The Race To Stupid - Tax The AIG Bonuses

Today's entry in the ongoing Race to Stupid comes from Rep. Carolyn Maloney (D-NY), the chairwoman of the Joint Economic Committee, by way of TPM:

Maloney is introducing legislation that would institute the tax, and apply it to any recipient of bailout money where the U.S. government has become the majority shareholder.

And let's excerpt Ms. Maloney's letter.  Following expressions of outrage we come to her gist:

That is why I will be introducing legislation that will instruct the Secretary of the Treasury and the Internal Revenue Service to develop guidelines that tax at 100% any bonus compensation that is not directly related to a commission for any recipient of TARP funds where the United States government is the majority owner of the company. This will allow AIG to continue to meet their "contractual obligation" to pay these bonuses, but will ensure that the recipients are not allowed to keep this money.

My goodness.  As a matter of quibbling, wait until Ms. Maloney finds out how many of the AIG FP 300 work and pay taxes over seas.  Remember, we are talking about American International Group.  Ouch, will the dark matter impact the whirling cooling unit at that moment of revelation.

Now, as a second quibble, I can't be sure from her letter whether Ms. Maloney is focusing on the bonuses paid in December 2008 and March 2009 totaling $220 million or the as-yet-unpaid $230 million retention bonus due in March 2009.  If the former, I wonder whether there is a problem with retroactive legislation.  I know that when Congress changes the capital gains rate or issues new tax legislation they include an effective date.  My suspicion is that the same issue would apply here - income earned and paid as of March 15, 2009 can not be subject to a tax imposed on March 16, 2009, is my guess.  Time will tell.  [Adn while we wait for time, this Heritage piece from 1998 suggests that retroactive taxation is normal and court-approved.  As of 1897 Delaware said no to this, but that is just one straw in the wind.  Conor Clarke gets a "Should be doable" from Laurence Tribe.]

Regardless of that technicality, as a matter of public policy this is a ghastly (yet oddly cramped) idea.  First, the tax code relies to a large extent on voluntary compliance.  If Congress proclaims that one's tax bracket depends on both one's income and one's current political standing, high earners will have yet another incentive to shelter and conceal income.  Just for starters, every hedge fund operator worth his 2 and 20 fee will be obliged to find more favorable tax jurisdictions, against the day that they become designated vilains subject to ex-post expropriation.

And on that topic, are the AIGFP people the only villains in the melt-down saga, or in the world?  Goldman Sachs traders and bankers were instrumental in designing and selling the CDOs backed by AIGFP which went south.  Goldman Sachs also assured the world that they had no need of an AIG bailout.  Yet we now know that Goldman Sachs received about $13 billion from the government by way of AIG support, as well as a direct TARP check from the government.  So, are the Goldman Sachs bankers and traders going to be allowed to walk away from the mess they helped to create, which has personally enriched them, and after the government has bailed out their firm?  Why?  What about the Merrill bonuses paid in the dark of night?

And don't even ask me about Mozilo of Countryside, who was on our side until he cashed out and the firm tanked.  And that is OK because...?

Changing the tax code on the basis of the outrage du jour is going to end badly.

Or even further afield, are Dems OK with the idea that Blackwater mercenaries are not subject to a tax adjustment for having shot up Iraq?  Maybe some KBR contractors can pay a tax levy, too.  If Dems want to get on a slippery slope with the tax code, I say slide, baby, slide.

YIKE:  OK, color the Senate stupid as well.  I cling to this:

But House  Majority Leader Steny Hoyer (D-Md.) said today that there might be issues relating to the "equal protection clause" in the Constitution that forbids laws that affect certain groups differently. For now, Hoyer advocated a course of action that centered around a public pressure campaign to persuade the AIG executives to voluntarily surrender the bonuses.

Comments

[Danube of Thought]

I seem to recall that after Clinton took office he imposed a tax hike that was retroactive to January 1, 1993--some months before the legislation, and three weeks before he even took office.

In any event, having done my part to revive the economy of Mexico last week, I am off at dawn tomorrow to do the same for the economy of Telluride, CO. See you folks next week.

[clarice]

I think the equal protection clause of the constitution might preclude this tap dance.

(Have fun in Telluride DoT).

[Ranger]

http://hotair.com/archives/2009/03/17/oh-my-gop-leads-on-rasmussens-generic-ballot-for-first-time-in-years/>This may help explain the sudden desire on the part of the Dems to march on AIG.

Though the rise in Republican support corrolated to the rise in disapproval of bailouts may mean the AIG issue is a loser for Dems in the long run as well.

[Thomas Collins]

I agree with both DOT and clarice. In general, the feds may impose retroactive taxation consistent with the US Constitution (although, as TM notes, Congress usually has effective dates that are on or after the enactment date, or at least on or after a key date in the bill's history, such as when the bill is introduced). As to clarice's equal protection point, in general, equal protection challenges to federal taxation fail. But in this case, I think a court would scrutinize a 100% tax under both equal protection and due process clauses

[Patrick R. Sullivan]

DoT is correct about the 1993 tax act being made retroactive. I didn't think that was constitutional at the time, but as far as I know, it was never challenged in court.

[Ranger]

For now, Hoyer advocated a course of action that centered around a public pressure campaign to persuade the AIG executives to voluntarily surrender the bonuses.

Hmmm... Given how many Wall Street Dems have issues with voluntarally caughing up the taxes they owe, getting these particular Wall Street Dems to part with money they have no legal obligation to give back would be rather more of a challenge.

[Cecil Turner]

This looks to me like an ex post facto bill of attainder (that's a twofer, right?). Don't see how it can survive a legal challenge.

[Thomas Collins]

See LUN for an interesting article on retroactive legislation (with a focus on retroactive taxation).

[pagar]

Looks to me like we should be seeing a bunch of Congresspersons volunteering to give back their pay, pensions and every other benefit they have taken over the years that this mess has been building up.

[hit and run]

Posted by: Patrick R. Sullivan

Happy You Day, Patrick.

[Danube of Thought]

I think the prohibition against bills of attainder only applies to legislation providing for criminal penalties, but I'm not certain of that.

[Cecil Turner]

Nope. At least two bills of attainder have been ones requiring loyalty oaths, and another forbidding pay to (named) federal employees.

[Doug in Fremont, CA]

As noted, many of the AIG employees getting the bonuses are overseas. Unless they are U.S. citizens, they are not liable for U.S. income tax. Furthermore, in many countries employees have first claim in bankruptcy (before even secured debt), and a labor board can take over a company to satisfy not only unpaid wages, bonuses and benefits, but severance as well (liquidated damages calculated by labor law statute resulting from an effective end of employment due to abrogation of the contract by the employer.) These can be non-trivial amounts.

This thing is a mess that is only snowballing. Paulson, Geithner, dodd, Obama, and others new about this long ago. Now they're shocked, shocked that there's gambling going on at Rick's. What BS!

[Kathleen]

The "equal protection clause" is not the correct one. It is the "Bill of Attainder"

Definition: A legislative act that singles out an individual or group for punishment without a trial.

The Constitution of the United States, Article I, Section 9, paragraph 3 provides that: "No Bill of Attainder or ex post facto Law will be passed."

"The Bill of Attainder Clause was intended not as a narrow, technical (and therefore soon to be outmoded) prohibition, but rather as an implementation of the separation of powers, a general safeguard against legislative exercise of the judicial function or more simply - trial by legislature." U.S. v. Brown, 381 U.S. 437, 440 (1965).

"These clauses of the Constitution are not of the broad, general nature of the Due Process Clause, but refer to rather precise legal terms which had a meaning under English law at the time the Constitution was adopted. A bill of attainder was a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial. Such actions were regarded as odious by the framers of the Constitution because it was the traditional role of a court, judging an individual case, to impose punishment." William H. Rehnquist, The Supreme Court, page 166.

[Chris]

This congress needs more and bigger clown shoes.

[kim]

Thank you Doug, and Kathleen. Good stuff, there. Just more proof we have thoroughgoing idiots in charge of the administration. Their ignorance leads to panic, and all the teleprompters and wise old sages like Robert Gibbs can't help that.
==========================================

[Rick Taylor]

I'm a liberal. I come here because I find it's one of the better argued conservative sites. I very rarely agree with you, but in this case you're absolutely right; this is not a good way to craft tax legislation. And I'm mad at anyone, it's not AIG executives, but the current administration for not negotiating any necessary compromises before everyone became outraged, and using AIG as a scapegoat.

[kim]

Humpty had a fall.
Look upon the empty wall.
Glue, Man, slip me glue.
==========================

[kim]

Bravo, Rick. Now tell all your friends.
============

[Ignatz Ratzkywatzky]

I'm a liberal.

Admitting your problem is the first and biggest step, Rick.

[kim]

Hey, I ran into some awfully reasonable liberals among the PUMAs. It's the progressives who are the real problem. That book should have been entitled 'Progressive Fascism'. There are still a lot of classic liberals out there.

Like us, heh, heh.
===============================

[pagar]

According to Gateway Pundit, There has been another entry "In the race to stupid"

Using 'Miss' and 'Mrs' has been banned by leaders of the European Union because they are not considered politically correct.

[mel]

Rule 12 of Chicago politics:

When threatened with losing the attention of the press, and its "proper" focus, have at hand conveniently placed "facts" and misdeeds of your opponent. All the better, if manufactured, and actual facts require, ahem, work, to uncover them.

File under: Strawmen, Closet full of

Related: Scapegoats, and Punching Bags

(when I say they're telegraphing their punches, I'm serious. I've seen this movie before.)

[kim]

Take your Mme and
Your Mlle to Hell.
Sense and reason fell.
====================

[Pofarmer]

The intent of this legislation, and the tone of those proposing it, should worry everyone.

[kim]

Strawmen and pitchforks
Spear the unwary wielder
And blaze into flames.
==========================

[alanstorm]

If the AIG bonus recipients can have their pay revoked (and that's what it is, after all - this "bonus" money is part of their legally negotiated pay) for alleged incompetence and mismanagement, shouldn't the same apply to Congress? Haven't noted any competence there for quite some years...

[PeterUK]

This is just another meretricious attempt to misdirect attention away from the culpability of politicians.The Brown regime has tried it here,unfortunately cronies in banking have blown the whistle on the scumbags.

[Ignatz Ratzkywatzky]

One thing is for sure, if Bambi and company wanted to do the one thing best guaranteed to make sure companies slit their own wrists before accepting anymore handouts it would be hard to think of a better one than stealing their pay.

[Old Lurker]

What Po said at 8:16.

[E. Nigma]

So, AIG paid out bonuses (due under contract)to their employees, that people and politicians are outraged about.

So, where did the rest of the $174 billion and change go? Will we ever know? The Shadow knows!

Look, up there! It's Haley's Comet!

Never mind.

[Old Lurker]

And PUK at 8:20.

Pretty move covers the territory.

[Old Lurker]

much

[Armadillo]

So, are the Goldman Sachs bankers and traders going to be allowed to walk away from the mess they helped to create, which has personally enriched them, and after the government has bailed out their firm? Why?

Several days ago, I heard former AIG CEO, Hank Greenberg talking about some of the earliest AIG bailout meetings, where he says that Goldman Sachs CEO was the only non-government representative.

He implied that there were other entities with more reason to be in on the initial discussions, but for some reason Goldman had the inside track. Now why would he believe that?

[daddy]

If I heard correctly;

Kudlow said on his show that the checks already went out, and that the majority of these 173 guys were working in AIG's London office, so don't PUK's Taxmen get their cut first?

[kim]

Hoohaw, the WaPo claims that Obama knew about these bonuses on Thursday, before they went out, but didn't complain about them until the news was public. I just love the spin.
======================================

[centralcal]

daddy: I heard somewhere over the weekend that the checks were out the door and most of the recipients (if not all) were outside the USA. That is why I have been reading all of this chest thumping about raising taxes to 100% with a wry smile.

If what I have heard and you are hearing is true, then WTF? Good lawrd! (Trying to be good with my language on this Saint's day.)

[mel]

kim-

8:14 , and I gotta go. Night all.

[Ranger]

So, Obama knew about it before it happened and did nothing. That should be on the lips of every Republican for the next few days. Turn this into Obama's "Katrina." This is a monumental failure of leadership if he really cared about it as much as he claims.

[narciso]

Just in case, you had the vague impression that there was going to be any defense against terrorists, it doesn't fit in the financial thread, but as General Honore would put it, it's stuck on stupid.

[Sue]

Obama and company were too worried about Rush Limbaugh to worry about bonuses. Sheesh. Priorities, people.

[BobS]

Talk about spin....that classic Dem hack at the WH only keeps the extreme bush Haters on fire. Those and their mailers, See as follows:

Friend --

The current debate in Washington over President Obama's budget has made one thing clear -- ensuring our long-term prosperity won't come without a fight.

Partisan voices and special interests are showing real resistance to President Obama's call for making the necessary reforms and investments in energy, health care, and education. That's why we need to bring the conversation back into homes and communities across America.

Last week, thousands of you pledged your support for the President's economic plan and encouraged your friends and family to join you in a national display of support. Now I need you to take the next step.

This weekend, supporters like you are organizing Pledge Project Canvasses to talk to people in their communities about this plan and mobilize support in neighborhoods across the country.

Host or attend a Pledge Project Canvass in your neighborhood this weekend.

It's absolutely crucial that Americans hear from you about this plan -- we can't leave this important debate up to a Washington establishment that doesn't welcome change.

It's up to you to show Washington that Americans are demanding this new direction and won't stand on the sidelines while our country's future is at stake.

On these canvasses, you'll join fellow supporters in your community to:

Talk with people about the President's plan
Ask them to sign their names to the pledge
Provide information on how to contact and urge their elected representatives to support the plan
Host or attend a canvass this weekend:

http://my.barackobama.com/pledgecanvass

Nothing is more powerful than having people hear from ordinary Americans about the vision President Obama has laid out for our country. Join us this weekend.

Thanks,

Mitch

Mitch Stewart
Director
Organizing for America

Obama's em list from his campaign has just been remaned and dashed off as tripe that they hope the dopes whom voted for them still drink the cooldaid

[kim]

I particularly like, as clarice points out on the 'too glib' thread, that Obama's Treasury Department is being fingered as the ones who are scapegoating Dodd. Oh, the tangled webs. Don't tell me how the movie turns out, mel, I'm enjoying imagining it.
=====================================

[Pofarmer]

Wife just made a great comment regarding Narcisco's link about the Pilots not having firearms on flights.

Does that mean they won't carry guns on Air Force One anymore?

[kim]

I wonder if you can make a criminal complaint about the activities of these canvassers? Any body know if the illegal behaviour of the White House translates into criminal behaviour by these brownshirts?
===================================

[clarice]

http://www.examiner.com/x-268-Right-Side-Politics-Examiner~y2009m3d17-Obama-Received-a-101332-Bonus-from-AIG>Dodd and Obama, AIG bonus babies

Senator Barack Obama received a $101,332 bonus from American International Group in the form of political contributions according to Opensecrets.org. The two biggest Congressional recipients of bonuses from the A.I.G. are - Senators Chris Dodd and Senator Barack Obama.

The A.I.G. Financial Products affiliate of A.I.G. gave out $136,928, the most of any AIG affiliate, in the 2008 cycle. I would note that A.I.G.’s financial products division is the unit that wrote trillions of dollars’ worth of credit-default swaps and "misjudged" the risk.
"

[MarkJ]

"Does that mean they won't carry guns on Air Force One anymore?"

Answer: No, because government rules and regulations are not applicable to living gods.

Now go sacrifice three chickens at the Temple of Hope & Change to atone for your sacrilege. ;)

[daddy]

CentralCal,

Well if we heard right, and at least half of these guys got checks in Britain, then I can't wait to see how Tax Cheat Geitner demanding the money back is going to play across the pond. We just last week un-Diplomatically treated Gordon (The Booger-eater) Brown like a bastard step-child, and half the Kingdom's already up in arms about the hypocrisy of Bono and U-2 skipping taxes by pretending they live in Norway, so I can't wait to see this play out. It's better than a Monte Python episode, plus we might even get Barrister's in Powdered Wigs screaming at us. And to top it all off, the new CNN "go-to" guy in England, is Richard Quest, former effete wanker who was caught after curfew last year in Central Park with drugs in his pocket, a rope around his pecker, and a dildo in his boot. Bring it on, please P'UK, please make Gordon Brown bring it on!

[BobS]

kim....sorry, no.....ron brown is there to make sure things go well

[matt]

well tomorrow I am trying to get 27 brave souls to carry the following signs near where Obama is supposed to speak at the Orange County Fairgrounds:

It's the Economy, Stupid!
No More Pork!
No New Taxes!
No More Socialism!

We have to nip this in the bud. He is coming into Orange County to push his agenda, which he feels they can now capture...we have to take a stand sometimes....and I got a really bad feeling about this.

[Xrlq]

I don't think it's an ex post facto law, but it does smack of bill of attainder, not to mention a taking without just compensation. It's too bad we don't have a generalized law allowing troubled companies to shed bad contracts before asking taxpayers for a dime. Oh wait, we do have such a law; it's called Chapter 11. Never mind.

[Ranger]

So, now we have two easy to remember phrases to tell people when they bring this up:

Obama knew and did nothing

and

Obama is an AIG bonus baby too

Repeat to everyone who mentions this in conversation.

[clarice]

It's a circular firing squad:
"Geithner waited 2 days to tell Obama about AIG bonuses
Posted: 08:44 PM ET
By Ed Henry
CNN Senior White House Correspondent

WASHINGTON (CNN) — A new timeline released by White House officials late Tuesday evening reveals the president first learned about the $165 million in AIG bonuses last Thursday, days before the story leaked to the media over the weekend.

The new timeline was released after White House spokesman Robert Gibbs said he was unaware of when President Barack Obama first learned of the bonus controversy and reporters asked that the White House provide a timeline. It also shows that Treasury Secretary Timothy Geithner first found out about the bonuses from his staff last Tuesday.

It was not until the following day, after 6 p.m. Wednesday, that Geithner called AIG’s CEO Edward Liddy to “express outrage” and say the payments were “unacceptable,” according to the timeline released by White House officials
"

[clarice]

I wonder when Geithner's going "hypovehicular" as Taranto puts it?

[Ranger]

The White House wanted to whip up populist anger about this, let them choke on it.

[clarice]

Well they won't if dopes like Grassley and Hatch are our spear carriers..(Is it time for my St Crispian's speech yet?)

[Rick Ballard]

"last Thursday"

Well, see, there's a problem right there. Everybody knows that Thursday is a very, very bad hangover day and the CIC is still in the bag at 2PM. Monday is bad too - those Sunday soirees are murder. Tuesday morning between 10 and 12 is usually best - if they can get him to understand the decision which has been made for him before he starts drinking lunch. Some Friday mornings are OK too, depending on the number of bracers and pick me ups required before he stumbles into the Oval Office.

The man is generally carrying a very heavy load and staff need to pay closer attention to that fact.

[narciso]

Does it occur to anyone that Geithner has this appointment because his father's tie to the Dunham family through the Indonesian microfinancing program; and whatever that entailed; how else can we explain the tax avoidance and a dozen issues that would have kicked him back to the NY Fed, or more likely to the SDNY US Attorney's office for prosecution, that's what you with tax cheats

Some one mentioned Rule 12 action, either standard Chicago or Alinsky's variant, brought to you by Joe McGuinniss, verminous worm, in the pages of the publication where
that forlorn Matt Cooper held his chair. Tear this thing apart, "those who hath
understanding"

[kim]

I just love this; everybody's mad at everybody, for all the wrong and right reasons. More to come, kiddoes, more to come.
=================================================

[bela1]

Clarice,
The American people need to grow mad. I am sick of weasels like Grassley and Hatch who will never, ever be able to speak for me, or anyone else for that matter.

I'm listening to a tape Mr. Moron Schumer right now about taxing these bonuses, and his idle threats to pass a law to retrieve the money.

What lying Dem pols won't do is mention the disgusting campaign contributions that Obama, Dodd, and other received. Will they be returning this money? Hell no.

[kim]

Maybe Geithner's got a copy of the cert...., oh, never mind.
================================

[Ranger]

Well they won't if dopes like Grassley and Hatch are our spear carriers..(Is it time for my St Crispian's speech yet?)

Posted by: clarice | March 17, 2009 at 11:04 PM

America has always relied on the quility of its foot soldiers and junior leadership. Unfortunately, the quality of out generalship has been hit or miss.

[kim]

This AIG is
So maddening, It's got the
Whole world in his head.
==============

[Rick Ballard]

Narciso,

I'd say it's Turbo's ties to Rubin, Summers and Citi which got him the call. One reason that AIG is on the front page is to get Citi off of it. Out of the big three zombies, AIG has the least political clout. ZombieMortors is necessary for the UAW and Citi is (or was) a Dem financial punchbowl and hiding place for major thieves - Rubin in particular.

[kim]

It would be really nice if Dodd gets the settled opinion that he was targetted by the Treasury to be the scapegoat.
========================================

[Jim Ryan]

I give a bonus
excoriate you for it
campaign donations

[Daddy]

Narciso,

Thanks for that link concerning the cancellation of the FFDO program (Pilots with Guns). It certainly surprised me, as I can't see it as something the Pilot Unions would be in favor of, and during this time when team Obama is trying to push his 'Hurry up and Unionize' proposal through Congress, it seems odd that a "Competent Administration" would make such an unnecessary tone-deaf proposal that would needlessly anger Union leadership, membership, and much of the general public. Anyhow, I will re-read it very carefully later, but already the e-mail's are in-coming, leading off with:

"In stark contrast to an op-ed article in today's edition (March 17, 2009) of the Washington Times, that claims." President Obama is quietly ending the federal firearms program, risking public safety on airlines in the name of an anti-gun ideology," TSA officials reassured...they are committed to the FFDO program and have plans for its expansion."

I suspect that will be prominantly posted everywhere tomorrow.

It's also interesting to note that Dick Durbin was featured on a Lou Dobb's CNN segment today criticizing the rising violence in Mexico, where on the floor he made some comments blaming that Mexican violence on US firearms, and turning that into an anti-Second Ammendment diatribe, in favor of limiting American's right to have arms simply for hunting and outdoor recreation and nothing else. This was reasonably criticized by Dobb's and a Republican Congressman, but I find Durbin amazingly naive, as I am informed from many of my fellow pilots who have their own small planes up here, that it is an Alaskan State Requirement that you must have a firearm on board your light civil aiorplane in Alaska, "and that that State requirement is neither for sport nor recreation, but simply necessary to keep you alive should you go down in the Bush.

I'll try to verify all of the above tonight.

[narciso]

Durbin, naive, the man who cried tears for the man who would have murdered him,detainee
# 603, Mohammed Mane Al Quahtani, surely you jest, It's like the last line of defense is being breached, closing down Gitmo, betraying Karzai with the
negotiations with the Taliban, now this, Maybe leaking this will shame them into reversing this shameful policy, I doubt it.

[ROA]

So General Shinseki, who was seen as the brilliant military strategist because he disagreed with Donald Rumsfeld is the one responsible for proposing that veterans use their private health insurance to pay for service connected medical issues? I am curious how many of his previous supporters will suddenly decide he isn't as brilliant as they thought he was?

[DebinNC]

Politico: Dems in disarray on AIG

Dodd is blaming unnamed "conferees". I hope we learn how Stowe-Wyden's bonus recapture amendment was jettisoned in committee in favor of Dodd's bonus protection amendment.

[narciso]

You know as I've pointed out he was a very conventional infantryman, in an increasingly
unconventional field, that why he was replaced with someone with irregular and special forces experience like Schoomaker. he became chief of staff because Wesley (or as Rush likes to call him, Ashley Wilkes) Clark, was radioactive after Kosovo. One notices that the same numbers quoted to pacify Bosnia, north of 300,000 were suggested for Iraq, an intenable situation,
Even in his wildest dreams, he never thought Obama would saddle him with this betrayal of American servicemen; which goes to show his poor judging of character

[JM Hanes]

matt:

If no one has already suggested it, I recommend the ultimate protest graphic: The Debt Star!

[Neo]

They have made such a stink that it is now impossible to tax these "bonuses" without running afoul of the US Constitution.

The SCOTUS has found laws that target an individual or specific group to be a violation of the 14th amendment.

nor deny to any person within its jurisdiction the equal protection of the laws

[Extraneus]

Who's working like crazy behind the scenes to take advantage of the AIG-bonus smokescreen and pull some other caper while we're all looking at "Haley's Comet"?

They're not dumb enough to waste this little crisis.

[Extraneus]

Heh. I like how they (and Geithner, in his Tuesday letter) use the word they think will subliminally make people feel sorry for O-bama.

AIG chairman inherits retention bonus mess

[JM Hanes]

Extraneus -

The part I like best is how Obama now owns this mess.

[Jane]

I know I sound like a broken record, but Congress and the President Obama should be forced to give back every donation of any firm or person from a firm receiving bailout money. Or they should be taxes 100% on the proceeds

Certainly no one can argue that Congress has done a better job than AIG. Where is the outrage?

[hit and run]

MEMORY LANE: This reminds me of the gnashing of teeth and rending of garments surrounding enhanced interrogation and waterboarding. Democrats were up in arms, calling for trials and resignations and public hangings and...

But, it turns out, their leadership http://www.washingtonpost.com/wp-dyn/content/article/2007/12/08/AR2007120801664.html>had been fully briefed about it and expressed no misgivings.

Until it was politically opportunistic.

I'd like to be optimistic that they won't get away with it this time. But why should I be?

[william]

From CNN:

"Senate Banking Committee Chairman Chris Dodd, D-Connecticut, who originally proposed the executive compensation provision, said he did not include the exemption clause, which said new rules "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."

In an interview with CNN, Dodd denied inserting that exemption at the 11th hour, and insisted he doesn't know how it got there.

Multiple Senate Democratic leadership sources also deny knowing how the exemption got into the bill.

Majority Leader Reid would not directly answer a question from CNN about whether that was a mistake."

Could there be a greater bunch of fools running this show?

[narciso]

You know Glenn Beck had a very good timeline of how we ended up in this mess, breakdown involving the 1993 Revenue Reconciliation Act, which gave rise to stock options, revisions to the CRA in 1995,
Cisneros's downscale directives absolving objective criteria, Andrew Cuomo's part in this, and the ubiquitous role of Barney Frank, as the sorcerer's apprentice, denying
the facts about the crisis, as late as last spring. So no william, there aren't a greater bunch of fools.

[TCO]

McCain endorsed Bush's AIG bailout. I called him out on that, while the rest of you backed him up. This is simple, people. Don't bail out financiers. Let them walk to the table, sort out who owns the chips and move on. Your "crisis averting" is KILLING the industrial economy. Everything is getting frozen now as no one will liquidate with bailouts on the horizon. And demand has dropped off a cliff because of the rational future expectation of the end of free markets.

You bail-out lovers screwed up. Admit it.

[DebinNC]

I hope the Pin the Blame on the Donkey fight keeps the AIG saga in the news.

[Jim Ryan]

No one read the bill
I got mad for the camera
Big donations soon

[TCO]

Oh...and looks you all are finally cottoning to the Goldman connection...little late now that trillions of dollars have been transferred from taxpayers to bailouts.

[Jim Ryan]

Narciso, don't forget Greenspan's passing out free dough.

[narciso]

Yes, but not before his year and a half of interest hikes, had the same effect that those in 1999-2000, and more broadly 1926-28, had on the economy, cracked the bubble. George Strong is in a better place, Fed Chairman emeritus from 1913-1928, former Morgan Man, because he checked out before the whole thing fell apart. Alan doesn't have that excuse, living with Andrea and
editing "The Age of Turbulence" short circuited any common sense he had gained with Ayn Rand.

[DebinNC]

CNN: Senate Finance Committee Chairman Max Baucus, D-Montana, who is now pursing a similar bonus tax idea in the wake of outrage over AIG, said it was a mistake to drop it from the stimulus bill. He made a stunning admission.

"Frankly it was such a rush -- we're talking about the stimulus bill now -- to get it passed, I didn't have time and other conferees didn't have time to address many of the provisions that were modified significantly," said Baucus. "We shouldn't be here. That should have passed, but it didn't," he said.

Snowe chastised colleagues for expressing outrage about AIG's bonuses, when just last month they did away with her amendment intended to prevent it.

[jeanne]

In seeking villains, I'm aghast that you didn't include the political cronies at Fannie Mae. Franklin Raines, Jamie Gorelick, Rahm Emanuel, Jim Johnson. All part of Team Obama, all got outrageous compensation from Fannie...while they simply cooled their heels waiting for the Dems to re-take the White House.

Raines alone got $91 million for about 5 years of work. That's more than HALF of all the AIG bonuses combined. And then there's that little detail about his pleading guilty that he cooked the books at Fannie to generate those bonuses. Those cooked books eventually cost taxpayers a lot more than we've spent to bail out AIG.

Where were Barney Frank, Chris Dodd, and Barack Obama when Fannie failed? Where was their outrage at those vulgar bonuses?

[Captain Hate]

living with Andrea

Shudder

[Ranger]

Senate Finance Committee Chairman Max Baucus, D-Montana, who is now pursing a similar bonus tax idea in the wake of outrage over AIG, said it was a mistake to drop it from the stimulus bill. He made a stunning admission.

"Frankly it was such a rush -- we're talking about the stimulus bill now -- to get it passed, I didn't have time and other conferees didn't have time to address many of the provisions that were modified significantly," said Baucus. "We shouldn't be here. That should have passed, but it didn't," he said.

So it is Obama's fault both on the front and the back end. He demanded the Porkulus pass immediately, without normal commitee review, then he ignored the bonus issue after he was told about it last week. I call that a lose/lose for Barry!

By the way, it took years for Blago to get the Illinois legislature this mad at him. Obama's done it in just two months. The man does have some political talent after all.

[Ranger]

And I seem to recall that some big time journo at Newsweek told us that waisting money was an unavoidable cost of saving the economy. I wonder if he wants to back that statement up now?

[clarice]

I want one thing and I want everyone who can to help me with it:I want this political charade to be exposed for what it is--a deflection by the Dems to hids the fact they paid off their buddies with an ill-conceived porkulus package and when it was learned what happened played the public for suckers by demonizing the bonus recipients.

It's the truth.
It will make people understand how theDems' "let's play the public for saps" gam e works .
It will wise them up for the next round of it.

[Extraneus]

Maybe Rush can help, Clarice. He's more popular than Pelosi, after all.

[narciso]

Of course, I've brought up Fannie and Freddie's mismanagement before, the philanthropy of the "Andrew Fastow of Government budgeting" Franklin Raines, Jim Johnson of B& A, tied to Countrywide, Jamie Gorelick, the 'zelig of disaster' as I've dubbed her. But those are sideshows to the role of the CRA, and government policies at HUD, for the better part of a decade.

[Ranger]

Clarice,

You are absolutely right. This is a golden chance to crack open the Porkulus bill and expose all the pork and favors that were in it. Given the amount of money AIG employees pumped into Dodd and Obama, it is easy to infer that the bonus language was slipped in either by one of Dodd's people or one of Obama's people. If we can keep people this angry about $165 million, imagine how enraged they will be when the full $200 billion of pork is explained to them.

I think it is also very important to note that people are not angry about the bonuses per se, they are angry about the fact that the bonuses are being paid with their tax dollars. Its no different than the stockholders of a company being upset to discover that the board is getting huge bonuses when the share value has dropped 50% and the dividend has been cut in half.

Now, I personally believe the bonuses were probably nessessary and in the long run would save the tax payers billions by keeping people around to unwind the contractual mess at AIG, but that is a reality that has been overcome by events. But the key is to try and chanel the anger towards the people who really deserve it, Dodd, Frank, and Obama.

[clarice]

Rush hit that theme over and over again yesterday , extraneus.

Now if he could only get thru to people like Grassley and Hatch and light a fire under them.

[hit and run]

Snowe chastised colleagues for expressing outrage about AIG's bonuses, when just last month they did away with her amendment intended to prevent it.

Knowing what you know now (and what you should have known then, and was told by many people many times in many ways and what would have been obvious if you had, you know, read the bill), Senator Snowe, would you still vote for the stimulus bill?

But hey, chastising Dems now is so very bold, so very brave and so very speaking-truth-to-powerish of you.

[Cecil Turner]

McCain endorsed Bush's AIG bailout.

Heh. Multiple trillions of dollars wasted by our Democrat overlords, and you can't find anyone except Republicans to excoriate. Talk about a transparent Moby (hey, I wonder, is that double-white, or merely translucent?).

'Bout time for another handle change there, Laddie.

[Thomas Collins]

Kathleen, it is likely that any confiscatory tax legislation would be worded broadly enough to escape the scope of the Bill of Attainder prohibition. Imposition of addtional excise taxes on all bonus payments by TARP recipients and on all folks receiving those payments is likely to escape being invalidated on Bill of Attainder grounds. It is also possible that a court would uphold these taxes against equal protection and due process challenges, but I think that equal protection and due process is where the action would be.

I am glad that it appears that this will be resolved by a fake reduction in federal funds going to AIG (as TM points out in a post, if AIG is short of funds because of such "reduction," the feds will just make up the difference. In this case, fakery is better than enactment of ridiculous tax legislation

[cathyf]

So follow the math here: the size of the hole that AIG is in is their liabilities minus their assets. These people who stuck around in exchange for these "bonuses" had the job of reducing the liabilities and/or increasing the values of the assets. Thereby shrinking the size of the hole that the taxpayers have to fill.

Can't anyone do math anymore?