A Tax Hike the Masses Will Love

There's nothing that unites Congress quite like populist outrage. And so, in a nod to the angry throngs, the House passed the bonus-tax bill yesterday, a bill that would impose a 90 percent surtax on the wealthiest bonus recipients of companies on the TARP list, more specifically aimed at AIG employees. According to the Wall Street Journal, "The Senate will take up a similar measure, as early as next week, that is less punitive but would tax a larger number of employees and firms." That bill carries a 70 percent surtax, the newspaper adds. The House's hastily crafted tax bill is already fraught with problems, the New York Times reports. "The House vote sent some employees into a panic about the prospect of, in effect, having to give up money they might already have spent," the newspaper writes, adding that nobody knows for sure if the tax plan is legal and what impact it could have on "the Treasury's efforts to stabilize the financial system if banks tried to flee the bailout program or if other firms refused to participate in coming rescue operations to protect their bonuses."

In a separate story, the NYT tries to answer the big question: in Washington, who knew what when? "Interviews with senior Federal Reserve and Treasury officials, as well as members of Congress, leave little doubt that the bonus program was a disaster hiding in plain sight," the newspaper writes.

On Thursday, anti-bonus crusader and New York Attorney General Andrew Cuomo secured the list of Merrill bonus recipients for which he'd been fighting for over a month. According to the WSJ, Cuomo received the identities of the 200 highest-paid bonus recipients at Merrill just as the sale of the investment bank was being finalized with Bank of America. The list is viewed as a crucial piece for Cuomo's investigation into why Merrill awarded "bonuses of more than $3.6 billion in December, when such awards are typically made in January." Staying on the TARP beat, there's yet another furor brewing over bailed out firms, this time over back taxes. According to the Washington Post, 13 of the largest recipients of the government's bailout program "failed to pay more than $220 million in federal taxes." Cue outraged politician: "This is shameful. It is a disgrace," Rep. John Lewis, D-Ga., chairman of the House Ways and Means Committee's oversight subcommittee, told the Washington Post. "The American people are fed up, and they are fired up. And they are not going to take it anymore."

And now for a more palatable bonus story. Wal-Mart handed out $933.6 million in bonuses to its rank-and-file U.S. workers Thursday, the WSJ reports, calculating that the average Wal-Mart employee who qualifies will get about $933. The retailer revealed that the bonus scheme, plus 401(k) contributions and profit-sharing plans, means the company is distributing $2 billion to its employees. All this largesse does not mask the fact the company is still adamantly opposed to the Employee Free Choice Act, which would make it easier for workers to unionize, the newspaper adds.

There's billions more in federal aid headed for the auto industry, this time to the auto parts suppliers. Business Week reports the Obama administration on Thursday "created a $5 billion fund that guarantees payments to struggling auto suppliers, especially those tied to providing parts to General Motors and Chrysler that are facing the possibility of bankruptcy." The Detroit News sees the bailout as a sign that Washington will not allow GM or Chrysler to slip into Chapter 11. "They're sending a clear message, I think, that they know GM and Chrysler have to survive," Rep. Thad McCotter told the Detroit News. "It would make no sense to save the suppliers and not save the carmakers."

After a marathon analyst meeting at 30 Rock yesterday, GE Capital came clean about 2009. First, the bad news. "The company’s projection, made in December, that GE Capital would deliver profits of $5 billion in 2009 seems increasingly unlikely," the NYT reports. Instead, the struggling financial unit gave two scenarios—"base case" and "worse case" projections. Under the two formulas, GE Capital will deliver either a profit of about $2 billion or no profit at all, the newspaper writes. Now, the better news. GE Capital is confident it will turn a profit this quarter and for all of 2009, Business Week writes. The five-hour session failed to impress investors, though. "G.E. shares rose early, and then slipped to close at $10.13, down a bit under 2 percent, in line with the overall fall in the market," the NYT writes.

And, finally, Microsoft CEO Steve Ballmer still wants Yahoo —or, at least, part of it. The valuable part. The search part. Ballmer told Business Week that he's already spoken to Yahoo's new CEO, Carol Bartz, about the two companies forming "a search partnership," arguing that the scale of the two joining forces would make for a better ad-supported search offering. Even after last year's rebuff, Ballmer remains confident, saying he "sees a real opportunity for a deal."