It would be still wiser, and fairer, to tax all income, including capital gains and dividends as a lumpped sum on the same progressive schedule and apply SSI and Medicare taxes to all of it. That would allow for tax rates to be lowered on all income brakets and still provide more federal revenue than the current system.

But if the goal is to get people to save, taxing all income equally would not accomplish that. It would be exactly like the present system; interest income (except for muni bonds) is taxed like wages. Eliminate the interest tax break for people above a certain income threshold if you like, but the point is that savings need to be taxed less to provide an incentive.

Which is all to the point: The politics of the bonus payments are awful -- that's one of the few things that Republicans and Democrats have agreed on in the first two months of the Obama administration -- but they are not essential to the real problem at hand, which is dealing with the systemic risk posed by the failure of a company such as AIG.

I would dispute this to some degree. As long as executives can get away with the kind of behavior AIG has perpetrated, it basically sends the message that whatever regulatory regime is implemented will never have enough teeth to prevent serious abuse. Companies will believe, probably correctly, that once this all blows over it will be business as usual again, and that any new regulations will represent little more than an attempt to mollify the public with cosmetic cover. After all, isn't that always how it's been? They get to keep "theirs" and we get to pay for it?

Conversely, if Congress actually did force the executives to disgorge their ill-gotten gains, it would announce in bright, bold letters that a new sheriff was in town and that things were going to change. This would help to ensure that any regulations put in place would be taken seriously and that compliance was mandatory instead of optional.

The subtitle of this article contains a phrase ("...if Obama handles it right") that suggests we haven't learned much from populism's history. Specifically, we have to stop looking at politicians as saviors whose cult of personality we have to join. Instead, we need to look at them as nothing more than public servants; we put them there based on their promises to do X, Y, or Z, and then we hold them accountable. If they betray our trust, we vote their asses out.

Only when politicians fear the people will the people's will be done. Liberals need to make this clearer to Obama. Either vote for what we want, or we'll desert you in 2012. Yes, the risk is that we'll end up with Sarah Palin or some other godawful Republican, but the old cliche is true: no guts, no glory. Say what you want about Republicans, but they're much better at making their politicians toe the line than Democrats are.

I voted for Obama (unenthusiastically), and, as far as this longtime Democratic voter is concerned, he's skating on thin ice right now. The AIG bonus situation in particular is absolutely egregious, and it was done at the behest of the Obama administration. If I wanted to make the rich richer, I'd vote Republican.

My own experience observing the pity party that's currently going on (re: people who bought more house than they could afford) corroborates yours. On the one hand, you have the greedy/naive who were either profoundly gullible or suckered into flipping schemes by con men. They get what's coming to them, as far as I'm concerned.

But there've also been a number of articles in my local paper (and I'm in the Midwest) detailing families who are facing foreclosure, and in a number of those cases it was clear that their houses are significantly larger/newer than mine. The logical question is: why should I as a taxpayer be responsible for helping "needy" people who live better than I do?

The bind no one wants to talk about is this: stronger regulation would've prevented the housing meltdown, but it would also have prevented many of these people from buying their unaffordable "dream" home in the first place. I'm all for stronger regulation as a means to provide some stability in the housing market, but you can see how, as soon as it's created, there will be a political constituency lobbying for a relaxation of standards in the name of the "American dream" of home ownership. Rewind, repeat.

I appreciate Prof. Cole's remarks on this topic, but why is that that even left-leaning commentators on Afghanistan and Iraq will not use the word "occupation" to describe the U.S. presence in these countries?

The word "war" implies an active conflict between two or more organized armies, and I would argue that the U.S. isn't fighting any wars at the moment. What we have instead is one dominant, foreign power propping up weak indigenous governments that serve the interests of that foreign power, and any actual fighting takes place sporadically against guerillas or insurgents.

I suppose "occupation" is too direct for the delicate sensibilities of the complex that has been gorging itself on U.S. military adventurism since WWII. Moreover, "war" has become one of those words that means everything and nothing - or whatever propagandists want it to mean at any given moment.