This morning it was reported that President Obama has taken responsibility for the AIG bonus mess:
“Listen, I’ll take responsibility. I’m the president,” Obama said at a “town hall” meeting in Costa Mesa, California, where his bid to sell his economic revival policies was swamped by news coverage of the bonus fiasco for a fourth day.
“We didn’t draft these contracts. We’ve got a lot on our plate — but it is appropriate when you’re in charge to make sure that stuff doesn’t happen like this,” he added, amid outrage across the United States.
I’m willing to give Obama the benefit of the doubt as far as how much specific information he had about all of this. That doesn’t change the fact, however, that he signed the stimulus bill into law and should have known exactly what he was signing. Therefore, he should have known about the “Dodd amendment” and dealt with it before it got to this point, and he seems to be acknowledging that.
Secretary of the Treasury Tim Geithner also took responsibility for the mess today by admitting that the Treasury Department did indeed work with Chris Dodd to add the amendment to the stimulus bill:
In an interview with CNN’s Ali Velshi, Geithner said the Treasury Department did talk to Sen. Chris Dodd about a clause he put forth that would have strictly limited executive bonuses.
The Treasury Department was concerned that legislation that would restrict contractual bonuses would not hold up to legal challenges, Geithner said.
“We expressed concern about this specific version. We wanted to make sure it was strong enough to survive legal challenge,” Geithner said.
This confession from Geithner comes only after Senator Chris Dodd (who previously lied about his role) admitted to inserting the amendment into the stimulus bill at the urging of the Treasury Department. Geithner still claims to have not known the full scale of the bonus issues until last week, but it’s quite clear that he foresaw a problem over a month ago when requesting that the amendment be inserted into the bill. The fact that this issue was singled out and addressed by Treasury would seem to indicate that it was known then that bonuses would be paid, therefore the government should have begun working with AIG then to come up with a reasonable solution.
As I said in last night’s post, AIG may have indeed been contractually obligated to pay these bonuses. Let’s assume for a moment that they were. In that case, the “Dodd amendment” was necessary to preserve rule of law. Had Geithner and Dodd (and any other Democrats) done their duty and publicly addressed the issue earlier, this whole ordeal probably wouldn’t have gotten so out-of-hand. Instead, they wasted time covering it up and lying about it and let it just spin completely out of control. By not taking responsibility earlier, they’ve given fellow Democrats the opportunity to play dumb about the law that they passed and pretend to be furious about it, contributing greatly to the unhealthy mob mentality that has taken hold.
A product of this mob mentality is the bill just passed in the House today (by about every single Democrat and sadly with significant Republican support) that would enact a retroactive 90% tax on any bonuses received since December 31,2008, by employees with family incomes of over $250,000 at companies that have received at least $5 billion in bailout money from the government (Source). Of course, this would include the bonuses paid by AIG. But if these bonuses were indeed part of legally-binding contracts (as Democrats apparently believed considering they passed the bill containing the “Dodd amendment”), then they have absolutely no business taking this money from them. This is nothing but an excuse to pass socialist legislation to take money from those who they believe made too much. I don’t like the fact that people at a horribly performing company that has received a lot of taxpayer money are getting bonuses, but if they were legally entitled to them, so be it.
Even if these contracts didn’t really obligate AIG to pay the bonuses, this is not the way to solve the problem. The truth is that the problem was solved last week:
In a letter sent to congressional leaders, Geithner said he persuaded AIG Chief Executive Edward M. Liddy last week to scrap or cut hundreds of millions of dollars in future salaries and other compensation after determining that the bonuses already granted would be “legally difficult to prevent.”
Geithner said the company would be required to pay the $165 million from corporate operating funds as part of the final terms for a previously announced $30-billion line of credit from the government. In addition, the credit line will be reduced by the same amount.
The Treasury has already worked out a way to recover this money! Democrats in Congress knew this, but they saw their opportunity to pass some socialist legislation to take even more money and took advantage of this mob mentality to do so. This really only strengthens the case that some conservatives are making that this may be a bill of attainder (one intended to punish specific individuals), which is prohibited by the Constitution. They no longer have a noble excuse. This bill was obviously designed with the sole purpose of punishing the receivers of the AIG bonuses. I can only hope that this bill doesn’t get any further and that the American people will see all of this for what it really is.