The House has passed the bill to retrieve the AIG bonuses through the IRS. What's wrong with this picture? It is my judgment that there are several things wrong.

First, the government has defined someone who received a bonus as an enemy of the people, who deserves the worst punishment that any American Citizen can imagine... the wrath of the IRS. Should we (our political representatives) not be focusing our energy on the people who PAID (or authorized payment) the bonuses? Is not the criminal the person who pulls the trigger, not the person who gets hit by the bullet?

What happens if a company borrows money from a bank, and the loan is insured by the Small Business Administration. The company is borrowing government guaranteed funds, right? But then the company, through its employment contracts, pays bonuses to its employees. Does this government action set a precedent for the IRS to go after any employee who receives a bonus that is in any way connected to "government guarantees"? Perhaps the government (our elected representatives) will decide that the best way to prevent these criminals from receiving bonuses is simply to raise every one's taxes to eliminate 90% of all income over the W-2 income.

That would actually help solve the deficit problem that we are going to face in the future. But, I digress.

What about the people who pay, or authorize the payment of these bonuses? Someone has to write the check. And, what about the calendar? Or, what does the calendar have to do with it? What about bonuses that were paid in 2008? What about Merrill? Did JP Morgan or CITI or Goldman pay bonuses? Did anyone at GM or Chrysler get a bonus? Don't even talk to me about Freddie and Fanny. If any company receives "bailout" money, and PAYS unconscionable bonuses, then all such companies should return the bonus money to the government. AIG has $190MM in the bank. The government should simply require that AIG write a check and return the bonus money. When the government resorts to the IRS attack dog tactic, then our system is in serious trouble.

This, pointing the finger at the employee, the recipient of the bonus, the person who is just part of the process, is not new. The new administration has repeatedly pointed to the irresponsible behavior of those who, hoping to finally own a home for the first time in their lives, "got in over their heads" borrowing to buy that home. The administration has stated that it is this irresponsible behavior that has caused the foreclosure crisis, and so severely damaged the banking system.

Second, our elected representatives are so focused on the political issues, they are ignoring the reality of the economic issues we all face. This is truly rearranging the deck furniture on the Titanic. It is very likely that many on capitol hill are incapable of anything else. They are so petty and so self centered that they will never change, and they will continue to allow the free enterprise system to be consumed by the fires of political greed. However, I believe that there are people who have been elected, who can step up and deliver some leadership at this time of need. I do not know who there persons are. I know many of those who will not and cannot.

So far, this does not look good. At the end of the day, Consumer Confidence, which drives consumer spending that is 66% of GDP, will lead the economy back. This charade that we are watching on Capitol Hill is shaking the confidence of the consumer/taxpayer/voter to the core.

As the government (read: Obama Administration) continues to work on the economy, the most recent pronouncement is that they are going to begin buying "securities" backed by small business loans. Presumably, this is going to enable the Small Business Administration to make (or guarantee) more small business loans... except, the Small Business Administration really doesn't do what they say they do, make or guarantee small business loans.

Here's the way it works. A small business goes to a bank to borrow money. The bank says that if the small business provides collateral and personal guarantees, in excess of the amount of the loan, the bank will make the small business an SBA Loan. There is lots of paperwork, and when the loan is approved, the small business pays a fee to the SBA to "guarantee" the loan. In my experience, the loan was for a company I was an investor in, the loan was $135,000, and the fee was about $4,000.

Now, one would believe that, when one party pays another party (sometimes called a "counter party", a fee for insurance (is this a credit default swap?) on a loan, one would thing that, if the company defaulted, the insurance would step in. Nooooooooo. First the bank goes after the collateral, and then the bank goes after the guarantors, and then there is a lawsuit, or threat thereof, against everybody (officers, guarantors, investors), and then, if everyone is wiped out, the "guarantor" pays the bank. SO, this is another bank bailout deal. This has nothing to do with helping small businesses borrowing money. The bottom line is that the investors could have simply guaranteed the loan for the company without the SBA, and saved the $4,000 "insurance premium". It is just another tax on small business (read: $4,000 fee), it is more bureaucracy, and, as far as the small business is concerned, it is a scam. The small business gets nothing for its money.

So, another month goes by, and nothing is being done about the significant loss of jobs (about 1 million a month) and nothing is being done about the plummeting value of real estate, in general, and homes, in particular. Why is that? Well, the people who are losing their jobs are, for the most part, not members of labor unions, so there are no negative political ramifications for the administration or congress for the job loss, and (it is my guess) most small business owners and operators are nose-to-the-grindstone moderates or conservatives who are trying to build wealth, and these folks just don't fit the profile of people deserving to benefit from the "stimulus".

Unemployment is now above 8%. By July 4, it will be above 10%. However, being INDEPENDENT from a job is not much to celebrate. Chairman Bernanke stated the other day that the recession could end in 2009. There are two ways that can happen. One is for the economy to begin growing to a level above a recession. The other id for the economy to drop to a level below a recession to a D....

The reality of the change in administration and the consequential change in political philosophy is revealed in the news of the day. Congress is considering (has already considered) the desire of the labor unions to eliminate the privacy of a secret ballot, so that those voting for or against unionization of a company will be exposed to significant pressure (intimidation, coercion, physical threat).

This is more frightening than the looming possibility of a world wide financial meltdown and depression. This is a "Human Rights" issue. The very idea that some union goon can walk up to a non-union voter and demand to know his vote, on the spot, is, well, "un-American".

Nevertheless, Congress and the Administration are firmly behind this political promise that was purchased with $65Million in campaign donations, not to mention the "review" of member voting behavior by union bosses.

So, while we vent our anger at the corporate executives who have ridden the "Big Three" auto makers into the ground, let us not forget the fact that they had a lot of help from the unions which have effectively driven their own jobs from the market. Now, the government is going to pass a law that is going to allow them to do this more effectively.