I have mixed feelings about this. We certainly should not reward incompetence, but as someone who would like a million dollar bonus one day, I don't think we should discourage dreaming either!

As is usually the case with issues of this sort, the outrage exploded before the facts were known or contemplated (not that facts make much difference in Washington). Consider:

1. The AIG bonuses represent less than 1/1000 of the bailout money, or less than 0.10 percent. During the presidential debates, the One dismissed McCain's concerns about earmarks because, the One claimed, they involved less than 0.5 percent of the federal budget. Even at 0.5 percent, the earmarks compared to the budget are more than 5 times the relative size of the bonuses compared to the bailout. As a percentage of the federal budget, the bonuses are less than 0.005 percent, or about 100 times smaller than the earmarks the One felt were not really a problem. So, it can't be the money itself that has everyone outraged.

2. Perhaps it is the perception of greed that has everyone upset. What has been lost, however, is a fact revealed today by the New York Attorney General Andrew Cuomo in a letter to Barney Frank -- the AIG executives who got the bonuses did so pursuant to renegotiated contracts in which they agreed to take the grand sum of $1.00 -- that's one dollar -- in salary for 2009, provided they got their 2008 bonuses. That surely makes things sound a little less greedy. You don't see the One, Frank, Dodd, Reid, or Pelosi agreeing to work for $1.00.

3. You want to talk incompetence? Also revealed in Cuomo's letter is the fact that while AIG agreed with Cuomo that it would not pay bonuses out of its Financial Products deferred compensation plan (and it honored that agreement), the brilliant attorneys in the New York AG's office neglected to obtain the same agreement regarding the Financial Products retention plan from which the bonuses -- which were retention bonuses! -- were paid. If you lock up the savings account, you'd better make sure the checking account is covered; if you don't, you can hardly blame AIG for writing checks.

4. Ah, but you say AIG has broken the law because the $787 billion stimulus plan puts limits on executive compensation, right? Well, sort of. There are limits, but they do not apply to the AIG bonuses. Why not? Because of a little provision inserted by Democrats (remember, Republicans had nothing to do with writing this thing) in the next-to-last section of the bill, specifically section 7001(b)(3)(D)(iii), which says:

The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.

Since the AIG contracts were signed before February 11, the limits in the stimulus don't apply.

5. So we should change the law, right? Here comes the hypocrisy, by the bushel. The Enchanted Mitten's own Gary Peters has introduced a bill that he claims will effectively tax the bonuses at 100 percent. Who voted for the bill with its carve out for pre-February 11 bonus agreements? Gary Peters. Chris Dodd called the bonuses an "outrageous example" of executives "enriching themselves at the expense of taxpayers." Yet it apparently was Dodd himself who inserted the pre-February 11 bonus language and, of course, championed the bill. Any attempt now to write a law that attacks these specific bonuses will likely be challenged on the grounds that it violated the Constitution's prohibition on bills of attainder.

6. What about the renegotiated contracts between the UAW and GM? Why shouldn't AIG executives be held to the same standard? They are! They renegotiated their contracts to take their salaries down to $1.00, which in many cases means a 50 percent cut in compensation. Sure, the numbers are much larger than auto worker wages, but don't tell me they didn't negotiate.