Cantor on AIG Stimulus Provision to Protect Executive Bonuses

WASHINGTON, D.C. – House Republican Whip Eric Cantor (R-VA) today issued the following statement on how taxpayer dollars were used for bonuses for AIG executives:

“One of our biggest concerns with the bailout, the stimulus, and government intervention in the private market was the stunning lack of accountability for taxpayer dollars. To date the Administration still has not put forth a plan to show taxpayers how the government will be accountable for how their dollars are spent. Whether it is Secretary Geithner or someone else, the Administration must account for the spending of taxpayer dollars and answer the question as to why taxpayers were forced to reward some of the executives who created this mess.

“Today, news reports reveal that a last minute provision in the stimulus bill inserted by Democrats protected bonuses like those received by AIG executives. Taxpayers deserve better than this from their government, and this is just the latest reason why legislation must be transparent for all Americans to see before it is recklessly signed into law.”


BACKGROUND:

Inserted By Democrats And Signed Into Law By President Obama, The Executive Compensation Rules In The Stimulus Bill Specifically Exempt Bonuses In Contracts Signed Before February 11 From The New Rules. "The new rules, introduced by Sen. Chris Dodd (D-Conn.) mark one of the major concessions Obama made in the last days of wrangling over the stimulus package he is expected to sign into law on Tuesday in Denver. … Additionally, the rules in the stimulus bill apply not only to companies that receive bailout funds in the future, but also to those that have received TARP money in the past - although executive bonuses doled out in contracts signed before February 11 would not be impacted." (Carol E. Lee, "Dodd Banker Pay Cap One-Ups Obama," Politico, 2/14/09)

Fox Business: "Dodd Unexpectedly Added An Executive-Compensation Restriction To The Bill" That "Exempts The Very AIG Bonuses Dodd And Others Are Seeking To Tax." "Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group bonus recipients so the government could recoup the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax. While the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an 'exception for contractually obligated bonuses agreed on before Feb. 11, 2009,' which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law. Also, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org." (Rich Edson, "Amid AIG Furor, Dodd Tries to Undo Bonus Protections He Put In," Fox Business, 3/17/09)

Stimulus Bill Text: "The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary." (H.R. 1 – The American Recovery And Reinvestment Act of 2009)

During the March 17 broadcast of his nationally syndicated radio show, Rush Limbaugh -- "a great leader for conservatives" -- defended American International Group (AIG) from criticism of the company's controversial employee retention bonuses. Limbaugh declared, "A lynch mob is expanding: the peasants with their pitchforks surrounding the corporate headquarters of AIG, demanding heads. Death threats are pouring in. All of this being ginned up by the Obama administration." Limbaugh later claimed, "This $500,000 limit on executive pay -- let me tell you why it won't work. New York City will die. New York City needs a whole bunch of people being paid a whole lot of money, so they can tax their butts off, so that the city can maintain its stupid streets, potholes, and welfare state. Without the super wealthy in New York, it's over. ... This -- it's just a populist ruse. It's just designed to people go, 'Yeah, yeah!' "

In addition, on March 16, Limbaugh challenged a caller who opposed the bonuses. The caller said, "I do agree with [President] Obama trying to get these bonuses back from the AIG execs because, I mean, that's our money." Limbaugh replied, "Let me ask you a question. ... You have a company -- let's take AIG out of this 'cause they're so emotionally charged. Let's say that the company being bailed out is the XYZ Widget Company. ... We need them to manufacture widgets and sell widgets and so forth. So why in the world -- or how do you get to the point where you're going to bail out the company, but you don't want the employees to get paid?" Limbaugh later added: "[T]his is not just executives, but executives are employees, too. And in many of these firms, Nathan, their salaries are pretty small. They work on bonuses, via contract based on merit."