Will Senate Slow the AIG Tax’s Roll … To A Halt?

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Since TPMDC first noted on Friday that the Senate was putting the brakes on the AIG-inspired bonus taxation bill, the signs of a further slowdown are piling up.

As more banks warn that a broad bonus tax would drive them out of the open arms of the Treasury Department, even senior figures in the Obama administration are suggesting that the House’s 90% levy on this year’s bailout bonuses might not reach the president’s desk.

But where does that leave the Senate, which aims to take up the bonus tax plan in the coming days? In a potential pickle, with must-get centrists such as Kent Conrad (D-ND) and Susan Collins (ME) cool to the idea and Majority Leader Harry Reid (D-NV) already facing a huge challenge in marshaling support for the White House budget — which is scheduled for floor consideration starting next week.

Even House Financial Services Committee Chairman Barney Frank (D-MA) — who is supporting a bonus tax bill that would impact far more companies than last week’s AIG-inspired measure — took a mushy line on the 90% tax yesterday, telling CBS: “I voted for the bill. I was not a major advocate for it.”

If senior lawmakers keep coming down from last week’s woozy, angry anti-AIG high, look for tomorrow’s testimony from Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke to be more of a test of political capital for Geithner than an AIG frustration-fest.

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