Former Labor Secretary Robert Reich on the apparent thumbing of its nose by AIG Insurance to the federal government's demand that it not hand out at least a $100 million in executive bonuses:
This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken.
Reich is right, to an extent. He fails to acknowledge that our democracy has always been a highly controlled system, with a government that often acts as an arm of big corporations.
A good example is probably going to happen this very week, when the state legislature agrees to let Sun Cal Corporation pad its bottom line with tax payer money to the tune of about $800 million over the next quarter century.
We've already done that for Mesa del Sol, and you can bet that both companies will be coming back with their hands out again, for more.
Sun Cal says they won't even issue the bonds until they've built the infrastructure and proven they can successfully raise the tax base. So, they're going to operate at a deficit until then? No, this means they don't need the bond money to build their project.
It's corporate blackmail, pure and simple--Sun Cal says they'll simply build sprawling housing tracts otherwise, with big box stores.
And as ever, our very weak government is going to fall for it. To a company that is experiencing mass bankruptcies in other states.
Have they not noticed that there is no market for those sprawling housing tracts?
It's business as usual. But what may be the case is that New Mexico hasn't actually realized yet that--whatever you want to call it--this system we have is indeed broken.
Caution and prudence should be the raison d'etre at the Roundhouse when it comes to corporate tax subsidies. Especially when it comes to diverting huge future tax revenue streams to a massive out of state real estate company that is struggling to salvage major projects throughout the west.