Not many Americans noticed, but this week the House of Representatives passed legislation giving the Treasury Secretary authority to regulate excessive pay at any company that takes government bailout funds. The fact that this legislation passed on April Fool’s Day, unfortunately, doesn’t make it a joke. No, it’s very, very real.
At first blush, you may take this legislation for entirely reasonable, after all, they are getting taxpayer money and we wouldn’t want them to waste it. But, there are so many problems with this action it’s hard to know where to begin. First, and most obvious, Congress doesn’t bother to define “excessive”. Gee, does anyone think that might be problematic? What a joke this government has become! And, I’m not picking on the Democrats, both parties are absolutely worthless. Pass a law that hinges on a totally ambiguous term like “excessive compensation” without bothering to define even the general parameters of your legislative intent behind the word “excessive. Are they serious? Really?
The intent of the TARP money was to stabilize U.S. banks to prevent the economy from collapsing. To that end, it would be wise for a bank to keep the money until certain it has avoided any calamity. However, another problem with this action by the Congress is the incredible pressure it places on these financial institutions to pay the money back early, perhaps too early, in order to get out from under government control.
Many of the banks who took TARP funds are now expressing concern that with these compensation restrictions they will struggle to attract the best talent. Their competitors in the U.S. who didn’t take TARP funds and foreign banks, whose governments aren’t so short-sighted, will not face these same restrictions and will have a competitive advantage over the TARP recipients. I know what you’re thinking, “Who cares, they failed and now they’ll have to suffer the consequences”. Well, you better think again. As a taxpayer your money is on the line. Taking any action that hampers the competitiveness of the TARP recipients puts taxpayer money in further unnecessary jeopardy.
So in the end, we have yet another poorly written law by an inept Congress which will restrict the ability of the banks to hire and/or retain the appropriate talent decreasing the likelihood of eventual repayment of the people’s money. And need I remind you, this government can hardly afford to waste any more of the people’s money.
Does this make six now? I have honestly lost count, but it was reported today that another Obama nominee failed to pay taxes owed. Today’s tax dodging democrat is Kansas Governor and Secretary of Health and Human Services nominee, Kathleen Sebelius. The irony runs deep on this one since she was the back-up pick and supposed safe choice after Democratic Senator Tom Daschle withdrew from consideration for this same position when it was discovered that he owed some $140,000 in back taxes due to “oversights”. So, let’s recap.
- Tom Daschle – Democrat – former Senator from So. Dakota – nominated as Sec. of HHS – withdrew due to oweing $140,000 in back taxes.
- Tim Geithner – Democrat – former NY fed chairman – nominated for Treasury Secretary (yup, the one that’s in charge of tax collection) – Nomination approved by the Senate even though he underpaid his taxes by nearly $30,000. The man in charge of all U.S. tax collection couldn’t manage to properly file his own taxes using Turbo Tax! I am not making this stuff up!
- Ron Kirk – Democrat – former Dallas Mayor – nominated to be U.S. Trade Representative – Nomination approved even though he had failed to pay some $10,000 in taxes.
- Nancy Killefer – Democrat – nominated to be the first ever nation’s Chief Performance Officer (oh the irony) – withdrew to avoid embarassment. You see the city of D.C. had to place a lien on her home to get her to pay a past tax bill.
- Hilda Solis – Democrat – Congresswoman from California – nominated to be Labor Secretary – also approved despite her failure to appropriately pay her taxes.
and last, at least for the time being, there’s
- Kathleen Sebelius – Democrat – Governor of Kansas – nomination pending for Secretary of HHS – plan on her being approved as well.
So, yes, that does make six Obama nominees, all Democrats, who failed to pay their taxes appropriately. Here is the problem for the President; this is an either, or situation. Either these people are criminals who were purposely avoiding paying their fair share of the tax burden as U.S. citizens, or they are morons who can’t figure out how to file a tax return and apparently can’t manage with all their connections to find an accountant who knows how to file taxes either.
Think about that for a minute. On the one hand, you have the very socialists who are screaming that the rich (which all of these folks are by the way) should pay more taxes, cheating on their tax returns to avoid doing what they expect the citizens they govern to do. Or, on the other hand, you have people with every conceivable connection and resource, a U.S. Senator, a Fed Chairman, a U.S. Congresswoman, a Governor, a Mayor of a major U.S. city who aren’t bright enough to properly file a proper tax return or hire someone who can? That is simply not believable. After all, these are people who know they are in the spotlight, who know that an inaccurate tax return could come back to haunt them.
But, where’s the outrage at this? American citizens are outraged that AIG employees received legally earned bonuses, but don’t seem to care that their leaders don’t pay their share of taxes??? Where’s the great American media? Where’s CNN? Do you honestly believe that had a Republican President nominated 6 members of his party who were tax-dodging thieves, that story would have ever gone away? Perhaps the most compelling question is this – if this high a percentage of Obama’s nominees aren’t properly paying their taxes, how many more politicians owe us money? If the people in charge of the tax code aren’t going to follow it, why should the citizenry?
Now this can’t be good. The Chinese government is warning the U.S. to watch its spending for fear continued haphazard spending by Washington will devalue the Dollar and by association the Chinese investment in U.S. Treasuries. “We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” said China’s premier, Wen Jiabao.
Just to make sure we all understand exactly what this is, this is like your banker calling you up and saying, “Steve, it’s Pete from ABC bank, I’m worried about you making this month’s mortgage payment, maybe you should save some money and not go on vacation next week.” At first I’m guessing you’d be a little angry wondering where this guy gets off telling you how to spend your money, but then after a minute you’d probably sit down and think, “uh-oh, guess I won’t be getting that new car loan from Pete!”
And that’s really the point. Every time the government spends money it doesn’t have (and let’s be clear, that’s every day these days), they have to raise/borrow it from somewhere. The most common source in recent years has been China – this in and of itself might send chills down your spine, but that’s only the beginning. China is now signaling some concern and that brings into question whether the “window” will be open the next time Ben Bernanke shows up for a loan. If the Treasury can’t raise the money through selling notes, they have to fall back on the ever popular print more money strategy. Now I won’t bore you with the economics lesson (and I’m not qualified to teach it) but the print more money approach must eventually lead to inflation.
Bottom line – the current administration and the Congress better listen to their banker and get their financial house in order, or that next “auto loan” may be hard to get.