The ironic thing is that the hostile public reaction against AIG or its bonuses makes the retention problem even worse--and is killing the federal government chances of spinning off all or individual profitable operations to the private sector at a decent price, which could reduce the net cost to the American taxpayer. The last thing Obama needs is not containing the AIG problem, which is difficult when the executives in the know are deserting, given very low morale and being publicly blasted by politicians and the press. Should Obama know better? Of course. An experienced executive would know that, but not Obama. But then blame the American people for electing an inexperienced leader. Obama couldn't see the big picture but was afraid the AIG situation was hurting his public approval ratings and wanted to remind the American people no one does class warfare rhetoric better than he does.
If Obama wants to continue such rhetoric, I feel we should in turn talk about pay-for-performance in Congress and the White House, which seem to be good at only one thing: running up the federal deficit. It turns out that the Congress continues to play games with compensation, even whether it should have an automatic raise (without evidence of better productivity)--but then you see expense accounts being padded.
The fact is that Obama's own administration and outside lawyers have reviewed the AIG contracts and concluded they are enforceable. This means not only will the bonuses have to be paid, but the US government would have to pay for the employees' legal fees if and when they almost certainly would lose the court cases. But maybe we're expecting too much of Obama; it's not like he has a Harvard law degree and is a former editor of its Law Review. Oh, wait a minute...
