House Passes Bailout Bonus Tax

By Big Tent Democrat, Section Economy
Posted on Thu Mar 19, 2009 at 07:16:21 PM EST
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NYTimes:

Spurred on by a tidal wave of public anger over bonuses paid to executives of the foundering American International Group, the House voted 328 to 93 on Thursday to get back most of the money by levying a 90 percent tax on it. . . . In one sign of the bonus issue’s political potency, 85 Republicans joined 243 Democrats in the House in voting for the measure, rather than for a rival proposal put forth by the Republican leadership. Only 6 Democrats voted against the bill, along with 87 Republicans.

The GOP House Leadership voted against:

. . . Republicans signaled that they would vote “no” and would line up instead behind a countermeasure that Representative John A. Boehner of Ohio, the minority leader, said would recover the taxpayers’ money much faster. . . Mr. Boehner was disdainful of Mr. Rangel’s proposal, calling it “a sham” and urging adoption of a bill to get back the bonus money at once . . .

There will be no more free bank bailouts. Geithner better be working on a Plan B - temporary takeovers.

Speaking for me only

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House Passes Bailout Bonus Tax | 25 comments (25 topical)

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Just once... (5.00 / 0) (#3)
by kdog on Thu Mar 19, 2009 at 07:48:08 PM EST

it would be nice if we thunk this through before rushing a vote. Don't freak, but Judy Biggert has a point. From the Times link...

Representative Judy Biggert, Republican of Illinois, said that while virtually everyone agreed that the A.I.G. executives should not be getting bonuses for failing, it would be a mistake for the House to rush through a piece of legislation. If that happened, she said, there could be regrets later, as there are now over the TARP bill, "made public in the dead of night, just hours before the vote."

Of course, she's probably just lookin' out for her fatcat donors, but what if she's right? If we don't like how AIG does business, umm...just stop giving AIG money!!!

The tax code is a myriad maze of shadyness as it is already, the last thing we want to do is set a precedent that it is legitimate to tax any subgroup at 90% because we're mad at them. Taxes are a necessary evil, not a weapon.

She was smart in the hearing (5.00 / 1) (#4)
by Cream City on Thu Mar 19, 2009 at 07:54:11 PM EST

with the AIG CEO - I never had heard of her before but sure noticed her then, amid the nonsensical Repubs who were just bashing to score airtime.

If she is the smart one in the room again on this, it could be worrisome.


: Her and Feingold... (none / 0) (#7)
by kdog on Thu Mar 19, 2009 at 08:03:20 PM EST

should get down together on a "Government Chicken Head Reattachment Act of 2009" or something...all bills must not only be read but pondered for a weeks time.

Changed my mind, as I just read this (none / 0) (#8)
by Cream City on Thu Mar 19, 2009 at 08:04:34 PM EST

about the CEO who is ruining my local paper, maybe the next major-city daily that will die.

Could we please pass a tax bill aimed just at him? Okay, add to it all the MBAs destroying daily papers -- the ones bringing the Wall Street mentality to Main Streets across the country, depriving city after city of watchdog news they really do need. He is the one who kept buying up tv and radio stations now "written down," for which he gets rewarded, while the employees and retirees -- who are the stockholders -- suffer . . . with more massive layoffs to follow this week.

These guys are everywhere now, and they have got to be stopped somehow:

Journal CEO's compensation increases
Total compensation increased almost 22% last year for Journal Communications Inc. chairman and chief executive Steven J. Smith, according to a regulatory filing by the company Thursday.
Smith earned no bonus, but his salary rose 3.7% to $798,077. He received . . . [stock] option awards valued at $397,003, a proxy statement for the Milwaukee-based media company and publisher of the Journal Sentinel said. The biggest change in compensation was in the value of Smith's retirement benefits, which grew to $233,110, compared with $74,782 in 2007.
Journal Communications posted a $224.4 million loss in 2008, largely due to $228.7 million in non-cash charges in the fourth quarter [for] its television and radio licenses. The company . . . also saw declines in revenue because of the recession and the ongoing migration of ads to the Internet. Its stock price fell 72.6% during 2008.

: It is tempting... (none / 0) (#12)
by kdog on Thu Mar 19, 2009 at 08:22:49 PM EST

but I think as long as we stopped rigging the game in your buddy Smith's favor things might well work themselves out.
Taking his money and putting it in the general fund accomplishes what exactly? We'll give it right back with the other hand or give it to law enforcement. Nah...I'd be happier if they wrote a bill giving the custodial staff at any corporation receiving bailout money 90% of any bonus over 100k...directly, from exec to custodian, in cash. That might actually help somebody.

and (none / 0) (#26)
by Bemused on Fri Mar 20, 2009 at 08:50:48 AM EST

"If we don't like how AIG does business, umm...just stop giving AIG money!!!"

and if we can show AIG has spent any portion of the money it has already received in manner contrary to law at the time it was spent take action to make AIG return money.


What about the good executives? (5.00 / 1) (#18)
by roy on Thu Mar 19, 2009 at 10:46:36 PM EST

I doubt (read: have not bothered to check) that all the bonus recipients advocated reckless behavior. Some presumably tended toward more conservative strategies, and some presumably made the company some money and gave it a better (though ultimately doomed) chance of surviving. What message does it send when the government demonizes AIG's attempts to give those executives their promised rewards, and takes the bulk of the reward away by changing the laws that that existed at the time the promises were made? It says "don't try to save a sinking ship, the Feds will force your head under with it". It says "don't accept help from the government, because not only are there string attached, but there will be more attached retroactively, and strings that were supposedly cut will be put back."

I don't want my tax money paying those bonuses either -- but that condition should have been set up front rather than as a bait-and-switch. The government shouldn't be encouraged to treat real contracts like the euphemistically named "social" contract, where one party gets to rewrite the terms at will.

Typical (5.00 / 1) (#19)
by Che's Lounge on Thu Mar 19, 2009 at 10:54:58 PM EST

reactionary legislation.

And the republicans who voted yes at the last minute are opportunists who have no moral integrity.

Great, a bill rushed through (5.00 / 0) (#22)
by Wile ECoyote on Fri Mar 20, 2009 at 06:08:39 AM EST

in order to remedy another bill that was rushed through. I was hoping Obama would actually follow through on his campaign promise allowing bills to be read for five days before being run through.

: Yes (none / 0) (#23)
by jbindc on Fri Mar 20, 2009 at 07:51:46 AM EST

Have we seen ANY bills being posted on the web for 5 days as promised? We didn't see the Ledbetter Act, we didn't see the stimulus bill, we didn't see the budget....so when DO we get to see them?

He might not be working at all (none / 0) (#1)
by Saul on Thu Mar 19, 2009 at 07:23:50 PM EST

He took responsibility for treasury pressuring Dodd to reverse his restricted section on the bonuses.

Rollcall (none / 0) (#2)
by andgarden on Thu Mar 19, 2009 at 07:23:57 PM EST

here.

This vote makes me smile because Democrats are united and Republicans are totally divided. I wonder how the Club for Growth will treat this vote.

Will probably be ruled unconstitutional if passed (none / 0) (#5)
by Saul on Thu Mar 19, 2009 at 07:59:36 PM EST

Nonsense (5.00 / 2) (#9)
by Big Tent Democrat on Thu Mar 19, 2009 at 08:12:47 PM EST

Maybe not (none / 0) (#11)
by Saul on Thu Mar 19, 2009 at 08:18:28 PM EST

It was discussed all day on TV by several lawyers that the tax was akin to Bill of Attainder if the tax is focused on a just a handful of people rather than a broad brush tax. All day the said the tax was against those that took the bonus.


Interesting (none / 0) (#13)
by Steve M on Thu Mar 19, 2009 at 08:48:50 PM EST

So I suppose excise taxes on manufacturers of wooden arrows would be unconstitutional, then? Maybe not. The tax code wouldn't be a tenth as thick if it weren't chock full of narrowly-targeted measures.


Punishment (none / 0) (#14)
by Saul on Thu Mar 19, 2009 at 08:57:17 PM EST

is what they said it was more than a tax


Well (5.00 / 1) (#15)
by Steve M on Thu Mar 19, 2009 at 09:12:21 PM EST

a thesaurus is not a substitute for a legal opinion. Are taxes on cigarettes a punishment?


: Taxes on joints are. (5.00 / 1) (#16)
by Ben Masel on Thu Mar 19, 2009 at 09:32:30 PM EST

after States passed Drug Stamp taxes in the '80s, without removing the Criminal penalties under the Uniform Controlled Substances Act, the 7th Federal Circuit, and I think a couple others, held the tax unconstitutional as double jeopardy.

: Bill of Attainder as found on google (none / 0) (#17)
by Saul on Thu Mar 19, 2009 at 09:55:23 PM EST

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.
"Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community." James Madison, Federalist Number 44, 1788.

a tax (none / 0) (#25)
by Bemused on Fri Mar 20, 2009 at 08:43:44 AM EST

imposed on goods is analyticaaly different than a tax imposed on personal incomes. Different goods can be viewed as having different social values or detriments.

Taxes imposed on PEOPLE cannot have the same analysis applied because we should not allow for government to decide that different people have different social values or detriments. Thus, taxes on people should be required to be differentiated based solely on the amount (e.g.,progressive tax rates-- which some people do think are legally objectionable although tat is not the law) or nature of their income (e.g., capital gains vs, earned income) not on who they are.

It's a fairly close call here, about which reasonable peole can disagree, whether this proposal is really targeting an amount (because not everyone receiving these amounts will be subject to the tax) or a type of income (because not everyone receiving employee compensation from an employer receiving government assistance will be subject to the tax) or in fact tareting certain people singlesd out for what amounts to punitive taxation.


constitutional? (none / 0) (#6)
by diogenes on Thu Mar 19, 2009 at 08:00:03 PM EST

How is it constitutional to target a very small group of people for earning bonuses while not taxing others who earn the same dollar amount of bonuses or other income? This is just politics for show, although the government will incur further legal fees defending this fiasco.

: Unclear (5.00 / 2) (#10)
by Steve M on Thu Mar 19, 2009 at 08:16:00 PM EST

Are you one of those judicial activists who just makes the Constitution mean whatever you want it to mean? Because I don't really see where it's written that people who earn the same dollar amount of bonuses must be taxed the same.

This kinda scares me (none / 0) (#20)
by BrassTacks on Fri Mar 20, 2009 at 01:30:47 AM EST

the government can decide this group and that group will have their contracts negated. That seems like a slippery slope to me. Let the companies go out of business, but don't take over deciding how much money some people are allowed to make.

The whole point was grand standing (none / 0) (#21)
by BrassTacks on Fri Mar 20, 2009 at 01:32:38 AM EST

They screwed up when the passed a bill that no one, other than Dodd and Geithner, had read. Now they're trying to cover their butts with lots of shouting, arm waving, and finger pointing.