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Obama Implies Rejection Of House Bonus Tax Plan

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The Associated Press

Published: March 23, 2009

WASHINGTON - President Barack Obama wagered significant political capital Sunday as he bucked a highly popular House measure to slap a punitive 90 percent tax on bonuses to big earners at financial institutions already deeply in hock to taxpayers.

Obama defended his stance by saying the tax would be unconstitutional and that he would not "govern out of anger." He declared his determination, nevertheless, to make Wall Street understand it must shed "the old way of doing business."

In a wide-ranging interview broadcast Sunday night, Obama also acknowledged surprise at how quickly the U.S. economy crumbled between his November election and January inauguration.

"I don't think that we anticipated how steep the decline would be," he said in the interview on CBS' "60 Minutes." "That slope is a lot steeper than anything that we've said - we've seen before."

There was considerable political risk attached to Obama's implied rejection of the 90 percent tax measure. It raced through the House last week as lawmakers responded to a wave of anger over bonus payments to American International Group Inc. employees.

A week ago, the company paid out at least $165 million in bonuses even though taxpayers were keeping the insurance giant afloat with a $170 billion government bailout.

While questioning the legality and constitutionality of the House measure, Obama said he expected the Senate would produce a much different and more acceptable version of the bill - one he could sign.

Obama also said that he felt caught in a balancing act, trying to address taxpayer anger at Wall Street while still needing support from the financial sector to stop the country from plunging into fiscal turmoil.

"I think that you've got a pretty egregious situation here bonus payments that people are understandably upset about," he said in the interview taped Friday. "And so let's see if there are ways of doing this that are both legal, that are constitutional - that uphold our basic principles of fairness, but don't hamper us from getting the banking system back on track."

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