The Big Question for March 17th: Bonus Naïveté in Congress?

The Big Question is a feature where influential lawmakers, pundits and interest group leaders give their answers to a question that’s driving discussion in news circles around the country.

Some responses are gathered via e-mail, while others are gathered in person via tape recorder.

Today’s Big Question is:
Was Congress naive to think that the bailouts it approved would not be used in part for executives’ compensation and bonuses?

See responses below from Sen. Richard Burr (R-N.C.), Sen. Kay Hagan (D-N.C.), Sen. Barbara Boxer (D-Calif.), Sen. Kit Bond (R-Mo.), Sen. Mark Begich (D-Alaska), Sen. Claire McCaskill (D-Mo.), Sen. Bob Casey (D-Pa.), Sen. Carl Levin (D-Mich.), Sen. Saxby Chambliss (R-Ga.), Sen. Judd Gregg (R-N.H.),  Dean Baker, Melanie Sloan, William Redpath, Leo W. Gerard, Celinda Lake, Daniel J. Mitchell, Nathan Henderson-James, Larry Sabato, and Tom McClusky.

Read the last Big Question here.

Sen. Richard Burr (R-N.C.) said:
I think it’s another example of why we shouldn’t be partners with companies.  It amazes me when people are surprised that the companies use the bailout money for the bonuses for its executives. Read the full response here.

Sen. Barbara Boxer (D-Calif.) said:
No, because we did anticipate it and we told Paulson not to allow it to happen.

Sen. Kit Bond (R-Mo.) said:
Quite frankly, I am a little surprised to see the President and his Treasury Secretary so outraged by the paying of these bonuses when they had the opportunity to prevent it before they gave AIG the latest installment of taxpayer money. Read the full response here.

Sen. Mark Begich (D-Alaska) said:
I don’t think they were naive, I think they were ill-informed on what the bailout money would be used for.

Sen. Claire McCaskill (D-Mo.) said:
I don’t think we were naive, we underestimated a culture of entitlement.

Sen Bob Casey (D-Pa.) said:
No, but we have to impose some accountability that wasn’t there before.

Sen. Carl Levin (D-Mich.) said:
I think we placed our confidence in the administrators of the program to make sure that the bailout would be effectively used.

Sen. Saxby Chambliss (R-Ga.) said:
No, I don’t think it was. This is a pretty extraordinary time in the history of our country from an economic standpoint. You would think that any business that wants to be successful is going to use good business practices, and good business practices don’t include giving out huge bonuses in a time when you’re company’s not doing well. Read the full response here.

Sen. Kay Hagan (D-N.C.) said:
No. I think it was the fact that the companies should have known better.

Sen. Judd Gregg (R-N.H.) said:
Yes.

Dean Baker, Co-Director at the Center for Economic Policy and Research, said:
No they were not naive. Congress knew the money would be used in part for executives’ compensation and bonuses. That is what many of us were yelling at them at the time they passed the bailout without any serious restrictions. Read the full response here.

Melanie Sloan, Executive Director of Citizens for Responsibility and Ethics in Washington (CREW), said:
Congress was not naïve, there simply has not been the political will to reign in corporate compensation. Despite the well-documented greed of many of the companies reaping the benefit of taxpayer funds and the endless reports about over-paid executives, too many members of Congress have been cowed by baseless threats that talented executives will desert their posts if faced with diminished compensation. Read the full response here.

William Redpath, Chair of the Libertarian National Committee, said:
Of course. Cash is fungible.

Leo W. Gerard, president, United Steelworkers International, said:
Congress should have specifically written its expectations into directives before giving any CEO of a failed financial firm taxpayer dollars.  Instead, Congress foolishly trusted CEOs to behave responsibly, thus exhibiting once again the same recklessness it did when it deregulated the nation’s financial markets. Read the full response here.

Celinda Lake, president, Lake Research Partners, said:
Hard to imagine that corporate executives would be this out of touch and greedy when they are rekying on public dollars. These have to be some of the most selfish and shortsighted decisions we have seen in a while from corporate america and that’s saying a lot.

Daniel J. Mitchell, Senior Fellow, The Cato Institute, said:
Congress was not naive. Politicians pretended that the bailout was to increase lending in the economy, but the real purpose of the bailout was to give unearned wealth to the financial services industry. The industry had spent years distributing campaign cash to politicians from both parties, and the bailout was an opportunity to get a good “return” on that investment. Read the full response here.

Nathan Henderson-James, Online Communications for ACORN, said:
They weren’t naïve, but they should have known better. This kind of behavior by Wall Street executives highlights exactly how important it is to have strong explicit language regulating the financial industry. Their persistence in paying extravagant bonuses, especially in the face of the worst economy in almost four generations, shows how Wall Street financiers still see themselves as masters of the universe, doing what they want, when they want to do it. Read the full response here.

Larry Sabato, Director at the Center for Politics, said:
Maybe a few senior legislators knew or strongly suspected that executive compensation would consume some rescue cash. But I’ll bet that even jaded, long-serving members of Congress could not have imagined that AIG (and others) would be this tone deaf to the popular outcry. Read the full response here.

Tom McClusky, Senior Vice President of FRC Action, said:
Naive? To put it mildly. Unfortunately, this is what happens when the solution to every problem is to throw more taxpayer money at it, with no internal structure to fix the root problem. I’m reminded of the old anti-drug PSAs from the 1980 where the teenage son, confronted by his father with some drugs the parent had found responds with the mantra “I LEARNED IT FROM WATCHING YOU!” Read the full response here.