TPM Reader TR points to one of the key issues in the whole ‘bonus’ debate.
I’m certainly no expert on the financial wheelings and dealings of Wall Street (how many times have you heard THAT caveat the last few days?), and I actually think that contributes to the overall problem so many people are having with this whole bonus issue. For much of the middle class, the term “bonus” is something you earn at the end of the fiscal year when you’ve done particularly well and/or your business division has turned a nice profit for the company overall. It’s a reward for out-producing expectations; it’s a
thank-you from the bosses for doing your job so well that the executives and the shareholders get more in their pockets, too. These AIG execs aren’t getting bonuses; they’re getting guaranteed income called something else for tax purposes. Everyone who is flipping out (and I was certainly one of those) is reacting so strongly because it feels like these bozos are getting rewarded. To us working stiffs, it’s a message of “great job!” when in fact we want to beat them all with rubber hoses. We’re incensed not just because of the money going back into their pockets, but because it feels like we’re being forced to congratulate them with our own tax money while our own bonuses flew the coop (along, quite often, with their associated jobs).
I know a number of people who work or in a few cases worked at the big investment banks here in the New York. And while the size of the bonuses would float to some degree with how well the bank did in a given year, and presumably how well they performed, to a great degree it was locked in income. And the great bulk of these people’s incomes came from their bonuses.
So in some respects, the people getting nicked here can say, hey, I’m losing two-thirds of my salary. In other ways, though, it’s just a trap of the industry’s own making since over the years they’ve increasingly used this redefinition as a tax avoidance mechanism — only now it’s coming back to bite them.
