horns of dilema

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interesting I think, anti tax house republicans vote to raise marginal tax rates to %90. seems to me house republicans and democrats have hit the ethics bottom of the barrel at the same time. This "public revenge tax bill" is the single most bizarre legislation to come out of the house of reps in a long long time.
the finger of guilt for the bonus boondoggle should be aimed very directly at the entire congress as well as the current and recently past presidential administrations.
btw, I think the bonus issue is a dead issue and should not be brought back to life.

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@dyslexia,

I agree. This witch hunt over bonuses is ridiculous. The amounts of money in question are not going to affect the success or failure of our economic recovery and repair, and that's the highest priority.

There are tons of things about the bailouts which are unfair. People need to accept that and get over it. We've been electing **** leaders for decades, and now we have to swallow the bitter medicine and let the latest bunch of congressional morons do their best until we get a chance to put a new bunch of morons in their place.

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@dyslexia,

dyslexia wrote:

interesting I think, anti tax house republicans vote to raise marginal tax rates to %90. seems to me house republicans and democrats have hit the ethics bottom of the barrel at the same time. This "public revenge tax bill" is the single most bizarre legislation to come out of the house of reps in a long long time.
the finger of guilt for the bonus boondoggle should be aimed very directly at the entire congress as well as the current and recently past presidential administrations.
btw, I think the bonus issue is a dead issue and should not be brought back to life.

In the first place the principal supporters of this absurd, impractical, and unconstitutional legislation are the Democrat leaders of the House and Senate - not the Republicans who mostly oppose it. I'm not suggesting that Republicans are immune to demagogery, but instead that, in the case at hand, it is the Democrats whose political tit is in the wringer and who are leading the mischief.

We are just beginning to rediscover what an inept manager of business operations governments really are. I don't think the payment of the bonuses is itself a valid issue - in the main these were pre-existing contractural obligations. Moreover the money involved is miniscule compared to the boondoggles and pay offs to constituent groups built in to the recently passed and grossly misnamed "stimulus" bill.

The spectacle before us is instead a result of the class warfare rhetoric put forward by the Democrats and their embarassment at the contradictions to it that were recently exposed. The real comedy here is the hypocritical squirming and outrage being voiced by Barney Frank, Chuck Schumer and Chris Dodd - all major beneficiaries of the political contributions of the very companies (AIG, CITIGROUP, Fannie Mae & Freddie Mac and others .

The one good outcome here is that the political fate of other planned bailouts (for the auto companies and the UAW) is now likely sealed.

Bankrupcy, liquidation and reinvestment produces more acute pain, but generally costs far less in the long run.

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@georgeob1,

No, the comedy is how it is the democrats fault in your mind george..

Did you not live in the US for the last 8 years?

By the way, did you know that 40% of the boondoggles and payoffs in the stimulus bill appear to have been put in there by Republicans?

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@dyslexia,

What I think will be interesting is the fallout from the companies that owed back taxes but received bailouts. Supposedly the CEOs had to sign a statement saying their company did not owe taxes.

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Come on guys, this is a perfect opportunity to bash congress as a whole. If you pick on the Repubs or the Dems you're cutting yourself out of a big piece of the fun.

Let's face it. We're the morons, we voted for them.

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@georgeob1,

Quote:

We are just beginning to rediscover what an inept manager of business operations governments really are.

Almost as inept as their original managers, wouldn't you agree?

Cycloptichorn

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Actually, here's a good comment on it -

Quote:

here's another take on it. the 80% shareholder of AIG have voted to eliminate bonuses.

And not just AIG but all bailed-out corps. And for good reason.

The protestations that people will quit their jobs over this are ******* ridiculous. Nobody in this environment is going to quit their job and walk away b/c they get taxed on bonuses they don't deserve.

When your company is billions in hock to the taxpayers,
You don't get bonuses.
Doesn't matter what your contract says.

Not a hard concept to figure out. Most people wouldn't expect bonuses at a time like this. But Big Business has gotten to the point where they feel OWED this money. **** that ****.

Cycloptichorn

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I simply do not see how business can be conducted in conditions like this. Mortgage lenders used to make long term loans in expectation of receiving their principle, plus enough interest to cover loses, inflation, and profit. Now? Who has any idea what their portfolios are worth? Likewise, bonuses determined by contracts arrived at before bailouts were conceived are essentially declared illegal, or taxed out of existance. Markets just cannot work if contracts can be voided.

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@dyslexia,

dyslexia wrote:

This "public revenge tax bill" is the single most bizarre legislation to come out of the house of reps in a long long time.

The constitution prohibits a bill of attainder for a reason. I think this violates the spirit if not the letter of such provisions.

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@roger,

Quote:

Markets just cannot work if contracts can be voided.

Markets work just fine that way. If AIG had declared bankruptcy, those contracts would have been voided by the court.

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@dyslexia,

dyslexia wrote:

btw, I think the bonus issue is a dead issue and should not be brought back to life.

yeah. talk about digging the horse back up and putting a gun to it's head...

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You are seeing, I hope, the first steps of major change in the way we handle compensation here in America.

We're calling the bluff of Wall Street. Let's see them quit. For too long they've pretended they have us by the balls; now it's the other way around, and let's see how much they like the squeezy squeeze now that they are in trouble.

Cycloptichorn

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@Robert Gentel,

Robert Gentel wrote:

dyslexia wrote:
This "public revenge tax bill" is the single most bizarre legislation to come out of the house of reps in a long long time.

The constitution prohibits a bill of attainder for a reason. I think this violates the spirit if not the letter of such provisions.

not sure about this at all, I suppose the courts would have to find that the bill is meant to be punishment rather than establish jurisdiction over taxpayer monies, pretty fine line. Far beyond my ken of constitutional law knowledge. My primary objection to this legislation is that it seems totally dictated by public uproar to obscure congressional failure on the part of both parties. It's trite, petty and a complete waste of legislative energies. Here's hoping the Senate shows better judgment.

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@Cycloptichorn,

Cycloptichorn wrote:

You are seeing, I hope, the first steps of major change in the way we handle compensation here in America.

We're calling the bluff of Wall Street. Let's see them quit. For too long they've pretended they have us by the balls; now it's the other way around, and let's see how much they like the squeezy squeeze now that they are in trouble.

Cycloptichorn

Well the truth is "we" don't handle compensation in this country and I earnestly hope that "we" never do. That is a matter for negotiation between employeer and employee. However, as the current administration seems to have a basic problem with the idea of private property and individual freedom, we will likely hear more about this.

It is interesting that very little has been published about how many people are involved in the $169 million in bonuses and just what the average individual amount might be. In addition, in the financial industry in particular, salaries are often small and the majority of an employee or manager's compensation comes from a performance based bonus.

My company sets aside 22% of pre tax profits for bonus payments to employees, and they are distributed rather widely in the company. This is not particularly unusual.

I'm not suggesting that there haven't been serious excesses in Wall Street. My preference in these cases is to allow the companies to fail, the stockholders to lose everything; the employees to lose their jobs with severance payments intact and the bondholders to get what's left (if anything).

We have been presented with the theory, accepted by both parties, that the banks and companies like AIG are too deeply imbedded in the money supply and the flow of credit to be allowed to fail. The theory holds that we will suffer more injury by letting them fail than by bailing them out. I'm not really sure the theory is correct, but as long as we are applying it, I would rather rely on the management ability of the average greedy bastard on Wall Street than the wisdom and honesty of Barney Frank, Maxine Waters, Chris Dodd and Charlie Schumer.

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@georgeob1,

Quote:

My preference in these cases is to allow the companies to fail, the stockholders to lose everything; the employees to lose their jobs with severance payments intact and the bondholders to get what's left (if anything).

What fantasy world do you live in?

The employees are low on the totem pole when it comes to payment for a bankruptcy. They are nothing more than an unsecured creditor once the company declares bankruptcy and would be lucky to get a final paycheck let alone a severance payment.

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@parados,

In chapter 11 Judges have a good deal of discretion and employees generally fare far better than leaseholders and other unsecured creditors. You are correct about severance payments, but then, as you may note, I was expressing my preferance.

What fantasy world do you live in?

1 Reply

@georgeob1,

THe SOuth DAkota News Blog has, this AM, presented the issue of the Constitutionality of Congress' action re: The TAx penalty on AIG employees

Quote:

File under “fools go.” The House of Representatives, responding to the AIG bonus issue with all the deliberation and finesse of a dancer in a mosh pit, has slapped a 90% tax on the greedy AIG financiers. So, having shoveled hundreds of millions to AIG, we are now about the business of taxing some of it back.

Okay. But there may be a little problem, which is the Constitution of the United States. Specifically Article 1, Section 9,

Clause 3: No Bill of Attainder or ex post facto Law shall be passed.

A bill of attainder is a law that singles out a specific person or group of persons for punishment without a trial. This is the kind of thing wicked English Kings and Parliaments did, along with drawing and quartering. One of the problems with due process is that the guys you want to see drawn and quartered don’t always get drawn and quartered, so why not just pass a law that declares them guilty and proscribes the punishment? Well, according to the clause above, Congress can’t do that.

The House bill looks a lot like a bill of attainder to me. It singles out a very specific group of people, and draws and quarters with the tax power. I don’t know how the courts will come down, but it seems certain that the courts will get involved. That will mean a lot of people fiddling while money burns.

This is unserious government. If we are going to use public power and wealth to try to correct economic dysfunction, maybe we need the private sector to cooperate. Does it encourage such cooperation to go into a tizzy and slap the pee wee of everyone who participates in the process? Maybe not.

But the current Congress seems to regard the Constitution as a set of suggestions. I suggest that we should take that seriously.

Posted by Ken Blanchard

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@dyslexia,

dyslexia wrote:

not sure about this at all, I suppose the courts would have to find that the bill is meant to be punishment rather than establish jurisdiction over taxpayer monies, pretty fine line.

Like I said, I don't think it violates the letter of that law, but the spirit of it.

I don't mind if the public wants that bonus money back, but I think that using taxes to get it is wrongheaded. I don't want taxes used as a the public's bludgeon.

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@Robert Gentel,

I believe the House legislation rather clearly violates the spirit AND the letter of the constitution - it is both after-the-fact and directed at particular entities. In its inept construction this piece of legislation would create a host of other side effects that are only beginning to emerge. Worse, in the awkward adempts to limit unanticipated consequences and focus the effect on AIG the House made it quite literally a Bill of Atttainder which is expressly prohibited in the Constitution.

Chuck Schumer's recent public statements don't suggest a greater degree of wisdom in the Senate.

However, I believe that our esteemed legislators already know all this to be true. There will be no such legislation. This is all just a bit of cynical kicking of dust in the air to obscure their folly on the part of our idiot Congress.

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