Pay to Play - Gambling with America's Future
Let's not kid ourselves. The prevailing modus operandi of Washington politicians—Democrats and Republicans alike—is "pay to play." Money is the "mother's milk" of politics. Nothing warms the hearts of members of Congress as much as campaign contributions. Special interests invest in political campaigns as a cost of doing business expecting that, if they ride the right horse across the finish line, they will get a return on that investment. And what a return! Billions of dollars in bailouts, subsidies, tax breaks, immunities from liability, preferential treatment by regulators—the list goes on and on.
The AIG scandal is Exhibit A for the benefits that accrue to those who pay to play. TIME magazine reports, "The company befriended politicians with campaign cash—$9.3 million divided evenly between Democrats and Republicans from 1990 to 2008...." In 2008, AIG doled out more than $630,000 in campaign contributions to Washington's political elites. Recipients of the corporation's largesse included Senator Chris Dodd ($103,100), then-Senator Barack Obama ($101,332), Senator John McCain ($59,499), then-Senator Hillary Clinton ($35,965), and of course many others. While, at first blush, those sums appear hefty, they are trivial when viewed in light of the $180 billion in taxpayer money that AIG received at the hands of those whose palms it greased.
If only your 401(k) produced the same return on investment!
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What is particularly galling, however, is that more than $120,000 was donated to the Washington political class after AIG received its first $85 billion in bailout funds. In other words, at that point America's Number One Corporate Miscreant was spending your money, not its own, in order to prime the pump to get more of the same.
And consider this: When the stimulus bill was under consideration in February, an amendment was unanimously approved in the Senate which would have placed tight limits on bonuses over $100,000 for any company that received federal bailout money. During the final negotiations on the bill, an amendment was put forth by Senator Dodd which made sure that the limitation applied only to bonuses issued after the passage of the bill on February 11th. This enabled AIG to pay the much-ballyhooed $165 million in retention bonuses to its executives even as the company took in more and more taxpayer cash. And yes, this financial boondoggle was engineered by the same Chris Dodd who took over $100,000 from AIG. He initially denied his role in the alteration, and when he was exposed he invoked the devil-made-me-do-it defense by claiming that the Obama Administration pressured him into it.
The AIG pay to play scandal is not unique. The same M.O. was pursued by reprobates like Bernie Madoff, Jack Abramoff, and others too numerous to name.
Is it any wonder Americans are outraged? The public no longer trusts that the government is doing the right thing. A recent poll shows 77% of Americans object to the government giving more money to AIG. President Obama's disapproval ratings have jumped from 20% to 30% in two months. The number of Americans who think Wall Street workers are "as honest and moral as other people" has sunk from 41% in 2006 to 26% today.
Even the New York Times—a usually reliable cheerleader for Mr. Obama and Wall Street—is filled with columns that are critical of the mismanaged response to our current economic crisis. If the media followed the exhortation "If you don't have something nice to say, don't say anything at all," newspaper pages and TV screens across the country would be blank.
Notwithstanding the public outrage over the current debacle, Treasury Secretary Timothy Geithner recently unveiled the Obama Administration's latest idea: a plan to purchase "toxic assets" from banks through a public-private partnership. In other words, Geithner will re-institute yet another version of the discredited Bush/Paulson plan by using approximately $100 billion of the $700 billion Troubled Assets Relief Program to relieve banks of more toxic assets. Geithner's new plan will ostensibly involve private investors, but the government will guarantee them against loss. The plan, therefore, adds an altogether new meaning to the words "free market."
The more things change, however, the more they stay the same. A few thousand years ago, the prophet Isaiah railed against the excesses of the politicians in another capital city, Jerusalem:
See how the faithful city
has become a harlot!
she once was full of justice;
righteousness used to dwell in her....
Your rulers are rebels,
companions of thieves;
they all love bribes
and chase after gifts.
They do not defend the cause of the fatherless;
the widow's case does not come before them.
(Isaiah 1:21,23 NIV)
Isaiah leveled charges against the political class which included hypocrisy, greed, self indulgence, and cynicism. The government had become tilted in favor of the rich. The poor couldn't get justice. Favorable rulings and laws could be purchased for the right price. The weak and vulnerable were being exploited. Unjust laws were being enacted. Innocent blood was said to be on the hands of the leaders. Their conduct was bringing the country to the brink of ruin. Men were calling evil good and good evil. Sadly, no one arose to avert the impending crisis and to lead the country in a new direction. As a consequence, Judah literally suffered the wrath of God.
Sound familiar? Some historians maintain that the corruption of today's Washington is not unlike the corruption of Jerusalem indicted by Isaiah. They also say that America is guilty of many of the same injustices that were present in Judah of old. If they are right, what will become of America? The Bible is filled with examples of nations that were judged because of such injustices, and history is filled with examples of nations that have fallen under the weight of their wrongdoing. Will we, like Judah, hear the indictment and fail to respond? Or will we take charge of our government, remake our leadership, and change our ways?
History awaits our answer.
