The infamous bonuses were offered because "people were weighing offers from other firms, and AIG executives feared that too many departures could lead to disaster...The much-vilified Rush Limbaugh has been pointing this out for days. Panicky Republicans and Democrats have not explained that AIG was bailed out in the first place because it was collapsing, and bringing down countless investors and homeowners in the process. If the bonuses kept AIG working, then they had a purpose. But few people with political power are really saying this.
The purpose of the tax code is to raise revenue. Like it or not, the Code is also used to discourage or subsidize certain economic activity. But it is not on the books to enforce laws by denying someone a tax benefit. And, as my TPC colleague Eric Toder notes, the Revenue Code should not be used to effectively abrogate private contracts. That's why we have courts.
There's no end of puffed up outrage and opportunistic posturing over the on-going revelation of the AIG bonus scandal...What is so damaging about this isn't the money -- which is almost trivially small compared to the many hundreds of billions we've already committed. The problem is what appears to be the president's mortifying impotence in the face of bankers and financiers who created the problem
As President Obama and his administration continue to struggle to find solutions to the brouhaha over bonuses at AIG, New York State Attorney General Andrew Cuomo has stepped into the void -- emerging as the voice of the little guy and, in the process, heightening talk that he may well be the Empire State's next governor.