Schumer to AIG: Give back the bonuses or we’ll tax them away
posted at 4:05 pm on March 17, 2009 by Allahpundit
Share on Facebook | printer-friendly
A zesty dose of outrage from the Senate’s second-biggest recipient of AIG campaign contributions. That’ll buy you a vote on the bailout, boys, but not even Schumer’s going to brave the flames of this populist brushfire. Reid said this morning that they’ll have a bill ready to go within 24 hours to target the bonuses at possibly a 90% rate; we’ve been arguing in Headlines ever since about whether that constitutes an unconstitutional bill of attainder. I’m skeptical as I suspect even a heavy tax wouldn’t qualify as “punishment” within the meaning of the clause, especially when recouping part of a massive bailout of a company the government now owns. An equal-protection argument would be hard too, as courts typically defer to legislatures unless they’re targeting a group based on race, gender, or religion. Sounds like the point is moot, though, as they’ll probably draft the bill broadly enough to hit any company that falls within its narrow parameters:
Rep. Gary Peters (D-Michigan) submitted a bill yesterday which would implement a 60% tax rate on all bonuses about $10 thousand, targeting employees of firms in which the U.S. government holds an equity stake greater than 79 percent. The bill is clearly aimed at the excesses of AIG, but is believed to avoid rejection as a “bill of attainder” since the bill covers any firm in which the government may hold nearly 80 percent or more ownership stake. Given the current conditions within the financial industry, it’s not a stretch to imagine other large banks fitting similar conditions if their liquidity does not improve.
Exit question: Is it time yet to start the AIG managed bankruptcy watch?
You must be logged in to post a comment.
Blowback
Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.
Trackbacks/Pings
Trackback URL
Comments
Comment pages: « Previous 1 2
As I posted in another related post…
As Feb-March is HR musical chairs in NYC, these 73 who represented over 50% of the contested bonus pool were probably high end trader / sales types who could have easily jumped ship for multi-year 7 figure contracts at the time.
This was prudent managerial judgment, preventing a brain drain before any TARP money was received. This also represent normal compensation levels for these employees.
phreshone on March 17, 2009 at 4:50 PM
I don’t think ex post facto laws work either. I think You can pass tax legislation to apply to that year, so these guys would have the money until tax time and then they’d have to pay it all back or risk going to a PMITA federal prison. Which would be fine with me.
Proud Rino on March 17, 2009 at 4:50 PM
Like the many comments before me, this sets a dangerous precedent…
Neo-con Artist on March 17, 2009 at 4:51 PM
As to the constitutionality:
1) Presumably they won’t be writing any criminal penalties into the tax code here, so it won’t be a bill of attainder, which is a criminal penalty only, and usually carries a punishment of death, as a matter of fact.
2) This is not an ex post facto law. The term ex post facto in the US Constitution has been held to refer only to criminal laws and not civil laws, although at the time of the framing it was meant to apply to both.
3) It could be possible to write a bill that would only target AIG employees but not anyone else and to claw back that bonus money through taxes, but it sets a pretty dangerous precedent.
Although hey, I say Republicans should use it to “claw back” the salaries of athletes and movie stars when we get into power again.
4) It does not violate the Contracts Clause. The Contracts Clause only applies to the states, not the federal government.
5) It does not violate the Takings Clause. Don’t even go there.
6) It does not violate either of the Due Process Clauses. I’m not going to go into the analysis.
7) It does not violate the Equal Protection Clause. Don’t go there either, not worth the time explaining it.
Tabris on March 17, 2009 at 4:51 PM
Schmucky Schumer…..proving once again that hypocrisy is alive and well. Also, that Democrats hate wealth.
Geithner looks like a genius compared to this Bozo.
Dr.Cwac.Cwac on March 17, 2009 at 4:51 PM
All together now Congress, Mr Hope and Change, Sheriff Biden:
“We’re a bunch of stupid shits that shouldn’t be allowed outside without a keeper!”
GarandFan on March 17, 2009 at 4:51 PM
AIG should sue to get their money back. All those campaign donations and it looks like AIG might not get what they paid for.
This reminds me of the old saying that an honest politician is one who, when bought, stays bought. By that standard, Shumer and Frank and Dodds (and a bunch of others) have proved themselves to be less than honest.
el rey on March 17, 2009 at 4:52 PM
What a stunning analysis.
LimeyGeek on March 17, 2009 at 4:55 PM
I don’t have time to write a memo for you people, I’m just pointing out that, assuming they’re not total idiots when they write their bill, they’re not going to run into constitutional issues.
I would not bet on them not being total idiots, by the way.
Tabris on March 17, 2009 at 4:56 PM
I wonder how many AIG execs are moving to greener Swiss pastures?
gwelf on March 17, 2009 at 4:58 PM
Chuck Schumer must not need money for re-election. 90% of his donors will get hit hard by this…
phreshone on March 17, 2009 at 4:59 PM
Lets see how many pork barrel earmarks will be on this one. Besides, why are we letting the government confiscate peoples money? This kind of crap should scare everyone.
lwssdd on March 17, 2009 at 5:00 PM
I’m not sure there has been this much shennanigans in the federal governemnt in………well, ever.
It really is true – the old saying….
To a Conservative every day is the 4th of July, and to a liberal every day is April 1st.
APRIL FOOLS AMERIKKA! It’s just another smoke-n-mirrors campagin.
OwlorNothing on March 17, 2009 at 5:00 PM
Just partial?
Snowed In on March 17, 2009 at 5:00 PM
Why should we think otherwise? I mean they screwed up on all the stimulus bills which how we got here in the first place. And if they only give the legislature a day to read the bill before the vote, how is anyone going to know for sure that it’s Constitutional?
SPCOlympics on March 17, 2009 at 5:01 PM
No, it wouldn’t surprise me if they write something that is totally unconstitutional just to say they did something.
Tabris on March 17, 2009 at 5:01 PM
Tax cheats belong in federal PMITA prison! They should get cell next to Geithners.
gwelf on March 17, 2009 at 5:02 PM
Someone else agreed with you above, and I do too.
Enacting legislation, now, to try to impose a surtax on bonuses that have already been paid doesn’t seem permissible. Consider it a spilled-milk/bottle or toothpaste/tube or Genie-bottle or cat-out-of-the-bag problem. It’s changing the rules of the game after the game’s begun.
The best, I think, Congress can hope to do is impose a surtax on bonuses relating to services performed in 2009.
Nice theatrics, Congress, but I think you’re a day late and a dollar short.
How’s that for cliches?
Exit question: has anyone asked whether the overseas recipients of the bonuses will be subject to any U.S. income tax? If a recipient isn’t a U.S. citizen and isn’t a resident alien and the income relates to services performed outside of the U.S., I think the bonus for that that recipient will avoid U.S. income tax.
Way to see around the corner to anticipate payment of the bonuses in the first place, Congress. Or maybe we should be thanking Dodd for his foresight in helping his AIG benefactors circumvent the issue.
BuckeyeSam on March 17, 2009 at 5:02 PM
Put your hands together… Let’s sing together,
“They botched the bailout.”
Heads up, Conservatives! We’re way behind in networking a majority surge in 2010.
Randy
williars on March 17, 2009 at 5:03 PM
This is very very dangerous
Why?
Because
First obama approves it and so does the democraps in congress and the house of repute..
then after they give them the money
and the company did TELL the MORONS IN CONGRESS
ALL ABOUT IT..
Now these same communist demigogs (the democraps)
come baCK AND state we are going to STEAL the money we approved to you by LAW
by just manipulating the TAX CODE..
So no matter what you do your screwed..
this is why we need a new revolution now..
To clean out the Cock roaches that infest
the white house
the congress
the house of ill repute (representatives)
and of course
ALL of
WALL STREET
the bankers
the CEOS..
they all shoudl do us a favor
and just committ
mass suicide..
hell the stock market would ralley then
if there were any traders left alive..
jcila on March 17, 2009 at 5:03 PM
That horse left the barn long ago…
elgeneralisimo on March 17, 2009 at 5:03 PM
Hmmmm AIG shows how no matter what happens in the world the rich will always come up with ways to get richer. Don’t hate the player hate the game. The government got suckered, it happens everyday to a ton of people. SO NOW we are going to tax Johnny AIGs money at crazy high rates which means the money will then come back as taxes and will be spent elsewhere and thats another 160 million of Dems money. The bailout has been wrong since the beginning, this is just a mockery now
Tremmy on March 17, 2009 at 5:05 PM
Also shummer if a frigging moron
he approved this and so did the evil witch pelozi
and now they are screaMING
because they were so damn stupid they didnt see it..
their all morons and need to be arrested tried
then SHOT..
jcila on March 17, 2009 at 5:05 PM
Congress has too many politicians who live in glass houses who like to throw stones at others to distract.
I’d love for these emperors with no clothes to get hit with some of their own glass shards.
INC on March 17, 2009 at 5:06 PM
Seems like my Mother use to have a saying about this kind of thing. Two wrongs don’t make a right, or something like that.
DFCtomm on March 17, 2009 at 5:07 PM
The federal government would not be retroactively changing the contracts. The US Constitution’s Contracts Clause only applies to the states, not the federal government. The Fifth Amendment’s Due Process Clause applies to the federal government, and would prevent a retroactive change in the private contract, but this is a retroactive change in taxation laws, not contract law. Retroactive taxation laws are almost always upheld unless they are discriminatory against a protected class – and guess what, AIG bonus employees are not a protected class, unless we suddenly discover they have a majority of women or something along those lines.
Tabris on March 17, 2009 at 5:08 PM
If Congress passes tax law aimed at AIG bonuses, and it’s upheld in the courts, that’s will crush private business in this country.
What corporation will want to do business in a nation where contracts are worthless and the government can tax whomever it feels is a good target?
Again- there’s an easy solution. Instead of giving $30 bn in AIG’s next bailout, give them $29 bn.
hawksruleva on March 17, 2009 at 5:08 PM
Except when they have it, apparently. You’ll take their taxes from their cold, dead hands…
I don’t think they hate wealth at all. They just love controlling every aspect of our lives and thoughts.
ddrintn on March 17, 2009 at 5:08 PM
Bite your tongue!
Vashta.Nerada on March 17, 2009 at 5:12 PM
No, but three rights make a left.
Especially when the three “rights” are Frum, Brooks, and Parker.
Snowed In on March 17, 2009 at 5:13 PM
What a pompous tool Schumer is! Maybe if the old coot had bothered to read any of the legislation he voted for, or better yet had even a SHRED of honesty in his crusty old body, he would admit that they’ve known for MONTHS that these bonus’s were coming. This is beyond insulting- anyone who thinks they can trust congress is delusional. I’m appalled at both sides on this; The Republicans have no damn business perpetuating the lie that this is so SHOCKING! It isn’t. Just more corrupt stupidity from Washington. Term limits for all!
anniekc on March 17, 2009 at 5:13 PM
So are we to believe this is brand new information about AIG bonuses? That DC had no idea this was going to happen?
This information about retention bonuses came out in December 2008. I believe the news of that time was the top 60 executives were going to forgo any bonuses. However, AIG spoke that there was “retention” bonuses that were going to be paid out later to employees who agreed to stay on for one additional year. These are the bonuses that are being discussed today.
So, if Congress and Obama knew of these bonuses back in 2008, why did Dodd place a exemption for bonuses just like that in the Executive Compensation portion of the Stimulus package and Obama sign this into law? What is this exemption? The exemption to the $500K salary cap for executives of companies receiving stimulus money is for contractual bonuses for contract signed before Feb 2009.
I guess Schummer and his cronies didn’t get to read this part of the package, huh?
LadyGator88 on March 17, 2009 at 5:15 PM
The next dumptruck full of cash is already being loaded.
We’ll be dumping money in that hole for years. If we still have money.
hawksruleva on March 17, 2009 at 5:16 PM
Oh heavens no! They knew it was in there- they adjusted the bill to accommodate the bonus’s over a year ago. This is false outrage of the highest hypocrisy!
anniekc on March 17, 2009 at 5:16 PM
Public to Shumer : _ _ _ _ yourself
Fuquay Steve on March 17, 2009 at 5:16 PM
Since congress has done such a lousy job, they should return all pay raises and pay taxes at the highest rate.
Not to mention, have the same retirement and medical as the common citizens.
Johan Klaus on March 17, 2009 at 5:20 PM
Obama said it was ok to be outrageously outraged at (certain people or group), and people were outraged and screaming for blood from these ‘bad guys’.
Yep, a true uniter we have there at the helm.
Sir Napsalot on March 17, 2009 at 5:23 PM
Hmm… how much campaign cash did Obama get from AIG after these contracts were approved?
DaveS on March 17, 2009 at 5:27 PM
Hey Chuckie!
Check out the Merriam-Webster definition of fascism:
2:A tendency toward or actual exercise of strong autocratic or dictatorial control
Moving closer every day
Southern by choice22 on March 17, 2009 at 5:28 PM
jcila on March 17, 2009 at 5:05 PM
Hawthorne on March 17, 2009 at 5:31 PM
Sayyy, does the governemt own more than 79% of Fannie and Freddie?
hawksruleva on March 17, 2009 at 5:35 PM
This is different from Democrat policies of the past how…?
Hog Wild on March 17, 2009 at 5:35 PM
79%
In what other companies does the US government own that much of an equity stake?
Why 79%
Why not 51%? Or any percentage between 51 and 79?
What are they trying to get around or protect?
myrenovations on March 17, 2009 at 5:52 PM
Tabris,
I agree with most of what you have said, except for one glaring problem.
A Bill of Attainder can indeed be civil as well as criminal legislation. In fact the framers of the Constitution were more concerned with seizure of property using this mechanism than trying to imprison somebody. Attainder was commonly used by state legislatures after the American Revolution to seize the property of British loyalists. But our founders felt that the problems stemming from the ill feelings that were caused far surpassed any benefits from this mechanism. The Bill of Attainder is closely related to the British Bill of Pains and Penalties which was also used to confiscate property as well.
I would refer you the case Cummings v. Missouri (1867). It states, “A bill of attainder, is a legislative act which inflicts punishment without judicial trial and includes any legislative act which takes away the life, liberty or property of a particular named or easily ascertainable person or group of persons because the legislature thinks them guilty of conduct which deserves punishment.”
Hawthorne on March 17, 2009 at 5:54 PM
I believe it is clear that they are trying to protect bonuses that are to be paid to other executives of financial institutions where the government has a large stake. Our legislature seems to have a firm belief that we as citizens are too incompetent to figure that one out.
Hawthorne on March 17, 2009 at 6:00 PM
This is basically right, but I disagree about the Ks clause. Whereas the 14th Amendment is clearly directed at the States, I don’t think there’s any reason why Article I would restrict a state’s right to impair contracts but not the federal govts righs. So while the Court has taken the First Amendment to apply to the Executive Branch (like in Sullivan) even though it technically only applies to Congress, I think the Supreme Court if challenged on the Ks clause is going to say it holds to the feds.
Proud Rino on March 17, 2009 at 6:14 PM
AIG would get protection from their creditors if they declared bankrupty right? Would they get protection from the US Government as well? If so, they ought to declare, just to put a boot in the a$$ of these Democrat overreachers. If they declare bankruptcy, then isn’t all that bailout money for naught anyway? So that’s two ways to make look bad the A-holes that are doing their best to make AIG look horrible. Please correct the errors in my understanding here; I know bupkus about bankruptcy (thank G0d).
smellthecoffee on March 17, 2009 at 6:16 PM
I truly detest that sanctimonious blowhard, he is the poster child for corrupt/career/slimeball politicians. Somebody remind me WHY I still live in this cesspool that is “shuma” territory. Sad part is he is/has been able to con his constituency time&time again…will the rubes ever learn?
NY Conservative on March 17, 2009 at 6:21 PM
One more point.
I think any Constitutional lawyer worth a nickel could argue this proposed legislation is a Bill of Attainder. The proceedings of Congress are a matter of public record and admissible in court as evidence.
I think that even a rookie lawyer could argue the statements by Schumer and his colleagues demonstrate a clear intent to target specific and identifiable individuals. Schumer identifies them in his speech.
I think it is child’s play to argue that private property is being confiscated as a punitive measure. The “or else” nature of the proceedings is pretty clear about that.
I feel it is a slam dunk to demonstrate that the legislative targets have been denied due process.
I know that some feel that the law can be written “broadly” enough to avoid these issues, but that is a legalistic dodge. It is clear from the debate what the intent of the law is. It clearly violates the spirit of the prohibition on Bills of Attainder even if it abides by the letter of the law.
Hawthorne on March 17, 2009 at 6:28 PM
Outdoing Nixon:
Special taxes on the politically inconvenient.
ajacksonian on March 17, 2009 at 6:31 PM
Hmm – you may have a point with the Bills of Attainder. It’s been so long since the issue was really argued at the federal level that I’m not sure which way SCOTUS would go on it. Most ancient Anglo-American case law I’ve seen on it deals with the use of it to levy death sentences on various unliked parties and not with confiscation of property, however.
As to the Contracts Clause, it’s pretty well settled that the US Constitution’s Contracts Clause only applies to the states (it’s pretty specific in its wording, even though since Blaisdell SCOTUS has emasculated it of any power). The Fifth Amendment’s Due Process Clause generally prohibits the retroactive violation of contracts, but in most cases it’s subject to a mere rational basis test, which is not hard to meet, and if Schumer’s bill is written correctly, it’s not going to violate the contracts at all, it’s just going to raise tax rates.
Tabris on March 17, 2009 at 6:34 PM
Oh and for the record, I would love to see this go all the way up to the SCOTUS. It would be fascinating to have a Bill of Attainder case in modern times. Maybe Congress can work some Corruption of Blood while they’re at it.
Tabris on March 17, 2009 at 6:36 PM
I am right there with you on that.
Hawthorne on March 17, 2009 at 6:40 PM
If this fool ever had to go out in the real world and get a job.He and his entire family would starve to death.He does not have enought of a brain to flip hambugars at Mickey Dees.I don,t know who,s dumber Chucky,Speaker Miss Nanncy, Barbra Boxer,Harry Reid or Chuck Grassley.It,s hard to beleave we pay these morons almost 200K per year for the deep thinker they think they are. GOD HELP US
thmcbb on March 17, 2009 at 6:45 PM
Isn’t what they are talking about known as a Bill of Attainder and thus unconstitutional?
That sounds like what they’re doing, doesn’t it?
schmuck281 on March 17, 2009 at 7:03 PM
Yup, no ex-post facto laws.
If it was legal when it was done, then its legal.
ajacksonian on March 17, 2009 at 7:08 PM
And estoppel plays in, if memory serves.
ajacksonian on March 17, 2009 at 7:11 PM
^ why are none of our beloved GOP wannabe 2012 candidates saying that??
das411 on March 17, 2009 at 7:22 PM
Idiot.
Claypigeon on March 17, 2009 at 7:53 PM
Give them their &$#%$ bonuses. Its gonna leave such a huge opportunity to screw the rest of us with some new tax or law fine print that we’ll wish they just got the money anyway. Maybe the dumbasses will get the bonuses and choke on the first bite of caviar or get AIDS from the prostitute they pay with the money or drown off of the yacht they go out to sea in. Screw the whole mess. Our Constitution must stand firm! I can see people getting tossed out of offices real real soon.
johnnyU on March 17, 2009 at 8:11 PM
Somebody get me a box of tea bags pronto!
johnnyU on March 17, 2009 at 8:12 PM
Don’t know about the timing but http://www.opensecrets.org/orgs/toprecips.php?id=D000000123
shows these two names at the top of their recipients list:
Chris Dodd–$103,100
Barack Obama–$101,332
riverrat10k on March 17, 2009 at 8:31 PM
I beg to differ with you, but democrats hate wealth when it is not their wealth.
belad on March 17, 2009 at 10:44 PM
This guys is such a moron, I don’t care what anyone says.
romanianhacker on March 17, 2009 at 11:46 PM
wouldn’t this be unconstitutional on its face b/c it targets a specific recipient of the funds? it would practically call out the bonus recipients by name.
anna on March 18, 2009 at 12:23 AM
As long as Schumer is writing letters trying to get taxpayer money back, can he write one to all the welfare recipients…
YEAH I SAID IT!
Lugnutmegger on March 18, 2009 at 12:40 AM
Even a DimmieDummyCrat like Schumer must realize that a 100%, specific situation tax would bend the Constitution like a pretzel and be open to years of judicial challenges winding up at some point in the SC–and cost far more millions than the initial bonuses. Of course this is merely diversionary posturing by a liar who knew full full well that the rescue bailout included paying for the bonuses (a tiny fraction of the total) and is trying to distract the public from the sheer stupidity of making these enormous bailout payments to the DummyCrats friends and co-conspirators.
MaiDee on March 18, 2009 at 8:09 AM
Isn’t this the equivelant of admitting that taxes are a punishment? If yes, then I want to know what wrong the American populace has done to deserve being taxed with a trillon dollar bill.
shick on March 18, 2009 at 8:15 AM
I’ll rephrase that.
shick on March 18, 2009 at 8:17 AM
I watched glenn beck and he had on a judge who said
this violates the US constitution..,
So we have a bunch of liberal DEMONCRAPS
Passing laws which VIOLATE THE US CONSTITUTION..
I want to know one thing now..
WHEN DOES THE NEW REVOLUTIONARY WAR II
START..
jcila on March 18, 2009 at 4:15 PM
Comment pages: « Previous 1 2