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No One Asked Me But…

No One Asked Me But…

by Dr. Larry Moses
Published March 25, 2009

No one asked me but…I watched the Congressional hearings on the AIG bonuses. The Congressmen were quite indignant that $168 million of the $80 billion in bailout money given to AIG was spent fulfilling contracts of AIG employees. The largest bonus was $6.4 million and 73 executives received $1 million or larger bonuses. It makes one wonder how large the bonuses would have been if the company had actually been making money.

The bonuses certainly should not have come as a surprise because Sec. Geithner had been told months before that the bonuses would be paid. I believe he did not think they would be much of an issue since they are less than one tenth of 1% of the entire $80 billion given to AIG.

The hearings were interesting in that Mr. Liddy, who is a retired insurance executive, was attacked often by the Congressmen for the bonuses being paid. It was hard to listen to men like Barney Frank, whose pressure on Fanny and Freddie caused the issuing of the unstable loans that created much of the economic problems we see today.

Mr. Frank attacking Mr. Liddy reminds me of the story of the man who jumped in the freezing river to save a young boy from drowning. When the mother of the boy is called to the scene, she hugged the boy and asked to see the man who pulled him from the water. When the volunteer stepped forward, the mother took one look at him and angrily demanded to know where the boy’s hat was.

Mr. Liddy gave up a comfortable retirement to receive $1 a year salary to clean up the mess at AIG. You might think the Senators would be kissing his ring and giving him all the help they can.

I also find it ludicrous that these bonuses are paid. The argument is that the contracts had been written and if contracts have no value, where in the world are we? One might wonder why this argument was not applied to the auto workers contracts. There may be grounds to prove that these executives violated their end of the contract.

Mr. Liddy’s rationale for paying the bonuses was that we are trying to solve the problem with the least cost possible. In his opinion, and the opinion of his corps of attorneys, the best way to get AIG back on its feet was to deal with the problem and move on. And while you and I see $168 million as a significant amount of money, in the large scheme of things in this gigantic financial mess it is insignificant within the recovery program.

If I were Mr. Liddy I would turn the problem back to Mr. Frank and his crew of Monday morning quarterbacks. If Mr. Frank knows how to cure the problem, of which he was a major cause, he should have at it. Otherwise he should keep his mouth shut and hope Mr. Liddy can clean up this mess Congressman Frank was instrumental in causing.

For what it is worth, my management style included the philosophy when someone brought me their problem to solve I was glad to help. But I never took their advice as how to attack the problem. My thought was if you know how to solve the problem, don’t bring it to me. But if you bring it to me get out of the way and I will solve it. However, I will be accountable only for the result not the process.

Congress decided to pass a confiscatory tax of 90% on the bonuses. Before you hurt yourself cheering, keep in mind if they can do this to these people what is to stop them from doing it to you? The next logical step would be to call all bonuses excessive and tax all bonuses at 90%.

No one asked me but…I have noticed that everyone seems to be against the earmarks going to other states and feel they should be abolished, but they are willing to take the earmarks coming to their state because those are projects that have real meaning.

The state of Nevada will be the beneficiary of the following earmarks attached to the $410 billion Stimulus Package; $807 million for the Nevada Fair Housing Foreclosure Effort, $507 million for Access to Healthcare Network for uninsured Nevadans, $523 million for Southern Nevada Health District for victims of the hepatitis C scandal, $1 million to assist the University of Nevada Health Sciences System nursing program, $856 million for the Clark County School District for drop out prevention, $856 million for the Washoe County School District for drop out prevention, $800 million for the University of Nevada’s agricultural programs, $269 million to help Carson City battle erosion from the 2004 Waterfall Fire, $300,000 to the city of Fernley for law enforcement equipment, $235,000 to the Nevada Department of Agriculture to battle invasive weeds, $4.78 million to Truckee Meadows Flood Control Project, $2.5 million for Truckee Canal Reconstruction, $3 million for water treatment at Lake Tahoe, $18 million for rural Nevada water infrastructure and water quality projects, $608,000 to help Wells recover from its earthquake, $150,000 to restore St. Augustine’s Church in Austin, $475,000 for the Virginia and Truckee Railroad, $190,000 for Armargosa Valley Community Center, $300,000 for wastewater treatment in Goldfield, $1.5 million for an interpretive center in Elko, $285,000 for Truckee Meadow Community College low-income student recruitment, $24,000 to help poor school children in Lincoln County, and $318,000 for the Nevada Cancer Institute to fund the Hope Coach which provides screening for women in the state’s rural outposts.

If every state refused to take their portion of the package, we would save eight billion dollars. However, I don’t believe that will happen. While we are quick to criticize, the money set aside for other states, we are quite sure what we need in Nevada is legitimate and that we should grab what we can when we can.

These programs come to a total of over $100 million. Look through this list and determine if you still hate the earmarks. If so call the Governor and encourage him to reject the money earmarked for Nevada. If you don’t mind the earmarks, stop complaining about the stimulus package and enjoy the fruits of the program.

Thought for the week…Pork is in the eye of the beholder.

– Trent Lott

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