In it, but not of it. TPM DC

Larry Smar, the communications director for Senator Bob Casey (D-PA), told TPM in an e-mail that Casey has not attempted to get GOP Senator Arlen Specter to switch parties, after Dem Governor Ed Rendell said in an interview that Casey, Joe Biden and himself have all tried to talk Specter into it:

The Governor may have been referring to the green jobs event in Philadelphia last month when the Vice President, the Governor and Senators Casey and Specter were on stage together and there was some public joking about Specter changing Parties. Senator Casey has had no private conversations with Senator Specter about switching Parties.

Biden's press office has replied that they are not commenting on his private conversations with Specter, and Specter's office pointed RNN-TV, which did the Rendell interview, to previous comments in which Specter said he was prepared to run for re-election in 2010 as a Republican.

President Obama addressed the growing controversy over AIG's retention bonuses this afternoon. Excerpts from his remarks can be found here, but it's notable that he did not signal much of a change in his administration's approach.

Obama said he has asked Treasury Secretary Tim Geithner to use the "leverage" of the taxpayers' investment in AIG to press for the return of the retention bonuses -- which is exactly what Congress has been pressing for all weekend.

But using "every legal avenue" to recoup the money may not be enough, as AIG's lawyers have already advised the company that it's legally obligated to pay out the bonuses. And Obama said that Geithner would continue "to resolve this matter with the new CEO, Edward Liddy," who has already made it pretty clear that he wants the bonuses paid. (And at least one senior Democrat, Rep. Elijah Cummings [MD], is already calling for Liddy's resignation.)

The Hill reports that the Coleman campaign is talking down that rumor that Norm might become RNC chairman, saying that nobody has asked him about it and that he supports Steele:

"Senator Coleman believes that Chairman Steele is doing an exceptional job, is a strong voice and leader for the party," Coleman spokesman Tom Erickson said. "And, he looks forward to working with him to build the party when he returns to the United States Senate."

It makes complete sense for Norm to put the kibosh on this one. After all, the Politico post said this would happen "after he loses his recount fight and big donors see Michael Steele's March numbers."

And absolutely nobody in Norm Coleman's position would want to legitimize a story like that.

The Democrats are keeping quiet on the rumor published this morning in the Politico, that Norm Coleman might take over as RNC chairman after a potential Michael Steele departure.

So far, the national party and the Franken campaign are not commenting. Even the Minnesota DFL Party -- the folks who have brought us some of the best anti-Coleman attack lines out there -- is declining to comment. As one anonymous Democratic official said: "When the Republicans are forming a circular firing squad, the last thing we're going to do is step into the middle."

Meanwhile, a Washington GOP source expressed some skepticism to TPM about the whole idea of putting Norm in: "If the argument against Steele is that he's not conservative enough, then no, it's absurd."

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.

Vice President Biden's office is not giving any details on a report that he has tried to recruit Senator Arlen Specter (R-PA) to switch parties.

As we posted on earlier today, Governor Ed Rendell (D-PA) said in an interview that he has tried to get Arlen Specter to switch parties -- and according to Rendell, so has Biden.

Biden deputy press secretary AnnMarie Tomasini tells TPM: "Our office does not comment on the Vice President's private conversations with Senator Specter."

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.

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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.

Full DSCC statement after the jump.

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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.