(updated below)
As I wrote on Tuesday, it was clearly Treasury officials (led by Tim Geithner) who were the driving force behind the dilution of Chris Dodd's efforts to impose strict limitations on the executive compensation paid by bailed-out companies. That fact leads former Bush speechwriter Marc Thiessen, writing at National Reveiw, to demand that Republicans blame the AIG bonus payments on Obama because he signed the stimulus bill that contained the exception for pre-February, 2009 employment agreements:
President Obama rammed through the stimulus bill — over Republican objections — that explicitly protected the AIG bonuses. . . .
Either Obama did not know the provision was in there, which validates the Republican point that no one read this bill. Or he did, and signed it anyway. Either way, it’s a disaster of his making.
We should lay responsibility for the AIG bailout where it belongs — directly at the President’s feet.
That's a nice illustration of the oozing, limitless deceit that characterizes the people who governed the country for the last eight years. It's certainly true that the Obama administration advocated less rigid compensation limits than Dodd wanted. But most leading Congressional Republicans -- the ones Theissen is urging blame Obama for the AIG bonus paments -- opposed all forms of executive compensation limits.
During the debate over those limits in early February, The Huffington Post's Ryan Grim wrote an article headlined "GOP Opposes Pay Limits On Bailed-Out Bankers" and compiled some of the statements from key GOP leaders:
President Obama has proposed capping compensation for executives at banks that take taxpayer bailout money at $500,000. Republicans hate the idea -- a position puts them uncomfortably on the side of people currently about as popular as child-porn producers and subprime mortgage brokers.
Senate Minority Whip Jon Kyl (R-AZ) blamed the "tone deaf" bankers for creating the political environment that allows Obama to call for a cap.
"Because of their excesses, very bad things begin to happen, like the United States government telling a company what it can pay its employees. That's not a good thing in America," Kyl told the Huffington Post.
"What executives have done is troubling, but it's equally troubling to have government telling shareholders how much they can pay the executives," said Sen. Mel Martinez (R-FL).
Sen. James Inhofe (R-OK) said that he is "one of the chief defenders of Obama on the Republican side" for the president's efforts to reach across the aisle. But, said Inhofe, "as I was listening to him make those statements I thought, is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?" . . . .
The objection to the government intervention in salaries is rooted in the Republican belief that government is inherently ineffective. "If Congress can run a financial institution, it belies everything I've seen in this body. Government does not do a good job running private institutions," said Sen. Kit Bond (R-MO).
Sen. Tom Coburn (R-OK) agreed: "If we do such a good job of running the federal government, what business do we have telling them how to run the banks?"
The GOP is also concerned that setting compensation limits could put the country on the road to serfdom. "This is just a symptom of what happens when the government intervenes and we start controlling all aspects of the economy. This is just the first piece," said Sen. Jim DeMint (R-SC). "If you accept the fact that the government should be setting pay scales in America, then it's hard not to go after these exorbitant salaries. But I think it's a sad day in America when the government starts setting pay, no matter how outlandish they are."
That's the Republican Party: vehemently advocate positions that result in great harm, and then, once political controversy erupts, once the destruction becomes transparent, shamelessly pretend to have opposed the policies in the first place. In fact, as Think Progress documents, many of the very same Republicans who emphatically opposed any executive compensation limits are now leading the way in protesting the AIG bonus payments. In fairness, some GOP leaders, such as House Minority Leader John Boehner, supported Obama's plan for limiting compensation, but most vehemently opposed it, and even now, the key right-wing leaders -- Rush Limbaugh, Sean Hannity, Glenn Beck -- are all explicitly defending the AIG bonuses.
The controversy of the AIG bonuses -- which, strictly as a quantitative matter, is rather trivial in the scheme of things -- illustrates how warped our political discourse is. Here is the hierarchy of positions regarding executive compensation limits back in February:
- Chris Dodd -- advocated full-scale, no-exceptions limits on executive compensation for bailed-out companies
- Obama administration -- supported limits but advocated exceptions for already-existing employment contracts
- GOP leaders -- opposed all executive compensation limits as Socialist tyranny
Yet everything is exactly backwards in this controversy. The Obama administration has been trying to blame Dodd for the carve-out that allowed the AIG bonus payments, a carve-out that came into being because Geithner/Summers demanded it and because they opposed the limits Dodd wanted as too onerous. And now, the GOP -- which opposed limits of any kind -- wants to blame the Obama administration and Dodd because the limits weren't stringent enough to stop the AIG bonus payments. And the media is playing along perfectly, having clearly decided that the person who led the way in fighting for absolute compensation limits -- Dodd -- is the real villain responsible for the AIG bonuses.
UPDATE: If Geithner -- when he was pressuring Dodd to include the pre-February exception for compensation limits -- was simultaneously aware of the imminent AIG bonsues (contrary to his denials), then that obviously elevates the problem for him substantially. Jane Hamsher examines whether Geithner's denials in that regard are credible.
And, as Greg Sargent notes, there is a remarkable disparity betewen these two things -- first, from The Washington Post today:
For the new administration, the bonuses were a distraction from what senior aides called the main focus: getting the economy working and people back to work. "People are not sitting around their kitchen tables thinking about AIG," [David] Axelrod said.
And this from a Gallup poll this week about the AIG bonsues:
You can't spend six months frightening people by warning them that they're headed into a Great Depression and then be surprised when they're "outraged" that hundreds of millions of dollars in taxpayer money are being shoveled into the pockets of those who helped bring the situation about. The belief that nobody cares -- which does seem to be the overriding administration view -- is possible only if one thinks that the way the financial industry functions is perfectly fine and normal and doesn't need any changing. That belief, more than anything else, seems to define Tim Geithner, and it appears to be the primary source of most of the problems that are now, quite justifiably, plaguing him.
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