So I was not a big fan of the U.S. bailout of the financial institutions to begin with. My objection is squarely based on two basic questions:

1) Is it cheaper in the long-run to allow major institutions to fail than it is to continually bail them out?

2) Where does it end?

I’ll leave number one up to those with far more experience than I have in understanding global financial markets and all the ancillary industries that go along with them. But question number two will become increasingly important and germane to our national conversation as time goes on. Already we have seen two rounds of bailout funding for the automotive industry, now we have the government pledging $5 billion to the auto parts industry, Larry Flint wants bailout funding for the porn industry, homebuilders want help, and list goes on and on and on.

Now comes news of the uproar created by AIG’s payment of bonuses to 70+ employees. Are we, the taxpayers, pissed? You bet. Are we, the taxpayers, calling our leaders in Congress to do something? You bet. But that does not mean Congress should act. Not now at least. We pay our leaders to lead. The minute we passed the first bailout package in October we sealed the fate of news programs like 60 minutes for the next 20 years — giving them tons of material to report related to misappropriation of bailout funds, corporate scandals, and government waste. It is the nature of the beast. Our leaders failed to give much thought to the bailout plan, which should have contained elements of control in the package, ahead of time. Mismanagement was bound to happen. But creating a 90% tax bracket for bonuses paid is absolutely ridiculous. The recent talks of tax brackets for those working for bailed out institutions is not conducive to fixing our problems.

Government never works well when it hastily crafts legislation for a specific and urgent cause. This feels a lot like the post 9/11 legislation that allowed our phones and emails to be tapped without cause, or the rush to judgement to go to war in Iraq, or the attempts to write laws to help a coma victim live or die in Florida. It’s not right and Congress should stop threatening legislation and do what it does best — make a public spectacle of AIG and allow the free market to punish the company as it will.

Which leads me back to question one. Aren’t our free markets capable of supporting those institutions that are vitally important to our economy? Is failure of portions of our Economic system not a natural process that we should allow to happen instead of interfering?