Perhaps it was merely a coincidence that the news about AIG’s determination to give bonuses to the very employees who drove the company into the dirt came on the same weekend that cable movie channel TBS was replaying the 2003 Chris Rock comedy "Head of State." Rock played a city councilman who improbably gets tapped to run for president. His campaign is going nowhere, until he holds a rally and lists the injustices in society: the woman who cleans a hotel she will never be able to afford to stay in; the man who works in a restaurant he will never be able to afford to eat in, etc. After each listed injustice, he shouts, "That Ain’t Right." Soon the campaign crowd is chanting the slogan. I hope that Democrats who are purportedly organizing a "message war" for the President’s agenda watched the rerun.
In the past week, the Republicans have cast themselves as the defenders of the taxpayer. They railed against the earmarks in the budget left over from last year, even while they issued press releases for the home newspapers touting the money they were bringing back to their own districts. The earmark debate is a sideshow fiscally, because they account for such a relatively small percentage of spending, but it resonates with many voters because it evidences a truth they already believe: No one is careful with other people’s money.
The bailout of large financial firms with taxpayer dollars is another instance where many voters can get angry because they see their tax dollars going to the very people who got us into this mess. To see those same firms, in turn, distribute bonuses throws fuel on that anger, turning it into a burning rage. Larry Summers is usually decisively well spoken on complicated economic matters, but he reverted to technical legalese – "The government cannot just abrogate contracts" - on George Stephanopoulos’s show yesterday and he did not persuade. In the event, if AIG had sought bankruptcy protection, the abrogation of contracts is precisely what the court would do. Summers never said, clearly, "That Ain’t Right" still less what the Administration intends to do to make it right.
AIG had a fiduciary obligation to shareholders and perhaps a call from the Attorney General about plans to investigate whether those obligations were met would help concentrate the mind of AIG’s managers. The Obama administration must insist that they not be paid or announce that it is letting AIG fail. AIG claims to be worried it might lose key talent if it does not pay the bonuses. I question the value of the talent (all we know for sure is that their credit swaps helped wreck the nation’s economy) but even if you stipulate that they are talented, in this economy, where would they go? Last time I checked, the job market for Wall Street investors was worse than the Dow Jones.
I do not for one minute believe that the GOP cares about fiscal restraint: The evidence of the past eight years proves as much. Nor do I think GOP Whip Rep. Eric Cantor stays up at night worrying about Wall Street investors getting large bonuses. But, I do know that he can smell a winner and the AIG bonuses are a winner. Compare the news about the bonuses to the news about how AIG spent the bailout money, also released this weekend. Transparency is a good thing, and it is better that we know where the money is going than not. But, people have a hard time following a complicated economic storyline. The bonuses are not complicated. The people who wrecked their company, and wrecked their country’s economy in the process, should not be rewarded, especially not with taxpayer dollars.
The Obama administration is now the Establishment, with the power to affect a wide variety of issues. But they have to be very, very worried about what comes with that power. Underlying the national mood, as given exquisite voice by Jon Stewart in his smack down of Jim Cramer last week, is the sense that the system has been gamed against the average investor, and that insiders (the "Establishment") are finding ways to escape the economic fallout the rest of us are feeling. The American people expect a Republican Administration to be in bed with the bankers but they voted for a change precisely because they want political leadership that will defend the little guy. Lamely invoking the sanctity of contracts is not the change for which we voted.
The President and the other spokespeople for the Administration should TiVo "Head of State" and then practice in front of the mirror: "That Ain’t Right." Populism is a powerful force in America, and the conflation of political power and economic power at the heart of this economic crisis is rife with possibilities for political exploitation. If President Obama and his team do not get into their pulpit first, the GOP will steal their thunder. Woe betide the politician who must defend the AIG bonuses.