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The rule of men

A friend of mine expressed surprise the other day when I said I wasn't sure if the stock market would bounce back fairly quickly. He said that societies with human capital and the rule of law always thrive. Yes, I said, but I'm not sure the rule of law is our strong suit in the US these days. This story (HT: Andy Roth) is a tragicomic example of what is happening and illustrates my earlier concern:

Senate Finance Committee Chairman Max Baucus, D-
Mont., suggested Tuesday he and other lawmakers will pressure the Internal
Revenue Service to impose hefty excise taxes on bonuses paid to executives of
American International Group Inc. (AIG) that have stirred outrage.

"We need to find out the answer to this question: What is the highest excise
tax we can impose that is sustainable in court?" Baucus said to IRS Commissioner
Doug Shulman during a hearing Tuesday.

Shulman declined to give a specific answer, saying he couldn't go beyond
President Barack Obama's statement on Monday, in which Obama expressed "outrage"
over the bonuses.

But Shulman said he recognized the finance committee wants to address the
issue of the AIG bonuses, and "we stand ready for IRS to do what it can."

Sen. Bill Nelson, D-Fla., said it may be possible to impose excise taxes as
high as 90% on the bonuses. At issue are $165 million in bonuses paid to employees of AIG's financial-
products division, after the U.S. government has poured billions of dollars into
AIG to shore up the foundering insurance giant.

House Majority Leader Steny Hoyer, D-Md., said he was unsure whether it would
be possible for Congress to draft a law specifically targeted at the AIG

Yes it's a shame that Congress is supposed to limit itself to legislation that is constitutional. In a real government (i.e, Zimbabwe, North Korea) the leaders aren't constrained from doing what they like.

He suggested one possibility might be to pass a measure taxing
all executives who received taxpayer funds through the Treasury's financial
rescue plan.

But, Hoyer said, there was no question in his mind the AIG executives should
give the money back, saying if "they had any common sense at all," they would.

"If they were at all sensitive to what the American people had done to keep
their company afloat … they would simply give this money back."

Alas, we haven't done anything to keep their company afloat. It's Mr. Hoyer and his colleagues who have taken my money and yours and given it to AIG.

Hoyer said all options were on the table, and lawmakers were looking at what
actions could be taken, and were in discussions with Obama administration
officials over how to proceed to recoup some of the money paid out to the

House Minority Leader John Boehner, R-Ohio, reserved his anger for the Obama
administration's handling of the AIG situation.At a press conference Tuesday morning, he questioned why officials agreed to
give the beleaguered company a further $30 billion only weeks ago, without
ensuring there were sufficient controls in place to limit how the firm used the

"I think this is outrageous, and I think the American people are rightly
outraged that their tax money is going to pay bonuses to the very people that
got this company in trouble," Boehner said.

Well he's on to something there. Maybe he can speak up a little sooner and a little louder in the future.