Robert Reich: Congress's Potemkin Populism

[flpoljunkie]

(Yet another blatant example of why we urgently need public financing of federal campaigns. Write your Senators and tell them to support Bernie Sanders bill S.852, co-sponsored by Dick Durbin. And, of course, the media is covering this 'outrageous' bonus story. They are not covering the things Robert Reich writes about below, and I do not expect them to do so. It is up to us. )

FRIDAY, MARCH 20, 2009
Congress's Potemkin Populism

It's nice to see that when the public gets sufficiently angry about something, Congress responds. In a rare show of bipartisanship, members are eagerly registering shock and outrage at AIG's bonus payments by coming up with an assortment of ways to reclaim the bonanza, including taxing them away retroactively. Who says democracy is dead?

But much of this is for show. When the public isn't looking, Congress reverts to its old ways. The Obama-supported plan to allow distressed homeowners to renegotiate their mortgages under the protection of bankruptcy has run into a Wall Street wall. Although Citigroup temporarily broke ranks a few months ago when it was receiving one of the most generous bailouts, the rest of Wall Street has remained adamantly opposed, and apparently Democratic leaders have decided not to push back.

Meanwhile, Obama's plan to limit itemized deductions for the richest 1.2 percent of taxpayers (including the top 1.9 percent of small business owners) to 28 percent, starting in 2011, is also in trouble on the Hill. Wealthy contributors and friends of congressional leaders involved in setting tax policy have balked. So Congress is telling the White House to look elsewhere for the $320 billion it needs over ten years to finance half of the tab for health care reform. Congressional leaders have also informed the White House that they don't have the votes to pass Obama's proposal for treating the earnings of hedge-fund and private-equity managers as income rather than capital gains.

Angry populism thrives on stories about the rich and privileged who use their influence to get cushy deals for themselves at the expense of the rest of us. AIG's bonuses provide a perfect example. It's too bad the same populist outrage doesn't extend to issues involving far more money, affecting many more people, and entailing far more insidious abuses of power. Congress's potemkin populism over AIG's bonuses disguises business as usual when it comes to the really big stuff.;/b]

posted by Robert Reich

http://robertreich.blogspot.com/2009/03/congresss-fair-weather-populism.html

[ProSense]

1. Too many mixed messages

Frank Says U.S. Should Sue AIG to Recover Bonuses (Update2) :

March 22 (Bloomberg) -- House Financial Services Committee Chairman Barney Frank said the government should “assert our rights” as the owner of taxpayer-funded American International Group Inc. and sue the company to return $165 million in bonus payments.

Policy makers also should address “the whole question of executive compensation and the perverse incentives” that result from how it’s structured, Frank, a Massachusetts Democrat, said today on CBS’s “Face The Nation” program.

“One of the things we ought to be doing is suing as a shareholder, saying ‘look these are people who were paid bonuses that they weren’t entitled to,’” Frank said.

AIG’s decision to pay the bonuses to employees after getting $173 billion in federal aid triggered a backlash in Congress last week. Lawmakers chided AIG Chief Executive Officer Edward Liddy for allowing the payments and advanced legislation to tax bonuses at the New York-based insurer and other companies getting government funding.

Senator Charles Grassley of Iowa, the top Republican on the Senate Finance Committee, said taxes are “Congress’s best leverage” for retrieving the money.

[eleny]

2. Or this Congress had their "Terri Schiavo" moment