Taxing the Bonuses
| Fri Mar. 20, 2009 8:55 AM PDT
This is a little embarrassing to admit, but by yesterday I'd gotten so tired of the AIG story that I barely even noticed the details of the House bill to claw back all the bonuses. But it's a monster. Taxing the million-dollar bonuses is one thing — I may be a little ambivalent about that, but overall I don't think it's all that problematic — but the bill that passed last night taxes away bonuses from anyone with a household income over $250,000. That's a couple of mid-level analysts. This is likely to hit tens of thousands of fairly ordinary workers who had nothing to do with AIG's troubles and who simply don't deserve this kind of treatment.
A friend of mine who describes herself as "Marxist at heart" but has nonetheless been trying to convince me all along that the tax clawback idea is a horrific idea, points me to this article in the Post today about how AIG employees are reacting to the death threats and armed security guards in the parking lots:
A friend of mine who describes herself as "Marxist at heart" but has nonetheless been trying to convince me all along that the tax clawback idea is a horrific idea, points me to this article in the Post today about how AIG employees are reacting to the death threats and armed security guards in the parking lots:A sense of fear hung in the room -- the palpable, unsettling kind that flashes across people's eyes. But there was anger, too. No one would express it publicly, of course. Who wants to hear a wealthy financier complain? And yet, within those walls off Danbury Road lies a deep sense of betrayal — first by their former colleagues, now by their elected leaders.
The handful of souls who championed the firm's now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president.
"They've chosen to throw us under the bus," said a Financial Products executive, one of several who spoke on condition of anonymity, fearing reprisals. "They have vilified us."
They say what is missing from this week's hysteria is perspective. The very handsome retention payments they received over the past week were set in motion early last year when the firm's former president, Joe Cassano, was on his way out the door. Financial Products was already running into trouble on its risky credit bets, and the year ahead looked grim. People were weighing offers from other firms, and AIG executives feared that too many departures could lead to disaster.
So AIG stepped in with an offer to employees of Financial Products. Work through all of 2008, and you'd get a lump payment in March 2009. Stick around through 2009, and you'll get paid through 2010. Almost all other forms of compensation — bonuses, deferred payments and the like -- have vanished.
"People are trying to do the right thing," the same Financial Products executive said. "Guys have worked their [tails] off to try to get value for the taxpayer. This isn't money that's being advanced to us. People have performed the work and done it exactly as we asked them to do."
I don't know what the Senate will do with the House language, but they simply can't leave it the way it is. A high marginal rate on million-dollar bonuses at bankrupt companies is one thing, but putting huge swathes of their professional staff in the same boat is another. If this is where populist outrage is taking us, it's time for a timeout.
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Comments
Apathy
Submitted by Bill Jones (not verified) on Fri Mar. 20, 2009 9:08 AM PDT.
Forgive me for not shedding too many tears for the fate of upper class citizens receiving huge bonuses. We've had years of screwing over the little guy, so I don't care too much about one year of screwing over the rich guy.
Besides, I have a sneaking suspicion that all the paupers in the Senate who hang out exclusively with their middle class constituents won't let this through. Call me crazy...
thats just silly
Submitted by kahner (not verified) on Fri Mar. 20, 2009 11:50 AM PDT.
You admit its screwing them over, but its OK cause they make a high salary? And apparently this is OK because poor people got screwed over in the past. How about we try to just not screw people over. Your sentiment really is class warfare (not the BS conservatives scream about when we try to move the top marginal rate a few points). You want to unfairly take money people are owed, not because they did anything wrong, but just because they have more than you. I'm all for punishing the many, many people (both rich and not so rich) who caused this crisis, but I won't paint all people who work on wall street or even at AIG with a broad brush. This bill is idiotic and a distraction from the real issues.
Blame game
Submitted by msoliver (not verified) on Fri Mar. 20, 2009 9:21 AM PDT.
Personally, I'm aghast at the House bill. This will backfire on progressives in a hurry. For one, it's the Left's version of the Schiavo nonsense. I've read through the constitutional reasoning that stipulates why this isn't a Bill of Attainders issue. But, the very fact that it isn't - that it is broad enough to target huge swathes of the financial industry is a bug not a feature. The intent of the law is clearly to punish a handful of people and that's a very wrong place for the federal government to be. Moreover, the reasoning behind the bill, though populist in nature (I fear this comment will get lambasted by your other MJ readers), is exclusively about shifting the blame. The AIGFS people acted as capitalists do. They failed in their responsibility to their employer, but they did not fail the country - that's not their responsibility. It is the responsibility, however, of Congress - and Congress failed us, not AIGFS. There are enough Dems complicit in this failure that we seem to prefer focusing on bad capitalists. So be it. If these guys committed fraud, let the AG's go after them. Otherwise, any attempt by Congress to avoid the blame here is wrong on the merits and wrong in term of fairness. The FIs did not unregulate themselves. Sure, their lobbyists helped, but that's their job. We want to blame the Bush administration and the GOP - but that's not the full story, by half.
Sorry
Submitted by serial catowner on Fri Mar. 20, 2009 9:22 AM PDT.
Just not feeling the sympathy for people who make over $250k/year. Not really sure I should. Leaning towards pretty sure I shouldn't.
Guess they'll just have to make do with taking my money instead.
I call BS
Submitted by Anonymous (not verified) on Sat Mar. 21, 2009 3:20 AM PDT.
The problem is that a couple that makes 250,000 a year and live in NYC are not wealthy. It is all relative to where you live. Class warfare is a scapegoat. Congress and the president signed this bill w/out reading it. Had they done so, this mess would have been avoided.
Make it go away?
Submitted by BigTom (not verified) on Fri Mar. 20, 2009 9:26 AM PDT.
I'm assuming this was just the product of a feeding frenzy. Impossible NOT to vote for it. And everyone involved probably thinks it will quietly disappear and never be implemented. Hope that is what happens to it.
Lordy, Kevin you're always a
Submitted by DougMN (not verified) on Fri Mar. 20, 2009 9:26 AM PDT.
Lordy, Kevin you're always a sucker for a sob story. These are workers at a company that, except for the giving nature of the federal government, would be bankrupt. They're lucky to have jobs nevermind bonuses.
No Mercy
Submitted by Yellow Dog on Fri Mar. 20, 2009 9:40 AM PDT.
Poor things, having to live on a quarter-mil! Even in Manhattan, that's a far better living than the 10 percent of that on which most families in Kentucky scrape by.
That's four people on 25 K earned, by the way, doing actual necessary work like teaching children or arresting criminals or feeding elderly people in nursing homes.
When AIG is back to running on its own money, it can pay its analysts any damn ludicrous fortune it pleases.
But as long as the taxpayers are paying five-figures salaries to teachers and nurse aides and firefighters, then the taxpayers can pay the same to AIG's analysts.
if you think the salary distribution is whack
Submitted by kahner (not verified) on Fri Mar. 20, 2009 11:59 AM PDT.
then that's an argument I'll accept. Yes, teachers should make more and policement and lotsa people. But that does not mean the government should start passing special laws to tax a specific group of people retroactively just because idiots on cable tv are yelling about it. If they decide to cut future salaries at AIG, considering the government owns pretty much 100% of it now that's fine too. But remember, all these people aren't responsible for our current crisis. They're just people who worked at a giant insurance company, one small part of which fucked us over. Pretending its all the same is equivalent to invading iraq because we were attacked by saudi's operating out of afghanistan.
Ok, Kevin I get your point
Submitted by Narodnik (not verified) on Fri Mar. 20, 2009 9:43 AM PDT.
Ok, Kevin I get your point that there can be unintended results from broadly defined legislation. And that there are many ernest people at AIG trying to do the right thing.
Even so, their attitude expressed in your article gives a glimmer of the cluelessness of these people (and by extension all these highly paid managers). While people left and right are losing their $30-75k jobs.....trying to make ends meet, these people, who have been making big money, are whining about how hard they are working and what they were promised. A million dollars?...ummm, maybe they could get by on a little less ($250k doesn't sound too bad either), especially as the only reason they even have a paycheck, is that we-the-people bailed out their company. My company fails and I'm SOL.
Perspective is the word. Look at the car making union members. They were promised a certain salary and everyone climbed all over them to take a cut. Are these employees so blind to the suffering of the people who actually keep them employed?
Yes, I would be standing by their parking lot and giving them the evil eye. It's called moral hazard and hardly anyone at a certain monetary level and in some industries has any sensitivity to it. One or two years pay is more than most Americans make in their life. The rant could go on, but I have to earn my keep with fingers crossed.
Actually, the over-reach could be by design
Submitted by Bradford (not verified) on Fri Mar. 20, 2009 9:47 AM PDT.
The GOP and douchbag democrats HATE the idea of punishing greedy/sub-criminal financial executives and traders. But since they're forced to by public opinon, they want to make sure they target innocent AIG employees, so that later, they can condemn the whole idea of punishing criminal elite executives, bankers, and traders.
I'll be an analyst for that rate
Submitted by Anonymous (not verified) on Fri Mar. 20, 2009 9:50 AM PDT.
Yes, I would take that analyst job without any bonus, at 250K per year. Even if I have to live in New Jersey and commute.
I didn't get any bonus this year at my job, not because of my poor performance, but because of the performance of the company in the current economy. My federal employee friends didn't do any better. I don't see any logic to giving any bonuses at a company that is bankrupt.
You've left out some detail in your lament
Submitted by Greg in FL on Fri Mar. 20, 2009 9:51 AM PDT.
The tax only applies to firms that took over $5 billion in taxpayer money - so, in principle, it's not "every" financial services company. Those that acted prudently, and didn't need help (probably none of the big firms) can give out their bonuses at normal tax rates.
Secondly, what about the moral hazard argument? Does society do nothing in response to all the real damage that these people did? If that be the case, what's to prevent the future copying the past?
I sense from your argument that you'd really like it better if the threshold income number were higher. Like what, $1M? If that's true then what really this post is about is a haggling over a number, not some existential battle over government taxation rights or circular finger pointing.
Yes, society may do
Submitted by Anonymous (not verified) on Fri Mar. 20, 2009 11:28 AM PDT.
Yes, society may do something, its called the Judicial Branch, and their responsibility is to prosecute those who break the law, and they can even recoup the funds through civil courts. Apparently Congress and the populist mob missed the class on the three branches of government.
Tone deaf
Submitted by DesiPanchi (not verified) on Fri Mar. 20, 2009 9:54 AM PDT.
First of all, I agree with the policy aspect of the bill - it almost seems like a mob mentality. But, even rational people can agree with the nonsense being spouted by these financial institutions and their shills - listen to Mark Haines on CNBC today.
Let me give you an example: I worked for a division which actually made money, but got laid off - didn't get the bonus which was part of my legitimate compensation and with the bonus I would have been nowhere near the 250K, BTW.
When I see these b!@#!ds mouthing off as if they are the MOTU (they might have been, but boy are they not now), it pisses me off. BTW, having spent like we were in a recession on these years, I can affort to stay home and relax for a couple of months before looking for a job, so I am not even that bitter.
Now, go read about Fannie Mae defending their boonduses..
regards,
-- r
Tell her to look up the definition of "Marxist"
Submitted by Yellow Dog on Fri Mar. 20, 2009 10:15 AM PDT.
A real Marxist would have already confiscated - not taxed - 99 percent of the personal worth - not just the bonuses - of everyone in the finance industry.
Somebody who worries about people in the top one percent of national income having enough money to get by is not only not a "Marxist at heart," she's a natural-born robber baron who would put John D. Rockefeller to shame.
Re-do
Submitted by SRW1 (not verified) on Fri Mar. 20, 2009 10:16 AM PDT.
Kevin,
There are a bunch of things in which I'd agree with you
- to pass laws by knee-jerk reaction is a mistake,
- to do an end run around legal principles, however well finessed, is inexcusable,
- to mete out indiscriminate collective threats or punishment is bound to hit innocent bystanders,
- justice by mob rule usually is a worrying sign of a dysfunctional society.
That said, an annual income of $250k in my book does not correspond to that of a 'fairly ordinary' worker, and how the law is 'likely to hit tens of thousands' of persons is not clear to me either. I thought there is a clause restricting the applicability of the law to employees of companies that received more than $5 billion TARP money?
All of that said, my sense is that with this law the House failed to come up with a sensible solution. They should try again. Maybe the Senate will do them a favor and force reconciliation.
Here's a thought -- stop
Submitted by dan (not verified) on Fri Mar. 20, 2009 10:16 AM PDT.
Here's a thought -- stop calling them bonuses and start calling them salary. First they were bonuses for performance, then when the business wasn't performing well they were retention bonuses, then when it came out that people were getting bonuses who weren't staying they were something else. At this point it's obvious to everyone that the people getting the money are going to get it for working there and it isn't contingent on anything else, so the money is salary and should be called salary. Then we can argue over whether the salary is appropriate for the job and comparing it to similar jobs in other businesses.
Generally speaking I don't care much about what something is called, but in this case I think the word bonus just pisses everyone off. Everyone else has a job, with a smaller salary, and we don't get bonuses even when we're obviously much better at our jobs than the folks at AIG are at theirs. So why do they deserve bonuses? They already have higher salaries, and haven't shown that they've done anything to deserve a bonus on top of that. The word grates. I might be willing to believe that a salary of X is appropriate, but a bonus of X? What has this person done to deserve a bonus?
Sorry, capitalists. This is
Submitted by Ruck (not verified) on Fri Mar. 20, 2009 10:19 AM PDT.
Sorry, capitalists. This is what risk looks like.
Precisely
Submitted by Yellow Dog on Fri Mar. 20, 2009 10:59 AM PDT.
We need much, much more of this hard lesson. Long past time people learned the almighty market isn't Santa Claus. The financiers sold their souls to be masters of the universe; now Satan has come to collect.
Jesus, Kevin. You have
Submitted by Anonymous (not verified) on Fri Mar. 20, 2009 10:24 AM PDT.
Jesus, Kevin. You have completely jumped the shark, but not only that, you're literally wrong about the bill. As posted by several commenters already,
I thought there is a clause restricting the applicability of the law to employees of companies that received more than $5 billion TARP money?
Yes. Yes there is. I think your Marxist friend is safe, unless they've recently received a bailout. And there's not a corporation in this world that should both expect to get government money and pay seven-figure compensation until that money has been paid back. Period. End of conversation.
Even if it *was* broadly based, it would essentially amount to a very large uptick in marginal tax rates on the top 5% of earners. I have no problem with that, either. Haven't you spent the last ten years complaining about inequality in this country?
Personally, I'm aghast at
Submitted by Jasper on Fri Mar. 20, 2009 10:52 AM PDT.
Personally, I'm aghast at the House bill. This will backfire on progressives in a hurry. For one, it's the Left's version of the Schiavo nonsense.
Not so. The public was against the right wing/pro-life crazies during the Schiavo affair. The public favors taxing away AIG bonuses.
I have mixed feelings about this bill, but a little populist excess isn't going to harm the country, especially given the fact that we've been suffering from a whole lotta capitalist excess for some time now. And anyway, I have a feeling Chip and Muffy will survive on their combined $325k.
Tax code as retribution
Submitted by msoliver (not verified) on Fri Mar. 20, 2009 1:44 PM PDT.
Using the tax code for retribution is wrong - full stop. The time for Congress to act to prevent the retention bonuses were last Fall or this February. They did not. Congress is not trying to make up for a missed call - they are trying to re-direct accountability from their bad acts by punishing other bad acts.
I'll have to admit that I really liked the part about how they were scared. I'm scared, too, and I have a lot less financial cushion than they do (but it's my tax dollars that are keeping them employed at the moment). In any case some real, well founded, long lasting fear would be a good thing for the finance industry, which has loved risk-taking a bit too much and now expects the rest of us to make up their losses.
Frankly I hope this period in history is so traumatizing for them that the current crop of young turks is still petrified by it by the time they become old codgers.
Most of you don't get it at all
Submitted by Mugsy (not verified) on Fri Mar. 20, 2009 11:09 AM PDT.
First of all, most of the people subject to this tax at AIG had nothing whatsoever to do with the department that caused this debacle. Most of those folks are long, long gone.
Second of all, we the people of the US now own 80% of this company. And are elected officials seem now determined to destroy it. The folks they are driving out with this ridiculous tax are the only ones who can untangle the mess. Can anyone of you smart asses go to AIG and unweave the byzantine web of credit default swaps? And if they don't get unwound, orderly, not only is AIG worth nothing (and "our" 80% investment), many of large financial institutions here and abroad are going down. If I were an AIG employee I would say "see you later".
It's as if someone bought a house and, in disgust at the last owners, punished them by burning it down. It's idiotic, and suicidal.
Missing the Point
Submitted by Yellow Dog on Fri Mar. 20, 2009 11:49 AM PDT.
We the taxpayers now own this house, and we are disgusted that the last owners are still hanging around expecting to be fed and clothed and housed at our expense.
It doesn't matter whether the people getting the bonuses are child-molesting ax-murderers or Mother Teresa reincarnated. It is immoral and ludicrous to expect taxpayers, 99 percent of whom make LESS than $250,000 per year, to pay ADDITIONAL money to people already making more than $250,000 per year.
This "poor little rich people" sob story is finally exposing our society's extreme oligarchy, in which no amount of pain and suffering on the part of the poor and middle-class is too great a price to pay to increase the obscene wealth of the rich.
Crying over taxing their bonuses? They should be down on their knees sobbing with gratitude that we the taxpayers are paying more than we can afford so these bonus babies can keep their jobs.
Boo-f'in-hoo
Submitted by Cardinal Fang (not verified) on Fri Mar. 20, 2009 12:21 PM PDT.
Why should these poor misunderstood highly-paid AIG employees get bonuses when their company lost all its money and brought down the financial system? In the real world, people who work for companies that fail spectacularly don't get bonuses-- because the company doesn't have the money. Even if the people were not responsible for their company's epic failure, even if they themselves were super performers, they still don't get bonuses. Instead, they get laid off. That's the way it works in the real world.
Populism
Submitted by ColoWayno (not verified) on Fri Mar. 20, 2009 11:24 AM PDT.
I now truly understand what populism is and why I was taught to be weary of it.
Populism mob kerfuffle
Submitted by MarkH on Fri Mar. 20, 2009 5:23 PM PDT.
by ColoWayno (not verified) on March 20, 2009 - 12:24pm. I now truly understand what populism is and why I was taught to be weary of it.Well, like the financial crisis this is also a little more complicated. People are angry, frustrated, afraid and confused. They want action and they can't see what the administration is doing to help them. They are possibly even upset that Obama is so cool. It appears he isn't working hard. In steps Obama's opponents who begin to pelt him from every direction 24/7 and they build the public's anger -- hoping to make Obama the object of their anger! Nice people if you're into sadism. So, Obama and crew, not paying much attention to the politics I suppose, get banged around a bit before getting into politics mode. Even now the public needs to see something, even if it's a 90% tax. Some people are asking what Obama is distracting our attention from. I don't think he began this and it isn't he who is distracting our attention -- it's his opponents including the mainstream media who want to see some little failure they can then build on. Remember how it begins small and builds. They didn't take on Clinton in a day or week. They went after him for years. There are certainly things the media could report to the public and in NOT doing that they are sort of deflecting our attention to these lesser (but perhaps juicier) things. I think the Obama team has been too busy solving real problems to get involved in politics and distracting the public. BTW, what was the media and Republicans distracting our attention from when they attacked Clinton for years? Maybe it was that Clinton was governing well and they didn't want anybody to notice. Now Cheney is saying it's not right for Obama to mention that all this mess was on his doorstep when he took office. He says it's just not right to blame the previous administration. Gimme a break. The mess is huge and complicated and nobody can explain it to the public because nobody really sees it all or could explain it. Suffice it to say ... Bush did it!
Kudos!
Submitted by Kasia from LA (not verified) on Fri Mar. 20, 2009 11:38 AM PDT.
Kevin--again you astound me by your insight. The fact that a tax bill of this magnitude, written and intended for only a small handful of companies and thereby individuals, was passed so quickly and so thoughtlessly is frightening. When there is no debate between parties, how can the real implications of a bill be understood? When did our tax code become a weapon?
I understand the populist anger against these companies and their "bonus" system. But I fear by allowing our individual anger to pool and create a national hate mob mentality, that we're doing the country a great disservice. We're letting populist hate override our intelligence--how is that supposed to help? Our anger is essentially giving the green-light for our Democratic House and Senate to ram these kinds of thoughtless and potentially harmful bills through without thought....WITH emotion instead. Someone has to be the adult in this situation. One would think our government--with its appointed think tank of Democratic approved geniuses--would play that role. Guess not.
Yes, I would take that
Submitted by J. Michael Neal on Fri Mar. 20, 2009 12:03 PM PDT.
Yes, I would take that analyst job without any bonus, at 250K per year. Even if I have to live in New Jersey and commute.
I'm sure you would. The problem is that I'm betting that you couldn't do it. The set of skills necessary to make a good trader are rare. I've watched someone lose $7 million in a half second because of a software glitch, and not panic. I couldn't handle losing $25,000 being picked off by inside trading on Maytag, and had a nervous breakdown.
Somehow, I suspect that you're more like me than you are like the other guy.
I agree with Mr. Drum that
Submitted by mwl (not verified) on Fri Mar. 20, 2009 12:09 PM PDT.
I agree with Mr. Drum that the AIG tax is a stupid idea. Every Representative who voted for it deserves to be replaced in 2010, whether Democrat or Republican. Likewise, those with the courage to oppose it deserve our support.
What too many people fail to understand is that talented people can, and will, vote with their feet if not properly compensated. If Congress persists in punishing every financial professional in this country for the misdeeds of a minority among them, then they'll walk away from the problem, precipitating an even steeper decline, if not a total collapse.
Talented at What?
Submitted by Yellow Dog on Fri Mar. 20, 2009 12:20 PM PDT.
If they were engineers designing inexpensive fuel cells to power individual homes, or scientists curing cancer, or teachers who could teach algebra to gang-bangers, I'd agree with you.
But these aren't even venture capitalists ensuring that the next generation of inventers have the money to spur the economy; they're cold-blooded gamblers and analysts figuring new ways to game the system and screw the taxpayers.
The biggest myth of our time is that Wall Street powers the economy. Workers power the economy. Wall Street rapes it.
These "talented" people
Submitted by Anonymous (not verified) on Fri Mar. 20, 2009 1:00 PM PDT.
These "talented" people drove our financial sector into the ground. What many of them deserve is prison. It is laughable to claim that we'll suffer if they leave. Let them leave. We can find people willing to work for sane salaries in the federal government, and we can find people willing to do their jobs too. And those folks won't be rewarded for reckless gambles with money from other people.
Which talented people? The
Submitted by J. Michael Neal on Fri Mar. 20, 2009 2:21 PM PDT.
Which talented people? The people who made the bad trades for AIG are gone. The people left didn't drive anything into anything.
The other downside
Submitted by Anonymous (not verified) on Fri Mar. 20, 2009 1:05 PM PDT.
Be careful what you wish for. The firms that have taken TARP funds and can't quickly pay it back will be bleeding the employees they want to keep very quickly. They won't be able to compete, will have trouble rolling over short-term paper, and will have to be nationalized. You'll soon learn how expensive and disruptive that will turn out to be. Also, private participation in the various Fed/Treasury credit facilities meant to get consumer and business credit flowing again--TALF and its kin--will now be minimal. No company with a healthy balance sheet now wants to risk being involved with any Federal program.
On nationalization, for starters, there's no existing legal framework for winding down a large, internationally active bank holding company like Citigroup--FDIC's resolution authority pertains only to Citibank, which is 1/3 as large. Sheila Bair describes the likely outcome: "Cross-country differences in close-out netting, the unwinding of financial transactions, and the enforceability of secured parties' rights to collateral may add to increased uncertainty. In this environment, ring-fencing – also known as every man for himself – may simply be the only rational response [to a bank holding company failure]". There's a reason why policymakers with actual financial industry experience have been reluctant to opt for nationalization. It's not that they're in dential about banks' true financial position--they're not confusing liquidity with solvency. Nor is protecting rich bankers the issue. Rather, they know that closing down a large, internationally connected money center bank will be fraught with unanticipated consequences, through channels no one can predict. Another Lehman type heart attack would be a clear possibility. Now we'll find out.
AIGFP
Submitted by slanted tom (not verified) on Fri Mar. 20, 2009 1:07 PM PDT.
Here's a complete history of AIG financial products. It's soon to be perp walk time!
http://tpmmuckraker.talkingpointsmemo.com/2009/03/is_cassano_vulnerable_...
90% Tax Household Income for All Employees Bailed-Out Companies
Submitted by Keith M Ellis (not verified) on Fri Mar. 20, 2009 1:14 PM PDT.
Let's be clear of what this bill is.
It applies to household income, not individual. So, it applies to two people making more than 125K each. Not necessarily only individuals making more than 250K. And not to only couples for whom both work at such companies. Just one of them is sufficient.
It applies to all wages, not just bonuses. The bonuses were what sparked the outrage.
It applies to all companies given a sufficiently large amount of bail-out funds. Not just AIG.
Yeah, this will be thousands of people. I know mid-level people in numerous industries who make more than a 100K. That's still (barely) middle-class in the larger social (perhaps not technical) sense. They're people down the street in normal, not dominantly affluent, neighborhoods.
I don't believe that everyone person who works at these companies who has a household income over 250K deserves to be punished when other taxpayers with similar incomes are not.
I do believe that the AIG FP people getting mid-six and seven figure bonuses deserve to be punished relative to other taxpayers earning the same amount of money.
There's a big difference between the two groups.
Bonus
Submitted by Anonymous (not verified) on Fri Mar. 20, 2009 4:57 PM PDT.
Unwinding a lot of someone else's bad bets is pretty dismal work. Knowing how to do that so that the cost is minimal is a rare skill. Facing death threats is a total freakout. The government should have stepped in and seen that the appropriate incentive arrangement was in place. But they didn't and now they have poo in their shoe so let's do something popular like clawback the bonuses with taxation.
It this passes we can be pretty confident that AIG will become a neutron bomb of toxic assets. The people currently working there have NO incentive to continue. They will clean out their desks and leave. Maybe that's a good thing or maybe not but I'd rather see the government force AIG into bankruptcy through direct action rather than this. Using retroactive taxation as punishment sure seems like a bad way to go.
THERE IS NO LEADERSHIP
Submitted by James Raider (not verified) on Fri Mar. 20, 2009 5:09 PM PDT.
A SPECIAL PROSECUTOR MUST BE APPOINTED
A.I.G. has long been a national embarrassment.
http://pacificgatepost.blogspot.com/2009/03/aig-national-embarrassment.html
A Special Prosecutor should be assigned and given wide berth to hunt down the malfeasance.
The Howling Mob.
Submitted by The Lounsbury (not verified) on Fri Mar. 20, 2009 6:11 PM PDT.
Wonderful thing it is, in all its unreason.
It appears to escape 90% of the slobbering mob that the majority of the employees of the Unit are in London, and a significant number are not even American. Ergo your law and your taxes have pretty much fuck all to do with them.
Special prosecutors for the 'crime' of bad judgement.
Well, go kill all the Kulaks, the working peasant shall feel better that his neighbours have no more cows than he.
The ghost of Marie
Submitted by Anonymous (not verified) on Fri Mar. 20, 2009 8:30 PM PDT.
The ghost of Marie Antoinette is chuckling at this thread.
the wealthy progressive
Submitted by Anonymous (not verified) on Sat Mar. 21, 2009 5:19 AM PDT.
the wealthy progressive vanguard is upset because the dirty masses are not following along like sheep
You reap what you sow.
Submitted by Kolohe on Sat Mar. 21, 2009 3:18 PM PDT.
If this is where populist outrage is taking us, it's time for a timeout.
Should have thought of that before you wrote this: http://www.motherjones.com/kevin-drum/2009/03/bonus-babies
"I don't, frankly, care all that much about the AIG bonuses being slashed"
Who the heck did you think you were talking about?
Even I knew how to run
Submitted by Marie Antoinette (not verified) on Sat Mar. 21, 2009 11:20 PM PDT.
Even I knew how to run Versailles better than the AIG people knew how to run their establishment.
Sacre Dieu! The attempt to make this appear as the work of one bad section -- the 'FP' section -- of an otherwise benign insurance company is a complete distortion. Nothing like this could have happened without the connivance of corporate headquarters.
Here's what Matt Tiabbi has to say on it:
"For six months before its meltdown, according to insiders, the company had been searching for a full-time chief financial officer and a chief risk-assessment officer, but never got around to hiring either. That meant that the 18th-largest company in the world had no one checking to make sure its balance sheet was safe and no one keeping track of how much cash and assets the firm had on hand. The situation was so bad that when outside consultants were called in a few weeks before the bailout, senior executives were unable to answer even the most basic questions about their company — like, for instance, how much exposure the firm had to the residential-mortgage market."
http://www.rollingstone.com/politics/story/26793903/the_big_takeover/4
To deal with this fraud as Kevin does with a heavy dose of ennui is the equivalent of saying 'let them eat cake'.
Take a stand, man!
Submitted by HydroCabron (not verified) on Sun Mar. 22, 2009 8:00 AM PDT.
Kevin, I see you're "a little ambivalent." I have you beat: I'm not quite ready to say whether I'm sort of ambivalent or not. Heck, I don't even know where I stand on that. I might be ambivalent, but then again, I just don't know.
Throughout my career I have worked at firms at which the success of the company had far more correlation to decisions made by the top officers than it did to my performance. Once I was laid off because our divison was understaffed, resulting in customer flight, which resulted in the end of our division.
Twice I have left companies because it was clear that they were headed to the tank, and that my job would be in jeopardy within a couple of years due to declining business.
Two years ago I would have guessed that AIG was headed for the cliff, and I don't work there. Remind me why these people, who likely had no direct connection to AIG's collapse, are entitled to huge bonuses because they have had the good fortune to be bailed out by the government.
Capitalism is ugly, and I'd change it if I could, but these people signed up for it, and are likely its staunchest believers.
"Yeah, this will be
Submitted by Adam (not verified) on Sun Mar. 22, 2009 1:51 PM PDT.
"Yeah, this will be thousands of people. I know mid-level people in numerous industries who make more than a 100K. That's still (barely) middle-class in the larger social (perhaps not technical) sense. They're people down the street in normal, not dominantly affluent, neighborhoods."
i.e. They are people like the commenter. Who considers themself a good person. Therefor these poor taxes multitudes must also be good people.
The idea that making more than 250,000 in combined household income makes you anything other than wealthy is absurd. Less than 3% of households have income exceeding 250k!
Comments about talent abandoning companies that pay less amuse me as well. Every trader has an assistant and there are 10's of thousands of B-school students graduating every year. I expect replacements for the departed can easily be found. And somehow I doubt much of the "talent" will have other job offers lined up - so I don't actually expect them to be going anywhere.
The basic problem here, as somebody else to alluded earlier, is the obvious unfairness of this process and the obliviousness of those involved. Normal employees don't get bonuses when their companies are going bankrupt. Most people who read these posts have been told, at some time or other, that they cannot have a raise or get a bonus because the company they work for is under financial pressure. And yet when it is the boss' turn that principle goes out the window.
Sob stories about how hard people were working all year long misses the point. If your company is going out of business you don't get a bonus. Period.
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