Three things they're not talking about in "Bonus-Gate," but should be

Most of you have heard the rumblings (and sometimes screamings) surrounding the $165 million (ish) that was paid out in retention bonuses to AIG employees. I personally think Congress has better things to do than tax these bonuses (and what, get back enough money to cover 0.015% of the "Stimulus" outlay?). But I can see how the AIG bonuses give people a "face" to the whole crisis of credit, something to lash out at in anger, ill-informed.

So, the three things they're not talking about, but should be:

1) If the bill is not sufficiently narrow (i.e., does not only apply to AIG bonuses), like the version that passed overwhelmingly in the House, there are other businesses that will be unfairly and negatively affected.
* For example, I was informed by a friend who works as a Tax Policy Advisor for a member of the Senate noted that some banks did not request TARP funds, but the Treasury "forced" them to take the funds anyway. Now, based on the House version of the bill, those banks, and other financial institutions in similar circumstances, cannot give bonuses to their employees without being affected by this bill (should it become law).

2) Despite outrage from the Congress, the bill that came out of conference committee and was signed by President Obama grandfathered in specific AIG bonuses. In other words - not only did they know about them, they passed a law that would protect some of them. Now, they want to hit the UnSend button? Senator Cornyn speaks about this situation (I only wish he came at it with a little more "fire power" [that's for you, Marriott.]).

3) The bonuses are not just going to "employees of the division that had been the primary source of AIG’s collapse."
* Many of these employees have since left the company. Since that time, AIG (and other financial institutions) have either collapsed (Lehman Brothers disappeared and some employees have been merged into other companies, such as Barclay's) and others have been held up by tax dollars (AIG). Since AIG is still operating, it needs employees. Those that left or were fired have likely been mostly replaced by (hopefully competent) people who were brought in to help turn the company around.
* Would you take a job at AIG? What if you were really good at your job in the financial sector, and could possibly help get us out of this rut? What would it take to get you to go to a failing company? Maybe, just maybe, you might be enticed, er, encouraged, er, persuaded to go work for AIG if they promised you a bonus as part of your hiring package.
* Now what? You signed on to help out, and Congress and some pausing-from-thinking American people want to take your bonus away.
* Are the bonuses excessive? Perhaps the answer to that question doesn't really matter. What we're seeing is that the financial industry has long rewarded its employees with bonuses. Perhaps the market should take another look at employee compensation - but Congress should not start deciding that some people who make more than others should give up their money.

[Go see this interesting post. Although a bit extreme ("So ask yourself; how much do you make? Is it more than your neighbor? Might someone else think that its not fair that you got something that they didn't? Because that’s all it will take. If we let them get away with this."), it also points out some legal questions that should be considered.]

Thankfully, the Senate is delaying their action, for the time being. Hopefully calmer heads will prevail there and allow Congress to focus on other issues.