Norquist Opposes AIG Tax, But Says It Doesn’t Break Tax Pledge
EmailABC News’ Z. Byron Wolf reports from Capitol Hill: While everyone seems to be outraged about the $165 million in bonuses awarded to AIG executives at the troubled financial products division, the plan by Democrats in the House to vote on a special "AIG tax" presents some problems for anti-tax Republicans. There’s the small matter of the anti-tax pledge that 172 Congressmen and 35 Senators – most Republicans – have signed. According to Grover Norquist at Americans for Tax Reform, the guardian and chief lobbyist for the anti-tax pledge – this was before details of the House bill that will be voted on today emerged last night – the tax could be feasible if it included tax cut or cut in spending someplace else (it does not). It’s a simple pledge and there is little wiggle room to tax AIG bonuses. The bill considered today will claw back 90 percent of bonuses paid to people making more than $250,000 at firms receiving more than $5 billion in government bailout money. The anti-tax pledge itself is simple. The signer agrees to: One, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and two, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates. But that does not mean any and all "AIG tax" would violate the pledge. According to Grover Norquist at Americans for Tax Reform, the guardian and chief lobbyist for the anti-tax pledge, the tax could be feasible if it was included with a tax cut or cut in spending someplace else, but it is not. When contacted by ABC News, Norquist responded with a long and animated voicemail message, saying the tax and bonuses are beside the point. He suggests instead of raising taxes on the AIG executives, he’d prefer to raise taxes on the "idiot senators and congressmen who voted to give the money to AIG in the first place." "Those are the people responsible. They’re the guys who caused the money to be wasted… If somebody gives you free money and then wants to whine that you bought scotch with it, it’s none of their ‘GD’ business once they were stupid enough to give you other people’s money," he said. "This is Democratic congressmen and senators I see here from the Ian Swanson piece trying to cover their butt. They did this. They threw money at people who paid big bonuses, many of whom are contributors to Democrat Senators, and they’re trying to cover the fact that they did that by yelling at other people." To listen to the full voicemail message, click HERE. UPDATE: Grover Norquist is now coming out against the bill to tax AIG bonuses, as reflected in a statement released by Americans for Tax Reform. "Americans for Tax Reform remains STRONGLY OPPOSED to H.R. 1596, the Rangel-Pelosi bill to tax AIG bonuses in order to deflect blame from Secretary Geithner’s failed mismanagement of Treasury funds," the statement reads. "The Democrat ploy to cover up and detract from the Obama/Geithner/AIG scandal is to pass a bill of attainder, probably unconstitutional, to pretend to recoup perhaps one-tenth of one percent of the $160 billion they have given AIG…ATR urges all Members to vote ‘no,’ to demand that Geithner resign, and that Congress enact real legislation forbidding future bailouts and specifically banning AIG from receiving further funds." UPDATE 2: Norquist called ABC News back to clarify his stance. While he doesn’t agree with the AIG tax bill and is urging tax pledge signatories to oppose it, he’s not going to say that people who vote for it are breaking the pledge. "It’s a phony, unconstitutional, cover your butt vote," Norquist said, arguing that it had more to do with politics than with tax policy.
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What, you mean adopting simplistic bumpersticker slogans as absolute management guidelines doesn’t work very well? How can that be???
Posted by: jhw539 | March 19, 2009, 12:06 pm 12:06 pm
Huh dems just trying to cover their butts? I seem to remember that the dems tried to insert executive pay limits into the bailout TARP funds, and that several repubs through a fit over it…McConnell included…and they ended up getting it removed. The repubs should be covering their own butts as well.
Posted by: Ordermonger | March 19, 2009, 12:23 pm 12:23 pm
so if you only took a $1.00 salary, you could keep a 4 million dollar bonus?
Posted by: realityville | March 19, 2009, 12:27 pm 12:27 pm
Z. Byron Wolf, are you a journalist, or a hack disseminating propaganda for right-wing Republicans? Judging by the above piece that you’ve submitted, it’s quite clear you’re the latter rather than the former.
So the question for ABC is: why are you employing a right-wing hack posing as a journalist? Please do tell, ABC.
Posted by: Glenn | March 19, 2009, 12:38 pm 12:38 pm
If you had a son and gave him money to use for college and he bought a car with it instead, how would you respond? Would you be upset and whine? – I bet you would. You would think you could trust him to make the correct decisions wouldn’t you? I wouldn’t have dared to that to my parents. They trust me to do the right thing without having to set conditions. The AIG people should be ashamed that they would even think about using and taking the government money for personal gain and not for the purpose intended. We have factories closing all over the place. People are losing thier jobs and will soon not have any type of income, let alone millons dollars worth of bonuses.
Posted by: C123 | March 19, 2009, 12:39 pm 12:39 pm
Why did ABC contact Norquist to begin with? I thought ABC was a respectable news source. Norquist is a right wing flake who has about as much sense as George W. Bush does.He has as much credibility as Rush Limbaugh or Ann Coulter. A wasted article.
Posted by: leftyintexas | March 19, 2009, 12:53 pm 12:53 pm
So is this grover norquist Rushs b*** boy…As I recall, The federal Reserve decided to bail out AIG during the fall of the bush administration..they used a law passed in the 1930s during the great depression, to circumvent congress. and authorise the funds…
Posted by: cowgirl | March 19, 2009, 1:03 pm 1:03 pm
Here is just one of many reasons people are leaving the Republican party by the droves. Only Rush Limbaugh and Dana Perino (Repubs) actually stood by AIG for giving those outrageous bonuses. Republicans are unbashful about being totally for the wealthy and big business and against the worker and the poor or middle class. Dinasours!!
Posted by: eyeonyou | March 19, 2009, 1:03 pm 1:03 pm
These stupid Represenatives, starting with Queen Nancy need to read Article 1, Section 9, Paragraph 3 of the Constitution. They are setting up a first year law student to have this tax thrown out of court and then these politicians will only look dumber than they look now.
Posted by: sandcrab1612 | March 19, 2009, 1:10 pm 1:10 pm
Problem is that the contracts for these employees (which were negotiated in March 2008) and the terms were that if they remained at AIG until they closed the portfolio of accounts they would receive the same compensation for 2008 that they received for 2007. This was done so that the people who put these portfolios together could best liquidate them with the least risk to AIG and the economy if they were just to let these folks go. These accounts require constant monitoring as the financial situation in the world change hourly. Once they have liquidated their portfolio they would no longer have a job, this was AIG’s method to wind down the Financial Products Division (which caused all of the problems) with the least risk to the economy. Nothing in the bonus was tied to performance, it was to keep the people who know how the portfolios were put together could use that same knowledge to liquidate the portfolios. As the contracts were in effect prior to the government stepping in and providing funding to AIG and installing Liddy as the CEO (for $1 ayear with no bonus or stock options) they were legal and binding on AIG to be paid under the terms in the contracts. In February of 2009 the bailout bill had an amendment added to it by Chris Dodd D-Connecticut (where the AIG Financial Products Division is headquartered and the #1 recipient of funds from AIG) which stated that ALL contracts, at firms receiving federal funding, negotiated prior to February 2009 had to be honored. Obama (#2 recipient of funds from AIG) signed the resulting legislation into law. At this point we had employees with a valid contract where they had fulfilled their obligation (remained with AIG and were liquidating their portfolios) and a federal law which said that even though the company was receiving federal funds they had to honor the contract. Now that the proverbial s%$t has hit the fan Congress now has determined that the payment of these contracts even though within the law they enacted are now illegal. I now see that they are planning on taxing these employees that they will tax them at 90%, these Congressmen (most of whom claim to have a legal background) need to read the US Constitution: Article 1, Section 9, Paragraph 3. This tax is nothing more than a “Bill of Attainder” which is 100% unconstitutional and any court in this country will agree and throw the tax out. The only people who will get rich will be the lawyers and the taxpayers will get poorer. Since Chris Dodd inserted the amendment which made payment of the contracts legal let him pay the $160M back to the taxpayer, to change laws after the fact will only be proven unconstitutional in the long run. The real problem here is the politicians who inserted themselves into a company that was failing and they are trying to run it with Monday morning quarterbacking. They can’t perform here, have failed with Social Security and Medicare, and now there is talk of wanting to take over our healthcare. What has the government successfully run over the last 50 years which has made a profit for the taxpayers or operated with no loss to the taxpayers?
Posted by: sandcrab1612 | March 19, 2009, 1:40 pm 1:40 pm
eeeewwww I hate to do this as I think folks like some of those running AIG are dirt bags, but….
Many, many companies (especially those who are startups or who are going thru a difficult period with staff or finances) will set up contracts with people that are written with time-based bonuses. I know people who have these contracts with several companies.
You sign on with a company with a one or two year contract for a starting yearly salary PLUS a bonus if you remain for the entire period of the contract. You lose the bonus money if you leave before the end of your contract.
There is NOTHING in there about performance – except if you get fired for lack thereof which would of course cost you the bonus. As long as these people weren’t fired or quit they are due their bonuses.
Congress should have negated all of these bonuses when they bailed out these companies, but, as the companies complained that folks who they wanted to keep would leave (or sue them) and also that Congress was reaping the benefits of donations from these people, Congress and the Treasury folks decided to protect their benefactors.
Blame Congress and Treasury for this mess as they are the guilty parties.
Posted by: wayne | March 19, 2009, 1:47 pm 1:47 pm
Norquist is a one trick pony. He’s also a deranged lunatic, but besides that, why does ABC think his opinions are important enough to have someone create? Clue to ABC: they aren’t. Stop fluffing the right wing nutz. You’re only driving off the rest of the population. You remember what ratings are?
Posted by: Kurt H. | March 19, 2009, 2:47 pm 2:47 pm
Love me some Norquist:
1) “…just want to make government small enough to drown it in the bathtub” always sounded like espousing violence against government. Which, of course, is treason.
2) All deficit spending results in raising future taxes. So the entire Republican House, from ’95 to ’07, and their Senate from ’01 to ’07, as well as their last three GOPresidents, have all broken the ‘pledge’.
3) And lowering the payout by eliminating these bonuses therefore reduces future taxes, Grover.
4) And I HATE these GOP clowns continuing to use a noun (‘Democrat’) as an adjective. It’s a holdover from Newt’s Whip days, when he fined GOP House members who called their declared enemies by the correct name. It’s now the easiest way to spot an in-the-dark Republican.
GOD (if there is one,) drown this clown in the bathtub…
Posted by: Cal Damage | March 19, 2009, 3:01 pm 3:01 pm
No Obama fan here, and I wish he wouldn’t go on Leno, but I am pretty sure that Coach K was being jocular about the basketball picks.
Posted by: quotidian | March 19, 2009, 3:58 pm 3:58 pm
AIG is a Government Run Company. It was taken over during the Bush Bailouts.
In Obama’s Bailouts a Republican and a Democrat sponsored the part about the Banning of Bonuses.
During a Closed door session between the President and the heads of the Senate and House the part about banning Bonuses was removed. Dodd inserted the part protecting the bonuses which he at first denied and then admitted to. This morning according to CNN Dodd claims that Obama had them remove the Ban on Bonuses out of Fear of Law Suits over a Breach of Contract. Obama later claimed that he did not know about the Bonuses until this week. According to Dodd that is a lie, he knew before the last Abilout payment to AIG.
The Government wants us to watch AIG and direct your anger at some “private” corporation that is really run by the Government, funded by the Government through 2 bailouts, given Free reign and even paid out Government Protected Bonuses…..It is a Dog and Pony show.
What they didn’t want you to see is that the Fed just printed 1.2 Trillion more dollars to buy $750 billion in bad loans from freddie and fannie and to buy $300 Billion in long term bonds. THE GOVERNMENT JUST PRINTED 1.2 TRILLION DOLLARS!!! There is NO ONE left in the World that will buy up our Debt…the FED had TO DO IT!
The Dollar has lost Value, Hyper inflation is coming in Months….
AIG is a SHOW….Pay Attention to what is REALLY HAPPENING!!!
Posted by: Patch W Adams | March 19, 2009, 4:31 pm 4:31 pm
sandcrab1612, your concern about ex post facto laws is reasonable, but wrong.
Look up the U.S. Supreme Court decisions “Calder v. Bull” (1798) for the original classification of laws to which the ex post facto restriction would apply, or more recently and to the point “United States v. Carlton” (1994) regarding retroactive tax law.
Posted by: James | March 19, 2009, 5:29 pm 5:29 pm
Obama, Geithner and Dodd are thoroughly incompetent. Sack the lot of them. Get John McCain back.
Posted by: John | March 19, 2009, 8:16 pm 8:16 pm
Subject: The “Bailout”___ Question: What is the road to hell paved with?___ Answer: good intentions…i hope they plan on paying the tax payers money back, with “interest”, like they expected everyone else to do?! (note: interest in meant to be an accumulative amount over a certain amount of time which shows an increase in value..) the agency you are paying gets the benefit and you yourself were paying it out as a “finance charge”… mortgage payment were never to be more than 4% as in ‘finance charge’, what you call interest..bailing someone out is ‘an interest’ and we’ve paid for it through the teeth, with job losses and foreclosures. i think it’s high time we invest in Humanity First where the jobs are and in the ‘going green’ programs where the future is. any of this making sense to you yet??____Humanity First
Posted by: augusta | March 20, 2009, 1:45 am 1:45 am
So did Grover give the Republicans permission to vote for the bonus tax? Or was he confused? I thought “Republican values” meant no new taxes…ever. I guess those values are “situational”. Hypocrites.
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