This week, the Chosen One finds himself in a bit of a pickle. Outraged over $165 million in bonuses that are going out to participants in the AIG debacle, President Obama said yesterday he would “pursue every single legal avenue to block these bonuses.” Of course, aside from having no legal authority to carry out this threat, the only people on the planet who really know how AIG can get out of this mess are the ones who got them into it. Dishonoring contractual obligations would, at best, cause massive resignations and, at worst, invite huge lawsuits that could end up costing AIG (and taxpayers) more than the value of the bonuses.
So how does Obama balance the righteous indignation of the public with the reality of the situation? It will be interesting to watch.
At this moment, it is critical Republicans stand up and, as soberly as possible, say ‘we f***in’ told you so’.
If you’ll recall, the first version of the Bush-Obama TARP legislation failed in the House last September. At the time, a huge pool of Republicans and Democrats stood together to defeat the bill because it lacked real accountability, significant reform or proper oversight. It wasn’t until the Senate loaded it up with pork and other projects that the House eventually passed it (see: yet another reason for earmark reform).
And now look where we are. We’ve spent trillions trying to shore up Wall St. and none of it has worked. Why? Because we never held accountable those who got us into this mess, we did not mandate reform of the system to prevent this from happening again, and we did nothing to ensure proper oversight so the funds would be spent the way they were intended. We have given them blank check after blank check and crossed our fingers.
Perhaps the mega recession could have been avoided, perhaps not. But if we had done the right thing at the time, at least we would know what worked and what didn’t and could move forward. Instead, we are still clueless.
What’s done is done and what’s been spent is spent. Obama should stop digging and start over. Any money that leaves the Treasury at this point should be tied to vigorous accountability, reform and oversight.