5 p.m. ET: Like the supple machine that it is, Congress has now sprung into action on the issue of AIG bonuses -- after the bonuses have already been paid and long after lawmakers had the chance to do something to block the bonuses legislatively.
It seems that lots of people knew that the bonuses were coming, but no one got all that worked up about it until this past weekend. That's why all this outrage, particularly on the part of Congress and the Obama administration, feels a bit fake. The salient questions now are 1) Will any of the new legislative remedies being floated on the Hill actually work? Can you really levy a tax only on employees of one company? And 2) What effect might this have on the markets? Will this scare other companies from taking bailout money in the future, and would that be a good thing or a bad thing? Smarter people than The Rundown presumably are working to answer those questions right now. Meanwhile, let's go back to being outraged.
The furor over $165 million in bonuses paid out to employees of the insurance giant, which is being kept afloat by government funds, has quickly subsumed every other news story this week and seems to have caught the Obama administration off guard. The result has been a flurry of letter-writing and threats. Congressional Democrats wrote to Tim Geithner, demanding he do something about this. Obama also called on Geithner, demanding he do something about this. Hill Republicans want Geither to present a bailout "exit strategy" (and noted that they asked the same thing of Hank Paulson). There was talk of firings, hearings, new laws and new subpoenas. Members of Congress haven't quite stormed AIG's headquarters with pitchforks yet, but it may not be far off.
What are the chances that the government can actually force these bonuses to be paid back? Apparently, not so good. And after so many hundreds of billions of dollars have been spent on various bailouts over the last six months, why did this $165 million spark such particular outrage? It could just be that populist anger, which has been building steadily, reached a tipping point. Whatever the cause, the Obama administration is now scrambling to make sure that it doesn't get blamed for the bonuses, and that the public focuses its anger on AIG, and not the government officials who are supposed to be monitoring the company's every move.
Speaking of the blame game, a new CNN survey asked respondents whom they would hold responsible if the economy doesn't improve over the next year. Fifty-four percent said they'd blame "the policies of George W. Bush and the Republicans," while 34 percent said "Barack Obama and the Democrats." As have other recent surveys, this poll also found a widening partisan split, with Obama's approval ratings for handling the economy high among Independents and stratospheric among Democrats, but slipping badly among Republicans.
So it may be time for Obama to redouble his efforts at bipartisan outreach. In the Senate, judicial nominations are always a good place to start, so it's worth noting that the administration, per the New York Times, is said to be ready to name a moderate Indiana judge to a key appeals court slot. Of course, the judge in question is a former aide to Evan Bayh, so it's not as though the White House is going way outside the box with this pick. Still, the administration tells the NYT that this pick is meant to be "a kind of signal" about how it will approach future nominations. Fellowship and good cheer on judicial picks? We'll believe it when we see it.
The same is doubly true of the idea that Arlen Specter might switch parties and run as a Democrat in 2010. Ed Rendell says that he, Robert Casey and Vice President Biden have all approached Specter and asked him to consider crossing the aisle. Apparently, he's not budging. Specter faces a very tough GOP primary against Pat Toomey, and is now getting enormous pressure from both sides of the Employee Free Choice Act debate. But at this stage of his career, it's hard to imagine Specter changing his ways.
March 17, 2009; 5:00 PM ET
Go to full archive for The Rundown »
Please email us to report offensive comments.
The comments to this entry are closed.