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The New Welfare Queens
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Forget the old scare stories of the poor defrauding the government. John Avlon says the great entitlement grab in history is coming from bankers, the new symbols of government dependency.
The greatest entitlement grab in American history has come from the least likely of places—not the welfare queen, the poster child of government dependency, but Wall Street.
The original welfare queen was the oft-cited star of one of Ronald Reagan’s favorite anecdotes from his 1976 campaign. “She has 15 names, 30 addresses, 12 Social Security cards, and is collecting veteran's benefits on four non-existing deceased husbands,” the Gipper said in genial tones. “She is collecting Social Security on her cards. She's got Medicaid, getting food stamps, and she is collecting welfare under each of her names.”
Now we’ve got populist anger at big business and big government. It’s a perfect political storm.
The term quickly skull-sunk into the lexicon, becoming shorthand for the dependent (and, in this telling, criminal) underclass lurking in the heart of the inner city. The insult to injury was that the welfare queen was living high off the hog on hard-working middle-class paychecks. A righteous tax revolt was not far behind.
It turns out the story, while mostly apocryphal, did have one an actual antecedent—a woman from the South Side of Chicago who was busted in 1976 for using four identities to defraud the government out of $8,000. She aimed low. She should have worked at AIG.
This week we found out that 400 lucky AIG executives got to split $165 million of taxpayers' money in bonuses, despite running their company into the ground. But they are far from alone—the failed federally owned mortgage company Fannie Mae just announced they plan to pay four execs more than $1 million each in retention bonuses. Bank of America granted 6,200 brokers bonuses after taking $15 billion in taxpayer bailout funds. Former Merrill Lynch CEO John Thain found $1.2 million to redecorate his office—complete with a $1,200 trashcan and a $35,000 commode—after his 94-year-old company was flushed down the toilet. And these pungent tales of excess may ultimately pale next to the misuses of taxpayer funds we don’t yet know about.
Forget welfare queens. We’ve never seen an entitlement mentality quite like this—where bonuses were not rewards for work well done but guaranteed entitlements written into high-end contracts. The AIG financial-division folks managed to have no performance-based criteria for their bonuses. And despite bankrupting a company, they still felt entitled to an extra helping of taxpayers' cash. Apologists claim such compensation packages are necessary to retain talent in a competitive business culture. Others point to the inviolate nature of contracts and shrug apologetically while pocketing the cash. Apparently “accountability” is just a word for management Powerpoints—it has no meaning for these folks when it collides with self-interest. "Proportion" and "perspective" have lost their meaning as well—if you mention that the average US household income is around $50,000 a year, they squint as if you’re talking about another species. That’s a fraction of financial-industry base salaries, let alone bonuses—even after the house of cards collapses.
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Jacob Bernstein is a senior reporter at The Daily Beast. Previously, he was a features writer at WWD and W Magazine. He has also written for New York magazine, Paper, and The Huffington Post.
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Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
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Jeff Madrick is a contributor to the New York Review of Books and a former economics columnist for the New York Times. He is editor of Challenge Magazine, visiting professor of humanities at Cooper Union, and senior fellow at the New School's Schwartz Center for Economic Policy Analysis. He is the author of Taking America, The End of Affluence (Random House) and The Case for Big Government.
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John P. Avlon writes a column for The Daily Beast and is author of the forthcoming Attack of the Wingnuts, to be published in January by Beast Books. He is also the author of Independent Nation: How Centrists Can Change American Politics. Previously, he served as chief speechwriter for New York City Mayor Rudy Giuliani and was a columnist and associate editor for The New York Sun.
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John P. Avlon writes a column for The Daily Beast and is author of the forthcoming Attack of the Wingnuts, to be published in January by Beast Books. He is also the author of Independent Nation: How Centrists Can Change American Politics. Previously, he served as chief speechwriter for New York City Mayor Rudy Giuliani and was a columnist and associate editor for The New York Sun.
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John P. Avlon writes a column for The Daily Beast and is author of the forthcoming Attack of the Wingnuts, to be published in January by Beast Books. He is also the author of Independent Nation: How Centrists Can Change American Politics. Previously, he served as chief speechwriter for New York City Mayor Rudy Giuliani and was a columnist and associate editor for The New York Sun.
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Thanks for putting into words what a lot of people are thinking.
Here's my response to the bankers. It's a song called "Let's Give It to the Bankers"
http://www.youtube.com/watch?v=_6DIktq3KIs
So true. I too have written about corporate welfare on my blog. www.andwearenotsaved.blogspot.com. These companies are the biggest benefactors of our taxpayer dollars.
So what do we do to avoid letting emotion rule the day? I'm not interested in a country run by the loudest people with biggest pitchforks. How do we avoid being sucked in by demagoguery so that we can concentrate on working through the problems?
The "welfare queen" line was also code for "lazy black" back in the Reagan campaign. But now that the president is black, he's somehow elitist, even though he's never belonged to a country club.
The truth is supply-side economics are proven not to work. Cutting taxes while having 700 military bases around the world doesn't work. Letting drug companies charge whatever they want doesn't actually cure a disease, it just keeps the rich healthy. Letting bankers run wild also leads to chaos.
So everything Republicans stand for, is in essence divisive, illogical, and destructive.
I have a question: what talent? These bonuses, paid to executives of companies bankrupt but for federal (read: taxpayers') bailout money, to retain "talent"? What talent? If they had talent, they wouldn't have run their compaines into the ground and buried them.
Ok, I grant you, there may be litigation involved in failing to pay these bonuses, but that just proves my point. If these people had 'talent', they would have written a performance clause into those contracts, protecting the company from payout in the event of catastrophic failure.
So my question still stands: what 'talent'? Anybody??
If I could lose billions and still get paid, thats talent
Barney Frank and the rest are squealing as loud and long as they can so we don't remember that the bankers were just playing the game by the rules the Frank and the rest of them made.
If Frank doesn't want bankers gambling away government money then Frank shouldn't be telling bankers who they have to lend money to. Lots of private sector stupidity, but it was all enabled by federal garantees.
I'm hoping this re-defining of "entitlement class" or "welfare queens" takes hold in the public discourse. We seriously need to take a hard look at some erroneous conventional wisdoms, and now is the time to do it. That's why I'm so frustrated with the Obama team for not catching the "zeitgeist" and seizing the opportunity to expose and undo the years of destruction done to the Middle Class by Republicans all in the name of capitalism.
The Republicans have already gained an edge by reminding people of the traditional (and incorrect) beliefs that they are fiscally conservative and Dems are for more taxes and more gov't. Never mind that the last decade (at the very least) goes against that pronouncement; those Reps who've been uneasy about the actions of their party are now being re-assured that all is well again. Any facts that suggest Reps aren't true capitalists are being swept aside and replaced by the uproar over big government spending of our tax dollars. So, we're back to the old familiar script.
What I find appalling are the senior executives at these banks who are using bailout money to refinance the mortgages on their multi-million dollar homes. (And then the banks are using these deals as proof that they're "helping" people out with their mortgages.)
"..inviolate nature of contracts.." What tha? Huh? Are you kidding? They DON'T have the money... NOOOOO MONEY! You cannot pay bonuses when you don't have money to pay it!!! American Taxpayer money is NOT revenue!
Are you saying that AIG is obliged to pay even if there is NO money? I want to see any business obligated to pay when there is a negative deficit, not to mention the f'ing company obviously had NO talent, thank you very much finderj, the continued use of the word boggles the mind
...now I need to put a cold compress on my head. That, or get my baseball bat and start whacking!
If these executives dare say they are talented then their performance can only be described one way - Fraud. Jail time is in order. Please name the 5 you have photo'd here. Thain and ....
It is easy to thrown rocks when there is a target available. The real target is the line of thinking that started nearly thirty years ago when Ronald Reagan said that government is the problem. He then set about to dismantle the previously enacted regulations (i.e. airlines, etc.) Pres. Obama, Sec'y Geithner, et al are doing their best to solve a problem that should have never been allowed to fester for the last eight years,. Oh yeah I forgot, we had to attack and occupy a land that did nothing to us. Ten billion a month, and countless lives lost. Yuk
I've been saying for some time now, and there can be no better time than right now, to institute an organized tax revolt by its citizenry. Let's see what this government and these loser businesses both of whom, JUST DON"T GET IT, could do left to their own devises! Can you say road to ruin? We'll get there in any event, but let's attempt to make a stand and be heard. Fellow citizens UNITE!!! Let the revolution begin!
I will explain the Law one more time for The Daily Beast Readers and Staff. If any head, of any Corporation or Civil Service Agency knows of an illegal act that is either on going or has happened, and does nothing, they are guilty of a crime. If they knew of violations of the law and discussed it with any co- employee and they both do nothing to enforce the law, then they are guilty of RICO-18usc1955-63, The note is #228, Knowledge Enterprise. Hello Reporters, it is time you got aggressive in the law news. Sincerely bigmikecraft
Irony... you give a little money to a poor person... it's welfare. You give billions to the super rich and it's capitalism. God bless Republicans!
As long as we're "clawing back", how about we claw back all the campaign contributions these bankers gave to the politicians? Oh, wait, we can't talk about that!
Can we talk about the campaign contributions made from bailout money?
The financial industry has evolved into an aberrant cultural monstrosity where practices and policies which defy all logic were celebrated and so entrenched as to be self-perpetuating. Despite the fierce competition this type of profession demands, all the big players lived by expectations internalized by tradition. The HR policy has been one big circle jerk all but guaranteeing highly compensated jobs and huge bonuses for those elite insiders irregardless of performance. Their orgies of entitlement ended up in a pandemic of economic collapse. It's been a painful process to get some of these people to realize what they're wrought.
I say God Bless those Democrats for garnering all the support from Wall Street! Who knew that the Democrats were actually the ones getting the most financial support from the "fat cats" and "moneyed class" until the figures came out on donations to Obama, the Democratic party and the Senators and House Members. I realize that getting the financial support and votes from the Wall Street and money crowd doesn't look good right about now but at least we all know where we stand! But since they supported and helped elect this party they can at least get some kind of benefit from their investment. When interviewed, Wall Street types said that they felt the Democrats had become the party who supported the moneyed classes better and were more willing to listen to their proposals.
Thank you.
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