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So does this make everyone happy?
Old 03-19-2009, 07:27 PM   #1
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So does this make everyone happy?

House Passes Heavy Tax on Bonuses at Rescued Firms:

http://www.nytimes.com/2009/03/20/bu...er=rss&emc=rss
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Old 03-19-2009, 07:38 PM   #2
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Actually, I think it sucks. Why stop at doing that? Then again Im one of those "rich" fat cats that is in the 10% of the population. Maybe I should be quiet before they come after me next.


I posted in this thread before it got moved to the political forum. :P
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Old 03-19-2009, 07:51 PM   #3
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You asked

[Rant]No, it sucks.
The congress is simply reacting to overwhelming hysteria from the public and no one really took the time to understand the 'bonuses'.
A bunch of the politicians are so busy yelling at each other they aren't doing anything useful. They would rather just make talking points on camera for the next election.
[/Rant]
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Old 03-19-2009, 08:16 PM   #4
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It's alarming when a non-economist, non-finance guy like myself can point out obvious problems with gov't bailout programs, and then sit back and watch the disasters unfold exactly as predicted. This whole episode further reinforces my opinion that we've placed too much power in the hands of the clueless. We have systemic governance problems to go along with our systemic economic problems and our systemic environmental problems. None of these problems will be solved by half-measures, band-aids, or 'business as usual' (IMHO).
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Old 03-19-2009, 08:33 PM   #5
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I'm curious . . . Yrs to Go, how does it make you feel?

Happy, unhappy, other?

-ERD50
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Old 03-19-2009, 08:39 PM   #6
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It's certainly a bill full of unintended consequences.

Not surprisingly the bill will encourage bankers at TARP firms to quit their jobs. What is surprising is that the legislation is so poorly written that it will actually encourage the banker's working spouses to quit too.

Consider the hypothetical banker who makes a $100K base, got a $400K bonus in January and has a working spouse making $150K in an unrelated industry. Now assume three different scenarios 1) they both work the full year 2009. 2) He quits at the end of March and doesn't work for the rest of the year. 3) They both quit in March and don't work. This is how much they'd earn in 2009 (after the new tax, but before normal taxes) under each of the three scenarios . . .

1) The both work . . . $290,000
2) He quits . . . $282,500
3) The both quit . . . $271,250

So the benefit for both of them working the next 9 months is $18,750 before ordinary taxes. In a way, the bill claws the spouses income back too.
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Old 03-19-2009, 08:40 PM   #7
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There are lots of words for what congress did. Happy is not one.
Imagine a long string of expletives.

The short version is NO.
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Old 03-19-2009, 08:43 PM   #8
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I heard the Connecticut AG (Bloomenthal?) say that they are getting the names of the bonus recipients, although he promised they would exercise good judgment when deciding how much to share with the public. This populist (that's the word they use instead of class warfare or envy) craziness is going to get someone killed.
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Old 03-19-2009, 08:58 PM   #9
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Quote:
Originally Posted by ERD50 View Post
I'm curious . . . Yrs to Go, how does it make you feel?

Happy, unhappy, other?

-ERD50
It's a stupid bill born not out of thoughtful policy, but a desire to punish a small group of people. It is also highly contradictory to other stated government goals. . . which is to support "systemically critical" financial institutions. On the one hand the government is offering distressed banks money to keep them afloat. And on the other they are crippling the ability of those same firms to keep and retain employees. Either support them, or let them go under. But don't support and undermine them simultaneously.
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Old 03-19-2009, 09:07 PM   #10
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Quote:
Originally Posted by socca View Post
It's alarming when a non-economist, non-finance guy like myself can point out obvious problems with gov't bailout programs, and then sit back and watch the disasters unfold exactly as predicted. This whole episode further reinforces my opinion that we've placed too much power in the hands of the clueless. We have systemic governance problems to go along with our systemic economic problems and our systemic environmental problems. None of these problems will be solved by half-measures, band-aids, or 'business as usual' (IMHO).
I was about to say that the bankers and Congress deserve each other.

Then, I remember that it is my money they are disputing over!

Oh my! To whom do I call "Beam me up"?
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Old 03-19-2009, 09:11 PM   #11
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Quote:
Originally Posted by . . . Yrs to Go View Post
It's a stupid bill born not out of thoughtful policy, but a desire to punish a small group of people. It is also highly contradictory to other stated government goals. . . which is to support "systemically critical" financial institutions. On the one hand the government is offering distressed banks money to keep them afloat. And on the other they are crippling the ability of those same firms to keep and retain employees. Either support them, or let them go under. But don't support and undermine them simultaneously.
Thanks - that is pretty much how I feel, but didn't want to comment w/o a little clarity from you.

Congress's statements against Northern Trust are in the same league. NRTS didn't need or want bailout money, but Congress told them they need to take it because they didn't want to single out certain banks. Then Congress criticizes them for having that Charity Bash / promotional party with Sheryl Crow that was set up and prepaid earlier. Heck, attracting new business like that is one reason NTRS was not in trouble, yet, Congress wants to tell them how to run their business, and tries them in the media.

It was Congress (Dodd in particular) who added the language to the Bill that Obama signed that said AGI *must* pay their bonuses. But now it's all "OMG - how could they pay those bonuses".

expletive time.... towards Congress, not necessarily against the bonus recipients, I still haven't seen enough info to decide whether they should get it or not, but it appears it was a contract, so I would lean towards 'Yes".

-ERD50
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Old 03-19-2009, 09:21 PM   #12
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I just caught a clip of some SEIU members marching outside the AIG offices with signs that said JUMP. Again, someone is going to get killed thanks to the lunatics in Washington.
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Old 03-19-2009, 10:09 PM   #13
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Is it even legal?
Can there be a special tax on a person just because the company they work for took money from the government?
Also, the article questions the reto aspect of it.
I'm guessing it will be thrown out in court and we will not hear about it.
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Old 03-19-2009, 10:20 PM   #14
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This is theater; a circus for the public (instead of bread). It probably won't even stick, and if it does it will cost us more than we gain. Still, I despise A.I.G. as much as anyone by now.

But how does this differ from Clinton's early days, when he instituted a retro-active tax increase? I don't mean that in a political sense. I've just always wondered how a retro-active increase was ever possible?
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Old 03-19-2009, 10:27 PM   #15
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If they can retroactively re-do the tax code, can we retroactively re-do the Congressional/Senatorial elections? I think the voters need a second chance now that we have more information. Everyone else--banks, insurers, mortgage holders, automakers-- is getting a re-do. How about letting voters take another swing at things?
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Old 03-20-2009, 12:15 AM   #16
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I was talking to my father about this one today. I think his exact words were.... "I think that is GREAT!!! that they are taking the money back from them. They should get nothing!!!" But when asked if that was HIM, he of course backed off a lot....

I think it is interesting actually. Does it really even matter who exactly is getting that money at this point? I am livid over the fact that my tax dollars got used to bail out a private company in the first place. Does it matter if that money is going to a company or an individual from my perspective? I think all of that money is gone, and I will never see a dime of it again. Even if all of that money was used "as it was supposed to" I do not see it would have done me any good anyway. A bit like finding a poison cookie in a supermarket, and then arguing if it was mint or chocolate frosted on top. I see the distinction to be fairly irrelavent.

However, what is not irrelavent is the idea of the govt dissolving standing contracts. If the govt has... by doing this, then I hope every exec at AIG quits... and no one wants to replace them. And then we will get to see who really needs whom in this worsening economy.
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Old 03-20-2009, 12:57 AM   #17
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Quote:
Originally Posted by . . . Yrs to Go View Post
House Passes Heavy Tax on Bonuses at Rescued Firms:

http://www.nytimes.com/2009/03/20/bu...er=rss&emc=rss
The only thing wrong is that they didn't impose a 100% tax and make the management wear dunce caps at work.

Poison away, regulate away, tax away, silliness away -- the more strings attached to money, the less willing companies are to take the money... it's the next best thing to not bailing out at all. I'm speaking as a heartless laissez faire sort BTW -- I'm loving the unintended consequences that Obama's administration is making all this bailout money poisonous.
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Old 03-20-2009, 01:41 AM   #18
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According to this article AIG gave more than $630K to political candidates in 2008 as the company was falling apart. Top recipients:

Sen. Chris Dodd, D-Conn., $103,100
2. Sen. Barack Obama, D-Ill., $101,332
3. Sen. John McCain, R-Ariz., $59,499
4. Sen. Hillary Clinton, D-N.Y., $35,965
5. Sen. Max Baucus, D-Mont., $24,750
6. Former Gov. Mitt Romney, (R) Pres $20,850
7. Sen. Joe Biden, D-Del., $19,975
8. Rep. John Larson, D-Conn, $19,750
9. Sen. John Sununu, R-N.H., $18,500
10. Former Mayor Rudolph Giuliani (R) Pres $13,200
11. Rep. Paul Kanjorski, D-Pa., $12,000
12. Sen. Dick Durbin, D-Ill., $11,000

Interestingly, the second person on that list took $23,000 from AIG after the company received its first tranche of $85 billion in government bailout money. Apparently some of the others did, too. Some might find it especially funny to hear such an individual making derogatory speeches about the bonuses paid (with government money) to AIG execs. After all, at least these execs were officially on the payroll. Will the politicians who took donations (from AIG or AIG execs) after the bailout give the money back?
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Old 03-20-2009, 05:20 AM   #19
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With all of the exposure maybe the Senate will kill this thing!
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Old 03-20-2009, 05:30 AM   #20
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I have come to the conclusion that the reason "government" seeks stability in the world is that instability so quickly and clearly demonstrates how incompetent "government" really is. Case in point, does anyone actually believe that those in-charge actually have a clue as to what corrective actions need to be taken to resolve our current economic condition?
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