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. Avlon is the author of Wingnuts: How the Lunatic Fringe Is Hijacking America.
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.
We’re heading for pitchfork politics here in America. Even during the economic gains of this decade, prosperity didn’t trickle down to the middle class because of increased energy and health-care costs. Union members who are being asked for necessary concessions to keep their companies financially afloat are seeing executives play by an entirely different set of rules. And now a demographic that might be called the working wealthy is bracing for tax hikes in a recession while their portfolios have been decimated—all while the Wall Street super-rich with multiple mansions are relatively insulated (assuming they’re not under indictment). After watching the jet-set excesses of the Madoff class from afar, Main Street Americans are left with less and still asked to clean up their mess.
This new populist anger isn’t going to fade away anytime soon. History shows that demagogues rise when the economy turns south. During the Great Depression, populist anger was directed at big business, pumped up by voices like Huey Long on the left and Father Coughlin on the right. When conservative populism reared its head in the late 1960s, anger shifted toward big business. But now we’ve got both— populist anger at big business and big government. It’s a perfect political storm and Republican and Democrat incumbents could be equally vulnerable to associational attack come 2010.
John P. Avlon is the author of Independent Nation: How Centrists Can Change American Politics. Avlon was director of speechwriting and deputy director of policy for Rudy Giuliani's presidential campaign. Previously, he was a columnist for the New York Sun and served as chief speechwriter for then-Mayor Giuliani.