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On the AIG kerfuffle:
This whole AIG fiasco...is just a complete farce. What it really shows is how the government has completely bungled the AIG takeover. Blame the Bush administration and the Obama administration. It also shows, once again, why the government shouldn’t run anything, because it cannot run anything.
AIG should have been placed in bankruptcy last fall under some sort of government sponsorship. While in bankruptcy, all the salary contracts (and every other AIG contract) would have been nullified and voided. At the same time, there would have been an orderly liquidation and sale of AIG’s assets and separate divisions.
—Larry Kudlow
I don't like the idea of tax money being used for multi-million dollar bonus checks, particularly when those millions are going to corporate executives who have driven their company into a ditch. This is why we shouldn't be handing out billions of taxpayer dollars to private corporations. Having said that, it's time to get some facts straight about the $165 million AIG mess.
1. The AIG employees recieved the payments in question persuant to contracts written last March (pre-TARP). The bonuses in these contracts were NOT based on performance.
2. AIG is headquartered in Wilton, Connecticut. In Connecticut they have a little gem called the "Wage Act." The state law allows employees to sue for twice the full amount of contractually owed wages plus attorney's fees, if an employer refuses to pay up. So...you're running AIG. What would YOU do?
3. The Democrat spendulus bill that was rammed down America's throat provided an extra layer of protection for these bonuses (thanks to AIG's bestest buddy, Democrat Chris Dodd). Oops! Our Democrat Congress and our Democrat POTUS have had considerable difficulty coming up with effective CYA maneuvers. In an act of despiration, Nancy Pelosi has proposed scandalously confiscatory legislation that would recover the bulk of these bonuses by taxing them at a rate of 90%. Ninety percent is barely enough as far as Chucky Schumer is concerned. "They should voluntarily return [the bonuses]. If they don't, we plan to tax virtually all of it," New York Sen. Schumer declared on the Senate floor.
4. Small problem with Madame Nancy's plan: it's unconstitutional. Article I, Section 9, clause 3 expressly forbids "bills of attainder." What's a bill of attainder? "It's a law that is written that is specifically aimed at an individual or small group of individuals, with the purpose of punishing or penalizing them in some fashion. It is also referred to as a 'private bill.' The British did this on a regular basis in the eighteenth century, which is one reason why the Constitution absolutely forbids it."
5. Not that congress actually cares about what the constitution says, but Article I, section 9 also prohibits the passage of ex post facto laws. "An ex post facto law is one that is passed after the event to which it relates has already occurred (another favorite strategy of the British). If Congress were to make the receipt of these bonuses taxable at a rate different than they are taxable now, and then enact a criminal penalty for the failure to pay, it would clearly be an ex post facto law and therefore would violate Article I."
The idea that Congress would even consider interfering with these contracts retroactively should be a grave concern for every one of us. And the idea that the government (with the support of a populist outrcry) would target a small group of individuals for a punitive 90% tax is extremely frightening to me. Who's next?!
AIG should honor its contractual obligations to its employees. Congress should stay out of it. Yes, it's depressing to witness this scandal, but let's not allow it to become a distraction. We should be much more concerned about Congress's insatiable, multi-billion dollar pork addiction. Let's get serious about saving taxpayer dollars: how about a 90% tax on porky earmark payouts?
Come on Nancy, make it happen! I'll make it easy for you. I've taken the liberty of borrowing your words; here's your press release:
"We must protect the American taxpayer from politicians who would use their constituents' crises as opportunities for private gain. Because Congress does not use sound judgment in the use of taxpayer funds, taxpayers will recover the bulk porky congressional indiscretions with a 90 percent rate of taxation on earmark payouts. I urge all my colleagues to vote in favor of this legislation and in favor of recovering taxpayer dollars and protecting Americans from the continued poor judgment of America's biggest spenders."
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