Vilified! - Red Meat for Conservatives from a Guy who’s Got a Lot of Beefs

Date: 3/17/09

So Easy, A Constitutional Law Professor Could Do It

On Monday President Obama decried the bonuses AIG contractually owed to executives and vowed to "pursue every single legal avenue to block these bonuses".

The Obama administration is acting naïve - and if it's not naïve then its certainly acting disingenuous because it's hard to swallow that this brilliant man who went through law school doesn't understand the basic tenets of contract law.

I only went through a year-and-a-half of law school and even stupid me understands it.

It's bad enough the government feels it has to bailout businesses that should actually be standing in front of a bankruptcy judge. It's even worse that our President and a host of legislators on both sides of the aisle are so willing to trash the idea that contracts are meaningless.

This country - our system - of capitalism is based on promises, some verbal and some written. Businesses make contracts with suppliers, buyers, and employees every day because promises that can be enforced by law, if need be, assures the circle of commerce.

When the Federal government first bailed out AIG, you can't tell me no one knew that part of its obligations wouldn't be contractual. President Obama's "outrage", fueled by a fear of a populist backlash, points out the futility of government even delving into the business world as a stakeholder because businesses spend money to make money and this is foreign to government. Government just knows how to take money from those who generate it.

Now, because the Fed owns part of AIG, it's trying to manage it through coercion or worse. The bailout money given to AIG was done so, in part, to help the company manage its debts. Contracts are debts until they are fulfilled, renegotiated, modified, or nullified.

If AIG and its executives had been able to come to a substantially less costly new agreement, that would have been great. But, as it stands the guys owed the money want their dough. Sucks to be the U.S. taxpayer but that's the slippery slope we climb when our government decides it's going to pay everyone's bills.

President Obama: whose contract will you next think is outrageous? Maybe the employment contracts the UAW has with GM - or would that be stepping on too many political toes in Detroit?

Article I, Section 10 of the United States Constitution says: "No State shall enter into any…Law impairing the Obligation of Contracts…"

Even a former constitutional law professor like President Obama should understand that.

Corey Deitz