There is no doubt that AIG seems to be deliberately acting in ways to spur the moral outrage of politicians and taxpayers. If you are not completely familiar with the story as it stands now, click here.
New Mexico’s own Sen. Tom Udall couldn’t resist piling on, but he went a step further by explicitly threatening AIG. As economist Russell Roberts points out:
Udall doesn’t like to see our money going to a bad cause. Unless it’s friends of his. From KFDA in Amarillo:
As part of the $410 billion Omnibus Spending Bill, US Senator Tom Udall says he included over one million dollars for Eastern New Mexico industries.
Over $200 thousand is going to a dairy consortium so they can boost research on improved dairy production.
And more than $950 thousand is going to the Sapphire Energy Algae so that company can create and grow technology that turns the algae into fuel.
Udall says the algae company could create 100 jobs.
Love that word, “could.” Can’t wait to count them.
The Senator does not seem to understand that these two stories conflict with each other. AIG has failed to generate private capital to keep it afloat. It can only stay afloat with my money. AIG can’t raise private capital because it has lost the trust of potential investors. They’re bankrupt and exist only because of the government’s largesse funded by taxpayers. Why would you want to repeat the same mistake with that dairy consortium and Sapphie Energy Algae? If they’re good investments, let private investors take the risk and either reap the reward or lost their money. If they’re bad investments, why am I being forced to pay for them?
To his credit, Udall voted against the original bailout bill, but the point remains that throwing taxpayer money at AIG is not much different from throwing taxpayer money at politically-connected companies that pledge to create jobs. If he and others in Washington (not to mention Santa Fe) understood this, we’d all be in much better shape.
HT: Harry Messenheimer