Yesterday, liberal lawmakers, after publicly blasting the multi-million dollar AIG bonuses as undeserved and excessive, privately voted down GOP proposals to limit them. (AIG is a major donor to liberal politicians, such as Obama, who received more than $100,000, and Chris Dodd (D-CT), who received $280,000. AIG’s contributions over the last 6 years have gone mostly to Democrats).
Today, however, they are pushing legislation to impose a 90 percent tax on bonuses, not just at AIG, but also at other, healthy banks that received federal funds (which did so under pressure at the Treasury Department’s urging so that less healthy banks that really needed the money would not be stigmatized by receiving it). The legislation just passed the House by a 328-to-93 vote.
They are doing this for transparently political reasons. If conservatives vote against the proposal, liberals can turn it into a campaign issue, and neutralize their own political damage from having previously protected the AIG bonuses. (The Senate Banking Committee Chairman, Chris Dodd (D-CT) inserted language into the stimulus bill protecting the AIG bonuses, then lied about it. He says he stuck in the language at the request of the Obama Administration. Dodd has attracted ethical controversy for receiving a sweetheart deal from the sub-prime mortgage lender Countrywide, which helped spawn the mortgage crisis).
And if it passes, liberal lawmakers can use it to threaten further restrictions on employee compensation in the business world, such as in conservative-leaning industrial sectors that have given them few campaign contributions in the past.
House Banking Chairman Barney Frank (D-Mass.) wants to extend compensation limits to “all financial institutions,” regardless of whether they receive public funds, and perhaps “all U.S. companies.” Given the strong liberal majorities that current hold sway in Congress, the mere threat of that happening will probably trigger big campaign contributions by companies and businessmen seeking to buy him off and avert his wrath. (Frank helped spawn the mortgage crisis by blocking reform at Fannie Mae & Freddie Mac, which are now being bailed out at a cost of more than $200 billion, and by pushing risky loans in the name of “affordable housing“).
Congressman Jerry McNerney (D-Cal.) has argued for a 90 percent tax rate on all high-income households in the U.S. Even this rate would be insufficient to pay for all the new spending proposed by the Obama Administration, given the $8 trillion in spending commitments incurred as a result of all the bailouts, which will shrink the economy, and benefit even illegal aliens, people who lied on their loan applications, and high-income homeowners with modest, conventional mortgages.