcohol and submit to random urine tests for nicotine and alcohol as well as any other drugs. Anything found should lead to serious consequences.

These people should also have to sell anything that is a luxury. If they have more than one TV or computer then the extra ones need to go. No iPods, no cell phones, and no PDAs. They should also have to sell any vehicle that is elaborate and get a small, low cost, fuel efficient model. It should also be required that they buy US savings bonds or some other investment vehicle so they can save for their future. Bonds are ideal because the money goes to the government and because they must be held for a certain amount of time and they have long maturity dates.

I am not trying to be a hard ass or anything but if I am going to be footing part of this bill then I am becoming a part owner in their homes so I get a say in how they live (as do all other taxpayers). They can take their own decisions when they pay their own bills.

This deal should also require recipients to give up any other government benefit with regard to taxes. They should lose the Earned Income Credit and any other similar deduction. They will be getting enough help from taxpayers so they should get no more.

There can be many more conditions to receive this mortgage assistance and I encourage people to list their ideas in the comments section.

Tags: auto maker, bailout, billion, mortgage, Obama, plans, trillion

Governor Jindal Might Just Say No To Stimulus Bucks

Feb 19, 2009 Political

Louisiana Governor Bobby Jindal has indicated that his state might not take the $4 Billion that it is slated to get under Obama’s Generational Debt Plan. Jindal stated that he would have to review the money and see where it is to go and what strings are attached to accepting it. I imagine he would be more willing to take it if it were designated for infrastructure and not so much if it were designated for welfare.

This is a wise move since the federal government might tie all kinds of conditions to the money or state exactly where it has to be spent. This country was set up with a centralized federal government and (eventually) 50 separate and distinct state governments. The states are supposed to be responsible for a lot of the spending that goes on within their borders. If the feds start handing out money like candy then the states become wards of the federal government which can then attempt to dictate how certain things are done.

It is irresponsible for states to make up their budget deficits off the backs of the taxpayers from other states. People in 49 other states had nothing to do with the failed policies that led to the collapse of California. That state needs to fix its own problems. Forcing us to pay for their problems (or the problems of any other state) does nothing more than enslave taxpayers. A portion of our earnings, the fruits of our labor, is being confiscated from us and given to states that cannot manage a budget.

Bailout money to the states keeps them from being forced to take the tough decisions that need to be made in order to become fiscally sound. Instead of making appropriate cuts in spending and workforce, the states will sit back and give residents more of the same stuff that caused the problem in the first place. Governor O’Malley of Maryland and his Democratic legislature are sitting around salivating at the chance to sink their teeth into the bailout money so they can spend, spend, spend. It is shameful and demonstrates a complete lack of leadership.

While Jindal has indicated that he might not accept the federal money the welfare king Ray Nagin said he will take all the money the state does not want. I guess the hundreds of millions of dollars that were forcefully extracted from taxpayers from other states and sent New Orleans did not quite meet the needs of of Nagin and his cronies. Now he wants 4 billion more to waste on his poverty torn hell hole. It was wrong to send taxpayer money to NO in the first place and it would be a travesty for him to get anything else. However, I would not oppose taking the 4 billion and spending it on construction crews to use bulldozers to fill in NO.

I hope Jindal sticks to his guns and works out his state’s problems without taking the money. It would be refreshing to see a responsible politician for a change, I mean in addition to Sarah Palin.

Palin? That woman that makes the left cringe. The one who they think is dumb? The one who was savagely attacked by the media?

Yep, that is she. Her state of Alaska has enough money squirreled away to weather the economic problems even if they extend for a few years.

There is an interesting thing to see. The governor that the left is so afraid of that they engaged in character assassination has run her state so well that it is in better shape than states run by their wonderful Democrats or the RINO in California. In addition, her state is doing better than New York, Maryland, Kansas, and a number of others who are standing around waiting to put their hands in our pockets.

To be sure, Palin said that her state would take the approximately 1 billion dollars in stimulus money if it were designated for the right things like infrastructure and transportation. She is wary of accepting it for social programs that the state will have to pay for once the money is gone. It is going to be tougher for Palin because the price of oil is down but since the state saved some of the money it made when oil prices were up it is in better shape to ride out the economic storm.

The state currently has $6.6 billion in its constitutional budget reserve fund that it could tap into. A few billion dollars more also is available from other pockets, said Juneau economist Gregg Erickson, a longtime Alaska budget watcher.

Given Alaska’s robust reserves, the state is well-prepared to weather the next two years, Erickson said. As to how long reserves will last after that, there are too many factors involved to say for sure. AP

We will see how well she does in the tough times but she is smarter than liberals give her credit for. She is at least smarter than all the governors who are running in the red.

As an aside, why does California not just spend a bunch of money? It has about 45 billion dollars in debt so it should spend 2 or 3 hundred billion more to get back on sound footing.

After all, that is what Obama is doing to fix the problems in the rest of the country.

Tags: bailout, irresponsible, jindal, Obama, oil prices, palin, stimulus

Obama Bites The Hand That Feeds Him

Feb 5, 2009 Political

Though Democrats like to portray the the Republican party as the party of rich people the left has quite a number of wealthy folks and they write big checks for Democrats. In the last election cycle Barack Obama received a heck of a lot more money from Wall Street than did John McCain and Democrats in general fared better than Republicans.

Today Barack Obama bit the hand that feeds him by limiting the salary of executives to half a million dollars if their companies received bailout money. I certainly understand the sentiment but there are issues here that I am having some trouble with.

I believe that if this is going to be a condition then it should have been spelled out in the bill when it was signed. It could have easily stated that the CEO of any company that receives bailout money will have his salary reduced to [whatever number] by whatever date. Doing it after the fact just looks like bad practice. Can Obama add stipulations like this?

Another thing I have a problem with is, how can the president or any other government official regulate the salary of employees in a private business? What part of the Constitution gives Obama the legal authority to decide what a person in a private company can make? I understand that the government is providing them bailout money but it is also my understanding that the money is a loan to the companies. As I stated, if it was not spelled out as a precondition, how can he add it now? Isn’t that a legislative function?

The limit on executive salary might also hurt New York. They are complaining that many good money managers might leave for better jobs if their salaries are cut per Obama’s orders. The first thing to ask is, if these are such good money managers why did their companies need bailouts? The second thing is, where are they going to get a better job in this economy, especially in the financial market?

One way this might actually hurt New York is the drastic drop in income tax revenues. A CEO making 10 or 15 million dollars a year certainly pays a lot more in taxes than one who makes half a million. The amount of tax revenue to New York might drop quite a bit.

I am not in favor of CEOs getting huge paychecks when they are the ones who ran their companies into the ground. However, I am in favor of doing things ethically and fairly. That means ensuring that Obama has the authority to do this and if he does not then getting it done correctly before imposing it. Also, bailout money cannot be forced on any institution. The rule must be, if they don’t want it then they cannot be forced to take it.

I have no sympathy for any of the CEOs and I was not in favor of any bailout/stimulus that has come along. I feel the companies should succeed or fail on their own merits and not be saved on the back of the taxpayer. The rules about salary and the bailout money are nothing more than huge government intrusion.

Government intrusion is what caused this mess in the first place.

Obama can rail about these people and their excessive salaries but I am willing to bet they paid their taxes…

I also bet the cap on salary will be challenged in court and I think Obama will lose the case.

Anyone taking bets on whether he will get as much money from them when he runs for reelection.?

Sources:
WCBSTV

Tags: bailout, Obama, pay freeze, salary cap

Using Crisis To Advantage, House Democrats Pass Stimulus

Jan 29, 2009 Political

Rahm Emanuel said that they should never let a crisis go to waste. He said that they should use a crisis to pass legislation that they would never be able to pass otherwise. Thus we get statements telling us of the dire consequences if we fail to act.

• “We don’t have a moment to spare,” Obama declared at the White House as congressional allies hastened to do his bidding in the face of the worst economic crisis since the Great Depression.
• “Another week that we delay is another 100,000 or more people unemployed. I don’t think we want that on our consciences,” said Rep. David Obey, D-Wis., chairman of the House Appropriations Committee and one of the leading architects of the legislation.

The first thing I will mention is that most Americans only want 535 people to lose their jobs next week and those people are in Congress. Secondly, if we are going to lose 100,000 jobs a week we are going to do so for a long time even if this passes and is signed into law tonight. The bill contains very few things that will stimulate the economy and create jobs.

The jobs it will create are jobs working for the government rebuilding infrastructure and those projects will not start for months and maybe a year or more down the road because it takes time to draw up plans, get approvals and put things in place. It might take longer because the Obama administration has been advised not to hire skilled or white workers for the projects. Unskilled minorities are best, according to Robert Reich.

The bill includes great amounts of money for things that will NOT stimulate the economy. The bill contains money for contraception, sexually transmitted disease prevention, voter fraud organizations (ACORN), a mob museum and a number of other items. These things will not stimulate the economy and they will not provide enough jobs (if any) to change the unemployment rate. Other than those involved in building a mobster museum, I can’t think of anything on this list that would create a job. I would love for my liberal commenters to explain these things and tell me how they help the economy.

Please don’t tell me they stop births or improve health or other nonsense because none of that has anything to do with the economy.

It was a foregone conclusion that the bill would pass in the House. The Democrats have a large enough majority that they can pass anything they want on a strictly party line vote. Obama wanted Republicans on board so that if (in his mind, when in mine) it fails he can say it was a bipartisan effort and that they all hold some of the responsibility. As he stated in his meeting, he won’t get reelected if things go badly.

Every Republican except one voted no. There was one Republican who did not vote. Eleven Democrats voted no with the balance voting for it. The final tally was 244-188.

The real battle will be in the Senate. The Republicans can filibuster this and keep it from passing.

Of course, there are a number of concerns with the RINOs who might vote with the Democrats. I am hoping Gillibrand, the new Democrat from New York, continues her opposition to a bailout but she is 99^th in seniority and might be forced (ahem, coerced) to go along. Time will tell.

It is time for people to call their Republican Senators and tell them to vote no and to filibuster it to death. They need to be warned that if they vote for it they will be targeted in the next election. They only understand their political careers so that is what they need to see as a consequence of voting for it. This is true of Blue Dog Democrats as well. They will be vulnerable in the next election and their vote could make the difference in where they work in 2011.

This “stimulus” plan will not work. It contains a ton of pork that has nothing to do with the economy and it will saddle us with even more debt. This debt will come from the party that criticized the debt under George Bush which will seem like a drop of water in the ocean compared to this mess. This debt will also be passed on to our children, our grandchildren and to generations of people who are not even born yet.

One warning. Don’t listen to those who say that it will take a few years or that estimates about how money will be spent are incorrect. The reality is that the politicians know it will take quite some time for the economy to recover (it will recover with or without the stimulus) and they want to prepare people now so they do not get shelled in the 2010 midterm elections.

If Senate Republicans follow the House’s lead then at least the Democrats can’t claim it was a bipartisan effort when campaigning for your votes.

To be fair though, if it passes and is a success (by my standards, not a politician’s) then I will give them credit. Of course, I know it will not be successful. History has shown us as much.

Walter E. Williams has an excellent article out that concludes with this:

In stimulus package language, if Congress taxes to hand out money, one person is stimulated at the expense of another, who pays the tax, who is unstimulated. A visual representation of the stimulus package is: Imagine you see a person at work taking buckets of water from the deep end of a swimming pool and dumping them into the shallow end in an attempt to make it deeper. You would deem him stupid. That scenario is equivalent to what Congress and the new president proposes for the economy. A far more important measure that Congress can take toward a healthy economy is to ensure that the 2003 tax cuts don’t expire in 2010 as scheduled. If not, there are 15 separate taxes scheduled to rise in 2010, costing Americans $200 billion a year in increased taxes. In the face of a recession, we don’t need that. [emphasis mine]

The article explains the situation and tells why the “stimulus” will not work. Please take the time to read it.

Then call your Senators…

Tags: bailout, Congress, economy, Obama, stimulus