The Feds lay an AIG

Thomas Toles, The Washington Post

I'm sure we have all felt the outrage over the lavish bonuses received by executives and employees of the American International Group (AIG), that were paid to them at our taxpayer expense as recipients of the Federal stimulus package.

It is wrong on several levels. It reminds us all of how faulty our system of corporate governance is, that managers are richly rewarded with bonuses even when their firms are losing money. The historical reason managers are to be paid well, is that they were supposed to accept the risks of running a business -- that when it lost money, so did they. It also shows us how skewed corporate organizations have become in favor of management, being unable to balance its interests with those of shareholders generally, and of employees.

Congress, of course, is criminally negligent. Its leadership forced its membership to accept the stimulus bill with far too little time to even begin to read, let alone analyze, the bill. Consequently, it was passed under pressure from the White House with the great majority of Congressmen left in the dark. Obviously, no one thought about prohibiting bonuses from being paid out of taxpayers' money.

President Obama and the Democratic leadership have been trying to make up for this negligence by feigning outrage that people will do what they could legally get away with. Now, there are calls to seize back the bonuses by charging their recipients a retroactive 90% tax on them.

This introduces a far more serious problem than the misuse of taxpayer dollars. It violates two key provisions of the Constitution:

"No Bill of Attainder or ex post facto law shall be passed." (Article I, Section 9).

Any attempt to add a surtax to the AIG bonuses would be both a bill of attainder and an ex post facto law. A bill of attainder, according to Wikipedia, is a legislative act declaring a person or group of people guilty of a crime and punishing them without a trial. While, strictly speaking, enacting a 90% tax is not criminal law, it is violating the principle that laws are to be of general application, and not applied to specific groups of people in specific circumstances.

Likewise, the Constitution prohibits ex post facto laws because such laws are making an act that was legal at the time it was committed into a punishable offense -- or in this case, is attempting to levy an additional tax on income that was received before that law was passed.

As Americans, we have always taken pride in a system that was governed by laws, not the whims of men. If we allow this provision of the Constitution to go by the wayside, we have eliminated the force of law altogether. We are saying, from now on, we shall allow ourselves to be governed by the whims of our elected officials.

Which will then and there eliminate all of our rights and freedoms, and introduce the kind of tyranny Americans have fought against throughout our history.

Let's correct the mistake, and ensure that bonuses like AIG's will never again occur on our dime, but let AIG's stand as a painful lesson learned, because our individual rights are priceless. We will not give them up even to recover a few hundred billion dollars.