At his bizarre town hall last night, President Barack Obama joked that "Washington is in a tizzy" over AIG and the $165 million in bonuses to be paid to its executives. The New York Times yesterday quoted White House chief of staff Rahm Emanuel complaining that the whole affair was a "distraction." At Tuesday's press briefing, White House press secretary Robert Gibbs could not even provide a rough timeline of the administration's handling of the AIG affair.
Yes, it's true that the bonuses represent less than one percent of the total bailout money that has gone to AIG. And yes, there are legitimate points to be made about retention bonuses in general and (though less persuasive) retention bonuses for these AIG employees. But it has been clear for a while that something -- an event, a comment, a cable news tirade, a speech -- was going to focus the growing public anger over bailouts and government giveaways.
This is it.
And if the White House doesn't understand that, Congressional Democrats certainly do. "I think in general the administration is underestimating the rage and frustration that people are feeling about the shenanigans on Wall Street," Sen. Bernie Sanders (I-Vt.) told Politico. "I think they need to be more aggressive in standing up to Wall Street and representing the taxpayers."
Other Democrats are taking shots, too.Paul Kanjorski, a Pennsylvania Democrat who chairs the relevant subcommittee on the House Financial Services Committee, suggested the administration isn't being honest about its knowledge of the bonuses. He said yesterday: "I'm sick and tired of hearing the administration and the secretary of the Treasury say, 'I just found out about it.' That's not true, and if he did just find out about it on Thursday or Wednesday then he better get to his mail department and to his telephone people because we communicated with the Treasury at least six or seven times."
Chris Dodd, chairman of the Senate Banking Committee, is scrambling mightily to avoid having the entire bonus mess laid at his feet. He blamed Treasury department staffers for inserting language into the stimulus bill that protected the bonuses. Dodd warned about the consequences of further mistakes, telling CNN: "The public confidence in our ability is being adversely affected - not just mildly, but seriously." Charles Rangel, chairman of the House Ways and Means Committee, complained that the White House isn't offering thoughts on how to recover the bonuses.
Ron Wyden, a Democrat from Oregon, faulted the White House for sending "mixed messages."
Mixed messages, indeed. As his economic team is full meltdown, President Obama is holding campaign-style town halls in California, filling out NCAA brackets on ESPN and doing "The Tonight Show" with Jay Leno.
I had lunch yesterday with Senator Johnny Isakson, from Georgia, who said that his office is seeing an unprecedented level of voter outrage. The only thing close was the outcry over immigration reform, but that came largely from one side of the political spectrum. This is everybody.
Voters are looking for someone to blame. At the town hall last night, Obama seemed to accept responsibility. "I'll take responsibility," he said. "I'm the president." It was enough for some in the media to give him credit for stepping up. But it was phony. The very next sentence out of his mouth: "We didn't draft these contracts." And later he added: "My job is to make sure we fix these messes, even if I don't make them."
But the bonuses are almost entirely a mess of his own making. Dodd says that someone from Treasury inserted the language that would protect the bonuses. And, of course, had Obama not fast-tracked the stimulus bill -- insisting on a vote before it was even possible to read it -- perhaps more members of Congress would have raised questions about that odd provision. With just three exceptions, Republicans voted as a bloc against the stimulus and complained loudly -- remember John Boehner slamming the bill on the floor? -- that they hadn't had time to read it.
And yesterday, AIG CEO Edward Liddy said in congressional testimony that Timothy Geithner had known about the bonus issue for a least a week before the White House said he did. And Liddy further said that Geithner, as head of the New York Federal Reserve when that institution gave AIG its first bailout last fall, participated in AIG board meetings.
President Obama, we are told, still has confidence in Timothy Geithner. He might be the only one.
The furor over the White House's handling of AIG is likely to increase as we learn more. What about the bailout money to AIG that has been regifted to counterparties overseas? Is it possible that U.S. taxpayers will be, in effect, paying the bonuses of European bank executives? How would that go over with Johnny Isakson's constituents? Or Chris Dodd's?
AIG means big trouble for Obama's big agenda. Does he understand that?
