In it, but not of it. TPM DC

Rep. Brad Sherman (D-CA), a senior member of the House Financial Services Committee, just pointed out the potential for loopholes to be opened in the AIG-inspired bonus taxation bill that his party is about to push to passage today.

Sherman, who warned TPMDC early on that executive-pay limits in the stimulus bill would be watered down, called today's bonus taxation bill "a step in the right direction" -- but noted that it would allow companies to still pay lavish bonuses while merely changing the terminology used to describe them.

But the most nagging question Sherman raised in his statement this afternoon relates to language in the Democratic bill that limits any bonus taxation to firms getting "capital infusions under the Emergency Economic Stabilization Act of 2008." Sherman interprets this language as applying to the preferred-stock purchases that were authorized under that law, which provided the first round of bailout funds nearly six months ago.

So would today's AIG-inspired bill apply to Citigroup, which last month converted its preferred stock to common stock and a "trust preferred security" with the government's blessing? And if 18 other banks follow Citigroup's lead by trading in their preferred stock -- they're all eligible to do so, as Federal Reserve Chairman Ben Bernanke said last month -- would that exempt those banks from today's bill as well?

Given the vaunted skill of internal counsels in the financial industry, one suspects they're working on making that potential loophole larger. You can read Sherman's full statement after the jump.

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A new CNN poll finds widespread approval for President Obama's Iraq withdrawal plan.

The question: "Barack Obama has announced that he will remove most U.S. troops from Iraq by August of next year but keep 35,000 to 50,000 troops in that country longer than that. Do you favor or oppose this plan?"

Those who favor the plan come in at 70%, with only 29% opposing it.

The data released so far doesn't tell us how many people oppose it from the right for withdrawing troops from Iraq, and how many oppose it from the left for not going far enough. Then again, the makeup of the opposition doesn't appear to be much of a concern if it's only at 29%.

Grover Norquist, the top anti-tax activist in the Republican Party, has given ABC an answer about whether Republicans can vote for the AIG-bonus tax and still be in accordance with the anti-tax pledge that the vast majority of them have signed with Norquist's group, Americans for Tax Reform.

The answer: Yes, you can -- but only if it includes additional offsetting cuts in taxes or spending, too. Norquist seems to acknowledge here that the AIG tax is itself a kind of spending decrease -- the government is taking back money it already spent -- but he wants more tax decreases, too.

"If your goal is to recoup the resources that you've given people that you hadn't thought would be spent this way, you can make it not a tax increase simply by having an offsetting tax cut on honest taxpayers," Norquist explained. "Or you could do the same thing by cutting the amount of money that you were going to give AIG in the next tranche that they'll demand, so you can have the withdrawal of the resources done in less spending."

He does get in a nice populist note: "However, I would prefer to raise the money by raising taxes on the idiot Senators and Congressmen who voted to give the money to AIG in the first place."

Washington's most powerful lawmakers are morphing into kitchen-table populists this morning with neck-snapping speed, as the House prepares to vote on a bill that would slap a 90% tax on AIG's infamous executive bonuses.

Republicans, while openly wavering on whether their anti-tax creed would allow them to back the AIG tax bill, are pushing an alternative plan crafted by two of their freshmen, Leonard Lance (NJ) and Erik Paulsen (MN).

The GOP bill would force a recouping of 100% of the AIG bonuses -- and the party clearly smells blood in the water as Sen. Chris Dodd (D-CT) becomes a scapegoat for the executive-pay debacle. Here's how House Minority Leader John Boehner's (R-OH) describes the Lance-Paulsen bill this morning:

Let's be honest. The legislation House Democrats are bringing to the floor today, which they claim is the best way to recover the AIG bonuses, is a sham. In a perfect world, it would lead to partial recovery of the bonuses a year or more from now - when the executives get around to paying their income taxes. And because the legislation is so riddled with loopholes, it wouldn't even lead to the recovery of all of the bonus dollars.

How is that a fair deal for taxpayers?

Don't taxpayers deserve to get 100 percent of their money back?

After all, they aren't responsible for the AIG executives getting the $165 million; Democrats in Congress and the Administration are. They're the ones who rushed through the trillion-dollar "stimulus" spending bill that allowed the bonuses to be paid in the first place.


In reality, the AIG bonuses were agreed to in the first quarter of 2008, and it's not clear whether Dodd's concessions to the Treasury Department on his CEO-pay amendment would have made any difference in getting the money back. Meanwhile, an amendment that would have punished AIG for its free spending, from Sens. Ron Wyden (D-OR) and Olympia Snowe (R-ME), was turned back by the administration during conference talks on the stimulus.

Just when you thought it was impossible to find more proof of the bungling of the bailout ... Rep. John Lewis (D-GA), chairman of the House Ways and Means oversight subcommittee, announced this morning that his panel had found 13 of the top 23 recipients of TARP owing the government $220 million in back taxes.

Making matters worse was the fact that any company getting TARP aid had to certify to the Treasury Department that they didn't owe back taxes before getting their share of the bailout, as Lewis explained. It appears that Treasury took the bailed-out businesses at their word rather than asking to actually see their tax records.

If there's any doubt remaining that Congress would not approve any more spending on the financial rescue, Lewis' opening statement this morning should put it to rest:

Taxpayers have no sense that there is any control over this money. They have no idea what, if anything, they will get in return. This entire program is based on trust - trust in the givers and trust in the takers. At this point, there is no trust.

To get money from Treasury, banks and others must sign a contract that states they have no material unpaid Federal taxes. Treasury did not ask these banks and companies to turn over their tax records. Treasury relied on the signed statements when it agreed to invest billions of taxpayer dollars. When you or I go to the bank to take out a mortgage to buy a house, we are asked for our tax returns. They're not going to just take our word for it, and we are not asking for millions of dollars.

The Subcommittee looked at the top 23 TARP recipients. We found that thirteen of them owed more than $220 million in unpaid Federal taxes. Two companies owe over $100 million each. How can this be? If we looked at all 470 recipients, how much would they owe?

Are they signing contracts knowing that they owe taxes but thinking they will not get caught? Did then-Secretary Paulson turn a blind eye? Either way, this is shameful. It is a disgrace. The American people are fed up, they are fired up, and they're not going to take it anymore. As members of Congress, we shouldn't take it anymore either.

A new survey of North Carolina from Public Policy Polling (D) indicates that GOP Sen. Richard Burr could be in serious trouble in 2010, as he runs for re-election in a state that flipped from the Republicans to the Democrats last year.

Burr's approval rating here is only 35%, disapproval is 32%, and a third of likely voters are undecided -- not very good numbers for an incumbent, to say the least. Against a generic Democrat, Burr has an initial lead of 42%-38%, with the incumbent well below 50%. Against Secretary of State Elaine Marshall, it's a very similar 43%-35% margin for Burr.

Democrats and independents are also more likely than Republicans to be undecided, suggesting that Burr already has much of his base locked down.

From the pollster's analysis: "A large segment of the electorate knows nothing about him and among those who do he's basically running 50/50. That makes him very vulnerable to a strong Democratic challenge next year."

The attack ads are getting pretty intense in the March 31 special election for Kirsten Gillibrand's old House seat, with the Democrat blasting the Republican for opposing the stimulus bill -- and the Republican launching an ad accusing the Dem of supporting the AIG bonuses.

Here's the new ad from Democratic candidate Scott Murphy, going after Republican Jim Tedisco for saying a few days ago that he would have voted no on the stimulus bill:



"Here's the answer, folks, get ready," we see Tedisco saying in footage from Monday. "No!" The repetition of the "No!" video is reminiscent of all those Americans United For Change ads, taking GOP leaders who say "no" and tying them to Rush Limbaugh.

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House To Vote On Bonus Tax Today The House of Representatives will vote today on a bill to tax bonuses of over $250,000 at financial institutions receiving bailout money, at a rate of 90 percent. Charlie Rangel explained to reporters: "We figured that the local and state governments would take care of the other 10 percent."

Obama In California -- Will Appear On Jay Leno President Obama is in California today, with a 1:30 p.m. ET tour of the Edison Electric Vehicle Technical Center Garage of the Future in Pomona, and a speech there at 1:45 p.m. ET. At 4:10 p.m. ET he will visit the Miguel Contreras Learning Center in Los Angeles, where he will be accompanied by Gov. Arnold Schwarzenegger, Mayor Antonio Villaraigosa, and Labor Secretary Hilda Solis. At 7:20 p.m. ET, he will tape an appearance on the Jay Leno show. And then tonight he will head back to Washington.

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AIG CEO Edward Liddy told the House Financial Services Committee today that the Federal Reserve had okayed his company's planned bonuses in advance -- and now Time magazine reports that the Treasury Department also knew about the ticking political time-bomb earlier than it has acknowledged.

As the magazine reports:

"Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus-payment] date was upcoming," a Federal Reserve source tells TIME. A Treasury Department source, speaking on background, confirmed the e-mail memo and its contents, saying, "Everybody knew that [AIG] had a retention issue."


When the debate comes down to a Nixon-style "what did he know and when did he know it," things aren't looking good. And we may have just reached that point for Treasury Secretary Tim Geithner.

Racked by negative coverage of its new chairman and its de facto talk-radio leader, the GOP is in need of a cause to rally around -- and it's found one in the storm of public anger over AIG.

Rep. Connie Mack (FL) today became the first Republican to call for Treasury Secretary Tim Geithner's resignation over the AIG bonuses controversy, a call quickly seconded by Rep. Darrell Issa (R-CA). House Minority Leader John Boehner (R-OH) took the middle ground by warning ominously that Geithner is "on thin ice."

Of course, Republican outrage at Geithner is to be expected. It's the lukewarm support coming from Democrats that should most concern the Obama administration.

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