The political issue dominating news coverage is the payment of $165 million in bonuses to AIG employees, some of whom no longer work for company.
Apparently, because the bonuses have been distributed, AIG cannot withhold the money and force its disgruntled employees to sue to obtain the bonuses. So now, talk has turned to the government recovering the bonuses by taxing the recipients in an amount close to or equal to the amount of the bonuses.
Such a remedy requires Congressional action, but if you’ve watched any cable network for more than 30 seconds during the past day, you’ll learn that there’s no shortage on Capitol Hill of eagerness to enact such legislation. (Although as I write this, I’m hearing that Republicans in the House will oppose such a provision.)
That leads to the question of whether such legislation is constitutional. Here is The Wall Street Journal Law Blog’s interview yesterday with constitutional law scholar and Harvard Law Professor Laurence Tribe, who addresses the government’s possible grounds for recovering the bonuses.
And in yesterday’s Times’ Deal Book blog, the Deal Professor, Steven M. Davidoff, analyzes AIG’s bonus contract and questions who negotiated the contract for AIG and why, considering that the bonuses weren’t tied to the employees’ performance or their group’s performance – as we have all learned to our amazement.
Finally, for a contrary point of view, Andrew Ross Sorkin, who writes the Times´Deal Book blog, argues that the bonuses should be paid because not to do so is worse than the alternative.