With Treasury Secretary Tim Geithner proposing the Public-Private Investment Program this morning, the good people at Heritage Foundation’s Foundry blog ask a timely question: “Would You Do Business with this Government?
This Saturday a bus filled with about 40 people pulled into a cul-de-sac in Fairfield County, Connecticut where a pastor and a steelworker disembarked and made their way to the front door of one of the large homes in the neighborhood. The protestors did not make it to the door however, as they were met by a security guard working to protect the home’s owner: AIG executive Doug Poling.
The identities of most current and former AIG employees remain private, for now, but for those executives whose names are known, life now includes security guards at their homes, reporters in their driveways, and vehicles invading their neighborhoods. Nobody was hurt and the protest went off without incident, but the event should serve as a dire warning for anyone even thinking about participating in Treasury Secretary Timothy Geithner’s new Public-Private Investment Program.
Thankfully, Administration officials are indicating they believe the retroactive tax on executive bonuses is unconstitutional, but the damage may have already been done. Let’s put that in the active voice: Congress may have already done the damage. From the Wall Street Journal, an editorial, “A Smoot-Hawley Moment?”
With such a sweeping assault on contracts and punitive taxation, Congress is introducing an element of political risk to economic decisions that is typical of Argentina or Russia. The sanctity of U.S. contracts has long been one of America’s competitive advantages in luring capital, a counterpoint to our lottery tort system and costly regulation. Meanwhile, the 90% tax rate marks a return to the pre-Reagan era when Congress and the political class behaved as if taxes didn’t matter to growth or incentives. It is a revival of the philosophy of redistributionist “justice” of the 1930s, when capital went on strike for an entire decade.
On 60 Minutes last night, the President sent a modest signal to Congress to slow down the populist rush to action, saying, “I think that as a general proposition, you don’t want to be passing laws that are just targeting a handful of individuals.” Obama added, “We’re going to have to take a look at this legislation carefully.”
It’s time for a Congressional leader to make the same call.
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