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. jp,michigan

    Well, think about it ! Who gave millions to the Obama campaign? AIG and so forth!

    March 22, 2009 02:43 pm at 2:43 pm |
  2. Rick S.

    He's still waiting to see which direction the wind is blowing, ala Clinton.

    March 22, 2009 02:43 pm at 2:43 pm |
  3. dave

    This whole thing reminds me of an old Frankenstein movie were the villagers run around with pitchforks. Come on we all knew about these bonuses lets move on.

    March 22, 2009 02:46 pm at 2:46 pm |
  4. bill

    They are voting present

    March 22, 2009 02:49 pm at 2:49 pm |
  5. Peter E

    I still don't understand what's the big outrage about the $165 million... we've given AIG a thousand times more in bailouts and yet they continue to screw over all of us. THAT's what people should be fighting about. We shouldn't be giving AIG a penny in bailouts in the first place. Recovering $150 million will barely pay for the greedy lawyers who'll be arguing this tax for the next year or two!
    It's almost as pathetic as the fight over the earmearks in the whole stimulus bill that add up to less than 2%, instead of pointing out the fundamental flaws in the whole bill.

    March 22, 2009 02:56 pm at 2:56 pm |
  6. WFU2013

    Look, I'm not thrilled about the bonuses, but taxing them at 90% is unconstitutional. I believe it's called an ex-post-facto law.

    March 22, 2009 02:56 pm at 2:56 pm |
  7. Marie

    I have to say that I was really hoping that Obama would bring some change to Washington, but am very disappointed in all his efforts. He is just not experienced enough for the job! I'm afraid we could even be headed down the road that our currency may not have much value so people load up on the Gold if you need it for your wealth! On top of that the whole AIG matter is just a debackle that Obama needs to step up with; Geither is not the man for the job! Dodd needs to go because he was on the AIG payroll not surprised there; AMericans are not looked after because everyone in congress is out for their own means. Since most are alseep there will prob. be revelution it ususally does happen in history when governements fail. Lobbying is the crux of the problems with our country if it was not allowed or was limited we wuod not be in the postion now. Look at Dodd; I am so sick at looking at him he needs to go Liar Liar. Dodd is but one in a sea of many being paid big money to turn a blind eye; so much for democracy.

    March 22, 2009 03:01 pm at 3:01 pm |
  8. Vic Florida

    This President will set yet another record: How to have a record loss in confidence and popularity within six months of taking office. This is the President that would "listen" to the electorate when they speak? Yeah RIGHT! What part of "GET RID OF THE BUMS" in the finance industry doesn't the Whitehouse understand?

    March 22, 2009 03:02 pm at 3:02 pm |
  9. Eric

    SOme form of punishment is NECESSARY! They drove their companies into the ground how do they deserve a bonus?

    March 22, 2009 03:02 pm at 3:02 pm |
  10. Sammy

    Targeted taxes of specific people that high is punitive and wont survive the courts. What happens the next time a company uses money in a way the government doesnt like? It doesnt matter whether or not a company took bailout money and it is a distinction that could be easily ignored if the government chooses to do so. The precident it would set is dangerous and not worth it. Get the money back another way.

    Besides, these people that get the bonuses have not broken the law or any tax code. So what exactly is the legal justification for them to be the targets of this mess?

    March 22, 2009 03:09 pm at 3:09 pm |
  11. Nancy

    As distasteful as the bonuses are, you cannot have an arbitrary tax that goes back and targets certain groups because they are unpopular. You are not going to get investments back if they are threatened by a Congress that changes the rules on a whim. Thinking long-term is very difficult for the Congress that is only worried about the next election and not the ramifications. This thinking has been going on forever. Bush thought the War in Iraq was a good idea, easy to accomplish, with never a thought to what do we do after "Mission Accomplished." President Obama has been very clear that this not just one problem that is easily fixed, by several severe economic factors that will not be fixed in a day. It seems Congress can't stay "focused." And Republicans until you can have a plan other than "No" or "Let everything go to He** in a handbasket as long as you don't tax the rich" -Go sit in a corner until you can put your thinking caps on.

    March 22, 2009 03:10 pm at 3:10 pm |
  12. wondering in virginia

    OMG We have an amature running the country – but as a junior senator with no experience running a state or a business – what else would we expect? Lets keep a focus on how his programs will run the country broke and not get side tracked on such small issues. He is spending trillions and trillions of our dollars -bankrupting this country

    March 22, 2009 03:18 pm at 3:18 pm |
  13. Eric in Texas

    LEAVE THE BONUSES ALONE. YOU APPROVED EM OBAMA. YOU, DODD AND EVERY OTHER DEMOCRAT THAT PUSHED THAT STUPID STIMULUS THROUGH. Now you have to lie in the bed that you made yourself. Stop being hypocrits and do the right thing. Abide by the law of those contracts. If you didn't want em, you should have told AIG to rewrite them BEFORE the money was given. You didn't, you said they COULD PAY THE BONUSES. Now you're red in the face because everyone found out what a boneheaded move you made (that could have been prevented if you hadn't been in such a hurry to push that stupid bill through). So leave em alone.

    March 22, 2009 03:23 pm at 3:23 pm |
  14. mellow

    Wait, why didn't he have Geithner just not have Dodd put the loophole in the firstplace....poor decision making by Obama/Geithner

    March 22, 2009 03:33 pm at 3:33 pm |
  15. Mary

    Like usual Obama will back out on his promise to get the wasted money back.

    Let's show the salaries of all executives who received TARP money, as well as the bonus paid out. We need to create jobs, right Obama? How many jobs could you have saved with the bonus money paid to executives?

    I'm a democrate, but I can recognize when the words don't match the action, and that should be a concern for EVERY taxpayer!

    March 22, 2009 03:33 pm at 3:33 pm |
  16. Juan Velasquez

    These guys still don't get it. They still don't understand our outrage. I voted for and actively supported President Obama, but Gieitner and company are leading him off a cliff

    March 22, 2009 03:36 pm at 3:36 pm |
  17. ObamaShrugged

    Is he for the bonuses or against them? Did he know about them or didn't he? Get out the Clinton waffle iron, it's starting again.

    March 22, 2009 03:48 pm at 3:48 pm |
  18. Jeanne

    Of course they won't endorse this tax, they put the wording in the spending bill to allow them.

    What will our country be like within the year? Scary!

    March 22, 2009 03:55 pm at 3:55 pm |
  19. keebler

    I have to 100% agree with Obama. I work on wall street, and "some" of these people who get paid $1mm, bringing in close to $10mm in revenue, which is why they get paid. Now if the government punishes Citibank/AIG, a company it owns by a whopping 90% tax on people with household incomes of more than 250K, you DAMAGE your own company in the long run. Why would any smart & successful person work for a firm with NO UPSIDE for bringing in millions. PLUS IT SETS A DANGEROUS PRECEDENT.

    March 22, 2009 03:59 pm at 3:59 pm |
  20. DC

    Obama says, "The buck stops with me" regarding the AIG mess. Indeed, it does. And the bonuses are just the down payment on the actual problem. The tax law strategy is a desperate attempt to fix the situation; a "better late than never" approach. The alternative is no solution at all. I offer three choices. (1) Let the 90% tax go through, (2) Allow the executives to defer their bonuses until all government bailout money is repaid. That means returning the money and taking a risk on AIG's survival. But if they can turn the situation around, let them earn every penny. (3) Do neither, in which case Obama, Geithner, and Dodd all RESIGN. This _IS_ Obama's problem. Either he fixes it or he can hit the road. Right now, he is on track for one of the shortest presidencies in US history. It's effectively over right NOW unless this situation gets fixed.

    March 22, 2009 04:02 pm at 4:02 pm |
  21. The black Spider

    OBAMA pledge to protect and defend the constitution of the USA.
    Taxing a specific group of people is unconstitutional and I do not expect Obama to sign a bill of that nature. HE IS NOT BUSH.
    There is other ways to get that money back. The public outrage is understable but Obama can not violate the constitution.

    March 22, 2009 04:10 pm at 4:10 pm |
  22. Helen, NY

    Mr. President, how can you endorse it. It is illegal. We are a country which respects legal contracts. You know that if it goes to the court , your will lose. Are you scared now to endorse it. Do not make us Socialist country. We do not want our Government to tell us what we do and we do not do.

    March 22, 2009 04:11 pm at 4:11 pm |
  23. Ted

    @ keebler:
    ...Read the article.
    As a huge Obama fan, I'm a bit confused. This doesn't seem typical of him, wonder what went on behind closed doors.

    March 22, 2009 04:12 pm at 4:12 pm |
  24. Alfred E Neumann

    Of course they won't approved of the tax, they approved the bonuses to start this whole mess.

    No leadership on the horizon unless you have the use of the Hubble telescope.

    March 22, 2009 04:15 pm at 4:15 pm |
  25. greengal

    It's just more blackmail. Wall Street continues to stick it to us and then adds insult to injury by demanding that we pay them even more to do it again! Have they no shame? Answer – obviously not! When is the administration going to call their bluff? Answer – apparently, they aren't. The corporatocracy is alive and well – thank you very much!

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