Lauren Weinstein: Congress' reaction to AIG bonuses -- am I the only one concerned? -- with comments Some facts frm Prof Tribe

[David Farber <dave () farber net>]

Begin forwarded message:

From: dewayne () warpspeed com (Dewayne Hendricks)
Date: March 19, 2009 11:46:14 PM EDT
To: Dewayne-Net Technology List <xyzzy () warpspeed com>
Subject: [Dewayne-Net] Re: Lauren Weinstein: Congress' reaction to AIG  
bonuses -- am I the only  one concerned? -- with comments

[Note:  This comment comes from reader Randall.  DLH]
From: Randall Webmail <rvh40 () insightbb com>
Date: March 19, 2009 8:12:46 PM PDT
To: dewayne () warpspeed com
Subject: Re: [Dewayne-Net] Lauren Weinstein: Congress' reaction to AIG  
bonuses -- am I the only  one concerned? -- with comments

> [Note:  This item comes from friend John McMullen. I'm in
> agreement
> with John here.  That said, I heard on MSNBC tonight that
> the bill is
> unconstitutional as is and is unlikely to ever become law.
> It seems
> that Pelosi did a neat Jedi mind trick on the GOP, which got
> about
> half their caucus to vote for a major tax increase, something
> that
> they've taken a blood oath not to do.  DLH]

[[The Wall Street Journal has an obvious dawg in that fight, but  
Laurence Tribe doesn't seem to]]:

-=-=-=-=-
It's the puzzle of the week down in Washington: how to get the money  
back from the AIG bonus-recipients. As we've written before, the Obama  
administration seems inclined not to play legal hardball for a variety  
of reasons, one of which seems to be that it could wind up on the hook  
for more than it would stand to recover.

The most current proposal: tax the bejeezus out of the recipients.  
Senate Majority Leader Harry Reid and other congressional Democrats  
have proposed a 91 percent tax. There are problems with this, too. The  
NYT writes that some of the AIG employees are thought to be foreigners  
based in offices abroad and not liable for U.S. taxes.

But could such a tax also run into Constitutional problems? Some  
pundits (for example, here and here) have suggested yes. The most  
commonly mentioned difficulties include the prohibitions on so-called  
Bills of Attainder and retroactive laws (laws passed Ex Post Facto)  
mentioned in Article I, Section 9 of the Constitution. Other possible  
problems brought to our attention deal with the Contract Clause of the  
Article I, Section 10; the Due Process Clause of the Fifth Amendment;  
and the Takings Clause of the Fifth Amendment.

For a little help with this, we turned to Harvard's Laurence Tribe, he  
of the canonized treatise "American Constitutional Law." In an email  
exchange, we asked Tribe to address each of the five possible  
constitutional problems and he determined none of them likely poses a  
problem.

Bill of Attainder: Article I, Section 9 of the Constitution prohibits  
Congress from passing Bills of Attainder, laws that punish a single  
person or specific group of people without affording them a trial.  
Would a law that targeted AIG executives violate the prohibition on  
Bills of Attainder?

Responded Tribe:

  I do think Congress (and the Executive Branch) could avoid serious  
Bill of Attainder problems by passing a sufficiently broad law …  
rather than targeting a closed class of named executives even though  
the prohibition against Bills of Attainder, unlike that against Ex  
Post Facto laws, potentially reaches civil as well as criminal  
penalties.

Ex Post Facto: Article I, Section 9 of the Constitution also,  
generally speaking, prohibits Congress from passing laws that apply  
retroactively. Would a law that imposed a tax on past-gotten earnings  
violate the Ex Post Facto Clause?

Responded Tribe:

  The Ex Post Facto Clause applies exclusively to criminal punishment  
and poses no difficulty here. And the fact that the measure  
contemplated would operate retroactively as well as prospectively  
doesn't distinguish it from any number of tax and other financial  
measures that the Supreme Court has upheld over the claim that  
fundamental fairness precludes retroactively undoing contractual  
obligations.

The Contract Clause: Article 1, Section 10 of the Constitution states:  
"No state shall . . . pass any Law . . . impairing the Obligation of  
Contracts." Now, what about this? With the passage of the law,  
wouldn't the government effectively be impairing contracts made  
between AIG and its executives?

Tribe had a quick dispatch for the ol' Contract Clause:

  The Contract Impairment Clause applies exclusively to state  
legislation and has no federal counterpart that would pose any  
difficulty in this setting.

The Due Process Clause of the Fifth Amendment: The Due Process Clause  
of the Fifth Amendment states: "No person shall be . . . deprived of  
life, liberty, or property, without due process of law."

On the issue of procedural due process — generally speaking, on  
whether a person is given adequate access to the legal system and its  
procedures — Tribe said this also isn't a problem.

  There's no suggestion that people would be targeted for payback  
obligations without notice and a fair opportunity to be heard on  
questions such as mistaken identity, so procedural due process would  
be satisfied.

On the issue of substantive due process — that is, whether a "liberty"  
has been taken away by a given act of Congress — Tribe said:

  And, as to substantive due process, the only relevant requirement  
would be that the challenged measure be rationally calculated to  
achieve a legitimate government purpose, something nobody could deny  
in this instance.

The Takings Clause of the Fifth Amendment: The Takings Clause of the  
Fifth Amendment states: " . . . nor shall private property be taken  
for public use, without just compensation." The clause is the one that  
requires payment for property "taken" by the government's eminent  
domain power — the power to, say, grab a piece of property to build a  
public road. In response to our question on whether tax on AIG  
executives might constitute an unconstitutional "taking," Tribe  
responded:

  Tax measures [generally speaking] are simply not vulnerable to  
challenge under the Takings Clause. . . The point of the Takings  
Clause is to require compensation for the fair market value of private  
property validly confiscated for the public's benefit, not to prevent  
the exaction of a tax that Congress is within its constitutional  
authority to impose.

<http://blogs.wsj.com/law/2009/03/18/would-an-aig-bonus-tax-pass-constitutional-muster-a-tribe-calls-yes/ 
>

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