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AIG Bonuses Raise Questions About Obama’s Leadership

Last Thursday, as the American International Group scandal exploded in Washington, Congressional Democrats and Team Obama, panicked by live cable coverage, provided one of the most surreal moments in recent political memory. It was a perfect storm of political posturing.

[IMGCAP(1)]On Capitol Hill, Democratic Members were raking the company’s CEO, Edward Liddy, over the coals for bonuses they had voted to protect just weeks before. At exactly the same time and a few blocks down Pennsylvania Avenue, President Barack Obama, flanked by his economic team, was lavishing praise on Treasury Secretary Timothy Geithner despite the fact that it was his staff who forced language into the stimulus bill preserving the bonuses.

Only moments before, Obama, trying to get ahead of the growing crisis, had bemoaned to reporters about how we “got to this point— and expressed his outrage over the bonuses as if he, his administration and Hill Democrats had nothing to do with it.

But in all the furor over the bonuses, one question was curiously absent in the president’s hastily called South Lawn news conference, held before he left on a trip to California: “If the bonuses were so outrageous, why, sir, did you sign the bill?—

There are two possible answers. Obama knew the stimulus bill enabled the bonuses and signed it anyway on the advice of his economic team, which had argued the sanctity of contract law; or, more likely, he didn’t know the “Dodd Amendment— had been added and he signed in ignorance.

Unfortunately for the president, his failure to explain his decision to sign the bill only raises more questions, a lot more. Did his own White House economic and legislative staff actually read the bill, and does Team Obama White House have any idea what Team Obama Treasury is doing? And what about the $100,000 in AIG political contributions taken by the Obama campaign, which was raised by a reporter at the news availability but totally ignored by the president?

With growing concerns about whether Obama is, as Rep. Maxine Waters (D-Calif.) put it last week, “up to speed,— the AIG scandal has morphed from a populist backlash story to become a legitimate question of presidential competence.

It is also a situation that could have been avoided if Obama and Democratic leaders in Congress had addressed the need for a stimulus package in a more disciplined, less panicked way.

On the day the stimulus bill passed Congress, Minority Leader John Boehner (R-Ohio) threw the bill to the House floor after Democratic leaders gave Members just hours to read the conference bill and warned, “1,100 pages that not one Member of this body has read. Not one.—

Apparently, he should have included the president and some of his key economic advisers. Like Obama, Hill Democrats found themselves between a rock and a hard place. If Boehner was wrong, then they knew this provision was in the bill all along and the AIG hearings of the past week were nothing more than political theater.

But if Boehner was right, Obama and Democratic leaders had forced Members to vote on the largest spending bill in history and nobody, including them, knew what was in it. Ironically, Obama’s people were the only policymakers who actually did have time to find out the particulars of the bill because Obama, despite his demand for immediate passage of the legislation, took four days to actually get around to signing it.

If this “historic legislation— could wait four days for signature, couldn’t Congress have had two of those days to read it before voting, or were Obama and Democratic leaders worried that if people read the bill and found provisions like the AIG loophole, it wouldn’t pass?

We now know that Obama, who expressed such anger over the AIG bonuses, had the opportunity to, in essence, veto them and didn’t. No one expects any president to read a 1,000-page bill, but taxpayers have a right to assume that someone in his White House knows exactly what the president is about to sign.

Maybe they were all too busy with the cap-and-trade initiative, the health care initiative, the new Iran policy, the new budget, the new combat veterans’ self-pay health care program, the California “campaign— rallies or prep for the Leno show.

Maybe that also explains why five months after the election, Obama still hasn’t staffed the top positions at Treasury other than Geithner’s. But where was the White House legislative affairs team when the discussions with Sen. Chris Dodd (D-Conn.), the water carrier for the enabling amendment, took place?

Either they didn’t report back or they were out of the loop; neither explanation adds confidence. Nor do Geithner’s increasingly dubious explanations of what he knew about the bonuses and when he knew it.

First, he said he learned about the bonuses on March 10. Then, we discover he was asked about the bonuses in a Congressional hearing March 3. The fallout continued as we learned that the bonuses were common knowledge at the Fed back in the fall when Geithner headed the New York Federal Reserve Bank, which was overseeing AIG activities.

The past week may well have been a watershed moment for this president. Issues of competence and confidence now cloud the country as the American people begin to question the “man behind the curtain.—

David Winston is president of the Winston Group, a Republican polling firm.

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