House Democratic leaders send out a daily list of talking points on the biggest stories in the capital, and today's memo mentions the burgeoning scandal over AIG's retention bonuses:
As a result of contracts entered into before government rescue funds were approved last year -- so before limits were in place -- AIG has paid out $165 million in bonuses to top executives.
AIG has committed to Treasury that they will look how to repay taxpayers for the retention payments.
A House Financial Services subcommittee hearing on Wednesday morning will look into problems at AIG.
That's all true ... but the reality of the situation goes deeper than this week's $165 million. It's not even clear that AIG's 2009 retention bonuses would be affected by the executive compensation limits that were added to the economic stimulus law.
Those limits don't apply to pay arrangements negotiated before last month, and it appears that AIG has already inked agreements on some of its 2009 incentive payments.
When reporting on AIG's bonus payments and the resulting political backlash, it's easy to get bogged down in numbers without seeing the full picture. So here are some points to keep in mind.
AIG CEO Edward Liddy has already agreed to take a $1 salary for 2008 and 2009, and he isn't in line for any of the $1 billion in total retention bonuses that are at issue this week -- $450 million of which is slated to go to the company's disgraced Financial Products unit.
But it's important to distinguish retention bonuses from plain ol' bonuses, because senior AIG executives certainly do. In a December 5 letter to Rep. Elijah Cummings (D-MD), Liddy said that five of the company's seven most senior executives (called the Leadership Group) "will not receive annual bonuses for 2008 or salary increases through 2009."
Yet Cummings himself had first called Liddy's attention to a November filing from AIG that said senior executives had agreed to delay payments of their retention bonuses, the money that's being paid out this week in defiance of the Obama administration. Among the AIG execs receiving retention payments are two members of the same Leadership Group that had pledged to forgo its bonuses: Chief Financial Officer David Herzog and Executive Vice President of Retirement Services Jay Wintrob.
So to be clear, these executives are getting paid this month ... while continuing to tout their willingness to give up other bonus payments. There's no stronger argument for seeking to reclaim the money without negotiating with Liddy, as the Obama administration had been previously attempting to do.
Late Update: To shed some more light on the retention bonuses being paid out this week, they're different from the ordinary annual bonuses that most companies give. The retention payments were negotiated early last year, according to AIG, with the goal of retaining key executives and preventing them from decamping to competing firms.
The focus on retention bonuses explains some of the weirdly out-of-touch rhetoric in Liddy's Saturday letter to Tim Geithner, where he argues that keeping the "best and the brightest" talent at AIG would be impossible if the government actually used its power to limit executive compensation.
AIG's plan to pay out $165 million in bonuses to its disgraced Financial Products unit is prompting some surprising unity on Capitol Hill: Democrats and Republicans in Congress are taking a forward-leaning approach to holding AIG accountable to the taxpayers, while the Obama administration appears to be caught a few steps behind.
The current controversy began on Saturday with a letter from AIG CEO Edward Liddy to Treasury Secretary Tim Geithner. Liddy's missive has been quoted frequently, but it's hard to get the full picture of AIG's commitment to its own enrichment without reading the complete version -- TPMDC's copy is viewable here.
Lawmakers from both ends of the ideological spectrum are seething at Liddy's argument to Geithner that "we cannot attract and retain the best and brightest talent to lead and staff the AIG businesses ... if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."
House Financial Services Committee Chairman Barney Frank (D-MA) told NBC today that firings may be necessary at AIG, whether or not the company's 2008 bonuses can be legally withheld. Meanwhile, Richard Shelby (R-AL), Frank's frequent night-and-day opposite on financial issues and the senior Republican on the Senate Banking Committee, was telling ABC the exact same thing.
"You're rewarding failure. A lot of these people should be fired, not awarded a bonus," Shelby said.
So where is the Obama administration? So far, the president and his advisers have shared Congress' keen sense of outrage but remained a few steps behind lawmakers on the fast-moving push to deny AIG its bonuses.
The DSCC has just sent out a press release against former Rep. Rob Simmons (R-CT), who has declared his candidacy against Chris Dodd in 2010. And one thing is clear: Democrats are going to keep running against George W. Bush for years to come.
The statement begins with a Simmons quote from 2004: "I am a big fan of the president's and I am quite proud to be a Republican, and agree with him on many issues." The rest of the release then goes on to link Simmons to Tom DeLay and Jack Abramoff, on top of the George W. Bush link.
Simmons held his House seat for three terms, but then lost re-election by a margin of 83 votes out of over 240,000, in the big Democratic year of 2006. A recent Quinnipiac poll gave him a 43%-42% edge over Dodd. So expect the Dems to make this race about Bush as much they can -- after all, it sure worked across the whole country in 2006 and 2008.
Ed Rendell told RNN-TV, a regional cable news channel in the Northeast, that he has in fact tried to talk GOP Senator Arlen Specter into switching to the Democrats -- oh, and so have some other important people, who Rendell probably shouldn't have mentioned.
"We've tried," said Rendell. "Myself, Senator Casey, Vice President Biden have tried to talk him into it, but he's bound and determined to stay a Republican."
When asked for comment by RNN-TV, Specter's office pointed them to an interview he gave recently where he said he was "prepared to run as a Republican," and did not directly confirm or deny that Specter has been approached by Joe Biden, Ed Rendell or Bob Casey about switching parties.
Late Update: Here's the relevant clip from Rendell's interview with RNN's Andrew Whitman:
More of the interview will run tonight at 6 p.m. ET.
Obama To Use Campaign Infrastructure To Build Support For Budget
President Obama and the Democratic National Committee will be leveraging Obama's 13-million name e-mail list in order to mobilize support for Obama's budget proposal. From the Washington Post: "Aides familiar with the plan said it is an unprecedented attempt to transfer the grass-roots energy built during the presidential campaign into an effort to sway Congress."
Obama's Day Ahead
President Obama and Treasury Sec. Tim Geithner will be meeting at 11:25 a.m. ET with small business owners and community leaders. Obama and Geithner will deliver remarks to the group and members of Congress at 12 p.m. ET. At 2 p.m. ET, Obama will speak at the Department of Veterans Affairs.
Biden's Day Ahead
Vice President Biden will be speaking this afternoon at the International Association of Fire Fighters 2009 Legislative Conference. In the evening, Biden will attend an event for the Democratic National Committee, where he will be speaking.
Obama To Roll Out Small Business Aid Plan
At their White House event today, President Obama and Sec. Geithner will announce plan to help small business. The plan will include lower small-business lending fees, as well as an increase on the government guarantees for some Small Business Administration loans, and other steps aimed at unlocking the credit markets.
Poll: Economy Is Top Issue, And Unemployment Is Top Economic Issue
A new CNN poll finds 36% of Americans saying unemployment is the single most important economic issue -- compared to 13% last April, when the biggest economic issue during a time of rising gas prices was inflation. Overall, 63% say the economy is their top concern.
Simmons Running Against Dodd
Former Rep. Rob Simmons (R-CT) has announced that he is running for Senate against Chris Dodd in 2010. Simmons lost re-election by less than 100 votes in the 2006 Democratic wave, but a recent Quinnipiac poll gave him a 43%-42% edge over the embattled Dodd.
GOP Spending Big In Special Election For Gillibrand's House SeatThe Hillreports that the Republicans are investing heavily in the special election for Kirsten Gillibrand's former House seat, where the polls are showing just a small lead for GOP candidate Jim Tedisco (after he'd previously held a much larger one). In all, 82 members of the GOP conference have agreed to donate to Tedisco's campaign, and both John Boehner and Eric Cantor have held fundraisers for him.
Cheney: Obama Putting America At Risk Of Another Attack
During his interview today on CNN, former Vice President Dick Cheney blasted the Obama Administration's decisions to undo the previous policies on Guantanamo, waterboarding and other issues. "President Obama campaigned against it all across the country," said Cheney. "And now he is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack."
No Obama Or Biden Events Today
President Obama and Vice President Biden do not have any public events today. Obama has a 3 p.m. meeting on the economy at the Oval Office, which will be closed press.
Summers: AIG Bonuses "Outrageous" -- But Government Cannot Abrogate Contracts
Appearing on ABC's This Week, Lawrence Summers denounced the AIG bonuses as "outrageous," and said the White House is doing everything it can to limit the bonuses -- but he also added that there are limits to what can be done. "We are a country of law. There are contracts," said Summers. "The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system."
Goolsbee: Administration Doing Everything It Can About AIG Bonuses
Appearing on Fox News Sunday, Austan Goolsbee addressed the AIG bonuses. "I don't know why they would follow a policy that's really not sensible, is obviously going to ignite the ire of millions of people, and we've done exactly what we can do to prevent this kind of thing from happening again," said Goolsbee. "I think the root of the problem has been some of the people have things written in their contract that say, 'Look, you sell this much life insurance, you get a bonus of X,' and it's in their contract and that part can't be changed."
Barney Frank Wants To See If AIG Bonuses Are Recoverable -- And To Get Tough On The Executives
Appearing on Fox News Sunday, Barney Frank said he wanted to see if the AIG bonuses are recoverable. "We can't just violate law -- legal obligations. I understand that," said Frank. "But I do want to find out at what point these illegal obligations were incurred, who said, and at what point, we're going to give these bonuses no matter what. And I do think it's inappropriate for those people to stay in power at that company."
WaPo: Jarrett High-Powered And Low-KeyThe Washington Postprofiles Valerie Jarrett, and her role as the public liaison for groups wanting to reach President Obama: "Jarrett's ability to navigate the big personalities and even bigger egos in the administration will go a long way toward determining her success, and perhaps the president's, in trying to change the tone of civic discourse and foster more grass-roots influence in Washington."
Biden Raises Big Money For Blanche Lincoln
Joe Biden headlined a fundraiser in Arkansas yesterday for Senator Blanche Lincoln, kicking off her re-election bid. The Lincoln campaign told the media that the event brought in about $800,000 a considerable amount in the inexpensive Arkansas media markets.
Americans United Ad: We Want The President And America To Succeed
The latest ad from the labor-backed group Americans United For Change, running on national cable and in the D.C. media market, blasts Congressional Republicans for attacking President Obama's budget plan, but failing to have a one of their own:
"Tell the Republicans that Americans won't take No for an answer. Tell them we want our President - and America - to succeed," the announcer says. Note that at this point, the group doesn't even have to directly mention Rush Limbaugh, as they did in prior ads -- the line about wanting the President and America to succeed gets the message across just fine.
Obama Announces Food Safety Appointments
In his weekly video address, President Obama announced the appointment of Dr. Margaret Hamburg as the new Commissioner of the Food and Drug Administration, and Dr. Joshua Sharfstein as Principal Deputy Commissioner:
Obama also a announced a new Food Safety Working Group to deal with recent regulatory failures that have resulted in food recalls: "In the end, food safety is something I take seriously, not just as your President, but as a parent."
GOP YouTube: "The Government Doesn't Create Wealth. It Expends Wealth"
In the weekly Republican YouTube, Sen. Chuck Grassley (R-IA) goes after the Obama Administration for taxing and spending:
"It's very simple. The government doesn't create wealth. It expends wealth," said Grassley. "No wonder then the public is skeptical about Washington trying to fix the economy with one massive spending bill after another. It's hard to convince taxpayers that more deficit spending is the answer."
Obama Meets With Brazil's Lula da Silva
President Obama met at 11 a.m. this morning with Brazilian President Lula da Silva. The topics of their discussion included the upcoming G-20 meeting and the Summits of the Americas, the financial crisis, energy policy and the environment.
Biden Campaigning For Dem Senator Blanche Lincoln
Vice President Biden is traveling today to Little Rock Arkansas, where he will attend the kickoff for Senator Blanche Lincoln's (D) 2010 re-election campaign. Biden will be speaking at the event.
WaPo: Obama Blaming BushThe Washington Postpoints out that President Obama has taken to frequently saying that he has inherited particular problems that he's dealing with, which has Republicans complaining of partisanship. Former Bush press secretary Ari Fleischer claimed to the Post that Obama is doing this because his approval numbers are going down: "His response to that trend is to turn up the blame on George Bush and everything that came before him. And he was the one who talked about getting past partisanship."
NYT: Republicans Split On Whether To Offer Budget AlternativeThe New York Timesreports that Congressional Republicans have split on whether they should offer up an alternative budget plan, as opposed to simply criticizing President Obama's $3.6 trillion plan. House Republicans are offering a plan, while the Senate Republicans are not. "The responsibility of the majority is to produce the budget," said Senator Judd Gregg (R-NH), the ranking Republican on the Budget Committee, "and we think it is more constructive to point out how we would improve their budget."
Pelosi: I Am Not Partisan -- And GOP Can't Win On Policy Or Process
In an interview with Charlie Rose, Nancy Pelosi denied Republican accusations that she has been an overly partisan leader, explaining that Republicans were invited to contribute ideas for the stimulus bill -- they just didn't win the arguments. "If you can't win on policy, then you go to process," said Pelosi. "If you can't win on process, then you go to personality. And that's how they have decided they would make up stories about me and the rest."
NYT: Bush Policy Institute To Be A Political, Not Academic InstitutionThe New York Timesexamines the upcoming Bush policy institute at Southern Methodist University, and the battles that the Bush Foundation has had with academics there: "It will proselytize rather than explore: a letter sent to universities bidding for the Bush center stipulated that the institute would, among other things, 'further the domestic and international goals of the Bush administration.' And it will hold itself apart from S.M.U.'s own world of academic inquiry, reporting to the Bush Foundation itself rather than to the university president or provost, as academic institutes -- even presidential ones -- normally do."
Rep. Bill Posey, a freshman Republican from Florida, is now putting forward a bill that should be good news for a particular demographic that cares a whole lot about their issue: Those folks out there who insist that President Obama hasn't offered a birth certificate to prove he's a natural-born U.S. citizen.
CNN reports that Posey has submitted a bill to require all presidential candidates to submit a birth certificate -- which Posey says is needed in order to remove this issue as a reason to question any president's legitimacy.
"Opponents of President Bush used the 2000 election results and the court decisions to question the legitimacy of President Bush to serve as President," Posey said in a statement. "Opponents of President Obama are raising the birth certificate issue as a means of questioning his eligibility to serve as president. Neither of these situations are healthy for our Republic."
Posey's spokesperson told CNN that Posey takes President Obama's word for it that he's a citizen: "This was not meant as an insult to the president. It is simply meant as a way to clarify future election laws and to dispel the issue so we can move on with doing business for the country."
A quick check of the Library of Congress' Thomas site shows the bill does not have any cosponsors yet. But Posey only introduced it on Thursday, so he's just getting started.