House Drops Tax Hammer On Bailout Bonuses

Dems Propel Measure To Slap 90% Tax On Wealthy Bonus Recipients; AIG Turns Over List Of Bonus Recipients To N.Y. AG

(CBS/AP)  Acting swiftly, the Democratic-led House approved a bill Thursday to slap punishing taxes on big employee bonuses at firms bailed out by taxpayers.

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money.

"We want our money back now for the taxpayers," House Speaker Nancy Pelosi said.

Democrats led the charge in an attempt to get in front of raging public anger over the AIG bonuses, even though a provision that would have made such payouts illegal was stripped from last month's $787 billion stimulus bill by its Democratic sponsors.

The vote to tax back most of the bonuses was 328-93. Voting "yes" were 243 Democrats and 85 Republicans. It was opposed by six Democrats and 87 Republicans.

President Barack Obama said the vote "rightly reflects the outrage" that so many people feel about insurance giant AIG. The president said he wants to receive legislation that will send a strong signal to business executives "that such compensation will not be tolerated."

Meanwhile, New York Attorney General Andrew Cuomo said AIG has given him the list of employees who received a total of $165 million in retention bonuses.

Cuomo said he won't release any employees' names until his office has answered any security concerns raised by the AIG employees. He also said he will work with AIG in the coming days to determine which workers have decided to return the payments.

The bonuses, totaling $165 million, were paid to employees of troubled insurer AIG over the weekend, including to traders in the unit that nearly brought about the company's collapse.

The wide margin of victory came despite sharp Republican attacks calling the legislation a ploy to paper over Obama administration missteps.

Minority Leader John Boehner, R-Ohio, said the bill was "a political circus" to divert attention from why the administration and congressional Democrats had not done more to block the bonuses.

However, although a number of Republicans first cast "no" votes, the political appeal of the legislation apparently won the day. In the closing moments of the roll call there was a heavy GOP migration from the "no" column to the "yes" side before the final vote was called.

Democratic leaders rushed the bill to the floor under a procedure that requires a two-thirds majority for passage.

Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses, nullifying the payouts.

Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money.

A competing bill is gaining support in the Senate that would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent excise tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.

In the House, a nonbinding resolution to express "the sense of Congress that the president is appropriately exercising all of the authorities granted by Congress" to deal with economic crisis didn't fare as well as the vote to tax the bonuses. The vote on that measure was 255-160, short of the required two thirds margin.

A tax expert said there is plenty of precedent for levying punitive taxes on behavior that lawmakers find objectionable. Robert Willens, a corporate tax lawyer in New York, cited the steep excise taxes levied on money paid to firms to keep them from launching hostile takeover bids, known as "greenmail."

"You can write very narrowly tailored laws," Willens said. "And they can do it for bonuses already paid."

The bill passed as controversy swirled around the disclosure that, while Democrats and Republicans were both railing about the AIG bonuses, Democrats were also responsible for removing a provision, originally contained in stimulus legislation, to ban such bonuses.

Senate Finance Committee Chairman Chris Dodd, D-Conn., said Wednesday his staff agreed to requests from the administration to delete the executive pay provision that would have applied retroactively to recipients of federal aid.

However, Dodd said he was not aware of any AIG bonuses at the time the change was made.

President Barack Obama, who took office just under two months ago, told reporters Wednesday that his administration was not responsible for a lack of federal supervision of AIG that preceded the company's demise.

But Mr. Obama added, "The buck stops with me."

According to the Washington Post, Mr. Obama and the Treasury Department only found out about the bonuses days before they were released - the results of a breakdown in communication between the White House and the Federal Reserve, which knew about the payments months ago.

[jpinsatx]

REALITY CHECK... The issues are: 1) Pay Cuts, Not Bonuses. 2) Who to Terminate. 3) Who to Prosecute. Rewarding Incompetence and Corruption (with taxpayer money) is Total Insanity!

[TPS2]

As a constitutional lawyer, Obama should know that singling out a specific group of people for punitive taxes is illegal. His blunders amaze me, yet his minions follow blindly.
Posted by joule18
You are correct- A bill of attainder is prohibited by the United States Constitution. Article 1 Section 9 (Limits on Congress) Clause 3 of the United States
Constitution States: "No Bill of Attainder or ex post facto law shall be passed. What the House of Representatives did yesterday is technically illegal.

[joule18]

As a constitutional lawyer, Obama should know that singling out a specific group of people for punitive taxes is illegal. His blunders amaze me, yet his minions follow blindly.

[longtree-2009]

hard to see the big change, or difference, between the obama and bush administration. congress is powerless or so it seems and greed, corruption continues to reign. american's are still being hosed. senator dodd soldout and geithner was already in the pocket of big business, wall street, since he was a former lobbyist. the rules, justice, the constitution, the laws, doing what's right, just doesn't apply to the rich and powerful. the rich and powerful are above the law and even when caught at wrong doing, or breaking the law, they receive no severe punishment as an ordinary american on the street would receive in the way of punishment.

[despido]

Most of this is for show.... I believe it's unlikely that these selectively punitive, retroactive taxes will make it through the Senate, through the joint House and across the Presidents desk and on to the IRS tax code. This is for show - a carcus to kick aroud - a distraction. All this to recover 1/10th of 1% of the funds that congress lost track of.... Get Real.

But the symptom here is much larger than the problem - singling out a given segment of society to punish, then accuse, then belittle, in that order, is extremely dangerous. I see an enormous precident being set - guilt by association is becoming the law of the land - and applicable to all but the elite.

[clancy49]

Bush revoked our Constitutional Individual Liberties and Obama is revoking our Constitutional State Liberties. The media is and was controlled by these propaganda celebrities and call it benevolence. This malevolence for both. The financier are stringing their puppets along to do their bidding and we the people cheer. Remember Star Wars the last movie? Remember Senator Padme in the Senate Chambers? "And so the end of democracy is greeted with cheers and applause."

[Marie Zarankevich]

This is not about politics, it is about greed. -- It is about taking a slightly greater percentage of profit every year for many decades, until there is so much that you no longer know what to do with all of it. -- It is about lies, secrecy, and secret friends in high places. -- It is about power of a kind that has never existed in this world before. -- It is about a few insanely greedy people taking all good things to themselves, and leaving everyone else with the dregs of what's left. -- It is about freedom in a world where only the wealthy feel they have a right to any freedom, to any autonomy or self-direction. -- It is the end-result of hundreds of years of absolute greed and misuse of populations. -- If we are smart, perhaps it is over.

[Marie Zarankevich]

These huge businesses have been stealing from us for so long that they think it is their due. -- They are holding us hostage. -- They expect us to capitulate, because they assume that we have no alternatives. -- These are the terrorists that we really have to be afraid of. -- They are the terrorists that Bush was aiding and abetting for eight long years. -- We've been bought, sold, skrewed, glued, and tatooed. -- They are nothing better than licensed gangsters.

[Rowdy99]

I don't like our Congressmen and women and our president, and I think we should tax their campaign dollars at the rate of 90%.

That would make up for all the lost taxes they've just FORGOTTEN to file.

I also think anybody who is a registered lobbyist should be taxed at the rate of 90%.

[rhs648]

I am appalled by our government and the peoples willingness to go along. retroactive taxes can be levied on us for any reason they dont like. Who is next?
Posted by McHineguy a

Too bad this level of outrage didn't exist when they were nailing smokers.
Posted by omega39-2009

omega39-2009 - There is a certain irony to your statement. Although many people might not appreciate smokers, the question is what group is next to have limitations, prohibitions, bans or some other type of discrimination against them.

[TommyJefferson]

This action is illegal and a distraction, as Ron Paul declared in his 2 minute speech in the House. CONGRESS INCLUDING THEN SEN. OBAMA voted to give the Treasury Secretary the exclusive power to disburse all funds (now well over $1 trillion) without disclosure and without being subject to review. Obama and most of Congress are controlled by intl. bankers who are openly planning for a global government. See
http://www.youtube.com/watch?v=eAaQNACwaLw

[vanron100]

Paulson (+ Geithner, etc) designed this 'Ponzi' scheme (TARP). We understand everyone wanting us to buy more stock in order to keep the market up...fix the system...then we'll have 'confidence' to invest.

And that FIX is simple and oblivious, but everyone seems not to be addressing it directly...
- it's 'Corruption-Corruption-Corruption'.
ie. special interest groups, earmarks, lobbyist, elimination of rules and regulations, the financial sector having contributed over $5.2B to political campaigns, same people who got us in this mess are now tying to get us out (humanly impossible...they will, and have instead spent most of the time & money trying to cover-up the industry's underlining behavior).

Corruption is the 'root' problem here...as it is everywhere. Until that gets fixed first...everything else is redundant...we're just pouring $$$ into the abyss! Wall Street has always been Ponzi Street, and the Golden Rule always applies; 'never invest $$$ you can't afford to lose'.

Fix the 'corruption' - then we'll have 'confidence'.
The solution ? 'Transparency-Transparency-Transparency'.
How? Start now Restructuring (nationalize, fix, resell) all the zombie banks - the FDIC does this every day.

[pensacola8-2009]

This bill might not pass the senate if they consider the federal constitution Article 1 section 9 & 10 - Ex Post Facto.

There is an order which things are suppose to happen to avoid retrocative legislation.

First, you make a law or tax code and lay out the violations and penalties.

Second, you witness the violation.

Third and last, you indict the violator with a charge for violating the law.

Legislation for tax rates in the same year that an earner is working is a political suicide.

A 90% tax rate for something doesn't sound like the USA I went to fight for and serve.

The Fed Chairman and the Bush Administration ram-rodded the AIG bill through expeditionsly and didn't have time to deliberate or consider the business climate that was possible in a post-election scenario.

The Repulbicans claimed that the bill violates our constitution and I have to agree with them completely about this one. The Republicans win this one on a constitutional techincality. The Democrats need to brush up on their constitutional studies or they will be facing some extremely humiliating days in about 16 more months when the next election comes for both House and Senate seats.

Taxing people you have disagreement with to settle a conflict is simply beneath the USA constitution. Lady Liberty will cry and bow her head down on this one if it passes in it's present form through the senate.

[despido]

Republicans voted for the mess to continue. May be thats why economy just getting worse and worse under Republican rule.
Posted by lami987 at 5:47 PM
+++++++++++++++++++++++++++++
And what planet are you on?

[lami987]

Democrats messed up big time. Fortunately they know how to correct it. On the contrary Republicans voted for the mess to continue. May be thats why economy just getting worse and worse under Republican rule.

[ioweign]

I am appalled by our government and the peoples willingness to go along. retroactive taxes can be levied on us for any reason they dont like. Who is next?
Posted by McHineguy


Those No-Bid Contracts...

[AJMarine12]

Of course the joke in the end is on us for Congress will likely spend more time talking about the $165 million in bonuses these faceless AIGers received than they did debating ? and, maybe more important, reading! ? the $787 billion stimulus bill

[despido]

The United States, under this administration, is rapidly approaching the point where certain of its citizens are arbitarily labled "Enemies of the State".

For example: Those in power obviously take Rush Limbaugh more seriously than do listeners to his entertainment oriented commentary. Singling out Jim Cramer, who, like Limbaugh, uses a schtick that works for him. But they have drawn the ire of this administration. Should they be silenced as suggested? Excuse me? As enemies of the State? Hardly.

Now we have Insurance and Debt Trading specialists who stayed on in a basically defunct company to do the business of shutting it down. The government does not have this level of knowledge or talent; and now turns on these people as 'enemies' for much the same reason as Limbaugh or Cramer. To distract from the administrations own incompetencies.

Whether one subscibes to the goofy schtick of those mentioned above, or the practice of trading debt instruments - there is an underlying cancer here. We are being purposely divided as a nation purely to fulfill an agenda that will benefit only those in power - and I do not mean all those of that party affiliation. This is a wake up call.

[nearl451]

Knee jerk legislation.

Rush stuff through then knee jerk.

[endurorob]

I have a question. I on Eastern time and my CBS pages show the time three hours behind me. May be something wrong with my system but it is OK on all the other networks. Any of you having the same problem????????????????
Posted by ormondbeach1 at 4:20 PM : Mar 19, 2009

The time thing started a couple of weeks ago when they "updated" the website.