Obama Uneasy About Tax on Bonuses

[biopowertoday]

Source: nytimes.com




http://www.nytimes.com/2009/03/21/us/politics/21bailout.html?_r=1&pagewanted=print

March 21, 2009
Obama Uneasy About Tax on Bonuses
By DAVID M. HERSZENHORN

WASHINGTON — The White House stopped short on Friday of endorsing legislation to severely tax bonuses paid to executives of companies that accepted taxpayer bailout funds.

Administration officials said instead that President Obama would assess the potential effect of the bill that emerged from Congress on efforts to stabilize the financial system.

...............

The House overwhelmingly adopted on Thursday a bill that would impose a 90 percent tax on bonuses paid since Jan. 1 by companies that owe the government at least $5 billion in bailout funds. That tax would apply to employees with family income of $250,000 or more, and would have an impact on businesses like Citigroup and Bank of America.

The Senate has proposed its own bill that would apply to all employees at companies owing $100 million in bailout money. The Senate measure would impose a 35 percent tax on the bonus recipient and on the company, which would apply to any amount above $50,000 for a merit bonus and to the full amount of any bonus paid solely to retain the worker.

Representative Barney Frank, the Massachusetts Democrat who is chairman of the Financial Services Committee, introduced another bill on Friday to curb bonuses. His measure would bar bonuses not based on merit for as long as a company owed bailout money to the government.

Wall Street firms reacted angrily to the tax proposals, with several saying they would explore ways to end their participation in the bailout program.

Read more: http://www.nytimes.com/2009/03/21/us/politics/21bailout.html?_r=1&pagewanted=print

---

Recall that was WH personnel --Geithner and Summers--who initially forced Dodd to water down the bonus insertion back in February. (I do not know who pulled out the Wyden-Snowe amendment. Anyway know yet?).

[960]

1. Duh. The administration is who snuck the bonuses in to start with.

Talk about faux outrage.... the WH claiming they didn't know and were angry about the bonuses is the faux outrage. They knew all about it because they put them in the bill.

[bookman]

8. Wasn't the bailout last year?

http://online.wsj.com/article/SB122156561931242905.html

[AZ Criminal JD]

10. Part 1 was. Part 2 was under Obama

[No Elephants]

44. TARP 2 or the spending bill?

[No Elephants]

41. Not really. The bonus contracts were signed in March 2008, according to the

article in the OP. Dodd originally sought to add language to a bill limiting compensation, but withdrew his addition when fear of lawsuits were raised. That is not the same as putting them in the bill.

[fascisthunter]

2. unbelievable...

[ProgressIn2008]

3. Well, gosh, you'd be tempted to think it was all theatrics. Or something. nt

[Pastiche423]

4. Pastiche Uneasy About Obama

[rollingrock]

5. I'm uneasy too

about this administration being in the pocket of Wall Street.

[TheWatcher]

36. You're starting to get it.

Others on this thread are too, apparently.

[mr_smith007]

6. Well they better

get EASY with it real quick....Bill of attainder threats be damned. Sign it and then get a 527 to point out every Republican who voted against it out on the airwaves fast. The public is overwhelmingly for this bill according to Gallup...even 67% of Republicans are for this! http://www.gallup.com/poll/116941/Outraged-Americans-AIG-Bonus-Money-Recovered.aspx

[christx30]

9. So it's ok

for the government to use the IRS against people that people don't like. Even if they aren't actually commiting any crimes. Constitution be damned.
Let's go after just anyone. And when the republicans get back in power in 2050, what's to stop them from coming after us for one reason or another?

[JDPriestly]

18. No one is using the IRS against people that people don't like.

The taxpayers virtually own most of these companies at this point, or are their creditors in bankruptcy. The taxpayers get to call the shots at this point.

What Republican or Democrat would vote against these limits? Do you think any of them will dare? I was talking this morning with several owners of small businesses. Nobody is doing well. Nobody is making money. One of the wives proudly said she got a job -- providing home nursing. The husband has his own business and was doing OK. Now -- the facts speak for themselves. People are really hurting. There is no way that a member of Congress can vote against these limits. It would be political suicide.

I suspect that a veto by Obama would be overridden.

If these Wall Street/bank types want to save face, they need to volunteer to limit their salaries to $250,000 per year until their companies have paid back the loans to the American people.

[christx30]

23. But the fact is

that there is nothing illegal about a company giving a bonus to their employees.
Yes people are hurting. I am hurting. I'm making $6 less an hour than I was before I was laid off.
And so what? It's not AIG's fault that I was laid off. What do I care if they give a bonus to morons? They were contracted to give the bonuses, which was stupid. You need to have a bonus dependent on the business situation and not as an absolute. If you don't meet the predetermined targets, you don't get the bonus.
And everyone is angry because they took the TARP money. Which leaves the company two undesirable options: Don't give the contractually obligated bonus, risk getting sued and having to pay the people twice what they were promised, or give the bonus and hope no one notices.
what would you do in the situation?
So they gave the bonus.
Now people are pissed off and want someone to pay. 90%... 100%... 110% They want someone punished.
And they want the IRS to do it.
That's why I was against these bailouts from the beginning. Giving government money to a business makes beaurocrats in charge of your business.

[No Elephants]

43. If there had been no bailout, the economies of most nations, including ours,

would have come to a halt in a few days. The only thing keeping them afloat as long as they stayed afloat was the likelihood of the TARP.

Most financial contracts provided that insolvency of the insurer would constitute an automatic default under the contract.

The insurer in most cases was Bear Stearns, which the feds saved, Lehman Bros, which the feds did allow to go under, and/or AIG. Most economists say that allowing Lehman to go under was a mega mistake. However, AIG insured many more deals than Lehman had; and AIG was insolvent. Therefore, contracts all around the world were in default and banks were not lending. Absence of loans impacted both businesses around and home buyers and therefore the home industry--builders, real estate brokers, mortgage brokers, etc.

Reagan began some of the policies that permitted this insanity, including allowing companies to become much, much "too big to fail." They continued and expanded under Bush 1, Clinton and Bush 2 and their respective Congresses.

They were coming unglued under Bush and he hid them too long and probably erred on Lehman. By the time of the bailout, the U.S. had little choice. The mistake, IMO, was giving bailout money with no clear requirement that it be lent out ASAP. I am not sure if we did enough to require the states to spend, either.


If Obama gets us out of a quarter of the evils he inherited, we will be lucky. However, I am watching to see whether he and Congress put in place (or restore) legislation and regulatory agency policies to protect our economy from things like this going forward. That is what happened under FDR and the unfettered greed/excesses of pre-Depression years.



Right now, though, it's fingers in the many holes in the dikes time, though.

[mr_smith007]

45. Having beaurocrats

temporarily in charge of the company sounds like pretty damn good idea right now. The FDIC does this on a weekly basis and it works exceedingly well. We did it during the Savings and Loan crisis and the worked well, the Swedish did it during their crisis and it worked well, Japan DIDN'T do it and it led to a lost decade. Seize the institutions, fix the holes, recapitalize it and sell it back to the private sector. This has worked over and over through history.

Anyone against any bailout at all needs to review the steps of Herbert Hoover after 1929 and FDR in 1936 and their consequences. It would be absolute folly to not have drafted a bailout, though I would argue ours was tragically low in specific stipulations on how the money was to be spent.

And as for the tax on bonuses, I would suggest actually reading the legislation that was just passed, it is very common sense and does not specifically target the AIG FP people. It will have zero problems in the courts due to its breadth of scope. It basically does what should have been done all along and put limitations on those receiving bailout money. Once they pay us back and are private and profitable again, do as you please. So long as you take our money, we have every darn right to attach strings.

[christx30]

55. I still think

the bailout was a bad idea when Bush did it and I think further bailouts done by Obama are a mistake too.
Because it makes it so that there is no consequence for failure. No reason to not totally fuck things up in your company. "I can do whatever I want, make millions and drive my company into the ground. Then the Feds are going to come in and bail me out and I can do it all over again in a few years."

The wall street assholes messed it up. Arrest the ones that are clearly guilty of fraud and allow someone that would do a good job to apply for the job of getting the company into profitable status again.

That's better than adding more power to the government. And making the tax payers pay for the mistakes of idiots.

[mr_smith007]

22. I don't think

this is about crime and punishment. This is pure politics and it is a very good political move. When 83% of Democrats, 77% of independents and 67% of Republicans are for something, it is a good political move to act on it. And after acting on it, make sure you put those that voted against it in the lights.

[Synicus Maximus]

31. It's not about crime and punishment. It is about punishment without

a crime. Did they run their company into the ground? Yes. Did they lose a lot of money. Yes. But these are not crimes.

[christx30]

34. Whether it's a good move

politically or not is not relevent. Violence to the constitution is wrong no matter who does it.
If Bush had brought Osama to the US on Sept 12th and tortured him on pay per view that would have been wrong even though a great deal of the country would have wanted him to do that at the time.
And punishing someone for a crime that does not exist is wrong.

[Dreamer Tatum]

14. "Bills of Attainder threats be damned"

Just curious...which other portions of the Constitution would you cross out when you get angry?

[mr_smith007]

21. Are you all 9 members

of the Supreme Court wrapped up in one person? I thought that an issue that is nebulous has to be ruled unconstitional by the courts before it can officially be called unconstitutional. Some things cut and dry and on which a ruling has been made can be called unconstitutional, but this isn't one of those. That is why I specifically called it a Bill of attainder threat, that is all that it is. I am not a constitutional scholar but based on some insights by a few much brighter than I, I don't think this would have a problem in the courts.

http://www.latimes.com/news/nationworld/nation/la-na-aig-legal20-2009mar20,1,1306210.story

[JDPriestly]

17. It is not a penalty. It is a tax to recoup tax money that should not have

been spent as it was spent. Give some loan forgiveness to ordinary people. That will do a lot more to get the economy going that the bonuses for the already rich. If these guys are so intelligent, so competent, why are we in this mess?

[bluestateguy]

7. The story is not credible (more anonymous source BS)

Pay it no attention.

[biopowertoday]

65. OBAMA is being swayed by Geithner---not Axelrod on this one...........

http://www.huffingtonpost.com/arianna-huffington/geithner-unable-to-escape_b_178006.html


Take the Steering Wheel out of Geithner's Hands


Arianna Huffington

Posted March 23, 2009 | 10:32 AM (EST)

On February 10th, the New York Times reported that there had been a "spirited" battle within the Obama administration over restrictions on executive pay and bonuses, and over attaching stringent conditions to any bailout money given to banks.

The clash pitted Tim Geithner, who opposed the restrictions and conditions, against David Axelrod, who favored them. According to the Times, Geithner had "largely prevailed."

In light of what has happened since then, that outcome must now be viewed as a tragic surrender to Geithner, Summers, and the political/Wall Street class -- a "victory" that could lead to the unraveling of the president's entire economic policy.

Maintaining the public trust is always important for a leader, but especially so during hard times. There is a fascinating chapter on Nelson Mandela in Stan Greenberg's new book, Dispatches from the War Room, in which Greenberg writes about how even the revered Mandela suffered a loss of public confidence when change did not come fast enough after he took office. "Don't assume the current euphoria, even with your high approval rating will carry you through," Greenberg counsels Obama, stressing the need to try to build up enough trust so that the public will stay with the president until they can actually experience change.

The Axelrod camp understood this and, according to the Times' February story, argued that "rising joblessness, populist outrage over Wall Street bonuses and expensive perks, and the poor management of last year's bailouts could feed a potent political reaction if the administration did not demand enough sacrifices from the companies that receive federal money."

Axelrod was right. And his loss has already cost the young Obama administration a lot.................

[AZ Criminal JD]

11. Obama knows it is unconstitutional

He hopes it will blow over before the bill passes the Senate.

[depakid]

12. What's unconstitutional about it?

:shrug:

[AZ Criminal JD]

13. It violates Article 1, Section 9 parts 3 and 8 of the Constitution.

Part 3 forbids bills of attainer. Bills of attainer are legislation which affects specific individuals or groups. As Jonathan Turley has pointed out this applies to non-criminal matters. Some have tried to claim it applies to just criminal matters. Part 8 forbids impairing contracts. It references the states but under modern court theory would be applied to the federal government as well. Also Connecticut, where the AIG unit is located has a law which would allow those denied bonuses to sue and get double.

[JDPriestly]

19. Let them sue re breach of contract.

The employer/government can countersue for embezzlement, all kinds of charges. There will be no public will for future bail-outs if these guys get these bonuses. And future bail-outs will occur.

By the way, while he is at it, Obama needs to go after the members of the Bush administration for the many crimes they committed including using the Justice Department and the IRS for their own political ends.

Personally, I think there should be a limit on all executive bonuses at this time in the economy. Read the article in Harper's entitled Infinite Debt by Thomas Geoghegan.

Our situation is, in many respects, very different from the situation that existed in 1932. But in one respect the situations are the same: too much wealth has accumulated in the hands of the extremely wealthy, and too little wealth has accumulated in the hands of the middle-class and poor. Why is that a bad thing? Because the middle-class and poor do not have enough money to buy things. Demand is insufficient at this point. The demand was artificially maintained at a high level during the Bush years by holding interest rates irrationally low, stimulating growth in the housing markets and ever higher valuations on housing, encouraging people to borrow against their homes -- rather than increasing the wages of ordinary people.

That's how you create a depression: decrease demand by depriving the middle-class and poor of discretionary income (income they can spend on non-necessities) and concentrating wealth in the hands of the rich (thus putting huge amounts of investment money into the economy when there is no demand for the products that the investments put into the market).

These bonuses are not the whole problem. It's the fact that too much money is in the hands of too few rich people leaving most people with too little to buy the products the rich people cause to be produced.

Raise the wages of ordinary people. Lower the incomes of the wealthy.

[AZ Criminal JD]

27. I think what you are suggesting is a government like Russia

which disregards the rule of law and its own Constitution. That would wreck our economy and I don't think Obama wants to go there.

[JDPriestly]

35. This mess would never have happened had the rule of law been respected

by the American financial institutions in the first place -- never.

What is wrecking our economy is the conduct of the very people who stand to get the bonuses. Those individuals and Wall Street in general need to show that they are willing to make the sacrifices that they have forced on folks on us here on Main Street.

So many people are out of work, and so many businesses are cutting back and closing. Small business owners are suffering in silence, but they are suffering the most. The bonuses to these wealthy creeps are an insult to the rest of us Americans.

The rich, like Bush and Cheney and Rumsfeld, et al. flaunt the rule of law and the Constitution and get by with it.

Your moniker, AZ criminal JD, suggests that you are a criminal attorney. If so, you have probably had the experience of representing some first-time shoplifter at an arraignment. 25-year-old mom, poor with 5 kids, 3 of whom are under 5 and she gets caught red-handed with $20.00 in merchandise hidden in her bag on the way out of a WalMart. Guilty plea, genuinely contrite, nearly scared to death -- and the judge throws the book at her.

A Wall Street broker bets against the banks with naked shorts, or sells insurance that ruins his company, and gets a million plus bonus.

Is that a picture of justice that you can defend?

I know, what's new? But, you must understand, when people lose their jobs, they can become very angry about that kind of injustice.

I will never forget the Rodney King riots here in L.A. I was working downtown. The windows of our office overlooked South Central L.A. We saw the fires as they rose up one by one. Red, orange flames. I remember that as clearly as I remember seeing 9/11 on TV. I rushed out to pick my children up from school. I was terrified. I did not panic on 9/11, but I sure did during the Rodney King riots. We live 5 miles from downtown L.A.

Those riots started during the recession during the first George Bush's reign -- in the aftermath of the S&L Crisis. The perception of injustice about the way Rodney King was treated was one contributing factor, but the desperation of the poor during an economically depressed period was another. The King verdict may have been the catalyst. The economy was the fundamental cause.

We are, again, in an economically difficult time. We have to pull together. The money that went to AIG and the banks could better have been spent to bail out individual debtors -- the American people. Instead, the influential and wealthy persuaded the government to give them the money, to bail them out. The AIG deals knocked us down as a people. We are lying on the ground, stunned, so to speak. By giving these bonuses, Wall Street, AIG, Geithner, et al. are kicking us while we lie there.

It's up to Geithner, Obama, and their friends to stop the kicking and to give a hand to ordinary Americans so that we can stand up and make our way on our own.

Where is the constitutional provision, where is the law that makes it OK for the government to loan money to specific private companies (while allowing other companies in similar circumstances to go bankrupt), and then give handy sums of money as bonuses to the individuals at the tops of those companies, the very people who mismanaged the companies? Where is the law that permits those kinds of special favors to special private banks? It's not as though Congress authorized a general hand-up to all banks or to all Americans. Where is the rule of law in that?

[No Elephants]

61. I am no fan of those who took the bonuses, but you are talking morals and

ethics, both wonderful things. You are not talking violation of laws or violation of the rule of law. Greed, selfishness, etc. are not good or pretty things, but they are not, in and of themselves, illegal

Also, our laws typically do not tell us what we can do, only what we cannot do. For example, no law tells me I may breathe, or go to the supermarket or read a book, yet none of those things are illegal.

Even accepting a fraudulent conveyance is not illegal. It does give rise to a right to recoup, but the person who accepts one gets no criminal penalty.

In this case, people signed contracts a year ago entitling them to bonuses, apparently to be paid in March 2009, if they stayed on for a certain period of time. Bush, then President of the United States, specifically approved those contracts. It's hard to see how acceptance violates the rule of law. People who are trying to prevent the bonuses, however, are advocating for breach of contracts that were not only legally binding under priniciple of contract law, but specifically approved by the President of the United States AND fully performed by the employees. AIG could not get out of a contract under those circumstances, even if it were in bankruptcy.

Again, I have no problem with your calling this immoral, disgusting, selfish, unethical, etc. But there has been no violation of law, let alone a breakdown in the rule of law.

(PS, I always assumed that AZ Criminal JD's monicker meant that he is a juvenile delinquent who did time in Arizona Juvie. Or that he wants people to think he is a lawyer. After all, on message boards, I'm Angelina Jolie, only single. Just sayin'.)

[depakid]

20. No, it surely does not

As Lawrence Tribe notes:

Congress (and the Executive Branch) could avoid serious Bill of Attainder problems by passing a sufficiently broad law … rather than targeting a closed class of named executives even though the prohibition against Bills of Attainder, unlike that against Ex Post Facto laws, potentially reaches civil as well as criminal penalties.
-------

This is the reason why the bank CEO's are pushing back so hard against the bill- they KNOW it's constitutional- and they kjnow that their ownm management will also end up being "adversely" affected.

http://www.rttnews.com/ArticleView.aspx?Id=889511&SMap=1

[AZ Criminal JD]

25. Unfortunately Tribe is a rent-an-opinion.

If a bill were suggested to tax university professors at a special rate if they made more than $100,000 and their employer received federal money I'm sure Tribe would find plenty of things unconstitutional about it.

[Hansel]

29. This example is exactly why everyone should be against it.

It's financial institutions this time. Once precedent is set, it can be any industry. And we all know how much the Republicans love them commie universities. And don't forget union workers.

[SpartanDem]

33. You're right

its all fun to sit around and say fuck Wall St. until the day the GOP returns to the majority and starts writing taxs laws based on our precedent that say fuck the UAW or fuck green tech companies

[depakid]

32. Tribe is one of America's foremost constitutioal scholars

You might even have read his casebook in law school.

So I'll take him at face value with respect to the issue. And, btw: there's no constitutional reason why if Universities receieved an unprecidented bailout that Congress could enact such a statute.

[customerserviceguy]

24. This doesn't void those contracts

it just imposes a tax of 90% of the amounts over $250,000 (whether from bonus or non-bonus pay) made by individuals who work in institutions that have agreed to take bailout money.

However, I'm more persuaded by the bill of attainder angle. If this were done for money earned after the date of enactment, giving individuals the ability to renegotiate contracts with the employer to get under the $250K limit before being subject to the tax, it might pass muster under the ex post facto test.

What is still at issue is the question of whether a tax is a punishment. Clearly, the gas-guzzler tax is intended to be one, but as it was imposed only on vehicles that were sold after the date of enactment, and not on vehicles that were already being owned, it is not a true punishment. In various cases on the subject of bills of attainder, the Supreme Court has looked to legislative intent to decipher whether something was in the nature of punishment, or merely regulatory.

Given the speachifying we've heard this last week, those bringing a suit against the tax might have a leg to stand on with that test.

[AZ Criminal JD]

28. As you point out the factor of "punishment" is one of the prongs of the court test

I believe all someone would have to do is get a DVD of comments made by Congresspeople this last week put into the record and the government would lose.

[customerserviceguy]

30. I guess the point was made

Perhaps in a conference committee, they will come up with a plan that taxes compensation for muckety-mucks in bailed out companies ON the date of enactment. It will look like a reasonable attempt to manage the companies that our government has given the priviledge of surviving. That's especially true of those companies that we are majority shareholders in, like AIG.

[elleng]

38. Its not at all clear that it does so.

IL allthingsJD

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5305204&mesg_id=5305624

[No Elephants]

39. Unless Turley cited SCOTUS cases to back that up, he's talking through his hat.

[AZ Criminal JD]

47. Not talking through his hat

The people talking through their hats are the people saying this is constitutional. They have failed to cite a single Supreme Court case to back them up.

Selective Serv. Sys. v. Minnesota Public Interest Research Group, 468 U.S. 841 (1984) and Nixon v. Administrator of General Services, 433 U.S. 425(1977) are pretty much on point.

In addition:

James Madison in the Federalist #44
"Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community."

[No Elephants]

52. So far, it seems he was talking through his hat. The material you cited does not support

what you claim he said.

You claim that Turley said that the Constitutional prohibition against ex post facto laws and bills of attainder apply in purely civil matters, like accepting a bonus. (Of course, accepting a bonus is not a crime or even a basis for bringing a civil suit. (I won't count civil action for fraudulent conveyance since that has nothing to do with what Turley said.)

In the Selective Service case that you cited, Congress withhold money to punish criminal acts or omissions, like failure to register for the draft. The SCOTUS said that this was punishing a criminal act without a trial. The case says absolutely nothing about applying the doctrine to something that is purely civil. http://supreme.justia.com/us/468/841 /

Soooo, the Selective Service case is NOT authority for the proposition that the Constitutional prohibition against ex post facto laws and of bills of attainder apply to something purely civil.

The Nixon case does not support that claim either. Plaintiff argued that a bill by Congress interfering with a contract for storage of Nixon's records was a bill of attainder, but the SCOTUS said that it was NOT a bill of attainder. http://supreme.justia.com/us/433/425/index.html

In sum, neither case is either on point. Not even close. Ditto for the Federalist Papers.


In what you quoted, Madison says only that bills of attainder and ex post facto laws are fundamental; and they certainly are. However, he does not say that they apply to civil cases. Again, not even close. Besides, what Madison said in the Federalist papers is not the law of the land. But, that does not matter because he didn't say anything about civil matters anyway.

[No Elephants]

62. So far, you have not established that the Constitutional prohibition against Bills of

Attainder applies to anything but crimes. The clause forbidding impairment of obligations of contracts applies to the states. Claiming that modern theory would result in its extension to the feds is, as far as I know, worse than baseless. Among many other things, may I introduce Justices Scalia, Thomas anbd Roberts, none of whom like to re-write the specific, express language of the Donstitution. And that language says states.

People making claims about application of Connecticut law may or may not have a basis for so doing. Without reading the contract andor knowing a lot of the circumstances, no one knows. Location of a unit is not the be all and end all of which state's law applied to a contract and some of the bonuses went to people working in London.

[Marie26]

16. He knows no such thing. nt

[AZ Criminal JD]

48. Of course he does.

He used to teach Constitutional law. Are you saying he doesn't know the subject?

[Marie26]

58. No

I'm saying that IMO Obama isn't "uneasy" because it's unconstitutional, but because it might hurt his bailout plan when the banks throw a hissy fit about the bonus tax. The article doesn't say anything about why the Obama Adm. is uneasy & it doesn't say that Obama believes the tax is unconstitutional.


"Reporting from Washington -- The American International Group Inc. employees who received big bonuses and now could face a 90% tax bill may feel they have been singled out for unfair punishment by angry lawmakers.

But they are not likely to win a court challenge if the legislation becomes law, because courts have given legislatures broad leeway to raise and lower taxes without running afoul of the Constitution, legal experts said Thursday.

"The courts are very reluctant to strike down tax legislation," said Edward McCaffery, a tax expert at the USC Gould School of Law. "I think a tax this high and this targeted raises some difficult questions, but at the end of the day, I would bet a constitutional challenge would not work."

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3791799&mesg_id=3791799

[No Elephants]

63. Yes, he knows the subject. Apparently, the people you are relying on are talking

through their hats, though.

And it isn't as if everyone who knows the Constitution agrees on what it means, or cases would never get to the SCOTUS, nor would there ever be a dissently opinion, let alone so many 5-4 decisions.

[harun]

57. It is constitutional and retroactive taxes like this aren't even uncommon.

[Marie26]

15. If Wall St. doesn't like it, Obama doesn't like it.

We've learned that much. BTW, I believe Wyden has suggested that the Treasury Dept. pulled the plug on that amendment as well. My BS meter pinged big-time when Obama gave that faux-outraged speech about the AIG bonuses last week, and now I know why.

[biopowertoday]

42. Yes that

'outrage' by Pres. Obama really made him look suspect (IMHO).

[bemildred]

26. More empty babble from the NYT. nt

[Jennicut]

37. Perhaps because its a reactionary knee jerk reaction?

And its okay when someone like Obama is in power but it sets precedents for abuse of power. I am torn. I want the stupid greedy bastards to be punished but I am wary about it.

[No Elephants]

40. If there were a Constitutional issue, President Obama probably would

have mentioned it. He was graduated from Harvard Law with honors and taught Constitutional law for 12 years at one of the nation's foremost law schools. If he is actually "uneasy" about the tax, saying it is probably unconstitutional would be his most persuasive argument. And, I would imagine that Congress, many, if not most of whom are lawyers, would have looked into the Constitutionality of the law before proposing it.

IF there is a Consitutional issue, though, the AIG employees would not only get to keep their bonuses, they might sue because Bush specifially approved them before he left office. If they did and they won, they'd probably get more than "just" their bonuses.

Whether or not the law is Constitutional, IMO, tax law aimed at only one group sets a horrible precedent. What is to prevent a law like this targeting the compensation of employees of the ACLU or of PBS, or of some state's Democratic Party or of some "liberal" university's faculty or some "liberal" public school's principal?

Yes, I understand the distinction in the case of AIG would be whether or not the organization took federal money. However, you can probably find all kinds of links to federal money. I don't know about the ACLU, but PBS and institutions of education certainly take tax money, federal, state and/or local.

[Waiting For Everyman]

46. ALL taxation "targets" a particular group.

What a bullshit argument. And 2009 taxes are not payable until April 2010.

[No Elephants]

53. Name a tax law that names a group comparable to AIG employees. Usually, the

groups are arranged on the basis of amount of income and whether income is passive or not. I cannot recall anything comparable to this.

[sendero]

49. "Wall Street firms.....

...Wall Street firms reacted angrily to the tax proposals, with several saying they would explore ways to end their participation in the bailout program.

GOOD. STOP TAKING OUR MONEY YOU FUCKING ASSHOLES.

[MindMatter]

50. The bill is a farce and everybody knows it

They know it is unconstitutional. It would never survive the most basic court test. Moreover, what is not being reported much is the fact that many of those bonuses were paid to AIG employees based outside the US, and they may be out of the reach of our tax code anyway.

This whole thing is bullshit. Now Treasury wants to spin it, with "don't worry, we'll just deduct the $180M from the next pile of $150 BILLION we send to AIG. Yeah, that will show them good.

Why are we propping up this piece of shit? Most of the $170 billion ended up going to non-American companies. Why are we bailing them out? If they were too stupid to figure out what they were buying had some risk, they should take the loss. And if that's a problem, then their own countries citizens should bail them out.

Here's the question nobody wants to discuss: Tell me how we would be any worse off letting AIG fail, especially if we could have put that $170 billion directly into the community banks that are doing legitimate business and funding all the honest business trying to get by in this country.

That bill is an insult to every American. Every goddamn Congressman who voted for it know it will never go into effect. What they are saying is that all they need to do is just bass a BS law to placate the population and pretty soon they will just forget about it.

[No Elephants]

54. I know of no SCOTUS case or other authority that says the bill that Congress is considering

is unconstitutional. That may turn out to be so, if the matter gets to the Supreme Court, but I personally doubt the Supremes would hold that way. Whether or not my crystal ball is clear on the future, the matter is not as cut and dried as your post indicates.

I think Bush's approval of the bonuses MAY give the U.S. a problem if AIG bonus recipients sued, though.

[MindMatter]

56. It is a bill of attainder -- by definition

There couldn't be a clearer textbook case. And that is EXACTLY WHY the House passed it. They didn't really want to do anything to irritate their masters, and with a few winks and nudges between them this made the public feel better. It was exactly like the day a couple of weeks ago where they had a bunch of CEOs in and gave them a real tongue lashing -- followed by absolutely nothing of consequence.

They think you are an idiot. They think this is all it takes to convince you they are making a change.

[No Elephants]

60. No, A bill of attainder seeks to punish a CRIME without a criminal trial. Therefore

a bill taxing a bonus is by no means, by definition, a bill of attainder.

I don't see how anyone could possibly argue that accepting bonuses is literally a crime, especially these particular bonuses.

In this case, there were legally binding contracts, signed in March 2008, saying these employees would get a bonus if they stayed (for a year, apparently) to help unravel the AIG mess, rather than go work for another company. Bush, then the President of the United States, specifically approved those contracts.

However, the SCOTUS is the final word on the Constitution--at least, unless and until it overrules itself. That's why I asked for a SCOTUS case. So far, I don't know of one, but that does not mean one does not exist.

[blue_onyx]

66. The reason people argue that accepting bonuses is a crime

is because DU is apparently filled with people who wrongfully think they are Constitutional scholars. Seriously, where did this assumption that the bill is unconstitutional start? So many on DU have become advocates for Wall Street which I can't understand. If the bill can be proven unconstitutional, then it shouldn't pass. Until then, I hope Obama supports it.

[No Elephants]

67. I think it will be moot, now that some people are giving back the

bonuses. If it passes, whether or not it is constitutional, expect many lawsuits until the SCOTUS pronounces, one way or the other.

[Staneck]

51. Obama is right to be wary

I know many of us would like to see the bonused taxed, but there is still a constitutional dilemma that needs to be analyzed and Obama is a Constitutional expert. He knows things need to be analyzed thoroughly so as to take the best legally possible step.

[acmavm]

59. I'm sure he is...

<snip>

AIG has given twice as much $$ to Democrats since 2006. Dodd & Obama
Posted by chill_wind
got the single largest amounts.

Just some additional factoids I gleaned (and journaled at DU) back in September (much of it since updated) while watching Congressional players and behavior during the giant wealth transfer of taxpayer money to Wall Street aka The Bailout. And watching since.

http://journals.democraticunderground.com/chill_wind/73



Money to Congress: 2008 Cycle

Dems: Dems: $452,526
Repubs: Repubs: $144,792
Others: Independents: $0


Top Recipients

Senate Obama, Barack $104,332
Senate Dodd, Chris $103,900
Senate McCain, John $59,499
Senate Clinton, Hillary $37,965
Senate Baucus, Max $24,750
Presidential Romney, Mitt $20,850
Senate Biden, Joseph R Jr $19,975
House Larson, John B $19,750
Senate Sununu, John E $18,500
Presidential Giuliani, Rudolph W $13,200


http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3495200

[rcrush]

64. +1