This week (March 16-20, 2009), the House of Representatives voted, by a count of 328-93, to impose a 90% tax on the bonuses handed out to employees of companies receiving federal bailout money. Wait, only those employees who make more than $250,000 per year will be taxed. This is, of course, consistent with Obama’s “concern” for spreading the wealth and penalizing those who make as much as he does.
What is interesting about this particular tax is that it was Obama who added wording to recent legislation that made the bonuses possible in the first place. Senate Banking and Urban Affairs Committee Chairman Chris Dodd (D-CT), recently admitted that he added the wording to the stimulus bill that allowed companies receiving bailout monies to award bonuses to employees. When questioned about it, Dodd quickly gave up his boss and said (on Thursday, March 19th), “The idea came from the administration.” Oops!
Republicans opposed the wording when the stimulus bill was being debated, but it was ignored. They wanted to add wording that would make large bonuses (like the ones recently given by AIG) impossible. Sadly, it seems that few were arguing that the stimulus bill was actually a budget and not stimulating at all. But, at least they passed it without any earmarks…right? At least we now have “change we can believe in”…right?
Anyway, AIG has received $182.5 billion of bailout money and gave $165 million in bonuses to employees. Who could blame them for giving bonuses to those who figured out how to pry that kind of money out of the government’s hands? Who knew irresponsibility was the way all along? Of course, now AIG is now 80% government-owned. So, the government is imposing these huge taxes on a company they now own. But you could argue that this is a brilliant profit-making scheme. The government takes over the business with taxpayer money, and then taxes them for giving large bonuses.
Obama says that AIG’s greed and irresponsibility is “a symptom of a larger problem – a bubble-and-bust economy that valued reckless speculation over responsibility and hard work. This is what we must ultimately repair to build a lasting and widespread prosperity.”
And what better way to repair it than giving $182.5 billion in bailout money to a company who has already shown great irresponsibility, making it possible for them to grant large bonuses, and then rewriting the tax code to punish them? Who thinks this way? Call me crazy, but I don’t think irresponsibility will be cured by giving them hundreds of billions of dollars even if it is money with strings.
Well, this kind of rambling is fun, but let me end by saying that it all highlights the truth of Proverbs 22:7 where Solomon reminds us that “the borrower is servant to the lender.”
P.S. – I should note that, since first posting this, President Obama has come out against the 90% bonus tax, fearing that such a harsh, quick reaction will prevent private investors from putting money into any companies receiving bailout funds. I will restrain myself from further comment.