Who's the real bonus-approving villain?If everything you knew about President Barack Obama’s role in the AIG bonus fiasco was his recent “60 Minutes” appearance,
By: Gene Lyons, The Dickinson Press
If everything you knew about President Barack Obama’s role in the AIG bonus fiasco was his recent “60 Minutes” appearance, you’d feel reassured. On television, Obama gave a masterful performance, all calm confidence and disarming smile. Was he surprised by public outrage over $165 million taxpayer dollars handed out like free casino booze to the crap-shooters who trashed the economy?
“Our team wasn’t surprised by it,” he said. “The one thing that I’ve tried to emphasize, though ... as we dig ourselves out of this economic hole that we’re in, we can’t govern out of anger.”
Quite so. If the president’s pants fell down, he’d probably cite the Obama Humor Initiative, keeping the nation’s spirits high. CBS’s Steve Croft, doubtless aware that the White House appears to have chosen “60 Minutes” as its go-to interview, played nice.
About as tough as it got was Croft’s parroting Wall Street mavens who say, “Look, we’re not going be able to keep our best people. They’re not going to stay and work here for $250,000 a year.” Poor babies.
That one Obama treated with appropriate scorn.
“They need to spend a little time outside of New York,” he said. “Because you know, if you go to North Dakota, or you go to Iowa, or you go to Arkansas, where folks would be thrilled to be making $75,000 a year without a bonus, then I think they’d get a sense of why people are frustrated.”
Arkansas, North Dakota? Actually, Mr. President, half that would be higher than the median family income in my home county. Obama did point out that a generation ago, investment bankers were happy to make 20 times a teacher’s salary. Today, they expect 200 times more, and no impertinent questions from people with mediocre SAT scores. OK, so they gambled away your pension playing high-stakes musical chairs with derivatives and credit-default swaps. Most peasants in fly-over country don’t know what those are.
Quick now, define “tranches.” See what I mean?
Obama did a decent job explaining why we’ve got to hold our collective noses and deal with AIG, Citicorp, etc. Basically, it’s not possible to invent a new world banking system from scratch without risking a catastrophic depression.
People gripe about, say, Manny Ramirez making $25 million to play left field. But if Manny hits .147, he’s out of baseball. These AIG jokers hit a lot worse than that. To put it another way, if a plumber caused a gas leak that burned an AIG aristocrat’s Disneyland-sized mansion down, they’d call it criminal negligence.
Which is what made the White House’s initial response so sickening. Yes, the bonuses totaled less than 1 percent of the $175 billion AIG got in the bailout. The harm’s largely symbolic. Rahm Emanuel called it a distraction; David Axlerod pooh-poohed the issue.
Yeah, well the U.S. flag’s nothing but a symbol. In politics, people live and die for symbols. The AIG thing may not rise quite to that level, but to people lying awake at 3 a.m. worrying about keeping their jobs, they were bound to provoke outrage.
Having bungled that elementary judgment, something I doubt a James Carville or Bill Clinton would have done, the Ivy League brainiacs on Obama’s economic team found themselves tiptoeing along the rim of a political volcano.
So they selected, if not exactly a virgin, a sacrificial victim to fling into the crater. Anonymous White House sources leaked a story to The New York Times pinning the blame on Sen. Chris Dodd, D-Conn. Dodd, the newspaper reported, had inserted a clause into the stimulus bill allowing the bonuses.
Now the cable news networks had their villain.
At first glance, Dodd looked perfect. Republican propagandists like Rush Limbaugh, trusting their audiences’ innocence of eighth-grade civics, have pinned the collapse on Dodd and Rep. Barney Frank, who somehow secretly ran the economy while the GOP controlled the White House and both houses of Congress. Dodd took campaign contributions from AIG employees; he’d gotten suspect refinancing deals from Countrywide.
Never mind that Dodd also broke with Hillary Clinton to endorse Obama. The senator was expendable.
Alas, the leak was fiction. The truth was almost the opposite. The AIG bonuses were first written into the Bush administration TARP bill last December. Then in February, Dodd wrote a provision into the stimulus bill prohibiting bonuses in companies receiving bailout funds.
“As word spread ... about the new and retroactive limit — inserted by Democratic Sen. Christopher Dodd of Connecticut,” the Wall Street Journal reported Feb. 24, “so did consternation on Wall Street and in the Obama administration, which opposed it.”
So the White House pressured Dodd into backing down, specifically enabling the AIG bonuses. Because The New York Times rarely admits getting burned by anonymous inside sources, the White House’s double-dealing has gotten little play.
Next time, they may not be so lucky.
— Arkansas Democrat-Gazette columnist Lyons is a National Magazine Award winner.