March 20 (Bloomberg) -- The Senate plans to vote next week on steep levies on employee bonuses after the House overwhelmingly approved a 90 percent tax on bonuses at American International Group Inc. and other companies receiving bailout funds.

The Senate's proposal on companies that got the federal money would place a 70 percent tax on the bonuses. Half that amount would be paid by employees, half by the companies.

This sounds like the nonsense Sen. Wyden has been spewing.  Half paid by AIG means nothing other than the taxpayers paying the tax since we are about to give them another $30 billion in a few weeks.  The 35% Tax is already the tax rate for income above $250,000.  So what does that accomplish--NOTHING.  Senate Democrats are as full of it and as corrupt as the Republicans.

For all of you adherents to the Paul Krugman/Joe Stiglitz world of "just nationalize the banks already" school of thought, I give you AIG.

AIG and its myriad counterparty contracts, insurance contracts and credit default swaps is the poster child of nationalization.  We the Taxpayers own virtually all of it and will continue to pour endless billions down a black hole in order not to let it fail.  As Eliot Spitzer rightly notes, these billions are the outrage; not the piddling, by comparison, bonuses wrongfully paid which are also an outrage.

Can you imagine what a takeover of Citigroup or Bank of America would look like?  As much as it is easy to trash Geithner and Summers over this whole affair, maybe their carefully slow approach and hands off style aren't as disastrous for us in the long run as rushing headlong into the "nationalize everything" answer that seems to be the conventional wisdom.

Oh and trashing the Obama Administration over this will easily produce exactly the results the obstructionists in Congress desire:  No EFCA, No Health Care Reform, No Carbon Taxes, No Major Reform of Government or Wall Street.

Be careful what you wish for because it just might end up in a new Republican Majority.