Update: My praise for Charlie Rangel in this post was, sadly, premature. Politico is now reporting that Rangel has gotten behind a 91% tax bracket for AIG bonuses.
When it comes to the AIG bonuses, I'm about as angry as any other taxpayer who has been paying attention. This morning, I was absolutely undelighted to read that quite a bit of the "retention" money is going to people who have, in fact, not been retained. The look I just took at AIG Chariman Edward Liddy's opening statement for today's Congressional hearing did absolutely nothing to improve my mood. When he says, "I share that anger," one has to wonder how much of that anger he actually understands.
Not to try to dish out the class warfare, but that's probably because he's rich enough that the numbers don't mean the same thing to him that they do to most of us. On the (very very small) chance that he might see this, let me try to put this into perspective. According to reports, one of the bonus recipients who worked in the AIG unit that caused the catastrophe received a $4.6 million retention payment, and has left the company.
The name of the $4.6 million dollar person has not been released - Mr. Liddy is apparently afraid that publicizing the names of the recipients might endanger their lives - so for the sake of simplicity I'll be referring to this person as "Mr. Scheisskopf". Mr. Scheisskopf worked for the unit at AIG that wrote credit default swaps that dropped AIG - and the American Taxpayer - in the drink. After contributing to a catastrophic collapse of the entire company that has required billions of taxpayer dollars, Scheisskopf, for whatever reason, left the firm. Now, as a "retention" award, the un-retained Scheisskopf is walking away with a cool $4.6 mil.
Let's put that in perspective. The median income for a man in the US was a little over $45,000 in 2007. More than half the wage-earners in the country, at whatever their current salary might be, would have to work for more than a century to earn what this AIG joker is walking away with. Scheisskopf walking away with far more money than most of us will earn in a lifetime, and to top it all up, we're the ones who are paying to clean up the mess he left. If Mr. Liddy thinks that he shares the popular anger about this right now, I'd suggest that he think again - preferably after spending three or four years working a long-hour, low pay job.
Under the circumstances, it's no wonder that people are really, really angry. It's no wonder that people want to take whatever steps they possibly can to repossess the money. So it really shouldn't be any surprise that some members of Congress are now proposing a super-special, for moron executives of companies receiving corporate welfare only, give-us-back-your-bonus tax bracket.
Fortunately, NY Rep. Charlie Rangel, Chairman of the House Ways and Means Committee, is injecting a much-needed voice of reason into these discussions:
But the reaction of another of the chairmen, Representative Charles B. Rangel of the tax-writing Ways and Means Committee, underscored the legal and political complexities facing Democrats as they scramble for a solution. Mr. Rangel, a Democrat from New York, objected to one of the most popular ideas being floated -- a confiscatory income tax on the recipients. The tax code is not "a political weapon," he told reporters.
I don't just want to see the government recover every dime of these "retention" bonuses, I want them to recover the money from the greedy morons that got us into this mess in the first place. Absent a confiscatory tax, that's not going to happen. Which means that I've got to accept, however reluctantly, that it shouldn't happen.
Rangel is right. We can't afford to use the tax code as a political weapon. It's wrong, and it sets a hideous precedent. Today, it's AIG execs getting slapped. Who's next, and why?