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WASHINGTON : Top US senators expressed disquiet Sunday over a populist bill aimed at taxing nearly all of AIG-style bonuses, querying whether it was constitutional and if it might delay economic recovery.
The bill moves this week to the Senate after passing overwhelmingly through the House of Representatives on Thursday. Senators on both sides are looking at diluting its punitive levy of 90 percent.
"I've got my doubts whether that's the best way to do this," Senate Budget Committee chairman Kent Conrad said on ABC's "This Week" program.
"I think there are certain constitutional questions about the imposition of a tax on a limited group of people," the Democrat said, while sharing in the public outrage against bailed-out insurer American International Group.
"If I were in charge of AIG, I'd call in these folks and I'd say, 'Look, you either give them back or you're fired.' That we can do, because we own the company."
The senior Republican on Conrad's committee, Judd Gregg, said Treasury Secretary Timothy Geithner should have done more to stop the bonuses in the first place.
"People are disgusted and outraged, as they should be," he told CNN.
"But let's not overreact in a way that basically has the Congress grabbing its pitchforks, and charging up the hill, and abusing what is a core authority of a government, which is the authority to tax its people."
US media reported Saturday that AIG paid 218 million dollars in bonuses, more than 50 million in excess of what had been previously disclosed.
Connecticut Attorney General Richard Blumenthal calculated the new figure after receiving documents from the company Friday, the Hartford Courant reported.
AIG denied the higher figure, saying that bonuses paid out just over a week ago totalled 165 million dollars.
The House bill's tax rate of 90 percent would apply to employees whose total annual pay exceeds 250,000 dollars at firms receiving more than five billion dollars in government rescue funds.
The Senate will debate a proposal to lower the special tax rate to 35 percent but to expand its coverage to take in more companies.
"I'm not against getting the money back. In fact, I feel very strongly that we do need to recoup the money," Republican Senator Susan Collins said on ABC.
"I'm just not certain that either the House-passed bill nor the Senate bill are the best approach," she said.
Echoed by Gregg, Collins said: "We need to look for an alternative means of recouping this money that doesn't cause further harm to our economy as we're trying to get banks lending."
President Barack Obama's administration was set Monday to unveil new proposals to get hedge funds and other private lenders to buy up toxic assets choking the books of distressed US banks.
Christina Romer, who chairs Obama's Council of Economic Advisers, denied that private investors would refuse to partner with the US government because of the AIG controversy.
"What we're talking about now are private firms that are doing us a favour, right, coming into this market to help us buy these toxic assets off banks' balance sheets," she said on "Fox News Sunday."
"I think they understand that the president realizes they're in a different category (to bailed-out firms) and I think they are going to have confidence that they're going to be able to come into this program."
Romer was non-committal on whether Obama would sign whatever bill emerges from Congress to tax such bonuses.
The Obama administration has already ordered that executive pay be limited to 500,000 dollars a year at firms receiving government aid, with limits on bonuses and stock compensation.
- AFP /ls
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