Where Your Tax Dollars are Going

October 7, 2008

ABC reports that after a difficult season wrangling money out of the government, AIG executives went on a retreat costing $440,000 at the St. Regis Resort in Monarch Beach, California, where rooms run up to $1000 a night. The group should be commended for only changing $23,000 in spa fees, but after eating $200,000 worth of food in a week, they may not have been able to get to the spa.

We are quite literally paying for this with tax money in order to stabilize financial institutions.

The bailout involves us just buying worthless securities.  The banking lobby convinced Congress that it should not follow the recommendation of economists in taking stock in the financial institutions that it is propping up.  By buying the garbage generated buy these institutions instead of taking a stake in them, we as taxpayers do not only lose the right to future profit of the business but the right to curb the sort of behavior reported on by ABC News.

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McKenna’s Suits Against the Republican Party and BIAW

October 7, 2008

Yesterday’s entry about the lawsuit against the Republican Party drew a comment that warrants notice. James Tierney of Columbia Law School’s National State Attorney General Program saluted Rob McKenna’s decision to bring the lawsuit against the Republican Party. I perhaps did not call attention to my recognition of this decision as a commendable action. Earlier I praised McKenna for suing the B.I.A.W., a major Republican contributor.

Mr. Tierney says that it was appropriate for the Attorney General’s office to bring the action instead of having an independent law firm pursue it. This is certainly something beyond my expertise, but the decision does at least raise a question of a conflict of interest. Given the wide ranging responsibility of the Attorney General’s Office, I am sure that this comes up with some frequency and that it has been adequately resolved in terms of professional responsibility.

My question is that given the appearance of what might commonly, not professionally, be viewed as a conflict of interest, the A.G.’s decision not to pursue immediate action, as is sought in the lawsuit by the two former state supreme court justices, is politically questionable. The citizen suit makes it appear that the A.G.’s office might be going lightly on the case by not seeking immediate remedies.

I should emphasize that there probably is a perfectly sound basis for not seeking the relief sought in the citizen’s suit. In fact the citizen’s suit asks the court for emergency permission to gather evidence so the matter can be decided shortly. The A.G.’s office may very well have determined that there was no such evidence or that the search for such evidence was inappropriate in light of the immanence of the election.

Much of this speculation, however, might have been avoided by hiring outside counsel to pursue the lawsuit. There is certainly nothing impermissible about the Attorney General’s office handling the case, but in the emotional charged context of this election, it may have been prudent to avoid the faintest question about the role of politics in the decisions regarding the litigation.