Friday, March 20, 2009

Obama's Spoiled Red Herring

"By Robert Romano

"It might be a good time for President Barack Obama to take a week off. And perhaps go fishing.
This week, the President waxed highly indignant that American International Group (AIG), Inc. gave out some $165 million in contractual bonuses after receiving more than one-thousand times that amount, some $173 billion, in taxpayer-guaranteed bailouts.

"Unfortunately for the White House, the whole episode ultimately has unwittingly turned into a net negative for the president. It's an irony, and one that could prove quite damaging in 2010.

"The New York Times' Adam Nagourney laid out the beginnings of the Great Bonus Scam just on March 15th in some detail in his piece, “Bracing for a Bailout Over Wall Street Bailouts,” writing that “The administration's sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses… marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger.”

"At first the feigned outrage was nothing more than a contrived red herring to divert and deflect public outrage over bailouts away from government that gave undeserving bailouts onto the undeserving firms that gobbled them up.

"Only Mr. Obama forgot to wash the pungent scent of the herring off his hands before posturing and preening at the podium. And, instead of throwing off the trail, once the hounds were done ripping the red herring to shreds, they showed up back on the doorstep of the White House, itself.

"What they discovered was the fact that the President had actually signed the legislation—the $787 billion “stimulus”—that guaranteed that the controversial contractual bonuses would be paid. What's worse was the admission by Senator Chris Dodd (D-CT) that he inserted the amendment at the explicit direction of Mr. Obama's Treasury.

"To be fair to the President, it is possible that he still has not read the 1100-page bill that he made law. So it not altogether surprising that he is the first president to denounce his own legislation—only a month after enacting it. Bravo.

"Earlier in the week, the President stated with mock outrage, "This is a corporation that finds itself in financial distress due to recklessness and greed. Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less 165 million dollars in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?"

"Well, sir, the way they justify it is by getting to first sign off on it. Pure and simple.
In truth, this is a solid example of pay-to-play corruption. Since 1989, AIG has donated more than $4.37 million to candidates for federal office—including Mr. Obama. In 2008, the company gave $644,218 to candidates, and in return, it received from the Federal Reserve some $173 billion in taxpayer-guaranteed loans. That represents nearly a 27 million percent return on investment 2008 alone.

"Of particular note, Senator Chris Dodd received some $103,900 from AIG in 2008—and in the 2009 “stimulus” legislation, he dutifully inserted the amendment that guaranteed that bonuses would be paid by adding language to a spending cap that specifically excluded executive bonuses included in contracts.

"The only politician who took more than Senator Dodd, not so coincidentally, was one Barack Obama. He took some $104,332 from AIG in 2008. And he then made sure his benefactors got their bonuses.

"In fact, according to OpenSecrets.org, no politician in 2008 took more money from the troubled insurance giant than Mr. Obama.

"All of which, of course, leaves a lot of egg on Mr. Obama's face.

"Every politician who received donations from AIG, and any other bailout-recipient firms, should return them to the taxpayers who are now paying, as the President noted, to keep these companies afloat. That is the least they can do to avoid the perception—or, more accurately, the reality—of a quid pro quo.

"In short, they should put their money where their mouth is.

"Instead, Mr. Obama put his foot where his mouth is. Perhaps now that he's finished posturing and preening in front of the prompter, he'll be able to dislodge it while he fishes for some more herrings to distract the American people from what an amateur he really is—as well as what he is really after: the total socialization of American society.

"Clearly, the herring isn't the only thing that is red in the Obama White House."

"Robert Romano is Senior Editor of ALG News Bureau."

all bold and italics are blog author's emphasis.

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