Squabbles Over Bankers' Bonuses and 'Wasteful' Spending Will Doom Us AllS

Washington views life as a zero-sum game: If you win, then I lose. Our leaders, in pursuing partisan passions, forget that the whole point of economic stimulus is to make the pie larger.

Instead, as an $819 billion stimulus bill wends its way from the House to the Senate, the Democrats and Republicans obsess over who's getting the larger slice, and whether the other guy got more whipped cream.

The Democrats' complaint: Taxpayer bailout money is going to pay bonuses to bankers. Even President Obama's carping about John Thain's $87,000 rug! The press mostly shares their outrage. The New York Times sniffed: "Some bankers took home millions last year even as their employers lost billions."

That ignores several realities:

  • Bonuses are the primary way bankers get paid, in good years and bad.
  • And what was the average bonus paid in 2008? $112,000, an order of magnitude away from "millions."
  • Wall Street pay is crucial to the tax base of New York, a Democratic stronghold.
  • Interior decorators need to earn a living, too.
  • Those bonuses buy fancy designer suits, generating revenues for fashion houses which then advertise in magazines which employ editors and writers.

The Republicans' complaint: The stimulus package contains "wasteful spending," like funding the National Endowment for the Arts, preventing of sexually transmitted disease, and re-sodding the National Mall, so recently and thoroughly trod by the boots of inauguration attendees.

Hello, wasteful spending is pretty much the point here! An AFP analysis quotes John Maynard Keynes, the patron saint of stimulative government spending:

To create jobs, he wrote, the government could "fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again."

(Photo by St0rmz)