I was going to stay out of this whole AIG mess, but it just keeps getting better and I can’t resist. There is so much hypocrisy and disingenuous outrage that I just have to give my take on this.

For anyone unfamiliar with the situation, here’s a basic description of what happened. AIG, the country’s largest insurance company, was going to go under last year because they bet that mortgages would not default and many of them did. AIG was another company “too big to fail,” so the government gave them $85 billion last September. They have given them more since then, to the tune of around $170 billion. That’s billion with a “b.” Now it turns out that AIG paid a bunch of their employees their annual bonuses last week, to a total of $165 million — about 0.1% of the federal money AIG has received. Surprise, surprise, everyone’s mad.

First, these aren’t “bonuses” in the way that you or I use the term. As King points out, a lot of salary is moved to a “bonus” for tax implications. Here’s an example to help illustrate. Players in the NBA don’t get huge signing bonuses because their contracts are guaranteed: if they get injured or the team doesn’t need them any more, they still get their money. And many players that sign multi-year deals get more on the back end, as a way of encouraging the player to stay with the team. But in the NFL, contracts are not guaranteed — players who do great one year and then get injured (Priest Holmes, anyone?), and players with large balloon payments in late years of their contracts, can get cut and not see a dime. So how do NFL players insure against this? They structure their contracts so that they receive a giant signing bonus up front and take less money in annual salary. In much this same way, Wall Street cuts down on regular compensation for tax purposes and gives people much of their salary in bonuses, which are taxed differently for the company. Many “bonuses” are contractual obligations that have little or nothing to do with actual performance. Even if AIG employees did a horrendous job, they’re getting that money because they already took a reduction in regular salary so the company could decrease its tax liability.

Apparently nobody knew about these bonuses, and that’s why Congress and the President are getting mad about it right now. This strains credulity, since a provision was put into the stimulus bill exempting bonus payments that were contractually arranged on or before February 11, 2009. That applies to all of these contracts. Congress wrote it into the bill that they passed, and now they’re shocked that AIG actually paid the bonuses that they are contractually obligated to pay. That’s why so many people are referring to this as phony or misplaced outrage. Congress should have known. Paraphrazing Representative Mike Pence (Rep-IN) yesterday: ”We give $170 billion to a company that ran itself into the ground making bad decisions with its own money, and somehow it’s shocking and outrageous that they didn’t use those funds appropriately?” Spare me the histrionics.

Everyone in Washington was so outraged that they demanded to see the former president of AIG, who was working for only a dollar a year by the way. Not the type of greedy Wall Street executive that Congress loves to give a tongue lashing to, but he’d have to do for now. He was brought in front of Congress (since they have nothing better to do) yesterday and interrogated. He said that he asked his employees who received bonuses to “do the right thing” and give back at least half of the money. They are not all complying, as one might expect. This is private information, so AIG is not releasing the names of the people who received bonuses, just descriptions of their situations. Representative Barney Frank (Dem-MA) demanded the names of the people who received bonuses, even though this is confidential information. This is the same Barney Frank who voted for this exact privacy legislation so that salaries are confidential information, between only you, your employer and the IRS. It’s the same reason why illegal immigrants “undocumented workers” can pay taxes to the IRS, but the IRS cannot release the information to the Department of Homeland Security — because Barney Frank voted to keep that information private. Until, that is, Barney wants the information to further his own political ends, then privacy be damned, he wants the names! Washington is his own little Gestapo. (On a different note, if you haven’t watched the O’Reilly-Frank smackdown, it’s a must see. If you’ve already seen it, watch this and try not to fall out of your chair laughing. If you enjoyed that, watch this.) The hypocrisy and fake moral indignation is maddeningly blatant, and apparently the only ones who can’t see that are the people in Congress doing all the finger-wagging.

Then there’s our good friend Senator Chris Dodd (Dem-CT). First he complained about this provision in the stimulus bill, saying it was unacceptable. Then when asked about the language in this provision, he admitted he actually worked on it originally. On Tuesday, he told a reporter from CNN that the language exempting these contracts wasn’t in the bill when the bill left his office, but somehow it got put in there later. He had no idea how it got in there, but he definitely had nothing to do with it. Then the next day he admitted actually putting it in himself. His explanation of the about face: he was mistaken and just didn’t remember things correctly. Riiiiiiight. But of course it wasn’t his fault — he did it at the request of Obama’s Treasury Department, who while denouncing the excesses of Wall Street purposely put this provision in so that they wouldn’t annoy Wall Street too much. Now Dodd is trying to parse his words and say that he didn’t say what he said, but if you look at the statements, he was lying before and had to come clean. (Update 3/19 at 8:30pm: Geithner is now admitting he asked for the provision to be put in there, as he was afraid that people from AIG would sue the government over the cancellation of their bonuses as a violation of their contracts.)

Now it’s President Obama’s turn. He also comes out in protest of these bonus payments, but he actually takes responsibility for everything instead of passing the buck like Dodd and Frank always do. Given that his Treasury Department had the provision put in, and he actually signed the bill, it’s a “the buck stops here” kind of situation. He did the right thing and bit the bullet for Tim Geithner, who must be the loneliest man in Washington, D.C. right about now.

I have questions for our government officials in D.C. First, for President Obama: Isn’t all spending stimulus? You gave your speech to the Democrats and said that spending = stimulus, and we have to spend money. You mocked Republicans who said that some spending wasn’t stimulus. If that’s true, why does it matter whether we’re giving money to people who work at AIG, who then go home and spend that money or put it in the bank (keeping our financial system strong), or giving it to other people as part of other programs in your stimulus bill. If all spending is good, which you have implied many times it is, what does it matter who we give the money to? Oh, they’re rich people on Wall Street, and being rich = being bad, so I guess I get it…

Now my question for Congress: where was all this outrage when earmarked legislation was rushed past your offices and we spent TRILLIONS in the last few months? Being outraged over $165 million after passing spending bills totalling several trillions is like a husband buying a new boat and then yelling at his wife for leaving the light on and wasting electricity. There is so much pork and waste in the stimulus bill, the Omnibus bill, and the new proposed budget for next year that it makes $165 million look like a drop of water in Lake Superior. I would love it if Congress actually suddently realized the error of their ways and actually looked out for the taxpayers and safeguarded their money. But that’s not what’s happening here. This is a political play, plain and simple. And they’re too stupid to realize that by being all outraged over this, they’ve just set the stage so that every time any spending bill or earmark comes up, someone in the opposing party can say “You got upset and did something about a little $165 million mistake, so how can you justify spending $X on this?“ Senators and Congressmen like Frank and Dodd jumped headlong into this thinking it would benefit them, without realizing it’s going to make their lives miserable in the future. Soak in the irony, my dear readers.

I have one easy solution to all of this. READ THE FREAKING BILL BEFORE YOU VOTE FOR IT OR SIGN IT! How many times do we have to hear that a bill is so urgent it can’t be debated, then we find out there were all kinds of weird provisions in the bill that have had unexpected adverse consequences? Congress doesn’t read the bills they vote on and the president doesn’t read them before he signs them. Then they both get mad at the people who behave according to the bill they passed. They then demand accountability for this horrible, shameful behavior. Off with their heads! I don’t even know how they can all yell and scream with a straight face, when it’s so transparent to everyone else. And for Obama, maybe none of this would have happened if he had kept his campaign promise to have all legislation available on the internet for public comment for at least 5 days before signing a bill. He broke that promise with the stimulus bill. He also promised that he would go line by line through budgets and eliminate wasteful spending, and he broke that promise with the Omnibus bill. He also promised the American people that when we spent hundreds of billions bailing out Wall Street, it would be done responsibly. He told us he understood how angry we were that money was going to the people who got us into this mess. He told us that he “got it” and knew we didn’t want to bail out Wall Street, but it was necessary, and he assured us there would be 100% accountability for every penny. If he intends to keep that promise, he might want to make sure at least one person in his administration actually reads the next bill before he signs it.