Legal Question in Constitutional Law in California

Re: Executive Order

There was no "ruling" on stem cell funding. President Bush ordered that no federal funds be used for research on embryonic stem cell research. President Obama reversed that order. Both presidents were deciding how to spend the government's own money.

AIG is a private entity, not part of the government. The government has very limited authority to tell private entities what to do with their money. AIG gave the government additional authority when it accepted its various bailout payments, but that authority is limited. Even if the government can block bonus payments, that does not mean the president has the authority to order it by himself.

Many of the controversial "bonuses" are actually payments mandated by contracts AIG had already signed before it started accepting federal help. The company probably does not have the right to withhold these payments; if it fails to make the payments, the parties who were to receive the money would be able to win breach-of-contract suits against the company. The contracts may require AIG to pay interest, attorney fees, court costs and other penalties in such lawsuits. If that is the case, paying the bonuses will be cheaper than withholding them.