Conservative Donnybrook

On Thursday, the House of Representatives voted 328-93 to impose a 90% tax on recipients of bonuses from taxpayer-supplied bailout monies. It is nice to see Congress suddenly concerned about taxpayer money for a change, or even that they recognize the money as coming from the taxpayer and not belonging to the government.

I suppose before I jump off into my rant, it is required that I offer the obligatory distancing speech from AIG. Here goes: What AIG did was reprehensible and there are plenty of bad actors among the leadership of that company that paying bonuses was questionable at best. Many of them don’t deserve bonuses for the harm their actions have wrought. However, I would stop short of suggesting that these execs fall on their swords.

Having said that, what in the hell was the House thinking? Sen. Christopher Dodd inserted a provision in the bailout contractually obligating AIG to pay bonuses to its executives (although Dodd is now pointing at Geithner as the guilty party, either way…). As a result, AIG paid out $165 milllion worth of the $173 billion it received in the bailout. (For those who don’t have a calculator handy, that’s less than 1/10th of 1%). The company was contractually obligated to make the payments and the Senate Banking Committee and Treasury Department were well aware of the fact. But, when folks like Barney Frank heard that AIG was paying out bonuses to its execs, the spittle began to fly and politicians across this great land began to grandstand and demogogue. They so whipped themselves into a frenzy, that they thought nothing of passing a bill of attainder in the House to recoup 90% of the bonuses. After all, let us not forget who that money really belongs to (and the right answer is not taxpayers). If AIG is going to try to give that money to people who are politically toxic, Congress has an obligation to reassert its authority over those funds – no matter how unconstitutional the measure it has to adopt.

The one comforting thing I think we can all take from this is the certainty that we can trust that this is limited to the bailout money. We should not worry that contracts have been imperiled by Congress’ act. We should go about our daily business entering into contracts freely, secure in the knowledge that, at least as long as the politicians approve of both parties to a particular contract and don’t perceive that any politically disfavored person is being enriched by the contract, that your contracts are perfectly safe from government interference.