May we suggest, perhaps, cloves of garlic and a wooden stake

The populist lynch mob aka the “Hey, look over there” U.S. Congress was thrashing about like a rabid and wounded animal yesterday trying to get back the bonuses to AIG that they had approved in the stimulus package.

The House of Representatives yesterday overwhelmingly approved a near-total tax on bonuses paid this year to employees of American International Group and other firms that have accepted large amounts of federal bailout funds, rattling Wall Street as lawmakers rushed to respond to populist anger.

Despite questions about the legality of the retroactive 90 percent levy, Democrats and some Republicans said the tax on bonuses for executives earning more than $250,000 per household annually was the quickest way to show angry Americans that Congress intended to recoup the extra dollars. Even backers of the measure noted it was an extraordinary step.

The House vote sent some employees into a panic about the prospect of, in effect, having to give up money they might already have spent. And it had regulators fearing it could undermine the Treasury's efforts to stabilize the financial system if banks tried to flee the bailout program or if other firms refused to participate in future rescue operations in order to protect their bonuses, some executives said. That could curb lending and damage the economy.

And more good news forthcoming over which Congress can get more uppity.

Rep. John Lewis, D-Ga., said a House subcommittee inquiry had revealed that 13 financial firms that received an injection of government money owe more than $220 million in unpaid taxes. All 470 firms that participated in the government bailout program were required last fall to certify they did not owe back taxes.
Meanwhile, beleaguered mortgage giant Fannie Mae disclosed it was set to pay its own big-money retention bonuses – ranging from $470,000 to $611,000 – the very sort of payouts fueling condemnation of AIG.

To top it off, Citigroup, which has received $45 billion in federal money, planned to spend $10 million for new offices for its top executives.

And who led the charge to levy the 90% tax on these bonuses? It’s gotta be:

The effort to impose the tax was led by the Ways and Means Committee chairman, Rep. Charles Rangel, D-N.Y., who just days earlier had expressed reluctance at using the tax code for this purpose. Rangel has also sought donations from AIG for a public policy institute at City College in New York that will bear his name.

You just can’t make up this sort of stuff.

So, there you have it. Congress is taking Constitutionally-dubious action that will not save a single job let alone create a single job, will not put one more dollar in your pocket, will not do anything of real benefit to society and which, in fact, will prove itself to be counterproductive in the short, mid and long term.

Yep, we’re in good hands.

Exit question: Now that we’ve been taught to demonize the banking and financial institutions, what is the Obama Administration going to do the next time they give these no good miserable fat-cats another couple or so hundred billion (a trillion, anyone?) of your tax dollars?