03/20/2009 (12:39 pm)
The text of the US House of Representatives’ reaction to the AIG Wage Rage, HR 1586, is available to the public, and it’s frightening on several levels.
Launched because of envy masquerading as a quest for justice, the law was supposed to confiscate most of the bonuses paid to AIG employees out of funds supplied by Congress to rescue the failing insurer. However, the actual wording of the law gives it far wider applicability. The law targets employees of any company that has received more than $5 billion from the TARP fund, mostly financial giants (GMAC, Wells Fargo, JP Morgan, Chase, etc. See here.) It establishes a 90% tax rate for “TARP bonuses.”
Is a bonus just a bonus? No; a TARP bonus, according to this law, includes any adjusted gross income for the family exceeding $250,000 for a married employee, or $125,000 for a single employee.
So basically, if a person works for one of the big US banks or brokerage firms, the gross income for their family has just been capped at $250,000.
Now, I’m not saying that’s it’s difficult to live on $250,000 a year. However, since the confiscation occurs only among very large brokerage houses, and since the skills used by the employees of such firms are useful elsewhere, what we’re going to see in very short order is an exodus of talent from large banks and brokerage firms. The best people will leave and go to work elsewhere, where they can make what the market is willing to pay for their talent. The shortage of labor in the big firms that will be created will be filled with the lesser talent that cannot command higher salaries, or workers that have been hoping for promotion into more responsible positions but have been unable to get there. Thus smaller firms will acquire better talent, and larger firms will be staffed by lesser talent.
In short, the Congress has just consigned large, American financial firms to a slow and painful death by incompetence. In doing so, the Congress has guaranteed the decline of the American financial industry and the rise of large foreign financial entities. Thus, the industry that made New York City the hub of the world is being driven offshore… by Congress.
Knowing the impact, many firms from here on will choose not to participate in TARP funds. This will, in effect, cripple any impact that the federal stimulus might have had, either positive or negative. Firms that refuse to participate in TARP will simply muddle through the economic downturn without capital. This is an instance where the unintended consequences of an overreaching Congressional acts might be positive; by frightening companies away from TARP funds, the negative effect of the bailouts might be reduced.
Congress has been warned of the impact. However, true to the character of American liberals, they are more concerned with displaying the appearance of doing something moral to quell inequality than they are with preserving prosperity, genuine virtue, or anything that works. They will persist in their policy even if it demolishes American business, because, after all, there’s nothing more important for the American people than that liberals can say they are brave and moral.
Historically, demagogues and tyrants begin their tyranny by encouraging outrage against a hated group, and creating precedent in their treatment of that group that later gets applied more widely. Do not be surprised if the US government moves to cap income generally; this is just one aspect of the income redistribution that candidate Obama accidentally let slip in Ohio, and which he later denied. He was lying; anybody familiar with the candidate (and not addled by idol worship) knew it. And the more the government attempts to enforce “justice” (which is actually not justice, but a faux virtue that has more to do with hubris than it has to do with anything decent,) the more talent will leave our shores and enrich foreign nations.
We elected them, and now they’re destroying us. Hope you enjoy the rule of Democrats, America.
Oddly enough, the blogger that’s gotten this right is Josh Marshall at TPM. I don’t recall agreeing with him before, even a little. Have a look.
3 Comments »
Comment by Joanie F.
Historically, demagogues and tyrants begin their tyranny by encouraging outrage against a hated group, and creating precedent in their treatment of that group that later gets applied more widely.
Thank you for your very insightful analysis. If the mainstream media would report real ‘news’ rather than fluff, every genuine American would be as outraged as you and I. But the fact that our fellow citizens have become too lazy to ferret out the truth has them simply mildly upset at the AIG bonuses, rather than outraged at all of the underlying, tentacle-laden injustice and scheming.
One of the things that so maddens me about the through-the-looking-glass nature of this travesty is the fact that the people whom the Marxists in the highest positions in our government choose to demonize, demoralize, and criminalize are the same people who are willing and able to do the kinds of work that these Marxists are truly incapable of doing. Our ‘leadership’ is meticulously following Saul Alinsky’s credo that, in order to seize increasing power, one must ‘frame a villain’. In the eyes of our ‘leadership’ in Washington, the ‘villain’ of their creation is anyone who seeks to make a profit, anyone who seeks to benefit from the sweat of his own brow, anyone who believes that one is responsible for one’s own actions, and anyone who wants to be free to determine the focus of his own charitable giving rather than sharing his wealth with those who choose not to create their own.
Faith, duty, honesty, industry, personal responsibility, and ingenuity made America what she was in her finest hour. Most real Americans still possess those traits. Our ‘leadership’ possesses none of them. They are simply schemers with connections – unqualified to shine the shoes of those they demean and degrade, and yet somehow delusional enough to believe that they are a part of a chosen elite whose destiny it is to dictate how, and whether, the rest of us should live — and powerful enough to make that delusion a reality.
Comment by RM
Good article and great response, joanie.
I can’t deny being angry about the bonuses, but that is wrapped up in an even deeper anger about essentially everything that is involved, layer after layer, in these bailouts.
Barely mentioned, but mind boggling to me, is how these clowns that are supposed to be our thoughtful leaders would rush through something even approaching this magnitude without even reading the bill, with all its pork, earmarks and other partisan warts and tumors…and then have the gall to presume to lecture anyone about how to conduct their business.
Also, on a smaller scale, Mrs. Obama received $300,000+ in salary from some hospital for some sort of community outreach position (for doing, what, exactly? – do any of these people do anything really productive?), receiving a huge raise (total coincidence, surely) when Barack was elected. And that receives a total pass. Indeed, she and the media preen about the sacrifices she and Barack made to enter public service and they are lauded for it.
And speaking of Barack, I do not feel someone who received a sweetheart deal from the likes of a Rezko to acquire his own house, who took huge contributions from Fannie Mae, and who has been entwined with Acorn (a partial cause of the problems with FNMA, and now getting billions more of our money, to do what?) should be preaching to anyone about ethical business conduct.
Comment by Joanie F.
Beautifully said, RM.
The points you make are exactly the kind of thing that makes me most angry about the demise of our republic.
Not only are those who have authored that demise presuming to ‘act’ (in the theatrical sense of the word) as the authors of her saving, but they have been taking advantage of their self-authored crisis by passing, and continue to pass, all manner of legislation restricting the rights of those they claim to represent, while exempting themselves from those same rules.
The hearings that have been occurring on Capitol Hill are very reminiscent of old Soviet show trials, all symbolism for the benefit of the voting public, and no substance that will inspire real change.
Even more maddening is the fact that these hearings serve merely as a smokescreen, focusing on trivialities in order to take the people’s focus (at least those who still have any) off of the underlying, escalating rot and corruption. And the inquisitors are exponentially more guilty of criminal behavior than those they have subpoenaed to sit under the bright lights.
The mainstream media not only participate in the charade – they also completely ignore, or significantly downplay, the connections that need reporting, like the Rezko connection you mentioned, Obama’s (and most in Congress’) financial backers and privileges received, and any other behind-the-scenes power brokering that would cast a negative light on this administration and the 111th session.
But the bottom line rests in the fact that we have no one but the American citizen to blame. His apathy. Ignorance. Self-centeredness. Ingratitude. Hedonism. The fewer than six hundred were placed into power by a band of adoring mental adolescents, who simply want to be allowed to go to the mall, download music/noise, and worship celebrity.
The mall/noise/celebrity fountain will continue to pour forth, while the nuts and bolts of a free society, the sanctity of individual liberty, the concept of personal responsibility, and the belief in reward for thrift, ingenuity and hard work, are breathing their last breaths.