A.I.G. bonuses taxed

Steve Chapman points out that the spasm of anger in which congress passed a retroactive 90% tax on the A.I.G. bonuses is being directed at the wrong people:

Congress is outraged. Really, really outraged. Unbelievably, incredibly outraged. And there are certainly grounds for anger.

Not at the insurance company AIG, which paid bonuses that are seen as intolerable, but at Congress, which blithely declined to prohibit them but is now shocked to find AIG doing what it was allowed to do. The Democrats who control Capitol Hill want revenge, as do many Republicans. So the House voted by a 328-93 margin to impose a 90 percent tax on the payments.

In doing so, members resolutely avoided a couple of inconvenient realities. The first is that the fault, if any, lies with the same people who are now angry. The second is that the tax conflicts with the clear intent of the Constitution.

The whole bonus scheme is intended to retain key personnel, and it makes perfect sense. In good times, high-performing executives can always try to move on to other firms who (in theory) offer more money, more opportunities for advancement, or both. The bonus payment is to try to keep those executives where they can do the most good for the corporation paying the bonus.

In these trying economic times, the bonuses actually make even more sense for the rest of the economy. They function to keep those same executives who made a total balls-up of A.I.G. from moving to other companies to do the same pillage-and-burn-and-sow-the-fields-with-salt to them. It's cheap, from the larger economy's point of view, to pay relative peanuts to keep all these folks from moving on and infecting other companies.

Update: Mark Steyn speaks for the outraged:

Are you outraged by these AIG bonuses?

No, no. For Pete's sake, you're an A-list congressional big shot. Try to get a bit of feeling into "outraged." The president's teleprompter puts it in italics, bold, capitalized and underlined: OUTRAGED !

That's better. Don't forget to furrow your brow and fume. No, not like a camp waiter when you send back the arugula salad drizzled in an aubergine coulis. We're looking for primal, righteous anger: You're outraged, OUTRAGED that bonuses are being handed out at companies the American taxpayer is bailing out. Yes, to be sure, the bonuses were specifically provided for in the legislation, but, like all busy senators and congressmen, you don't have time to read every footling trillion-dollar bill before you vote in favor of it. And yes, true, the specific passage addressing these particular bonuses was, in fact, added to the bill in your name, but that was nothing to do with you — you just did that because the White House asked you to, and just because their people called your people and some intern in your office drafted some boilerplate with your name on it is no reason for you to be denied 10 minutes of grandstanding on MSNBC. It's an outrage to suggest you're anything other than outrageously outraged!