AIG Bonus Blow-up and Constitutionality
So in doing some more thinking about this and doing a little bit of research, there is a question of whether the Federal Government can actually do anything about the AIG bonus payouts. AIG has made the claim they were contractually obligated to pay out the bonuses. If that holds out, then the argument could be made the Federal Government cannot interfere with those contracts.
Here is the basic gist of this argument (emphasis mine):
Article I, Section 10, Paragraph 1 says the following:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Amendment 10 says the follows:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
The basis of this argument rests on the precedent of Enumerated Powers in the United States Constitution and the two portions of the Constitution I’ve quoted. The gist of it boils down to the fact that given that Amendment 10 states that anything no specifically delegated to the United States or prohibited to the States by the Constitution is left to the States or the People. Given Article I, Section 10 specifically says the States can’t interfere in Contracts, then my reading of it says it’s pretty clear the Federal Government can’t either (since it’s not one of the Enumerated Powers of the United States).
I will grant, however, that this does not forbid Congress from passing a law that taxes bonuses over a certain amount at 98% as they’re threatening. I simply think that is a horrible move and will be just another weight strapped to the feet of our drowning economy.
All of the above is, of course, qualified with the knowledge I am not a lawyer let alone a Supreme Court Justice.