Senator Charles Grassley (R-Iowa) has been a little upset about the AIG bonus situation. That part isn’t unusual; lots of people are upset about that. Grassley just took his frustration a bit farther.

First, he was quoted recently suggesting that company executives commit suicide:

“I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say ‘I’m sorry,’ and then either do one of two things: resign or go commit suicide.”

Mental health experts may be relieved to know that he backed off those comments. Now he just wants the company to stop sucking on our tits. For a guy from Iowa, he has a way with words.

The AIG bonuses are, frankly, understandable. If the company agreed contractually with its employees on a certain set of criteria resulting in certain level of bonus compensation, AIG really has little choice other than to pay the bonuses. That the world has changed since those agreements were made matters little to the legality of those employment contracts. Somebody told me Rush Limbaugh is in agreement on that, which is enough to make me want to completely shift course and change my views, but it is what it is.

The fundamental truth about businesses is that they don’t do a single thing for their employees that the marketplace or the law doesn’t demand that they do, so if AIG set up a generous bonus system for their employees, it’s only because failing to do so would have caused their employees to take a walk.

What the situation really symbolizes is the tone deafness Wall Street has for Main Street. That’s what the politicians tell us, so it must be true. Right?

Of course there is deep passionate frustration with the AIG bonuses – there is frustration with everything about this bailout. It is truly one of those situations in which the bailout is the absolute worst policy choice imaginable…except for all the other available policy choices. Things like this happen only when situations get so out-of-whack that mere mortals cannot possibly fathom the depth of a problem not of their making.

But it’s not just Wall Street which is tone deaf. It’s Washington too. It all goes toward the general notion that people don’t really know what government stands for these days, but they’re pretty sure government doesn’t stand for them. Or, if it does, it’s more as an after-thought than being central to the core business model.

A prime example of this contrast came up in conversation recently with a friend of mine. Our far-reaching discussion took us all the way back to the Clinton-era legislative fight over health care reform in the early 1990′s. We all know that the Clinton White House failed in their efforts to reform health care at the time, which is why 17 years later, we’re still crying out for the need for health care reform.

Universal health care is, at its core, about taking full advantage of economies of scale, using the largest scales imaginable. When you spread the costs of each individual’s particular health risks across the entire population, the average cost per person goes way down. And, oh yeah, people live instead of die.

So why is it, my friend and I wondered, that when it comes to taking on the risks associated with our health, Our Government is so far unwilling to pull it together long enough to serve our interests and ensure that every single one of us is okay?

On the other hand, when it comes to taking on the risks associated with the bad business decisions of Wall Street executives, Our Government stepped right up to the plate, and spread the consequences of those decisions across the pocketbooks of every man, woman, and child in America, thus making sure every single one of them is okay?

That the American public is frustrated is obvious – the AIG bonuses just happened to be where the frustration landed, because it’s one of those very clear “that is what is wrong with this picture” moments.

But there have been big pictures, with big wrongs, for a very long time. The only real surprise, is that any of us are surprised.