RON HART: Obama's New Deal: An envy-based economy

In the second most regulated business behind banks, insurance giant AIG (the same company that snookered our federal government out of $170 billion to pay its obligations) is in the news again.

Congress, having no idea how a good business works, did what it does best.  It mindlessly threw our tax money at yet another company uttering breathless warnings of calamity.

For our $170 billion, Congress bought us 80 percent ownership of, and thus responsibility for, AIG. Responsibility is another thing Congress does not do well. Much like its stewardship of Freddie Mac, Fannie Mae, Amtrak, the Postal “Service,” etc., Congress fumbled this one.

Let’s face it folks, government could not run a church bake sale. Yet, inexplicably, many of us want to turn more of our economy, health care and private lives over to politicians.

The stimulus bill, written by Democrats, passed by Congress and signed by President Obama, included a provision for AIG to pay contractually obligated bonuses of less than .01 percent of their bailout money.

After the public reacted to AIG’s bonus plan, the thespians in Congress feigned outrage. If there is anything politicians do well, it is acting angry about something they did — followed closely by pointing fingers and sidestepping issues. Shucking and jiving round out the top five.

Elected officials are that rare breed of multi-taskers who can both cause a problem and be incensed by the results. As long as 51 percent of us are dumb enough to buy it, they stay in their gerrymandered and lobbyist-dominated offices.

Claims by AIG executives that they deserve the bonuses are credible, since they were smart enough to effectively steal $170 billion taxpayer dollars in the first place.

It is rich that Congress, which ran up an $11 trillion deficit, bankrupted the country and then raised its own pay, tells others how to run their financial affairs.

This is particularly ironic as it relates to jets (which, behind other people’s pay, is the only thing Congress seems to fixate on) in light of Nancy Pelosi’s demand for a larger personal jet to chauffeur her back and forth to California — presumably so she can preach to us about using too much fuel.

Sen. Chris Dodd, D-Conn., who lied about his role until caught dead to rights — which is the only time a politician comes clean — inserted the language allowing AIG, coincidentally based in his home state, to pay these bonuses.

And oh by the way, Dodd and Obama were the top two recipients of donations from AIG last year, followed by Fannie Mae and Freddie Mac when they sought a bailout.

See any trends developing?

With all the blood on their hands, both Obama and Dodd were able to conjure up outrage. It is akin to O.J.’s outrage at the murder of his ex-wife; like O.J., they have vowed to get the culprits.

In retrospect, if George Bush had wanted to protect the USA, he would have invaded the credit default swap department at AIG or the Senate Banking Committee instead of Iraq.

In the same way we only learn geography when we invade a country, Americans only learned about credit default swaps when forced to pick up the tab for someone else’s poorly calculated risks. Each administration teaches us something. Bill Clinton’s presidency taught a nation about DNA testing on dresses.

Credit default swaps are nothing but off-track betting, where one company promises to back bond payments from another. This is like Mafia protection money only with less transparency. Allowing the gamblers to default would have been fine for our country.

When clearly insolvent companies are propped up by the government, we have a fake economy.  Distrust of this manipulated market makes the usual economic metrics unreliable and creates a dangerous business landscape.

Private business owners, who risk their capital and make sensible decisions, are forced to compete with inefficiently run, yet politically connected, companies.

The most disturbing event coming out of the AIG mess is the ability of politicians to single out someone who has been paid in accordance with a legal contract and to tax him 90 percent. This political retribution where Congress governs out of anger should scare us all.

The great thing about leaving business owners alone is that if they make stupid mistakes, they lose money and go bankrupt. Smarter operators move in and the consumer wins.  It is the purest and best way to weed out bad companies. Let the free market work since, as we all know, government does not.

It is amazing how well capitalism works in the absence of meddling politicians.

Ron Hart is a southern humorist and political columnist. He can be reached at RevRon10@aol.com.