House Passes a Bill to Levy a 90% Tax on Executives at Rescued Firms; Political Posturing Intensifies

 by Teh Nutroots |  Huh.  That's one way to clawback those bailout dollars.  The House has just passed a bill (368-93) taxing the AIG bonuses at a rate of 90%. The tax applies applies to executives at companies getting more than $5 million in taxpayer bailout bucks.  (NYT) 

The measure easily surpassed a procedural hurdle requiring a two-thirds majority vote, thanks to considerable Republican support. The Senate will consider a roughly similar measure, perhaps next week. If something is approved in that chamber the House and Senate versions would have to be reconciled, so prospects for final passage of a bill are unclear.

But there was no doubt after the House vote that the lawmakers were keenly aware of their constituents’ anger, which was focused on A.I.G., although the House measure would apply to executives of any company getting more than $5 billion in federal bailout money.

As my co-blogger has said, you gotta love Congress for snatching up their pitchforks and torches and joining the mob to hunt down and skewer the monster it helped to create.  But that doesn't mean I disagree that the government should get back that money.  Bailing out the company is one thing; seeing individuals profit from its collapse is quite another.  

Ezra Klein doesn't think the tax is going to reduce public anger.

Would recapturing the AIG bonuses defuse populist anger this point? My sense of the politics is that disgust at Wall Street has passed a tipping point, and from here on out, every measure will have to include something that satisfies the electorate's "hang the bastards" sensibility.Is that wrong? Would sufficient punishment of AIG and AIG alone render this episode moot going forward?

It's certainly wrong to scapegoat a few individuals for doing what, a few short months ago, was not only legal but also considered by many to be admirable....a realization of 'the American dream' of magically spinning money out of straw, cow pies, and bird droppings.

In the meantime, the political theater wags on:

“The people have said ‘no,’ ” Representative Earl Pomeroy, Democrat of North Dakota, shouted on the House floor. “In fact, they said ‘hell no, and give us our money back.’ ”

“Have the recipients of these checks no shame at all?” Mr. Pomeroy continued. Summing up his personal view of the so-far anonymous A.I.G. executives, he said: “You are disgraced professional losers. And by the way, give us our money back.”

Representative Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee and has been among A.I.G.’s fiercest critics, spoke contemptuously of the bonus recipients as people “who had to be bribed not to abandon the company” they had nearly ruined.

There's just one thing:  According to The Washington Post, that's not the case.  According to WaPo, the guys who created the credit-default swap mess are long gone.  I don't know whether that's true or not, but it should give people pause before they carry on baying for blood as well as blood money.   

Anyway, the Republicans join the Dems in decrying AIG -- and in scapegoating the bonus recipients -- though naturally Boehner and his gang of losers are not enthusiastic about passing what some Republicans are pleased to call "a confiscatory tax."  The Malkin, who hates the bonuses, has written a piece aimed at the outraged Main Streeters called "First they came for the AIG bonuses." 

Wait.  Aren't the AIG bonuses funded from our money?  Wasn't that sort of the point?  And shouldn't that change the meaning of "confiscatory"?  For it to be "confiscatory," wouldn't we have to concede that it was their money?

Any threat to their wallets scares the bejesus out of the GOP and the ever credulous "You can fool some of the people all of the time" "Republican base," whether down on Main Street or in the trailer parks. 

According to the ever-reliable GOP, TARP is now the fault of Democrats, not Bush's pal Hank Paulson. 

Republicans were not to be outdone in expressing disgust, and they had a collective “I told you so” message for Democrats. Representative Ed Royce of California, for instance, said he would vote for the bill on the floor, but he proudly recalled that last fall he had voted against the Troubled Assets Relief Program, the bailout plan that is the source of mounting public fury.

Before the vote, other 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. (NYT)

Well, well, look at that:  the Republicans actually have a cunning plan to offer as well as mere obstructionism.  That's new.  Er....wait.  What is this cunning plan of which they speak?  Benen explains:

[W]hat's the "Republican alternative" on this? It's a non-binding resolution asking the Treasury Department to figure out a way -- the GOP's bill doesn't specify -- to recoup the money AIG paid in bonuses. Seriously, that's it. The "alternative" bill basically just passes the buck, telling Treasury Secretary Tim Geithner, in effect, "We don't have a policy per se, but be a mensch and go get all the money back." That's the "better" Republican "alternative" to the Democrats' plan to recoup the money through taxes.

And if Geithner didn't figure out a way to get the money back? Nothing happens. This, Boehner believes, "would recoup all of the money immediately."

Obama took office on January 20 and it's almost March 20th now; ergo, it's all the Democrats' fault!

“This bill is nothing more than an attempt to cover their butts,” said House Minority Leader John Boehner (R-Ohio). (The Hill)

I think Boehner's just jealous because while it's usually possible to cover your butt, it's a different matter covering your butthead.

Memeorandum has more.

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