Tuesday, March 17, 2009

Um, Can They Do That?

In an article titled Livid Democrats Demand AIG Return Bailout Bonuses I read today,

Whatever the process, lawmakers of all stripes said, the money — generally "retention payments" to keep prized employees — belongs back in the government's hands.

"Recipients of these bonuses will not be able to keep all of their money," declared Senate Majority Leader Harry Reid in an unusually strong threat delivered on the Senate floor.

"If you don't return it on your own, we will do it for you," echoed Chuck Schumer of New York.

Not all Democratic leaders were racing in that direction. Penalizing people with the tax code could be inappropriate, declared Rep. Charlie Rangel, D-N.Y., chairman of the taxwriting Ways and Means Committee. He said, "It's difficult for me to think of the code as a political weapon."

I don't think that they can do that. How can the government legally target specific individuals for taxation penalties? If they can, then things are worse than I thought, and we might as well change the flag to a solid red field with a gold sickle and hammer crossed in the upper left hand corner.

If the people in Congress and the White House had intended for these funds to not be used that way then they should have had the foresight to stipulate that. Or even better they should have let capitalism do it's thing, letting the companies that have been competently managed thrive and the ones run by boobs sink. The share holders in these companies ought to be out for scalps.

According to the article it would seem that these bonuses were contractual.

Administration officials said Geithner did all that he legally could to avert the payments.

Geithner urged AIG's Liddy last week to renegotiate the contracts that called for the bonuses.

"He recognized that you can't just abrogate contracts willy-nilly, but he moved to do what could be done," Larry Summers, Obama's chief economic adviser, told the AP in an interview Tuesday.

How do I get in on a contract that will pay me million dollar plus bonuses if I run the company into the ground on top of a multi-million dollar salary? I need to get me some of that. How is it that the share holders allow this sort of thing to go on? Something stinks like five-day-old road-kill. The "little people" don't get deals like that. No wonder American business is floundering. Toddlers are sailing the ship. Wait, toddlers would probably do a better job.

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