EDITORIAL: Today it's AIG ...

• Article
• Comments ()
• Click-2-Listen
• Videos

By

The power to tax is the power to destroy, and when Congress decides to tax 90 percent of anything it is sowing the seeds of destruction. HR 1586, which passed in the House with lightning speed and bipartisan support, seeks to tax away the bonuses paid to AIG executives and others whose corporations have benefited from TARP funds. The Senate, a more deliberative body, is more sanguine on proceeding with its version, S 651, which is broader, covering businesses that received much less government cash, but at a lower 35 percent rate. Finance Chairman Max Baucus, Montana Democrat, said the Senate version was on cold ice "for the time being. But I don't know how long 'the time being' lasts," the senator said Tuesday. "It may be a short time. Basically, it's because there are a lot of ideas."

The best idea would be to think about it a good bit more. The electorate is rightly outraged at what appears to be a looting of public coffers, but this legislation has all the elements of an unconstitutional bill of attainder, which raises an uncomfortable question: Who is next?

Not to be overdramatic, but it is reminiscent of the famous Martin Niemoller real-life poem that goes, "In Germany, they came first for the Communists,/ And I didn't speak up because I wasn't Communist;/ And then they came for the trade unionists,/ And I didn't speak up because I wasn't a trade unionist;/ And then they came for the Jews,/ And I didn't speak up because I wasn't a Jew;/ And then ... they came for me. ... And by that time there was no one left to speak up."

Defenders of the tax bill say that the question of constitutionality comes down to how the bill is written, and it can pass constitutional muster if it is worded vaguely, broadly, or cleverly enough. Sen. Charles Grassley, Iowa Republican, who supports similar Senate legislation and famously suggested AIG executives commit seppuku, told The Washington Times, "We go to lawyers in making the legislation and we think the legislation is constitutional." But not all in Congress agree, by any means. And President Obama, who is waiting to see what version of the bill comes to his desk, recently stated that "as a general proposition, you don't want to be passing laws that are just targeting a handful of individuals."

Congress would do well to review the Supreme Court case Nixon v. Administrator of General Services (1977). Justice William Brennan, writing for the majority, noted that questions of attainder arise when there are fears that Congress, "in seeking to pander to an inflamed popular constituency, will find it expedient openly to assume the mantle of judge - or, worse still, lynch mob." In this Brennan accurately describes the current angry mood.

The court stated that a critical question in determining constitutionality is "whether the legislative record evinces a congressional intent to punish." There is no doubt that Congress sought to ride the current wave of public disapproval to penalize a specific group of people. House Ways and Means Committee Chair Charles Rangel, who sponsored the House bill, made a silly and disingenuous assertion Sunday that the bill has "nothing to do with AIG." Au contraire, Speaker Nancy Pelosi's official statement that "these AIG executives will pay the Treasury in the form of this tax," strikes one as a smoking gun.

James Madison wrote of the evils of bills of attainder in Federalist 44, calling them "contrary to the first principles of the social compact, and to every principle of sound legislation." So it is with the untracked, unaccounted-for TARP funds; Congress giveth, and as haphazardly taketh away. Those with influence in Washington prosper, those without are thrown to the wolves. The real crime is not the millions of dollars of executive bonus money but the billions - even trillions - the government is shoveling out to the people who caused the financial meltdown in the first place.

The American people are eager to see justice done, but Congress should not commit a greater injustice in their name. This legislation sets a dangerous precedent for a tax agenda that will eventually reach into every pocket in America. The Congress that today can tax away the benefits of corporate executives can tomorrow seize what it wills. We suspect some proponents of this "remedy" see a new permanent tax source.

In its hurried, fumbling, ad hoc, self-serving and contradictory response to the financial crisis, Congress must come to understand that it is at least as much the problem as the solution. We urge Congress to find an alternative means of rectifying this situation, one that respects the Constitution and does not set a dangerous and threatening precedent. Failing that, President Obama should ready his veto pen.