Fallout, Anger Come On Heels Of AIG Disaster Taxpayers continue to express outrage over $165 million in bonuses paid to executives at insurance giant American International Group (AIG). The payouts were made after the company received billions in government bailout funds following the recent Wall Street meltdown. President Obama publicly lambasted the actions of AIG executives, but some say the White House is partially to blame.
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Fallout, Anger Come On Heels Of AIG Disaster

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Fallout, Anger Come On Heels Of AIG Disaster

Fallout, Anger Come On Heels Of AIG Disaster

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I'm Michel Martin, and this is TELL ME MORE from NPR News.

Coming up, our personal finance guru Alvin Hall on the administration's plan to rid banks of so-called toxic assets. He'll break it down for us in just a few minutes. But first, the ongoing saga of the bonuses. New York State Attorney General Andrew Cuomo says he has persuaded nine of the top 10 bonus recipients from insurance giant American International Group, or AIG, to give back the money. He says that could mean $50 million of the $165 million could go back to the taxpayers. News that executives at AIG, which got more than a $150 billion in federal bailout money then got millions in bonus money, has sparked national outrage in recent days.

Hecklers harassed CEO Edward Liddy at a congressional hearing. Company executives have been besieged by demonstrators and even - they say - death threats. President Obama has also said his officials should use all legal means to get the money back, and Congress is moving to tax the bonus money at a rate of almost a 100 percent. But while the outrage at AIG runs across the political spectrum, one of the more interesting debates is taking place among progressives who supported Obama and say that despite his protests to the contrary, his administration actually does not get it, or they're making too much of not very much.

Joining me to talk about this are political columnist and activist Jasmyne Cannick and syndicated columnist David Sirota. They are both identified with progressive politics, and they have both written about this issue this week from very different perspectives. I welcome you both. Thanks for joining us.

Ms. JASMYNE CANNICK (Political Columnist; Activist): Hi.

Mr. DAVID SIROTA (Syndicated Columnist): Thanks for having me.

MARTIN: David, let me start with you. You suggest that, actually, Obama has a credibility gap here, that even though he says he's outraged, his actions suggest that he really isn't. Why do you say that?

Mr. SIROTA: Well, it's not that he has a credibility gap, as much as the administration has a credibility gap. Obama is saying one thing. The president is out on the campaign trail saying one thing. And his administration aides are saying another thing. Specifically, he has said, you know, Americans should be angry about the AIG bonuses. Meanwhile, back in Washington, you've got people Rahm Emanuel, his chief of staff, David Axelrod, his top political guy, saying that this is not that big of a deal, that Americans really aren't that angry about the AIG bonuses.

So I think, again, what you're seeing is the president echoing a more populist tone that I think is in touch with the public and his administration aids saying and - in some cases - doing very different things.

MARTIN: The important issue, though, is whether or not the administration will support plans to essentially tax the bonus money to the point where executives are really giving it back, even if they don't voluntarily give it back. And the administration (unintelligible) they have some problems with that. What's wrong with that? I mean, there are a lot of people who suggested this is bad policy to target legislation at a few people. What do you say to that?

Mr. SIROTA: Well, what I say is that first of all, as the legislation reads, it's not targeting a few people. I mean, it's saying that executives at companies that have taken bailout money, taxpayer money, their bonuses will be taxed at a certain level. Now last I checked, these banks that have accepted TARP money, bailout money, employ thousands and thousands - probably tens of thousands of people. So that's not exactly that small a group of people. Secondly, I think as a matter of policy - look, I think if taxpayers are subsidizing banks, if we are effectively partial owners of banks, we should have a right to say what our taxpayer money can and cannot be used as. Certainly, that should be the case at a company like AIG in which we don't just own a part of, we own effectively 80 percent of.

MARTIN: Jasmyne Cannick, you wrote a piece this week saying don't hate the player, hate the game. What did you mean by that?

(Soundbite of laughter)

Ms. CANNICK: I sit back and I look at all of this outrage over the bonuses, and I put into this category what I like to call taxpayer selective outrage, because we've been funding, you know, incompetence with taxpayer dollars for quite some time now. And routinely, as a matter of fact annually, you know, the members of Congress get a raise, and those are our dollars as well. So I kind of wanted to remind people like look, you know, let's look at the bigger picture here. You know, oftentimes, issues like this are blown up by the media, and in my opinion, used as a way to distract us from what the real issues are.

You know, I'm less concerned about AIG's bonuses and more concerned about elected officials, for example, who, many of them - in my opinion - are incompetent, and they still take home, you know, hundreds of thousands of taxpayer dollars. And we don't say anything about that. And so I challenge voters - especially the voters and the taxpayers who are all up in arms over AIG - to sort of step back for a minute and let's look at this bigger picture and say why are we just playing our outrage at AIG? Because all of a sudden Congress, they've got our back all of a sudden, right? The same people who don't return our phone calls, who ride around in their districts where people are living at or below the poverty line in Lincoln Town Cars that are paid for by us.

MARTIN: Well, the other point you made is that it's interesting to you that Congress can be Johnny on the spot to address this issue…

Ms. CANNICK: Right.

MARTIN: …but in addressing subprime mortgages, in addressing health care -which has been an issue you've been writing about for years - magically, there doesn't seem to be this rush to the, you know, to the barricades to address these issues. But what about David's point, that the taxpayers put this money up and that we have an opportunity here - if members of Congress acting on behalf of the people have an opportunity to express the sentiment of the people then that's what they should do?

Ms. CANNICK: You know, as long as we continue to make a furor about this issue, of course Congress is going to, quote-unquote, "act like they have our back" and are representing us. I think at end of the day, it's a much bigger issue than just AIG. And as taxpayers, we need to be savvy enough and smart enough to figure that out.

In the beginning, I personally felt like, you know, this is standard across Wall Street. I feel like someone wasn't paying attention in terms of creating the original legislation, because I believe this could have been caught. But now it's happened. Okay? I'm not under the assumption that we should have a piece of legislation created that, you know, taxes these companies to get this money back. Like I said, I'm less concerned about $165 million and more concerned about the billions and billions of dollars that are being misappropriated and misused by Congress, period.

MARTIN: If you're just joining us, you're listening to TELL ME MORE from NPR News. We're speaking with two progressive writers and activists, Jasmyne Cannick and David Sirato. We're talking about the furor over the bonuses paid to AIG executives. David, what about Jasmyne's point that this is essentially theater? She writes in her column: Ask yourself how much taxpayer money went into funding last week's Capitol Hill AIG hearing that resulted in congressional members giving "Mad Men," "30 Rock" and Alec Baldwin a run for their money for consideration in next year's Emmy-award nominations?

You can tell that Jasmyne lives out in L.A.

(Soundbite of laughter)

MARTIN: But David, what about that? That is, essentially, theater. It really doesn't have a larger meaning in the, you know, fiscally or from a policy perspective.

Mr. SIROTA: Well, it's a symbol. I mean, and I think that's important. It's a sign. It's an image that I think people can envision in their own head. They can feel it. They can touch it. They can understand it. And so I think that the flip side is, is that if this is what organizes the public's mind around the broader outrage of Congress and the administration wasting millions, tens of millions, hundreds of millions, billions and trillions of dollars, then I think that's a good thing.

I think symbols can be used, and I think that there's a potential upside of people saying, okay, now I really understand what is going on, what kind of rip-offs are going on. This little example, relatively little - and I would also add that 200 or $160 million is not all that little. But this relatively small example is something that makes me understand - me, the public -understand the bigger problem. I think that's a real, that's a real opportunity.

MARTIN: David, what about the argument that in contrast - I know you also raised the question of the fact that nobody seemed to have any problem asking the United Autoworkers to renegotiate employee contracts in exchange for government assistance to the auto industry. But other people make the point that there has been no negotiation with these individuals, that that is in part what makes it punitive and unfair, that they at least ought to be given the opportunity to negotiate.

And that's the point that Senate Republican Jon Kyl made on Monday. He suggested that the Senate should wait on the legislation that's being considered by the House imposing stiff taxes on the bonuses, and that they should look at alternatives like asking the Treasury Secretary Timothy Geithner to use his own authority or encouraging AIG to renegotiate. What about that?

Mr. SIROTA: Well, I think that the New York Attorney General Andrew Cuomo makes a more important point, which is that in these contracts, AIG was effectively promising away money as bonuses that it did not have, and that that potentially violates statutes dealing with fraudulent practices in New York State. I also think that there's all sorts of other clauses potentially in these contracts that invalidate them. And then the final point, and this is the really important point, these contracts would have been invalidated 100 percent had the government not taken the unprecedented step of giving that company, effectively giving that company enough money to stay out of bankruptcy court.

Had the government not done that, the company would have gone into bankruptcy court, and those contracts would have been invalidated immediately. So all three of those factors suggest to me that we don't, the government really didn't need to negotiate because these contracts may have been invalidated already, and they certainly would've been invalidated had the government not taken an unprecedented step of ownership.

MARTIN: Jasmyne, we're down to our last couple of minutes. Is the main issue for you that you think that this is a waste of time, it's actually diverting Congress from addressing the more important issues like the subprime mortgage crisis, like the global credit squeeze, and this is just political theater designed to satisfy us? Or do you feel that it's bad policy?

Ms. CANNICK: There's selective outrage again. It amazes me how voters and taxpayers can get so outraged over one act and then, you know, let all of these other things just slip through to the cracks and we don't get nearly as outraged when we should actually be even more outraged. I implore and I encourage taxpayers to really look at the bigger picture and just realize it's just not about AIG. There's a whole lot of wasting of the money, our money going on, and a lot of that has to do with Congress.

And I again, you know, I'm hopeful that this situation doesn't come up again, but I'm even more encouraged by the fact that at least people are speaking up and speaking out. I just think we need to be a little bit smarter about when and where we do it and why we do it. And it just can't be, you know, pointing the finger at, you know, corporate executives who whether they give the money back or not are still going to be more wealthy than any of us will ever be in our lifetime.

MARTIN: Jasmyne Cannick is a political commentator and activist. She blogs at jasmynecannick.com, and she joined us from our studios at NPR West. David Sirota is a syndicated columnist who joined us from Cleveland, Ohio. Thanks to you both.

Ms. CANNICK: Thank you.

Mr. SIROTA: Thank you.

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