Because 90% tax is not enough

Posted by Marc Hodak on March 20, 2009 under Collectivist instinct, Politics | Read the First Comment

Barney Frank says, “Heck, why not just eliminate all TARP recipient bonuses, period.”  Uh, because we want at least some return of the massive investment you forced us to make in these firms?

But a zero bonus rule would be too simple.  Congress doesn’t want to keep it simple because they’re afraid of getting outsmarted by the bankers, once again.  So, like inept batters who keep swinging and missing, they’re simply pulling the backstop to the plate with a catch-all prohibition on “unreasonable and excessive” compensation.  Or, to use a card analogy, this would be like handing themselves a trump card.  In Tarot the trump card is represented by the Fool, which the French call “L’excuse,” as in “any excuse will do.”  This is quite appropriate as we move toward French attitudes about wealth creation.

The market will reasonably interpret this bill, should it make it into law as: TARP = bankruptcy…why draw out the agony?  Fair enough.  But there are precedents being set here.

Precedents like confiscating or eliminating all pay above a certain level would be bad enough.  But precedents where the government gets to decide what is reasonable in broad compensation matters invites unlimited meddling, especially when reasonable is whatever Barney Frank thinks is reasonable.  Is Barney Frank even capable of distinguishing reasonable?  Isn’t reasonable kind of different from “driven purely in reaction to headlines of the moment that stoke raw, unchecked emotion?