Let Congress repay taxpayers for bonuses

The latest furor over the AIG bonuses has revealed the 111th Congress for what it is — the Keystone Kops of the 21st century. Take Sen. Christopher Dodd of Connecticut, chairman of the Senate Banking Committee.

After the AIG bonuses came to light last week, the good senator said he had no idea where the amendment to the stimulus bill that contained language permitting the bonuses came from. A short time later, when the first explanation failed to fly, he admitted actually having a hand in placing the language in the final version of the legislation.

But he said he was utterly clueless that the language, which was given to him by the administration’s financial brainiacs (read Treasury Secretary Geithner, and others), would have the effect of allowing AIG employees to obtain bonuses to which they were contractually entitled. Like police inspector Claude Raines in Casablanca confronting Humphrey Bogart in his casino, Dodd was “shocked and amazed” something like this would go on.

Where does this leave us? Is the chairman of the banking committee so dumb when it comes to legislative language that he doesn’t know what words mean?

Or is he simply lying to avoid being held responsible for inserting language in the stimulus bill that allowed employees of one of his major campaign benefactors (AIG) to reap tens of millions of dollars in bonuses at taxpayer expense? Perhaps he has lost control of his staff, who inserted the language and just neglected to let their boss know.
None of these scenarios reflects particularly well on the silver-maned Connecticut senator, who has served in that body since January 1981. And none of it reflects well on the 60 senators who, along with Dodd, voted “aye” on the final stimulus bill that contained the bonus-permitting language. The 246 House members who similarly supported the offending legislation hardly look more perceptive.

Subsequently, House and Senate members have been floundering around like kindergartners trying to avoid being found out after their teacher found a frog in her purse. In the latest and perhaps most ridiculous effort to atone for their mistake in passing the bonus language they now denounce, the Congress is going to tax AIG employees receiving the bonuses to the extent of the bonuses themselves. This is a constitutionally risky maneuver, but there is actually a much easier — and legally sound — way to recoup the AIG bonus money for the American taxpayers.

The Congress should simply assess those senators and representatives who voted for the legislation a pro rata share of the $165 million in questionable bonuses. This actually would cause little hurt to many of those members of Congress who voted in favor of AIG, since they rank among the richest members. For example, by Sen. John Kerry’s own estimates, his net worth is around $231 million (Forbes magazine puts his wealth a bit higher — at $1 billion). He is considered the wealthiest member of the Congress and is a champion of “fairness,” so paying perhaps an even larger share of the bonuses than whatever his pro rata share would be ($165 million divided by 306, which is the total number of representatives and senators voting for the measure) should sit well with him. And even though Sen. Dodd is not among the wealthiest of the senators, his recent financial disclosure forms include a large number of assets he values in excess of $100,000, and several worth as much as $250,000 each.

Such a self-effacing move by the Congress might spur former Treasury Secretary Henry Paulson — whose net worth was estimated at $700 million when he became the top dog at the Treasury in 2006 — to kick in a fair share. Even his successor, the hapless Geithner, whose net worth pales in comparison (topping out at just $1.7 million), might thus be shamed into contributing his fair share. Perhaps President Barack Obama who, like Sen. Dodd, was “shocked and amazed” when the AIG bonuses came to light, and who has reaped millions from the sales of his books, would feel moved to pay his fair share.

And who knows — if the House and Senate were to take such a benevolent step, their poll numbers, which have dipped recently into the single digits, might skyrocket into double digits once agai

24 comments Add your comment

Eric

March 25th, 2009
7:35 am

Great idea! Makes sense to me.

Nobama

March 25th, 2009
8:23 am

I think congress should publish a list of all homeowners who required govt help with their mortgage. If any of these homeowners ever experience good fortune, I think all citizens should chase them down and get money back. OR
I think all civil servants who got bonuses at work last year should give them back since our govt has a Trillion dollar deficit.

Road Scholar

March 25th, 2009
9:36 am

If this idea moves forward, let’s also charge the Repubs for the cost of the Iraq war! They went in on trumped up issues and had no budget or new revenue to pay for it!

One solution is to ask for the bonuses back, and then investigate those who didn’t return it for fraud and marketing tainted assets. That is within their contracts!!!!

Eleanor Rigby

March 25th, 2009
9:43 am

Excellent idea. Pity Bob Barr isn’t Attorney General.

the best driver

March 25th, 2009
11:37 am

What a fantastic idea! If these congressmen, who voted on legislation which specifically approved these bonuses, had been working for a real business they would have been fired! They are incompetent liars, who couldn’t make it in the real world with a real job. If they really believed that people should take responsiblilty for their own mistakes, and that those most able should pay their “fair share” (see VP Biden), then they should apologize to the American people and pay up. What these congressman would rather do is create a smoke screen around their own culpability, and wrongly accuse other people, who have worked under a contract approved by these same congressman, of being greedy. In Wikipedia, they should post pictures of Sen Dodd and Sen Frank under the word “hypocrisy”.

Valentine Wiggin

March 25th, 2009
12:40 pm

Can we all say “Term Limits”?????

dave montgomery

March 25th, 2009
1:11 pm

The Greeks of 3000 years past never trusted their leaders beyond 4 years of public service. Will “We The People” take action during the next election ? Not likely.

mom

March 25th, 2009
1:30 pm

I work for AIG – whenever I hear someone complaining about the $165M in bonus’ I point out that there are approx. 165M who pay taxes; then I give them $1 and tell them to STFU and to never complain again since they have been paid in full!

luangtom

March 25th, 2009
2:11 pm

mom@1:30PM, consider yourself fortunate that you have a job that is funded by tax-payers’ money. Were it not for us hapless saps that are tax-payers, your business would be in the sewer like the rest of the economy. Get off your soap-box for AIG and appreciate where your salary is coming from…..US.

Californication

March 25th, 2009
2:40 pm

The best thing to do would be to institute the Fair Tax and get rid of the 77,000 page tax code we now have. Then one simple law that if a publicly owned company is losing money then NO bonuses will be paid to any employee. Problem solved!

MIke

March 25th, 2009
3:51 pm

The bonus should be recopupled from the employees and former employees of the division that created the mess – the derivatives side. The many divisions of AIG which were profitable, and where the employees had legally binding contracts, should not be penalized for the scandalous operation of one operating unit by having to return legally earned compensation.

catlady

March 25th, 2009
4:41 pm

Public servants generally cannot get bonuses, even a turkey or ham at Thanksgiving. In GA all teachers can “accept” is a free pass to go to home sports games (and then it is because they want us to come for crowd control.) And maybe some talcum power at Christmas from one of our kids.

I agree that money losing (and dole-accepting) firms should be regulated on the pay, benefits, and bonuses they can offer. The AIG squirrels should be given IOUs for AFTER their company repays the taxpayers (as if).

williebkind

March 25th, 2009
4:45 pm

I am sure most of the AIG employees worked very hard for some promised rewards above their huge salary. The fact is that AIG failed. The taxpayer is billed. Do they teach that at executive school? Many Americans worked hard and their company failed. They got nothing!

Just because you receive a so called good education does not grant you success during failure. That is what I see from the management of these large companies! The executives and managers expect huge payoffs even if their company fails. The employees of AIG stated they worked hard and the company profiited from their department. But the company failed. So they thinks the company should reward them regardless of the company failure. I do not get it. If the company thrives then the employee thrives. Someone should revisit executive colleges and see what their institution is teaching? But you know what is humorous is that the managers are behaving like AIG is a department of the government….OMG.

Scott

March 25th, 2009
4:54 pm

All this proves that Obama is completely in over his head. God help us all. All this administration wants to do is subsidize failure. They give money to people and businesses who cannot get out of their own way, but then they attack success (Exxon/Big Pharm/ Walmart). TOTUS (Teleprompter of the United States) is clueless.

hryder

March 25th, 2009
5:12 pm

All these after the fact offerings are amazing. Retroactive solutions are easy, here is another. Since many are unhappy with the big O, kick him out and the country can hold another election and whoever is able to B.S. the public more than anyone else will be the next entertainer in chief until the public realizes incompetence in administrative governance. Promises of various courses of action mean zero when anyone with a functioning brain SHOULD know that they will never occur due to illegality, lack of funds, Congress, lobbyists, and all the other competing money grabbers. The only thing that I know for certain that has occured and will to all is death!

[...] From the Atlanta Journal-Constitution: [...]

fed up

March 25th, 2009
8:31 pm

Ditto on the term limits, it’s way past time for that. Kick all of them out on both sides of the aisle.

ikesmith

March 25th, 2009
11:13 pm

Ask Bob about term limits, he got termed out not long ago.

Whoever is still feigning indignant about the AIG bonus’ should read this- and think about the alternatives: abrogate the original contracts (scary) or selectively tax such a specifically targeted subset of the populace (very scary).

Op-Ed Contributor – Dear A.I.G., I Quit! – NYTimes.com
Source: http://www.nytimes.com
Jake DeSantis, an executive vice president of the American International Group’s financial products unit, sent this letter on Tuesday to Edward M. Liddy, the chief executive of A.I.G.
http://www.nytimes.com/2009/03/25/opinion/25desantis.html?_r=5

————

Bob Barr’s ad hominem rant about AIG bonus’: if there’s one thing I dislike more than the withered intellectual rigor of an ad hominem it’s Barr’s stupid mustache…

herbK

March 26th, 2009
7:42 am

Nothing new here. Congress & senate have long held two sets of standards: one for the unwashed masses, and one for those who matter, namely themselves. This nation, financially, is absolutely no different from an alcoholic or drug addict, meaning it hasn’t hit bottom yet, so it can’t begin to recover. AIG, GM and the banks who are in the TARP program should have been allowed to fail and dissolve. Would this create an additional burden due to additional unemployment? Yes, but the principle behind allowing them to fail would preserve trust, trust that government would not meddle in the private sector of capitalism. When companies such as AIG, GM, among others, come to D.C. looking for help, it implies that they have failed at producing a product/service geared for profit and their books are now in the red, hence they need financial help. What it really means is the simplistic message has been sent: management and labor both failed in their objectives and goals, and because of the differences, the company is in the red. Often, those differences are clearly defined, sometimes not so much. Why should government allow itself to become immersed in problems like this? Because, in the world of our current government structure, they actually believe they can solve problems. No one in D.C. today has problem solving skills. That is clear. These companies should be allowed to fail. New ones, with a quality philosophy of what is required of management and labor, will eventually take their place.

ken

March 26th, 2009
8:18 am

I find it amazing that most politicians are Lawyers and yet they voted for this package without reading it.When has a Lawyer not read a contract over several times before signing off on it?
This just goes to show you how little regard our leaders have for us.Everyone in our country should not vote for an incumbant next election, this will really send a message to Washington.

neo-Carlinist

March 26th, 2009
9:03 am

Bob,

The Casablanca reference is a bit over-played, but your screed is otherwise spot on. When I fantasize about a more Constitutionally driven government, I wonder why more Sentors/Congressmen are no impeached, terminated or otherwise removed from office for failure to achieve stated goals/objectives? Most private sector working stiffs are employed by virtue of a contract or agreement (verbal or written). Politicians take an oath of office, which avers, among other things to “…support and defend the Consitution…” So, is not de-regulating in essence a failure in one’s sworn duty to “regulate commerce”? At the end of the day, the paper trail for this shameless money grab (and when the dust settles, those paying attention will see it for what it is) leads to Washington, DC (both parties). All this “sock and outrage” coming from 1600 Pennsylvania Avenue and Capitol Hill is just a smoke screen. I’m a populist and I am outraged by the de-regulation of the derivatives and credit default swap markets; and I bear no animosity (or even envy) of the private sector worker bees who played by the rules (the rules changed by Congress/President). As I stated last week, this snowball started rolling down the hill when Bill Clinton (sincere, or not) wanted to eliminate what he perceived as racial bias (”red lining”) in the mortgage market. We’re not in this mess without Congressional (see: Financial Sector lobbyists) consent. As far as the AIG bonuses go, whether recipients are taxes at 25-35% or the 90% proposed by Congress, we’re talking about pennies on the dollar when compared to the $175 billion we’ve pumped into AIG. As the saying goes; that monkey is out of the cage. I’m no good at being noble, but it doesn’t take much to realize the problems of the American taxpayer do not amount to a hill of beans in this mess.

Chuck

March 26th, 2009
11:59 am

Recall the Movie The Hunt for Red October. The part where the aid to the President said “I am a politican which means I am a liar and a cheat which means when I am not kissing babies I am stealing their suckers.

Caveman

March 26th, 2009
11:24 pm

Anti-redlining laws caused the housing bubble and crash? So a law saying that banks can’t refuse to give loans just because the property is in a certain part of town did all this?
And the anything goes attitude in the mortgage industry had nothing to do with it? Or de-regulating banks so that they can invest in riskier commodities than before? Or allowing fly-by-night mortgage companies to write loans to unqualified buyers and sell them off as low risk investmments?

And they say Cons don’t get high.

neo-Carlinist

March 27th, 2009
1:42 pm

are you the GEICO caveman or just a run of the mill caveman (who cannot read/comprehend written words)? I did not say the “anti-red lining” legislation caused this. What I said (wrote) was:

this snowball started rolling down the hill when Bill Clinton (sincere, or not) wanted to eliminate what he perceived as racial bias (”red lining”) in the mortgage market. We’re not in this mess without Congressional (see: Financial Sector lobbyists) consent.

The banking industry/Wall Street simply looked for the silver lining (how can we make money) in Clinton’s efforts to “regulate” the mortgage application/approval process and basically the banks said; “if you are going to force us to change our lending practices, you must make it easier (less oversight) for us to sell insurance on these iffy loans…” And thus the de-regulation of credit default swaps and derivative, etc.

So, is this all Clinton’s mess? No, but my point was it is not a Liberal/Conservative mess. It is a bi-partisan mess. The special interests (banks, Wall Street) etc.; a/k/a as the folks who continue to funnel money to Congress (both parties) don’t care about libs or cons. They care about legislation which allowed them to turn Wall Street into a casino.