Local Congressmen Vote in Favor of Tax on AIG Bonuses
TAX
Worcester Telegram & Gazette
Sarah Gantz
Boston University Washington News Service
03/19/09
WASHINGTON—The House of Representatives voted Thursday to take back almost all of the money firms aided by the Troubled Assets Relief Program paid out as bonuses to employees, a measure local congressmen say is necessary to quell an infuriating situation.
The bill came as a response to public outcry over $165 million in bonuses TARP recipient American International Group gave to executives, many of whom are considered responsible for shaking the insurer’s stability.
The House voted 328-93 to enforce a 90 percent tax on the bonus paid by AIG and any other company that received more than $5 billion of taxpayer aid.
“Basically what we did today amounts to a big two by four that we’re slamming against the back of their heads,” said Rep. James P. McGovern, D-Worcester, who was incredulous that taxpayer money had been used so frivolously.
During debate Thursday, Mr. McGovern expressed on behalf of taxpayers the frustration that money paid with faith it would be put toward fixing a financial problem was squandered for the personal profit of those who played a role in the economy’s downward spiral.
“Those employees made bad bets, and now the American people are paying the tab,” said Mr. McGovern, who described the bonuses as “outrageous.”
Public anger has largely focused on AIG, but the tax would be applicable to bonuses paid by any company that received at least $5 billion in bailout aid.
“Their abusive behavior clearly demonstrates how out of touch they are with the rest of America,” Rep. Richard E. Neal, D-Springfield, said in a statement. “While hard working men and women are struggling with the current economic crisis, these greedy executives are rewarding themselves with unjustified compensation.”
Edward M. Liddy, the chief executive of AIG told Congress Wednesday that he had asked bonus recipients to return the money.
“That’s fabulous,” Mr. McGovern said. “But we can’t rely on their good hearted generosity.”
He said the bill is necessary to ensure taxpayer money is retrieved.
Only six Democrats voted against the bill and the Republican vote was split nearly in half, with 85 voting in favor, 87 against.
“They’re hearing what we’re hearing,” Mr. McGovern said of his Republican colleagues. “Fix this problem. We don’t want this to happen again.”
####
