Friday, March 20, 2009

Congress-What's That Brown Stuff You Stepped In?

If you're lucky, members of the House, it's just mud. But step in it, you did!

I blogged yesterday about what I thought was an asinine move by Congress - to set a 90 percent tax on those bonuses given to AIG executives. I was a bit worried about putting my opinion out there, simply because it was pretty much lockstep in line with Andy Parks, my longtime friend and morning host at WMAL whose opinions are usually somewhat to the right of my own.

In this case, Andy was right. And Congress was wrong. How do I know this? Just take a look at today's Washington Post Op-Ed page...

The main editorial, titled Washington Gone Wild, took lawmakers to task for "currying favor with the public", and went on to say "the House had the feel of a mob scene" and "Elected officials have a responsibility to lead, not just to pander; to weigh what makes sense for the country, not just what feels good."

Two conservative columnists, Michael Gerson and Charles Krauthammer, also (somewhat predictably) attack Congress' actions on the op-ed page in the Post, and even liberal columnist Michael Kinsley points out that all of this current outrage of the AIG bonuses could have and should have been debated by Congress MONTHS ago. Kinsley even finds it tough to give the Obama Administration a pass.

Finally, on the business page of the Post, Steven Pearlstein's column is titled Let's Put Down the Pitchforks. Pearlstein says "the reality is that we can punish the bankers or we can save the banking system, but we can't do both at the same time." He goes on to say:

At the moment, the Treasury is working (and working and working) on ways to entice private capital back into the banking and shadow-banking system by offering government financing and guarantees against losses. Every dollar of private capital that can be attracted back into the system is a dollar that the Treasury won't have to borrow or the Federal Reserve won't have to print. And only with the return of private capital will the government be able to get back the rescue money it has committed.

But how eager do you think private equity and hedge funds will be to invest those billions of dollars if they fear that their participation will subject them to front-page accusations, congressional inquiries and public outrage over how much they might be paying for bonuses or employee travel or office decoration? Will they participate if they think that Congress, in a moment of populist pique, will try to tax back their profits if they earn more than originally expected?

At the end of the day, we still have to fix what's broken. We can't do it without the help of the private sector. And we need our elected leaders to have their heads in the game - not distracted from the conversation because they are too busy poking their fingers in the air to see which way the wind is blowing!

1 comment:

Aaron said...

Krauthammer's angry at the world; like we need another column to know that. Kinsley's piece is pretty good; it highlights the painful nature of the status quo. Gerson's analysis, on the other hand, is just plain daft - he should be embarrassed.