Monday, March 16, 2009

AIG bonuses stir hornet's nest

Perhaps the worst news for the Obama administration has been the story about AIG's annual bonuses for its bailed-out executives. The Washington Post broke the story that AIG, which has received $170 billion in government funding since last fall, plans to honor a commitment to pay multi-million-dollar bonuses to the very executives that drove the company into the ground. It seems that before the federal bailouts began last September AIG promised $400 million in bonuses to its employees. Under pressure from embarrassed administration officials, AIG has talked the insurance company's 43 top executives into taking only half of their bonuses — $9.6 million — right away. The other half of these bonuses will be delayed until things quiet down a bit. Administration officials and more than a few taxpayers are outraged, and for good reason. AIG says the bonuses are a legal obligation. A contract is a contract, they say. Others might retort, a bankruptcy is a bankruptcy.
The AIG bonuses are not isolated phenomena. They reflect the whole topsy-turvy nature of compensation in this country. While millions of responsible, hard-working people are out of work in this economy, the people who precipitated the mess are being inconvenienced by the delay in their multi-million-dollar bonuses. Executive compensation has been out of kilter for decades. While wages stagnated or declined in inflation-adjusted terms, executive compensation soared.
And it's not just Wall Street bigwigs. Pay in the entertainment industry and in professional sports (maybe I'm being redundant) is outrageous. A single actor or actress commands millions of dollars for making one movie? An NFL quarterback can demand $10 million a year or more, and get it? Meanwhile, the people who do essential work that benefits society and makes life better for everyone — teachers, clergy, health-care workers, journalists, care-givers — can barely scrape by, or are laid off.
The AIG bonus scandal won't change this imbalance, but it might raise consumers' doubts about how compensation is calculated.
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2 comments:

  1. AnonymousMarch 16, 2009 at 9:51 AM

    Ironic, since during the last eight years, most Conservative pundits have been arguing (if not demanding) these executives are entitled to these kinds of perks, tax incentives and other various corporate capitalist entitlement loopholes. No matter what.

    Come to think of it, these same people were against an increase in the minimum wage! Imagine that? They probably still are. Secretly.

    Anyway, this was initially a Bush administration bail out, that surely came with the (legal) knowledge that these Bonus-ho's would be entitled to get their loot. Since the new President (whomever that was) would inherit this mess, one could even surmise that was (at least partially) its intent. I'd wager it was.

    The Obama administration really faces quite a challenge with this Bush Inherited fiscal fiasco. Not helping things are news organizations such as Fox "Fair and Balanced" (yeah, right, sure) News Corp. and faux demigod/draft dodgers like Rush making it sound like Obama is responsible for the AIG mess, and every other mess du jour he inherited. When they smell blood, they roll out their spin machine Kool-Aid wagon. Their minions follow suit.

    Fortunately, anyone with half a brain knows (or should know if they are honest or not in denial) the time frame and specifics would make those claims impossible.

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  2. AnonymousMarch 16, 2009 at 6:14 PM

    ....


    ....hogwash.


    obsessed w/ 'W' will get you no where.

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