Congress and President Obama find themselves in a cold sweat frenzy over the AIG bonus payments that hit the airwaves Sunday night (although Congress knew about them long before then). The Politico asked the best question of the day:
Here’s something neither Obama nor Grassley answered in their bellicose remarks Monday: Why did it take so long for the president and senior lawmakers to get so worked up? More troubling, why did it take so long for them to discover AIG planned to give huge bonuses in the first place?
…AIG disclosed its retention-bonus program more than a year ago, including bonuses directed to those handling the exotic derivatives that got the company and the country into this mess.
Hmmm. From beneath the righteous indignation of all these lawmakers and the Obama administration a familiar odor of CYA is beginning to emerge. In an effort to stoke the populist fires around this issue some congressmen, upon learning they have no legal basis to unwind the already paid bonuses, are threatening the nuclear option:
Senate Democrats threatened to tax the bonuses at up to 91 percent through narrowly written legislation, said Schumer, if AIG does not return the money voluntarily. Republicans have said President Barack Obama should have done more to prevent the executives from accepting the bonuses in the first place.
Senate Finance Committee Chairman Max Baucus asked, “What is the highest excise tax we can impose that will stand up in court? Let’s find out what it is.”
In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money.
Setting aside for a moment the matter of paying these bonuses with tax payer financed bailout funds, any reasonable person must ask: Do I want Congress to go after me like that? That’s not a moot question because once a precedent is set it’s almost impossible for Congress to resist trying the same maneuver again.
Congress and the Obama administration are treading on dangerous ground with the AIG bonus issue and, understandably, the law of unintended consequences will soon be seen in other venues.