Taxing the bonuses

[egslim]

What we have here is the government deciding that these people made too much money

No, what we have here is the government finding that taxpayer money was inadvertedly misappropriated to line the pockets of a few individuals, instead of to save the financial system for which purpose it was requested and intended.

The government didn't attach the appropriate strings when they took over pseudo-ownership of AIG.

Strictly speaking that's true.

But the reason those strings weren't attached is because these bonusses are contractually obligated. Without a bankruptcy it was legally impossible to attach such strings, and the whole purpose was to avoid a bankruptcy. It's quite silly to blame the government for not doing the legally impossible.

In a free market these employees should not only have lost their bonus, but also their job. The only reason they were saved is because of the pure luck their company was deemed systematically important, and the legal complications resulting from that screwed over the taxpayer.

But luck grants no right of entitlement. And now it turns out their luck may be a little less good than it first appeared, because the government has a perfectly legal way to take back those bonusses. Luck can be either good or bad, and in their case even without the bonusses it's on balance still good.

 

[funk de fino]

That's not an option, either. They have to pay as much as it takes to keep the company solvent.

OK, so they pay them 30 billlion but keep back 125 million. The company will fold unless the money is voluntarily given back by the employees.

Not a tax.

 

[DC]

In germany the workers at Opel agreed to lower salarys and alot lot other things they agreed on just to save jobs.
But Managers fight for their boni. greedy bastids.

 

[Thunder]

How about this: the AIG folks voluntary give back all their bonuses...or the American people take back the $150 billion bail-out.

Does that sound like a plan?

 

[Meadmaker]

How about this: the AIG folks voluntary give back all their bonuses...or the American people take back the $150 billion bail-out.

Does that sound like a plan?

How do you take it back?

 

[Darth Rotor]

How about this: the AIG folks voluntary give back all their bonuses...or the American people take back the $150 billion bail-out.

Does that sound like a plan?

Interesting idea, how do you intend to implement it?

DR

 

[gdnp]

I hate to be heretical here, but I'm not even sure that the bonuses were a bad idea. Performance bonuses--yes, retention bonuses--maybe not.

AIG otherwise might have had a massive hemorrhaging of talent. Would you be happier right now if we had punished the EEEEvil bankers, and as a result their $65 billion loss last quarter became a $75 billion loss? Or were we planning on making these people work for no pay?

There are lots of things that look good on paper, but when it comes to running a multi-billion dollar enterprise and you need people around who know what they are doing, reality has to trump righteous vengeance.

 

[ingoa]

Retention bonus... My backside....

Who would hire an AIG manager?

 

[Tmy]

Huge taxes on an individual group??? Tell it to the cigarette smokers.

 

[Meadmaker]

Huge taxes on an individual group??? Tell it to the cigarette smokers.

I'm no huge fan of that, either, but when you buy a pack of cigarettes, you know what it costs and the tax consequences. What would happen if they decided to raise cigarette taxes (again), but make it retroactive to January 1? It will apply to businesses that sold the cigs, as opposed to the smokers themselves.

 

[Allen773]

Corporations have done more harm to this nation (and the rest of the world) than the U. S. government could ever hope to.

Punish them.

 

[Allen773]

The power to tax is the power to destroy.

Someone drank the discredited Reagan kool-aid about those evil taxes.

 

[gdnp]

Retention bonus... My backside....

Who would hire an AIG manager?

I have no idea. I suspect that they have some very talented people. Even if they decide to leave an live off their savings, which in most cases probably is in the millions, that still leaves AIG without people who know how to run the day-to-day operations of the company.

 

[Dan O.]

That's not an option. The number of companies dependent on it is huge. If it falls, a lot of them would not be able to legally operate, for example. A lot them would be depending on claims to be paid for the continued operation. A lot of them would be in breach of guarantees they have made to other companies. It's a massive chain that can't be allowed to fail.

That's just the BS we are being told. The only difference between supporting AIG with the bailout and directly supporting all the other companies that are financially linked to AIG with the bailout is that in the later case the government would get to look at all the books and determine which of those other companies were insuring real positions and deserve to be bailed out verses those that were simply gambling with their depositors funds and need to also be shut down.

 

[a_unique_person]

That's just the BS we are being told. The only difference between supporting AIG with the bailout and directly supporting all the other companies that are financially linked to AIG with the bailout is that in the later case the government would get to look at all the books and determine which of those other companies were insuring real positions and deserve to be bailed out verses those that were simply gambling with their depositors funds and need to also be shut down.

I don't think a lot of people realise just how close to the abyss we are.

 

[Sword_Of_Truth]

Now Treasury Secretary Geithner is begging for the private sectors aid:

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Sunday that help from the private sector was critical to get toxic assets off banks' balance sheets and help resolve a credit crisis.

So after spending a week or so terrorizing the private investment community, making them fearful of being too successful or earning too much lest they incur congresses wrath and be singled out for punishment, now the administration wants their help?

Who among the investment sector is going to want to place themselves under the Sword of Obamacles?

 

[a_unique_person]

Now Treasury Secretary Geithner is begging for the private sectors aid:



So after spending a week or so terrorizing the private investment community, making them fearful of being too successful or earning too much lest they incur congresses wrath and be singled out for punishment, now the administration wants their help?

Who among the investment sector is going to want to place themselves under the Sword of Obamacles?

Damn right they ought to watch out. They aren't being punished for being successful, but for insisting on acting as if they are worth millions when they clearly aren't. AIG is case of a massive failure. if the Government hand't bailed it out, they wouldn't just be losing their bonus, they would all be out of a job. People out there are paying a much higher price for this economic turmoil than they are. Something like 500,000 a month losing their jobs is much bigger price to pay.

 

[kallsop]

No, what we have here is the government finding that taxpayer money was inadvertedly misappropriated to line the pockets of a few individuals

Huh? The law as written had the Dodd amendment added to explicitly allow the bonuses (for his VIP friends). Tax Cheat Geithner knew of the bonuses on March 3rd at the latest, raised no flags at all. When the public found out and got angry, the yahoos in DC put on their pretend outrage. Don't fall for it. Keep your eye on the disastrous $3T budget and $10T deficit that will bankrupt us all.

Geithner Aides Worked With AIG for Months on Bonuses
Sen. Gregg says Obama budget will bankrupt US

Change and Hope, it's gonna cost ya $1T/year.

 

[Sword_Of_Truth]

Damn right they ought to watch out. They aren't being punished for being successful, but for insisting on acting as if they are worth millions when they clearly aren't. AIG is case of a massive failure. if the Government hand't bailed it out, they wouldn't just be losing their bonus, they would all be out of a job. People out there are paying a much higher price for this economic turmoil than they are. Something like 500,000 a month losing their jobs is much bigger price to pay.

Thanks for proving my point.

The AIG execs have few friends in the world and that's largely their own fault. But they are not the whole of the financial community. The treatment of the AIG execs and attitudes like yours will have a stifling effect on any economic recovery.

 

[leftysergeant]

The treatment of the AIG execs and attitudes like yours will have a stifling effect on any economic recovery.

You mean they will be afraid to invent some new kind of financial vaporware for fear of a crowd of peasants with shotguns at their doorsteps?