Updated: 12:48 p.m.

Senate Finance Chairman Max Baucus (D-Mont.) is expected to release a proposal that would halt American International Group from distributing some of the $165 million in funds earmarked for executive bonuses, Majority Leader Harry Reid (D-Nev.) said Tuesday.

“Remember, we as a Congress are not defenseless. We can also do things,— Reid said in a floor statement.

Baucus’ proposal “will certainly send a message to people at AIG and all others who try to benefit from the hardships the American people face,— Reid said. “AIG recipients of these bonuses will not be able to keep all of their money. And that’s an understatement.—

AIG has come under fire for issuing the bonuses after having received some $170 billion in bailout funds from the federal government. President Barack Obama has joined a chorus of bipartisan lawmakers urging that the bonuses be blocked or voluntarily returned.

The Finance Committee effort is just the latest in a series of remedies being discussed. Committee spokeswoman Carol Guthrie declined to expand on details of the forthcoming plan.

But Baucus did ask Internal Revenue Service Commissioner Douglas Shulman during a committee hearing Tuesday about the possibility of imposing an excise tax on the controversial bonuses, with the rate reaching as high as 90 percent.

Meanwhile, Democratic Conference Vice Chairman Charles Schumer (N.Y.) sent a letter—co-signed by eight of his Democratic colleagues—to AIG Chief Executive Officer Edward Liddy calling on the executive to halt payment of the bonuses.

“If Mr. Liddy does nothing, we will act and we will take this money back and return it to its rightful owners, the American taxpayers,— Schumer said in a strongly worded floor statement that doubled as a warning to Wall Street. “We will take this money back by taxing virtually all of it.—

Also, Tuesday, Minority Leader Mitch McConnell (R-Ky.) criticized both AIG and the Obama administration, which he argued has not imposed strict enough requirements over how taxpayer rescue funds should be spent.

“It is my hope that the Treasury will be vigilant in safeguarding taxpayer funds as we move forward. And I certainly expect them to look for every possible legal way to live up to the pledge made yesterday on behalf of taxpayers,— McConnell said.

CongressNow contributed to this report.