Desparate, Need Financial Bailout to Pay Bonuses

Imagine you’re driving down the highway and you exit off the exit. At the stoplight you see a desolate man and his family standing beside the road begging with a sign that reads “Homeless, Need Food”. You feel empathic towards him and his family so you give the man some money. Later on that day, you are out to dinner with you family at an expensive restaurant and you notice the same man and his family sitting at the table next to you. You confront the man and he explains “Yes, We’re homeless and hungry but I promised my daughter I would take her to this restaurant if she made perfect attendance in school this year, and she did, so I can’t go back on my promise.” Is he right or wrong? That’s basically the current situation with AIG. The company promised all these retention bonuses for people agreeing to work for them for the past year before they accepted the fact the company was headed for failure and was given a financial bailout. I personally think both situations are wrong. Both the homeless man and AIG needed to prioritize and accept that their financial situation had changed and neither could afford to be wasteful with their charitable gifts. The homeless man could have provided many more, cheaper meals for his family instead of fulfilling a promise. Feelings may get hurt and lawsuits may emerge but making irrational decisions based on fear is neither smart nor moral. Like perfect attendance, retention bonuses were promised and given as a result of attendance. They were not based on performance, so to get these bonuses all these executive had to do was “show up for work”. The daughter may have showed up every day for school but if she, like the executives still flunks out what are you rewarding? AIG rewarded the same f-ups that ran the company into the ground creating a need for a final bailout. Apparently, those same f-ups are still running the company further into the ground but now they’re using our tax dollars.

Now the federal government is planning on placing a 90% tax on these types of bonuses, leaving the remaining 10% to be tax by the local state government. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG. Sounds good to me!