8 a.m. ET: The AIG bonus controversy showed no signs of abating Wednesday, providing a useful reminder of how quickly Congress can move when it's scared, like an otherwise tame animal that lashes out when it's cornered.
A body that can take weeks just to decide whether to clear its throat now appears set to pass a strange, punitive tax bill against recipients of those bonuses with remarkable haste. The House is expected to act today, while the Senate could move soon after. It remains unclear how much long-term political impact the AIG story will have; for one possible comparison, recall the Dubai Ports World controversy, which burned hot for a few weeks but seemed to fizzle out fairly quickly. It could just be that this story, like that one, is a convenient hook for populist anger. Or it might be the thread that unravels the government's entire bailout strategy, as increased scrutiny of the entire edifice brings increased criticism. Either way, there's little doubt that both the Obama administration and Congress, particularly Democratic leaders, are genuinely afraid of this story.
It seems that there's one Democrat who really should be afraid. If you listened closely yesterday in the Capitol, it's possible you heard the sound of Chris Dodd's career coming to an end. Too harsh an assessment? Perhaps, but it's hard to overstate how badly the Connecticut senator stepped in it when he admitted that he had put language in the stimulus bill ensuring that contractual bonuses were paid out at companies receiving bailout money, a day after saying he didn't know how the language got in. Dodd blamed the administration for asking for the change, but this revelation -- on top of the Countrywide VIP scandal and recent coverage of his personal financial deals -- will make his reelection fight even tougher in 2010. Will Dodd put his head down and fight to keep his seat, or might he decide to retire?
Also on shaky ground today -- Tim Geithner. (Has there been a day when he wasn't?) The AIG mess is proving to be a real test of the treasury secretary's staying power. As chaotic as the Obama administration's response has been to this story, and though the president did declare that "the buck stops" at his desk, the White House has actually been consistent in saying that Geithner was the administration official who found out about this first, and he was the one who decided the bonuses had to be allowed. A couple of Republican lawmakers have called on Geithner to be fired, though those voices have not yet formed a chorus. They might soon, if it turns out that Geithner knew about the bonuses earlier than he has claimed.
Now is the perfect time to get out of Washington, so it's nice for Obama that he will wake up this morning in a Los Angeles hotel. After a well-attended town hall meeting in Costa Mesa last night, the president will tour an electric vehicle technical center and do another town hall today before taping his appearance on "The Tonight Show." The Fix polled some smart strategists, and their reaction to Obama's decision to appear was more positive than negative. At least one constituency is unhappy -- news photographers, who were initially told they wouldn't be allowed into the studio to take pictures of Obama while they were filming. A compromise was soon reached, though, so the rebellion was quelled. Perhaps the White House can negotiate its way out of the AIG mess, too.
March 19, 2009; 8:00 AM ET
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