Populism, AIG and the Crossing of a New Threshold
Much of the populist rancor up to now over everything from AIG bonuses to shady securitization schemes to bailout bonanzas has taken the form of media ranting. Whether it’s Rick Santelli on the right or Jon Stewart on the left, the public outrage over various shades of corporate and governmental malfeasance in this economic crisis has been limited to the realm of late night television and the blogosphere.
Now that has changed.
Congress just approved a highly punitive 90% tax on bonuses beyond $250,000 to ANY employee at ANY financial firm receiving TARP money. Even more remarkable is the fact that half of the House Republican caucus voted for this measure.
Folks, this is close as you will ever see to real “class warfare.” Yes, these firms would be kaput if not for the TARP. And they shouldn’t be awarding bonuses to anybody for failure – especially not with taxpayers’ dollars.
But remember that many employees at these firms work for divisions that are still quite profitable. Yet, the decisions made by people in the holding company or some far-off division imperiled the whole company so gravely that the government had to provide a bailout and, hence, a ban on the bonuses of any and all employees throughout the firm. This is the proverbial broad brush.
Forget for a moment the question of whether or not $250,000 constitutes a sizable income in New York City. And forget for a moment the easy way that companies can get around this (by renaming bonuses as salary, though there would be other tax implications).
Think of what a threshold the Congress – both parties – has crossed by passing this legislation.
In the Senate, some are calling for a slowdown of this measure, but Republicans like Charles “Japanese option” Grassley and Olympia Snowe are pushing for an equally punitive measure along with many Senate Democrats.
How is it that a party that united to oppose the stimulus bill has now effectively endorsed one of the most punitive tax increases in modern American history? How is it that Eric Cantor, the conservative GOP House Whip, voted for this confiscatory tax increase on virtually the entire financial sector?
As Bob Dylan sings in “Ballad of a Thin Man,” – “Something is happening here and you don’t know what it is. Do you, Mr. Jones?”
Cartoon by RJ Matson, Roll Call. The cartoon above is copyrighted and licensed to appear on TMV. All Rights Reserved. Unauthorized reproduction prohibited.