Americans Learn from Russia

Well its nice to see that the Russians have taught Americans something, writing tax policy to target specific individuals.

As much as I'm not happy about the bonuses at AIG, writing tax policy to target those specific bonuses is nutty and seems dangerous to me as a new government policy. I don't think the congress will succeed, but should they pass it we will be in for a long haul of a legal fight and I almost wonder if its constitutional writing law that is specific for certain individuals. Of course the tax code already does that to some extent targeting the wealthy.

For a while there was talk about nullifying the contracts which violating contract law would not be in the best of interest of the United States. Thankfully, the government officials finally got some sense in them about that and dropped that idea.

A lot of people said that the AIG contracts should be renegotiated to remove the bonuses just like the UAW is having to renegotiate its contracts with GM, Ford, and Chrysler. The UAW contracts are being changed for now and the future. The AIG contracts are for last year. I don't think the UAW is being asked to renegotiate the money the workers earned making the cars last year that nobody wanted. The UAW contracts are being renegotiated for the coming years and I'm sure the new AIG contracts will be renegotiated as well.

Is the congress trustworthy. After the big blowup about the bonuses the congress and Timothy Geithner finally admitted they knew about the bonuses all along. I guess that means the congress was actually lying to us for several days before they finally came clean.

But the whole things seems absurd to me. Congress has blown enough money on bridges to nowhere to equate to at least 1000 million dollars per congressman. The congress should not be wasting time on AIG bonuses of 167 million while the economy burns down. Fine get indignant about the bonuses, say you don't like it, but its a contract, can't change it, and then move on to the nation's business.

The contracts were written more than a year ago, so I don't see there is much to be done. Of course its not clear to me how you can have a bonus. I thought bonuses were divided out of profit. If there's no profit how can there be a bonus. I did hear one short analysis that said what they call bonuses on Wall Street are really more like sales commissions. You earn a sales commission on what you sell not on the profit the company makes. But I can't verify this.

I'll end with a statement made by Jay Leno to President Obama.

"If the government decides they don't like a guy, all of the sudden hey we're going to tax you, and, boom, and it passes, that's seems a little scary," he said. "It was frightening to me as an American that Congress or whoever could decide I don't like that group, let's pass a law and tax them 90 percent." - Jay Leno