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May 18, 2013
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 Kill AIG Bonuses With a Tax? It’s a Lousy IdeaPosted on Mar 23, 2009By Marie Cocco There is little that boosts the level of a president’s leadership hormone like a politically tough but principled veto. This is one good reason for President Obama to stop straddling and to threaten to veto any cockamamie tax scheme that emerges from Congress as retribution for the repulsive bonuses handed out at American International Group. Since the firestorm over the bonuses began burning up the airwaves, Obama has managed to take all sides of the issue. He did it again on CBS’ “60 Minutes” Sunday, saying: “As a general proposition, I think you certainly don’t want to use the tax code to punish people.” On the other hand, in the case of AIG, Obama wants to “see if there are ways of doing this that are both legal, that are constitutional—that uphold our basic principles of fairness, but don’t hamper us from getting the banking system back on track.” Got that? I didn’t think so. So many of Obama’s economic advisers sent such mixed signals about the tax-back of bonuses on the Sunday news shows that it’s a wonder screens across America didn’t turn fuzzy. This, as the administration is rolling out (for the second time) its bank rescue plan—which happens to count on the kindness of the same sort of high-roller rascals who like big bonuses—to help remove bad assets from bank balance sheets. Advertisement Then the White House line was that contracts were contracts and well, the most powerful man on Earth was utterly powerless to break them. Ah, but then the president sensed that the outrage bandwagon was about to outpace him, so he climbed aboard. Anyone could have told him that no one can trump the House of Representatives when it comes to getting worked up over controversies of the moment that crackle over talk radio and cable TV. Remember when members were in a lather over the irreparably comatose Terri Schiavo? Or when they impeached President Bill Clinton with salacious glee—and with the full understanding that the Senate was not going to remove him from office? The Senate is usually a chamber of lesser horrors, though it, too, seems determined to use the tax code to mete out some punishment over the AIG bonuses. Why should Obama refuse to sign a solution-of-the-minute tax bill? I don’t necessarily buy the argument that the confiscatory, retroactive tax is unconstitutional. That might be so, but the conservatives making this point most loudly are some of the same great legal scholars who went along without a peep as President Bush shredded the Constitution with his detention and other anti-terrorism policies after 9/11. And besides, which AIG executives—who at the moment fear for their lives—would come forward publicly in lawsuits to challenge the public’s right to get back its own money? The bonuses were a bad mistake. They are a particularly brutal punch for autoworkers who voluntarily opened up their contract to make pay concessions to carmakers. This was a condition forced upon Detroit by the same Bush administration officials who first negotiated the AIG bailout and knew of its handsome bonus plan. The trouble is, we don’t—or at least we’re not supposed to—use the tax code to punish industries or people we don’t like, even those that prey on the public. We haven’t taxed the tobacco industry out of existence, though quite a convincing argument could be made for doing so. Once we start using the tax law to decide which companies and employees we admire and which we don’t, we’re in for a heck of an ideological ride. Would Democrats not love to punish the oil industry? Wouldn’t Republicans, if they held the reins, revel in taxing the pay of union organizers at about 100 percent? Taxes are meant to raise revenue, and to raise it equitably. Inequity is, in fact, a central complaint Democrats have had about years of conservative tax-cutting for those at the top. But making bad policy to solve a brutal conundrum now only means that someday, someone else will settle the score—by doing just the same. © 2009, Washington Post Writers Group  TAGS:
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Letter From Birmingham Jail
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By Oceana, March 25, 2009 at 10:23 pm Link to this comment
The first direct link on my previous post should be http://www.countercurrents.org/khan120309.htm
Israel-Palestine Conflict 101: Taking off the Blinders in the U.S. by A.M. Kahn 12 March 2009
The others remain the same:
http://www.youtube.com/watch?v=yyVy5XHjuGI&feature; =related
Report thishttp://www.ifamericansknew.org
http://www.occupation101.com
By Oceana, March 25, 2009 at 9:54 pm Link to this comment
Since we are discussing tax money being ill spent, I am little bit more horrified and angry that we are spending a minimum of $8 Million a day to Israel, without any public debate.
The U.S. citizenry as a whole have become ‘clockwork oranges.’
Our tax money not only funds illegal settlements in the West Bank, “...All of us who pay U.S. income taxes funded the recent atrocities in Gaza. We paid to drop white phosphorus on civilians. We paid to level homes, clinics, and schools. We paid to kill children and whole families as they slept in their beds. We are complicit in the bloodbath in Gaza. We are complicit in children starving to death laying next to their dead mothers buried in rubble as the International Red Cross documented in Gaza. We fund acts of state terror in which people watch their beloved daughter, son, father, mother be literally torn apart. We pay for a military machine that maims, kills, and holds captive an unarmed civilian population of men, women, and children, enclosing them in prison-like cantons within the West Bank and Gaza. For decades, we have been paying for the slow annihilation of a society and people who have done absolutely nothing to us…”
http://www.countercurrents.org
Report thishttp://www.youtube.com/watch?v=yyVy5XHjuGI&feature=related
http://www.ifamericansknew.org
http://www.occupation101.com
By Archie1954, March 25, 2009 at 11:05 am Link to this comment
(Unregistered commenter)
This article misses the whole point. The only reason there is a push to tax these bonuses is because they are being paid for by the America taxpayer. This has nothing to do with getting even for Heaven’s sake.
Report thisBy joeygayol, March 25, 2009 at 10:52 am Link to this comment
(Unregistered commenter)
The president has hired the same “Robber Barons” of todays Wall Street gang to set the rules to be played out which only bails out the banks with tax payer $‘s. I feel that we should have let them go bankrupt and the gov’t then would call the shots needed to regulate these “Robber Barons” once and for all. FDR did in the 30’s, but their contributions to our gov’t representatives have been bought off. There lies the problem. We need gov’t campaign finacne to free our gov’t leaders to be free to legislate.
Report thisBy tolstoy, March 25, 2009 at 10:13 am Link to this comment
Thank you AFriend, now clearer. The “bonuses” are salary, agreed on last October in bailout#1. The following letter in today’s NYTIMES from an AIG exec also helps clarify:
http://www.nytimes.com/2009/03/25/opinion/25desantis.html?pagewanted=1&_r=3&ref=opinion
Report thisBy underledge, March 25, 2009 at 8:39 am Link to this comment
You have to wonder while the nation has been consumed with AIG bonus issues, what is going on between the sheets, so to speak. Strange world we live in.
Report thisBy AFriend, March 25, 2009 at 4:28 am Link to this comment
Congressman Barney Frank has threatened to summon AIG executives before his committee and force them to reveal their home addresses—which would of course put their wives and children at the mercy of whatever kooks might want to literally take a shot at them.
There have been real death threats against people at AIG. 99.9% of them did absolutely nothing wrong. They do not deserve to be threatened in their own homes, neighborhoods and schools. It’s frightening!
And media, the lazy bunch that they are, is as much to blame in whipping up this hatred toward innocent people and their families. These people are being threatened with attacks on their homes!
Why has it not been made very clear that AIG Insurance, over 95% of the company, was never the problem? Why has it not been made clear that AIG’s cash problems stemmed from a small London subsidiary, AIG-fp, with only a handful of employees, and not the company as a whole? Why has it not been made clear that the U.S. Congress has oversight of these matters and failed miserably to do it’s job? Why has it not been made abundantly clear that the AIG retention packages were the result of the Treasury Secretary and the Congress after the U.S. government took an 80% stake in the company? Yes, that’s correct. The retention “bonuses” are not bonuses at all. These so-called “bonuses” were devised by the former head of AIG, signed off by the U.S. Treasury, and very specific legislation was passed in the Congress in order to retain employees from jumping a government controlled sinking ship.
Why, I ask, is it not made very clear that the current CEO of AIG came out of retirement at the request of the U.S. Government, agreed to do the job asked of him, for only for $1.00 a year, and was forced to sit and listen to the most vile and threatening crap ever devised by the Congress? This innocent man, a man working for the Treasury, has been made the new face of evil by the Congress and the media. He agreed to help the government and is now unable to walk the streets without security protection. His grandchildren cannot attend school without the same protection. Who is reporting on that? Where is the media outrage?
Not a single charge of illegality has been leveled against anyone at AIG or AIG-fp. But today thousands of AIG employees are genuinely fearful that their home addresses will be released by the Chairmen of the House Financial Services Committee, Congressman Barney Frank. These people, these innocent people, are rightfully scared to death. And nobody in the media is reporting this frightening scenario. On the contrary. Most are doing everything they can to whip up lynch mobs. Why? Because it’s good for their business.
What we are witnessing today in the matter of AIG is truly frightening. The lynch mob mentality is not the answer. It’s dangerous!
Report thisBy drklassen, March 25, 2009 at 4:01 am Link to this comment
What we really need, instead of an ex-post facto attack on the rich is a real attack—-a counter attack to the past 30 years of their attacks.
1) Create super-rich tax brackets: 50% bracket at $2M, 75% at $5M, and 90% at $10M.
2) Create a law that says no executive compensation can be greater than 100x the compensation of their lowest paid employee (including subcontractors like cleaning staff). Realistically, they can’t do that, but they can say that any amount of compensation above that level can not be written off as an expense.
Report thisBy tolstoy, March 24, 2009 at 6:46 pm Link to this comment
By even talking about the bonuses in terms of “taxing,” we’re legitimizing them. Okay, we got the principle. But no, these “bonuses” are not legitimate and should be canceled. Period. Why weren’t they? What is the answer to this question?
And while I’m at it—
Matt Taibbi
http://www.rollingstone.com/politics/story/26793903/the_big_takeover/4
Additional to AIG’s being in legal trouble for the past six years, Matt Taibi’s article shows how the company under the influence of Cassano went wild with Credit Default Swaps reaping premiums without the funds to back up all the policies if the loans went south and AIGFP actually had to pay up.
“AIGFP’s returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary’s 400 employess were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money—and then it all went to shit.”
~~
“The following February [08] when AIG posted $11.5 billion in annual losses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had beeb forced to hand AIG $85 billion to patch up his fuck-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to “retain the 20-year knowledge that Mr. Cassano had.”
Report thisBy JFoster2k, March 24, 2009 at 3:04 pm Link to this comment
Do any of you actually believe these bonuses were out of line with the status quo on Wall Street? These types of retention payments are commonplace. Execs in critical positions are often paid huge contracted sums to stay with companies that are nearing a meltdown of one form or another. The justification of the amounts is simple math. If losing the employee would cause the company to lose half a billion, paying them a few million is well worth it.
The outrage is a diversion… and purely political. The general public (like me) are never going to see that kind of money unless we win the lottery, so we really don’t understand how the top 1% function. For most of us $1 million is a lot, but for those in high finance it’s chump change.
I say we suck it up, hate AIG silently, and get back to real issues.
Report thisBy G.Anderson, March 24, 2009 at 2:00 pm Link to this comment
Here’s my plan. Let them fail, don’t give them one more dime.
Let them file for bankrupcy like normal people.
The board members are responsible as are the corporate heads, so let them file for bankrucpy as well. And let them keep $7,000 in personal assets, just like you and I would in a bankrucpy, and make them sell everything from their BMW’s, Mercedes Benz’s, to their Bidet’s, to their house plants, down to the very last Cashew in their nut bowl, to pay off their debt just like they would you and me.
After all didn’t they pay good money to ensure, that bankrupcy reform would be passed in congress, to guarantee that you and I could never get out of the debt they sold overseas, thereby making it more attractive to investors?
And then let the IRS hound them for the next 30 years, just like they would you and me, and let them place a lien on their social security, just like they would you and me..
But don’t give them another dime… Let them fail…
Report thisBy samosamo, March 24, 2009 at 1:55 pm Link to this comment
Lobbyists will rule here and it won’t be for the people.
Report thisBy NYCartist, March 24, 2009 at 1:18 pm Link to this comment
Why does the House and Senate writing (possibly one of the fastest)this bill(s) smell like grandstanding? And how cynical can you pols get: (very)The folks rolled over (how many new folks in each chamber?) for the BailOut bills in the Fall (and it was), now they are making funny-if-it-didn’t-hurt-us-regular-folks in the pocketboook. Cynical aren’t they? The public is not stupid, despite most of the “reporters” in the mainstream media.
While I agree with Marie Cocco, I think the scope of the question needs widening.
Also, in theory the tax system is not for “punishment” but it certainly is for reward, viz the corporations (many getting the bailouts) haven’t paid their taxes. Tax codes have been lowered for the corporations. Compare (as people do)how much the rich paid in taxes under Eisenhower, etc. Another reason the Congress might be jittery, besides the aforementioned tax inequities on the working class and middle classes (overlaps), are the Bush Admin. tax cuts on the wealthy that this Senate made sure, by only 3 Republicans, got restored in a recent bill. Maybe punishment, since social security taxes are heavily burdening the lower wage workers.
Am reading Colleen McCollough’s First Man in Rome series, am on #7 “Antony and Cleopatra” and no doubt the author has Washington in mind, is my conjecture….
Report thisBy Inherit The Wind, March 24, 2009 at 11:29 am Link to this comment
Folktruther, March 24 at 2:15 pm #
There’s a simple solution. Tax the income and assets of all the rich.
And all the anti-Semites can bond together and raise Inherit’s taxes.
*******************************************
That would be the new Inherit-ence Tax?
“you have to take up the tacks before you can take up the carpet.”—Marx
(J.H. Marx, not K. Marx)
Report thisBy tropicgirl, March 24, 2009 at 11:16 am Link to this comment
Sorry, taking public money IS a voluntary act. No one would care if they were using their own money. In order to make this “involuntary” they could simply choose NOT take taxpayer money.
The writer should also have done the morning read… Here’s another article posted today about this topic and how silly it is that a government entity can’t institute taxes…
You Want to Tax What? Government Gets Desperate
Report thisFrom Stripper Fees to Insurance Surveillance, Governments Try to Raise and Save Money ‘Creatively”
By ALICE GOMSTYN
ABC NEWS Business Unit
March 23, 2009
In Chicago, surveillance cameras may someday help the city to fine more uninsured drivers. In Ohio, a city court is limiting its new cases because it can’t afford more printer paper. In California, there’s a loud call to tax marijuana sales. And in Georgia, one lawmaker says he’s not giving up on his proposal for a state strip club surcharge. Across the country, these and other unusual money-saving and money-making efforts have been volleyed by government officials desperate for funding…
By Folktruther, March 24, 2009 at 11:15 am Link to this comment
There’s a simple solution. Tax the income and assets of all the rich.
And all the anti-Semites can bond together and raise Inherit’s taxes.
Report thisBy P. T., March 24, 2009 at 11:06 am Link to this comment
“Mob Rule is Democracy by another name.”
Just the opposite. The mobsters are on Wall Street.
“That is why we live in a Republic, not a Democracy, and it is, in fact, exactly what the founders of this country were afraid of.”
Report thisYou’re right about that. The “opulent few,” as James Madison called them, were worried about protecting their privilege. The people are up against the same problem today.
By tolstoy, March 24, 2009 at 10:32 am Link to this comment
No, if you don’t like taxing the bastards how about canceling their “bonuses”—also known as grift? Tell me it isn’t grift. The problem with Marie’s fancy complaint is it leaves us with nothing. You say it’s not possible to cancel because they might sue, they’re legally due? This is so weak Geithner and Liddy can only lie and contradict themselves about it. These heroes of AIGFP are going to sue because they DESERVE their grift? Okay then give them bonuses, and while we’re at it why don’t we serve champagne to Madoff in his prison cell?
Report thisBy voice of truth, March 24, 2009 at 9:57 am Link to this comment
to P.T., Mob Rule is Democracy by another name. That is why we live in a Republic, not a Democracy, and it is, in fact, exactly what the founders of this country were afraid of.
TropicGirl, a levy, or tax or tarrifs, that you describe are not what is being discussed here. Those are laws against voluntary activities. What we are discussing here is what are called “Bills of Attainder” and are, in fact, unconstitutional.
US Constitution, Article 1, Section 9, Limits on Congress
‘No Bill of Attainder or ex post facto Law shall be passed.’
In the context of the Constitution, a Bill of Attainder is meant to mean a bill that has a negative effect on a single person or group (for example, a fine or term of imprisonment). Originally, a Bill of Attainder sentenced an individual to death, though this detail is no longer required to have an enactment be ruled a Bill of Attainder.
All of you are arguing about the fact that they got the bonus in the first place, which is not even what this article is about. I thought this site was for actual educated comments and stories, not hyesterical mob rantings.
Report thisBy tropicgirl, March 24, 2009 at 9:45 am Link to this comment
Taxes are levied all the time on what we consider “bad” products or “vices” in order to raise money. We have even issued a VAT tax on luxury items at various times in our history. This argument by Marie is incorrect and falls flat and heartless when one considers that most 401Kers lost over 50% of THEIR savings. No one is talking about compensating them which is just plain evil. Marie should check her history in an objective manner and stop carrying water for the cheats.
And this action was a last resort when our government and Timmy the Tax Cheat’s resistance to stop the excessive pay, bonuses, stock options and other gushing money from the taxpayer to the crooks, which is not only happening with AIG but WITH ALL THE BAILOUT BANKS. Because of this action, and only because of this action, is ANY money coming back.
If you are watching C Span, Timmy is still refusing to give up the names of the banks (not even the individuals) who got bailouts and who are getting the above-mentioned compensation. HE WON’T EVEN TELL US WHO THEY ARE BECAUSE HE BELIEVES THEY SHOULD STILL GET THEM.
GOT IT NOW?
Report thisBy bilejones, March 24, 2009 at 9:36 am Link to this comment
(Unregistered commenter)
It wasn’t the clowns at AIG who looted the taxpayer, it was the political filth in Washington.
Report thisBy P. T., March 24, 2009 at 8:56 am Link to this comment
“This is Mob Rule by any other name. Can’t wait for Kristallnacht!”
Report thisIt’s not mob rule—just the opposite. It’s democratic rule. The taxpayers are reclaiming their own money from the incompetents—that is not punishment. In addition, looting a failing company is fraud.
By voice of truth, March 24, 2009 at 7:52 am Link to this comment
Marie is correct, this is a VERY scary issue. First, it is patently unconstitutional to pass a law to tax a very small group of specific individuals, not for revenue, but for punishment.
Follow this to a very logical conclusion….. Republicans become in charge of the Executive and the Legislative branches. Someone makes a movie, say Michael Moore, that outrages a large bit of the population. Congress passes a law that says that because the movie has certain falsehoods and demonizes individuals, 100% of the proceeds from this movie should be taxed.
You think that is farfetched? This is not a road you want to go down. This is Mob Rule by any other name. Can’t wait for Kristallnacht!
Report thisBy Jim Yell, March 24, 2009 at 6:01 am Link to this comment
(Unregistered commenter)
I have watched a few of those self-serving pigs telling us how the bonus is so important to retain the wonderful staff they have, ignoring the fact that it was these self same “wonderful staff” that authored much of this disaster and the broken regulation that was bribed out of existence by these same arrogant fools.
The money wasted on propping up these fools is an outrage. The government should establish a lending organization and ignore saving this criminals. Lend to homeowners pushed out of their houses are into poverty by these loans. Bring back usuary laws and lock the greedy people up.
Report thisBy RdV, March 24, 2009 at 5:30 am Link to this comment
“And now the GOP is blaming Obama for all the elephant $#it”
which makes me think:
Notice how out of one side of his mouth Obama claims to take all responsibility, and out of the other, blames Bush exactly in the same manner that Bush blamed Clinton.
Report thisI am really starting not to like Obama-first for continuous disappointment, now for betrayal and squandered opportunity—After all, with Bush it was expected, but Obama will fall so much harder because he promoted himself in contrast to Bush when he is maintaining the Bush world view with a bone thrown here and there, but still preserving the status quo and pandering to Bush’s base.
Makes me sick.
By RdV, March 24, 2009 at 5:22 am Link to this comment
Okay then…well, the death penalty is still legal, eh?
String em up!
Funny, no one comes out to get all idealogical when it comes to skewing tax hikes up on us regular folk.
Report thisBy Inherit The Wind, March 24, 2009 at 4:06 am Link to this comment
While we are all outraged, bills of attainder are UNCONSTITUTIONAL!
Hopefully, in the Senate, the GOP will filibuster and the Democrats will somehow find a way to CONVENIENTLY be unable to muster 60 votes for cloture. The bill will die and…the GOP will have filibustered to prevent WRONGFUL bonuses being repaid to the tax-payer—let the voters remember THAT in 2010!
Meanwhile Obama is being blamed for not cleaning up all the elephant $#it in the house, but it was George Botch who not only let the elephant $#it in the house, he even ENCOURAGED the elephant to $#it in the house.
And now the GOP is blaming Obama for all the elephant $#it.
Report thisBy P. T., March 23, 2009 at 11:29 pm Link to this comment
The column by Marie Cocco is muddled. What taxpayers want is their own money back—the money that the incompetent executives continue to loot.
Report thisBy Ribald, March 23, 2009 at 11:16 pm Link to this comment
(Unregistered commenter)
Perhaps the AIG bonus debacle was intended to spring this legal/ideological trap and ensnare the general public in what amounts to a rhetorical prison and stymie substantive action.
Using the law to punish people we don’t like is wrong, but how would we otherwise stop people from profiting from what *should* be a crime, but happens not to be illegal, after the fact?
Our outrage should at least be partly aimed at ourselves, for not demanding better regulation (OTS? Really?). Still, it may be an unreasonable demand for the average person to be able to make informed political decisions about the regulation of financial instruments that bewildered their own creators. We depend on experts to, in essence, tell us what medicine is good for us, and what ails us. They failed in fulfilling their social contract, but doing so has never been illegal—only ethically reprehensible. When that betrayal of trust harms us physically or financially, we often have legal grounds to demand restitution.
The current episode shows how atrophied our restitution muscle is. We no longer know how to get it in an easy, legal, and effective way.
Congresspeople aren’t that smart, and the bonus tax was the first, almost useless, tool they picked up to fulfill that desire for restitution. If anything, they should have initiated a full-scale auditing/investigation of the institution to expose whatever illegalities are (probably) lurking underneath the surface. If AIG defrauded the government, there’s grounds for a serious legal assault. Instead, it’s AIG that’s suing the government (to recoup tax money, of all things).
Another thing: it isn’t logically consistent, but the counter-argument to the bonus tax runs a high risk of being over-applied. Ex post facto punishment is, to the public, just the same as future punishment, only faster. A loose counter-argument that appeals to political stability can easily be extended to financial stability, so you have a lot of people who are very angry, but told that making significant changes and holding people responsible would open the door to revenge or disaster, neither of which may even be remotely likely.
Finally, I’ll end with an unimportant, but compelling point: the Republicans have been getting their vengeance on America for the last decade, through all manner of legal, illegal, and extra-legal maneuvers. Arguing that exercising this power would give them license to is silly. Republicans will take such license, whether it is given or not.
Report thisBy Kaelieh, March 23, 2009 at 11:04 pm Link to this comment
(Unregistered commenter)
Ummm, want to know why Obama’s doing this dance? Read this Rolling Stone article http://www.rollingstone.com/politics/story/26793903/the_big_takeover
The veto threat has nothing to do with concerns over the tax code.
Report thisBy diamond, March 23, 2009 at 9:31 pm Link to this comment
Why shouldn’t these bastards pay some taxes? It’s not as if they ever do it under normal circumstances and this money is MONEY OBTAINED BY FRAUD. However it is returned to the government so they can spend it on education or infrastructure or a million other necessary things, it should be taken back. By any means within the law, another thing the vultures at AIG don’t much concern themselves with.
Report this