Democrats and Republicans are rushing to see who can serve as the primary scapegoat for the populist rage-inducing AIG bonuses. In this case, however, both parties are equally culpable and, if this were a court of law, both parties would both be tainted by "unclean hands."
For Republicans, they must accept responsibility that the bonus retention payments were originally in the November TARP document drafted by the Bush Treasury Department. As special Inspector General for TARP, Neil Barofsky, stated this week, the bonus retention payments were indeed in this document. More damning, however, is the fact that Republicans last fall blocked attempts to cut executive compensation and cap bonuses, deriding both as unnecessary "meddling in the markets."
Democrats do not fare much better in the blame game. The Treasury Department in the Obama Administration had the chance to fix the bonus problem in the latest round of TARP, but specifically objected to any Congressional limitation of the bonus payments. The Treasury Department strangely insisted that the rule of law would somehow be irreparably harmed if these bonus contracts were abrogated. Probably what was it play here was a fear that private firms would not want to get into business with the US government under the private-public model that the Obama Administration is touting, if they feared contracts could easily be rescinded. This argument though is not terribly strong as there are extenuating circumstances to the bonus payments that would make a onetime contract abrogation not only warranted but indeed necessary.
President Obama is right to try to avoid the partisan rancor that is now gripping Washington over the bonus payments. By appearing on Jay Leno, holding town hall meetings in California (a state gripped by 10 percent unemployment), and appearing alongside Republican Governor Arnold Schwarzenegger, President Obama is appearing to be above the partisan discord and blame game.
President Obama needs to continue to transcend the partisan bickering, as he faces the uphill battle of selling his $3.6 trillion budget plans to the American people. While Speaker Nancy Pelosi may have won some points politically by forcing the House to vote on a 90 percent tax on the bonus payments (thereby effectively splitting House Republicans half of whom bolted at the thought of voting in favor of the highest marginal tax increase in American history), she showed that she is still focused on the blame game. While should be furious over these bonus payments, we must now focus on the arduous task of passing a second bailout and health care and energy plans which will ultimately help to fix the economy.
It is all too easy to get swept up in the populist anger that is dominating the news of the day. We have a right to be angry and outraged over these bonus payments. But we now need Congress to get back to the task of fixing the economy and if the backlash against the bonus payments causes people to fail to back President Obama's second bailout and health care and energy plans, now that would be something for which we should have enduring anger.