When Andrew Cuomo gets involved in bonus matters, it's pretty clear where he's coming from. He's been loud and clear that he thinks it's unconscionable for companies to dole out massive bonuses while on the public dime. In the case of AIG, Congress might end up thanking him for bailing them out of a really tough spot. 

Cuomo has persuaded, at last count, 15 of the top 20 bonus recipients in the U.S. to give back the full amount of their bonuses. We called on AIG executives to do so last week. That amounts to $50 million out of the $165 million given. He hopes to recover up to $80 million and is still on the case. He's playing hardball apparently. According to a memo leaked to the media, AIG executives feel he has given an ultimatum to employees: Give back the bonus money, and names will be kept private. AIG has set a deadline of 5 PM for employees to make up their minds. Some are still holding out. Others have agreed and then resigned to voice their protest. A big problem for Cuomo (and taxpayers) is that about $85 million were given to people who lived outside the U.S., mainly in London, and they may be beyond his influence.

Still, Cuomo's efforts seem to be ratcheting down the public anger level, which was extreme after the bonus news surfaced. You can't really blame livid Congressmen for feeling as though they had to do something. They had little choice but to promise special tax legislation to take back the funds.

But using the tax code in this manner struck many as ill-conceived; in some cases it would have taken a year to get the funds back. President Obama, whose anger was apparent, nevertheless refused to get behind the tax-'em solution. His "we can't govern out of anger" sound bite got lots of play. The Senate, after a lot of hot rhetoric, has delayed its efforts to formulate a bill. The House has passed a version that would tax the entire amount. 

Cuomo's efforts have the ability to prevent the Congress from moving ahead with an effort what might have come back to haunt it. One scenario here is that public anger recedes to the point that the special tax issue is dropped. That might be the best possible outcome, but it certainly wouldn't be ideal. Taxpayers would still be out lots of money. Still, Cuomo may have recovered enough to lessen the sting and the Congressional imperative. - Jim