WASHINGTON â Denouncing a “squandering of the people’s money,” lawmakers voted decisively Thursday to impose a 90 percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies.

The House vote was 328-93. Similar legislation has been introduced in the Senate.

“We want our money back now for the taxpayers,” said House Speaker Nancy Pelosi, D-Calif. “It isn’t that complicated.”

The outcome may not have been complicated. But the lopsided vote failed to reflect the contentious political battle that preceded it.

Republicans took Democrats to task for rushing to tax AIG bonuses worth an estimated $165 million after the majority party stripped from last month’s economic stimulus bill a provision that could have banned such payouts.

“This political circus that’s going on here today with this bill is not getting to the bottom of the questions of who knew what and when did they know it,” said House Republican Leader John Boehner of Ohio.

He voted “no,” but 85 fellow Republicans joined 243 Democrats in voting “yes.” It was opposed by six Democrats and 87 Republicans.

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

The House vote, after just 40 minutes of debate, showed how quickly Congress can act when the political will is there.

It was only this past weekend that the bailed-out insurance giant paid bonuses totaling $165 million to employees, including traders in the Financial Products unit that nearly brought about AIG’s collapse.

AIG has received $182.5 billion in federal bailout money and is now 80 percent government owned.

Disclosure of the bonuses touched off a national firestorm that both the Obama administration and Congress have scurried to contain.

Topic No. 1 raised by Republicans during the House debate was the last-minute altering of a provision in President Barack Obama’s $787 billion stimulus law to cap executive compensation for firms receiving government bailouts.

The measure might have forestalled payment of the AIG bonuses.

But Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat and the author of the provision, says the administration insisted that he modify his proposal so that it would only apply to payments agreed to in the future.

That, critics claim, cleared the way for the AIG payouts.

“The idea came from the administration,” Dodd said Thursday

Dodd said he was not aware of any AIG bonuses at the time the change was made.

Treasury Secretary Timothy Geithner confirmed such conversations with Dodd. He said the administration was worried about possible legal challenges to the provision.

“We expressed concern about this specific version,” Geithner said in an interview with CNN. “But we also worked with him to strengthen the overall bill.”

The treasury secretary, who has been criticized for not learning of the AIG bonus payments sooner since he helped orchestrate the bailout last year as president of the New York Fed, said anew in the interview that he was not informed of the bonuses until last week.

“And as soon as I heard about the full scale of these things, we moved very actively to explore every possible legal avenue to address this problem,” Geithner said.

A similar â but not as punitive â bill to recoup bonus payments with taxes was gaining support in the Senate.

It would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.

“This is not just another case of runaway corporate greed and arrogance, ripping off shareholders by excesses lavished around the executive suite,” said Rep. Earl Pomeroy, D-N.D. “These bonuses represent a squandering of the people’s money. … Starting right here, right now, we are saying no more.”

The Senate measure is sponsored by Sen. Max Baucus of Montana, the chairman of the Senate Finance Committee, and the panel’s senior Republican, Chuck Grassley of Iowa. It was expected to be brought to the Senate floor next week.

Meanwhile, New York’s attorney general, Andrew Cuomo, said AIG has given him the list of employees who received a total of $165 million in retention bonuses.

Cuomo said he won’t release any employees’ names until his office has answered any security concerns raised by the AIG employees.

He also said he will work with AIG in the coming days to determine which workers have decided to return the payments.

Cuomo had sought the names from AIG chief executive Edward Liddy through a subpoena. The deadline was Thursday.

About 400 AIG employees and future employees received bonuses, but not all of them earned over the $250,000 family income threshold specified by the House bill.

Obama administration special envoy Richard Holbooke was on AIG’s board of directors in early 2008, when the insurance company committed to the bonuses, and during the previous years of aggressive investment strategies that brought the firm to brink of collapse. White House spokesman Tommy Vietor said Thursday: “Mr. Holbrooke had nothing to do with and knew nothing about the bonuses.”

While the House legislation calls for a 90 percent tax, Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses.

Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money.

“The American people demand protection and that’s what we’re doing today,” he told the House.

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Archived comments

This is Congress getting mad at its own stupidity. Congress knew or should have known about these contracts that called for bonuses to be paid.

Most of these people have written agreements where there bonuses are tied to objective financial metrics, and the agreement were entered into a long time ago.AIG can’t just unilaterally change them – just like if you had a written employment agreement with your company that set forth your salary and bonus, your boss could not change it.Congress also does not have the power to unilaterally change someone’s employment agreement, as much as we all wish it could.

This tax will only lead to litigation and Congress getting its hand slapped by the courts.


3/19/2009 7:40:19 AM

I’m pretty unhappy with the performance of Congress right now, and since I think that they’ve done a pretty poor job (don’t read bills before you vote for them, etc.) I’d like all members of Congress to return half their salary to the government immediately.Letting them keep half is pretty generous though.


3/19/2009 7:52:39 AM

This doesn’t seem as easy as this.Why didn’t someone look into these things?They just started handing out cash and we’ve been bent over since! Of course these companies give big bonuses, they have for years.Someone should have recognized the “waste” and done something about that before handing over money.Let any one of us taxpayers look at the budgets for the companies, I guarantee I could cut them to the bone!


3/19/2009 7:55:37 AM

Congress’ outrage over the bonuses is silly. Since most congressmen and congresswomen don’t seem to have the time to read bills before they vote for the bills it’s easy to see how easily they make mistakes.It’s probably why they have such empathy for homeowners who claim not to know what were the terms and conditions of their mortgages.


3/19/2009 8:05:49 AM

you mean “outrage”


3/19/2009 8:24:14 AM

maybe if Obama kept his promise to let the American Public have 5 days to read the final bill before he signs it, we could have discovered these loopholes.But, much like bush, he cried CRISIS as a way for him to break his promises.


3/19/2009 8:26:37 AM

The problem with taxes is loopholes.Just stop the bonuses at bailed out companies for chrissakes.


3/19/2009 8:35:04 AM

Nothing new here. The politicians and lazy media focus on the irrelevant detail while the bigger issues – which they know are too complex for them to even try to understand – are ignored.


3/19/2009 8:38:36 AM

And why is anyone surprised???

The Obama administration is in bed with wall street and has been all along.

Wake up people!!! his administration (especially sen. Dodd D Conn) had pushed for the specific language to be amended to include provisions so that these bonuses got paid. It is only now that the public caught wing of what they are doing that the ‘outrage’ starts.

New Boss….

Same as the old Boss…


3/19/2009 8:58:11 AM

I’ve said it before…it’s amateur hour in Washington.

US Constitution, Article 1, Section 9:No Bill of Attainder or ex post facto Law shall be passed.

We know the Legislature doesn’t bother to read the bills they vote on.It seems they don’t read the Constitution either.


3/19/2009 9:50:52 AM

New Boss….

Same as the old Boss…

Nahh thats not accurate. Obama has made some bad judgements, I’ll agree with that, but the current government is reaping what has been sown for many years.

Everyone knew what the banks was doing was unsustainable, but nobody stood in front of the snowball as it grew, and now we have a congress frantically looking for answers, or a scapegoat (mostly a scapegoat though)

If you ask the republicans, they will blame obama and his massive bailout plan. If you ask the democrats, they will blame AIG and the previous administration.

Problem is, yelling at these guys doesnt change the fact that we overestimated our value by a few trillion.


3/19/2009 10:36:59 AM

And the “all legislation will be posted on the Internet for five days prior to a vote” doctrine is where, exactly?

gotta agree with rlopesino.I voted for O, but did not expect the world would “change”.But I did expect different, and better, than what we’ve gotten so far……..


3/19/2009 10:39:49 AM

You Rush Limbaugh fans should be smiling this morning–his campaign for AIG is succeeding.Few Republicans in the House are willing to vote for any means of recovering the AIG bonuses, and hardly any of them have been willing to speak on the floor this morning.

And the “need more time to read it” gimmick?Another Limbaugh line.It’s only five pages, kids, and your aides already digested it for you and gave you a summary.


3/19/2009 11:14:20 AM

Tax the bonuses and extreme salaries at 200% of their face value. That’ll stimulate the greed-heads to see the light.


3/19/2009 11:21:19 AM

If your boss found out that you signed a contract that cost him dearly without reading it, what would he do to you?

The ineptitude of congress and the executive branch seems to get worse with each passing day.

This whole taxation of the bonuses is just a CYA charade to throw off the lap dog main stream media and a purposefully ignorant public that just wants to blame someone, and why not some Wall Street capitalist pig millionaire?

Senator Dodd and his White House handelers knew exactly what the public reaction to that last minute change would be, so now we have feigned outrage over this relative drop in the TARP bucket .Washington thinks the American people are too stupid to add two and two together.Considering the headlines in today’s papers and on The Today Show and GWA, they are probably right, we got the government and media we deserve.

The blame game is too easily played and will be until the media decides to forget its political bias and preform it’s historic role of watchdog.Is it any wonder that newspapers are folding left and right?


3/19/2009 11:26:20 AM

don’t know whether to laugh or cry watching this:


3/19/2009 11:29:33 AM

Oggy, you have a short memory.Obama promised congress would have five days to review the bailout legislation before voting, then they rammed it through before most in congress know what was really in the legislation.

Did Polis, Bennett and Udall read the legisation before saying yea?That would be bad.If they didn’t read the legislation, that would be even worse.


3/19/2009 11:31:42 AM

Oh look, the self-loathing zionist Bu$h supporting dead-enders have slithered out from under their rocks.


3/19/2009 11:36:23 AM

You hit it right on meister.Oggy watch the video to refresh your memory.

Change you can believe in (just like Santa Clause, The Easter Bunny and the Tooth Fairy.)And my wife wants to know why I’m so angry all the time lately!


3/19/2009 11:36:58 AM

BT:Thanks for the antisemetic compliment.However I have never been a Bush supporter.

Do you wait, holding your breath, for someone you disagreed with last week to post so you can be insulting, rude, antisemetic, and ignorant for everyone to see?


3/19/2009 11:41:30 AM

Obama’s supporter’s mantra: “You’re either with us, or you’re a Zionist Republican”


3/19/2009 11:44:38 AM

Typical for a self-loathing zionist to slander and libel others with a fallacious assertion of antisemitism.


3/19/2009 12:18:07 PM


Yes,and they are outraged that some dems are not marching in lockstep with them towards a socialist utopia.

Will they try to defeat Udall and Bennett?Our senators’ moderate stance is the first positive development this democrat has seen on the political landscape in quite some time.


3/19/2009 12:21:58 PM

“Venting their outrage, lawmakers are preparing to slap heavy taxes on employee bonuses at insurance giant AIG and at other companies that have received large bailout packages from the government.”

I bet that the companies that took these bail outs are starting to regret that decision.

Heck, they probably would’ve been better off if they just went bankrupt.


3/19/2009 2:29:43 PM

Y’all are so stupid your hair must hurt!


3/19/2009 3:43:30 PM

The porkulus bill was passed without debate or hearings. Our local Senator and Representative had not read the ugly details concealed in the hundreds of pages of bill, one of which is the bonus protection amendment introduced by Sen. Dodd at the behest of Obama administration employees.

Now we have a Congress targeting private citizens with what is essentially theft in order to grandstand with moral outrage for something caused by their own incompetence.

You have to love the shameless hypocrisy of someone like Rangel–a tax cheat and generally corrupt thug.


3/19/2009 4:50:26 PM

This is what you get for slamming through 1,500 pages of legislation w/o review…

Chris Dodd even admits he added the AIG bonus amendment…then points the finger at the Obama administration for twisitng his arm to do so…

Who was the Obama person who did that?We should have NAMES…

And listening to Jared today on his ‘support’ for this legislation…when he should have read the original in the first place…

This congress makes me want to throw up…they don’t give a tinkers damn about the working people in the USA…

Where is the ‘outrage’ at Nancy’s use of the airforce as her own personal tranportation arm?


3/19/2009 5:58:31 PM

Don’t they call this an ex post facto law?Isn’t it unconstitutional?See article 1 section 9 of the constitution.


3/19/2009 6:08:36 PM

what constitution?


3/19/2009 6:32:29 PM