March 24th, 2009
05:11 AM ET
14 years ago

Senate Democrats suddenly slow drive to tax AIG bonuses

WASHINGTON (CNN) - The populist wave that swept Capitol Hill last week against controversial bonuses paid to AIG executives stalled Monday after the White House and several key senators raised concerns about legislation to heavily tax the bonus payments.

"In light of concerns raised by President Obama and Senate Republicans we need additional time to discuss next steps," Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada said late Monday.

In response to the criticism, Senate Finance Committee Chairman Max
Baucus, D-Montana, who angrily denounced the AIG bonuses last week, said he's been talking to White House officials and to other senators about changing the bill he introduced just Friday.

"I want to hear what senators have to say. A lot are weighing in now with different ideas," Baucus said. "Some are tax. Some are regulatory. But they're still all addressing bonuses."

Baucus said he does not know when his bill - which appeared to be on a fast track last week - will be considered by the Senate.

On Sunday, President Barack Obama said on the CBS News program "60 Minutes" that, "You don't want to be passing laws that are just targeting a handful of individuals."

Democratic sources told CNN that statement was a subtle public warning that was privately delivered to Senate Democrats in a much more direct way.

Sources said top Obama officials argued behind the scenes against
eliminating the bonuses with a stiff tax because it might not be constitutional and because it might deter companies from participating in the government's rescue attempt of the banking industry.

But sources also say some Democrats are reluctant to bend to White House pressure after seeing the public beating Sen. Chris Dodd, D-Connecticut, took last week after acknowledging he agreed to an administration request to change the bonus restriction.

Asked about the president's concerns, the principal Republican supporter of the tax legislation criticized Obama.

"We wouldn't be using the tax code if he had been on top of things and kept the bonuses from going out in the first place," said Sen. Chuck Grassley, R- Iowa. "I think the special interests the president says he's been fighting are raising their ugly head and he's submitting to them."

Filed under: AIG
soundoff (42 Responses)
  1. Lotta Muni

    The big finger needs to point at congress and the senate for rushing their bloated spending measure. BTW, that's S-P-E-N-D-I-N-G! Let's have no more of this Government doublespeak referring to tax increases and governemnt spending as "investment".

    March 24, 2009 09:23 am at 9:23 am |
  2. NHVoter

    Honor the contracts and pay these folks their bonuses. Don't publish their names, addresses or even the amount of the bonus. Just make sure to pay them with 100lb bags of pennies that can only be picked up in person, at a secure but public place, so the world can watch them skulk off with the cash..
    IFthey have the nerve to show their face.

    March 24, 2009 09:23 am at 9:23 am |
  3. Dutch/Bad Newz, VA

    They might as well let it go. It's only 1/1000 of the total bill. Most of the executives who received the money are in London. Since they can't be touched, A.G. Cuomo should release their names.

    March 24, 2009 09:28 am at 9:28 am |
  4. Larry

    Democrats wasted more of our time trying to do unconstitutional ,unethical ,ill moral laws,to punish a few people–(All things they swore not to do when they took office)the "few" people had not broken any laws,they took the bonus money the Democrats agreed to give them last year and again in the stimulus bill that the Democrats said they did not read.These people are totally inept.

    March 24, 2009 09:31 am at 9:31 am |
  5. Virginia

    Well, back-pedaling seems to be the trend now with this administration. Could it be because AIG was a big contributor to this and a lot of other election campaigns??? We wouldn't want to bite the hand that feeds us, now would we.......

    March 24, 2009 09:39 am at 9:39 am |
  6. Ignorance

    I think the AIG issue was just a simple wording mistake. Instead of saying they paid them bonuses, do like the republicans, say they gave the AIG executives a tax cut.

    Yeah that does sound better. AIG executives' received a $218 million tax cut. Now are you happy republicans?

    March 24, 2009 09:40 am at 9:40 am |
  7. Richie

    As much as the bonuses are repulsive, changing the tax law retroactively is not a good precedent. Let it go.

    March 24, 2009 09:42 am at 9:42 am |
  8. eric in texas

    Ummmm....yeah, that would be illegal. You can't write in a tax code to specifically target one group of people. Also, they APPROVED THE BONUSES. That is what I can't believe enough Americans don't understand. The Congress and the President TOLD AIG THAT THEY COULD PAY THESE BONUSES. Now they have egg on their face because the American people are upset. So they have to run around and scream at AIG (hypocritical to the 1000th degree) and talk about what they need to do so that the taxpayer money can get refunded. What a bunch of idiots.

    March 24, 2009 09:43 am at 9:43 am |
  9. RJN

    The only thing that can be done now is to ask them to return the money.
    You can't give them the money and then take it back.
    Congress, Geithner and Obama have pie in the face because of this mess. They were fully aware the bonuses were going to be given and they didn't stop it prior to the point of no return.
    We can only hope they also learn a lesson and will not rush giving away our money until every i has been dotted and t's crossed.
    Most important READ the document first!!!!

    Shame on all of them.

    March 24, 2009 09:57 am at 9:57 am |
  10. Rob

    OOOPPPSSSS. Looks like a little investigating and the Dems found out they helped AIG (thank you Sen. Dodd). Hardly a surprise that they spout off before they have all the facts, but that's the Dem playbook: Decry, yell, threaten, intimidate before you find out anything. Once you do, go quiet and hope nobody notices.

    March 24, 2009 09:57 am at 9:57 am |
  11. Marcia, Marcia, Marcia in CA

    These jerks are playing the American taxpayers like they always do.

    THEY are the problem. THEY got in bed and still are with the banks. THEY need to be GO!

    We are not going to forget. Put everything on the back burner so the apathetic public will forget.

    We won't. Not this time.

    March 24, 2009 09:57 am at 9:57 am |
  12. Karen S Crow

    The Senate is not stupid. If THEY can make taxing laws that target only a few whilst they are in power .... what is to prevent another batch of Senators from targeting THEM at a later date?

    I wish it were concern for the Constitution that is behind this slow-down ... but I rather suspect it is just another case of CYA by those in power.

    March 24, 2009 09:57 am at 9:57 am |
  13. yuri

    That said, we were painfully pugnacious towards the well-paid persons of power in the progressively pecuniary world. Capitalism may see its crown being challenged by the congressional carpin' crowd that corners certain cacophanous collection of coy boys who have large caches of cash, and catches them off guard by taxin' their bonuses. Simply put, taxin' AIG bonus, out of sheer soreness and spite, may be potentially perilous for the economy as echoed by elite economists, who refuse to sing encomiums for BHO's endeavors.

    March 24, 2009 09:59 am at 9:59 am |
  14. sammieb51

    I think any company that received more than $5.0 Billion is bail out monies, if they gave employees bonuses because of a contractual agreement, the company should be on the hook to repay the government that money. That way there is no lawsuit from the "belittled" employees (HA) and the government is not interfering in contractual agreements a private company made or arbitrarily and retroactively taxing money. We could call that the companies' "bonus" money or "commission" due to the government.

    March 24, 2009 10:00 am at 10:00 am |
  15. Super MOD

    Do you think they finally realized that the Constitution prohibits Congress from retroactively proposing penalties? It is scary to know that Congress thinks they can create laws to punish someone after an act has been committed that they think should be illegal.

    March 24, 2009 10:07 am at 10:07 am |
  16. Uncle Sam

    Maybe because what they were trying to do was UNCONSTITUTIONAL?

    March 24, 2009 10:11 am at 10:11 am |
  17. Keith in Austin

    Don't be surprised re: the Dems backing off in taxing AIG employees receiving bonus. Simply put, they created the issue in the first place and the Constitution prevents them for trying to retrieve it now.

    March 24, 2009 10:54 am at 10:54 am |
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