David Kravitz (Blue Mass Group) -- a very smart appellate lawyer and a former law clerk for Justice Sandra Day O'Connor -- writes on the subject. The most recent case I know of involving bills of attainder in the business law context is Consolidated Edison Co. v. Pataki, 292 F.3d 338 (2d Cir. 2002), which struck down as a bill of attainder the following New York statute:
§ 1. Declaration of legislative findings. The operator of a nuclear generating facility has a high duty of care to protect the health, safety and economic interests of its customers. Rate regulation of nuclear operators should discourage the taking of risks with regard to potential threats to public health and safety.
By continuing to operate steam generators known to be defective, and thereby increasing the risk of a radioactive release and/or an expensive plant outage, the Consolidated Edison Company failed to exercise reasonable care on behalf of the health, safety and economic interests of its customers. Therefore it would not be in the public interest for the company to recover from ratepayers any costs resulting from the February 15, 2000 outage at the Indian Point 2 Nuclear Facility.
§ 2. With respect to the February 15, 2000 outage at the Indian Point 2 Nuclear Facility, the New York state public service commission shall prohibit the Consolidated Edison Company from recovering from its ratepayers any costs associated with replacing the power from such facility. Such prohibition shall apply to any such costs incurred until the conclusion of such outage, or incurred at any time until all defective steam generation equipment at the facility has been replaced, whichever occurs later. Such prohibition shall apply to automatic adjustment mechanisms as well as base rates or any other rate recovery mechanism. The commission shall order the company to refund any such costs which have been recovered from ratepayers.
I can't say anything beyond that, since I'm not an expert on bills of attainder, and unfortunately don't have the time right now to get up to speed on the subject.
Related Posts (on one page):
- Epstein on AIG Bonus Tax:
- Is the AIG Bonus Tax Really a "Tax"?
- More on AIG Bonus Tax as Bill of Attainder:
- Tribe on Taxing AIG Bonuses:
- "Would a Super-Tax on AIG Bonuses Be an Unconstitutional Bill of Attainder?"
Annotated Constitution of the United State, 1891
If you think that the Federal Due Process clause has any sort of meaning informed by the "law of the land" clauses in state constitutions, then this isn't a deprivation of property by due process, it's a takings, and thus subject to all the restrictions on takings.
The constitution's prohibition on bills of attainder strikes me as merely an instance of (and possibly a synecdoche for) a more general natural law rule giving substantive content to the word 'law'.
Congress writes "rifle shot" tax provisions all the time - provisions that could not possibly apply to more than one or two individuals. Perhaps it's relevant that these generally confer benefits, in the form of tax breaks, but I'm not sure.
Further light may be found in the question of retroactivity. I have seen retroactive tax penalty legislation in draft form, but I have no idea if there is any serious constitutional limitation (due process, one supposes) on such legislation.
I'd welcome hearing from anyone with expertise along these lines.
"I don't understand all the anger at AIG. It's their money, they can do what they want with it. Maybe the politicians don't understand what "giving away money" means."
In rereading this, I get the sarcasm of it. At least, I hope it was meant that way....
AIG has contracts with certain employees, in these contracts they are obligated to pay the employees a salary, and bonuses under certain conditions. These contracts were negotiated between the employees and AIG. The specific provisions of the contract were no doubt negotiated. It has nothing to do with the government bailout of AIG.
What exactly is your argument that the government legally can tell AIG and the employees that these contracts are no longer valid? AIG could face punitive damages if they breached.
All this ridiculousness is a direct result of the stupid bailout. What did you expect would happen? That these companies will take orders from political officials on how to conduct their business?
My point is, blame the politicians, don't blame AIG.
I don't defend the bonuses, but I thought we of the "chattering class" weren't supposed to care about these "...little, tiny, yes, porky..." things.
Where's the outrage over the thousands of earmarks in the Messiah's budget?
http://althouse.blogspot.com/2009/02/schumer
Yup, because no one has standing to sue and therefore the matter cannot heard in any Art III court.
I've long wanted a departure from the cramped notion of standing we have now, but that's a different kettle of snakes.
And another thing: Do folks just not understand anything at all? Look at the statute in the post:
Ratepayers aren't supposed to pay any of the cost? Where the heck are the costs supposed to come from?
Soon it may be torches and pitchforks so some people should be scared.
TRE: What exactly is your argument that the government legally can tell AIG and the employees that these contracts are no longer valid? AIG could face punitive damages if they breached.
Contracts of all types seem to be malleable. Passing a law is overreach, but I bet there are some smart lawyers out there that could poke all sorts of holes in these "retention" payments. If 11 employees that received > $1 million in "retention" payments left the firm, what good were those payments at retaining them?
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"Captain Dumbass"?
Hadn't heard that one before. I did hear "The Chimp" for eight years.
"Messiah" ain't so bad. Sounds kind of respectful.
But it'd cost more than the payments.
Uh, the bonuses only retain them before they are paid out. That's the whole point of being contractually obliged to pay them. The 11 left after their bonused probably because they wern't likely to see additional bonuses.
It's almost as if nobody recognized that re-animating AIG and using it as a conduit to funnel money to banks around the world wouldn't put "the taxpayer" in the position of honoring said conduit's other obligations. Maybe someday we will have a President who will be better able to wrestle with these difficult areas of the law.
Duh, to distract from the more egregious ones
Cite? And what jury, so instructed, would ever award them?
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I hope you're right, but I'm not so sure about "nobody".
I would never refer to our President as a "Chimp", nor would I refer to him as "Captain Dumbass".
Maybe "Colonel Bogey"... because, so far, his performance is significantly below par.
http://www.youtube.com/watch?v=bo_93HWTyrk
Please refrain from trying to make something scandalous out of the name of the band.
Thank you.
forcedmanipulated into paying out grotesque amounts of $$ to multiple entities on the same single property. Many, many times.Like totaling out my car and paying it off in full to every resident in my neighborhood. Now THAT's a business model that's gonna fail big time. Talk about a law needing to be writ. But we would rather be distracted by bonuses. I'm with DiversityHire on this.
Live by the blue state bad faith tortious breach of contract law, die by the blue state bad faith tortious breach of contract law.
On another scandal front, I understand that AIG is actually paying out on claims by insureds. Don't they know that's taxpayer money? These insurance policies are just contracts that can be abrogated at will, right? Or perhaps we can just tax the insurance settlements at 100%, right Senator Schumer? Senator Schumer?
Well, and that's your problem. These aren't performance bonuses, they're retention bonuses, a kind of deferred compensation paid after a fixed interval so long as the recipient hasn't left the employ of the firm.
"Duh to distract from the more egregious ones"
Damn, wish I had said that.
On the bright side, think of how much fun it will be when people start proposing 100% taxes on the salaries of Members of Congress who voted for the bailout.
It's fairly black-letter law that transferring ownership of a firm does not touch the validity of the contracts. No reasonable jury could fail to award the AIG employees whatever they were due by contract plus interest and fees. The worst the jury could do is set punitive at $1.
No doubt Congress could word things in a way that makes the tax susceptible to being characterized as a bill of attainder, but it could easily achieve the same effective result without doing so.
Look! Shiny things! We're repudiating the phrase 'enemy combatant'! Rush Limbaugh is a meanie! AIG paid freaking bonuses!
Are we really expected to be that brainlessly inattentive? Or is the Administration just extrapolating from its supporters and/or Cabinet Secretaries? Feh.
From concurring opinions.
"AIG has been advised by outside counsel that a breach of the retention plan would subject it to claims for not only the contractually owed payments, but also penalties and fees under the Connecticut Wage Act.2 The Wage Act provides for the recovery of double damages and attorneys’ fees when wages are improperly withheld and the employer’s refusal to pay wages lacks a good faith basis. (Conn. Gen. Stat. §31-72.)3 In addition, individual managers who decide to withhold wages that are due are individually liable for violation of the Wage Act.4"
Notwithstanding that, isn't it clear that the bonus payments are stimulative? These bonus recipients will be hiring bodyguards, isntalling alarm systems and up-armoring their limos.
Besides, what did people expect AIG to do with bailout funds if not continue to run its business and meet its obligations? Buy T-bills?
Ugh. I don't know whether or not anything can or will be done to the AIG executives and similarly situated individuals (and though I hate to admit it, much as I think their incompetence should have been a capital crime, they probably should get to keep their ill-gotten gains just because retroactive laws are terrible, terrible things that ought to have been more explicitly and completely banned in the Constitutional text), please tell me there aren't going to be any retention bonuses in the future. There's 435 Representatives for the time being. Surely one of them's introduced some sort of publicity-seeking-but-worthy-of-passage ban on them. Right?
I'm leaning towards B.O. myself.
Has anyone noticed the quoted comment in Monday's (I think) WSJ, to the effect that the employees in question could be told (my quoting is inexact, but close enough) "You may take the bonus, or you may keep your job."?
On the matter of retention, we ought to be asking "Why?", not "How will AIG [ital] ever [un-ital] survive the loss of these irreplaceables." And yes, I do, or did once, know a bit about employment contracts and employment law.
It is disingenuous to ignore the fact that all of AIG's employees are considered by many members of the public to be, in effect, on welfare already. Using food stamps at Whole Foods, and that sort of thing. Certainly the gov't is also at fault for, it its rush to do [ital] something [un-ital], failing to review the obligations of its various rescuees in advance of its commitment to disburse money, but that doesn't alter the proposition that some lawful corrective ought to be available. Again, what are the facts--details, you know?
I am a little embarassed by the rantish tone above, but what the heck, honest outrage is nothing to be ashamed of, ladies and guys.
Perhaps that's why AIG lost so many executives ...
Also, "...in its rush...."
Yes, and the simulated outrage of the Administration and Congress, who drafted and passed the giant "stimulus" bill -- it's too urgent to read it, just vote -- that expressly provides for these payments? That's nothing to be proud of.
Watch those assumptions. I'm no DB hater. My handle is an invitation to those who complain about him.
Said otherwise, isn't a particular bonus of a numerical nature subsumed and tacitly underscored by the rudiments of the company's financial solvency, itself? I mean, if I sign a contract with TeamX tomorrow of the nascent PA Football League that would pay me a one million dollar bonus if I score 20 touchdowns in the season, isn't there an implied notion that the bonus (money) is only as good as the survival of the team and THE LEAGUE, in addition to the touchdown test?
I can't believe these AIG carpetbaggers didnt get or pay the bonuses, run home, look covertly in the mirror like some sort of Kafkaesque crook, and start howling.
An invitation I was happy to avail myself of when I saw it in your name field, and it certainly improves my site experience at VC. So thank you.
On topic: Laurence Tribe disagrees with the perspective EV links to in this post. Not having any particular knowledge of bill of attainder law myself, I can't really say who has the better of this argument, but Tribe's explanation strikes me as plausible.
Bankers corrupted regulators and government officials in order to depredate state treasuries; bankers used OTC derivatives to evade market regulations and taxes; bankers abused accounting rules, thereby defrauding shareholders and bank officers, in order to generate bank profits and individual income.
Although the State should not justify bankers' abuse of rules by abusing itself laws in punishing bankers, it should recognize bankers' fraud and abuse in electing the course of pursuit and in electing the genus of punishment. Bankers accepted Treasury's funds and recklessly transferred these funds to friends and other favored employees in same mode as Ponzi scheme fraudsters who accept funds from investors and transfer those funds to friends and other preferred investors; so remember Milken's racketeering conviction and punish the bankers under RICO statute, or creatively interpret fraudulent conveyance in order to "clawback" individuals' incomes going back many years. The course and punishment elected now determines the integrity of the State in the future.
Moreover, if you want to take heads at least make sure you are taking heads from people who did wrong. Not everyone at AIG performed incompetantly, not even everyone in the financial services division. Some of these employees dutifully did their jobs and either lacked the authority or simply weren't involved with the problematic deciscions.
I mean if you name specific people on a case by case basis I might be more sympathetic but as far as I an tell no more thought is going into this than AIG financial products=BAD!
I mean if there was ever a situation where conservatives should be getting upset about the rule of law it's trying to undo these bonuses after we let these employees work for AIG after the bailout for several months under these contracts.
Perhaps so. But still, what are the terms of these so called bonus obligations? Facts, facts, facts. Please.
It's like characterizing a hotel's 18% required service charge as a "gratuity". You can call it a gratuity, but that doesn't actually make it voluntary or gratuitious in the sense that the customer has an option of not paying it. It's not a gift. Calling it a "tip" doesn't make it one.
Same with pre-agreed "bonuses."
And yet ... the on the stimulus facts are more complicated. The stimulus bill does not "expressly provide" for these payments. The Dodd amendment was described by FoxBusiness.com as a "restriction" on executive compensation. It was received as such by many on Capitol Hill. Jim Inhofe asked why Dodd wanted to tell these companies how to compensate their people and run their businesses. The amendment reads in part ...
But wait! There's more. The final version, after the House-Senate committee, added among other restrictions, the following:
This amendment protected executive pay for contractually bound categories, but even those exceptions appear to be subject to Treasury approval. So do you read the above amendment and clause, which prohibits many retention bonuses but allows for a few exceptions -- per Treasury's judgment -- as an "express provision" for these bonuses?
It's true that this addition wasn't the best idea, but it still gave the government power to rework particularly egregious bonuses -- like a $450 million retention payout to the 400 or so guys who sunk AIG. The problem might be, Treasury didn't effectively prevent that. According to Rep. Brad Sherman of CA, Treasury "missed its chance." Sherman, a Democrat, voted against the stimulus in its final form because he felt Treasury wouldn't act appropriately with its discretionary powers.
So there's some merit to what you said, but you paint Congress as a cabal of hypocrites too dumb to understand what's even going on. The overall picture is hardly that simple, and belies any notion of "express provision." That sounds rather like there was a $450 million line item for AIGFP retention bonuses.
I read the language you cite as leaving untouched any bonus required to be paid by a contract made before 2/11/09. I don't see that the Treasury Sec. has to "approve" the bonus, just determine that the employment contract is in fact a valid contract. BTW, I don't see how anything written in this bill, and undisclosed to the employees, could alter their contractual rights.
But my point was that our governors -- at least the ones doing the bill writing, like Dodd, whose constituents include most of the Americans getting theses bonuses -- knew long ago that such bonuses would be paid, and that their "outrage" is largely a phony one, designed to put them at the head of torches and pitchfork mob, now that they see it has gathered, rather than up in the castle with the Frankenstein they created. President Obama is reported to have known the specific details of these payments for a few days, but didn't register any "outrage" until the lines started heating up.
As far as "too dumb to understand what's even going on": you needn't take my word for it; just watch any session of the House Financial Services Committee, or even the Senate Banking Committee, and you will see enough sheer dimness displayed by our elected representatives to make you despair.
But part of the politicians' obliviousness is understandable, as the bills our governors vote for are crammed with all sorts of extraneous things -- repeal welfare reform here, renege on trade deals with Mexico there -- that nobody discusses, or debates, let alone votes on. Little nuggets that were passed into law with next to no one knowing it will continue to be unearthed for the rest of the year.
Then take the side of the mob by doing something to the group. Righteous justice.
Hell, that worked so well we can do it again. Who's the next group we can get the mob to hate?
IANAL, but I figure there's a reason for laws.
If we pretend if isn't punitive, and pretend it isn't aimed solely at AIG, maybe the courts will agree to pretend to believe us.
I stand by my argument: if it's constitutional to take the salaries of private citizens, it's obviously constitutional to take the salaries of government employees. So instead of retro-taxing AIG employees, let's retro-tax the salaries of all members of Congress who voted for TARP in the first place. If the latter will agree to forfeit 100% of their salaries for the last year, then AIG employees ought not to complain about having to do the same.
As far as I know, the Messiah anticipated by the Jews does not have to be the physical incarnation of God. The early Christians had some pretty big fights over exactly who Jesus was, and it took until at least Nicea to get it settled.
I'm leaning towards B.O. myself.
I've seen plenty of Obama supporters use "B.O." If he was my guy I'd shy away from such an abbreviation. They're kind of stuck, though: they want to abbreviate Obama's name, but they can't go with "B.H.O." because Obama is "He Who Must Not Be Middle-Named."
You are more than welcome. I'm all about everybody being happy. And once we get those DB detractors out of the comment threads, I can concentrate on reading DB's thoughts on the DC real estate market, which are routinely fascinating.
Then take the side of the mob by doing something to the group. Righteous justice.
The government outrage at AIG is manufactured to deflect criticism and wrath that belongs on Congress. The government could have ordered AIG to renegotiate its bonuses as a condition of the bailout cash. That's what it did with the Big 3. It wouldn't have been hard. AIG could have said to its bonus babies: "You've got a choice: you take 10% of your bonus, or we go out of business and you get nothing."
Congress didn't take this very simple step. Obama can read his teleprompter as angrily as he wants, but this was his own fault.
Those are exactly my thoughts. Arguably it's good over the medium run because the financial talent will be spread over more firms and we'll have less likelihood of creating more firms that are "too big to fail." In the long-run, I assume we'll get more large financial services corporations as some of the smaller business prove more successful than others, but possibly not.
In the short run, though, there seems a good likelihood that the large banks that needs bailouts and are receiving heightened scrutiny will lose their best people, decreasing the chances they'll successfully restructure.
What investor is going to want to take the risk on these dicey assets if the government can come back in a year or two and say wait a minute, we sold the assets too cheaply, or, seeing that the assets have now rebounded so much, we will tax the buyer's "windfall profit" at 100%.
The government seems to have forgotten that it's not only AIG that can acquire a reputation.
No reason it can't be both.
I also find the aesthetic objection to the bonuses to be deficient. If a player on the Detroit Lions (0-16, last year) had a contract in which he was entitled to a roster bonus of $2 million on December 1, 2008, who in his right mind would say that the Lions should not pay that bonus, given the horrible performance of the team?
A bill of attainder was essentially a bill passed by the English Parliament that made it illegal to be some particular person or a member of a particular group of people; they were used to execute people who had not committed any particular crime worthy of the death penalty.
Here, this legislation is aimed at a particular class of persons: those who received bonuses from AIG following the bailout. It is patently unconstitutional, even more if (as I have read and heard) the bonuses were authorized by the Act of Congress that approved the bailout.
The most frightening thing is the level of discourse about this on the part of politicians and press: they must thing we are a bunch of fools.
Be it resolved that Edward Liddy shall die.
Compare with the following:
There shall be imposed upon all income received as a lump some payment in the calendar year 2009 by any employee of an entity of which the United States owns 75% or more of its stock, a tax in the amount of 99% of such income, provided that the lump-sum payment exceeds $100,000. The tax described in this paragraph shall not apply if the employee within 14 days of receiving a payment subject to this paragraph returns the payment to the company and disclaims any interest in the payment. The tax described in this paragraph shall be due within 21 days of receipt of a payment subject to this paragraph. Any person convicted of evading the tax described herein shall be guilty of a felony, and shall be sentenced to a minimum of 10 years in prison and fined a minimum of ten million dollars.
These two are in different worlds.
What's so different? The following all seem pretty similar, unless you're objecting to the penalty:
Be it resolved that Edward Liddy shall die.
Be it resolved that all persons bearing a last name ending in ddy, with aformentioned ddy preceeded by an i preceeded by an L, and bearing the first name Edward, shall die.
Be it reloved that all persons receiving bonuses from AIG shall have their bonus money siezed by the government
And, the text of the law you propose.
Are some of these bills of attainder and not others?
Would the team still be required to pay the bonus if that player shot every other team member in the knee caps causing the team to go 0-16?
Do you have evidence that someone at AIG shot anyone in the kneecaps.
All we know is that AIG employees were told, do X and we'll pay you a bonus. Now, even if X ruins the economy, that's not justification for not paying the bonus.
See www.sec.gov for American International Corporation 10K filing on Nov 10, 2008.
Employees
The decline in AIG’s common stock price and the announcement of proposed asset dispositions may prevent AIG from retaining key personnel.
AIG relies upon the knowledge and talent of its employees to successfully conduct business. The decline in AIG’s common stock price has dramatically reduced the value of equity awards previously granted to its key employees. In addition, the announcement of proposed asset dispositions may result in competitors seeking to hire AIG’s key employees. AIG has implemented retention programs to seek to keep its key employees, but there can be no assurance that the programs will be effective. A loss of key personnel could reduce the value of AIG’s businesses and impair its ability to effect a successful asset disposition plan.
As I said, "the people at the financial services division wrote $2.7 trillion in credit default swaps against $100 billion in assets." Unless we get access to AIG's internal documents we won't know if that fraud/kneecapping was done on purpose or if it was accidental.
"A bill of attainder is 'a law that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial.'" Selective Service v. Minnesota Pub. Interest Research Group, 486 U.S. 841. In order to be a bill of attainder, the statute must:
1) single out an identifiable individual or group;
2) determine guilt;
3) inflict punishment without a trial
Id. It is arguable whether a law that defines a set of circumstances that are only met (at least for now) by the AIG bonus babys singles out an identifiable group. Given the number of bailouts during the current crisis, there could well be another set of individuals subject to the law. The law could also be seen as an effort to prevent payments like AIG in the future.
Even if the first restriction were met, it's not clear that the others would be. The only relevant "conduct" here is receiving a given amount of money, and the only "punishment" is a special income tax. As the Supreme Court said, "That burdens are placed on citizens by federal authority does not make those burdens punishment." Id. We do not ordinarily think of income taxes as punishment (even if they feel that way). Although a small group of people would be affected by this tax, you could say the same about, for instance, a 100% estate tax on the value of an estate over $10 billion. That might affect very very few people, but that doesn't make it punishment on those few people.
Whether a burden is "punishment" depends on "(1) whether the challenged statute falls within the historical meaning of legislative punishment; (2) whether the statute, "viewed in terms of the type and severity of burdens imposed, reasonably can be said to further nonpunitive legislative purposes"; and (3) whether the legislative record "evinces a congressional intent to punish." Nixon v. Administrator of General Services, 433 U.S., at 473, 475-76. The "the punitive confiscation of property" is one of the historical legislative punishments, so condition (1) would be met, but this statute could reasonably be sid to further nonpunitive legislative purposes. As noted, the law would apply to future bonused by similarly situated bailout companies, so it could reasonably be said to further the legitimate purpose of preventing such bonuses. And while people are surely angry at the recipients of the bonuses, the real rage is at AIG for paying the bonuses. The aim is not to punish people for receiving the bonuses, but to prevent them from receiving them in the first place.
Reasonable minds could differ, but I doubt that they would in this case.
At any of the various stages of investment by the various branches of government (the NY Fed engineered the first last year), the bailout should have been contingent upon opening the books and demanding various things. The employees would have been totally free to refuse to renegotiate and the government would have been totally free to refuse to invest.
(And, honestly, if I was the one looking over AIG's debts last year and saw a line item of less than a half-billion dollars for promised bonuses, I probably wouldn't have cared, given the huge scale of other debts that AIG had. But I've never been good at predicting mobs.)
These folks made cosmic shitloads of money for AIG (while exposing them to a lot of risk, of course). AIG got consideration.
Jeez, do you bother reading anything anyone writes before you unload? I don't think I purported to "define" bill of attainder. Talk about your strawmen.
Profit = revenue - cost
It seems like AIG is big on the cost issue, not so much on the revenue. TPM has a couple interesting posts about AIGFP here and here. The guy running AIGFP came from Michael Milken's firm? el oh el.
Whether a burden is "punishment" depends on "(1) whether the challenged statute falls within the historical meaning of legislative punishment;
As Snaphappy says, confiscation of property does fall within this definition. I could readily make an argument that this "tax" is but a fine masquerading as something else. So this condition is met.
(2) whether the statute, "viewed in terms of the type and severity of burdens imposed, reasonably can be said to further nonpunitive legislative purposes";
Given that a 100% income tax rate on legally obtained income is unprecedented in American history, I don't see how anyone could make an argument that this serves a legitimate legislative purpose. After all, in all of the crises faced by previous Congresses, ranging from the Whiskey Rebellion to the Civil War to WWII and more, no previous Congress has found it necessary to do this.
and (3) whether the legislative record "evinces a congressional intent to punish."
The on-record statements of the legislators involved make it absolutely clear that the intent is in fact to punish. This is indisputible.
Conclusion: All of the tests are met; it is in fact a bill of attainder. It's also a violation of the soverignity of contract. Plus one could drag the Sixth and Fourteenth Amendments in if one were so inclined.
The only way I can see around this is to tax all wage income over a certain threshold at 100%. That would be legal. Also extraordinarly stupid. Which means this Congress just might try it.
I do think that there is considerable evidence to suggest that Treasury could have looked at these contracts in light of public policy and the expenditure of public funds if it had chosen. I'd repeat that at least one Congressperson, a CPA, voted against the stimulus bill knowing Treasury was vested with discretionary powers but doubtful that Geithner would use them properly. The representative was perhaps right, and for that there's some blame. And now we are treated to the spectacle of Congress villifying Liddy for honoring a contract that could have been potentially declared invalid in any case as a condition of continued receipt of TARP funds.
So there's ample blame for the short-sighedness and the populist response. But for myself, I wouldn't call it false populism: these people are now the most notorious welfare queens in history. They screwed up theircompany and received retention bonuses on the logic that only they could unwind the screw-up. This is business? If Liddy defended them too much, I'd say he ha Stockholm Syndrome. There is also a possibility that some of these AIGFP employees committed actual fraud, as opposed to CDO stupidity.
When it comes to Dodd, well, you're free to theorize that he wanted these people to get bonuses because they are constituents (and yet, AIGFP is a London office -- are these people mostly Conneticut voters working abroad?). That the amendment he wrote was intended and received as a limit on executive pay -- perhaps insufficiently stringent -- doesn't support your theory. It also doesn't help that he didn't write the section recommending protection for pre-2/11 contracts.
Again, you're free to this theorize along those lines, but that would require him anticipating and guiding this bonus payout, without specifically protecting it, and also not realizing that it would be a particularly contentious issue. That is a shaky chain of events.
Oh, okay. I'm convinced now. Cousin Dave says its indisputable and absolutely clear. That settles it.
Argument by assertion usually falls flat and this is no exception. It's not "indisputable" because you say it is. And just because something is unprecedented does not mean it does not serve a legitimate legislative purpose, otherwise Congress could never do anything new.
The best indicator of Congress's intent is the text it uses in the statute, not what some random legislator says on or off the record. So if Congress says the intent is to encourage fiscal discipline in entities that it has bailed out, who are you to say that a couple of random Members' statements mean Congress as an entity is lying?
Events have outpaced your own speculation about what Dodd did, or intended to do: see Dodd's statement (6:30 ET).
Special tax bills use facially neutral wording to give special tax breaks all the time. One could use such techniques in reverse to impose a tax with targeted applicability.
It's an interesting development. I'd assumed the language came from the House-Senate committee, and wanted to know why I couldn't find out which House members pushed for the new clause.
Now we know why.
The refusal to be totally forthcoming at first does make me wonder why he framed it at as a change in the committee, when it was added at the behest of the White House.
But I don't know how that substantively alters his role or constitutes the "reversal" suggested by some news outlets (and the Republicans). He did not originally include the language but consented to it in a compromise. This much we knew. We just didn't know it was Treasury seeking the compromise, we thought it was some group in the House. Yes, know we know he added it, but he didn't exactly have much leverage in doing so. And I think if he'd known about the FP bonuses at the time, which he claims he did not, he might have used that as leverage in bargaining with Treasury. They wanted to avoid lawsuits. Instead, they got this sad sideshow. But it's impossible to say whether he knew about these bonuses when he inserted the language.
That, more than anything, leaves me upset with Treasury. Why are we hearing about this from Dodd nistead of Geithner? Why does is he not acting like a leader? Why is Treasury seeking non-trivial modifications to CEO compensation without directly claiming responsibility, waiting for Dodd to name them?
Hugely disappointing. Add to this that that Treasury was informed on Feb 28th about these bonuses and, making allowances for the enormous task before Treasury, why were they not out in front on this? Short-sightedness on the details won't help us. Geithner is deeply unimpressive.
Dodd's reversal is simple: he first said he had nothing to do with the "savings" provision, and didn't know how it got there. Here he is on Tuesday:
CNN: “There’s the suggestion today being made that you received more money from AIG than any other senator. And that you were responsible for the February 11th, 2009 date. Again, I just want to get — you’re saying you had nothing to do with . . .”
Senator Dodd: “Absolutely not.”
CNN: “And there was nothing you were doing that was aimed at protecting AIG?”
Senator Dodd: “Not at all. Not in the slightest. . . . The point is when that language left the Senate I wrote, that was not included.”
Now he admits that he did put the language in (but at the behest of the administration). Watch it yourself: http://www.youtube.com/watch?v=1GoK0539Gl4
If this isn't a reversal, then I'll retire to bedlam.
On the larger issue, I'm amazed the the administration can claim they are suprised. Their appointee, Libby, is running AIG, their people are running the Treasury and the Congress, and the Treasury Sec has been intimately involved in the AIG rescue since he was head of the NY Fed.
All of this is a distraction from the bigger issues: as usual, 99% of the attention is directed to a fraction of 1% of the spending, and the rest slips by unnoticed.
Just to make the rubble bounce, here's Dodd's earlier claim that he didn't know how the bonus savings language got in the bill, he said on Tuesday:
“I can't point a finger at someone who was responsible for putting those dates in. I can tell you this much, when my language left the Senate, it did not include it. When it came back, it did.”
I would.
How many times has tax law designed to "target" specific entities ended up sweeping up bystanders in a wider net?
But then simply take out any "designating" language from the final bill leaving only the bare tax. It simply doesn't matter what people in the legislature fee.
The fact that some people don't like alcohol or tobacco or gambling or pork or brocolli doesn't turn taxes on these things into fines or punishments. The fact that some people don't like bonuses paid by companies receiving bailout funds doesn't turn a tax a on that activity into a fine or punishment either. What people think inside their heads as they vote for a tax bill is simply irrelevant to whether or not the courts should regard it as a bill of attainder. What matters is what the tax statute says.
Words fail me. Legal or not, it is highly dishonest to unilaterally void legal contracts just because you can. What a display of unchecked raw power. Aside from the obvious issues of $1 Trillion + vs. 165 M or the issue how the bonuses got into the "stimulus" in the first place or how the president himself whipped up the public's emotions. We should all be afraid what our dishonest, highly incompetent lawmakers are going to do or fail to do next. What a sad spectacle. I hope it will cost the politicians dearly at the polls. Kick the rascals out!
And the court would also have to be wearing blinders and earplugs to not know that the intent was punitive.
So, my prediction: The SC will disgrace themselves by ignoring obvious facts again...
I'd have to join you in Bedlam if that weren't called a reversal on the matter of whether he added the clause himself. But his opinion about the clause apparently remains the same. I felt that his political opponents wanted to make it seem as though he were dissembling on that issue.
But this is a sad mess. I'm deeply uneasy about Dodd's dishonesty, about Treasury's silence, about the tax bill, about the bonuses themselves, and about the focus on this diversion, which involves $450 million of the $182 billion lent to AIG.
they are trying to pass a law on and tax an event that has already occurred. whats to stop them from retroactively taxing all of your 2008 income at 80%?
I believe that the ex post facto clause (Art 1 Sec 9 cl 3) has been specifically limited to retroactive adjustment of criminal punishments.
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