Michelle Malkin » First, they came for AIG bonuses

First, they came for AIG bonuses

By Michelle Malkin • March 19, 2009 09:28 AM

The House is set to vote today on the retroactive, confiscatory 90 percent tax on bailout-funded bonuses. Lawmakers say the tax will apply to Fannie/Freddie bonuses. But who knows what the hell will end up in this Chicken Little measure:

The House is scheduled to vote today on a bill that would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money.

“We figured that the local and state governments would take care of the other 10 percent,” said Rep. Charles Rangel of New York, chairman of the tax-writing House Ways and Means Committee.

Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money…The top two members of the Senate Finance Committee on Tuesday announced a bill that would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent excise tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.

The NYPost rightly warns that such politically expedient power grabs are courting catastrophe:

Now, a bonus witch-hunt will satisfy many souls but it surely won’t help solve Liddy’s problem.

Which, obviously, is America’s problem, too.

And such action threatens substantially to damage other institutions now being swept up in it.

Four big New York employers each, it needs to be noted, a major local tax-revenue generator seem to be squarely in Pelosi and Rangel’s sights: Citigroup, JP Morgan Chase, Goldman Sachs and Morgan Stanley.

Many banks entered the federal bailout program because of intense pressure from Washington and many only after being assured that confiscatory taxation and other ex post facto penalties would be off the table.

How badly any of them will be hurt depends on the fine print in the legislation now at issue. Certainly it would be useful if those details got a complete airing before Congress acts.

But politics, hypocrisy, resentment and fear have good sense on the run.

Beware the awful precedent this after-the-fact 90 percent tax grab will set. Remember that last month, Barney Frank was already flexing his grubby paws over executive compensation:

Congress will consider legislation to extend some of the curbs on executive pay that now apply only to those banks receiving federal assistance, House Financial Services Committee Chairman Barney Frank said.

“There’s deeply rooted anger on the part of the average American,” the Massachusetts Democrat said at a Washington news conference today.

He said the compensation restrictions would apply to all financial institutions and might be extended to include all U.S. companies.

First, they came for AIG bonuses. Next?

***

Lawhawk: “You can’t lose the irony on any of this. Rep. Charles Rangel, the New York Democrat who’s managed to avoid paying taxes on real estate transactions for years, run afoul of House ethics rules regarding his parking spot, and generally thinks himself as being above the law, is leading the charge to impose a confiscatory tax of 90% on persons receiving the bonuses (executive compensation) at AIG and other companies receiving a bailout from the federal government.”

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#654072

On March 19th, 2009 at 5:47 pm, prendad said:

Charlie Rangel getting tough with the Meany-Corps. What a hoot.
#654080

On March 19th, 2009 at 5:53 pm, mike.musculus said:

#205
On March 19th, 2009 at 3:05 pm, emjem24 said:

paraphrase: “…pay for combat-related injury…”

Oh, Emjem24, its worse than that, much worse.

StepMom is a USAF surgeon. The actual midrange goal is all AD to pay a “co-pay” of 25% for any treatment, not avail at the base MTF, and 20% for treatment at the MTF.

For dependents, it will be 30-35%, with all treatment going toward a lifetime cap. This is with the eq. of Tricare Prime. Standard is, to use the words of the Pentagon Louse who was briefing the MDs “much less generous”.

And, under the long range, VA, Mil.Medicine and Universal Care are rolled together, and Military “have no special call on the combined system”.

Oh, my…
Sorry emjem24, reciting this has put me into a poor mood… (not saying its your fault, of course…)
#654097

On March 19th, 2009 at 6:11 pm, lwssdd said:

Since the BAIL OUT effects almost all business, how was it they wrote a law that effects only a few businesses. Or was this all manufactured to trick us into accepting a 90% tax. NO…Demand the tax!!! I work for a company that payed a bonus this year. What if they didn’t receive directly any money from the bailout but indirectly. Will my bonus be taxed at 90%. And I am far from wealthy.
#654181

On March 19th, 2009 at 8:41 pm, cabrerski said:

Intriguing arguments, one and all…

Regardless of the legality or interpretation thereof, we find ourselves missing the most important aspect of this whole fiasco…

Our government and the actions they take are either incredibly incompetent or deviously evil.

I tend to lean to the latter but would not fault you if you think the former.

Some people had the power to take out and then re-insert language in a bill that allowed this AIG “bonus” fiasco to take place. It had to have some real juice behind it to get through after it had come to light.

Once the money was distributed to AIG, then these “bonuses” came to light (again). This time with the media and public watching. Quickly our Congress ducks into a phone booth and springs into action, cape and all. You would be surprised how fast Congress can get things done especially if they do not get the bills out to be read by the public or its own members (nothing like abusing the deliberation process).

Grammyski loved to quote that haste makes waste. I think here that haste builds up the “heroic” image of a Congress that is in dire need of public approval. “Did you see what we just did to those evil people…please don’t report that we are the ones who set it all up!”

And yet, we keep voting these morons in…
#654208

On March 19th, 2009 at 9:31 pm, torabora said:

When Bwaney Fwank is around, don’t bend over….for any reason.

Don’t do it.
#654272

On March 19th, 2009 at 10:40 pm, Micheleeroo said:

Where is the tax on Fannie Mae execs who took $100 million bonuses??
#654484

On March 20th, 2009 at 6:46 am, RetFireman said:

b) The argument you are making here s the Democrats argument. The Democrats went to considerable effort to give these people our money. And you are defending their doing so. The GOP opposed these payouts on a straight partyline vote. So yes, you are attacking the GOP and siding with the Democrats.

How you can get me defending the Democrats giving AIG from this is simply astounding, and only a projection of your own thought process.

I am defending people getting money that was guaranteed them through the contracts that were signed. Where they got the money from is completely moot. The fact is that they were owed that money, thus it is rightfully thiers.

It is NOT THE FAULT OF THE PEOPLE RECEIVING THE BONUSES as to where the money came from. If you would like to provide evidence that shows these people went to the Congress and demanded they pay AIG bailout money in order for them to receive their contractually obligated bonuses, then please do so. However, you are making the argument that the employee is responsible for what the employer does. Is that how it works where you work? Are you to be held responsible for what your bosses do?

As I am on record numerous times as stating that these companies should have been allowed to fold and not received a dime from the government in bailouts, again I would like to know exactly where it is you are finding my defending the Democrats, bailouts or anything else.

Don’t put words into my mouth, and don’t make claims of statements which are not there.
#654485

On March 20th, 2009 at 6:51 am, RetFireman said:

And if, for some reason, I decided I did not want AIG to go out of business, I would have tied any money given to the company to restructuring of company compensation packages. Just as I would do if I gave money to GM.

But I would not in any case have lied to the American people and told them that AIG’s continued existence was required to save the economy. Not when the only thing I was really protecting was my own political career.

So this is the fault of the employees who received the bonuses? The Democrats failed to put restrictions on the money, so you are blaming the employees. And this makes sense to you? The employees are responsible? No, they are not. They had every right to not only expect payment of the promised and contractually obligated bonuses, and they were in no way obligated to turn it down and are in no way obligated to return it now or ever.

If this is the lesson that AIG need learn, then they need to be held responsible…not the employees. The Democrats need to be held to the coals for this, not the employees. If you, yourself, would not do what it is you are requiring the employees to do, then you have no business requiring them to do it.
#654486

On March 20th, 2009 at 6:54 am, RetFireman said:

If the company had died, the bonuses would NOT have been paid. Companies with no money do not pay their employees anything. I don’t know what you experiences were as a fireman, but things do not work that way out in the free market economy.

Once the lawsuits would have begun, as well as the bankruptcy proceedings, they would have been paid out from the selling off of the companies assets. They would still be held responsible for what they owed.

Now, would you like to continue with your sophomoric little snide comments? Or do you want to discuss things like a big boy?
#654676

On March 20th, 2009 at 10:34 am, arromdee said:

I’ll repeat it again since it seems people don’t understand: the “bonuses” aren’t bonuses in the sense of unexpected gifts. They’re pay that happens to be given at the end of the job instead of on a monthly basis. You can’t restructure a company in such a way that the employees don’t get paid, and you can’t say “we’re going to bail you out as long as you don’t pay your employees”. The Democrats allowed AIG to pay bonuses because they had to.
#654922

On March 20th, 2009 at 1:47 pm, dominigan said:

I know this is a dead thread, but I still needed to comment…

On March 19th, 2009 at 4:58 pm, flenser said:

a) They did not receive anything which “rightfully” was coming to them. Their company was broke, in some measure due to the actions of these very individuals. They have as much “right” to get million dollar bonuses from the taxpayer as the workers at GM have to sit around playing cards and getting paid by the taxpayer. That is, none.

The bonuses were paid as RETENTION bonuses to keep executives from abandoning ship, and help straighten out the financial mess, since they knew the details of the financial holdings.

These were valid contracts, offered by the company (encouraged by the Fed) and accepted by the employees. The executives stayed, and honored their part of the contract.

The bailout money prevented the company from going into bankruptcy (contrary to most conservatives wishes), and so… those contracts are still valid and in force.

Thus, they DO have a right to that bonus money.