Over the last couple of days, everyone in Washington has suddenly been outraged over the revelation that AIG is contractually obligated to pay out $165 million in bonuses to its executives, even after the company has taken $170 billion in taxpayer bailout money.
But as MSNBC points out, the whole reason they’re locked into paying out the bonuses is because of Congress itself:
The employment contracts became so complex, with pay packages consisting of stock options and other forms of deferred compensation, largely because of Congress’ attempts to control soaring executive salaries. In 1993, Congress limited the tax deduction companies could take for cash payments to $1 million. The result was a cottage industry of lawyers, consultants and advisors who structure even bigger pay packages with creative legal strategies that now make the AIG bonuses difficult to rescind.
Before Congress got involved we used to give them a $2 million salary and a corporate jet,” said Lynn Stout, a UCLA professor who specializes in corporate governance and securities regulation. “And it was much cheaper and safer.”
This is why Congress should just butt out and let the market decide how much executives should earn. But of course, that would be too easy, wouldn’t it?
For the record, I’m not in favor of seeing my tax money go to pay for these bonuses. But then again, I’m not in favor of any of these bailouts, so whatever.
Update:
RedState is reporting that President Obama received a nice bonus himself from AIG, to the tune of $101,332 worth of political contributions. Senator Chris Dodd, who echoed the president’s (faux) outrage at the executive bonuses, was the top recipient, though, with $103,100 worth of contributions from the company.
As RedState asks, will the President now give back what ought to be taxpayer money?
I’m not holding my breath.
Previously:
Comparing Wall Street bonuses to abortion funding
