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U.S. Sen. Ron Wyden, D-Ore., right, and U.S. Sen. Gordon Smith, R-Ore., talk to citizens during a town hall style meeting in the city council chambers in Medford Tuesday. Jim Craven/1-11-05 U.S. Sen. Ron Wyden, D-Ore., right, and U.S. Sen. Gordon Smith, R-Ore., talk to citizens during a town hall style meeting in the city council chambers in Medford Tuesday. Jim Craven/1-11-05

Wyden: Bonus cap would have avoided furor

Sen. Ron Wyden said Thursday that public furor over bonuses paid to executives at insurance giant AIG could have been avoided if a provision he helped write hadn't been mysteriously stripped from the federal stimulus package.

"People asked me who killed this, how did it happen, and I cannot give you, as of this evening, a name," Wyden said in a telephone interview.

The Oregon Democrat and Sen. Olympia Snow, R-Maine, crafted a provision a month ago that would have capped bonuses at $100,000. If the bonus was any higher than that amount it would have been taxed at 35 percent.

Wyden's language survived the Senate in a voice vote, but was removed from the House version in committee.

"This is one of the most, I think, regrettable features about the way decisions are made in Washington, D.C., now," Wyden said. "You can deep six the public's interest without your fingerprints on it." Wyden said he appealed to the Obama administration for help reinstating the provision, given the president's previous statements opposing bonuses for executives in the troubled financial sector.

"I talked to key members of the Obama economic team and I couldn't convince them to go to bat for this," Wyden said.

The senator has heard some people question whether the provision would stand up to legal tests, but he said a letter sent to him on Feb. 4 by the Joint Committee on Taxation stated the amendment would stand up to constitutional scrutiny.

Fallout from the bonuses paid to AIG executives prompted the House to vote Thursday for legislation that would slap heavy taxes on the bonus money. AIG has received $182.5 billion in federal funds and now is 80 percent government owned.

The House bill would levy a 90 percent tax on bonuses given to employees who earn more than $250,000 at any firm that received more than $5 billion in bailout money.

Wyden said he didn't know details of the House bill, but has teamed with other senators in proposing stand-alone legislation that mirrors the provision offered a month ago.

The lack of oversight and accountability prompted Wyden to vote against the bailout bills, particularly the Troubled Asset Relief Program last year, that were designed to help financial institutions.

"To me, the handling of these bonuses is central to increasing confidence among the citizens in the way the government is going to deal with tough economic times," Wyden said. "People are just saying 'How in the world with our money, you know TARP money, the Troubled Asset Relief Program, are all of these abuses taking place?' "

As part of his plan for the bonuses, Wyden said it would have made the process more transparent, which in turn would have also made it more difficult for the companies to propose the bonuses in the first place.

Julie Edwards, spokeswoman for Oregon Sen. Jeff Merkley, said Merkley supported the Wyden provision when it came up for a voice vote in the Senate.

"Sen. Wyden was on the right path after all, as all the events seen last week have shown," Edwards said. "Sen. Merkley thinks it's wrong to give bonuses to executives from AIG at a time when millions of Americans are losing jobs."

The AIG bonuses couldn't have come at a worse time for Oregonians who have been hard hit by the recession but continue to see companies receive billions in federal stimulus money, she said.

Reach reporter Damian Mann at 776-4476 or e-mail dmann@mailtribune.com

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