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AIG $100 Million Bonus—Not Free Market Capitalism

This $100 million A.I.G. bonus storyis truly outrageous.

This is a company that remains TARPed and bailed out to the tune of a staggering $124 billion in taxpayer dollars. They have already received $230 million in prior bonuses, from the taxpayers.

Let me state, unequivocally: this is not free market capitalism.

I'm making this case against A.I.G bonuses as a market-based conservative, not as a left-wing populist. But as I have argued before regarding commercial bank bonuses, TARPed firms on the taxpayer dole should forego bonus payments.

You know, if A.I.G had been put into bankruptcy, as they should’ve been, all those bonus contracts would’ve been nullified, as would shareholders, creditors and all the rest. I don’t understand why we’re sitting by and allowing these bonus payments to be made.

That said, once banks get off of TARP, and have paid back taxpayers in full, then I say let free market capitalism roll. But not when you're on the taxpayer dole.

Back room deals like this are creating a political revolution across the country. And I can't wait to hear what Senator-elect Scott Brown says about all this when he is formally sworn in this afternoon.

Another outrage is this $2 trillion tax hike in the Obama budget.

Presidential speech pedistal
Photo by: Pete Souza
Presidential speech pedistal

This thing is a job destroyer.

Let me narrow it down: why in the world would we raise corporate and capital gains taxes on the very people who are most likely to invest in new businesses, or new ventures, that create new jobs?

Instead, we should be cutting the capital gains tax rate to 10% instead of raising it to 20%. We should be slashing business tax rates for large and small corporations, not raising them. Supply-side incentives have worked before, and they will work again.

This should be a major rallying cry for the new Scott Brown Republicans and sensible Democrats who are willing to follow John F. Kennedy’s lead that lower tax rates ultimately produce more economic growth, higher revenues and smaller budget deficits.

We get a jobs report tomorrow. It does not look likely that 10% unemployment will fall. This economy needs more torque, not drag. It needs incentives, not obstacles to risk and reward and expansion.

Everybody ought to quit the class warfare tax hike message for the “rich” and instead, refocus on a tax-cutting, spending limitation message that will grow our economy and create jobs through free market private enterprise.

Questions? Comments, send your emails to: lkudlow@kudlow.com

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