March 22nd, 2009
01:04 PM ET
13 years ago

White House officials won't endorse tax on bonuses

[cnn-photo-caption image= caption="The White House isn't embracing the House tax bill."]WASHINGTON (CNN) - President Obama's economic advisers on Sunday refused to endorse a House bill that would levy a 90 percent tax on bonuses paid out by companies that receive bailout money, with one administration official describing the plan as potentially "dangerous."

Fueled by anger over more than $165 million in bonuses paid out by insurance giant AIG, the House passed the punitive tax bill on Thursday in a 328 to 93 vote

Jared Bernstein, Vice President Joe Biden's top economic adviser, told ABC's "This Week" that the bill "may go too far in terms of some legal issues, constitutional validity, using the tax code to surgically punish a small group.  That may be a dangerous way to go."

Bernstein noted that that private investors the government needs to carry out its toxic assets plan might be scared away by such a tax.

Christina Romer, who chairs the White House Council of Economic Advisers, told CNN's "State of the Union" that the president believes "it's completely appropriate to have different standards" for firms that have taken federal funds.

But she told CNN's John King the White House favors creating a federal "resolution authority" over bailed out financial institutions, which would give a judge the ability to void the kind of controversial contracts that allowed AIG to pay out the bonuses.

Romer called it "a legal way to break these contracts and go forward."

Another White House official stressed that the president will weigh all options coming out of Congress, but will not act too hastily to recoup the money.

"The president has been pretty forthright in his anger with what happened with AIG, and the simplest thing is for these guys to give the money back," Austan Goolsbee, a member of the Council of Economic Advisers, told CBS' "Face the Nation."

He added, "The president has also been clear, we don't want to govern out of anger."

Filed under: Christina Romer • President Obama
soundoff (40 Responses)
  1. Truth Bomb Thrower

    Because they know it was their boss who OKed the bonuses in the first place. The dumb-a-crats in congress are simply trying to cover up for their own corruption and incompetence. They voted for an 800 BILLION DOLLAR spending bill…….AND THEY DIDN'T EVEN BOTHER TO READ IT!!!!!!


    March 22, 2009 04:24 pm at 4:24 pm |
  2. S Callahan

    Yes! Yes! Yes!...heed the wisdom of the Lord......I am so proud of you President Obama......this is good!!!!
    the scales are tipping! literally........

    March 22, 2009 04:30 pm at 4:30 pm |
  3. Doug T

    This is BS. AIG took taxpayer money, given to them to make available for loans and to prop up the supposedly failing company, and they handed it out to their executives as bonus, millions at a time. The so called advisors are right in that the tax is not really the answer, criminal charges for embezzlement against Liddy and all his executives who took bonuses is a more appropriate course of action.

    March 22, 2009 04:35 pm at 4:35 pm |
  4. texas teacher

    @The black Spider

    Your right, he is not Bush. Bush protected the constitution. Obama's congress is trying to tax a specific people group and that is unconstitutional. I believe somebody finally told him what the constitution said, as I am sure he hasn't read it himself, and told him to not support it. That is why he has seemingly changed his mind on recovering the bonus money through taxation.

    March 22, 2009 04:36 pm at 4:36 pm |
  5. phillip johnson

    Sure obama and his league refuse to tax the bonuses that his
    man geitner endorsed,this administration of so-called change
    in washington was just talk and everthing continues as it was,
    its ok for wall street for public money with no-retrictions but a
    different story for the U.A.W. as the government demanded concessions if money was given to G.M.

    March 22, 2009 04:37 pm at 4:37 pm |
  6. Janet

    Why is it always "White House" officials - instead of the "the buck stops with me" guy - who have to comment when the doo-doo hits the fan?

    March 22, 2009 04:39 pm at 4:39 pm |
  7. Leslie

    How can you endorse to tax those bonuses when YOU in the Whitehouse ENDORSE the said bonuses for executives! This is your PAYBACK to them after contributiong MILLIONS OF DOLLARS for your CAMPAIGN last year. YOU'RE BOUGHT AND PAID FOR BY WALLSTREET, NOW WE ARE PAYING THEM FOR YOU! You should be ashame of yourself OBAMA.....! My God! We're not stupid!

    March 22, 2009 04:39 pm at 4:39 pm |
  8. today

    American taxpayers own 80% of aig, we want our money back.

    March 22, 2009 04:43 pm at 4:43 pm |
  9. Mike T

    If these executives won't give the money back, then I have no problem with any bill to tax it all back. Bottom line: AIG, Liddy, and his executives were wrong to take these bonuses at a time when this company was taking government (taxpayer) money to "bail out" their company. What would Liddy and his executives have done if the government had not given them this taxpayer money? Where would their millions of dollars in bonuses have come from then? Let them sue, no judge will hold their case – they are WRONG. This is the definition of embezzlement.

    March 22, 2009 04:43 pm at 4:43 pm |
  10. Simmy

    Geithner and Dodd put themselves on the line trying to clean up more of Bush's old mess. Shut the heck up cry babies and come back to reality. Your guys don't have a clue what to do with this enconomy. Stop disrespecting President Obama. He is doing a wonderful job. Please hurry and move into your perfect universe; that Union of 20 states, so that you can finally have your faux realistic society.

    March 22, 2009 04:46 pm at 4:46 pm |
  11. GB in TX

    Why not discriminatory tax? It has been used for decades against tobacco, alcohol, gasoline and many other items. On the other side of the coin, religeous activities and even many foreign charities have been exempted from taxation. This is also discriminatory. Precedent was set during Roosevelts time when he taxed the ultra rich as high as 95% in order to get the cash flow of the nation going again. Those that abuse the system of capitalism by feeding at the pig trough and making the rest of us swim in the offal, swill and manure of the sty deserve to be punished. The Wall Street financial gang knowlingly participated in fraudulent sales when the securities were falsely rated higher than the risk value of the mortgages. I knew it, they knew it and you know it. Now is the time for a body slam.

    March 22, 2009 04:47 pm at 4:47 pm |
  12. observer

    Constitutionally, and Legally, the President cannot support the actions of Congress to go back on a contract set by the executives at AIG. We have to get away from the frenzied cry for blood because these guys got compensated for a job they did. It is more prudent to have them return the bonuses since it was part of the TARP bail-out, and for them to wait until the company is solvent for them to take the bonuses. We are in dire straights economically, and to alienate private institutions at this time with hysterical tax penalties is not a recipe for Economic recovery . Furthermore, getting tied up in a Legal tossel at this time is foolish, since Congress were the ones that gave them the go ahead to do this in the first place.

    March 22, 2009 04:48 pm at 4:48 pm |
  13. Texas Teacher

    Obama is a Constitutional Law professor! For God's sake, don't you people believe that he has enough knowledge of the constitution to know what is within the boundaries of that great instrument and what is not? He was President of the Harvard Law Review... let us give the man a little bit of credit..... Pa lease!

    March 22, 2009 04:49 pm at 4:49 pm |
  14. SD,Michigan

    I agree with the Pres, it's not a good idea, plus it's beyond shady in terms of constitutionality. There are other means to get the money back: sue them.

    March 22, 2009 04:49 pm at 4:49 pm |
  15. peakarack

    Obama=drama. hahaha!!!!!!!!

    March 22, 2009 04:56 pm at 4:56 pm |
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