The biggest controversy facing the Obama administration this past week involved the bonuses given to the top executives at American International Group, better known as AIG. In November of last year, the company reported that it would give out $469 million in bonuses. This report came two months after the federal government, under the leadership of George Bush and Henry Paulson, saved the company from bankruptcy by buying 80% of the company’s stock for $85 billion. Today, the US government has fed AIG up to $170 billion in total.

Last week, someone decided this was a major problem. Why did it take four months to become a one? Probably because the bonuses actually aren’t really that big of a deal. A better way to compare the $469 million in bonuses vs. $170 billion given by the government might be the following: $469 million vs. $170,000 million, or even better, 469 vs. 170,000. $469 million doesn’t seem so big anymore, does it?

However, President Obama and a vast majority of Congress jumped on the bandwagon anyway. They are on a populist witch hunt.

It’s very true that the AIG executives do not deserve any sort of bonus. A bonus is given for a job well done, for doing work that goes above and beyond. The heads of AIG have done no such thing. In the fourth quarter of 2008, the company posted a $62 billion loss.

However, Congress’s time would be better spent on other things. Many of our elected representatives are just playing to populist anger. Take the Iowa Senator, Republican Chuck Grassley, who wanted AIG board members to do “one of two things: resign or go commit suicide.” Obama obviously has not been as extreme, but he is equally guilty of playing to populist sentiments.

(This isn’t just a one-off for the President. During his presidential campaign, Obama strongly criticized free trade, a policy that has repeatedly been shown to be economically beneficial. This appears to only have been a political ploy, for the President has disowned many of his worst comments.)

Under a bill passed by the House last week, AIG bonuses will be taxed at a rate of 90%. As I’ve said before, this is a waste of time. Congress’s time would be better spent working on other things, a response to global warming for example.

The populist road is a dangerous path; travel too far down it and you get socialism. Obama must be wary of the public’s demands, and instead, look out for the best interests of the country.