Saturday, July 11, 2009

Horatio Alger Story 2009: Paid for by Uncle Sam

Two articles today highlight the competing visions of America’s future. In the first in the Washington Post, we learn that AIG wants to give its top executives their promised bonuses: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/09/AR2009070902702_pf.html. Largely unmentioned in the article, is why they should be paid bonuses. Hasn’t AIG contributed substantially to the global financial crisis? Aren’t bonuses usually given for actually doing a good job? And should the tax payers really fund bonuses for those who still have jobs, when so many don’t? On top of these questions, is the reality that AIG could soon be insolvent: ‘“Our valuation includes a 70 percent chance that the equity at AIG is zero,’ Joshua Shanker of Citigroup wrote in a note to investors. He cites the continuing risks posed by the company's exotic derivative contracts, called credit-default swaps, and its sale of assets at low prices. AIG's stock plummeted by more than 25 percent yesterday.”

In the second article in the New York Times, the House has come up with an interesting plan to fund half of the new healthcare initiative – paying for it with a surcharge tax for those making over $250,000 (http://www.nytimes.com/2009/07/11/health/policy/11health.html?ref=todayspaper&pagewanted=print). This seems in line with the populist undertones that helped Obama win the election, but Republicans and conservative “blue dog” Democrats are already trying to undermine the plan. Will we see a profound change in the way our government does business or eternal return to the same as our future stands in jeopardy? I guess we’ll have to wait and see.

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