AIG and Our Embarrassing Congress
Congress is outraged. Really, really outraged. Unbelievably, incredibly outraged. And there are certainly grounds for anger.
Not at the insurance company AIG, which paid bonuses that are seen as intolerable, but at Congress, which blithely declined to prohibit them but is now shocked to find AIG doing what it was allowed to do. The Democrats who control Capitol Hill want revenge, as do many Republicans. So the House voted by a 328-93 margin to impose a 90 percent tax on the payments.
In doing so, members resolutely avoided a couple of inconvenient realities. The first is that the fault, if any, lies with the same people who are now angry. The second is that the tax conflicts with the clear intent of the Constitution.
The pending fees were not exactly classified information. "AIG's plans to pay hundreds of millions of dollars were publicized last fall, when Congress started asking questions about expensive junkets the company had sponsored," reports the Associated Press. "A November SEC filing by the company details $469 million in 'retention payments' to keep prized employees."
In January, two House members urged the Federal Reserve and the Treasury to block such bonuses. Last month, the Senate passed an amendment outlawing such payments by companies getting federal bailout funds — and then dropped it.
The White House was also in the loop. Sen. Chris Dodd (D-Conn.) says that the administration asked him to attach a provision to the stimulus bill that authorized such bonuses. Dodd protests that he only agreed because he didn't understand what the measure would do.
Maybe other people who voted for it in the Senate and House didn't either. Maybe Dodd and the rest ought to read legislation before they approve it.
But if members had any pangs of remorse for their failure, they stifled them in favor of vilifying AIG and its personnel. House Financial Services Committee Chairman Barney Frank demanded the names of employees who "had to be bribed not to abandon the company." Rep. Michael Capuano (D-Mass.) urged that they be fired.
Until these staffers can be publicly tarred and feathered, though, the House will settle for subjecting their bonuses to a 90 percent tax levy — up from the normal maximum rate of 35 percent. Why not 100 percent? "State and local governments will take the extra 10 percent," said Ways and Means Committee chairman Charles Rangel.
So the bill aims at sanctioning supposedly bad people by confiscating their earnings. As such, it sounds an awful lot like something the Constitution expressly forbids — a bill of attainder, which is a punishment of particular individuals imposed not by a court of law but by a legislative body.
Many if not most legal scholars believe this furious retribution can be structured to pass judicial review. But not Jonathan Turley, a George Washington University law professor. "I am not so confident that it would pass constitutional muster," he told me. "While courts give Congress great discretion in the tax area, this would require a case of willful blindness."
Turley speaks with special authority on the subject because of a rare achievement: In 2003, he persuaded a federal appeals court that a law passed by Congress was a bill of attainder.
That statute revoked a divorced father's visitation rights because his ex-wife claimed he had molested his daughter — a charge that courts repeatedly rejected. But it was overturned because the court found the measure, though it didn't name him, was designed to place a severe burden on a specific person deemed to have done something terrible.
Ditto for this legislation. It's aimed at AIG employees who accepted payments guaranteed them by a legal contract, and it's intended to inflict pain to express disapproval of their conduct. Rangel, in fact, had earlier opposed the tax because it would be "punitive." But after voting for it, he explained that "we had very few weapons" to use against the recipients. Taxation as a weapon — if that's not punitive, what is?
To uphold the tax, says Turley, "the courts would have to ignore the open statements of members of Congress. They have done everything short of burning the AIG executives in effigy on the House floor."
Maybe the people in Congress are smart enough to figure out a way to sneak this act of targeted revenge past the courts. Maybe, in other words, they have more brains than scruples. But so far, they haven't shown much of either.
Steve Chapman blogs daily at newsblogs.chicagotribune.com/steve_chapman. To find out more about Steve Chapman, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2009 CREATORS SYNDICATE, INC.
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Sir;...The people know that all the evil that has happened to them, and to the economy has been legal...But they also know all this evil is legal because the government made it legal...Understanding that this is a country made to an extent by outlaws and robber barons, and that our heroes have been outlaws, still; right is right and wrong should be illegal...We have been made a nation of victims all puffed up with hope and robbed blind... The people are angry...Many of us are living in fear and pain... Pain seeks revenge, and fear grows into hate...So don't blame the congress for their outrage... They were handed a bill they had to pass... A quite legal, and quite wrong set of bonuses were provided for...There would have been a great place for the government, on behalf of the people to be illegal...Instead, they obeyed the law, contract law to be exact... And in doing so they added to the injury this whole people have suffered...The government does not outrage easily.... The congress is suffering the outrage of the nation...The congress has been had, and the people have been double had...The congress was told that they did not have to govern the economy, that the economy was for the best in this best of all possible worlds...Ya right; so take a vacation in DC, and wait for reality to jar you into consciousness...This is just the beginning... Even if this depression improves some, the pain is going to be felt far and wide...And no one knows how bad it will get; and there is bound to be some resentment... There is bound to be some anger, and I hope the people take a lesson from this affair, that the congress is running scared, and that even the president can be made to flop like a fish.... There is mutiny in the crew.... None of the brass wants to walk the plank, so they will share the outrage...It is more of fear of the voters than genuine outrage; but that is the natural and desirable situation in life... The best we can hope for is that the government will fear our rath...Our anger has united us, and cowed the congress...Let us keep up the skeer...Thanks...Sweeney
Comment: #1
Posted by: James A, Sweeney
Sun Mar 22, 2009 8:25 PM
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Steve Chapman, I salute you. I normally don't care for your articles, because you come across as too left-of-center for my taste, but this is fair, balanced, considered, and accurate, so far as we can discern truth in the present government activities. Thank you.
Comment: #2
Posted by: Juanito Verde
Mon Mar 23, 2009 5:34 AM
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DO YOU THINK TAXPAYERS' MONEY, COMING FROM SOCIAL AND WELFARE
PROGRAMS, SHOULD HAVE BEEN USED FOR OBAMA'S CAMPAIGN!
Folks, the Change, needed for hard-working Taxpayers, that have a job at
present, ‘ain't gonna happen' unless you let the politicians know you're fed up
with what they've done to destroy America and America's future!' Obama's
‘deceit and hype', his bigger and greedy administration, will, unfortunately, finish
bankrupting America! Taxpayers, of all races, just thought they were fed up with
the Bush Administration! They're totally fed up with the Obama administration!
Have people been fools or what? Obama's well-written speeches made some of
his voters believe he was the only real man to be President, but, after only a
couple months on job, Taxpayers know better as he should have decided the
Number #1 priority should be, cutting politicians salaries and retirements to
$12,000.00 a year, for their less than one month of public service. ‘Fair Tax', to
include property taxes, should have been another top priority to cut spending.
Wouldn't this have been the right thing for him to do, instead of talking about all
the things he's going to do, thus, costing trillions more!”
Obama promised to redistribute wealth! In other words, raising taxes on highest
income earners who are private business owners! By allowing this to happen
would mean ‘no more jobs!' Raising taxes, increasing government spending,
allowing more power to his administration, and the creation of more massive
government bureaucracies, during these depressed times, will accomplish the
socialist's goal! Guess what, folks, these socialist and radical changes will come
back to haunt America for generations.Your children and grandchildren don't
stand a chance!
It was one thing for Obama to campaign for almost two years, spending millions
of dollars that's needed for America's debt and the homeless, rather than him
trying to prove he's ‘the man'! Do you think Taxpayers money, coming from
social and welfare programs, should have been used for Obamas' campaign? Do
you still think Obama is working for America's best interest?
For several decades, Taxpayers know politicians, of all races, are somewhat
responsible as they should have stopped the ‘tax and spend' politicians, long
ago, and put an end to ‘social and welfare programs', ‘non-profit organizations',
‘handouts', ‘bailouts', committees, sub-committees, this board and that board,
and any other organization that take any amount of Taxpayers' money. Let's take
a look at how some of these socialist and radical programs took place.
1977 - Community Reinvestment Act. Remember the Carter admininstration.
Along came the Clintons. At that time, the Democratic Congress intimidated
banks and other financial institutes into making sub-prime loans to high-risk
buyers. Therefore, Mr. Obama, you can stop telling Americans that ‘you inherited
the trillion dollar deficit from Mr. Bush', as people who actually work and pay
taxes, know you're lying. The ones who live off social and welfare programs
shouldn't have been pushed into thinking they could have the American dream
without working for it and frankly, couldn't care less as long as the illegitimates
keep coming along with the monthly checks they're not entitled to!
2000-2008 -Taxpayers remember when Barney Frank, Meeks, Waters, Dodd (just
to name a few) vouched for Freddie and Fannie stating “We don't have a crisis
and there's nothing wrong!” Taxpayers knew better. Even the homeless person
on the street knew better! What does this tell you?
Obama, Geithner, Frank, Waters, Dodd, Reid, Clinton, Pelosi, Kennedys, Raines,
Howard, and Johnson, (just to name a few) ‘vouch for each other, lie and are still
collecting a salary they're not entitled to!' Raines, Howard, and Johnson, you
know, part of the Fannie/Freddie groups, who walked away with 20-90 million
dollar parachutes! Taxpayers wonder how many millions politicians received?
By the way, don't politicians have some nerve saying that ‘stronger government
regulatory power is essential and broader powers are needed by them?' This may
be shocking to you, but you're absolutely not entitled to what power you have
now and Taxpayers would be fools to let you finish bankrupting America after
what some of you have done to this country!
2009 - Politicians are now pushing infrastructures stating “America's Highways,
bridges, water, sewer plants need money, manpower and a new vision!” A few
politicians have admitted these are temporary solutions. Until textile and
manufacturing jobs, actually putting people back to work, are brought back to
America, your ‘ideas of spending more money we don't have' isn't needed! The
people in these manufacturing jobs worked hard, paid taxes, bought houses,
cars, furniture, and clothes, and kept the economy rolling.
From early 1970 until 2009, the automakers continued ‘making lots of cars'! Not
good-made cars from America steel and components, but from plastic being sold
to America for huge profits! Didn't it occur to the ‘managers' that since almost
nothing put into this cars was made in America, that jobs would go ‘bye-bye', as
the people buying these cars were losing their jobs and stability because of Nafta
and Cafta! Doesn't take a rocket scientist to figure this out, now does it?
While I'm on a roll, it's time for AIG, Freddie, Fannie, several banks and
investments firms, GM, Chrysler, and others taking Taxpayers money, to file
bankruptcy, immediately, as they all need to learn how to run a business, keep up
with the times, and stop the politicians and their buddies from taking control of
Americans and their businesses!
Just think Obama is now stating ‘maybe, his new spending of almost another four
trillions will be partially paid off by 2012!' With What? Oh, I almost forgot, 2012 is
election year!
Comment: #3
Posted by: Shirley deLong
Mon Mar 30, 2009 10:03 AM
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