To judge by the rhetoric coming from Capitol Hill liberals, you would think the recently bailed-out American International Group (AIG) was some sort of free-market, government-hating, leave-me-alone-to-make-my-profits capitalist cowboy before it came begging this week for a handout from Uncle Sam. The company’s lobbying record and campaign contributions tell a different story.
AIG has built its business in conjunction with big government and, naturally, lobbied for big government programs that make some of its businesses possible. Still Democrats are using the company’s collapse, and the broader context of the financial crisis, as an indictment of the free-market and of Republicans.
Senate Majority Leader Harry Reid (D-Nev.) summed up the Democratic line of attack Tuesday: “in their simplistic philosophy of big business equals good, government equals bad, the administration and Republican Congress let the financial sector go wild.” To accurately cast AIG’s philosophy in similar terms, Reid could put it: AIG equals good, government equals good.
AIG in 2007 joined the U.S. Climate Action Partnership (US-CAP), a group whose purpose is to lobby for federal restrictions on greenhouse gases. Specifically, US-CAP lobbies for a scheme of mandatory federal caps on greenhouse gas emissions with tradable emission allowances—a “cap-and-trade” policy pushed hard by Enron before that firm’s collapse in 2001.
As part of its climate change strategy, AIG also joined the Investor Network on Climate Risk, which AIG describes as “focused on the financial risks and investment opportunities posed by climate change.” But this network is not, precisely speaking, focused on how climate change might create new risks or opportunities. Rather, it addresses risks and opportunities created by legislation passed in the name of addressing climate change.
In other words, AIG and its cohorts are not investing in beachfront bungalos ten miles inland to take advantage of Al Gore’s promised 20-foot sea-level rise; they are investing in currently-struggling alternative energies and worthless greenhouse gas credits that will become valuable when the government imposes some sort of cap-and-trade scheme. In other words, AIG is a regulatory robber baron, trying to get rich off of government action that would make our lives more expensive.
AIG is also a member of the American Council of Life Insurers, who has spent about $20 million on lobbying over the past two years, including a successful effort to block permanent repeal of the estate tax. AIG, like other life insurers and annuity retailers, makes millions helping folks avoid the estate tax, also known as the death tax. If there is no estate tax, there is a lot less estate planning, which means a lot less business—thus AIG loses money.
There are other examples: AIG spearheaded the push to put taxpayers on the line for claims against insurance companies stemming from terrorism-related losses. The company also lobbied to privilege its business in legislation relating to “Superfund” environmental clean-up sites and asbestos litigation.
Looking at AIG’s federal campaign contributions, it is a prudently bi-partisan company. Going back to the 1990 election cycle, the company has split its $9 million in campaign contributions almost perfectly evenly.
The firm’s former CEO, Maurice Greenberg, favored Republicans six-to-one with his personal conrtibutions, but still gave to important Democrats (although since former New York Governor and Attorney General Eliot Spitzer (D) drove Greenberg from his job, Greenberg’s donations have been all to Republicans).
Nowadays, though, AIG is a Democratic donor. This election cycle, AIG’s political action committee has given $327,000 to candidates and PACs, with 70 percent of that money going to Democrats. Democratic Vice Presidential nominee Joe Biden and Senate Banking Committee Chairman Chris Dodd are the top two recipients of AIG PAC money this cycle.
The Center for Responsive Politics reports that since 1990, Dodd has been the company’s favorite, pocketing $284,100 in donations from AIG PACs, executives, and employees, “while Charles Schumer (D-N.Y.), a member of both the Senate Banking … and the Senate Finance Committee, takes second with $116,400. Presidential candidates John McCain and Barack Obama collected $103,000 and $82,600 from AIG, respectively.”
While liberal Democrats continue to create a false dichotomy between big business and big government, Sen. Bernie Sanders, a self-professed socialist, correctly assessed the real situation when he pointed to the AIG bailout as an example of “socialism for the very rich.” But AIG’s lobbying record shows that this isn’t its first embrace of such “socialism.”
Examiner columnist Timothy P. Carney is editor of the Evans-Novak Political Report. His Examiner column appears on Fridays.
