We've moved!

Social Icons

twitterfacebooklinkedinrss feed

Saturday, March 21, 2009

Bonus Tax: Darn Good Policy, and Perfectly Constitutional

Bill of attainder, ex post facto... you know what to do kids: scream real loud!

Dr. Blanchard joins the chorus declaring HR 1586, the AIG bonus tax, an unconstitutional bill of attainder.

I'll lay my bet to the contrary: HR 1586 will pass Constitutional muster. It is no more a bill of attainder against the executives of AIG than the PATRIOT Act was a bill of attainder against Osama bin Laden (though while we're thinking about the Constitution, I'd happily trade HR 1586 for a repeal of the PATRIOT Act). It is no more an ex post facto law than the tax refunds proposed in the stimulus package, which, oddly, provoked no such Constitutional outcry.

But what do I know? Dr. Blanchard is an honest-to-goodness NSU poli-sci guy; I'm just a DSU computer geek who married a poli-sci major. Who ya gonna call?

How about Dr. Laurence Tribe of Harvard Law, who says we can tax those bonuses without violating the Constitution. HR 1586 denies no due process, it targets no "closed class of named executives," and "the ex post facto clause applies exclusively to criminal punishment," not taxes.

Of course, we don't get to have lawyer fun unless the Senate passes the bonus tax. So, Senator Thune, as you head toward your 2010 re-election campaign, are you ready to defend bonuses for AIG execs on a somewhat tenuous Constitutional claim? Senator Thune's resolution of that thorny question should be fascinating.


  1. Cory,

    You were dancing so close to the truth when you compared taxing the bonuses to the patriot act, but I disagree with your trade off.

    I want the patriot act gone. That act has moved us further down the slope toward tyranny than any other legislation in my lifetime. It sprang from fear and anger and it has made this country a more dangerous place for our kids.

    The moral outrage over the bonuses is justified, but the games being played to avoid bill of attainder status illustrate a tyranny of mob mentality that is just as dangerous. As I understand it, to get the bonuses paid to the top guys at AIG, the bill taxes bonuses paid to mid and low level people who had nothing to do with execs who caused all of the problems. In short, it was a "we're gonna get the S.O.Bs and we don't care who gets taken down with them" bill.

    Both types of tyranny are equally dangerous

  2. The bonuses should not be paid for failure, but the people screaming the loudest (Obama, Frank, Dodd, Pelosi, and all the Dems who voted for the bill) are the ones at fault here. They put in the Dodd amendment, they knew it was there. They are the ones who wouldn't allow people time to read the bill before voting on it. Alzheimer's has struck full force on this one!

    And what about the larger issues that are being ignored because of the hoopla over the bonuses? How much money was funneled thru AIG to overseas banks? How much AIG has given to Obama in the campaigns? How much of Obama's other socialist policies are being advanced while everybody is watching this controversy?

    Bonuses are wrong, but they should have been stopped by those complaining in the loudest now. Bailouts are wrong and should never have been done.

    But don't forget to watch what's going on behind the scenes. There's the danger.

  3. Corey,

    The image you have on this article is very disturbing. ARGH! ! ! !

  4. It's good to see a little sanity here to temper the general rage.

    I'll agree that the behavior of AIG (and Nortel, too, if I could believe my ears when I listened to National Public Radio the other day) is outrageous, but I think the reaction of Congress right now is analogous to burning down a house to get rid of the termites.

    I suggest that the IRS audit each and every one of these executives. Further, I encourage the people in general to file class-action lawsuits against each and every one of these errant executives. Make them spend a few thousand hours in court ... and find themselves living in rented one-bedroom flats at the end of it all.

    As for preventing this sort of behavior in the future, I'm at a loss. Have we reached the point where the greed instinct can only be put down by the heavy hand of the government? If so, then maybe we all deserve the socialism that we seem to be heading toward.

  5. Mob rule makes me nervous, too. If lawmakers can target one disfavored group today, they can come after uppity bloggers tomorrow.

    We can't escape the fact that the bill was motivated by revenge and populist rage. But what if, on further review, we can frame good reasons to stand right alongside those bad reasons for this law? Suppose Senator Johnson takes the floor and offers this argument:

    "HR 1586 serves the national interest. The TARP funds were intended to prevent bank failures and unfreeze credit. If we find out some TARP funds are not used directly for those purposes, we have an obligation to recoup that money, either to reapply those funds to other institutions that will use the money for the original purposes or to pay back the taxpayers and reduce our deficit."

    Is that mere after-the-fact rationalization or justification for an aye vote?

  6. Take back all the TARP money, the stimulus money, and the earmarks. Balance the budget. And don't raise taxes to cover all this and future reckless spending which might have started in the previous administration, but is being hugely expanded to the detriment of our nation under this administration. Businesses can make it or fail, file bankruptcy, reorganize, etc. But it isn't up to the gov't to make sure every business succeeds and every person succeeds. It is up to the individual company and individual person.

  7. The horses, dogs, cats, rats, and cows have already left the barn. I think the bonus recovery tax closes the barn door and, as Stan G said, sets the structure on fire.

    I would like to see Johnson and Thune combine with others to link any new money to full disclosure of the loopholes that allowed AIG and others to get "too big to fail."

    If the Sunday talk shows and other weekend gabfests are to be believed, banks et al are going to be coming back for $250 billion.

    The bonuses are $167 million. The cost of the whole mess will be somewhere around $1.5 trillion. I hope cooler heads can prevail so that we can find a way to prevent our economy from being tied to companies "too big to fail" and have to go through this ordeal in another 30 years or so.

  8. Maybe you don't remember why PeeWee Herman (Paul Reubens) was arrested years ago, but it was for lacivious behavior in an adult theater. That photo reminds says a lot of what I think has been going on in Washington and at AIG regarding the bonuses and stimulus.


Comments are closed, as this portion of the Madville Times is in archive mode. You can join the discussion of current issues at MadvilleTimes.com.

Note: Only a member of this blog may post a comment.