Bonus Hypocrisy

As I was making my daily perusal of the Drudge Report, I came across the following article that struck me as odd and somewhat infuriating.

Lawmakers Have Long Rewarded Their Aides With Bonuses

For those of you who don't want to read the linked article, it talks about how congressional offices gave bonuses to staffers at the end of last year that totaled $9.1 million. On average, staffers made 17% more in the 4th quarter of last year than they made in the other 3 quarters of 2008. And, of course, like any other government expenditure, these bonuses were paid with tax dollars.

So, maybe you're thinking, big deal. $9.1 million is nowhere near the $165 million AIG paid in bonuses to its employees. Besides, AIG got us into this huge economic mess and certainly its employees do not deserve bonuses. If that were all there was to the story, maybe you would be right in thinking that. However, let's talk about what is really going on here.

First, the so-called "bonuses" paid to AIG execs were not really bonuses, but rather salary. In exchange for not jumping ship when the government took over, these men and women agreed to work for $1/year in salary. I don't know many people who can afford to live on $1/year, so in order to provide some incentive to stay in light of the unparalleled salary cut, AIG promised "bonuses" to these executives that would be paid out in installments (otherwise known as retention payments). No matter who you blame for the AIG fiasco, no one can honestly assert that every executive in that company was responsible for AIG's demise. Some people needed to stay on in order to right the ship and not many people qualified to run that company were going to leave their current job security at another company to go to AIG. Therefore, I really don't see much wrong with paying these executives these "bonuses". The other alternative is to let AIG sink into bankruptcy and start over.

Despite the above explanation, for the sake of argument, let's call the AIG payments bonuses--which brings me to my second point. People are outraged over the AIG bonuses for 2 reasons: (1) the company is a complete and utter failure and people don't deserve bonus payments for running a company into the ground, and (2) the bonuses were paid with tax dollars and these people shouldn't be getting rich off of taxpayer money. Both of these are pretty good arguments with which I would agree.

So, let's take a closer look at these congressional staffer bonuses. Does anyone happen to know what congress' approval rating was for the year 2008? Take a look at this graph from polls conducted by Gallup:



For the calendar year 2008, congress' approval rating never got above 25% and ended the year right around 20%. Since then, it has shot up to a whopping 39%, the highest it's been in 4 years. Something to be proud of...hardly! So, with a 20% approval rating ending last year, why did these staffers deserve the taxpayer-funded bonuses they received? Besides the total amount of bonus money paid, and the fact that the AIG bonuses were not on top of salary like the bonuses paid to congressional staffers were, is there really any fundamental difference between the "bonuses" paid to AIG and the bonuses paid to congressional staffers? Am I really surprised at the level of hypocrisy going on in Congress?

Just to point out one fundamental difference between the bonuses, I haven't heard any members of Congress clamoring to tax congressional staffer bonuses at 90%.