The Washington Post dryly informs us:
Congress today moved to levy punitive taxes on bonuses at financial firms receiving government aid, threatening to undermine the government’s rescue of the financial system. The taxes imposed would be so high that the result would likely drive away nearly all firms participating in the federal assistance program.
We have, it seems, converted an error in oversight (Tim Geither and the Fed failing to stave off embarrassing bonuses) into a feeding frenzy which will undermine the effort to steady the financial sector — which was the purpose of the AIG takeover in the first place.
Once the president took the plunge into the pool of populist rage, there was no turning back. As the Post tells us, House Ways and Means Chairman Charlie Rangel, who first raised qualms about using the tax code as a punitive cudgel, soon was leading the confiscatory charge.
Some Republicans, either for sound policy reasons or out of good old fashioned political spite, are seeking to hold back the tide. The report noted, “Rep. Mike Pence (R-Ind.) called the tax measure a ‘constitutionally questionable bill to paper over’ changes supported by Democrats that he said made the bonuses possible.” And over in the Senate, the Republicans are heckling the president for spending his time on brackets and Jay Leno, and they are asking for a “who knew and when did they know it” inquiry about the AIG bonus-protection plan.
And now after fanning the flames the president seems worried by the bonfire. He told Jay Leno:
It’s important, he said, not to “lurch from thing to thing” in trying to address the nation’s big problems.
“Look, I understand Congress’ frustrations,” he said on “The Tonight Show with Jay Leno.” But he suggested that legislators were being more vindictive than constructive.
“Everybody’s angry… but I think that the best way to handle this is to make sure that you close the door before the horse gets out of the barn. And what happened here was the money’s already gone out, and people are scrambling to try to find ways to get back at them,” he said.
So he’ll veto the bill? And if he thought this was the wrong approach it might have been a good idea to tell Nancy Pelosi before the torches were lit and the pitchforks sharpened in the House. The mind reels.
It is a sorry tale. Poor oversight by the Fed and Treasury begets a populist frenzy, begets a collapse of an orderly approach to straightening out our financial sector. And this is what flows once we decided to let government “manage” a business — and then entrust it all to an administration with too little business acumen and too little toleration of public criticism.
If these developments have undermined the public’s willingness to indulge in the fantasy that government is equipped to orchestrate huge enterprises, then perhaps there is a silver lining to all of this. Those hoping for an era of sage technocratic rule by the best and the brightest must be disappointed. For those who thought it was folly from the get-go, there is no joy in watching the whole experiment implode.