More Republican Hypocrisy and Obstruction

Republican legislators are well-known for flagrant hypocrisy. They don’t care. But the public is beginning to notice what has been apparent to many of us for a long time. An example is the current flap about bonuses for employees of AIG. Republicans do not care a whit about those bonuses, but they are delighted to have an issue with which they can attack President Obama.

Republican senators and congressmen have complained loudly about the AIG bonuses in an effort to ferment public outrage against President Obama and Secretary Geithner. The blatant hypocrisy of this whining is illustrated by the fact that in February of this year, when the Obama Administration announced conditions on future recipients of TARP funds, including a cap of $500,000 on senior executives' compensation, a number of Republican senators, including Kyl (R-AZ), Martinez (R-FL), Inhofe (R-OK), Bennett (R-UT), Bond (R-MO), Coburn (R-OK), DeMint (R-SC), and others said that they opposed any government restrictions on executive compensation.

The Democrats in the House of Representatives tried to get the AIG bonus money back for the taxpayer by means of a somewhat hasty tax bill that would, for people with incomes over $250,000, tax bonuses, at the rate of 90%, which were received from firms getting bailout money. The Republicans loudly opposed by bill, not because it was too hastily or carelessly written, but because they oppose restrictions on executive compensation. When the time came to vote on the bill, however, dozens of Republicans, knowing that a “no” vote would not sit well with the voters, switched their votes from “no” to “yes” and the measure passed 328-93.

I suspect that there will have to be changes in the bill taxing 90% of bonuses. Such legislation should be more carefully crafted to apply only to large bonuses. Ninety percent seems confiscatory considering that the bonuses will also be subject to state and local taxes. Although the Republicans charge that the tax will amount to a “bill of attainder” which is forbidden by the Constitution, I doubt it will fail on that account. A bill of attainder is generally a private bill punishing a single person or company. Congress has passed other laws like this one, and they have not been struck-down by the courts.

There is a bill in the Senate which might be better. It affects bonuses paid after Jan. 1, 2009, by firms receiving more than $100 million in government bailout money. The Senate bill would impose a 35 % excise tax on the companies that pay the bonuses, and a 35 % excise tax on the employees who receive them. Those taxes would be in addition to the 25 % now withheld by the IRS on bonuses up to $1 million, and 35 % withholding on bonuses above that. Retention bonuses, like the ones paid to AIG employees, would be fully taxable. The first $50,000 of other bonuses, such as performance bonuses, would be exempt. The Senate bill would also cap deferred compensation for top executives at $1 million a year. Deferred compensation above that amount would come with steep penalties.

Republicans are doing everything they can to condemn President Obama and Secretary Geithner because they are angry about the drubbing they received from the President and the Democrats last November. Instead of being Speaker of the House, our local guy, John Boehner, is now House Minority Gasbag. Recently, in the midst of a recession/depression, Boehner and his pack of conservative lemmings called for a “spending freeze!” A spending freeze? Even conservative columnist David Brooks said: “That is insane.” That brilliant concept reveals the poverty of Republican ideas. Republicans have no program for fixing the economy. All they can do is sit in the road and obstruct traffic.

Now is the time for Mitch McConnell, John Boehner, and their Republican crews to get on board the economic recovery of this nation and stop the obstructionist tactics that are only going to bring them more defeat in 2010.