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Give it back...tax it at 95%....VENGEANCE IS MINE ! ! !

I was reading blogs this morning. I came across one offered by ABC News Senior Political Reporter, Jonathan Karl. You can read the entire entry here.

It shares this opening salvo..."The AIG Bonus Tax:"Give the money back or we'll take it away".

Now this is an interesting concept. The public is outraged that these employees are being rewarded. Elected officials are patiently standing in line, waiting their 2 minute soundbite opportunity.

The angry mob has gathered.

Do you really think let this throng loose will stop at AIG?

One of the ideas offered is that the employees that received these bonuses should just give back the money that is contractually theirs. The thought is that the contract they signed and the work they have done should be tossed aside and they should just - GIVE IT BACK.

Another idea being tossed around it to have the tax code changed so that the bonuses can be taxed at a rate of "95%". This would certainly put the money back into the U.S. Treasury.

The only thing missing from all this uproar is a very bright caution sign.

Caution !

Slippery Slope Ahead

Once we get past those nasty derivative creators, who should be next on the list? Once we trash the Constitution and get the nasty rule of law out of the way, which is the next group that will we vilify?

How about we move down the line. Let's target the lenders. They made money on every loan. Some of them made lots of money making bad loans. It would make perfect sense to parade their greed over the television via all the talking heads. Don't let anything like the facts get in the way. The public could become enraged and all the politicos could stand before microphones and denounce the actions and demand that all lenders and mortgage brokers return the money they earned on any loan that has defaulted.

GIVE IT BACK.

Give back those fees. Give back those points. Give back the money you were paid. It can go right down to the loan processors. Publish their names. Print every dollar earned in all newspapers. Release the home addresses. Send in the crowd. If that doesn't work, well we will just change the tax code and tax earnings on loans that went into default at 95%. This will certainly put money back into the U.S. Treasury.

Don't stop there. Next we should move to those greedy real estate brokers and agents. They made money on every transaction. Some of them made lots of money representing buyers that have since defaulted on their mortgage. In the spirit of continuing to trash the Constitution, we should parade their greed and avarice on all the major networks. Let the talking heads continue to share outrage. Give the elected officials another chance to rail against the horrible greed of someone accepting money that was contractually obligated. They could demand that all brokers and agents return any money earned on a transaction that involved a buyer that has since defaulted on the loan.

GIVE IT BACK

Give back those commission earnings. Give back that money earned to process paperwork. Give back those dollars paid at the table. Print the name and earnings by transaction of every broker and agent that represented a buyer that has since defaulted. List the home address of all those involved. Let the world know how much money was pocketed representing buyers that defaulted. If that doesn't work, well we will just change the tax code again and tax all those earnings at 95%. This will certainly put money back into the U.S. Treasury.

Finished Product?

The country as we know it...goes up in flames.

I suppose we can keep going down the list. We can gather in everyone in the entire cycle. I think if we play the hypothetical game, we will eventually reach the elected officials. They will have no one else to blame. It seems that they will be left with but one option.

They will just have to stand alone and fall on their sword.

Hmmmm.................maybe we should rethink our outrage. Maybe we should see if we can not quell the angry mob. Maybe we should focus on the solution and stop taking our eye off of our goal. Maybe the crowd should be sent home and told........let's get on with the business of correcting our faults.

This is no way to resolve anything.

Allowing this......

(the flag representing the Constitution) will only lead to something like this.....

If we keep saying GIVE IT BACK

soon

There will be nothing to GIVE

Posted by John MacArthur on 03/19/2009 11:05 AM

Comments (44)

aig, give it back, constitution, public outcry

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44 Comments on Give it back...tax it at 95%....VENGEANCE IS MINE ! ! !

MAR

John, I'm as outraged as the next person that AIG is forced to give bonus's to employees in a division that lost billions of dollars. I'm also a firm believer in contract law and if they were smarter than the corporate execs and had it written into their contract, than they should get the bonus by right.

This country's entire business foundation could be in serious jeopardy if the government is allowed to go back and change contracts. The other aspect, taxing specific individuals for retribution, is bizarre beyond belief.

Frankly, I think a lot of this would go away if they just banned cameras in Washington, DC. Maybe we should start paying our politicians for performance. Rich

Just like others I'm outraged at the bonuses but agree that it does set an unusual precidence that could create more havoc down the road. Lets fix the underlying problem of lack of oversight on the use of the bailout money, how we lend money in the future and how we resolve the issue of the 1 out of 5 homeowners who can not take advantage of the "bailout" as they don't qualify in any of the current categories.

The "outrage" over the bonuses is an obfuscation drummed up by the administration to give them a window to load us up with another few $Billion of give aways to the Wall Street cronies, the banks, the unions and favorite governors.

Any tax on the bonuses would be unconstitutional. The government cannot enforce an ex post facto tax. See,

Bill of Attainder

Definition: A legislative act that singles out an individual or group for punishment without a trial.

In fact, we now have a admission confession from Sen. Dodd that he inserted language that permitted the bonuses.

If anyone want to be outraged, Dodd's a better target.

One major issue that has been skirted around is that Sen Dodd, is the main person to blame! I listened to the AIG hearing yesterday and I found myself screaming at the TV! Those pompous Congressmen were attacking the guy who they put in the CEO postion at AIG to try and fix the problems! They were blaming him for the contracts and on and on when they could have stopped the entire thing if they had only done due diligence a couple of months ago.

If I was Leddy I would have put a $1 bill on the table and walked out of the room. The man is not even being paid to do the job. He said he was doing it out of a duty to his country.

Like Lenn said this tax would be very clearly uncostitutional and as you said a very slippery slope. This is yet another reason we needed to let these companies go through bankrupcy instead of bailing them out. Those contracts would have been severed had AIG actually gone bankrupt. I don't see much of a legal/consitutional avenue for recovering them after the fact, no matter how outraged people are.

I do find it frustrating that the media is so focused on the $167M in bonuses to AIG employees while completely ignoring the fact $120 billion went out AIG's backdoor to about a dozen investment banks where it was partly used to pay billions in bonuses at firms like Goldman Sachs. Because this was done indirectly and I believe purposely hidden, the current congressional attempts to take back bonus money would be ineffective at recovering this.

Scott: Yeah, Leddy is absolutely the WRONG person to blame in this thing. The bailouts had happened and the contracts were in place when he was placed in that position. If there was anyone that had there hands tied legally in the whole thing it was him. Not that I exactly believe he would have severed those contracts if he could.

These bonuses never should have been paid once AIG received bailout money. An "all bets are off" clause of sorts should have been enacted and all contracts severed. Once the American Taxpayer steps in to save your ass, you don't get bonuses!

Lenn is absolutely right:

Any tax on the bonuses would be unconstitutional. The government cannot enforce an ex post facto tax.

I wrote a detailed comment about this very issue last night on a blog post. We must be very careful about shredding our constitution just because we don't like something.

These bonuses were not even performance bonuses, they are retention bonuses. Total different animal and it is because of the gov that it is even named that.

The white house admin changed the language and stuck this in the stimulis bill, why? They knew it would be unconstitutional to interefere with a contract in place and that it would be a great way to create havoc and distraction to what they really want to be doing and getting through while we are putting our attention on this.

This is a small amount of money in the big scheme of what they plan to spend on stuff that is a total waste of money.

If I was Leddy I would have done the same thing that Scott just said. Put his big 1 dollar salary on the table and tell congress to stuff it where the sun don't shine. This is ridiculous, they are the ones who begged him to go to AIG to fix the mess, then they hang him out to dry? Those retention consultants- well- if I were them, I would QUIT right now! Then see how congress can fix the mess they insisted on creating. What a joke! And then to use these people as their scapegoats!

There are death threats on these people that congress wanted to stay! They should have their backs, but no, congress is the backstabber.

I don't even know where to begin with my thoughts of how unconstitutional this act is. I think it's time for a revolution.

From bonus tax to flag burning and swastika on the star spangled banner ... A bit of a leap don't you think. Bonus outrage is nothing but good theatre that Shakespeare himself would be proud of... But so is the outrage about the outrage

In retrospect, the government should have required a 3 year hiatus for bonuses, for any company taking bailout money. Further the employee could be paid a bonus when the company was profitable and if they had stayed with the company during the whole three years it took to recover (or more). Leave early and have no claim on the bonus...novel idea bonuses for success, not failure. The government failed to put stipulations on the money...so the conversation is rhetorical at this point.

I also am outraged that performance standards by industry seems to have been thrown out the window, BUT what about the guy who has already spent the money or got a car loan based on the money?

Can we throw contract law out the window?

Who was asleep at the switch here? Did we all think Congress was spending the money with oversight? The people who should be thrown out are the bastards who approved the bailout! Hurry, hurry, hurry! When you hear that hold on to your wallet!

And behind the scenes . . . the REAL AIG money went to huge banks, the largest in Europe;

Société Générale, Deutsche Bank, in the sums of billions and billions.

"Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion)."

http://www.iht.com/articles/2009/03/16/business/16rescue.php

Why, might be the first question.

Hmmmm . . . 'cause they funded sub-prime loans would be my guess.

But, WTF do I know?? I can only guess that AIG had to pay the piper ("If you dance to the music, don't you know you have to pay it to the piper," Chairman of the Board)

And the "bonuses" received were the commissions for putting these deals together so that we, the United States taxpayer wouldn't get sued by the European Union.

Don Henley was right, ". . . and all she wants to do is dance."

http://www.lyricsfreak.com/d/don+henley/all+she+wants+to+do+is+dance_20042046.html

I think everyone understands that legally we can't "throw out the rule of law" and insist that they either don't get the bonuses or have to give them back. At least most people understand that. That doesn't mean our government can't pressure them to give it back. And I think that's a GOOD thing.

Your quote:"The thought is that the contract they signed and the work they have done should be tossed aside and they should just - GIVE IT BACK."

The point is, that the work they did is what caused the problems, it ran the company into the ground and caused it to need the Government bailout. Yes, they are contractually owed the money, but most people see it that MORALLY, they shouldn't be owed a thing because they did a really lousy job.

No, this won't lead to a mob wanting everyone to blame to give back any money they made. Namely, because not everybody has received umteen billion dollars in government money.

Leslie

Ysterday, I posted:

Proposed "Bills" and "Bailouts" Should Be Posted Online for Public Review & Opinion Before Being Voted On

I admit my reaction was harsh in regard to the AIG bonuses for the purpose of retention. I understand contracts, and the law, but these are special circumstances. If AIG went under, I have serious doubts that anyone would have bee paid a bonus.

Probably lost in the content of my previous post, and what I really wanted to drive home was that Americans should have the ability to view these proposed bills and bailouts. Yes, we hire/vote-in officials to look after us, but obviously things slip through these bills that are not too popular with the public.

We need to read the fine print that affects our lives.

Looks like everyone is pretty much in agreement that the bonuses were bogus.

And, we're in agreement, legislating they be taxed is not a good precedent.

And, yes, the contract is alleged to have included a clause that the bonuses must be paid.

One thing that I didn't see in this posting, or the comments is a different perspective.

Transportation workers (i.e., airline personnel) had contracts that stipulated certain compensation for their time and effort. Those contracts were negated, and the people accepted new contract conditions.

Auto industry workers, and retirees, have / had contracts that stipulate(d) certain compensation, health benefits and retirement payments. Those contracts have been, or are expected to be, negated. Some of those people don't have a fall back. They are ... scr#$%*&.

A report on NPR yesterday indicated the bonuses were paid to employees to retain them, to unwind the mess in the financial products sector. It was also noted that some of the people who received bonuses had left AIG before the bonuses were paid.

Also, do any of us in the real estate industry get paid a bonuses for failing to do our work. Do we get paid if we don't show up to an inspection, or don't follow through on a contract to closing.

Why are we rewarding people for not only not doing a good job, but reward them for unethical behavior?

They should be required to give back money that was paid in bad faith.

Collecting is another matter.

Andrew:

In the instance of transportation, auto workers, etc those were either negated because there was a bankrupcy filing in the company what allows contracts to be broken by the courts or the union representing those people agreed to a new contract. In the instance of AIG there isn't a union negotiating those contracts so, really the only legal way to get out of the contracts is bankrupcy or to renegotiate contracts and have them agreed on by each individual. That's the administration excuse on why they couldn't add the bonus language to the contracts is it would have created a court battle over it's legality. Again gets back to my point where I believe bankrupcy was the best option to avoid this whole mess.

If they find that retention bonus's were paid to people who'd already left, that sure seems like instances where the worker may have voided the contract and the bonus can be recovered.

Well...........lots of opinions here. Most of you understand the rule of law. Some of you think it is immoral to accept the bonuses. Interesting. I do not see anyone raising their hand to return money they earned as a party to a transaction in which the buyer has now failed to pay.

The inclusion of other contracts is mixing apples with oranges.

The points are rather clear. It is wrong to change the terms of a contract after the fact. It is illegal to tax a group as a form of punishment.

This is not good theatre.

It is obvious that the facts are lost on many. These were retention bonuses. Yes, some that received them are no longer employed - they fulfilled their end of the contract.

This is not BONUS money.

Possibly the once glib candidate, now President might try focusing on facts and explaining the truth rather than expressing "moral outrage". The justifiable outrage should be directed at those that continue to make deals behind closed doors and then present the opposite in public.

If you made money involved in one of these deals, are you morally obligated to give it back?

I watched how they treated Liddy yesterday and it made me sick, no repect for someone trying to save the company. Just like they treated the Big Three when they were before them.

The people doing the accussing should be sitting in the hot seat. Dobbs, Frank, Geitner....

Do they think we are stupid ? The only people who will be stupid are those that vote them back in again and again.

Unfortunately this is all about politics. And, yes it is a slippery slope. Disney needs a new ride...the holier than thou ride. Cost of admission - being in Congress!

I think it was outrageous for them to even think about paying these huge bonuses. They beg for the US Government to bail them out of a crisis..they pass the money around to their peeps who created this mess.....

You were reading my thoughts. I just got done reading about this and was formulating a post such as yours in my head. Well said.

If they can do this, then they can do anything. How can anyone do business with such uncertainty?

The slide down the slope started with the bailouts unfortunately. Where do the bailouts end? It all leads to the same place, a system controlled by politicians and corporations instead of a system of law.

John MacArthur- I agree with you! Many people in this country practice class warfare on others. This is one of the reasons obama was elected imho. I could not even count the number of times I heard "tax the rich" from his party.

Did you know 2 years ago obama came out with a bill to throw mortgage brokers in jail! The ONLY bill he sponsored!

http://activerain.com/blogsview/397756/Should-Lenders-spend-35-years-in-jail

NOW he and the democrat congress are looking to break legal contracts of citizens. For those of you who cheer this on, who say "lets get those guys" it may come back to bite you!

Remember now, Realtors make big checks and are not held in high esteem by the general public.

YOU could be next!

PS:I dont think they sould have gotten the money either!

The outrage in my mind is not the bonuses. That issue in one way or another is going to get resolved. However, after the issue is resolved we will still have the awful Congressmen representing us in Washington. Anybody looking at yesterday's hearing clearly can see that these folks are an embarrassment to our country. And, to think of the power that they have.

For any of them to be lecturing to someone like Liddy is sad. Not one of them could do the job he is doing, yet they are the experts. Oh please, let's vote all of these incompetents out in the next election.

Hey Lenn,

just watching FOX and a news alert just came across the wire stating that the House has just passed a bill to tax those bonues at 90%. I think if I were one of those who received a bonus, I would definitely file a lawsuit against the government. Do these people that we elect ever make a decision based on reason and the law....or does every decision have to be a knee jerk reaction to an emotion?

Just some food for thought folks...here is a bit of an article which I will post the link to below but for now, check out some true, hard facts on the AIG issue...by the way, I am PISSED as well that the bonus' are even being thought of being paid out...."With all the outrage coming from the White House over bonuses paid to executives at the troubled AIG Insurance group, the White House might be a bit embarrassed to admit that as a Senator, President Obama took plenty of money from AIG in the form of campaign contributions. According to OpenSecrets.org, Senator Obama was the second largest recipient of campaign dollars from AIG at $101,332. Only Connecticut Senator Chris Dodd (D-CT), Only Connecticut Senator Chris Dodd (D-CT), who, it turns out, is responsible for the loop hole that allowed the bonuses to be paid to AIG executives.

Here is the link to the entire article...I guess I'd be embarrassed as well if I took over $100K from AIG for my campaign and then had to explain to the voters as to WHY I was "in the dark on it"....yeah, right!

http://news.aol.com/political-machine/2009/03/19/obama-accepted-aig-cash-for-campaign/

I'm outraged as well. Reading Ralph's comment above makes me sooooo mad. Lets fire all of them and start over....I wish we could...I wish we could...I wish we could.....

Be outraged, be upset, be sad, disgusted, whatever, but SCOTT, Shot?!! Come on. Have we really come to that? There are still thousands of people who ae so sure that REALTORS are all raking in huge "bonuses" off the backs of poor home owners from the sell of their properties. Do we really trust the media to be telling us the real story and do we want to sink to the level of saying they ought to be shot. Shame.

Great post and fantastic comments all the way around. It seems to me that BEFORE the bailout funds were rushed into the hands of AIG and others that some stipulations should have been placed on them. If they weren't willing to follow the stipulations then they shouldn't have been allowed to get any of the funds and should have been allowed to fail. I promise you the sun will rise the day after AIG fails. We will recover and a better business will take its place.

If Congress had of let AIG fail then AIG ould have file for bankrupty protection, Congress would have gotten AIG of half of what they paid and the bonuses would have not had to have been paid because of bankruptcy.

But all this is a cover up so more bail out money can be gotten. Today it was annouced that the dollar is dropping and our debts will no longer be bought at the high prices it was worth.

That being said we will probably be headed to using the euro as the world money which is what they wanted back in 93 and 94.

If AIG went under, I have serious doubts that anyone would have bee paid a bonus.

You're right. They wouldn't have been paid a bonus because AIG would have file for BK and at that point all contracts are basically null and void (BK judge decides who, what, when and how much gets paid).

HOWEVER, the Gov't decided that AIG was "too big" to fail and propped them up with tax payer money. Because of that, AIG is obligated to pay those bonuses according to the contract.

So here's the quick view of it all: AIG is broke. Gov't loans BIG money to them with no stipulations as to how those funds can be used or any limitations to the company. AIG has contracts requiring bonuses to be paid. Public becomes 'outraged.' Gov't says, "Bad Company for using that money we so stupidly gave you on such a thing! You're the BAD GUY! Those people that took these bonuses are BAD GUYS, too, and if you don't give it back, we're gonna make you!"

So, who should you really be outraged at?

While there may have been an exeption for <250K earners re: this bonus thing <from what the media says>, to me, the bigger issue is:

It seems to me that we are always playing catchup here, and pointing things out AFTER the fact, and not proactively managing things BEFORE we give out the money.

It's amazing because my father and I had the exact same conversation earlier today. His point was that the Government was correct in levying a "special" tax on the bonuses. My reply was that although there is a HUGE moral issue involved here. It can, in no way, compromise the living breathing document that is the precious fabric of our country....our constitution.

John, I don't at all agree with AIG and there arrogance. I more so don't agree with the kind of government intrusion that we are seeing in everything.

I think we need to START with our elected officials, not work our way to them. While they were waving this AIG flag they printed up a cool trillion to bail out the economy. (?) Or should I say another trillion. It's all smoke and mirrors. Thanks for the post.

I knew I loved you before, but now I am sure. I was thinking about this earlier today while walking my dog. Taxing the bonuses at 90%," that will show them" But what happens when the government or the public thinks what any or all of us make too much money. Will the public, by pressuring the politicians, determine our worth. You are right, it is a slippery slope and we should be careful. We should have just let them file for Bankruptcy.

I'm with Audrey on this. I didn't read through all the comments but this concept of "too big to fail" has got to go. I think this bruhaha about the economy collapasing if a large company like AIG or Citi goes under is a bunch of who-ha. If a coupe were allowed to go under maybe the rest would realize they need to do something other than keep their hand out to the American taxpayer.

Well I personally think it's time for some sort of a revolt or revolution here - I am against the bailouts to begin with - and against big government as a whole - we have such a mess on our hands, where do we even start???!!! Is this democracy truly for the people and by the people?

Is it too late or too early to say "Impeach obama" I think its just right!

MAR

Our founding fathers are rolling in their graves with what is taking place in D.C....

All the while a Trillion dollars is currently being printed up to buy up a trillion in debt... The Biggest Crime our country has ever seen is currently taking place and it has nothing to do with AIG employees receiving bonuses.

Oh... while we are at it... let's make our elected officials return all of the Campaign Contributions they received from the very banks they voted on to bail out and allowed the bonuses to take place...

http://www.opensecrets.org/news/2009/03/before-the-fall-aig-payouts-we.html

And

http://www.opensecrets.org/news/2009/02/tarp-recipients-paid-out-114-m.html

The reason that our founding fathers are rolling over in their graves is because we the people have allowed the bums that sit on Capitol hill to get away with murder. It is about time that We The People took back our country and made our voices be heard...

Your building consultant for life in Nashville, TN

Interesting point. We must be very careful what we do, no matter how mad we are. I think the problem is that we (our government) handed out money with no rules, regulations, etc. We just made it a huge give-away and now we're upset because the company did not do what we did not tell them to do!

The original income tax was only for "the Rich". Then it spread to all.

They are just getting us used to 95% for these evil rich folks. Then, they will try to spread it to the rest of us.

These are the same people that always append the words evil and greedy to Real Estate Agent/Investor/banker.

MAR

The New York Time is reporting

obama will call for increased oversight of 'executive pay at all banks, Wall Street firms and possibly other companies' as part of sweeping plan to 'overhaul financial regulation'

Translation, we are next!

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