AIG Bonuses Side Effect of Bailout

While many people disagree with the recent government bailout of AIG, I think the more important issue is the $165 million paid in bonuses to employees.  In the grand scheme of things, it probably was a good idea to not allow the largest U.S. insurer to fail.  The economy might not have been able to bear it.  But certainly, the bonuses were inappropriate.

Rush Limbaugh, in all of his mumbled wisdom, believes that the AIG bonuses shouldn’t have been taxed.  But what he fails to appreciate is that the money allocated was wasted.  Yes, normal bonuses shouldn’t be so heavily taxed, but perhaps the bonuses shouldn’t have been paid at all.  And maybe, those funds could have been used more proactively.

It’s also disappointing that the government didn’t have a provision to prevent such misuse of the bailout money.  But I suppose that’s simply politics as usual.  At any rate, I applaud the taxation of these bonuses.