pageok
pageok
pageok
Tribe on Taxing AIG Bonuses:

Conor Clarke posts Laurence Tribe's views on whether the federal government could effectively take back the AIG bonuses without running afoul of constitutional prohibitions. Tribe's bottom line:

It would not be terribly difficult to structure a tax, even one that approached a rate of 100%, levied on some or all of the bonuses already handed out (or to be handed out in the future) by AIG and other recipients of federal bailout funds so that the tax would survive bill of attainder clause challenge.

If Professor Tribe is right, I wonder what such a targeted tax provision would look like. Megan McArdle also wonders what implications this will have for other institutions that received TARP.

ShelbyC:
Like on the other thread, it sounds like he's saying that if congress lies and pretends it's not a bill of attainder, judges might pretend to believe them. too bad.
3.19.2009 9:19am
KenB (mail):
Looking for silver linings, might such a tax turn out to be a good thing in the end by discouraging others from seeking to suckle at the federal teat? You can never be sure where you stand when contracting with Satan-----or the feds.
3.19.2009 9:20am
Houston Lawyer:
An excise tax of 100% is hereby levied against any bonus legally paid to an employee of a company, or the employee of any subsidiary or affiliate of a company, who received [federal bailout assistance], the payment of which embarrassed certain members of Congress and provided other members of Congress an opportunity to posture and grandstand.
3.19.2009 9:25am
Matt P (mail):
At least if you play fiddle well you can beat Satan...
3.19.2009 9:25am
Ariel:
While at first I was somewhat sympathetic to restricting bonuses for TARP recipients, once I found out about the nature of the bonuses, I am not at all. The bonuses were "retention bonuses," i.e., you sacrifice your life for one year winding down a business and then you will get a bonus. In this kind of economy, that sort of thing is not joke - you know you're not going to get a job at the end of one year, so you will have to live off of this bonus. Plus, as a general matter, our government should stand behind the contracts it makes with people, particularly when the government needs them for their expertise in winding down this business.

As to the attainder issue, if this isn't it, what is? How will the folks who thought they were getting a retention bonus get their year back? What happens when they finish winding down their business and there is no job for them in the foreseeable future? People acted in reliance on government promises and should be able to do so.
3.19.2009 9:34am
mls (www):
“the fact that the aim of such a tax would be manifestly regulatory and fiscal rather than punitive and condemnatory”

“such a tax would be devoid of the sting of political retribution”

In other words, if we pretend that the tax is something other than what everyone knows it to be, it is fully constitutional.
3.19.2009 9:36am
David Drake:
Houston Lawyer--

Looks to me like the two classes of members of Congress overlap quite a bit.

This morning's WSJ says that some of the employees returned or will return the money, and that employees of Freddie and Fannie are also expecting big "retention bonuses." Also, yesterday's WSJ said that the government might withhold the amounts paid out from the next monies to go to AIG, which, although not very financially meaningful, might be politically meaningful, given the current almost total economic, legal and financial ignorance surrounding this whole issue (meaning the financial crisis).

For Congress to change the laws in the middle of the game, if that's what they do, would be very ill-advised step in trying to improve the economy. But it wouldn't surprise me at all.
3.19.2009 9:37am
xx:
I think Tribe is likely right, but his note reads like he has an undisclosed duty of loyalty to a government client who is in favor of the tax. He makes sure to give away nothing.
3.19.2009 9:44am
RPT (mail):
1. Any problems with "retention bonuses" to people who then left?

2. Why assume that the AIG FPD people who created the problem have or had either the intention or the skill to fix it? Joe Cassano?

3. Why is this not a simple fraudulent transfer situation? AIG was insolvent.

4. Why are these contracts sacrosanct but not others, i.e. UAW?
3.19.2009 10:00am
Richard Aubrey (mail):
If this is possible, what is the immovable and unshakeable mechanism which will restrict it to TARP issues?
What protects any other group against whom public resentment can be manufactured?
3.19.2009 10:09am
PC:
1. Any problems with "retention bonuses" to people who then left?

No, because the people that left AIG are free to "retain" their "bonus" of tax payer money.

2. Why assume that the AIG FPD people who created the problem have or had either the intention or the skill to fix it? Joe Cassano?

It's hard work to go from working for Michael Malkin to bankrupting the largest insurance company on the planet. That kind of skill and dedication deserves a large reward, namely a $1 million per month consulting contract after you leave AIG.

3. Why is this not a simple fraudulent transfer situation? AIG was insolvent.

They clearly weren't insolvent after getting billions from the tax payer. AIG is just taking its cues from Obama and spreading the wealth around; $1 million at a time.

4. Why are these contracts sacrosanct but not others, i.e. UAW?

Because union workers are lazy and stupid and rich people are hard working and smart.
3.19.2009 10:12am
NTB24601:
I agree with Professor Tribe. Despite the overheated rhetoric from some legislators (like Senator Grassley), the purpose of this legislation is not, and ought not be, punitive. The legislation is designed recover public funds, not to cause these individuals to suffer. The funds were intended to restore the financial system, not to enrich individuals.

Personally, I would prefer that Congress end the farce of these government financed zombies. To me, it makes a lot more sense to bring insolvent institutions into a receivership, or into some quasi-bankruptcy status through specially tailored legislation, and then clawback payments like this in the manner that frequently occurs in bankruptcy proceedings. That could also address the much more significant counterparty issue (which is being drowned out by the retention bonus fury). Nonetheless, I see no problem with Congress recovering the funds through its taxation power, if that's the avenue that it prefers.
3.19.2009 10:22am
Houston Lawyer:
Charlie Rangel, chairman of the Ways and Means Committee, has stated his objection to this tax, saying that the tax code shouldn't be used as a weapon. I'm a little conflicted to be in agreement with him, but he's right.
3.19.2009 10:33am
David M. Nieporent (www):
I agree with Professor Tribe. Despite the overheated rhetoric from some legislators (like Senator Grassley)actual evidence that it's punitive, the purpose of this legislation is not, and ought not be, punitive.
FIFY.
The legislation is designed recover public funds, not to cause these individuals to suffer.
Puh-lease. Who are we kidding? That's exactly what the point is. These people are bad people/overpaid, so we want to get revenge on them by taking their money.
The funds were intended to restore the financial system, not to enrich individuals.
How was it intended to restore the financial system? Oh... by keeping AIG running. And how does AIG keep running? With its employees.
3.19.2009 10:36am
NTB24601:
Houston Lawyer:

Charlie Rangel, chairman of the Ways and Means Committee, has stated his objection to this tax....

I believe you are thinking of an earlier version. Represenative Rangel introduced the bill on which the House will vote today. See the news on the House Ways and Means website. I suspect the difference is that the current bill has a broader focus, but I haven't compared the various proposals.
3.19.2009 10:45am
NTB24601:
David M. Nieporent: These people are bad people/overpaid, so we want to get revenge on them by taking their money.

I disagree. Remember, these individuals would not have received their retention bonuses but for the government intervention. AIG would have been forced into bankruptcy, and they would have been far down on the food chain of AIG's creditors. No one is going after funds that can be rightfully considered theirs. That would only be the case if the tax exceeded 100 percent. The effort is to recover misdirected public funds.

David M. Nieporent: How was it intended to restore the financial system? Oh... by keeping AIG running. And how does AIG keep running? With its employees.

As I understand it, the purpose was to restore the financial system by allowing AIG to honor its committments to other financial institutions, which was supposed to restore the credit markets. I find absurd the suggestion that AIG could not accomplish that without paying multi-million dollar bonuses to its executives.
3.19.2009 11:01am
Ariel:
RPT,

1. Any problems with "retention bonuses" to people who then left?

Not really. They were being retained in a dead-end job. They are probably all looking for something else, so it should not be surprising that someone wanted to leave. I would hope that the retention bonuses were structured in some way, such that you would get more for staying around longer, but private parties have the right to engage in contracts.

I believe (but am not certain) that these sorts of retention bonuses are given in bankruptcy as well - nobody wants to wind down a business that will end in them being terminated. Any problem with people being given bonuses for a job that is completely undesirable, and may lead to people not getting another job for a long time?

2. Why assume that the AIG FPD people who created the problem have or had either the intention or the skill to fix it? Joe Cassano?

They have reduced AIG's FPD liability from $2.7T to $1.6T. There's no need for assumptions here.

That said, there's still a lot of work to do. More than 50% of it. Who is going to do it now?

3. Why is this not a simple fraudulent transfer situation? AIG was insolvent.

It was, and it should have been allowed to go bankrupt. The government did not make that choice. Whoops!

4. Why are these contracts sacrosanct but not others, i.e. UAW?

They are both sacrosanct, outside of bankruptcy. The UAW's contract is likely to drive GM into bankruptcy, at which point it will no longer be sacrosanct. If the UAW wishes to prevent some of the harsh consequences, it could voluntarily renegotiate the contract to take GM off of life support. (HA!)
3.19.2009 11:04am
David McCourt (mail):
The bonuses were provided for by contracts that the government never attempted to renegotiate; they were approved and paid out by the CEO (Liddy) that the government put in to run AIG, upon advice given to him by lawyers from AIG, the Treasury, and the White House; they were specifically exempted from legislation restricting bonuses elsewhere; and they were known to the Treasury and Fed officials who administered the doling out of subsequent tranches of public funds to AIG.

But now the public is outraged, so the government is embarrassed and wants the money back. Apparently, some law professors are easier to hire than derivatives traders, and the government has no problem finding a law professor pliable enough -- without a bonus! -- to say what his client wants to hear: that retroactive, confiscatory "taxation" directed only at people that Congressmen have called "criminals" who ought to kill themselves isn't punitive.

This bodes well for the next step in the financial recovery plan: that's where the government is going to try to find private investors to "partner" with it on owning the toxic assets. I'd sooner climb in the cage with a psycotic gorilla.
3.19.2009 11:05am
NowMDJD (mail):

It's hard work to go from working for Michael Malkin to bankrupting the largest insurance company on the planet.

Umm.. did he work for Michell Malkin or for Michael Milkin?
3.19.2009 11:09am
Steve:
What protects any other group against whom public resentment can be manufactured?

Nothing. They may have to give up their government-funded subsidies, too.
3.19.2009 11:10am
common sense (www):
AIG, arguably, should have been allowed to go into bankruptcy. It wasn't, however. The government agreed to give it money, with specific provisions that allowed AIG to pay these bonuses. In fact, AIG had no choice; it was contractually obligated to pay these bonuses because the TARP specifically contemplated it. Banks are already wary of the government changing the rules on TARP. The WSJ has an article today showing the banks that are trying to repay TARP funds as quickly as possible to get out from under government interference. If the TARP was necessary, then this is bad, as bank executives think it is less risky to give back the funds than to take government assistance. If TARP was unnecessary, then we are merely paying the price for electing politicians who want to take some action in a crisis, regardless of whether that action will help mitigate the crisis or not. Either way, even if it is possible to legally grab these bonuses, its really bad policy.
3.19.2009 11:10am
wfjag:
@RPT:

Any objections to a question #5:

"5. Any objections to making the tax retroactive to January 20, 2001 so that it also covers retention bonuses paid former Clinton administration officials who then went to Fannie Mae and Freddy Mac and received bonuses there while driving them to insolvency?"

As a general comment, personally, I'm mostly upset with Sen. Chris Dodd (D. Conn.). As Gov. Earl Long (D. La.) correctly observed: You can't trust a politician who won't stay bought.
3.19.2009 11:14am
David McCourt (mail):
If AIG had been allowed to go into bankruptcy, the world's financial system would almost certainly have collapsed, because of the cascading effect of counterparty failures involving trillions of dollars of OTC derivatives. Most, if not all, of the big banks in the developed world would have gone down, each failure dragging still others down. But hey, some guy in Greenwich or London wouldn't have got a bonus, so we'd have that to console ourselves.

Arguably the authorities got the Bear and Lehman situations exactly backwards: they should have let Bear go, and saved Lehman, which was much more central to the dreivatives markets. Letting Lehman fail came very close to pulling down everything. Before you let a climber go off the cliff you have to see who else is tied to his ropes.
3.19.2009 11:24am
PC:
Umm.. did he work for Michell Malkin or for Michael Milkin?

I guess the coffee hadn't kicked in. Cassano worked at Drexel Burnham Lambert, the firm Michael Milken made famous. CDOs were developed at Drexel in 1987, the year Cassano left to join AIGFP.
3.19.2009 11:26am
David M. Nieporent (www):
I believe you are thinking of an earlier version. Represenative Rangel introduced the bill on which the House will vote today. See the news on the House Ways and Means website. I suspect the difference is that the current bill has a broader focus, but I haven't compared the various proposals.
Rangel himself is a tax cheat; that he's still running Ways and Means tells us how seriously to take the outrage here.


As I understand it, the purpose was to restore the financial system by allowing AIG to honor its committments to other financial institutions, which was supposed to restore the credit markets. I find absurd the suggestion that AIG could not accomplish that without paying multi-million dollar bonuses to its executives.
Yes, the government was obviously trying to restore the financial system, but it was trying to do so by keeping AIG as a going concern. The government could have cut out the middleman if all it was trying to do was to give money to "other financial institutions."

Besides, that's obviously not an accurate summary either, since the same loons stirring up the outrage over the "bonuses" are also whining that Goldman got money from AIG. What did people expect, that money given to AIG would go to unemployed steelworkers?

I disagree. Remember, these individuals would not have received their retention bonuses but for the government intervention. AIG would have been forced into bankruptcy, and they would have been far down on the food chain of AIG's creditors.
Yes, and? So? The government didn't want AIG going bankrupt, and didn't let it go bankrupt. So what would have happened "if" it had gone bankrupt isn't really relevant. The monies were given to AIG, to allow AIG to keep operating. Part of AIG operating involved retaining these employees.
3.19.2009 11:28am
Richard Aubrey (mail):
Steve.
What protects folks who aren't getting govmint money but who happen to get crosswise of Congress for some reason?
3.19.2009 11:32am
The Drill SGT:

1. Any problems with "retention bonuses" to people who then left?

No, because the people that left AIG are free to "retain" their "bonus" of tax payer money.


As Ariel said, these bonuses were promised to employees cleaning up the accounts, e.g. reducing the AIG/Fed liability from 2.3 trillion to currently 1.6 trillion. Ultimately these employees will be laid off. In that circumstance, if you don't provide retention incentives, your best and brightest bail first, and only the worst stay. These bonuses are structured so that payment comes at the end of a period of employment.


e.g., they didnt take a bonus and run, they earned a contracted bonus and left at the end of a contract period.


PS, The NY FED knew all about this. Treasury Sec Geithner is BS'ing. NY FED President Geithner approved it all last Fall.
3.19.2009 11:33am
The Drill SGT:

1. Any problems with "retention bonuses" to people who then left?

No, because the people that left AIG are free to "retain" their "bonus" of tax payer money.


As Ariel said, these bonuses were promised to employees cleaning up the accounts, e.g. reducing the AIG/Fed liability from 2.3 trillion to currently 1.6 trillion. Ultimately these employees will be laid off. In that circumstance, if you don't provide retention incentives, your best and brightest bail first, and only the worst stay. These bonuses are structured so that payment comes at the end of a period of employment.


e.g., they didnt take a bonus and run, they earned a contracted bonus and left at the end of a contract period.


PS, The NY FED knew all about this. Treasury Sec Geithner is BS'ing. NY FED President Geithner approved it all last Fall.
3.19.2009 11:33am
ShelbyC:

Any problems with "retention bonuses" to people who then left?



Keep in mind, retention bonuses are designed to retain the employees before they get the bonus.

So AIG was saying, look we understand you might not want to stay at a company that's going down the crapper, but we need to retain folks that understand these credit default swaps. So if you stay a year, we'll pay you a big fat bonus.

Now, the government doesn't want to pay money to folks who are legally entitled to recieve it because it has decided that they are guilty of "ruining the economy" so it wants to pass a law to take the money back.
3.19.2009 11:36am
ShelbyC:

AIG would have been forced into bankruptcy, and they would have been far down on the food chain of AIG's creditors.


Isn't employee compensation right at the top of the food chain?
3.19.2009 11:52am
gallileo:
PPT asks:

4. Why are these contracts sacrosanct but not others, i.e. UAW?

--

The biggest difference here is that no one thinks the government ought to step in and dictate the terms of the UAW's contract. People are telling GM to renegotiate with the UAW to lower costs, and the UAW is totally free to accept or reject the new terms however it likes. Absolutely no one is suggesting that congress change the terms for them.

The UAW will have to deal with the consequences of whatever decision it makes, and it is reasonably certain that they will be unhappy with the consequences if they don't change the terms.

But the government isn't and doesn't plan on dictating those terms to the UAW, but the taxpayers do want the government to dictate the new terms to these AIG employees, and that is after explicitly saying that giving (and getting) these exact bonuses would be OK.

That is just lame. If you didn't want these bonuses going out, you should have voted against the bill.

The other difference is that it is at least ar
3.19.2009 11:54am
NTB24601:
David McCourt: If AIG had been allowed to go into bankruptcy, the world's financial system would almost certainly have collapsed, because of the cascading effect of counterparty failures involving trillions of dollars of OTC derivatives.

AFAIK, the United States could have still used public funds to honor the commitments to the counterparties, but wouldn't necessarily have had to do so at 100 cents on the dollar. I'm skeptical that requiring the counterparties to bear some of the loss would have collapsed the global financial system. This may have required legislation; I have no idea whether it could be accomplised under existing law.
3.19.2009 12:11pm
Le Messurier (mail):



"That is just lame. If you didn't want these bonuses going out, you should have voted against the bill."



And Senator Claghorn said:
"What do you mean vote against the bill. We didn't read no stinkin' bill, so how can you blame us for whats in it?"
3.19.2009 12:15pm
PatHMV (mail) (www):
The power to tax is the power to destroy.

Congress has rarely looked more asinine and dangerous than it does right at this moment, threatening to breach contracts with private citizens who did the work required of them under their contract.

The mob mentality of some people (including some of the commenters here and most folks in the Administration and Congress) is really starting to scare me.
3.19.2009 12:23pm
NTB24601:
David M. Nieporent: Besides, that's obviously not an accurate summary either, since the same loons stirring up the outrage over the "bonuses" are also whining that Goldman got money from AIG.

You are conflating the position of the "loons stirring up outrage" with the stated purpose of the bailout. Many people on the left, including myself, who are outraged at the bonuses and also at Goldman Sachs getting 100 cents on the dollar, think AIG should have been taken into a receivership instead of being bailed out.

David M. Nieporent: So what would have happened "if" it had gone bankrupt isn't really relevant.

I see it as highly relevant to the question of whether this tax is punitive. I don't think individuals can truly be said to be "punished" by the government when all the government does is attemot to recover public funds that the individuals would have never had but for a government intervention.
3.19.2009 12:26pm
delurking (mail):
I think people have missed the glaring inconsistency in the government's position here. What is a corporation? It is a group of people, some buildings, and some contracts. In the case of a financial services corporation, the buildings are essentially irrelevant (as opposed to a manufacturing company where the plants matter).

So, basically the government decided to prop up AIG because it decided the contracts were very important to the welfare of the country, and only the AIG people could handle the contracts expeditiously enough. If the government thought that the contracts were important but the people were not, it could have just let AIG go bankrupt (ensuring that every single one of the employees lost his/her job), and taken all of the filing cabinets full of contracts and paid other people to handle them. But, obviously, the gov't felt they needed those particular people. So, it is disingenuous now to complain about those people getting paid.
3.19.2009 12:26pm
Bored Lawyer:
What is really frightening is the level of short-sightedness being displayed for a bit of cheap demagoguery.

Suppose the govt. had announced at the time the AIG bailout was being made that all retention bonuses would be taxed 100%. You would have seen a massive exodus of the very employees most needed at the time to keep AIG running. It would have collapsed from lack of skilled employees.

What is going to happen at the next bailout? Why stay on at a sinking ship, when any promise to you to be paid can simply be reneged upon by demagoguing Congressmen.
3.19.2009 12:40pm
NTB24601:
ShelbyC: Isn't employee compensation right at the top of the food chain?

If you are thinking of the preferential treatment for wages in 11 USC § 507(a)(4)(A), I believe that's capped at $10,950. I have no idea whether these retention bonuses would qualify as "wages, salaries, or commissions, including vacation, severance and sick leave pay" but even if they do the cap renders the point moot.
3.19.2009 12:42pm
David M. Nieporent (www):
You are conflating the position of the "loons stirring up outrage" with the stated purpose of the bailout. Many people on the left, including myself, who are outraged at the bonuses and also at Goldman Sachs getting 100 cents on the dollar, think AIG should have been taken into a receivership instead of being bailed out.
Well, I think it should have been allowed to go bankrupt rather than being bailed out, too, but we lost that argument. Once they decided not to do that, once they decided that keeping it as an ongoing concern was the right approach, it doesn't make sense to attack AIG for actually operating as an ongoing concern rather than acting as if it actually had gone bankrupt.

I see it as highly relevant to the question of whether this tax is punitive. I don't think individuals can truly be said to be "punished" by the government when all the government does is attemot to recover public funds that the individuals would have never had but for a government intervention.
They're private funds. When you give money away, it's no longer yours. And since the people actually worked for that money, it's certainly punitive to take it away from them just because you don't think they should have it.

Nobody is suggesting that the money has any impact on whether AIG or the financial industry generally remains solvent. Nobody is suggesting that the money raised from the proposed confiscatory taxes is needed for some government purpose; hell, the cost of passing a new law, implementing it, and litigating the issue would wipe out much of the money raised. The sole purpose of taxing away the money is moral outrage over the fact that perceived-to-be-undeserving people received it.

(Oh, and as for "recovering" it, the money would be going not to AIG, which spent it, but to the general treasury.)
3.19.2009 12:45pm
ShelbyC:

The mob mentality of some people (including some of the commenters here and most folks in the Administration and Congress) is really starting to scare me.



Obama and the Democrats are doing exactly the same thing that Bush and the Republicans did, except that now their doing it to traders instead of suspected terrorists.

The more things change, meet the new boss, etc.
3.19.2009 12:46pm
EPluribusMoney (mail):
This isn't the USA that I was born into. I hoped it could have lasted more than 200 years.
3.19.2009 12:50pm
ShelbyC:
Laurence Tribe, the new John Yoo
3.19.2009 12:50pm
NTB24601:
David M. Nieporent: (Oh, and as for "recovering" it, the money would be going not to AIG, which spent it, but to the general treasury.)

At this point, is there really much difference?
3.19.2009 12:53pm
RPT (mail):
"wfjag:

@RPT:

Any objections to a question #5:

"5. Any objections to making the tax retroactive to January 20, 2001 so that it also covers retention bonuses paid former Clinton administration officials who then went to Fannie Mae and Freddy Mac and received bonuses there while driving them to insolvency?"

No problem here, and happy to take it back further. White collar crime is nonpartisan.
3.19.2009 12:53pm
David McCourt (mail):
NTB24601,

I don't think your view is shared by most observers, whether at the Fed, the Treasury, or the Street. AIG was a unique institution, in that it was a Protection Seller for whom no collateral was required. It would sell "insurance" on mortgage CDOs to banks, etc. without being required to post collateral on the transaction. So if AIG suddenly defaulted, all of its counterparties -- B of A, GS, Merrill, Deutsche Bank, Barclays, Societe Generale, et al. -- would be left holding an empty sack. Maybe this would not have led to general collapse -- although it was the bankruptcy filing by the smaller Lehman that was the immediate, precipitating cause of the credit crisis that began this past autumn -- but I wouldn't want to go "all in" on such a bet, which is what you're suggesting.
3.19.2009 12:57pm
Houston Lawyer:
Obama and the Democrats are doing exactly the same thing that Bush and the Republicans did, except that now their doing it to traders instead of suspected terrorists.

Yes, passing bills of attainder punishing individuals for receiving the benefits of contracts that everyone knows are valid and enforceable is just like when Bush ...

That meme has seriously jumped the shark.
3.19.2009 12:57pm
Thorley Winston (mail) (www):

Laurence Tribe, the new John Yoo



That’s rather unfair to John Yoo.
3.19.2009 12:57pm
Charlie (Colorado) (mail):

Charlie Rangel, chairman of the Ways and Means Committee, has stated his objection to this tax, saying that the tax code shouldn't be used as a weapon. I'm a little conflicted to be in agreement with him, but he's right.


You can feel better now, as I just listened to Rangel on the floor of the House proposing exactly this tax.
3.19.2009 1:00pm
delurking (mail):

"wfjag:

@RPT:

Any objections to a question #5:

"5. Any objections to making the tax retroactive to January 20, 2001 so that it also covers retention bonuses paid former Clinton administration officials who then went to Fannie Mae and Freddy Mac and received bonuses there while driving them to insolvency?"

No problem here, and happy to take it back further. White collar crime is nonpartisan.


OK, then can I get back the salary I paid to that incompetent machinist I had to fire? He was here for for four months, taking a salary, failing to finish a single machining job, and breaking 3 very expensive pieces of equipment in the process.
3.19.2009 1:00pm
Paul Allen:
Hrm.

Posit: Its well known that Congress wishes to pass a law to ensnare a particular set of individuals. Congress writes a convoluted set of requirements that distinguishes those individuals from everyone else.

Doesn't it eviscerate the bill of attainder provision to not see through the locution?
3.19.2009 1:15pm
Snaphappy:

Yes, passing bills of attainder punishing individuals for receiving the benefits of contracts that everyone knows are valid and enforceable is just like when Bush ...


tortured detainees at Guantanimo, detained U.S. citizens without any process, monitored Americans' communications without warrants ...

You're right that the analogy is very very bad, but I think you're confusing those who agree with you with those who don't.

P.S. I'd like to see a single cogent analysis concluding that this is a bill of attainder (other than a blog comment saying "this is clearly punitive!") before you can just assert that's what's happening.
3.19.2009 1:15pm
NTB24601:
David McCourt: "-- but I wouldn't want to go "all in" on such a bet, which is what you're suggesting."

You may have misread my comment above, or perhaps I was unclear. The whole point of my comment was that the government wouldn't have had to go "all in" if it had followed a bankruptcy or receivership approach for AIG. The United States could have still used public funds to honor committments to AIG's counterparties, but not necessarily at 100 cents on the dollar. (This may have required special legislation.)
3.19.2009 1:17pm
PC:
OK, then can I get back the salary I paid to that incompetent machinist I had to fire? He was here for for four months, taking a salary, failing to finish a single machining job, and breaking 3 very expensive pieces of equipment in the process.

If the machinist rigged the equipment so only he could use it and if anyone else tried to use it your entire shop would go up in flames, you might be able to clawback some compensation. Oh, and the failure of your shop would cause a cascade of failures through machine shops worldwide. Of course the incompetent machinist will be happy to stick around and "fix" the equipment if you give him a retention bonus of $4 million.
3.19.2009 1:22pm
Guest for now:
Glad to see that Larry believes in a very narrow interpretatin of the Bill of Attainder provision. I'm sure that has nothing to do with the intended use of that provision and that he'd apply that same narrow reading to other provisions, regardless of their intended use.
3.19.2009 1:34pm
ShelbyC:

tortured detainees at Guantanimo, detained U.S. citizens without any process, monitored Americans' communications without warrants ...



Heck Lincoln killed thousands on U.S. citizens without any process. And the constitution doesn't say anything about monitoring Americans' international communications.

But they're both panicing and ignoring the constitution, if your only arguement is that one party's transgressions are worse than the other parties then I'd say I've made my point.

As for a cogent analysis, look at the rhetoric coming from Congress the past two days about how these individuals are guilty of running AIG into the ground, combined with congressional attempts to take money that's legally theirs. What more analysis do you need?

I haven't heard a single Congressperson say, "Those guys profited illegally! Let's have AIG sue them and get our money back! Let's let due process of law handle this."
3.19.2009 1:35pm
R.J.Torre (mail):
Semantic point: If it's a civil, not a criminal, enactment; it's a bill of pains and penalties, not a bill of attainder.
3.19.2009 1:48pm
RPT (mail):
"Delurking:

OK, then can I get back the salary I paid to that incompetent machinist I had to fire? He was here for for four months, taking a salary, failing to finish a single machining job, and breaking 3 very expensive pieces of equipment in the process."

Are you insolvent? Did he make you insolvent? That's the content for a UFTA or preference claim analysis.
3.19.2009 2:14pm
David McCourt (mail):
NTB24601,

I understood you. Filing bankruptcy, in this context, would have been to "go all in" on a a bet of no systemic risk. Remember, Lehman actually did what you suggest AIG should have done -- filed for bankruptcy - with the resulting dislocations we are still trying to work our way past. Expecting legislation -- from this legislature? -- to be passed OKing the payment of something (less than 100 cents on the dollar) to AIG counterparties like Barclays and Deutsche Bank is a fond hope.

I think we are lucky to have emerged as well as we have this far. Regretting that we didn't sail closer to the wind is tempting fate.
3.19.2009 2:52pm
Brett Bellmore:
I suppose Tribe is 'right', if only in the sense that the courts did the heavy lifting of eviserating the bill of attainder clause decades ago, along with the double jepardy clause, and most of the rest of the restrictions on federal power.

If you take the reasoning by which the National Firearms Act was upheld, Congress doesn't have to stop at 100%, they could levy a 10,000% tax on those retention bonuses if they wanted.
3.19.2009 2:54pm
Randy R. (mail):
"While at first I was somewhat sympathetic to restricting bonuses for TARP recipients, once I found out about the nature of the bonuses, I am not at all. The bonuses were "retention bonuses," i.e., you sacrifice your life for one year winding down a business and then you will get a bonus."

More importantly, the current employees are not the ones who created this mess -- the ones who did have already left. It is THOSE people I would like to tar and feather. Unfortunately, they got their bonuses and left before anyone could clawback anything at all.

The bigger picture is a little different. I think what the public is really fed up with is executive and wall street compensation that allows millions of dollars of bonuses to be paid to high level execs no matter how badly they run the company. they can even drive it into bankruptsy and still get millions of dollars.

This has to stop. It isn't good for capitalism, free markets or the body politic. If you are a great manager and earn *real* value for your company, not just short term gains, not just paper value, then compensation can be as high as you like. Otherwise, you have to bite the bullet just like everyone else. In other words, you have to be responsible for your decisions.
3.19.2009 3:01pm
delurking (mail):

If the machinist rigged the equipment so only he could use it and if anyone else tried to use it your entire shop would go up in flames, you might be able to clawback some compensation. Oh, and the failure of your shop would cause a cascade of failures through machine shops worldwide. Of course the incompetent machinist will be happy to stick around and "fix" the equipment if you give him a retention bonus of $4 million.



Are you insolvent? Did he make you insolvent? That's the content for a UFTA or preference claim analysis.


The machinist broke the equipment. The money and time required to fix it came, ultimately, from other members of our organization, whose well-being was reduced, and from the customers who wanted the work done by a specific time, whose profits were also reduced. The difference between that and our entire organization and its customers going up in flames (or insolvent) is only one of degree.

AIG would be insolvent if not for the government's decision to bail them out. My point in both earlier posts is that the government's outrage is inconsistent with their decision to keep AIG solvent in the first place. If they didn't want the people who work there to be paid to keep working there, they should have let AIG go bankrupt.
3.19.2009 3:15pm
Ariel:
I do think it's curious that no one has responded to my question about who is going to do the other >50% of the winding down, now that they know their compensation will be up for grabs.

Silly communists, you're supposed to kill the capitalists after their work is done, not halfway through.
3.19.2009 3:20pm
David McCourt (mail):
More evidence for Professor Tribe that the retroactive targetted confiscatory tax is not "punitive." Government appointed AIG CEO Liddy testified -- does anybody in Congress actually listen to those they drag up there? -- that the people getting the bonuses are NOT the same people who were responsible for the losses, but are from another unit: “These are not the people that ran the company into the ground. . . . The people who were primarily responsible for credit default swaps that brought us to our knees -- they're gone."

So here's a new argument for the Tribe brief: "It can't be punitive because the 'attainted' are not guilty of anything."
3.19.2009 3:20pm
Richard Aubrey (mail):
How are they doing with the FanFred bonuses?

Oh, yeah. And returning AIG campaign contributions?
3.19.2009 3:24pm
Ken Arromdee:
So here's a new argument for the Tribe brief: "It can't be punitive because the 'attainted' are not guilty of anything."

That's like saying that firing someone for being black is okay as long as they're not really black. I'd think that whether it's punishment depends on whether they are treated that way because they're being perceived as guilty, not whether they're actually guilty.
3.19.2009 3:26pm
David McCourt (mail):
Ken,

The "argument" is tongue-in-cheek. Of course it's punitive; only a law professor could persuade himself otherwise.
3.19.2009 3:36pm
Tom952 (mail):
Remember, Congress is an organization of elected politicians who want more than anything to get re-elected. This may be more an act of grandstanding and buck passing, rather than serious legislating.
3.19.2009 3:42pm
NTB24601:
David McCourt:

Remember, Lehman actually did what you suggest AIG should have done -- filed for bankruptcy - with the resulting dislocations we are still trying to work our way past. Expecting legislation -- from this legislature? -- to be passed OKing the payment of something (less than 100 cents on the dollar) to AIG counterparties like Barclays and Deutsche Bank is a fond hope.


You are misconstruing what I wrote. I am not suggesting that AIG be handled the same as Lehman. My comments to you (here and here) make precisely the opposite point: a bankruptcy or recievership approach would not require the United States to handle AIG the same as Lehman; instead, public funds could be used to honor AIG's committments to the extent necessary to preserve the global financial system.

Your "fond hope" retort flies in the face of the fact the Congress has already allowed "AIG counterparties like Barclays and Deutsche Bank" to be compensated with public funds at 100 cents on the dollar. Because this approach would reduce, rather than increase, the public funds flowing to those institutions, I have trouble seeing why you believe Congress would balk.
3.19.2009 3:51pm
NTB24601:
David McCourt:

Remember, Lehman actually did what you suggest AIG should have done -- filed for bankruptcy - with the resulting dislocations we are still trying to work our way past. Expecting legislation -- from this legislature? -- to be passed OKing the payment of something (less than 100 cents on the dollar) to AIG counterparties like Barclays and Deutsche Bank is a fond hope.


You are misconstruing what I wrote. I am not suggesting that AIG be handled the same as Lehman. My comments to you (here and here) make precisely the opposite point: a bankruptcy or receivership approach would not require the United States to handle AIG the same as Lehman; instead, public funds could be used to honor AIG's committments to the extent necessary to preserve the global financial system. (To my knowledge, that was not done with Lehman.)

Your "fond hope" retort flies in the face of the fact the Congress has already allowed "AIG counterparties like Barclays and Deutsche Bank" to be compensated with public funds at 100 cents on the dollar. Because this approach would reduce, rather than increase, the public funds flowing to those institutions, I have trouble seeing why you believe Congress would balk.
3.19.2009 3:53pm
David Schwartz (mail):
Randy R: Companies use both retention bonuses and performance bonuses, depending on circumstances. Sometimes performance bonuses wind up rewarding or punishing employees for factors way beyond their control.

In fact, it's probably at least partly performance bonuses that got AIG into this mess. Their derivatives business had huge short-term benefits. And anyone who suggested ending it would have seen an immediate reduction in performance and thus a reduction in performance bonuses.

Simply put, performance bonuses don't work very well if you want to encourage the long-term stability of a company.
3.19.2009 3:54pm
David Schwartz (mail):
Also, performance bonuses encourage employees to abandon sinking ships rather than saving them (and who knows, maybe you can get a signing bonus at the ship that's not sinking). Retention bonuses encourage loyalty through good times and bad.
3.19.2009 3:56pm
NTB24601:
Richard Aubrey: How are they doing with the FanFred bonuses?

The legislation that passed in the House this afternoon expressly includes Fannie Mae and Freddie Mac.
3.19.2009 4:03pm
Richard Aubrey (mail):
NT.
That means the FanFred guys are going to be taxed as well?
Anybody else?
3.19.2009 4:16pm
TalkingHead:
At what point does a tax become so extreme that it is confiscatory for takings analysis?
3.19.2009 4:23pm
David Welker (www):
NTB24601:

You definitely got the better of the argument with Nieporent.

That AIG would have gone bankrupt and these people (especially those dealing with credit default swaps -- the same people who caused AIG to become insolvent in the first place) would not have gotten bonuses, but for government intervention is certainly relevant. These individuals are in no way made worse off because of government intervention. But for that intervention, they would not have received bonuses. That the government prevents taxpayer bailout money from being misused on lavish compensation to the very people who caused the crisis in the first place is not punitive. It is common sense.
3.19.2009 4:41pm
NTB24601:
Richard Aubrey: Anybody else?

The term "covered TARP recipients" includes any entity that recieves over $5 billion from the first TARP, Fannie Mae, Freddie Mac, affiliates of covered TARP recipients and partnerships in which covered TARP recipients have a 50% or greater stake. I am pretty sure that this is the bill, although THOMAS still shows it as referred to committee.
3.19.2009 4:42pm
David Welker (www):
It looks like opposition to the bonuses is definitely very bipartisan. It is really nice to see both parties coming together on a common sense issue.
3.19.2009 4:56pm
Richard Aubrey (mail):
Considering that, if Liddy is correct, these guys were not the ones who caused the trouble, and that the contract was in force, and the bonuses were protected until it turned out to be useful to demagogue them, and the guys who got the bonuses were supposedly helping clean up, this seems like a bad idea.
And if Liddy et al can be demonized like this, I see no practical limit.
3.19.2009 5:00pm
cognitis:
Many bloggers on this site absolutely defend all speech, absolutely defend gun rights, and absolutely defend AIG's reckless abuse of taxpayers' money. I propose consequently: buy and collect large number of assault rifles; next place booths before Goldman, Citi, AIG, Morgan; then post signs reading "KILL ALL BANKERS HERE 10 YEARS HENCE" and "FREE GUNS"; finally display collected assault rifles before the banks and AIG.
3.19.2009 5:08pm
NTB24601:
David Welker: "...lavish compensation to the very people who caused the crisis in the first place ...."

I wonder if House Bill 1586 does successfully capture the bonuses paid to the executives at AIGFP. It covers "retention payments" but excludes "commissions." I've seen some commentators refer to these bonuses as commissions. (I haven't reviewed the contract terms closely enough to tell, and I probably lack the expertise to distinguish them anyway.) It would be ironic if the House passed a bill that doesn't cover the bonuses that caused the outrage.
3.19.2009 5:16pm
NickM (mail) (www):
Why would you assume that a bankruptcy court would not allow similar bonuses to executives of the bankrupt company? The most famous example of bankruptcy bonuses was in the PG&E bankruptcy about 7 years ago, with 7-figure bonuses being paid to key executives by order of the bankruptcy court.

Nick
3.19.2009 5:20pm
Not_in_my_contract:
I have a bonus agreement, that the company will "gross-up" the bonus to cover taxes.... so my bonus is a known amount "after taxes."

That won't be pretty if the government taxes it at 90%... or even 100%?
3.19.2009 5:26pm
David M. Nieporent (www):
Not in my contract: the government will just tax your bonus at Infinity+1%.
3.19.2009 5:39pm
ShelbyC:

That won't be pretty if the government taxes it at 90%... or even 100%?



Not in my contract: the government will just tax your bonus at Infinity+1%.




Wouldn't the bonusee's end up just owning the company? Or the government?

And if the company had no value because it owed an infinite amount of money to the bonusee's, they wouldn't have to pay any taxes on it.
3.19.2009 5:52pm
David M. Nieporent (www):
@Welker

1. The claim that these specific people "caused the crisis" is unsubstantiated.
2. That very argument of yours proves the point: why would it be relevant that they "caused" it... unless you're trying to punish them for that?
3. Of course it's punitive. You can't in good faith argue that Congress is motivated by anything other than a desire to see these specific people suffer.
4. Yes, they're made worse off by government intervention: this bill. There's no principle by which one can aggregate all sorts of government actions, conclude that a particular person is better off net, and then argue that it doesn't matter, therefore, that a specific action harmed him.
3.19.2009 6:07pm
David McCourt (mail):
NTB24601,

I think a very fast response to the AIG situation was key. A bankruptcy filing by the biggest Protection Seller may well have unravelled the $62 trillion credit default swap market, long before a creditors' commitee could be formed.

You may be more comfortable with how close we came to disaster with AIG, but I think we were lucky to get by, and have no regrets as to how it was handled. So much else has been handled so much worse: we still await the actual plan to revive the banking system, and the so-called "stimulus" bill and omnibus budget have rightly been called (by Camille Paglia) "a chaotic pig rut."

As for the payments to AIG's foreign counterparties: they were able to be made only because Congress didn't know who te recipients were. Given the disgraceful Congressional stampede regarding these bonuses, do you really think legislators would have voted to make good the contracts by paying Deutsche Bank, for instance? Even now, the Obama administration thinks it a good idea to start a trade war with Mexico. Peronism and sound economic policy are not acquainted with one another.
3.19.2009 6:11pm
Calderon:
Well, now we know the response to the original question. The government (or at least the House, maybe the Senate bill will be different) decided not to go with a "targeted tax provision," but rather with a broad attack on bonuses by people with an AGI over $250,000 who got TARP funds.

Potential scenarios are: (1) the companies try to give back enough of their TARP funds to get under the $5 billion limit, which will leave those companies with less to lend and cause TARP to do less to prevent a credit freeze; (2) increases in salaries to make up for lost bonuses, which ironically enough gives the companies less flexibility to deal with challenging economic times. This may also provoke another round of outrage; and/or (3) an exodus of good people from those firms by people who can get financial jobs elsewhere (to the extent all of those people haven't already left).

The only benefit of the bill I can see if that it will help kill the current firms that were "too big to fail," since they'll be husks with underperforming employees, while bolstering the rank of smaller banks that are under the $5 billion TARP threshold. Unfortunately, that could lead to an increase in the perceived need to nationalize the larger companies and play political games with their loans and terms.
3.19.2009 6:28pm
PC:
I'm confused. I thought some of the people getting these bonuses were the same people that wrote the CDSs. I remember hearing the justification that the swaps were so complex that only the people that wrote them could understand them. So AIG had to give those people bonuses so the swap writers would actually unwind the contracts in an orderly manner. Has this story now changed?
3.19.2009 6:38pm
David W:
David Welker:

It looks like opposition to the bonuses is definitely very bipartisan. It is really nice to see both parties coming together on a common sense issue.


My understanding is that the Republicans supporting it are doing so precisely because it's not common sense - they can't prevent the unending stream of bailouts to the politically connected, but maybe they can help make those bailouts painful enough that no one else is willing to be bailed out. So far, anyway, the government seems to need management's permission before taking over a company that's not broke.
3.19.2009 6:47pm
David Welker (www):

1. The claim that these specific people "caused the crisis" is unsubstantiated.


Of course, likely not all people getting bonuses are themselves the cause of the crisis. AIG has a lot of employees. However, we do know that many people who worked in the division dealing with derivatives are slated to receive bonuses.


2. That very argument of yours proves the point: why would it be relevant that they "caused" it... unless you're trying to punish them for that?


Declining to reward people who caused a firm become insolvent (and thus required a Federal bailout) is not equivalent to punishing them. If we went after their pre-existing assets, that would be punishment. To decline to give them bonuses merely puts them in the same position they would have been absent a bailout.


3. Of course it's punitive. You can't in good faith argue that Congress is motivated by anything other than a desire to see these specific people suffer.


Definition:
Bonus - something given or paid over and above what is due.

That, to me, it key. You are not talking about the base salary that is necessary for survival here. You are talking about bonus money for a job well done. But, collectively, the employees of AIG have not done a good job. (Though, I am sure that there are individual exceptions.) The company is not prospering.

Bonuses, by their nature, are risky. Those who fundamentally alter their lifestyle in dependence on bonuses are taking risks. It is generally a wise course of action to keep your expenditures within your regular income, not depending on bonuses. (I think it would be wise to invest such bonuses and you can spend the returns on investment. But depending on the bonus money itself for regular expenses is probably an unwise strategy if it can at all be avoided.)

Whether or not they "suffer" because they do not get something they don't deserve (because the firm they worked for would have gone bankrupt in the absence of a bailout) is besides the point. I am sure that when you decline to give a homeless person a million dollar bonus, they likewise "suffer." But the point is, that in justice, the homeless person has done nothing to deserve a million dollar bonus and either have the people who collectively ran AIG into the ground.

I think that the "suffering" of people is unfortunate. I very much doubt that the employees were actually malicious when they failed. I don't they set out to make AIG fail. But, there was a management failure and lost profits and incompetence in some areas of the company. That impacts everyone.

If AIG were to go bankrupt, there would be some people who would "suffer" and not receive bonuses. And maybe, in some cases, this would even be unfortunate because that individual in fact did his or her job well. But, the fates of individuals are naturally tied to the fate of the company as a whole. When a company fails, the natural consequence is that some people who do not "deserve it" end up paying the price too.

It is the same situation here. The bailout of AIG was not intended to protect employees from the natural consequences of their failure. although, to the extent that it enables them to continue to collect their normal salaries, and in times like this, they should be grateful for that, it does in fact protect them -- to ask for more, that is simply greedy.

Overall, I don't think that denying people bonuses when their company has failed is a punitive measure. It is merely ensuring that some of the natural consequences of failure are felt. They wouldn't receive bonuses if the company failed.


4. Yes, they're made worse off by government intervention: this bill. There's no principle by which one can aggregate all sorts of government actions, conclude that a particular person is better off net, and then argue that it doesn't matter, therefore, that a specific action harmed him.


Your argument that we should ignore the fact that the government is the one that is IN FACT paying this bonuses, strikes me as stupid. This is the same fiscal year.

You would have a point if someone was trying to argue: well, the government did benefit you back in the day when it provided you with an elementary school education, so you should complain today when it wrongly deprives you of something less valuable. But seriously, that argument does not fly here.

You actually want to reward people for failure. That is ridiculous.
3.19.2009 7:03pm
David Welker (www):
David W:


My understanding is that the Republicans supporting it are doing so precisely because it's not common sense - they can't prevent the unending stream of bailouts to the politically connected, but maybe they can help make those bailouts painful enough that no one else is willing to be bailed out. So far, anyway, the government seems to need management's permission before taking over a company that's not broke.


Plenty of Republicans have expressed justifiable outrage at the bonuses themselves here.

If healthy institutions decline to take bailouts because it means that their executives have limits on compensation, I hardly would consider that a crisis.

Bailouts should definitely be the exception, not the rule.

Of course, if it was really necessary to provide bailouts to healthy companies in order to restore health to the economy, I would be for it. (To me, it is not about the companies, it is about what is good for the country.) But, absent a very convincing argument that such was necessary, I would prefer healthy companies not take taxpayer money. (In fact, I would prefer unhealthy companies not take it. I only support it because I think it is better for the country in some cases to bailout certain critical companies.)
3.19.2009 7:09pm
gallileo:

You actually want to reward people for failure. That is ridiculous.


Actually, the ridiculous thing is congress changing the rules midstream. They wrote a bill that said, "Bonuses are OK", then when the bonuses happened (which is pretty standard practice), they got mad.

That is the real problem here. If they didn't want AIG employees to get bonuses, then they should have allowed them. They screwed up, and now very few people will trust that congress won't change the rules out from under them.
3.19.2009 7:14pm
NTB24601:
@David McCourt: You are probably correct that the political calculus is different now that Congress knows who the counterparties are. I don't think its a forgone conclusion, though, that Congress would balk at moving away from the current bailout approach to a bankruptcy/receivership approach with partial payments to counterparties, given that they would be reducing the amount of public funds that are currently going to foreign corporations.
3.19.2009 7:21pm
NTB24601:
gallileo: "...and now very few people will trust that congress won't change the rules out from under them."

We'll see if this has any long term effects on people's confidence in the United States. I doubt that it will. I think most people will realize that this was a unique situation.
3.19.2009 7:24pm
David M. Nieporent (www):
Declining to reward people who caused a firm become insolvent (and thus required a Federal bailout) is not equivalent to punishing them.
Most of us don't think of our paychecks as a "reward," but as compensation for services rendered. And tricking us into working with the promise of that compensation, and then taking away the money we earned from that work, is certainly equivalent to punishing us.
If we went after their pre-existing assets, that would be punishment. To decline to give them bonuses merely puts them in the same position they would have been absent a bailout.
We're not "declining to give them bonuses"; they've already gotten them. Pre-existing. Now we're taking those bonuses away from them.
3.19.2009 7:29pm
ShelbyC:
David Welker:


Definition:
Bonus - something given or paid over and above what is due.



Well, since these payments are contractually "due", under your definition I guess they're not bonuses. Pheeew! All that aingst for nothing. I guess Congress can finally move on!
3.19.2009 7:30pm
NTB24601:
David M. Nieporent:
"Of course it's punitive. You can't in good faith argue that Congress is motivated by anything other than a desire to see these specific people suffer."
I have made that precise argument above. Just as you do not appear to have been persuaded by my argument, I was not persuaded by your responses. Nonetheless, I did not question that you were arguing your position in good faith. I would ask the same courtesy.
3.19.2009 7:30pm
RHSwan (mail):
David Welker,
Healthy institutions took TARP money to cover for the unhealthy institutions. They are now under the same restrictions as the institutions that gambled and lost. They have people who did excellent work who now won't be paid what they should be because Congress and the Administration put politics above common sense.
3.19.2009 7:32pm
David M. Nieporent (www):
Definition:
Bonus - something given or paid over and above what is due.

That, to me, it key. You are not talking about the base salary that is necessary for survival here. You are talking about bonus money for a job well done. But, collectively, the employees of AIG have not done a good job. (Though, I am sure that there are individual exceptions.) The company is not prospering.

Bonuses, by their nature, are risky. Those who fundamentally alter their lifestyle in dependence on bonuses are taking risks. It is generally a wise course of action to keep your expenditures within your regular income, not depending on bonuses. (I think it would be wise to invest such bonuses and you can spend the returns on investment. But depending on the bonus money itself for regular expenses is probably an unwise strategy if it can at all be avoided.)
Ah. So the problem here is that you simply don't understand the facts of the situation. These are not "over and above what is due." These are due. They're base pay; they're simply paid at the end of the time period rather than spread out over each pay period. These are not "for a job well done." These are not performance bonuses. Nor are they "risky." They're retention bonuses -- which are simply automatically earned by staying at the company the whole time.


It seems a lot of the hysteria arises from the fact that the public mistakenly thinks that these are performance bonuses.
3.19.2009 7:33pm
gallileo:
I think most people will realize that this was a unique situation.


Yes, and the next time the congress desperately needs someone to help it out of a unique and terrible situation, and explicitly gives that person permission to do something that he think will help, that person isn't going to believe them.

This might have been a unique situation in its particulars, but unique-in-particulars situations show up all the time--and you need those you want to solve it for you to believe that they can trust you.

good luck with that.
3.19.2009 7:39pm
NTB24601:
As far as I can tell from quickly skimming AIG-FP's 2008 Employee Retention Plan, these awards come from the same bonus pool as performance bonuses. They are simply a guaranteed portion of the performance bonuses. I only skimmed it quickly, though, so its possible that I misread. (No time to do more; I'm already running late.)
3.19.2009 7:46pm
The Original TS (mail):
I think TalkingHead raises and interesting point. At some point, a tax becomes confiscatory and triggers the takings clause.

Could a municipality or state avoid the takings clause by imposing a 100% property tax on property in a redevelopment area? How about a 200% tax?

Even better, could the state or federal government impose a 90% income tax or even a 90% wealth tax on people who owned property in certain areas? How about people with net worths in excess of 10 million dollars? How about people who work at certain companies?

In another context, the Supreme Court has remarked that "the power to tax is the power to destroy." This is a real slippery slope that we don't want to go down. If it's OK to impose 100% taxes on people who work at specific companies, governments are free to use the tax code to punish anyone who works in a business that is politically unpopular or, in fact, people who do anything that is politically unpopular. Maybe California can get out of its fiscal crunch by imposing a special 20% income tax on everyone who owns an SUV. If you think that's a completely far-fetched idea, you don't know the California legislature.
3.19.2009 7:50pm
David Welker (www):
The Original TS,

I don't think your point of view makes sense.

Whenever the government taxes, it takes 100% of what is owed. Say, you owe $500 taxes at the end of the year. The government will take 100% of $500. Despite this clear taking of something valuable, this is not a "taking."

In contrast, the government could not take a plot of land from you for some public purpose that was worth even less than $500 (let us say $400) without paying you compensation.

Basically, I think you reading your policy preferences into the Constitution. Either that, or under your logic, the power to tax itself is unconstitutional. Because always 100% of what is due (and what is due is in fact valuable property) is taken.
3.19.2009 8:04pm
Ariel:
David Welker,

As David Nieporent points out, the bonuses are for retention, not performance. The idea was that these folks could help AIG wind down the liability. They have, in fact, done so, from $2.7T to $1.6T. Who do you think is going to work on the other >50%? Now that they know that their efforts will be rewarded with a big fat zero, and there is nothing realistic on the horizon given the situation? I can see how that meeting will go down at AIG - any volunteers to do this job? Hmmm - none... what do you know - if you take away an incentive for a dead-end job, people would prefer to take their chances with their regular old position, thank you very much.
3.19.2009 8:09pm
David Welker (www):
Ariel,

I have my doubts that million dollar bonuses are in fact necessary to get the work of qualified people to unwind the liabilities of AIG, given the laws of supply and demand, especially in this economy.

If anyone at AIG wants to leave their job, I bet you could get several thousand resumes of people who would take that job.

Of course, I haven't examined the particular job market to know that this is the case for sure. But I suspect it is the case.
3.19.2009 8:21pm
The Original TS (mail):
David,

So could a state or municipality impose a 200% tax on property in a redevelopment area and avoid the takings clause? If not, why not?
3.19.2009 8:24pm
Tyler A.:
I think it would be hilarious if any of these bonuses had "gross up" provisions - where AIG automatically has to pay the tax that the individual would have to pay plus any additional tax incurred from the gross up. If my math is right that means that AIG would have to pay $10,000,000 for a $1,000,000 bonus after this tax change.
3.19.2009 8:37pm
The Original TS (mail):
If anyone at AIG wants to leave their job, I bet you could get several thousand resumes of people who would take that job.

This idea is one of the biggest misconceptions about the whole situation.

AIG has several product lines. It's actually a bunch of different companies. Some of those lines, like life insurance, are extremely profitable. You definitely don't want to drive these people away.

If you think AIG is in trouble now, get rid of the top 500 executives and replace them with people who send in resumes and are willing to do their jobs for 60K/year.

In addition, a lot of these bonuses aren't retention pay, they're performance pay, e.g., if your department hits its underwriting target, we'll pay you XXXX. If you remember, just a couple of years ago, everyone was screaming about how managers should get performance pay instead of big salaries.

For a lot people in the financial business, these bonuses are their salary. They get a small draw every month and rely on a bonus at the end of the year to actually live on. This isn't just true for highly-placed executives. Even many people at the bottom rungs get paid this way.
3.19.2009 8:38pm
Ariel:
David Welker,

I have my doubts that million dollar bonuses are in fact necessary to get the work of qualified people to unwind the liabilities of AIG, given the laws of supply and demand, especially in this economy.

These are dead-end jobs. There is no future for them. If you sign up to do this, you know you are being terminated after you are done. Given the state of the economy, and its apparent direction, you will not be getting another job after you are done. So - would you get qualified people at a lower price, when they know that if they take this opportunity, they're taking themselves off of the market for any other reasonable opportunity that might pay a little less, but at least if you work hard, you might still have a job in a year?

If anyone at AIG wants to leave their job, I bet you could get several thousand resumes of people who would take that job.

Sure you could. Qualified people? That's another question. Washington has already demonstrated that it does not know what a swap is, so we're talking about people smarter / more knowledgeable than your average Congressman. And people who would knowingly take themselves off of the market, for a phantom bonus, at a time when they have the safe option of just about anything else, if they can get it, but at least with the potential for longer term?
3.19.2009 8:53pm
Guest-aholic:
David Welker bets AIG could find people to do the job, an opinion undoubtedly borne from his substantial experience as a student somewhere. It's clearly not from his experience in the actual business world, where he clearly has no experience. But hey, he has time to surf the internet and post several comments on a message board, so of course he knows how to unwind a derivatives unit! And because there are unemployed people, he can assure you that he could fill those jobs in no time!

You'll make a great national planner one day!
3.19.2009 9:07pm
Nick056:
ShelbyC,

Did you respond to concerns over demagougery by suggesting that Obama is sending AIG employees to off-shore detention centers and denying them habeus corpus, or that the tax bill is the legal or moral equivalent thereof?

And you said that without irony?

This is a bit of a precipice. Free contract arguments on behalf of these payments are all well and good, but I think arguing that taxing the bonuses implicates core principles of free contract will just convince people that the core principles of free contract can and must be flexible.

370 people, many of them rather culpable for this mess, are owed $450 million in taxpayer dollars. I'm sure everyone here knows that this won't be happening. People like David Nieporent rarise excellent questions and argue with great facility -- though I don't think the taxes are putative, necessarily -- but my advice would be to stay quiet on this one. Like I said, these payaments are so dirty, if you muster free contract arguments to defend them, you're just going to damage free contract by association.
3.19.2009 9:36pm
Fedya (www):

If it's OK to impose 100% taxes on people who work at specific companies, governments are free to use the tax code to punish anyone who works in a business that is politically unpopular or, in fact, people who do anything that is politically unpopular.

As long as they don't try to do it to popular children's authors
3.19.2009 10:52pm
Ariel:
Another way to think about this. Here is the new AIG employment contract:

Compensation:
- A nominal salary
- A substantial bonus, which the gov't may take away, if you stay the whole time

Your job:
- Unwinding derivatives most people don't understand

Your prospects:
- Guaranteed termination after your term
- Likely no job when you're done
- You're too busy to look for a job, so no job until your end date

So, take the job? Enjoy your unemployment benefits, newly expanded? Look for another job?
3.19.2009 11:09pm
ReaderY:
I basically agree with Professor Tribe on this one. A tax is value-neutral. It doesn't imply anyone is guilty of anything. It is not a punishment. It simply raises revenue.

If a higher tax rate implied conduct was criminal, we would say that Congress attainted work by making the tax rate on earned income higher than the capital gains tax, or attainted the rich by progressive tax brackets. Such thinking is basically silly. This is a nonissue.
3.19.2009 11:31pm
David McCourt (mail):
"Of course, I haven't examined the particular job market to know that this is the case for sure. But I suspect it is the case."

Well, this is plenty good reason to break out the torches and pitchforks. Just what I like: an informed electorate.
3.20.2009 12:21am
suriname:
Question: Why is there no Takings Clause issue here?
3.20.2009 12:49am
David Welker (www):

David Welker bets AIG could find people to do the job, an opinion undoubtedly borne from his substantial experience as a student somewhere.




Well, this is plenty good reason to break out the torches and pitchforks. Just what I like: an informed electorate.


What pitchforks?

I guess YOU know everything. At least I am smart enough to recognize that I do not know everything about every market.

But, nonetheless, I am suspicious that the job of unwinding requires million dollar compensation packages to attract qualified talent:

From the WSJ:

August 2, 2008


Retail jobs dropped by 17,000, and employment in professional and business services -- a category hurt by the ailing financial industry -- lost 24,000 jobs.


October 4, 2008


Financial-industry employment declined in September, but that number is likely to climb substantially amid the recent turmoil in the sector.


From the NY Times:

November 6, 2008


Goldman Sachs notified roughly 3,200 employees this week that they have been laid off, part of previously reported plans to slash 10 percent of the firm’s global work force amid slumping markets, Reuters reported, citing people familiar with the situation.



...


Goldman has quietly and slowly cut jobs all year. The bank laid off hundreds of M&A support staff and junior bankers in June due to slowing markets, following a round of leveraged lending and mortgage securities cuts in April.



I could find more news stories, but I think you get the point. In the absence of a specific and persuasive case being made, I think it is reasonable for me to be skeptical of the claims about the need for huge retention bonuses financed by taxpayers at AIG.
3.20.2009 2:09am
David Welker (www):
Actually, lets get those pitchforks and go!
3.20.2009 2:24am
DiversityHire:
This just gets awesomer:


A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year.
3.20.2009 5:19am
Brett Bellmore:

I basically agree with Professor Tribe on this one. A tax is value-neutral. It doesn't imply anyone is guilty of anything. It is not a punishment. It simply raises revenue.


No, it's clearly punishment, based on the statements by the Congressmen who voted for it. It's just a financial punishment, rather than imprisonment.

But Tribe is 'right', in the sense that the Supreme court doesn't enforce the bill of attainder clause unless Congress is stupid enough to title the bill, "The 2009 Bill of Attainder Against People Who Embarrassed Us". And maybe not even then.

The bill of attainder clause is one of those clauses of the Constitution, like the double jeopardy clause, or the requirement that Congress have a quorum present to conduct business, or that bills have to be passed by both houses to become law, (I'm sure we could expand the list with some thought.) that the Supreme court doesn't feel like enforcing. And so can't be brought to notice when they're violated, no matter how clear the evidence is.

It's part of the ever growing "dying Constitution".
3.20.2009 6:37am
David Schwartz (mail):
Will anyone address the legal question? Can Congress, or a State legislature, avoid the takings clause simply by cleverly drafting a 100% tax?

If so, the takings clause is entirely dead. If not, why is this not that?
3.20.2009 8:49am
PC:
Can Congress, or a State legislature, avoid the takings clause simply by cleverly drafting a 100% tax?

Just guessing, but a 100% tax may trigger an action based on the takings clause where a 90% tax will not. A 90% tax has precedent (88% starting in 1942, reaching a high of 94% from 1944-1945). Some income was taxed at greater than 90% for over a decade.
3.20.2009 10:01am
Ken Arromdee:
Bonuses, by their nature, are risky. Those who fundamentally alter their lifestyle in dependence on bonuses are taking risks. It is generally a wise course of action to keep your expenditures within your regular income, not depending on bonuses.

Just because they are described with the word "bonus" doesn't mean that they're a bonus in the sense of only being provided under certain conditions. They're a type of pay that happens to be given out in a lump sum at the end instead of in the middle. The "bonus", in other words, is their regular income. Saying that employees shouldn't have relied on them is equivalent to saying that they shouldn't have relied on their salaries.
3.20.2009 10:24am
David M. Nieporent (www):
I basically agree with Professor Tribe on this one. A tax is value-neutral. It doesn't imply anyone is guilty of anything. It is not a punishment. It simply raises revenue.
Ideally, a tax is designed to raise revenue. Unfortunately, in the real world, Congress routinely uses the tax code to incentivize [sic] behavior: to encourage people to buy hybrid cars, or to discourage them from buying foreign sugar, or whatever. Still, that's a general tax.

But this is entirely different. It's not designed to raise revenue -- the monies in question are trivial, and by the time it's fully litigated, most of them will have been spent. Nobody in the debate over the bill has suggested that they're supporting the bill because they feel the need to raise government revenues.

It's not designed to encourage people to behave a certain way -- it can't be, because the behavior that it targets already happened. If it were designed to discourage companies from paying bonuses, it could have been written prospectively. But as we all know, the entire focus of the debate over this bill was retrospective.

Rather, this law has a third purpose: it's designed to take money away from people who are felt to be undeserving of that money. That's punishment. It's not value-neutral. It does imply that they're guilty of something, which is why it only applies to a certain class of people -- coincidentally, the sort of people who one senator suggested ought to kill themselves. Look at the supporters of the bill here or in Congress: it's all about anger over those people, who "caused the crisis," getting "rewarded" for it.

If a higher tax rate implied conduct was criminal, we would say that Congress attainted work by making the tax rate on earned income higher than the capital gains tax, or attainted the rich by progressive tax brackets. Such thinking is basically silly. This is a nonissue.
What's silly is pretending that a general tax rate applied to everyone across the board for general conduct for behavior that we know as a factual matter Congress is not trying to punish is somehow similar to a law expressly intended to take money from people that we know as a factual matter Congress is trying to punish.

Look, formalism has its place, but we don't need to deny reality. When Congress taxes earned income, it is trying to raise revenue, not to punish people for earning an income. We know that. There's no anger over the fact that people have incomes when Congress debates the tax brackets. The income tax is not targeted at a specific individual or small group of individuals. This proposed law is. The fact that you can argue that if you close your eyes and ignore context you can pretend that it looks the same as any other tax is what's silly.
3.20.2009 10:27am
trad and anon (mail):
It seems a lot of the hysteria arises from the fact that the public mistakenly thinks that these are performance bonuses.

Were it not for the term "bonus" this would be a complete nonissue. Joe and Jane Sixpack hear "150 million in bonuses" and get angry because it sounds like a corrupt waste of taxpayer money--how could people who have run this company into the ground possibly deserve extra pay for good performance? If someone then tries to explain what a "retention bonus" is, they're already angry, so the reaction is "these people are incompetents--why pay them millions to be retained?" So then you have to go into a detailed, nuanced explanation like the ones we've seen above. The public does not do well with detail and nuace, especially when it's angry.

If these payments were called a form of "salary" nobody would care.
3.20.2009 10:28am
David Schwartz (mail):
I basically agree with Professor Tribe on this one. A tax is value-neutral. It doesn't imply anyone is guilty of anything. It is not a punishment. It simply raises revenue.
We all agree on that. What we disagree on is whether this is a tax or not.

If the government passed a "100% tax" on houses in a particular area that the government wanted to redevelop, they could call it a "tax" and claim "it simply raises revenue", but that would be a lie.

This is not a tax, because it doesn't "simply raise revenue". It is poorly disguised as a tax.
3.20.2009 10:50am
PC:
The public does not do well with detail and nuace, especially when it's angry.

The public is really, really angry. This week it's AIG, next week it may be someone else. Call it a retention bonus or deferred compensation, the optics of it are horrible. Some people at AIG are getting checks cut to them that are for more money than many Americans will make over their entire career. And that money is coming from the tax payer's pocket.

Personally I'd much rather have congress do these clawbacks than an angry mob. Mobs tend to be much less cordial.
3.20.2009 10:53am
trad and anon (mail):
I could find more news stories, but I think you get the point. In the absence of a specific and persuasive case being made, I think it is reasonable for me to be skeptical of the claims about the need for huge retention bonuses financed by taxpayers at AIG.
So am I. I have no idea whether this compensation structure is a good idea and it is distasteful to be paying this much money to executives at a company run so poorly that the government has to bail it out. Nonetheless:

These people were contractually entitled to those bonuses. The government could have demanded that AIG renegotiate those contracts as a condition of being bailed out. I would have had no objection to that result. But that's not what happened. The bonuses have already been paid and it is too late to grab them back now. The savings would be trivial for the taxpayer (compare $165 million to the $170,000 million AIG bailout and Obama's proposed $3,550,000 million budget) and would do nothing to help us get the rest of our money back. If anything, by provoking unnecessary litigation and prompting the competent AIG execs to leave, it would reduce the chance that the taxpayers will get our money back.
3.20.2009 10:54am
ShelbyC:
I'm not sure I understand the various "takings" arguments being raised. Any tax, be it 1% or 100%, is a taking, in the sense of the government taking your money. But since the constitution gives congress the power to tax, but forbids it from "taking private property for public use without just compensation" it seems clear that a tax isn't a taking under the takings clause.
3.20.2009 12:34pm
Careless:
Prof. Tribe wrote

Moreover, the fact that the aim of such a tax would be manifestly regulatory and fiscal rather than punitive and condemnatory

Are we supposed to take this man seriously on this subject? It's like he's trying to be an avatar of negative lawyer stereotypes.
3.20.2009 12:56pm
gallileo:
Note the timing of these bonuses: The one year anniversary of the Bearn-Stearns collapse.

At the time of the collapse, there was actually a pretty high demand for people who understood credit default swaps and how to manage them.

An AIG employee with this understanding looks around and notices that his performance bonus this year looks horrible, but that he can get a lot of money at a different firm, just for signing up. He makes a decision based on what is available to him at that moment

He negotiates a retention bonus with AIG, and makes a decision based on that bonus vis-a-vis the other opportunities available to him in Spring of 2008, and he decides to stay because AIG has offered him a nice fat check.

So he stays and works for several months, providing value to AIG (remember, they are unwinding the book at this point--and AIG really needs this book unwound).

Now things really go south and the feds step in to bail out AIG. The employee looks around at his options, and it's decision time again.

Say employee wants to get the hell out, but AIG says, "Look the feds said the bonus is OK, it's coming to you. Stick around another six months and you'll still get a nice fat check."

So the employee stays, again providing value to AIG by continuing to unwind the book.

Now the feds come and say, "Sorry--we lied to you. We enticed you to stay by dangling that money in front of you, but you don't really get it."

That is just patently horrible. People made decisions based on explicit statements by the government, and now they can't rely on them? That is just patently absurd.

You can argue that the bonuses weren't really necessary to retain those people. You can argue that it was unconscionable by AIG to make those contracts, and by the feds to approve those contracts.

But AIG did make them, and the feds did approve them. The people you should be outraged with are the feds and AIG, not the people who they lied to.
3.20.2009 1:01pm
David M. Nieporent (www):
I'm not sure I understand the various "takings" arguments being raised. Any tax, be it 1% or 100%, is a taking, in the sense of the government taking your money. But since the constitution gives congress the power to tax, but forbids it from "taking private property for public use without just compensation" it seems clear that a tax isn't a taking under the takings clause.
Again, the problem with that argument-based-on-labels is that if it's valid, any time the government wants your property, it can skip eminent domain proceedings and simply enact a 100% tax on the property.

A taking doesn't become not-a-taking just because the government uses the word tax. It's the substance, not the label -- one would hope -- that the constitution governs.
3.20.2009 1:04pm
trad and anon (mail):
A taking doesn't become not-a-taking just because the government uses the word tax. It's the substance, not the label -- one would hope -- that the constitution governs.

Unfortunately, as we Obama supporters are rapidly learning, hope is not a plan.
3.20.2009 1:28pm
ShelbyC:

A taking doesn't become not-a-taking just because the government uses the word tax. It's the substance, not the label -- one would hope -- that the constitution governs.



Right. But given the government's authority to tax incomes, it's hard to imagine taking a percentage of someone's income, whether 1% or 100%, could be construed as a taking, whether or not you use the word tax. Here they're taking certain income because they want to punish the receipients for ruining the economy, which makes it a bill of attainder.

If a state action were aimed at a specific piece of property and designed to transfer that property to the state without just compensation, I agree, that would be a taking even if the government called it a tax.

And I agree with your point that some of the comments that rely on labels, i.e. "This is a tax, and taxes aren't punitive" don't make sense. If congress says, "we find person or group X guilty of crime Y and we're going to puninsh them by levying a tax on them" then the tax is punitive. And that's what's happening here.
3.20.2009 1:40pm
Dan Weber (www):

Isn't employee compensation right at the top of the food chain?

Generally yes, but only to certain limits. I'm not an employment lawyer but employees generally have first pick for services already rendered and only to an amount that stops in five figures.

The employees could legitimately argue that they are then due the pro-rata of their retention bonus, but the limit would kick in way before that.

I don't think individuals can truly be said to be "punished" by the government when all the government does is attemot to recover public funds that the individuals would have never had but for a government intervention.

If the government saves my life, does it own my life? After all, I wouldn't even have had that life if the government hadn't intervened.

At what point does a tax become so extreme that it is confiscatory for takings analysis?

I'm pretty sure the Supreme Court ruled that a >100% tax was out of bounds, but I don't have a cite.

It looks like opposition to the bonuses is definitely very bipartisan. It is really nice to see both parties coming together on a common sense issue.

Sometimes our political parties get together and do something that is both stupid and evil.
3.20.2009 1:59pm
einhverfr (mail) (www):
Could the federal government, as majority owner of AIG, fire executives that refuse to give at least large portions of the bonuses back? Might not amount to criminal findings, but it seems some sanctions ought to be possible. And it would send a fairly clear message.

Also is AIG at least partly privately held? If so would a shareholder lawsuit (with the US government as a primary plaintiff) be possible?

Could Congress direct the executive to sue? If so, then the bill of attainder issues are entirely avoided since Congress is not making a finding of guilt, I would think.
3.20.2009 7:57pm
Guest-aholic:
As I suspected, Welker has no real business experience but can cite plenty of internet links. As I said, he has a helluva future as a central planner.
3.20.2009 9:52pm
David Schwartz (mail):
ShelbyC: This isn't a tax. Its purpose is not to raise revenue. So the taxing power is irrelevant.
3.20.2009 11:07pm
Richard Aubrey (mail):
There are unintended consequences which, at least, we didn't see coming.
Then there are unintended consequences which had flashing lights and loud sirens.
This tax crap is loaded with the latter.
And any idea that it's a "tax" is moonshine for lawprofs who have left Planet Earth.
It's revenge, it's satisfying the mob's lust for blood--which lust for blood has been stoked by Congress.
It's BS except for its political component.
And, I suppose, in line with most political issues, the fallout is expected to be blamed on somebody else.
3.21.2009 12:26am
Richard Aubrey (mail):
So, as one conservative said, for all those who voted dem, thanks a pantload.
3.21.2009 12:26am
einhverfr (mail) (www):
I guess what I don't understand is why the government doesn't sue them as shareholder and thus avoid the bill of attainder issue entirely by letting the court find the relevant facts. Especially now that AIG is suing the government, it might make a useful countersuit :-)
3.21.2009 1:18am
einhverfr (mail) (www):
In fact, since ex post facto doesn't apply to civil liability, couldn't Congress pass a law making folks have to give back any undue bonuses relating to recovery money and then sue for that money?

It might not be criminal, but would it work?
3.21.2009 1:20am
Cruising Troll:
Einhevfr, ex post facto does apply to civil law as well. As for why a shareholder suit (by the gov't, hmmm, conflict of interest anyone?) wouldn't be of much use, its pretty simple, as were the contractural provisions regarding the bonuses.

paraphrased:

AIG - "We're really hurting here, folks are jumping ship left and right, we need some folks to stick around and clean up this mess. Hey, Joe, we'll give you a million bucks at the end of a year if you stick it out that long."

Joe - "Okay, I'll stay."

Joe sticks it out a year, he get's a million bucks. That's the contract. Hell, trucking companies were doing the same thing with OTR drivers before the economic crunch. Spend a year with the company, get a "bonus" at the end of it. Criminy, the gov't's proposing doing the same damn thing with teachers. Spend X years working in really crappy schools were nobody wants to stick around, and at the end of that time period, we'll give you modest buckets of money.

Do the time, get the dime.
3.21.2009 4:08am
Johnn Ballard (mail) (www):
With the possible exception of a baby stuck in a well somewhere, I can't recall seeing so much attention paid to so little an issue. In the face of the worst global meltdown in recent memory this is maddening.

Wake up, everyone. Trillions is the new Billions. Billions is now the new Millions. The old millions are like dust on the table, lost in a blizzard of zeroes. You're on to something important, but it's bigger than this one bill.

The time is here for a return to multiple tax tiers.
Congress got it right for the most recent examples of Avarice Gone Wild.
If they will calm down enough now to connect the dots, our elected representatives will see that what happened over the last twenty-five years has resulted in a near-fatal harvest of unintended consequences.
It's time to set things right and return to a meaningful update of the Sixteenth Amendment.

Nouriel Roubini had it right when he said (last week in Forbes)
Madoff may now spend the rest of his life in prison. U.S. households, financial and non-financial firms, and government may spend the next generation in debtor's prison having to tighten their belts to pay for the losses inflicted by a decade or more of reckless leverage, over-consumption and risk-taking.

Americans, let us look at ourselves in the mirror: Madoff is us and Mr. Ponzi is us!
3.21.2009 10:57am
PC:
So, as one conservative said, for all those who voted dem, thanks a pantload.

If only Phil Gramm were Treasury Sec. we certainly wouldn't be in this mess, amirite?
3.21.2009 1:36pm

Post as: [Register] [Log In]

Account:
Password:
Remember info?

If you have a comment about spelling, typos, or format errors, please e-mail the poster directly rather than posting a comment.

Comment Policy: We reserve the right to edit or delete comments, and in extreme cases to ban commenters, at our discretion. Comments must be relevant and civil (and, especially, free of name-calling). We think of comment threads like dinner parties at our homes. If you make the party unpleasant for us or for others, we'd rather you went elsewhere. We're happy to see a wide range of viewpoints, but we want all of them to be expressed as politely as possible.

We realize that such a comment policy can never be evenly enforced, because we can't possibly monitor every comment equally well. Hundreds of comments are posted every day here, and we don't read them all. Those we read, we read with different degrees of attention, and in different moods. We try to be fair, but we make no promises.

And remember, it's a big Internet. If you think we were mistaken in removing your post (or, in extreme cases, in removing you) -- or if you prefer a more free-for-all approach -- there are surely plenty of ways you can still get your views out.