The Washington Post reports that Fannie Mae plans to pay four top executives $1 million or more in retention bonuses. The Post helpfully explains that a fifth of this money was paid in 2008. The four Fannie Mae executives will receive about 60 percent of the remaining funds this year and, depending on performance, as much as 40 percent next year.
According to this statement issued by the Speaker’s office, the Fannie Mae retention bonuses would be subject to the 90 percent tax rate set in the bill the House is to vote on today. However, the 90 percent rate principally targets the AIG retention bonuses.
The last time the tax code carried a marginal income tax rate in this neighborhood was the period 1951-1963, when the top income tax rate stood at 91 percent. From 1971 through 1981, the top income tax rate stood at roughly 70 percent. Then came Ronald Reagan. (See this table.) A 90 percent income tax rate (even if not a marginal rate) harkens back to the good old days for liberals.
Pelosi’s proposed 90 percent income tax rate on the nefarious bonuses may well be a stalking horse for tax rates exceeding those to which Obama has already vowed to return. if so, the frenzy over the AIG bonuses would thus have produced another application of the key adage of the Age of Obama. That would be Rahm Emanuel’s proposition that you never want a serious crisis go to waste. In this instance, one would have to extend it to add: Even if it is a crisis of your own making.
UPDATE: The editors of National Review make the point in another way, arguing that LBJ returns.