Let's not kid ourselves. The prevailing modus operandi of Washington politicians—Democrats and Republicans alike—is "pay to play." Money is the "mother's milk" of politics. Nothing warms the hearts of members of Congress as much as campaign contributions. Special interests invest in political campaigns as a cost of doing business expecting that, if they ride the right horse across the finish line, they will get a return on that investment. And what a return! Billions of dollars in bailouts, subsidies, tax breaks, immunities from liability, preferential treatment by regulators—the list goes on and on.
The AIG scandal is Exhibit A for the benefits that accrue to those who pay to play. TIME magazine reports, "The company befriended politicians with campaign cash—$9.3 million divided evenly between Democrats and Republicans from 1990 to 2008...." In 2008, AIG doled out more than $630,000 in campaign contributions to Washington's political elites. Recipients of the corporation's largesse included Senator Chris Dodd ($103,100), then-Senator Barack Obama ($101,332), Senator John McCain ($59,499), then-Senator Hillary Clinton ($35,965), and of course many others. While, at first blush, those sums appear hefty, they are trivial when viewed in light of the $180 billion in taxpayer money that AIG received at the hands of those whose palms it greased.
If only your 401(k) produced the same return on investment!
What is particularly galling, however, is that more than $120,000 was donated to the Washington political class after AIG received its first $85 billion in bailout funds. In other words, at that point America's Number One Corporate Miscreant was spending your money, not its own, in order to prime the pump to get more of the same.
And consider this: When the stimulus bill was under consideration in February, an amendment was unanimously approved in the Senate which would have placed tight limits on bonuses over $100,000 for any company that received federal bailout money. During the final negotiations on the bill, an amendment was put forth by Senator Dodd which made sure that the limitation applied only to bonuses issued after the passage of the bill on February 11th. This enabled AIG to pay the much-ballyhooed $165 million in retention bonuses to its executives even as the company took in more and more taxpayer cash. And yes, this financial boondoggle was engineered by the same Chris Dodd who took over $100,000 from AIG. He initially denied his role in the alteration, and when he was exposed he invoked the devil-made-me-do-it defense by claiming that the Obama Administration pressured him into it.
The AIG pay to play scandal is not unique. The same M.O. was pursued by reprobates like Bernie Madoff, Jack Abramoff, and others too numerous to name.
Is it any wonder Americans are outraged? The public no longer trusts that the government is doing the right thing. A recent poll shows 77% of Americans object to the government giving more money to AIG. President Obama's disapproval ratings have jumped from 20% to 30% in two months. The number of Americans who think Wall Street workers are "as honest and moral as other people" has sunk from 41% in 2006 to 26% today.
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