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  • The AIG (And Everyone Else) Bill: Counterproductive and Unconstitutional

    Whom It Really Targets

    • The Hit List: H.R. 1586 retroactively taxes AIG employees who are due deferred compensation and would tax that compensation at a 90% rate.
    • A Much Broader Sweep: Going forward, the bill also imposes a 90% federal tax rate on anyone employed by a company receiving $5 billion in TARP funds who has a family income over $250,000, individual income over $125,000 (if single or married but filing separately), or performance pay larger than adjusted gross income.
    • What Defines a Bonus? Under H.R. 1586, a “bonus” is any amount over an employee’s base salary, including retention and performance pay and even deferred compensation. But compensation in banking and finance is heavily geared towards performance, with relatively lower base salaries.
    • Counterproductive Policy: While taxpayer money shouldn’t be spent on excessive bonus compensation, broad-based pay caps and punitive clawbacks will hurt performance and slow economic recovery. The government is ill-suited to set private-sector pay scales and risks causing more financial damage.
    • Your Branch Manager: Anecdotally, a “Regional Branch Manager” for Bank of America who makes $250,000 plus bonuses for outstanding customer service at his branches would be taxed at 90% due to this bill.

    The Real Problem, Plain and Simple

    • How We Got Here: Senator Chris Dodd would like you to forget that he inserted specific language recognizing AIG’s executive compensation into the $800 billion stimulus bill, which Finance Chairman Max Baucus now admits nobody read.
    • Government Bailouts: This is the inevitable result of government bailouts, which turn private concerns (such as compensation agreements between private parties) into public business, bringing politics where it is likely to do damage.
    • Hasty Bills Make Disastrous Policy: The very fact that this problem was created by a mega-bill that wasn’t properly reviewed before passage—and is now being “corrected” by a hastily put together bill that hasn’t been properly reviewed—is beyond ironic.
    • Avoid This in the Future: To avoid further entanglement of the federal government and taxpayers in routine business matters, President Obama and Congress should reject further bailouts and insist those already done be unwound as quickly as possible.

    It’s Not Constitutional, Plain and Simple

    • Bill of Attainder: The Constitution prohibits Congress from punishing individuals, which is the role of the justice system. This prevents legislative tyranny and is essential to ensuring that those accused of wrongs receive due process and can mount a defense. It also encourages “sound legislation,” which is not accomplished by legislators being whipped into a frenzy and interfering in personal and economic affairs.
    • An End Run? Congress added more taxes to the bill to get around the bar of bills of attainder, but it can’t make an unconstitutional act permissible by cloaking it in the guise of a tax bill.
    • Taxation Not the Answer: Congress is prohibited from using the tax code as a weapon of convenience against a select group of unfavorable people, even when the political opportunity exists.
    Posted in Ongoing Priorities [slideshow_deploy]

    46 Responses to The AIG (And Everyone Else) Bill: Counterproductive and Unconstitutional

    1. John Mila, So Cal says:

      After listening to what Liddy was able to say between interuptions the other day, one question comes up. What happens to the 1.6 trillion dollar book of business that is still at AIG to liquidate? These (bonussed) people were retained to complete a job. It started at near 2.7 trillion and was sold off to 1.6 Tril. So now almost halfway thru this job of liquidating sensitive and complicated contracts, by people that were put there to do the job. The 'ones' that got AIG there were fired. These people doing the job were hired or promoted to complete a very extensive task.

      If you dump a trillion dollars, you should be compensated.

      What happens to the 1.6 tr that still remains if these people should leave. Who (with any expertise) is going to come in and do the job.

      Or does AIG go bankrupt, over 160 million dollar bonus that was agreed upon when this task was put upon them.

      A big point of this is why the outrage? From the top down in government and their media accomplices.

      Is ANY of this 90% tax going to come back to the taxpayer?

    2. Spiritof76, New Hamp says:

      Welcome to the new Politburo located in Washington DC used to be called the US Congress. USA has died.

    3. Franklin's Lock says:

      This bill is appalling. This is what the Founders were afraid of, a out of control government. I hope these people sue the government and get their double damages. I hope the bill is proven unconstitutional.

      I hope this whole mess teaches them to read the bill, but alas I highly doubt it.

      http://franklinslocke.blogspot.com/

    4. JMTruth, New York says:

      I agree this puts us on dangerous ground. But I am concerned over the Congress throwing out AIG as the "sacrifce" to the angry mob for something they made legal. Another case of not being accountable for their actions. It is time to show our elected Officials that we are not a mindless Mob that will hate whomever you try to thow at us. To show that our elected Officials will be held accountable by us their employers — we must should ask that Senator Chris Dodd step down or be removed from the Senate Banking and Finance commitee. Geitner is being set up to be the fall guy for Dems and for the President, he is appointed time to show our elected Officials we will hold them accountable and even before the 2010 elections. Ask for Sen Chris Dodd to step down from the Banking and Finance Commitee.

    5. Dan, Virgin Islands says:

      We can't have a society of laws if the laws can be changed after the fact, retroactively applied to acts which were legal at the time. This is not the America that I want to live in.

    6. Sherrill Langsam Ne says:

      People must be made aware that this type of bill opens up the possibility of taxing every one of us for any reason at any time not just these bonuses. This congress is running out of control and contrary to the wishes of the majority. They must be held accountable. Dodd knew what he was doing and profited from it. Why isn't he being brought up on charges?

    7. norberto metrikis ar says:

      gentlemans ,ionly need that mr winestock say that enter in zaporizthal and buy millons of tons ,that aaaeo buy oil of tnk because copy mi contacts ,that rober newman promess payme 27 millons and that this mesage arrive to vladimir puttin ,because the russian contitution say that all the citizen be iquals but i suplier of market dates for 1 millonsof trillons of diferent materiasl ,and now only have a top vigilance .iwork from general ignatov because is a man of honor but not payme ,work from roman ,a friend because i training to your team of the future ,so maebe need speak with roman directly but not is posible ,so to all the asesors of russia pay with a bullet ,is a good business for the gansters ,but not for the strong russia .now say that kindnaped mi mother paralitic ,.mr president MEDVEDEV , CORONEL PUTTIN ,SAY THAT STOP AND PAYME THAT IS A GOOD DEAL AND BECAUSE YOU ARE THE LIDERS OF 300MILONS OF PEOPLE THAT IS A GOOD PEOPLE AND YOUR ARMY CUMPLIMENT YOUR WORD ,.ROMAN NOW THAT I WORK 12 HOURS FOR YEARS WITH CUSTODY OF THE POLICE OF PROVINCIA BUENOS AIRES ,AND I PROMESS TO THEY AND SAY THAT PAYME WITH THE DEUDE ARGENTINE AND SOME CASH BECAUSE REMEMBER THAT YOU BUY 11,8 BILLONS OF TONS OF GOLD ,TO1000US THE KG AND I SALE 1.150.000KG OF GOLD AND MAKE CONTRACT WITH CHINA ,INDIA ,A CAITION FOR 200BILLONS WITH JAPAN .AND ANY SPEAK ABOUT MI DOCUMENT .INEED THAT RECOGNIZED MY WORK AND PTREND WORK FOR THE RUSSIAN OIL BUT HELP TO MY COUNTRY ,ROMAN NOW THE AMOUNT .THANKS IN ADVANCE.

    8. Silence Dogoode New says:

      It amazes me that the fools that got us here, are yelling louder and instituting more errant legislation that is of questionable legality. I agree that it should cost them because of their actions, however ultimately we the taxpayer are once again the victim of their stupidity. Well maybe ours for voting for them! Maybe it's time for some pitchforks and guillotines and clean house of all these idiots!

    9. norberto metrikis ar says:

      ISAY WITH ALL RESPET THAT IWORK WITH TRUST ,AND THAT IS A COMENT THAT IS A UNIVERSAL LAW ,BECASUSE I LOVE MY COUNTRY AND LIKE GIVE A PART TO THE PEOPLE ,SO IF YOU THINK THAT IS A BAD COMENTARY PLEASE SORRY BUT I SOSTEIN THAT THE RUSSIAN DIRIGENT HAVE THE SAME HONOR THAT THE USA PRESIDENT.AND ONLY SAY WITH OTHER WORD THAT LIKE THAT THE EAST BE ALSO THE LAND OF THE FREE MANS ..THE MENS OF HONOR WHERE THE WORD IS THE BEST DOCUMENT THANKS SO MUCH.

    10. norberto metrikis ar says:

      SORRYNOT IS PRODUCTIVEBUTTHE BIG RUSSIA TODAY ARE MORE STRONG ,AND WITH LIVERTY ,,AND REALLY IF NOT LIKE THIS COMENTARY I TELL THAT OTHER WORD IS ENTER IN THE SITUATTION OF THE COUNTRY ,AND THAT ONLY WITH APROVAL OF THE DIRIGENT .BLESS

    11. MissArabian, Florida says:

      This is America's fault. The citizen need not criticize when they keep electing the same crooks back into office. We the citizen need to take back America! The reason we came here was for religious freedom and less taxation, wake up America!! I will keep my guns, freedom, and you can keep the Change!!

    12. Barb -mn says:

      Whose job is it to arrest those committing treason?

    13. Marcia Picou, Baton says:

      I want to know why the Congresspeople who voted in the Stimulus Package (I call it the "Stymie-Us Package) without reading it are not being punished? They are the ones who should be losing their jobs and any compensation that goes with those jobs. Because of them, we may be headed down an abyss without recovery.

    14. dr8251, Lincoln Nebr says:

      I find it very interesting that they people who caused this mess, are the ones trying to fix it. They should all be in jail, for failing to defend the constitution. They should all go back to grade school and learn to read. Who are these idiots kidding. If you listen to them talk, you know they know nothing about what they are doing. Since when is it a crime to make money in this country?? Or for anyone who isn't a politican to make money?? They people of American should go and boot these people out of office, and take our country back.

      Forget about government for the people, by the people and of the people.

      They haven't done anything to stimulate anything but take money away from the taxpayers who pay their salries, and put it in their own pockets.

    15. Marty, Maine says:

      We need to levy a stupid tax on Congressman. The higher the level of stupidity the more tax they pay. Senator Dodd would be in the 90% bracket.

    16. Steve says:

      What will happen is the best will simply move to other firms that did not receive more than 5 billion in Tarp Money. I worked for a derivatives trading desk 10 years ago. What happens in the industry is that the best move to other banks, take their team with them to set up shop elsewhere. AIG will be left trying to liquid extremely complex contracts with the best gone. In the end this will only cause more losses for the government. Profitable divisions will walk from AIG to the bank down the street that did not receive more than 5 billion in TARP funding. These other banks will gladly accept them because they are bringing a profitable group.

      Essentially the government is "Throwing the baby out with the bath water". Remember this "The road to hell is often paved with good intentions."

    17. Dave, Georgia says:

      When you have one party in charge, and that party generally puts its political power above what is right for the country, this is the mess one can expect. Both parties are corrupt, but the dems are absolutely power crazed. To them the government is the answer for EVERYTHING. It is way past time for term limits at all levels of the federal government, including the bureaucracy to clean out the entrenched career types. This is the way to change the culture in DC. Let's turn the anger of the mob against government, the true culprit of our economic disaster!

    18. George M. Semel Bozr says:

      The funny thing about this is that at current rates of return around 2.5 to 3%. There is a divorce in court here, the lady wants 53K a week for expenses, and in order to provide that amount of money per week at the current rate of returns and current state and federal tax rate, that 165 million in bonus money would not be enough, you would need darn near 185 to 200 million in a well run trust fund to do it. Last September they needed 700 billion for this TARP business, they had to borrow 810 billion in order to get the 700 million, that they didn't use if for what they said they needed it for. So 110 billion for the votes, and they make an issue out of some thing in a bill they voted for and signed, that they wrote and didn't allow anybody to read. And the AIG guys are the bad guys hear? Seems to me that the people who are really to blame for this mess are the ones charged with fixing it, and they been winning elections. If there was just one republican in the house or senate they could have tied this to, there would be hearing going on 24/7. When did it become a crime to make a good living?

    19. Bob, Evans, GA says:

      I can't believe anyone would want this bill passed. It certainly makes me mad that a company taking $130B + in bailout money would have the gaul to pay $150M in bonuses but what is $150M compared to the $1.5 trillion (plus interest) that has currently been authorized? Do not let the government play this shell game with your mind. The fact that our congress now believes they can punish American citizen's with a special tax should scare you to death! Is $130M worth losing an incredibly large portion of your freedom as an American?

    20. Lynn B. DeSpain says:

      We all need to look at how we got here form a different direction.

      Mr. Clinton's Administration are the ones who pushed through a pressured the Banking system to accept High Risk, Non-Qualifying loan applicants, under the quise of getting more minoriies and low income families into homes.

      They did this on three occations during their tenure. Each time increacing the percentage af applicants to be accepted.

      This turned into the edict of no verifying of income and no verifying of backgrounds, just to meet the quotas!

      Quotas are what is Illeagal and Unconstitutional about this whole mess. Followed by selective Taxation.

      Hozro

    21. Jerome Zacny says:

      It is absolutely clear that the "lawmakers" in the House and Senate, and our President, are irresponsible people who do not deserve to hold office. Their laziness, ineptitude and arrogance have put into place laws, the cost of which, will drastically affect the American people of today and for generations to come. These descriptions are assigned due to their failure to read, let alone study and debate the provisions of their bailout and stimulous legislation before putting this into law.

      How can Americans ever again trust such people with our well being? Not reading proposed legislation before voting on it or signing it into law is the height of dangerous irresponsibility. They have no idea of what they are doing. There is no excuse. Most of these people have law degrees; they have been trained to read.

      And now, to hide from their colossal stupidity and irresponsibility, they want to pass a Bill of Attainder to make this all look like it's somebody else's fault. Monumental hypocracy!

    22. mike baker Dallas Ce says:

      The people who work in the District of Columbia see the United States of America as secondary to that government. They just use us to test new experiments on. You don't go there if you just want to mind your own business. We need a 'RESET' button. If we can trust Justice Kennedy, I'd like to see a S.C. docket full of 9th and 10th amendment issues, and I'd love to watch a lot of liberals wail about the results, year after year, until we're a free people, again.

    23. MARK,HOUSTON says:

      this is SOCIALISM plain and simple, and like ALL socialist regimes they are not going after the people that they said they would go after. My wife is a salaried employee of AIG and here "leadership" bonus for doing an outstanding job is to be taxed at an unearthly amount. If the American people want justice then start with expelling those IDIOTS in washington.

    24. Joanne Tellez Giron, says:

      I concur, Mark… This mess is the responsibility of Congress. They got caught and are running for cover. The most appalling thing is the turning loose of citizens against other citizens in the form of mobs… The mobs need to be re-directed to congress.

      Not only is this SOCIALISM, it's a move towards COMMUNIST FASCISM. I never thought I'd live to see this day. Watch for and beware of Acorn boots on our streets. That was funded through the so called stimulus bill. If you believe in the American Dream, this is not the kind of change you can believe in. I believe in equal opportunity, not spreading the wealth.

      And it doesn't work.

    25. Ross, Bradenton, Fla says:

      It is time to start an amendment to the United States Constitution to curve the ill-gained power of our congress uses to mettle in areas of American life that the founding fathers never dreamed would ever surface;the development of an elitist ruling class as seen by our, the people's employee as they blatantly flaunted by the majority party in the United States House of Representative and Senator.

      First, by making all members of the US House of Representatives and US Senators receive their paid and benefits from their home state as a representatives of that state.

      Secondly, to bar members of both houses of congress from voting or bringing up any vote for salaries, benefits, or retirement packages for their peers or personal staff in either houses of congress.

      Thirdly, the homestate will reimburse the federal government for cost incurred from any picaresque congressmen using US Government assets for personal or political benefit,which is not readily available to all taxpayers ie, flying congressman and/or their family to their homestate or a vacation/recreation destinations in or out of the US.

      The fourth point would be that each state will determine the salary level, benefits packages, and operating budgets for each of their representative as they would any other state agency(this may be different from state to state but it would be a true representation of their homestate and constituates, thus curbing esurient, self-centered, power-hungry petty puentats.

      Point five would be that home state would provide their US congressional representatative a homestate-owned official resident in the national capital to include the staff and a vehicle. Also that the state will rent the office space for their representatives as a part of their representative budget.

      This is a method that would rein in an uncontrollable congress and move them back to the original role that the founding fathers had invisioned. Socialism will work only as long as the other peoples(the taxpayers) money doesn't run out.

    26. Pingback: Promises, Promises « Justbkuz

    27. Marshall Hill MI. says:

      The AIG fiasco was setup by the Democrats,and is

      just a Smokescreen for other forms of Legislation

      hidden under the Radar! They own what they did!

    28. I Wendel, Connecticu says:

      We are the 'sleeping giant' in America–it's time to wake up!! Our system of government is sound when run by sensible, honorable people. Sadly that is not the case right now. We, the people, are the final check and balance and it's time to 'check' and 'balance' the way we know how. We rally, organize and protest. We unite in one cause even if we disagree in the details.

    29. Shelpicker, Florida says:

      When the congress becomes judge and jury without any representation for the victim we have become a communist state. How can they pass a bill overnight punishing individual workers while they can't produce a budget in a year and are always late in providing a copy to the president to sign into law. When they are late in procucing a satisfactory budget their pay, along with their assistants, should cease until they complete the job they were hired to do. Pay raises for elected officials should be based on job success and not automatically made as a rider on some other important bill. It really is time for term limits and that decision shouldn't be left up to congress to pass or fail. It is the responsibility of the people of the United States to decide whether or not to limit the terms in office in both the house and senate. While almost every job in Civil Service has an age limit forcing retirement so should both houses have the same age limit. The president, senate, house and judicial branch should also have to pay for health care and social security.

    30. Ann, Gaithersburg, M says:

      The executive and legislative branches are running roughshod over the constitution and placing our economic future and civil liberties at grave risk. Can someone please tell us what we can do about this, individually and collectively?

      With collective resolve, we could vote out the entire House of Representatives and one third of the Senate in 2010 — but even if we could be assured of succeeding at that, the thought of what will happen between now and then is frightening.

    31. Sandi, Colorado says:

      I've thought for a long time that there should be a law requiring one day of review for each page of a bill before a vote can be scheduled on that bill. This would eliminate these huge bills that get pushed through without responsible review. It would also make it easier for the rest of us to have a chance to read it and respond prior to a vote.

    32. Major Tom Nisen says:

      This Federal Government violates the Constitution

      every day! Where does it give feds control over education? Why don't we use TRUE LEGAL TENDER MONEY? Why do courts legislate instead of GUTLESS

      legislators? Why don't we care about our children's and grandchildren's future?

      Let's give the Democrats in congress a fair trial

      and then, promptly execute them all!! If we don't,

      they'll come for us first.

      LIVE FREE OR DIE!!!

    33. Rich, St Louis says:

      The people of this country, Dems and Repub, got what they deserved. 1) Dems for voting in the same people that caused this mess in the first place. (Let's not forget Congress' approval rating was even worse than Pres Busch.) And 2) Republicans for nominating a guy that was no more of a conservative than Pres Busch. Until someone figures out how to fix "stupid", this country will continue in its current direction!

    34. Kevin Doyle, Newpor says:

      I share the author's observation: these actions are unconstitutional.

      The greater point everyone has missed is that the Congress or Treasury Department giving taxpayer money to a business, or purchasing equity in a corporation, is well beyond the scope of the Constitution.

      I don't recall any sections of the Constitution giving Congress this authority.

    35. cathy wilson Marion says:

      I too am concerned about our Constitution becoming

      a thing of the past if we don't do something soon.

      I did some research on the grounds for impeach-ment.

      Every one, please take the time to lookup "high

      crimes and misdemeanors". It's all there in black

      and white. We are being lied to by elected officials that took an oath to protect and defend

      the Constitution, not make up the law to fit their agenda.

      Read this then put your local congress representative and senator's phone # on speed dial and call them every time you hear some-

      thing that goes against the Constitution. This is

      what I am doing everyday!!!! I call, I send e-mails and hand written letters. Please join me in

      this effort to take our country back. It is not

      just our right, it is our responsibility to our

      children and grandchildren!!!!

    36. Pingback: The AIG And Everyone Else Bill: Unconstitutional « Political Vel Craft

    37. Akiva, nh says:

      I think this current administration do know what they are doing. They are very smart people but in a dangerous and calculated way, never underestimate the enemy, right? The great damage was done in the stimulus packages and now people are beginning to see and will continue to see those packages were filled with treason, treachery and tyranny.I think Obama and administration want America and liberty to fail. They despise America and are setting us up for a mighty big fall. We are in deep trouble folks and need to wake up fast before its too late.

    38. Rodger Padgett, Free says:

      I keep hearing people say "It's time to throw the Congress out." No, it's past time. If we keep going the way we are, America will move into a period of Anarchy (which will only serve to make the Dems happy, because then they can come in can really "clean-up.") Then all bets are really off.

    39. John, ME says:

      What country do we live in? Our Government has spawned public vitriol against a corporate scapegoat and more importantly, private innocent citizens whose lives are in potential danger due to the actions of the Federal Government. All in order to keep the public eye off of the real problem: Government Intervention into the Financial Markets. This is Fascism.

    40. Joe, Greenville, SC says:

      Every state should have the option of recalling their elected "representatives" when these so-called representatives exceed their constitutional authority. Of course, this would imply that the citizens of such states would have the good sense to recognize those excesses and be willing to act on that knowledge.

    41. Don Kamp, Canajohari says:

      "Let he who is blameless cast the first stone." –The Bible.

      To say the least, I get very nervous when I see our elected officials avoid what they should be doing and joining angry crowds with pitchforks. NY AG Cuomo and Congressional leaders want to publish the names of those who don't give back the AIG bonus money even after there have been death threats. Now our US Treasure is demanding a new agency powers to take over insurance companies and dictate what CEO's get paid. I am sure we could find a Hugo Chauves or Fidel Castro figure to head up this program.

      Count me out! I'd rather live in poverty and work until I die rather than be a party to this mob mentality. I just emailed Obama, my senators and rep and told them they should first offer to have THEIR OWN pay reduced to $1.00 per year before they do anymore finger pointing. Enough!

    42. GHines, Russellville says:

      Once again our government, our US government, was caught with its pants down and is busily pointing its fingers at others (AIG) in a vain attempt to deflect attention off itself. Who directed/encouraged ACORN to make those protests? Was it real or was it orchestrated? AIG does what AIG does best, take care of your people and they will take care of you. Tasteless, yes, but logical and understandable, also yes. The press going after them like some 1936 vintage German press corp and the government acting like some fascist regime trying to retroactively punish them is also wrong and simply dangerous. If limiting bonuses was part of the original intent or method of application for the bail-outs, it should have been in the original text (but it wasn't, Dodd took care of that – people in Connecticut remember this!) Regardless, it's time to realize that the government is not them it is us. The people in beltway are only our representatives; they are not our lords and masters. Contact your senators and representatives, write editorials to your local papers, start a blog, campaign against them should they seek re-election – do something. Turning this country back around will take time and patience and our approach (conservatives) is not always the best approach in all situations, but the foundation of solid conservatism is based on solid values, principles and ethics. What AIG did was arguable tasteless and stupid, but what the house of representatives is trying to do is unethical and immoral. Stop them before this goes too far and America becomes only a fond memory for some.

    43. Greg, Canada says:

      I guess this is what Obama meant by "change you can believe in". Obliterating the constitution certainly would qualify as "change"!

    44. Louis, Dallas, TX says:

      "…H.R. 1586 retroactively taxes AIG employees who are due deferred compensation and would tax that compensation at a 90% rate."

      Irrespective of Calder v. Bull, would this bill not be considered to be ex post facto most laypersons?

    45. Pingback: Chaos at AIG - Page 4

    46. Sam Kendall, Wiscons says:

      Good grief, in the space of about 240 years we went from being oppressed by King George III of England to being oppressed by King Barry I of America. Then again it could be King Harry I or Queen Nancy I, hopefully it won't spark another War of the Roses.

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