Topic: Decline of the West
The AIG mess is symptomatic of a growing problem for the Obama Administration—a problem that very possibly could derail its plan to bail out the nation's shaky banks.
In its attempt to combine fiscal responsibility with populist rage, the Administration has grabbed a wolf by the ears. Stoking up public anger over such a relatively minor issue as the AIG bonuses probably seemed like good idea at the time. At the very least, it might pull the focus from the Administration's halting approach to the banking crisis, its failure to staff the Department of the Treasury, etc. And in Congress, anything tending to distract attention from the culpability of such luminaries as Rep. Barney Frank and Sen. Chris Dodd had to look like a smart move. Ah, but our leaders forgot that the Law of Unintended Consequences never takes a holiday. And once you do grab a wolf by the ears, you dare not let him go.
The Obama Administration's bank rescue plan, which depends on the participation of private investors, may well have been undermined by the behavior of Congress and the President over the past couple of weeks. Think about it. If you were, for instance, a hedge fund manager, would you be eager at this point to partner with a government that howls against executive compensation, has no respect for the sanctity of contracts and seeks to tax bonuses as a rate of 90%? Would you consider such a government to be a reliable business partner? At the very least, you'd think long and hard before taking the plunge.
The Obama Administration is performing a potentially valuable (if hardly deliberate) service by demonstrating that where economic issues are concerned, our government is completely, utterly, almost comically incompetent. I only hope that America is paying attention.
