There has been a great deal of anger expressed by the public over the payment of huge bonuses to AIG officials. This anger is understandable, especially if one's hard-earned retirement 401(k) has been converted into a retention bonus to keep those who committed the massive lending errors to remain in position to commit more wrong. Despite the popularity of the dubiously-legal bonus tax bill which passed the House this week, I have doubts that it would achieve the goal desired. Worse, it certainly establishes a dangerous legal precedent which would come back to haunt us in the future, assuming that the GOP-complicit Supreme Court doesn't declare it unconstitutional.
Despite the claims of proponents of the bonus tax bill, and its popularity with the public, there are times when the Will of The People is not in sync with the Constitution. This is, for example, the main argument raised in opposition to California's Prop 8. But the cowardly "conservatives" who make up the California Supreme Court are avoiding their legal duty by expressing a desire to hide behind the Will of The People instead of concurring with their own earlier decision overturning the previous anti-Constitutional and discriminatory effort produced by popular referendum.
It is also thus with the House-passed bonus tax bill. I am as angry as anyone over these outrages, yet I am against the special tax. It isn't for the roundup of the usual suspect reasons, such as those now being pontificated from high above the pavement of Wall Street (click here for an excellent example). I am actually more in line with the reasons presented here: "First, it is retroactive" (not that this mattered any when it was the Telcos benefiting from an unconstitutional ex post facto immunity for illegal spying on The People).
I disagree with the second reason, as there is no valid defense presented for the position. I'm angry enough over the whole scandal to temporarily forget "innocent until proven guilty" as banks across the nation and around the globe were all involved with this scam to varying degrees.
"Third, and most importantly, it creates a set of bad incentives." Despite the specific position presented in the linked article, the incentives which I feel are important and agree are accurate are those expressed reactions listed after the defense of the position: returning the TARP funds and shutting off the credit tap needs to be prevented, and blocking chaos taking over the process of recovery is vital. I don't give a damn about the "necessary" employees leaving for what they may deem greener pastures. They did enough damage already, so why give them another opportunity to foment mischief? Don't let the Golden Door hit you on the ass on the way out!
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