General Electric: The Worst Bailout in the World
{{#rendered}} {{/rendered}}By Phil Kerpen
Policy Director, Americans for Prosperity
We've been hearing over and over again about the astonishing $182.5 billion in bailout funds that the federal government has been pouring into AIG, but you might be surprised to learn that a close runner up to AIG in the bailout sweepstakes is General Electric, which got its own $139 billion bailoutin November. So with Congress and the media in a frenzy over AIG bonuses, where's the GE outrage?
In a wild rant on MSNBC---owned by General Electric--Keith Olbermann denounced Citigroup CEO Vikram Pandit's salary, AIG, Northern Trust, and other bailouts recipients, which he called "vast engorged gluttonous multinational corporations whose sneezes can be fatal to our jobs, whose mistakes can turn us into the homeless, whose accounting errors can be so panoramic that they can make our economy tremble and force us to hand them billions after billions in a blackmail scheme that has come to be known as 'bailout.'"
{{#rendered}} {{/rendered}}That's great stuff, but somehow, in his righteous indignation, he forgot to mention his own employer's massive bailout or his own hefty salary on the list of horribles that followed. That's a heck of an oversight, because even though GE CEO Jeff Immelt decided to forego his 2008 bonus (which the board granted to him even though he missed every one of his performance measures) other GE executives are receiving their bonuses-- in some cases millions of dollars.
Chief Financial Officer Keith Sherin and Vice Chairman Michael Neal were given 2008 bonusesof $5.2 million and $5.8 million, and chose to return only half. The average GE executive bonus only dropped 19 percent from 2007, even thought GE stock lost 53 percent of its value.
Then there's Olbermann himself. In November, with GE already in the depths of crisis and just two days before its $139 billion bailout deal was announced, Olbermann signed a lucrative new contractjust two years into his then four-year deal, with a hefty raise from $4 million a year up to $7.5 million a year. It's unknown whether he also got a bonus, but either way that's a heck of a raise to be paid using freshly given taxpayer bailout dollars.
{{#rendered}} {{/rendered}}MSNBC's other leading light, Chris Matthews, who's been bashing AIG bonuses nightly, just signed a new contractthis week that reportedly pays him over $5 million per year. This is the same Chris Matthews who saidhis job at MSNBC is to do everything he can to "help" President Obama succeed.
It actually gets worse. My friend Tim Carney has brilliantly describedhow General Electric (with its MSNBC unit cheering every step of the way, I'll add) has been one of the prime movers behind the push for the cap-and-trade energy tax, one of the major pieces of President Obama's budget and economic agenda. In 2008, while GE stock was losing more than half its value, the company spent upwards of $18 million on federal lobbying -- the majority of it pushing for cap-and-trade. GE is positioned to make a fortune on a cap-and-trade scheme, rebooting its failed financial derivatives business for every aspect of carbon trading that the Wall Street wizards can dream up.
None of this is to say that Congress should step in and block GE bonuses or tax them away as they're considering doing to AIG. The rule of law matters, and contracts should be honored (even though Olbermann himself said contracts should be torn up -- and overpaid employees of bailout companies should be fired -- an idea MSNBC should consider taking him up on). The real problem is the bailouts themselves, which create impossible choices. We' forced to decide between tax dollars being spent on unpopular things and Congress micromanaging businesses after bailing them out -- in essence substituting political decisions for market decisions and greatly damaging our economy and capitalist system.
{{#rendered}} {{/rendered}}Is MSNBC taking a hard left-stance to keep the federal bailout dollars flowing from an appreciative Obama administration? It's impossible to say, but that there could even be the appearance of such a thing is un-American. I'll be consistent--if GE can't survive without taxpayer bailouts, it belongs the same place AIG does: bankruptcy court.
Mr. Kerpen is director of policy for Americans for Prosperity.