March 19, 2009

Three Hack Writers at the Washington Post.

David Cho Shailagh MurrayPaul Kane

David Cho, Shailagh Murray and Paul Kane ;

These three reporters for the Washington Post seem to lack the ability to fully understand the capitalist system that we adhere to in our democratic republic. Their complete lack of a grasp on the realities of the situations leads me to describe them henceforth as The Three Hacks. (As you can see, this isn't Kane's first offense).

With millions of Americans angry over the outrage of executives at failed financial institutions being rewarded for leading their businesses to bankruptcy, Congress has responded with a rather inelegant solution: place a tax on those receiving the un-earned bonuses to recover those funds in their entirety. The Three Hacks take issue with this approach in their article Punitive Income Taxes on Bonuses Threaten Financial Rescue Plan:
Congress today moved to levy punitive taxes on bonuses at financial firms receiving government aid, threatening to undermine the government's rescue of the financial system.
The Three Hacks sternly - and I imagine with straight faces - wrote:
The taxes imposed would be so high that the result would likely drive away nearly all firms participating in the federal assistance program.
Well, DUH. If the firm can afford to turn away from the program, then they really shouldn't be benefiting from it anyway. And if you need to come begging for money to keep your doors open because you led your company into fiscal disaster, you have not earned any bonuses. AIG's not the victim of a natural disaster or an act of god: AIG is in this mess because their senior management was greedy and short-sighted.

The Three Hacks go on:
Employees receiving bonuses at Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley, Fannie Mae and Freddie Mac would all be covered, according to supporters of the measures. At many of these firms the majority of employees receive bonuses, which often comprise a large part of their compensation., that is true. But that's not to say that their base salary is peanuts; we're still talking six to seven figures. A vice president might make $200,000 in salary, but bonuses and stock options bring that up to a couple million dollars. Very true. The Three Hacks seem to be under the very mistaken impression that no one in the entire United States of America understands employment contracts. The problem is, while the rest of us seem to understand it, The Three Hacks do not.

Here's a fact that the Three Hacks have missed: the executives are only supposed to get those bonuses for the work they do; they have contracts, and the contract spells out the exact circumstances that merit bonuses, commissions and options. That's what they are being compensated for; results, not sitting in a big office swilling martinis while planning vacations. And I think it's fairly certain that not one of the executives in question has "running the company into a black hole of debt so massive we take the entire country's gross national product with it" as one of the contractual benchmarks of their performance.

You work, you get paid. You do the work exceptionally well, you get rewarded. The more you earn for the company, the more you increase the profits, the more valuable you are and the more you should earn. We all understand that.

If not for billions of dollars of taxpayer money being funneled into it, AIG would not only no longer exist, neither would many if not most of its clients.

And I have to point out, that if the company were out of business, these executives who stand lose their un-earned bonuses would not be collecting any compensation beyond unemployment. And that only lasts six months.
The bottom line is this: if you are managing a company, and the company fails because you did something stupid, you don't get rewarded for that. In most businesses, you get the axe. You're lucky we're bailing you out; you don't deserve it: but the people doing business with you, who thought you knew what you were doing, might.

No, David, Shailagh, and Paul, Congress isn't threatening to undermine the government's rescue of the financial system: the incompetent clods who thought that taxpayer bailout money should be used to reward greedy jerks are the ones doing that, as are the greedy jerks themselves for accepting it.

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