This was what finally pushed me over the edge from annoyed with the now seemingly inept administration to fear.
These people really are scary. And I'm not being sarcastic. Really scary.
Um, where are all the people who freaked out over Bush tapping the phones of people that talk to overseas terrorists? Weren't they worried about PRIVACY? Wasn't that their big issue?
Wow. Really. When we're seeing our gov't gin up crowds to picket people's homes and give out addresses and no one seems to CARE we're way further gone than I really thought possible.

One reason that I've posted several times on the AIG debacle is because there are few things that get me more incensed than when the Government goes after private citizens so that congressional and executive branch blowhards can pretend to be defenders of humanity.

Yep. It's all a bunch of grandstanding that won't make the smallest dent in the problems with the economy. I'm not in a whole lot of sympathy for many of these executives -- though the guy in the story sounds like a good guy made a scapegoat. I've been a cube sweller in Fortune 500 companies for a long time and I have been ticked at crazy corporate bonuses given to people who didn't do much of anything for a decade or more now. If there hadn't been so many corporate shenanigans going on, there would be alot more public sympathy for the executives. But, on the government's part, it's still just grandstanding. Sad.

uhhh, cube dweller

Shades of "Atlas Shrugged".

1 Samuel 8:10-20 Samuel told all the words of the Lord to the people who were asking him for a king. He said, "This is what the king who will reign over you will do: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. He will take the best of your fields and vineyards and olive groves and give them to his attendants. He will take a tenth of your grain and of your vintage and give it to his officials and attendents. Your menservents and maidservents and the best of your cattle and donkeys he will take for his own use. He will take a tenth of your flocks, and you yourself will become his slaves. When that day comes, you will cry out for relief from the king you have chosen, and the Lord will not answer you in that day. But the people refused to listen to Samuel. "No!" they said. "We want a king over us. Then we will be like all the other nations with a king to lead us and to go out before us and fight our battles."

He who has ears, let him hear.

Okay, look.

The government bailout was a bad idea. The rescinding of the money was a bad idea. But lots of banks refused government money...and lots of banks are trying to pay back as fast as possible to avoid government strings.

I think that's a silver lining. Money almost always comes with strings; if the government's strings are stupid, don't take the cash. If the government can't give money away to for-profit organizations as a result, all the better.

I've heard a lot of banks are working to give back the funds to the government. That's a good thing.

I understand the anger, though. It doesn't seem reasonable that people should be angry, looking at Mr. DeSantis' letter - but almost nobody is in a position to be objective about it. How many people are out of work? Do they have the resources Mr. DeSantis does? Why expect people to be sympathetic to the rich-rich-kid when he complains about... anything?

I heard one commentator respond to his letter. Mr. DeSantis had compared himself to a plumber who had done the job, but then was asked to walk away without payment.

The response was: Ok; but what if the house burned down after the plumbing job, and it turned out the plumbing was responsible for the fire?

One more thought: this guy was VP of the department which caused the problem. Why does he claim to be innocent?

Thanks Hobo,

I understand the anger too. But we are not a nation that is governed by emotions. We are governed by laws.

People are OK with congress passing unconstitutional bills of attainder to retroactively get the guys at AIG, nulling out contracts that were part of the agreement the government already made with them.

But next time it might be someone else who's getting hosed. Could be you or me.

I don't know anything about Mr. Desantis. I know things are rarely as straightforward, black and white as they seem, in these cases. Under the rule of law, if a legal agreement was made, Congress shouldn't be able to pass targeted legislation to nullify it. But they did.

There is another factor that makes this whole situation even more ridiculous. A story today in the Wall Street Journal covers some of it, which I also thought about when I first heard this story given I am a CPA.

What is it? For those AIG people that give back their bonuses, they very likely have still triggered massive tax liabilities for themselves. How is that possible? Because the IRS treats wages and bonuses you are entitled to receive independently and differently from voluntary actions (i.e. returning it) that you take with the money after you receive it.

In this case, the IRS will likely have to find that the bonus income still must be included in the AIG employees income and have income taxes paid on it, since AIG employees were entitled to receive it, whether they then returned it or not.

The return of the money to AIG doesn't eliminate the income tax, and is instead likely to be construed as some kind of nondeductable employee business expense (for AMT purposes). Potentially even worse, returning that money without obligation to do so could be construed as a gift to AIG, and thus crazily, would even trigger additional gift tax since gifts given over an annual exclusion of $13,000 are subject to that tax.

So let's assume an AIG employee received a $1 million bonus, but gave into public outrage and threats and has already returned it. Even without that crazy 90% rate proposed by Congress, that $1 million still has to go on his tax return in 2009 as income, which would trigger an additional $350,000 in federal tax at the prevailing rate of 35%, and additional state income tax as well of probably close to $100,000 depending on what state they live in.

Next, exactly how the IRS would treat giving that money back is admittedly more in doubt, but the likely case is they will get no tax deduction or credit for returning it since they were under no legal obligation to do so. And if the IRS determines that it is therefore a taxable gift, they would have to pay a 45% gift tax or additional $450,000 for returning the money. States could then also tack on state gift tax.

So all told, this AIG executive who has returned their promised bonus might not only be out their $1 million bonus, they very likely will be required to come up with nearly half a million dollars and up to a million dollars of money out of their own pocket to cover the income and gift tax repercussions of returning that money before they realized how confiscatory our tax laws really are.

Wow.

Thank goodness we have heroes like Barney Frank and Chris Dodd protecting us from these ne'erdowells.

I once worked for a company that had a bunch of derivative deals go bad. The people responsible for structuring those deals could be counted on one hand.

That's another reason this is so maddening. How many of the AIG employees being targeted for confiscation and, frankly, mob-violence by our brave and noble congresspersons actually had anything to do with the bad CDS trades?

It doesn't matter. They work for a corporation, and they get paid well (as far as we know) - they are "fat cats", and thus must be destroyed.

I read Evan's post to my wife, an Enrolled Agent (ie, a tax specialist, the person one should consult regarding tax issues). Evan got it right. Unless some decision occurs to modify the laws and restrain the IRS, while, as Evan noted, some part of the results will vary depending on what a given state tacks onto the federal bill, those AIG folks are in for a huge surprise.

Imagine the political uproar in trying to accomplish that modification. Not gonna happen.

Imagine how describing the scenario Evan accurately reported will play out in some of the following situations: NPR (national people's radio); a major newspaper in a large city; commentary by democratic party officials; commentary by Al Sharpton et al. Be interesting to see what revisions come out.

Like I said, Atlas Shrugged.

Secondary moral to the story: My wife observed that most people do not consider the tax implications of decisions, which can turn out significant even with amounts much smaller than the AIG execs'.

What was most depressing for me in the last election was that neither party is really economically conservative anymore, and even worse, it now appears to be a significant minority position (maybe only 20-25%) of the American people.

The Democrats are almost uniformly anti-business (both their voting base and their politicians) and desire much more government control of the economy.

The Republicans are obviously less supportive of a government run economy, but much of their social conservative base (which were never stong economic conservatives to begin with) have drifted into supporting more economic socialism in many critical ways. Therefore Republican politicians believe (probably correctly) that they can't win by being strong economic conservatives, and therefore we get modifiers like 'compassionate' conservative (like Bush and I'd argue Huckabee) or the 'maverick' conservatives (like McCain and probably Palin).

Bill argued a few posts back for a 'throw all the bums out' agenda. I could go along, but unfortunately, I don't see how we'd end up with anything significantly better as replacements. I believe we largely get politicians that reflect our people. And unfortunately, the majority of Americans seem to now believe that if we just empower government to take more money away from the greedy businesses and rich people, the government can then provide government guaranteed food, housing, education, transportation, child care, health care, retirement funds, etc. for all citizens.

Like Israel, rather than remain a free people as our founders established, too many Americans now find freedom too hard and too terrifying. So we will continue to expand our king's power hoping he will run things right, fight our battles, and make us prosperous. But as Samuel prophesizes(echoed by writers like Hayek), we will instead get slavery and serfdom.

It does bother me that:
(quoting Evan)
the majority of Americans seem to now believe that if we just empower government to take more money away from the greedy businesses and rich people, the government can then provide government guaranteed food, housing, education, transportation, child care, health care, retirement funds, etc. for all citizens.

It bothers me a very, very great deal more that among that majority I find many Christians.

Roy, why would it bother you a very great deal more that *Christians* have a particular perspective on American fiscal policy? I'm generally an economic conservative but I can understand and sympathize with Christians who are economic liberals (redistribution of wealth) a lot more so than I can Christians who are social liberals (issues of marriage, abortion, etc.).

After all, when I read the Bible it isn't the rich whose side God seems to be on. Exactly what, if anything, the multitude of scruptural injunctions to care for the poor means for American government in the 21st Century isn't nearly so clear to me as it seems to be to some of my "God is a Republcan" friends - even though in my mind logic seems to suggest that the poor are better helped in the long run most often by compassionate conservatives' approaches to these problems than by the approach of the liberals.