John McHugh nearly almost responds, sort of.
Okay, I know the Congressman is busy and all that, and certainly wasn’t surprised that it took a couple days for an official response to come in from his office re: the letter I sent him a few days ago. And indeed, it is a lengthy and well-written response. Unfortunately, it doesn’t really address the issues I brought up.
Okay, that’s not completely true. There is a single paragraph regarding the offending bill about which I wrote the letter. It would appear that, on the Congressman’s hard drive (but I flatter myself; more likely, it is on the hard drive of an assistant), there is a folder of pat responses, labled “AIG complaints, general.” From this folder, I theorize, somebody must simply have picked the response which best fit my own letter. At least that means somebody read it, I guess.
So, out of fairness, since I published my own letter, I will also publish the official response from the McHugh office. It’s pretty lengthy, so I’ve highlighted the part of the response which corrosponds to my own letter. Read the whole thing if you want, though. And after that, my own response to that response, which I may or may not take the time out of my day to send to McHugh’s office.
Dear Mr. Streu: [that's me]
Thank you for taking the time to contact me regarding the recent news that American International Group (AIG) will be paying some executives nearly $165 million dollars in bonuses after receiving over $170 billion from a federal rescue package. I appreciate your reaching out to me on this very serious matter, and I sincerely share your frustrations with this troubling development.
At a time when our country is facing unprecedented economic challenges, it is unconscionable to me that American taxpayers have been asked to put their money on the line only to reward the failures of financial executives on Wall Street who took enormous risks and continue to operate as if it were business as usual. I continue to be outraged by these irresponsible, and potentially criminal, actions of many in the financial industry who operated out of the sight of federal regulators and bear much of the blame for our nation’s current economic struggles. American taxpayers deserve to know that a thorough review and investigation will be conducted and those who violated the law held accountable.
To that end, I have sponsored legislation and written letters to the appropriate government officials calling for accountability for corporate executives. Moreover, I will continue to aggressively press for increasing scrutiny and investigations into any and all related criminal behavior. For example, I recently sent a bipartisan letter with thirty other Members of Congress calling for the U.S. Attorney General to conduct a criminal investigation of any financial institution, corporation, or individual that is suspected of criminal action relating to this circumstance. I have also sent a letter to the Secretary of the Treasury and Federal Reserve Chairman asking that they investigate how taxpayer dollars are being used by AIG. In addition, I have sponsored legislation that would ensure that no taxpayer dollars could be used to pay for executive “golden parachutes” for companies that receive direct assistance from the Federal government. I believe Congress needs to do more to protect those who have made the right decisions – everyday Americans – and not the irresponsible actors on Wall Street.
Thus, on March 19, 2009, the House passed legislation (H.R. 1586) that would impose a 90% tax on bonuses paid to employees who earn more than $250,000 and whose companies have received more than $5 billion in TARP funds. This legislation first must be passed by the Senate before it can be presented to President Obama. Although the bill was less than ideal, I made the decision to vote for it, in part because I believe that bonuses paid with taxpayer funds that are in no way linked to the performance of a company are abusive and excessive. Thus, I supported this legislation in an effort to retrieve the American taxpayers’ money.
That said, I continue to have serious reservations regarding the manner in which Congress is considering such legislation. For example, Members of Congress learned recently that a provision in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) that would have lawfully prevented such bonuses from being paid was removed and, instead, replaced with language that specifically protected such bonuses. I voted against that hastily developed legislation in part because the 1,073 page long authorization spending $787 billion of taxpayer money was only released 16 hours prior to its vote. Had Members of Congress actually had the time to read the legislation they were voting on, such mistakes could have been avoided. Conversely, few, if any, Members of Congress actually reviewed the bill in its entirety and could not reasonably understand its provisions in such a short time, thus requiring Congress to take corrective measures like H.R. 1586.
I also believe that these actions alone to deal with the outrage at hand are not enough. We need to undertake a comprehensive change, and in that regard, I also support legislation that would establish a National Commission on the Financial Crisis. If enacted, H.R. 74 would be modeled after the 9/11 Commission and would create a bipartisan commission to determine the causes of the financial crisis and make recommendations to Congress and the President. I believe that such a commission would give the American people an objective and credible assessment of the causes and handling of the financial crisis and would be conducted by a bipartisan panel of experts. As with the 9/11 Commission, this report will be free of accusations of political showmanship and a partisan slant that has limited any current Congressional investigation.
Lastly, I believe it is absolutely critical that the Federal government act now to apply newer, more flexible tools that will effectively update our nation’s regulatory system. I was pleased to learn that the House Financial Services Committee is considering plans to establish a Select Committee to review and rewrite the regulatory structure currently governing the financial industry. I applaud these efforts to apply smarter modern regulations to improve our nation’s regulatory system and will work for their implementation.
As the 111th Congress moves forward, please know that I will carry on fighting for accountability and proper oversight by the Congress. Again, thank you for taking the time to contact me on this critically important matter. I appreciate having the benefit of your views and trust you will not hesitate to contact me in the future with any matter of interest to you before the Federal government.
With best wishes, I amSincerely yours,
John M. McHugh
Member of Congress
My Response:
Dear Congressman,
What?!!?
“The bill was less than ideal?” Sir, the bill was, and is, unconstitutional. That is not a simple matter of it being a little bit inconvenient. Saying such a thing was “less than ideal” is like saying the nuking of Hiroshima “annoyed” the Japanese.
What is troubling, sir, is that you seem not to have a problem with legislating the breaking of a negotiated contract between two entities — and worse , with the idea of passing what amounts to a “bill of attainder,” expressly forbidden by our Founding Fathers in the Constitution of the United States. A document, sir, which you swore an oath to defend.
Congressman McHugh, I respect and honor the many correct decisions you’ve made in your tenure in the Legislature. But if a bit of panicked public outcry is all it takes for you to abandon the single most important promise of your carreer — to uphold the Constitution — and then to waive off that offense by admitting it was “less than ideal,” than you, sir, are a man not to be trusted.
An open letter to Congressman John McHugh, re: the 90% punative tax against AIG
(submitted to the office of John McHugh, and as letters to the editor, and cross-posted at RedState)
Dear Sir,
When you took office, you swore to uphold the Constitution. This is the document which defines our nation, and as such, which must be the standard to which our government holds.
Yesterday, when you voted ‘Aye’ on HR1586, you, and those who voted with you, blatantly disregarded not only the letter, but the intent of the US Constitution. And in so doing, you negated the very reason for a Republican form of government: to protect from the tyranny of the majority.
Sir, no matter how egregious the act, for the government to impose a retroactive, punative tax is not only tyrannical (and no, I’m not merely being hyperbolic), but unethical. But let’s take a look at this so-called crime, committed by certain executives at AIG. What they did, in essence, was accept a sum of money which they were promised — and contracted for — by a company which happened to get a government bailout that they never should have gotten.
That the bonuses were in bad taste in not in question. Indeed, the very idea of non-performance based bonuses of this type illustrates the kind of poor business management that drove AIG to the brink of collapse in the first place. However, in providing the bailout, it was THE GOVERNMENT which ultimately provided for the bonuses — even to the extent of actively allowing for them in the bailout bill itself. In other words, what the government has done in effect is to give these executive their bonuses, and then punish them for receiving them.
How are we, the citizens of this Country — of your District — to have any confidence in a government that shows this level of ethical schizophrenia?
Sir, you have betrayed your oath to uphold the foundational ideals of this Country. I pray, and as your constituent demand, that you find a way to make this right.
Regards,
Randy Streu
Paterson decides against fat tax, other fees… for now
New York’s illustrious “governor” Paterson has issued a statement saying he no longer needs to levy the entire tax and fee package against New York’s citizens, because of money coming to the state from Obama’s “Stimulus” package. The $11 billion from Washington will help Paterson back away from his more politically detrimental tax and fee suggestions, such as the softdrink tax, download fees and taxes, and more.
He does plan on keeping several of the new or higher fees or taxes he’d proposed, since his administration is unable or unwilling to trim enough fat out of the budget. Of course, much of New York’s overhead has to do with enforcement of codes, rules, regulations and laws. There’s a reason “over-regulated” often turns into “over-taxed” as it has in the case of New York. Simply put, when you make regulations, you have to pay somebody to enforce them. This means a larger budget. Which means… yup… higher taxes.
Paterson makes the claim that “nobody likes to tax people,” suggesting that he simply has no other choice. But there is another choice. Back off. Get the hell out of New Yorkers’ lives. Stop regulating every matchstick that comes off the assembly line. Stop requiring licenses and fees to so much as trim somebody’s hair. Shut the bureaucracy down, and then we taxpayers won’t have to foot the bill any longer. It’s an easy enough fix, if you can get the Legislature to go along with it.
Of course, given the makeup of the State Legislature, that doesn’t look too likely. Even if Paterson wasn’t completely obtuse.
Politicians either don’t ‘get’ Capitalism… or they don’t like it
Common with the bailout rhetoric of the last several months, Harry Reid has come out to say the government had to bail out AIG, because to do otherwise would be calamatous. It would, says Harry, lead to another depression, were AIG to fail. Indeed, according to Washington, the Insurance giant is so big that its collapse would trigger a chain reaction that would destroy the financial world. Neither am I exaggerating the government’s position on this. In fact, those are almost the exact words of Fed Chairman Ben Bernanke:
[Bernanke] maintained that because the company has ties to major financial firms across the globe, its collapse “would be devastating to the stability of the world financial system.”
A few problems with that statement, however. First, Bernanke doesn’t really go into what, exactly, those ties are, nor in what ways the fall of AIG would negatively impact those financial firms. Also, though he says they are “major” firms, he’s short on details of exaclty how a financial hiccup for those firms would “devastate” the financial stability of their home countries. Third, not to sound callous, but why is that the problem of the American taxpayer? We have problems of our own, after all.
Most importantly forgotten in this doom and gloom scenario, though, is the role of capitalism. Capitalism ain’t physics. The collapse of a giant star is not, in a capitalist nation, going to cause a black hole that will create a gravitational field and suck all its surroundings into itself. Matter of fact, Capitalism loves a void. Capitalism thrives on voids. Indeed, fulfilling needs (filling voids) is the gear on which Capitalism turns. Every invention created in the US, every business built, job created, was because of a need that existed. This is Economics 101 stuff and yet, here we are, worrying about financial ruin because, horror of horrors, a void might be created.
A void, by the way, which intelligent Capitalists have already been making plans to deal with:
Competitors who have been overshadowed for years by AIG’s dominance in key commercial insurance markets now see AIG’s problems as an opportunity. But there is growing frustration that the government keeps stepping in to thwart what could be business prospects for them, said Andrew Barile, an insurance consultant in Rancho Santa Fe, Calif.
In other words, from the perspective of the rest of the industry, the government isn’t saving them; it’s making life harder. And when life is hard for businesses, the economy suffers. How, according to industry folks, could the government really help business and, by extension, the economy? Simple. Getting the hell out of the way.
Moreover, it’s daunting having the government as a big investor in a competitor. “The challenge is that we have a regulator who also is an investor,” said Mike Foley, chief executive officer of Zurich Financial Services Group’s ( ZFSVY) North American commercial segment. “From a competitive dynamic, it creates some confusion if your competitor is also your regulator.”
…
“You need some type of rules of engagement or a way to think about the regulatory environment,” Foley said. “Our sense is it should be limited and finite.”
This creates other problems as well. Not only do we now have a regulator who is invested in business, but now we, the taxpayers, are in it for the long haul. The same is true for GM and Chrysler. Our money is invested. If these companies fail there will be no return on investment. It is now in Washington’s interest to make sure these companies don’t fail.
For Capitalists, this is not a good position for Government to be in. Whether you identify yourself as a Republican, or Democrat, or some third party, or independent… if you identify yourself as a Capitalist, you have to see this as a bad thing. With the government invested in AIG, every piece of insurance legislation must be considered suspect. With the government invested in GM, every auto regulation is suspect. It has to be. We are now in an anti-liberty situation. We are now in a situation where the government has to be watched to make sure they aren’t passing laws to benefit some companies while punishing others.
And — perhaps ironically for some — it is the Democrats, the party that made a name for itself by claiming that Republicans were in the pocket of big business, who are responsible for this.
So now the question is, are taxpayers now on the hook to make sure these companies succeed simply because politicians don’t understand our economic system; or was this their intention all along?
When you want to boil a frog, you don’t put it in hot water. You put it in cold water, where it is comfortable and unsuspecting, and you turn up the heat. The heat is rising, and it is high time we frogs jump the hell out of the pot.