Democrats Defend AIG Tax Vote

Posted March 20, 2009 at 5:16pm

A handful of House Democrats have some explaining to do over a controversial vote against legislation that imposes a 90 percent tax on executive bonuses at American International Group.

On Thursday, just six Democrats opposed the bill targeting AIG, the firm that sparked Congressional outrage for giving out $165 million in bonuses as it takes billions in taxpayer bailout dollars. The bill, which severely taxes bonuses at companies that took more than $5 billion in federal aid, overwhelmingly passed the House.

Despite universal outrage at AIG, Democratic Reps. Melissa Bean (Ill.), Larry Kissell (N.C.), Michael McMahon (N.Y.), Walt Minnick (Idaho), Harry Mitchell (Ariz.) and Vic Snyder (Ark.) all voted against the bill. Two even changed their votes at the last minute: Minnick switched from “yea— to “nay,— and Kissell switched from “present— to “nay.—

Bean, a moderate Democrat, is just “as outraged as her constituents— that AIG executives took millions in bonuses as taxpayer dollars are being used to bail out their company, Bean spokesman Jonathan Lipman said.

“But she differs on the solution to protect taxpayer investment in the financial institutions who have received TARP money. Government interference with those business units that remain profitable could jeopardize taxpayer dollars in the long run,— Lipman said.

Kissell told liberal blog DownWithTyranny that he, too, opposes the CEOs taking bonuses but said he worries about the bill’s constitutionality.

“AIG and its executives should be severely penalized, but arbitrary and retroactive manipulation of the tax code is not the right way to do it. Rather than be taxed at 90 percent, AIG executives … should be forced to repay at 100 percent the money they received as part of this bonus package,— Kissell said.

McMahon thought the bill was “too reactionary— and “would have an adverse effect— on his constituents who work on Wall Street, according to his hometown paper, the Staten Island Advance.

“We cannot have our legislative agenda dictated by the latest headlines,— McMahon said. Instead, he called for appointing a czar to oversee the return of the AIG bonuses.

Minnick said he was “incensed— by the actions of AIG executives but opposed “tinkering with the tax code— as the solution.

“Instead, we need the Treasury Department to use its full weight and authority in administering the rules already in place to better regulate the companies receiving our money,— he said in a statement.

Mitchell in a statement said he opposed the “knee-jerk tax bill— because it failed to address the main issue: that taxpayers deserve oversight and review of how federal bailout dollars are spent.

The bill “fails to set up any system or review for how funds would be spent moving forward. Additionally, we do not know yet if this will work, especially if some of the recipients are former AIG employees in foreign countries and not subject to our taxation,— Mitchell said.

Snyder complained that lawmakers had no time to review the bill since its text wasn’t made available until late the night before the House voted on it. More time is needed for analysis, he said, in order “to avoid unintended consequences harmful to our long-term goals of reinvigorating our economy.—