By Michael Barone, Thomas Jefferson Street blog
This Washington Post editorial gets it right. "The House had the feel of a mob scene," when it passed a 90 percent tax on bonuses paid by AIG and other firms which have received more than $5 billion in TARP money. This was a moment of panic for House Democrats. Almost all of them, and not a single House Republican, had voted for the stimulus package which specifically authorized such bonus payments. A bill that no one was given the opportunity to actually read. You don't have to be a political genius to see what peril that poses for just about every Democratic incumbent and the opportunity it presents for every Republican candidate. But they evidently felt they couldn't just pass a confiscatory tax on the bonuses only at AIG, since that would violate the Constitution's prohibition of bills of attainder—not to mention notions of basic fairness, as Majority Leader Steny Hoyer and Ways and Means Chairman Charles Rangel noted when they were first asked about proposals for a 100 percent tax on AIG bonuses. So now this will apply to other firms, including those like JPMorganChase which took TARP money though it didn't want it, because Treasury Secretary Henry Paulson said that otherwise there would be a stigma on those firms which did take TARP money.
This confiscatory tax has the smell of something that will not finally make it into law. But in the meantime the stench is pretty strong. The House has just made it a lot harder to repair the financial system, as Charles Krauthammer demonstrates. Appalling.
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