President Barack Obama this week has given clear indications that, when it comes to “the wealthy,” he is of two minds: help ’em and hurt ’em.
First, the help.
We can start with the hundreds of billions of dollars the government has poured into various large corporations, including American International Group, the multinational insurance conglomerate that has received $170 billion of taxpayer money, first from the Bush administration and now the Obama administration. As a result, American taxpayers own about 80 percent of AIG.
Executives at such corporations are among the wealthiest of Americans, and the bailouts are helping them preserve their wealth.
Also in the help-the-wealthy category would be this week’s announcement by Obama and Treasury Secretary Tim Geithner of plans to make lending to small businesses more attractive. Small business owners often report six-figure incomes on their tax forms.
On Tuesday, the day after the government announced it would throw another $15 billion into the Small Business Administration to beef up SBA loan amounts and guarantees, Obama said small businesses are “not only job generators, but the heart of the American dream.”
Now, the hurt.
Obama has joined federal lawmakers and citizens across the country in expressing outrage at about $170 million in bonuses that have gone to dozens of top AIG employees of the very division that effectively destroyed the company by insuring credit defaults.
In the government’s haste to throw money into AIG, no one cared to ask the firm to revise the contracts guaranteeing those bonuses. On the contrary, the Obama-backed $787 billion economic “stimulus” bill that became law last month included an amendment from Sen. Chris Dodd (D-Connecticut) specifically protecting the bonuses.
Obama this week proclaimed his “outrage” at AIG’s “recklessness and greed” and announced he has ordered Geithner to pursue “every single legal avenue available to block” the bonuses his stimulus package specifically protected.
So Obama throws money into a failed company to keep it afloat and protect the people who ran it into the ground, while ordering his treasury secretary to do all he can to block those people from receiving bonuses they were promised in their contracts.
Also in the hurt-the-wealthy category would be Obama’s treatment of small business owners. Throughout the presidential campaign and now in his presidency, Obama has repeatedly pledged to raise taxes on those who earn about $250,000 or more a year.
Many small business owners, the very persons the president praises for generating jobs and being “the heart of the American dream,” file their taxes on the personal income tax form and fall into the top 5 percent of taxpayers. A higher tax on those incomes means less money for their small business. And that means less money they can spend hiring and paying people to work.
So the president funnels money to the SBA to help small businesses while proposing tax hikes to take far more from them than their owners could possibly borrow from the SBA.
Mixed messages always make for bad policy, and in this instance they make for bad form, too. AIG gave Obama more than $100,000 for his campaign. Accusing this important campaign contributor and recipient of huge amounts of taxpayer money of “recklessness and greed” makes neither party look good.
Steve Stanek ([email protected]) is a research fellow at The Heartland Institute.