(White House Press Pool) In what insiders say is a move calculated to penalize insurance giant AIG for recent bonus payments that have outraged Washington, President Obama announced today that he is backing a bill proposed by Senator Charles ("Chuck") E. Schumer, D-NY, that would retroactively tax benefits paid by "any insurance company more than 79% owned by the Federal Reserve Bank" to veterans of the first or second Gulf Wars. The description is applicable to AIG, which is the only insurance company to date in which the Fed has purchased a 79.9% stake, by fronting to it more than $170 billion.
(The White House simultaneously announced [scroll down for details] that it was withholding $165 million---an amount equal to the bonuses that AIG paid---out of the next $30 billion it is advancing in its latest effort to keep the huge corporate sponge afloat, so that it will receive only $29,835,000,000. "That will sure teach AIG a lesson," said Press Secretary Robert Gibbs. "This administration was shocked---shocked! I say---that AIG would actually go ahead and pay those bonuses. But now our total investment in AIG, thanks to the President's quick thinking, will be only $199,835,000,000 instead of $200,000,000,000.")
Timothy Geithner, Secretary of the Treasury, estimated that the proposed tax, applied retroactively to all private health insurance benefits paid by AIG to wounded veterans since 1991, could bring as much as $460 million into the Government's coffers. "We're hurting right now," he said in a hastily arranged press conference at the White House, just after he finished meeting with President Obama to go over the details of the unusual plan. "That money, plus the $540 million we expect to raise by billing the veterans' insurers directly for all the future costs of their care, will come to an even $1 billion that the Government would otherwise not have. It will allow us to release more funds to community organizers than we had anticipated, and I'm sure you realize that when you gain a billion here and a billion there, it all adds up---especially when we're spending trillions as I speak."
Pressed for an explanation, Secretary Geithner ticked off a number of rationales for the retroactive tax:
"Number one," he said, "President Obama himself---remember, he used to be on Harvard Law Review---figured out that Senator Dodd's call for a 100% tax on the AIG bonuses, especially after he (or persons in his office unknown to him) authored the language that exempted them, would probably be struck down as an unconstitutional 'bill of attainder'. So we had to go back to the drawing board to figure out a way to reach AIG, and really send it a message that it's no longer 'business as usual,' now that I am---I mean we---we are its chief shareholder."
"Number two," he continued, "we realized that the bonus payments are already going to be taxed, just in the normal course of things, at about a 50% rate, when you take into account state and local income taxes as well as federal income and employment taxes. So taxing the remaining 50%, even had we been able to do so at a 100% rate, would have yielded only an additional $83 million. But by taxing the benefits paid to vets, we figured we could bring in nearly five times that much. So it was a no-brainer."
"And thirdly," he concluded, "we realized that if we could have made the AIG executives return their bonuses, the same rationale would have required legislators to return all of their AIG political contributions. That would not have been politically acceptable in the current economic downturn." [Ed. note: Campaign finance records [scroll down], which are difficult to read because of the faded and blurred state in which they have been made available to date, are believed to show that AIG paid only two legislators amounts in the six figures for 2008: the sum of $103,100 to a "C. Dodd" of "WashDC", obviously a resident of the nation's capital, and the sum of $101,332 to a "B. Hussein O___" (the last name has been scratched out), identified only as from a place called "Hide Park". Journalists from the major newspapers are systematically questioning Capitol office receptionists in order to find out who received the money, and where it went.]
Asked how taxing wounded veterans could possibly be justified, Secretary Geithner responded: "We recognize that the burden of spreading the wealth around cannot be imposed equally on all," he said. "These particular citizens, however, received substantial benefits in the form of health care for which they were never taxed, and that's just not right. I, of all people, ought to know that," he chortled. "Fortunately, AIG kept excellent records of all those payments, and so we were able to estimate the anticipated revenues almost to the penny---at least, assuming all those wounded vets are still alive. But even that doesn't matter, because for those of you who can read the budget, you know that starting next year, we are going to reimpose the death tax, and we'll get that money then."
When queried about how the tax could be made retroactive to 1991, the Secretary had a ready answer: "Oh, we've looked thoroughly into that, and there's no problem. Congress frequently makes taxes retroactive, and no one has ever successfully complained. Besides, given that President Obama did not vote for either of the wars in question, the people who are now veterans were employed illegally to fight them, and so they have no ground whatsoever on which to object."
In response to a reporter who tried to point out that both Gulf Wars had been authorized by Congressional resolutions, Secretary Geithner testily snapped: "That was then, this is now. The point is that the President did not vote for either of them, so from his perspective, which is all that counts here---remember, he won the election---those wars were 'dumb' and unauthorized. I'm sure the Secretary of Defense will back me up on that. Besides, those soldiers missed their opportunity. They should have lost the war while they had a chance. Then we might have bailed them out, too," he finished.
With that, Secretary Geithner turned his back on reporters and strode quickly away. He paused briefly, however, when a journalist shouted after him: "But how will taxing wounded veterans punish AIG?"
"You think you're as smart as the President? You figure it out," he called over his shoulder, as he disappeared through a door in the West Wing.