I was of course happy with all of the Democratic pickups in Congress last election, but one in particular pleased me. I worked for Gary Peters in the past, and he won my parents home district, MI-09, in the suburbs north of Detroit. Despite having a professional background in the financial services sector, as a state senator Peters always looked out for the interests of his constituents over the narrow interests of financial firms; year after year he was given stellar marks by labor, environmental and consumer groups.
Today Speaker Nancy Pelosi instructed the Financial Services committee "to examine options that are legally available to recover taxpayer funds of companies that abuse the privilege of taxpayer assistance." At the other end of the National Mall, President Obama called on Treasury secretary Timothy Geithner to do whatever he could to could to block the outrageous bonuses set to be paid to executives of ward-of-the-state insurance firm AIG:
In the last six months, AIG has received substantial sums from the US Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole.
I know he’s working to resolve this matter with the new CEO, Edward Liddy, who came on board after the contracts that led to these bonuses were agreed to last year.
This isn’t just a matter of dollars and cents. It’s about our fundamental values.
Since these bonuses are apparently tied in to some contractual obligations, it may be tricky for the federal government to try to abrogate them. Which is where Peters comes in, with a devious bit of legislation (from a press release, not yet posted):
“It is beyond outrageous that the very people who brought AIG to its knees and helped create the current financial crisis are scheduled to receive hundreds of millions of dollars in bonuses while tax dollars keep their company afloat,” said Rep. Peters, a Member of the House Financial Services Committee. “These bonuses are in effect a raid on taxpayer dollars. The legislation I’m proposing will get taxpayers their money back. Congress must act swiftly on this matter to show AIG, other companies receiving federal support and taxpayers that we mean business when we say that tax dollars are not to be used to enrich company executives.”
Congressman Peters’ bill would create a 60 percent surtax on bonuses over $10,000 to any company in which the U.S. government has a 79 percent or greater equity stake in the company. Currently, AIG is the only company that meets this threshold. The 60 percent surtax would be added to the normal income tax rate, meaning that bonuses received this year by AIG executives paying the top 35 percent tax rate would be taxed at 95 percent. The remaining 5 percent would likely be paid in state and local taxes, so taxpayers would fully recover any AIG bonuses paid in 2009.
President Obama wants Secretary Geithner to pursue "every legal avenue to block these bonuses and make the American taxpayers whole." In addition to being a full-throated statement of principle that our tax dollars shouldn't be enriching banking executives so they can indulge themselves with five-figure lunches in the shadows of Wall Street, Peters' bill would provide another legal avenue for Geithner to claw back the tax dollars that shouldn't go to the irresponsible vultures who helped gamble away the stability of the world financial system.
Yet another example of how elections matter.