DOLLARS AND NONSENSE

A few extraordinary items fairly jumped off the news pages this week, and every one of them had to do with money. No big surprise there, but what is most astounding is how blatant some of the fiscal recklessness has been lately. Consider:

The Social Security Administration held a conference in Phoenix last week. This wasn’t just any old conference; officials say this one was held to help SSA employees de-stress, since their jobs are so stressful that they just needed to get away. So they did, to the tune of $700,000 – that would be $700,000 in taxpayer money. And not only did they do a little de-stressing at a four-star resort, but they even got to bring some of their relatives. And there’s more: As it turns out, their getaway was just one of many such regional SSA gatherings in the past year, which have amounted to about $1 million in costs. So proud of his employees is he, that SSA administrator Michael Astrue personally attended. Here – see for yourself:

So, why is this an issue? Here’s why: In May, trustees reported that Social Security will start paying out more in benefits than it collects in taxes in 2016, a year sooner than projected last year, and the giant trust fund will be depleted by 2037. (The government has to start relying on the trust fund when it starts paying out more than it takes in in taxes). So, the solvency of the system is already in question. Why then, would the agency that represents a potential insolvent government fund be spending government dollars to have de-stressing resort gatherings.

Last week I received a Social Security statement that is sent out periodically to American workers, which indicates that to receive even approximately $2,200/month from Social Security, I will have to continue working at least until I am 70 years old. My gut tells me that the above-mentioned trust fund will be depleted by that time, even though it won’t be 2037 yet. You want to talk about stress? I’ll give you stress.

I do know of one guy who really won’t be needing much from Social Security. His name is Rick Wagoner, and until March he was the CEO of General Motors. And although Mr. Obama essentially gave him the bum’s rush last Spring, don’t cry too many tears for Mr. W. It seems that he will officially retire in August with a tidy golden parachute worth $8.6 million in the first five years. Based on 32 years service to GM, Wagoner is entitled to an annual $74,030 under the salaried retirement program and five installments of about $1.64 million under the executive retirement plan. So, let’s review: General Motors declares bankruptcy and ousts its CEO, who hightails with millions. What’s wrong with this picture? He is 56 years old with an MBA from Harvard and a pretty decent resume. Presumably he is healthy enough to go make a living. More dollars and nonsense, right?

That would be enough dollars and nonsense, were it not for one of our old favorite blogging subjects, AIG. You remember AIG, the mega-insurance giant that the government bailed out to the tune of $85 billion in 2008? Come on, you remember – AIG, the company that AIG took its executives to a lavish California retreat at a cost of $444,000 (complete with spa treatments, banquets, and golf) about a week after the bailout? Well, it seems now that AIG is in talks with the Feds about plans to pay millions of dollars in retention incentives and bonuses. AIG, it would seem, has decided that it is business as usual, although the government reports it has extended taxpayer assistance to AIG in one form or another of about $180 billion to date. Oh, and by the way, why aren't your Congressional representatives hooting and hollering about this? What’s wrong with this picture?
Listen…is it just me, or…..

COME ON -- WE COULDN'T MAKE THIS STUFF UP

UPDATE: 52 AIG EMPLOYEES WHO RECEIVED BONUSES NO LONGER WORK FOR THE COMPANY. Senator Chris Dodd takes responsibility for the loophole that allowed the bonuses to be paid. Bailed out Fannie Mae and Freddie Mac are both planning to pay out huge retention bonuses
UPDATE: THE OBAMA ADMINISTRATION NOW CLAIMS IT ONLY FOUND OUT ABOUT AIG'S PLANNED $1.65 MILLION IN BONUS PAYMENTS THIS MONTH. This, of course, begs the question: How recklessly is the bailout money being distributed? And how many other bailout recipients have not been properly investigaged and researched before receiving the funds?

Was it just me or did you think you heard a chorus of angels when they found O.J. Simpson guilty of 12 charges, including armed robbery and kidnapping last October? Finally. Some kind of karmic justice for the slimeball who clearly murdered Nicole Brown Simpson and Ron Goldman in 1994. You will recall this was the case where O.J. and his posse stormed their way into a hotel room to confront some guys who slimeball believed had stolen some of his valuable memorabilia. Intimidation, guns, yelling ensued. The usual O.J. stuff. Now comes news that two of O.J.’s friends, Tom Scotto (often called his best friend), and Barrett Prody, brother of O.J.’s ex-girlfriend, have formed a corporation to accept donations on slimeball’s behalf. It seems Scotto and Prody believe O.J. got a bum rap, so they formed Society Against Legal Injustice. Get this: Once you get to the web site you get to read about how O.J. is the victim in this case, and how his appeal may take a year or longer and cost up to $1 million. Pass the Puffs.

Now, about this whole AIG bonus mess: I couldn’t help wondering why it suddenly came into the public consciousness that AIG was giving out bonuses. When the government agreed to give AIG that big ole bailout, did they not know about the contractual agreements for retention payments to these 100 employees? Did they not know that the payments would amount to something in the neighborhood of $165 million? The facts: The government bails AIG out to the tune of $170 billion; AIG turns around and pays up to $90 billion directly to US and European banks to finance transactions already in progress. Although $165 million may not sound like much in the shadow of $170 billion, it turns out that some of the bonuses were paid to individuals whose division caused AIG to need government bailout money in the first place.

Back to the original question: Yes, reportedly the government did know about the planned bonuses -- a year ago. It appears that the administration did not plan to make this knowledge public, but it came out anyway, of course, and suddenly Obama started yelling “foul.” And it turns out AIG has the U.S. government by the proverbial balls, because if AIG is allowed to go under, all economic hell will break loose. AIG insures everything from movie companies to health insurance underwriters to auto insurance companies to…well, everything that matters. Still, legislators are calling for true, immediate action that would prevent AIG from paying these bonuses. AIG says it would cost them more to break the bonus contracts than to pay the $165 million. AIG further states that it could lose some valuable employees if they don’t pay the bonuses.

And I say, WAKE UP. It’s 2009. Our unemployment rate is higher than it’s been since the 1940s. Something tells me those valuable employees can be readily replaced. Let’s let the greedy ones walk, and let’s reduce the bailout of AIG by exactly $165 million. And then let’s put in place a corporate oversight committee to monitor how AIG spends its remaining free billions. And who should sit at that particular table? CEOs of American-owned companies that are in the black and not in need of bailout funding. Evidently they are individuals who know how to run a business. Or, if you prefer, some nuns. There, see? Done. Jeez.