I can't say I was really dismayed at the demonstration of shortsighted posturing-- from both sides of the aisle -- when the members of the House Financial Services Committee saw the cameras begin to roll and they started playing for any home town constituents who might be watching C-Span 3 last Wednesday. It's what I've come to expect from our political elite. Longtime Finance Industry shill Rep. Spencer Bachus (R-AL), who has accepted, or solicited, a breathtakingly senatorial $3,789,474 from a grateful financial/insurance/real estate sector for his unstinting service on their special interests-- like passing the Gramm-Leach-Bliley Financial Services Modernization Act-- was particularly reprehensible in his timeworn role as defender of banksterdom. Pandering, whether to pissed off voters or dependable campaign donors, seems like an awful way for congressmen to spend their expensive ($174,000/year with platinum benefits) time.
By the time they got to Michigan freshman, Gary Peters, I confess I expected more of the same Democratic expression of anger towards Wall Street and not much else. I couldn't have been more wrong. Listening to Congressman Peters speak last week made me very, very proud that Blue America had endorsed him in 2008 and helped him replace rubber stamp incumbent Joe Knollenberg. Suddenly someone was speaking as though he respected reason and thought it worthwhile to strive towards actual leadership. If you missed his one minute speech please watch him:
I called his office and asked him to expand on his remarks and he responded with this statement:
When news broke that AIG planned to pay out hundreds of millions of dollars in bonuses, I was outraged. So were the American people, and rightfully so. AIG has received over $170 billion from taxpayers. My constituents and other Americans are finding it harder and harder to believe that such support is justified. Federal support for financial institutions was meant to prevent systemic economic collapse and job losses and get credit flowing to consumers and businesses-- not to enrich executives.
The AIG bonuses are especially outrageous in that they are being paid to the very people who brought the company to its knees and whose reckless investments helped drive our economy into the ditch. Bonuses are usually meant to reward good performance, but the people receiving these bonuses at AIG failed spectacularly. AIG says the bonuses are not tied to performance but rather are "retention bonuses" to encourage employees to stay at the company. This does not square well with the fact that millions of dollars in bonuses are being paid to individuals who have already left AIG. The bottom line is, as long as tax dollars are keeping AIG afloat, no executive bonuses should be paid.
Legislation that I co-authored will reclaim outrageous bonuses paid with our tax dollars that were given out to executives at AIG and other companies that received billions in taxpayer support. H.R. 1586, which has now passed the House, would create a 90% tax on egregious bonuses paid to executives of companies supported by tax dollars. Regular state and local taxes would recover much or all of the remaining 10%, effectively returning the entirety of these bonuses to taxpayers.
Many said there was nothing that we could do about the AIG bonuses because the company was contractually obligated to pay the rewards. I reject that notion. Thousands of United Auto Worker members in my home state of Michigan and across the country are making sacrifices and renegotiating their contracts right now as a condition of receiving federal support. There are thousands of white collar employees with contracts who have forgone promised bonuses and benefits and have taken pay cuts in order to save their companies. The CEO's of both GM and Chrysler are working for a $1 salary this year.
Auto companies and their workers were told that agreeing to renegotiate contracts was necessary before they received a dime of federal support. The same should have been required of AIG and other financial institutions. I was not in Congress when it was first decided to provide support to AIG to prevent its collapse, but I am here now and am determined to work with my colleagues to solve this problem.
People are sick of the double standard in which working class and middle class workers are treated differently than financial industry executives. All that people are looking for is a sense of shared sacrifice. Wall Street does not seem to understand that yet, but they need to start soon. If financial executives think that they should be able to get preferential treatment over other American workers, they've got another thing coming. The double standard must come to an end and these bonuses must be stopped.
That's why the legislation we passed in the House is just common sense. It will recover the bonuses, and do so in a manner that protects the sanctity of contracts. The bill allows AIG to meet its contractual obligation to pay the bonuses, and then recovers the bonuses through the tax code. The Senate should pass this legislation so that financial sector executives know that we mean business. Million-dollar bonuses to the very people who drove our economy to the brink of collapse are simply unacceptable, and we must move swiftly to stop them.
As the Administration and more than a few of the 328 Democrats and Republicans are succumbing to pressures from business and political elites to back away from the proposal, it's refreshing to hear someone explain the justice of it so clearly. Like I said, it's why Blue America supported Gary Peters in 2008 and it's why we feel like we made the right decision. It's also why I'd like to remind everyone that if we don't help members like Gary get re-elected, we'll wind up with a Congress filled with bought-and-paid for shills like Spencer Bachus and Eric Cantor. Gary Peter's Blue America ActBlue page is still open and I want to remind you that even $5 and $10 contributions add up to significant numbers in an election campaign. Blue America has managed to collect approximately $2 million for progressive candidates and causes and the average donation has been something like $35. I know times are tough but after you think about Congressman Peters talking about the double standards between the middle class and the self-professed masters of the universe, listen to Rep. Bachus at the same hearing and decide if you can afford a government made up exclusively of people like that?