March 19, 2009

You're Doing A Great Job, Timmy

Or so says President Obama. I seem to recall President Bush saying similar things about his FEMA director immediately after Katrina, his Secretary of Defense and other Iraq policy architects, and his Attorneys General.

But the thing is, the shitstorm is hitting Tim Geithner not for the basic idea of effectively nationalizing AIG. Instead, it's for what is possibly the most defensible use of the company's money imaginable -- fulfilling its contractual obligations to pay its employees for their labor. Conservatives ought to be happy that the company is fulfilling its contracts. Liberals ought to be happy that the company is honoring its obligation to pay people for their labor.

Instead, because the company chose to structure its compensation package in the form of "bonuses" rather than simple salaries, there is populist rage on both sides of the aisle. People, it's time to step back and put this in perspective. The issue is not whether bailout money is being used to pay for regular operations of the business. The issue is whether we should bail out AIG at all, or put it into receivership instead. There are arguments to be made in either direction.

But having decided to bail the company out rather than restructure it, that means the public has to assume responsibility for the company's operations. That includes paying people because, as I wrote before, if these people aren't paid what they were promised, they'll sue for the money, and win, which will cost AIG (and by extension the taxpayers) even more money than this because of the lawyers and court costs that will also need to be paid for. So get over it already and let's start talking about what's important here.

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