Thursday, March 19, 2009

Tax and Tax

This is outrageous. The House of Representatives is voting on a bill to tax 90% of the bonuses that AIG executives are receiving. Forgetting the fact that they have no basis for imposing this tax other than they need to look like they're doing something, who is really at fault for allowing these bonuses in the first place?

The stimulus bill that was passed a month ago went through several incarnations. The version that passed the Senate would have been sufficient to keep these bonuses from ever being paid. However, in the conference before passage of the final draft of the bill, Senator Chris Dodd inserted language that would allow bonuses agreed upon before the signing of the bill to be paid. (It took a while, but he finally admitted that he was the one who wrote the final language of that stipulation.) The House and the Senate were supposed to have two days to review the final draft before voting, which makes perfect sense when you're dealing with any sort of bill at all. Speaker Pelosi, however rushed the final bill through in less than a day.

Would the bill have still passed if Congress had been given the full two days? Probably not, which I suspect is the reason they were not given those two days. Did Speaker Pelosi know about the bonus provision? Did either she or Senator Dodd know about the multimillion dollar bonuses already promised to AIG executives? Personally, I doubt it. That wouldn't change the fact that this legislation was passed irresponsibly without proper review and at least one consequence is that the United States is now required to pay millions in bonuses to AIG executives who most likely do not deserve them.

What's Congress' solution to this mess of their own making? Admit they made mistakes? Contritely ask the public's forgiveness? Vow to do better the next time they bail out a failing company?

Nope. Their solution is to impose a massive new tax and hope that the American taxpayers will continue to view the executives as the bad guys, despite the fact that all they've done is collect contractually guaranteed and Congress-approved bonuses.

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