Treading Carefully in Unchartered Waters
The (self) righteous anger that emerged from Congress last week over the AIG bonus situation was a perfect example of just the type of damage that can come from the government during trying economic times. After shrugging aside the role that Christopher Dodd played in allowing the AIG bonuses to go forward in the first place, the redistributionists now want to punish AIG and other beneficiaries of bailout bucks by imposing a 90 percent tax on those same bonuses.
The Obama administration and some cooler heads on Capitol Hill are justifiably squeamish about the idea. It may be unconstitutional. It also sets a bad precedent of targeting specific groups with punishing taxes. If this new tax flies, who can say where it will lead next? Media companies that generate product critical of the government? Manufacturers not deemed to be environmentally friendly?
Robert Samuelson, who is probably one of the best economic columnists around, wrote today that while government has sometimes actually come to the rescue in prior economic emergencies, subscribing to the theory that government should have a controlling hand in our markets is a dangerous proposition.
President Obama said on 60 Minutes that "we can't govern outta anger." He's right. But he may have to face down his comrades in Congress if he truly intends to stand by that point.