Sunday, March 22, 2009

Bad Cases Lead to Bad Laws

Latest Newspaper column (turned in before the vote on taxing the bonuses):

Like a lot of you, I'm well and truly teed off about the massive bonuses (totaling $165 million) paid to executives of failed insurance giant AIG. The bonuses were paid after a massive federal bailout of the company, using our tax money.

It's certainly a tempting idea to grab a torch and a pitchfork, storm AIG's offices and start tossing these mooks out of windows.

Republican Sen. Chuck Grassley even suggested that the top brass of AIG should, and I quote, "follow the Japanese model and come before the American people and take that deep bow and say I'm sorry, and then either do one of two things -- resign, or go commit suicide."

Talk about a major sign of how things have changed! If a Democrat had said that a year ago, he'd have been denounced as promoting "class warfare" at best and dismissed as a Naderite socialist kook at worst. Guess we're all Naderite socialist kooks now.

But here's the thing. It seems that some of the contracts under which these bonuses are paid were negotiated before anyone -- President Bush, Congress, or Senator and later President Obama -- had any idea AIG was in trouble, much less that they needed a bailout. These shocking bonuses, which appear to be payable regardless of how the company or the recipient performs, appear to be debts incurred pre-bailout that are now coming due.

Yes, you heard that right, this one I'm not blaming Bush for. Shocking to some of you, I know. Don't worry, there's plenty I do blame him and his henchmen for in this mess. But on this one issue, I think everyone got blindsided.

Saying in an employment contract, "you get a bonus, no matter what," is, no doubt, a bad deal. But if we demand as a cost of the bailout that the company spend attorney fees defending a contract claim that AIG's going to lose and end up paying anyway (with interest), doesn't that seem like a worse deal?

I know, I know, you don't care about "legal technicalities," but if these guys sue AIG over these contracts, at least some legal argument for not paying is going to need to get made, probably at great expense. All I'm saying is, unless the contracts these guys negotiated before the government got involved don't tie the bonuses to company performance, then they're as much a legal obligation of the company as the light bill.

Yes, it was foolish of AIG to negotiate a deal like that. It was one of an awful lot of foolish things done by AIG that got them, and then us, into this mess. But what we can do about it may not be so simple.

Some in Congress have proposed the idea of recouping the bonus money via a tax. Sen. Chris Dodd has suggested a tax rate on these bonuses alone of as much as 100 percent. In fact, it appears that a provision to tax bonuses at a high rate was in a version of the original TARP bill, but was removed, and no one seems to know how or why.

I do like the idea of taxing these bonuses out of existence, but I worry that this may be what the Constitution refers to as a "Bill of Attainder" (an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial). And the Constitution says Bills of Attainder are a big no-no. We've had eight years of a president who treated the Constitution as a suggestion. I'd like to start treating it as the law of the land again.

I want us to get that money back. But I think it's important for us to do so under the rule of law, especially now that emotions are running so high.

I have no problem with canning the people who head up AIG, giving them 15 minutes to clean out their desks, and having security escort them out of the building with all their stuff in a cardboard box. But I don't know that we should just give Obama and/or Congress the supreme power to take something away because it offends us. That would go beyond socialism into despotism.

It's become fashionable in the wingnut community to sneer at supporters of Obama by implying they think he's "the Messiah." Well, I might have no problem with the actual Messiah having unlimited power, but I'm leery of handing it to any man, including Barack Obama.


charlie stella said...

The bonuses are a dog and pony show at this point. Both administrations should be shot over the lack of protection they afforded the workforce (outsourcing being the prime example--we're giving them American taxpayer dollars and permitted them to outsource even more than they have). The "tax incentives" for them not to outsource are a bigger dog and pony show. Give away (to Citibank, for instance) $25 billion and why would they be concerned about tax incentives to keep jobs in America? They aren't. They're going to increase their outsourcing to 25%.

Let's not start on 401K's and whether there should be deferrments on taxing money we choose to pull out (our money) ... why do that (while we're giving away hundreds of billions to corporations) ... let the little guy eat the penalties.

This is so obsene, the bonuses are nothing more than minor infractions by comparison ... and they're enough to shoot the losers who legislated the bailouts in the first place.

Obama, so far, has proved equally as incompetent as his predecessor ... he might look better on television, but so far he's acting just as incompetently as his former battering ram, Bush.

Tom Panek said...

There is so much hypocrisy in this whole situation that it's enough to sicken anyone with any intelligence. First we have lawmakers who create a bailout against the wishes of the public (if you remember, polls early on showed a majority of the people were against bailing out AIG). Then the first half of the $700 b goes out and is spent with what amounts to no oversight. The second half is re-legislated for better oversight, but a key provision concerning bonuses is omitted by as-yet parties unknown. When the AIG bonuses hit the news, there is no outcry anywhere in the federal government until the public screams with outrage. Now ALL the lawmakers jump on board, but when you hear them talk about how angry they are, you don't hear any outrage in their voices. And tehy're all pointing the finger at someone else and denying any culpability.

What's worse is the outrageous attempt to have the bonuses taken back. How is it that Congress, which has a greater number of attorneys represented than any other occupation, can't figure out the chain of events and realize the bonuses are perfectly legal? Or is it that, in their attempt to pander to their constituencies, they conveniently overlook anything that might prevent them from satisfying the sheep - the majority of citizens who also just want retribution, no matter what?

The whole thing just makes me wanna puke - the greed, the lying, the hypocrisy, from all of them - from the people who fell for the mortgage crap to the greedy lenders to the greedy insurers and investors to all the politicians who encouraged it all to happen. And it won't stop.

Charlie Stella said...

My point exactly, Tom. The only fingerpointing necessary here is at our government in totality. Both parties have been acting with the rich and powerful in mind only (or what they could do for themselves). The average taxpayer wasn't given a moment's thought.

Just wait and see all the money that goes south in this operation ... sooner or later it'll be exposed ... the corruption that results from governments doling out cash is a fact of life. When the smoke clears from this one, if we're not all living in tents, they'll be even more to be outraged by and you're right, nothing will change.

So long as people point fingers at one party or the other (and get caught up in our two party system), the song remains the same.

Now I have to shoot myself for quoting a Led Zeppelin song.

Charlie Stella said...

From Paul Krugman's NY Times article this morning:

If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

Recycle Bush ...

Change you can believe in?

Anonymous said...

And let's not forget as banks swallow other banks and the government prints or redistributes more taxpayer dollars or illegally taxes up to 95% whom they see fit (AIG bonuses now...but watch out for your company/industry in the near know, for equality and the nice nice socialist levelling of society and pay...from each according to his ability to each according to his needs b.s.)

Bad credit? No credit? No problem! I'm seeing more and more of these signs, and isn't this one of the reasons we got into this mess in the first place? Good credit should mean something. A degree and high GPA from a great school should trump a degree from a CUNY school. Not EVERYONE deserves a house just because they want one and got in over their head.

And why is no one talking about Mr. Joe Cassara (sp?) from the AIG group of 300+ employees (out of 150,000 company employees)who orchestrated the financial meltdown, who was STILL after the bailout receiving over a million dollars PER MONTH?!

Somebody please string up the commie Chris Dodd, the suffering succotash speaking Barney Frank and his male prostitute who ran his brothel, Nancy bugeyed freak Pelosi and all the rest of the tax cheats and terrorist sympathizers and members of the American Communist Party Obamba has appointed or used in Illinois to propel him to an office in which he is unfit to serve (hee hee hee. what is this fool of a POTUS, on Ecstasy? Does he walk around his 150+ room mansion w/ 35 bathrooms aka the White House w/ a pacifier in his mouth?)

Oh, how'd he get into Pakistan in what was it 1981, immediately after college, if Americans were banned from entering the country?

Anybody know how much of the stimulus money has already gone to Africa? I wonder if he'll follow in Bush's spend crazy footsteps-sending BILLIONS of our money over there to "fight AIDS". It's call castration. Don't they already practice that over there, dancing around in circles with bones through their noses? Oh, sorry...that's only female castration...

Signed, Charlie Stella's #1 right wingnut fan still waiting on her "free" healthcare, mortgage, car, student loan pay off, and change from our new messianic president. Have a great day!

JD Rhoades said...

The Rude Pundit says it better than I can.

JD Rhoades said...

Imagine if you will, that it's 2005; George Dubbya Bush has just won re-election. Someone posts a rambling screed like that of Anonymouse above, calling for the "fascist Rethuglicans" to be strung up and throwing out wild allegations against Dubbya. Imagine the tut-tutting from Republicans about the "angry, bitter, loony left". But I guess IOKIYAR! Welcome to the lunatic fringe, Anonymouse. See how you like it.

All that said, I agree the bonuses are a sideshow; the real scandal in this whole mess is that they're still not providing for real regulation and oversight, but are, instead, continuing a Bush plan I didn't like then and don't like now.

Charlie Stella said...

My son just emailed me this article.

In a move expected to cost 300 American jobs, the government is switching to cheaper off-shore condoms, including some made in China.

Yeah, he's the messiah alright. Maybe if you live in China.

JD Rhoades said...

Not only that, they'll be too small!

Thanks folks, I'll be here all week...

Charlie Stella said...

JD said: Not only that, they'll be too small!

I wish ...

Tom Panek said...

I have to add that the rot Anonymous posted would probably gotten her jailed by the Bushanistas for being unpatriotic, or whatever other bullshit the Evil Order (Bush, Cheney, Gator, Wolfowitz, Snowcroft et al) would have cooked up to put her there, were it pertaining to their administration. Snatched out of bed in the middle of the night and lost forever...Gitmo!

David Terrenoire said...

...sending BILLIONS of our money over there to "fight AIDS". It's call castration. Don't they already practice that over there, dancing around in circles with bones through their noses? Oh, sorry...that's only female castration...

Get the net 'cause that's some industrial strength crazy right there.

charlie stella said...

Annonymous is a dear friend of mine who calls ME a communist (see JD, I torture the right, too) ... I start her day off with a word I learned from Davey 3xs (wingnut). I email her every morning: Good morning, Wingnut ... then go about the business of (sort of) defending YOUR messiah vs. her party. I can't defend your party because they're at the least equally as bad as her party.

Staying with me here?

What can I say ... I'm a political shit stirrer, but only because both parties have failed miserably at the expense of the people they're supposed to represent.

We've been (let me paraphrase here) "Bam-fucking-boozled"

Stephen Blackmoore said...

What worries me about this is the mob thinking. Coming from the crowds of people in the street I can understand it. But when Congress jumps on the bandwagon and starts making wide sweeping pronouncements, that scares me. Knee-jerk law tends to go after one guy and hit another fifteen unintended targets.

Last I heard, and this may have changed since then, the Senate was looking at hitting people in TARP funded companies who received a bonus after January 1st and made over $100,000.00 last year.

In California that could very well be a middle to high level manager, not an executive, in the shipping department. Or Human Resources. Or IT. Or any of the other support systems (and there a lot in a major nation-wide corporation) that are just designed to make the place run.

The fuck did he have to do with this mess? What was his crime? Working for the wrong company?

And how much of a bonus did he get? $2500.00 maybe? 5K? Sure as hell not $10 million.

I don't recall what the tax rate is that the senate is proposing, but I think I heard about 35%. I honestly don't see how that's going to send a message, frankly, since chances are they're in that or a higher tax bracket, anyway. I'm talking state and federal combined. But that's neither here not there.

Point is, the guy was promised a bonus based on things like reducing shipping costs, bringing a particular project in under budget, making sure his people are in on time. Some of it is based on how well the company did that year, sure, but chances are it's only a small part.

And there are a lot more of those people than there are high level executives or guys on the trading floor or loan underwriters. I would hope that these aren't the folks that Congress is going after.

Tom Panek said...

More like"jerk law" than "knee jerk law", Steve. And mob mentality is too superior a description of Congress's response - sheep mentality is closer. Congress doesn't shit unless the American Public says it's gotta go...