For the many reasons I've detailed elsewhere, it's gratifying to see the effort to slap a punitive and retroactive tax on AIG sputter and (probably) die. Perhaps Obama's admonition about using the tax code "to punish people" was taken seriously. And then I see something like this at the end of the WSJ article:

One potential alternative to the AIG tax bill could be House legislation giving the Treasury and the U.S. attorney general enhanced authority to recoup excessive bonuses.

I suppose it's possible that there would be some advantages to the "enhanced authority" system. Maybe it would make it easier to recoup bonuses from specific employees at a firm -- like those at AIGFP -- without pilfering from the entire institution. But if congress is proposing to give the attorney general or Treasury new powers to retroactively take back bonuses as a inoffensive alternative to the punitive tax, then I think they've missed the point of the criticisms of the punitive tax.

The point of those criticisms wasn't that there is something magical about the tax code (though it is magical in its own way) or uniquely terrible about using it as a partisan cudgel (though that's probably bad). The point was that laws in general that are retroactive, punitive, hasty and motivated by public outrage are not desirable things, in part because they have unintended consequences. Presumably, a law that gave members of the executive branch the power to recoup bonuses would still be one such law. ("Everybody knows you've got to address the outrage -- that's a no-brainer," Senator Max Baucus told reporters yesterday. Indeed, a no-brainer in more than one way.)

And in some ways it seems worse. A tax, at least, is consistent and predictable: The formula might be retroactive and punitive, but it's still a formula. Granting ad hoc powers to the executive branch seems rather less likely to produce consistent and predictable results.

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