American Recovery And Reinvestment Act Of 2009

Floor Speech

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Mr. WYDEN. Mr. President, I appreciate the courtesy of Senator Feingold and Senator McCain, who I know have a very important amendment. They have allowed me to come to the floor before them and speak about the amendment Senator Snowe and I will be offering later.

I thank Senator Feingold and Senator McCain, and it is not my intention to give a lengthy speech at this point.

Last week, Americans were horrified to hear the news that Citigroup and other companies receiving taxpayer money from the Troubled Asset Relief Program were paying their employees billions and billions of dollars in bonuses.

Today, along with Senator Olympia Snowe, our colleague from Maine, I will offer a bipartisan amendment to this legislation that makes it clear it is not enough to say these Wall Street bonuses are wrong; they have to be paid back.

Taxpayers must be protected, and that is what the amendment Senator Snowe and I are offering will do. Our proposal gives the institutions that received Troubled Asset Relief Program money and paid these outlandish bonuses a simple choice: The institutions will pay back the cash portion of any bonus paid in excess of $100,000 within 120 days of the amendment's enactment or those institutions would face an excise tax of 35 percent on what is not repaid to the Treasury.

The money can be repaid by buying back the preferred stock the Federal Government owns in these companies or in any other fashion the institution chooses. Senator Snowe and I have had extensive legal review with respect to the constitutionality of this provision. We believe it passes constitutional muster.

Mr. President, I ask unanimous consent to have printed in the Record a letter sent to me yesterday by Edward Kleinbard of the Joint Committee on Taxation.

There being no objection, the material was ordered to be printed in the RECORD

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Mr. WYDEN. I will read briefly now from the letter from Mr. Kleinbard. I will quote from the second paragraph:

There is a powerful argument that your proposal is simply not retroactive.

It is his judgment, based on what he has been able to look at thus far, it would be constitutional.

Mr. Kleinbard states specifically:

Taxpayers can avoid the tax completely by repurchasing shares they sold to the United States; the excise tax would be imposed not on prior bonuses, but on the taxpayer's affirmative post-enactment decision not to repurchase those shares at the same price that the shares were sold to the United States. Moreover, the timing, repurchase price and amount of shares that must be repurchased are not punitive, and are commensurate with the conduct that Congress can rationally find to be contrary to the purpose and intent of the EESA legislation that authorized the Treasury's investments.

I think anyone who looks at the letter from the Joint Committee on Taxation will see that the bipartisan amendment Senator Snowe and I will be offering with respect to excessive cash bonuses is a matter that does pass constitutional muster and clearly is in the taxpayers' interest.

I note my colleagues, particularly from Tennessee and Georgia, have made a number of good points that I happen to feel strongly about with respect to the need to address the current housing crisis, and one of the things we have seen with respect to housing and all of the other economic challenges we have is we have to get people's confidence back in the American economy.

I believe the Snowe-Wyden amendment will help to generate that confidence by saying at some point we are going to say excessive bonuses are being paid, in effect, with taxpayer money. I mean these are companies who received billions and billions of taxpayer dollars.

If we are going to have the confidence we need to promote housing, as the distinguished Senators from Tennessee and Georgia both noted, we have to make sure taxpayers do not say: This is wrong. This is not right to give these excessive bonuses with taxpayer money.

I would note that Senator Snowe and I set the limit for bonuses at $100,000. So, clearly, we want to be sensitive to the young person getting started in financial services, someone, perhaps, who was a secretary. But it is the outlandish bonuses that we are concerned about.

I would also note these TARP institutions have not yet paid their 2008 taxes. So what we have is a situation where a number of these companies have not yet paid their 2008 taxes. In other parts of this economic recovery legislation we are giving retroactive tax benefits. Certainly, that is the case with the net operating loss provisions, the carryback provisions, with respect to business.

So it seems to me, if you are giving those kinds of retroactive tax breaks, you surely ought to take steps to protect taxpayers, as Senator Snowe and I seek to do with our legislation. The bottom line is, the Wall Street firms that took bailout money knew they were not supposed to pay their executives lavish bonuses, but they went ahead and paid out more than $18 billion in bonuses anyway.

The Wyden-Snowe amendment makes sure these firms can't take the money and give the Congress and taxpayers the runaround. If they took the bailout money, the Wall Street firms either have to pay taxpayers back for the excessive bonuses, or they ought to pay a tax on these bonus payments. Either way, they should not be allowed to pay outrageous bonuses to executives and stick taxpayers with the bill. It is fundamentally wrong to reward with billions of taxpayer dollars this kind of conduct. We have all heard about handing out of bonuses to executives at firms responsible for the current economic meltdown. But what happened a couple of weeks ago takes this to a completely different level. At a time when the Congress is faced almost on a weekly basis with requests for billions of dollars of additional money, how in the world can we allow these kinds of bonuses, with taxpayer money, to stand, as if the economy were booming?

My colleagues from Wisconsin and Arizona have been waiting patiently. I hope Members will look at the amendment Senator Snowe and I are offering. I hope they will look at the legal analysis provided by the Joint Committee on Taxation with respect to how and why this particular proposal passes constitutional muster. I hope the Senate will say it is not enough to just give speeches about how it is wrong to hand out these bonuses with taxpayer money but will back bipartisan legislation to correct it and to protect taxpayers at a critical time when we must increase confidence in how major economic decisions are made.

I yield the floor.

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