The House has overwhelmingly approved a measure to recoup taxpayer money by imposing a 90 percent tax on bonuses paid to employees at the insurance giant AIG. The tax would also apply to any company receiving more than $5 billion in bailout funds. A Senate version would impose a lower rate than the House’s 90 percent. The vote came hours after AIG complied with a New York state subpoena and disclosed the names of employees who received bonuses.

Public outrage over the AIG bonuses fueled the congressional response. On Thursday, demonstrators gathered outside AIG’s offices in Washington, D.C. to decry the bonus payouts.

Amy Swanson: “It’s not fair to all the working people here who struggle daily for our healthcare, income, pay their rent, pay their bills.”

Joan Nemeth: “Being paid $15,000 an hour compared to your workers’ hours at $8 or $10 or even $15, where’s the justice in that? There is no justice in being paid that much more.”

Francisco Cuison: “This bailout moneys from the government is taxpayers’ money, and it should be spread out to the people who needs it.”

Treasury Secretary Timothy Geithner, meanwhile, has admitted his staff asked Senator Christopher Dodd to insert a provision in the economic stimulus bill that allowed AIG to hand out the $165 million in bonuses. Geithner made the admission in an interview with CNN.

Treasury Secretary Timothy Geithner: “We expressed concern about this specific provision, because we wanted to make sure it was strong enough to survive legal challenge. But we also worked with him to strengthen the overall framework, and his bill has this very important provision we’re relying on now to go back and see if we can recoup payments that were made that there was no legal ability to block.”

The New York Times reports Senator Dodd is drawing outrage from constituents in his home state of Connecticut for his role in the AIG bonuses controversy. Dodd has come under scrutiny for admitting he was asked by the Treasury to include the bonus protection provision in the stimulus bill after initially claiming he didn’t know how it got inserted.

As AIG faces the loss of its bonuses, it’s quietly filed a lawsuit to recoup more than $300 million in what it says are overpaid taxes. The company says it overpaid the government in charges for using offshore tax havens. The suit effectively means AIG is using US taxpayer money to sue its majority owner, the US taxpayer. The government owns an 80 percent stake in AIG following its $170 billion bailout.

Meanwhile, a top Obama administration official is coming under scrutiny for his ties to AIG. Richard Holbrooke, the US special envoy to Pakistan and Afghanistan, served on AIG’s board from 2001 until early last year. Holbrooke is believed to have collected up to $800,000 during his AIG stint.

In other bailout news, a congressional probe has found the top thirteen firms to receive bailout money owe more than $220 million in unpaid federal taxes. Congress member John Lewis of Georgia, the chair of the House Ways and Means Subcommittee on Oversight, says two of the companies owe more than $100 million apiece. The review only looked at the top twenty-three bailout recipients, leaving open the possibility of further owed taxes from nearly 450 remaining companies. The inspector general overseeing the federal bailout says he will investigate whether recipient companies misled Congress on their tax obligations.

The bailed-out financial giant Citigroup, meanwhile, is coming under scrutiny for a $10 million plan to build new offices for top executives. Citigroup has received $45 billion under the taxpayer-funded bailout.

The Treasury Department is set to provide up to $5 billion in financing to auto parts suppliers. The money will come through the government’s Troubled Assets Relief Program, or TARP. Auto parts suppliers have asked for up to $25 billion amidst the auto industry decline.

President Obama continued his criticism of AIG Thursday on the second day of his trip to California. Appearing on the Tonight Show with Jay Leno, Obama said the AIG case exemplified Wall Street excess.

President Obama: “The immediate bonuses that went to AIG are a problem, but the larger problem is we’ve got to get back to an attitude where people know enough is enough and people have a sense of responsibility and they understand that their actions are going to have an impact on everybody. And if we can get back to those values that built America, then I think we’re going to be OK.”

Obama’s appearance marked the first ever by a sitting US president on a late-night talk show. He was later forced to backtrack after appearing to make fun of the disabled in joking about his bowling abilities. After Leno complimented him for a low bowling score, Obama said, “It’s like the Special Olympics or something.” In a statement, the White House said Obama didn’t “intend to disparage” the Special Olympics.

President Obama, meanwhile, has released a videotaped appeal to the people of Iran. In a message timed to coincide with the Iranian holiday of Nowruz, Obama said he is prepared to meet with Iranian leaders.

President Obama: “My administration is now committed to diplomacy that addresses the full range of issues before us and to pursuing constructive ties among the United States, Iran and the international community. This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect.”

Iranian officials reacted to the tape by renewing calls for the US to address Iranian grievances, including the 1953 coup that overthrew Iran’s nationalist government.

The Obama administration is drafting a plan to double Afghanistan’s national security forces. According to the New York Times, senior administration officials say the US is seeking a force of about 400,000 Afghan troops and police officers.

In Israel and the Occupied Territories, several Israeli soldiers have provided new accounts of human rights violations during Israel’s attack on the Gaza Strip. The Israeli newspaper Haaretz published testimony from soldiers recounting the firing on unarmed Palestinian civilians and the intentional destruction of their property. The Israeli military says it will investigate. We’ll have more on this story after headlines.

The allegations come as a top UN human rights investigator has accused Israel of committing war crimes during the Gaza attack. In an annual report, Richard Falk, the UN special rapporteur on human rights in the Palestinian territories, said Israel appeared to violate the Geneva Conventions code requiring forces to distinguish between civilians and armed combatants. Falk is calling on the Security Council to establish an ad hoc criminal tribunal to investigate alleged war crimes in Gaza.

Meanwhile, Israel has arrested ten Hamas officials in the occupied West Bank. Hamas is calling the move a blackmail attempt to pressure it for the release of the captured Israeli soldier Gilad Shalit. Talks on a prisoner exchange broke down this week in part over an Israeli demand that hundreds of the freed prisoners be arrested or deported upon their release. Israel has seized and jailed some forty elected Hamas lawmakers since Shalit’s capture in June 2006.

A former Bush administration official says the US has continued to jail many Guantanamo Bay prisoners seized in Afghanistan despite knowing of their innocence. In an interview with the Associated Press, Lawrence Wilkerson, the former chief of staff to then-Secretary of State Colin Powell, said the US held onto the innocent prisoners in the hopes they could one day provide helpful intelligence. Describing the Bush administration mentality, Wilkerson said, “It did not matter if a detainee were innocent. Indeed, because he lived in Afghanistan and was captured on or near the battle area, he must know something of importance.” Wilkerson continued, “We need to put those people in a high-security prison like the one in Colorado, forget them and throw away the key. We can’t try them because we tortured them and didn’t keep an evidence trail.” Wilkerson says former Defense Secretary Donald Rumsfeld and Vice President Dick Cheney fought efforts to improve vetting of Afghan prisoners.

The Pentagon contractor CACI has lost a bid to dismiss a torture lawsuit brought by four former Abu Ghraib prisoners. On Thursday, a federal judge made public a ruling rejecting CACI’s claim to be immune from prosecution. The case also names the company L-3 Services, as well three individual contractors. One of the plaintiffs, an Iraqi farmer, alleges he was caged, beaten, threatened with dogs and given electric shocks during more than four years in US detention.

El Salvador’s new president-elect is vowing to restore diplomatic ties with Cuba. Mauricio Funes says he will reverse a policy that has not recognized Cuba since the 1959 Cuban Revolution.

El Salvadorian President-elect Mauricio Funes: “I said during my speech announcing running for the presidency, I would reopen diplomatic relations with Cuba, because, up to this date, we would be the only Latin American country who does not have diplomatic relations with Cuba, and that’s what I plan on doing.”

Funes’s FMLN party won El Salvador’s election on Sunday, ending twenty years of governance by the US-backed, right-wing ARENA party. His announcement comes as Costa Rica also reopened diplomatic ties with Cuba after nearly fifty years.

Newly declassified material has provided further evidence the Reagan administration knowingly supported the Guatemalan government’s human rights abuses in its crackdown on guerrillas and leftist dissidents. The National Security Archive has released documents showing State Department officials directly reported that Guatemalan forces targeted anyone suspected of involvement with guerrillas or dissident groups. In 1984, then-US Ambassador Frederic Chapin also reported labor activists were being “rounded up” for interrogation. More than 200,000 people died under the US-backed Guatemalan military between 1960 and 1996.

Back in the United States, Alaska Governor Sarah Palin has announced she’ll reject nearly half the federal stimulus funds allocated for her state. Palin cited her opposition to increasing the deficit and her desire to remain free of Washington control. The rejected spending includes $160 million for education and $9 million for public health. Palin becomes the third potential 2012 Republican presidential candidate to turn down stimulus funds, following governors Mark Sanford of South Carolina and Bobby Jindal of Louisiana. This week, Texas Governor Rick Perry also rejected stimulus aid.

Here in New York, dozens of people gathered at a vacant building in East Harlem Thursday to call for more affordable housing and better treatment of the homeless.

Protester: “We need housing now. I’m homeless. I’m tired of being homeless, when it’s $1,500 a month for a closet in New York City alone. In the Bronx they’re charging people $1,500. Section 8 is not there anymore. These housing programs that they give us are only two years. What happens after two years? We need to tell the people today that we are tired of it. And this is what we’re going to do: if there’s a homeless building, we’re there; if there’s a shelter that they’re not opening up for the homeless, we’re there. We need to change now.”

The event was organized by Picture the Homeless. The group says New York has up to 24,000 vacant apartments that could house every homeless family in the city.

And protests are underway in this country and around the world to mark the sixth anniversary of the US invasion of Iraq. On Thursday, more than two dozen protesters were arrested at parallel events in San Francisco. Five of the arrested said they were Iraq veterans. Here in New York, hundreds gathered at Union Square and later outside the military recruiting station in Times Square. In Washington, D.C., a US Army veteran was arrested hanging up a sign near the White House that read, “Veterans say NO to War and Occupation.” Protests are expected to continue in several major cities through the weekend.