AIG tax puts Republicans in sticky fix
Tribune's Washington Bureau
Posted March 19, 2009 9:39 AM
The Swamp
by Frank James
swamppolitics.com
Congressional Democrats have set something of a trap for their Republican colleagues with the AIG tax proposal meant to capture the money the company controversially paid in bonuses.
The conventional Republican position would be to oppose the idea of a new tax, especially one that might be as confiscatory as 90 percent, according to some Democratic proposals.
But Republican anger at the non-stop bailouts was rising, even before the weekend revelations about the bonuses.
The $165 million in bonuses just added rocket fuel to the combustible mix. Meanwhile, there's the populist anger over the bonuses which shows little sign of abating and no Washington politician wants to be on the wrong side of that.
So it's not surprising that Republicans appear to be torn about what side to come down on when it comes to the bonus tax. Supporting a new tax would be very unRepublican. But not supporting an effort to punish the AIG executives who received the bonuses from a company that's received to date over $180 billion in taxpayer support isn't a tenable position.
It's not hard to imagine the political ads that could be run against any Republican who votes against an AIG tax. It might even mean inviting a primary challenge.
This Democratic-crafted dilemma for Republicans is captured in a Politico.com story.
An excerpt:
Leaders of the Senate Finance Committee are putting together a bill that would impose a 35 percent excise tax on AIG on bonuses greater than $50,000, force the company to be responsible for paying taxes for foreign employees who received the bonuses, and tax by 20 percent any deferred compensation that exceeds $1 million. House leaders are moving forward with similar legislation, which could hit the floor this week.
Although the plan has the support of Sen. Chuck Grassley (R-Iowa), the ranking Republican on the Finance Committee, other Republicans were slow to embrace it Wednesday. They wouldn't mind letting the bonus issue linger for a while, and they're wary of either signing on to the plan -- and with it, a tax increase -- or resisting it, and thereby risking being seen as insufficiently tough on AIG and its employees.
"First thing we have to understand is what happened," Boehner said. "Who knew about this? What did they try to do to stop it? And I'm still trying to get the answers to the questions."
Asked if it would be tough to vote against an AIG tax increase, South Dakota Sen. John Thune, a member of the GOP leadership, said: "It might be, yeah." Like other Republicans, he said he had concerns about the constitutionality of going after a private company's bonuses but added: "They ought to give them back. Absent them doing that, there are a lot of people who I think will probably be very inclined [to support it] ... Americans at least will want see some retribution for this and see them have to pay something.
Lawmaker-watching is always at its best when they're forced to take what they call "tough votes." This will be one such moment as we watch them try to square the circle. |
