Comments on FiveThirtyEight: Politics Done Right: Throw Out Baby, Bail Out Bathwater

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2009-03-30T11:08:00.000-04:00

i think we give to much power to groups such as AI...

2009-03-27T15:48:00.000-04:00

i think we give to much power to groups such as AIG because how would they get to a point??? where they start to get THE PEOPLES tax dollars and give them away as bonuses with the gov. knowing and get away with it! thats ridiculous. But theres no telling how long this has been going on before the people were made aware. also by groups such as AIG doing this and the people who actually struggle to make there money see this, this lowers the trust in the gov. which is at an all time low i believe right now. president Obama has a spark in him that is raising MOST peoples trust in the gov. but things get worse before they get better and alot of people dont realize that

I disagree with this one, Nate. Whining about bonu...

2009-03-22T11:46:00.000-04:00

I disagree with this one, Nate. Whining about bonuses is disingenuous to the reality that most people never get bonuses. Until you can point to evidence of a person being substantially less well off because they didn't get a bonus, then I think you should reconsider arguing so strongly for them.

I agree with the general argument in your post but...

2009-03-22T00:55:00.000-04:00

I agree with the general argument in your post but take exception to the use of Jamie Dimon as an example of someone who didn't blow taxpayer funds. Are you kidding me? How do you think JPM bought Bear? They wouldn't have bought it last year if Treasury didn't agree to absorb all the losses on Bear's loan book. JPM is costing the taxpayer billions more than most other big banks.

@Mike,Thank you for offering your judgement of Pet...

2009-03-21T21:58:00.000-04:00

@Mike,

Thank you for offering your judgement of PeteKent's past behavior.

Life's a bitch, then you die. My group at Motorol...

2009-03-21T20:50:00.000-04:00

Life's a bitch, then you die. My group at Motorola was doing well. Cellular wasn't. So the entire company lays off a third of its people. There are countless examples from the real world that refute the points made in support of these bonuses for bailed out companies. The real issue is clear: they'd be in bankruptcy if it weren't for the taxpayers, so they'd be getting no bonuses. Suck it up, and hope things improve, and next time you think of betting the entire economy on your derivatives hunch, better think twice, and then think again.

Hear that Muddletoes? Stop feeding Mike.

2009-03-21T20:43:00.000-04:00

Hear that Muddletoes? Stop feeding Mike.

For instance, JP Morgan Chase, a bank that did not...

2009-03-21T19:21:00.000-04:00

For instance, JP Morgan Chase, a bank that did not make big bets on the subprime market, did not trade in the quasi-criminal derivates market still received TARP money because the government asked them to step in and keep Bear Stearns from failing

Uh, that WAS a bailout of JPM. They were huge counterparties to BS and would have been the first domino to fall behind them. JPM *invented CDSs* as well as generated 43% of the entire CDS market. I have no idea what you mean by "did not trade". "Generate" is not trade, somehow?

But aside from "the massive bank that's been *writing* every law that pertains to them for 30 years somehow now is victim schtick" . . . You have the order of events confused. Congress is reacting to anger, not fomenting it. By doing nothing, they would signal to their constituents that individual action is the only remaining outlet. That would be very bad.

The only "reasonable" suggestion, as I read yours here, is to let them rob us all blind for years (years this has been going on) oh, and then of course let them continue on as before, with all our representatives in their pockets, and write some pitifully weak laws somewhere down the line that don't change anything by have lots of pretend circus. That will be the outcome of your suggestion, so in reality it reads, "do nothing."

If they don't get hammered now, somehow, for 6+ years of legal graft across the system, then they will simply continue to consolidate their power and there is no way we will get any stronger laws that limit them. Ever. We will be a banana republic and we will deserve to be.

@Statler:They want to think it is illegal, but the...

2009-03-21T18:49:00.000-04:00

@Statler:

They want to think it is illegal, but they are focusing on intent and not on the legal definitions.

Sure, the passing of the law is after the execution of the deed, and that is what "ex post facto" (after the fact) means; but not how it is defined legally with regard to the tax code. Because in the tax code, income is only defined for computing tax purposes after the final second of the year has passed on Dec 31st. So legally it is NOT after the fact, because the fact of income has not occurred yet and won't for nine more months.

Maybe it sounds like a Bill of Attainder to them, but they aren't declaring the bonus recipients criminals so it isn't, and taxes are not considered punishment either. A Bill of Attainder requires punishment, and some people may regard taxes as punishment, but they don't meet the legal definitions of punishment. Otherwise all taxes are punishment; I could say the government charging higher taxes on luxury items is a Bill of Attainder, or the progressive tax system is a Bill of Attainder.

So all their protestations are bullshit; they want to interpret this as a punishment of a legal process so they do, and somebody brought up a "Bill of Attainder" with the cachet of appearing in the Constitution and they don't even know what the fuck a BoA even is but they want this to be one.

That's it, it violates their sensibilities so they claim it is unconstitutional; just like common idiots that think lying or adultery are actually against the law.

Ted said...It's not a question of whether these ex...

2009-03-21T18:42:00.000-04:00

Ted said...
It's not a question of whether these executives sulk and leave. The law imposes a more-than-90% tax on earnings above $250,000, regardless of source.

Your wrath might be justified if it were based on facts.

However, it is obvious that you have not read the legislation, nor have you checked out the facts from the provider of an honest synopsis.

From the legislation (H.R. 1586):
(2) DISQUALIFIED BONUS PAYMENT-

(A) IN GENERAL- The term `disqualified bonus payment' means any retention payment, incentive payment, or other bonus which is in addition to any amount payable to such individual for service performed by such individual at a regular hourly, daily, weekly, monthly, or similar periodic rate.

(B) EXCEPTIONS- Such term shall not include commissions, welfare or fringe benefits, or expense reimbursements.

(C) WAIVER OR RETURN OF PAYMENTS- Such term shall not include any amount if the employee irrevocably waives the employee's entitlement to such payment, or the employee returns such payment to the employer, before the close of the taxable year in which such payment is due. The preceding sentence shall not apply if the employee receives any benefit from the employer in connection with the waiver or return of such payment.

The ONLY circumstance the 'administrative assistant making $40,000 a year' 'whose spouse makes >$210,000 at their job at an unrelated company' would pay any 90% tax is if any of the $40,000 earned was 'retention payment, incentive payment, or other bonus which is in addition to any amount payable to such individual for service performed by such individual at a regular hourly, daily, weekly, monthly, or similar periodic rate'. ONLY the portion of the $40,000 that is 'bonus' would be taxed, not the entire taxable income. And it is HIGHLY doubtful that any administrative assistant at AIG was paid any amount of 'bonus' money as defined in H.R. 1586.

Pack away your righteous indignation until you read the facts, then if the facts fit, you can express that righteous indignation.

In this case, your indignation is misplaced.

So how much bonus money was there?AIG originally s...

2009-03-21T18:22:00.000-04:00

So how much bonus money was there?

AIG originally stated it was $165 million.

Then on Friday, it turned over documents to the Connecticut Attorney General, and on Saturday the AG announced that it totaled the bonus money at $218 million.

But we then have another figure entering the scene. Did anyone here realize that AIG had given out $55 million in 'retention bonuses' prior to last weekend's gluttony of $165 million given out?

http://www.msnbc.msn.com/id/29812224/

Anyone here still want to even try to pretend that AIG isn't a lying sack of male bovine droppings, and try to defend them?

muddletoes,In case you don't know, the TROLL who s...

2009-03-21T18:15:00.000-04:00

muddletoes,

In case you don't know, the TROLL who signs in as 'PeteKent' is exactly that - a TROLL.

Please:

Do
Not
Feed
The
TROLLs

DNFTT

@PeteKent:For me its I've always said to myself th...

2009-03-21T16:41:00.000-04:00

@PeteKent:

For me its I've always said to myself that I will vote with the Party that favors popular freedom over the imposition of government control.

Indeed, the Republican party will give you any freedom you want, so long as it's popular.

I may have been to harsh on Statler."Well, I've al...

2009-03-21T15:53:00.000-04:00

I may have been to harsh on Statler.

"Well, I've always said to myself that I will vote with the Party that favors the disadvantaged over the rich."

I think sometimes you can make your selction simply, especially in a binary system like ours.

For me its I've always said to myself that I will vote with the Party that favors popular freedom over the imposition of government control.

Statler at 149 struggles with coherence, but he ma...

2009-03-21T15:51:00.000-04:00

Statler at 149 struggles with coherence, but he makes a good point: "Why should I vote for a wannabe Republican when I can get the real thing?"

Indeed wisdom eventually comes to us all. The laws of economics cannot be repealed any more than the laws of nature. The Republicans have always respected such laws, the Democratics seek to change them.

They might just as well sponsor a giant public works program to change the tides or the direction of earthly rotation.

Emma @102 might as well be Madame Defarge. She wr...

2009-03-21T15:47:00.000-04:00

Emma @102 might as well be Madame Defarge. She writes:

"It's like the criminal complaining about how the laws are written!"

Note how quick some people are to presume that everyone who works in the financial services industry is a criminal, and even if they are not it is okay to punish the innocent as long as we don't miss any of the guilty.

That might make sense if it had anything to do with restoring the economy or creating jobs, but instead iit s caluculated to destroy the very powerhouse that makes our economy run.

I understand the outrage. What I don't understand is the ignorance and the lack of self-interest.

@Statler N Waldorf:Why should I vote for a wannabe...

2009-03-21T15:33:00.000-04:00

@Statler N Waldorf:
Why should I vote for a wannabe Republican when I can get the real thing?

If you want the real thing, by all means go ahead and vote for the real thing. Please. Be my guest.

However, two things.

Firstly, it's been fundamental to Obama's approach from the beginning that the executive should attempt to govern from the center of consensus rather than by radicalizing and rewarding a self-identified 'base' that can deliver 50% + 1.

Secondly, if you want to ensure that government focuses on an agenda of helping the disadvantaged rather than fulfilling the expectations of the wealthy, you need to get in there and become politically active yourself. You live in a country with a two party system. Like the Republican party, the Democratic party is full of the 'advantaged', many of whom are not as strongly aware of the plight of the 'disadvantaged' as you are, and most of whom have — between each other — multiple conflicting concerns, all of which they would allow to take precedence. It's an inevitable consequence of how political power works, and rewarding them for 'favoring' the disadvantaged concedes the point and moves the social dynamic not towards equality but towards a system where there is a perpetual constituency of the disadvantaged who rely upon the Democratic party for patronage.

This isn't due to anyone's plan, or anything; it's just where equilibrium lies. If you want to change the world you need to go change the world. I'm not sure how you're going to do that by voting Republican, but I guess you'll think of something.

It's not a question of whether these executives su...

2009-03-21T15:29:00.000-04:00

It's not a question of whether these executives sulk and leave. The law imposes a more-than-90% tax on earnings above $250,000, regardless of source. Why work any longer, once past that point?

Also, the law taxes any compensation other than hourly or weekly wages, at over 90% (including state and medicare taxes). So someone who left one of these firms years ago, who makes over the limit at their new job -- gets taxed at 90% on compensation deferred in earlier years. Compensation that has nothing to do with incentive bonuses.

The example of the administrative assistant making $40,000 a year, whose spouse makes >$210,000 at their job at an unrelated company, is truly scary -- why is he taxed at 90% on his admin's salary?

The scope of this law is so much broader than its target, that it's scary.

Well, I've always said to myself that I will vote ...

2009-03-21T14:49:00.000-04:00

Well, I've always said to myself that I will vote with the Party that favors the disadvantaged over the rich.

If Nate is representative of the Democrats that have started to favor the Wall Street Robber Barons over the working class, fuck you Nate, I'm voting Republican.

And before you all start howling at me (and I can sense already that the liberal posters here will) I vote according to the issues not the party. You've already started talking about abandoning GLBT rights as a plank int he platform, then the environment and now this. Why should I vote for a wannabe Republican when I can get the real thing?

Betray your base and you only have yourselves to blame when the whole shithouse goes up in smoke. And bitching at me isn't going to make me vote for you either-get back to your core values and show me you were sincere when you promised us an agenda that favors the disadvantaged instead of the elites.

Before we remember that y9ou first noticed food prices were going up while shopping at Whole Foods for arugula and not while shopping for the food working class people eat at a market we can afford. Unless you just send the butler out to do the shopping while you hobnob with the Wall Street execs.

It's like the criminal complaining about how the l...

2009-03-21T14:02:00.000-04:00

It's like the criminal complaining about how the laws are written!

He may be right but I just can't muster alot of sympathy.

Bonuses that have no connection to performance shouldn't be called bonuses.

Company performance should always be a factor to individual incentive pay.

I'd love the topic to focus on the fact that the credit default swaps that killed AIG were COMPLETELY unregulated. This was because Phil Gramm wrote into law an explicit prohibition to it's regulation. A Republican House and Senate passed the legislation with broad Democratic support and Clinton signed it.

We need to understand where this problem came from in order to fix it.

Nate understands the issue perfectly. The punitiv...

2009-03-21T12:57:00.000-04:00

Nate understands the issue perfectly.

The punitive aspect of this is astounding and makes little sense in an arena where the affected class most likely earns a median income of $2,000,000, and would also sweep in the highly professional admin assistant who adds all the sizzle to presentation, putting together the books, suggesting graphics and layout suggestions and getting paid over a 100K for it. No bonus for her if her husband is a NYC Fireman pulling down the bucks it takes to attract America’s Bravest.

You cannot design fair compensation packages with a blunt instrument like this. Would this prevail the industry would be done and inside of ten years there would be one Bank, the Bank of the US. The Post Office of Banks. It would mean a virtual return to the pre-industrial revolution. This moment would be looked at as the Zenith, perhaps the beginning of the coaster falling just over the apex of the highest hill, an exhilarating, terrifying race to the bottom, from a height never to be equaled again.

That the United States House of Representatives, the people’s house (!), would act so categorically against the tender interests of the people (all the people) and would ignore glaring evidence of Constitutional infirmity, sullying its place in the annals of democracy, is beyond my comprehension. What a venial political calculus that would rather subvert the people’s freedom than see its agenda defeated and use class warfare to distract from the real policy issues that should be vetted, but few are allowed to understand.

Make no mistake: this tax bill is not intended to be made into law. It is meant to distract and throw some bones to the people, the popular version of Bread and Circuses. All parties do it, but until now none had been so inept as to throw the financial markets of the United States under the bus at the very time that the administration’s plans are so dependent upon the market’s resiliency and ability to absorb yet new trillions of debt in a short, short period of time. Inside of a few years there will be no one left to sell those Bonds to the Chinese and then one way or the other we will be working for them.

President Obama risks losing his legitimacy by losing the consent of the governed. He fails to use his power to command our attention to educate us, he only is motivated by a desire to inflame us to support him and his agenda for visceral and personal reasons that, like the reaction to the AIG Bonuses, seems apt and just, but in their implementation would lead to total destruction.

Reason from the margins and figure out at which pole you might survive.

(You can now follow me on Twitter: PeteKent01)

Well, if it is legal then, WTF are we arguing abou...

2009-03-21T12:47:00.000-04:00

Well, if it is legal then, WTF are we arguing about?

I'm so confused by this whole mess.

1) Why are Democrats defending rich banksters and Republicans decrying the fate of the working poor? This is something like seeing gravity reverse itself spontaneously, and yet nobody seems to be bothered enough to comment on this bizarre, sudden political switcheroo.

2) If it's legal and constitutional like Tony says. why is it that Nate here, and even the folks on Washington Week are calling it an ex pos5t facto Bill of Attainder? I mean, if it were a muddy part of the law like what exactly constitutes pornography, the debate would be more amusing. But both sides are saying it's not muddy at all, and it seems crystal clear tot hem: Nate says obviously it's not, and Washington Week and Nate say it is clearly so. As a non-lawyer, I am developing a headache from watching the two sides in action.

The problem is a wage and compensation system that...

2009-03-21T11:38:00.000-04:00

The problem is a wage and compensation system that is disconnected from the contingencies of performance that is tied to quantitative and qualitative measures aligned with company/corporate goals (which can be regulated; e.g., a goal to increase productivity by utilizing smoke stack technology or outsourcing labor. A performance-based system eliminates bonuses and excess salaries being paid out despite the success or failure of an organization.

@Bruce:A pretty good observation! In some sense, t...

2009-03-21T10:01:00.000-04:00

@Bruce:

A pretty good observation!

In some sense, these firms have formed a trust, or monopoly, even if they didn't collude to do so.

This is a basic problem with capitalism; the natural outcome over a few decades or centuries (depending on the industry) is monopolistic rule, which destroys competition and all the supposed benefits that Adam Smith was talking about. Those benefits come from the competition for customers, but eventually this competition tends to produce a big winner that dominates the market and no longer has to compete for customers, and can crush any new competition with price, lawsuits, legislation or just economies of scale. They have a monopoly, and this is not in the best interest of customers.

At this point, big banks have monopolized our financial industry, and are holding us (the taxpayers) hostage to fund their multi-million dollar salaries, extravagant buildings and offices, corporate parties, jets and much more. If we don't fund it, they will trigger a great worldwide depression.

@Merin:This is not a very well reasoned position. ...

2009-03-21T09:51:00.000-04:00

@Merin:

This is not a very well reasoned position. People are worth more if they contribute more, that is what most compensation negotiation is all about.

A janitor employs a minor amount of skill and knowledge at their job, and almost anybody can be trained to do it within a few hours. Same thing for a cashier, or shelf-stocker, or forklift driver or warehouse worker.

Now if I have two companies, A and B, and A is doing much better than B, why exactly do the janitors in A deserve more than the janitors in B?

It seems very unlikely to me that the janitorial staff is the key difference between A and B. Much more likely is A's buyers, or salesmen, or managers that invested in better equipment, or A's programmers, or something.

It isn't like Joe is out there generating twice the revenue by driving his forklift around the warehouse twice as efficiently. Look at him load those boxes!

Tellers, computer techs and clerks are in jobs that do not exert any leverage on the bottom line. They chose this line of work, for whatever reason, but the fact is they cannot generate much of an economic boon to their company no matter how quickly or diligently they work; the company is happy if they just get their assignments done.

It is the people that have unusual skills that deserve both credit and reward for making A do better than B. The clerks and janitors at A have done nothing and contributed nothing that makes them deserve more money than the clerks and janitors at B, I don't understand why you think they should be paid more just because A is more profitable.