Obama’s Katrina Moment: The Teleprompter President Hit From All Sides

Frank Rich was one of those big time pundits back in the Democratic primary who, failing to notice Barack Obama’s total lack of relevant experience for the office of president, repeatedly documented his school-boy infatuation with the One in his NY Times op ed while stooping to new lows in trashing Hillary Clinton.

Reading Rich’s column this morning feels like vindication: fewer than 100 days into the Obama Administration, and our media good old boy is asking the question, “Has a ‘Katrina moment’ arrived?”

Rich begins:

A CHARMING visit with Jay Leno won’t fix it. A 90 percent tax on bankers’ bonuses won’t fix it. Firing Timothy Geithner won’t fix it. Unless and until Barack Obama addresses the full depth of Americans’ anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: “President Obama may not realize it yet, but his Katrina moment has arrived.”

Rich continues:

Six weeks ago I wrote in this space that the country’s surge of populist rage could devour the president’s best-laid plans, including the essential Act II of the bank rescue, if he didn’t get in front of it. The occasion then was the Tom Daschle firestorm. The White House seemed utterly blindsided by the public’s revulsion at the moneyed insiders’ culture illuminated by Daschle’s post-Senate career. Yet last week’s events suggest that the administration learned nothing from that brush with disaster.

Otherwise it never would have used Lawrence Summers, the chief economic adviser, as a messenger just as the A.I.G. rage was reaching a full boil last weekend. Summers is so tone-deaf that he makes Geithner seem like Bobby Kennedy.

Bob Schieffer of CBS asked Summers the simple question that has haunted the American public since the bailouts began last fall: “Do you know, Dr. Summers, what the banks have done with all of this money that has been funneled to them through these bailouts?” What followed was a monologue of evasion that, translated into English, amounted to: Not really, but you little folk needn’t worry about it.
Yet even as Summers spoke, A.I.G. was belatedly confirming what he would not. It has, in essence, been laundering its $170 billion in taxpayers’ money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Société Générale and Deutsche Bank abroad.

Summers was even more highhanded in addressing the “retention bonuses” handed to the very employees who brokered all those bad bets. After reciting the requisite outrage talking point, he delivered a patronizing lecture to viewers of ABC’s “This Week” on how our “tradition of upholding law” made it impossible to abrogate the bonus agreements. It never occurred to Summers that Americans might know that contracts are renegotiated all the time — most conspicuously of late by the United Automobile Workers, which consented to givebacks as its contribution to the Detroit bailout plan. Nor did he note, for all his supposed reverence for the law, that the A.I.G. unit being rewarded with these bonuses is now under legal investigation by British and American authorities.

Within 24 hours, Summers’s stand was discarded by Obama, who tardily (and impotently) vowed to “pursue every single legal avenue” to block the bonuses. The question is not just why the White House was the last to learn about bonuses that Democratic congressmen had sought hearings about back in December, but why it was so slow to realize that the public’s anger couldn’t be sated by Summers’s legalese or by constant reiteration of the word outrage. By the time Obama acted, even the G.O.P. leader Mitch McConnell was ahead of him in full (if hypocritical) fulmination.

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BTW, I wasn’t the only way who noticed that Rich has changed his tune about Obama. Here’s a reader’s response to this morning’s column:

It is nice to see that Mr. Rich has finally demanded some tough answers from his idol. The supposed change that Obama and others (including Deval in MA) promised us appears to have lost its sheen. We now see that Obama and his gang are no different (worse in fact) than the Wall street moghuls that ruled during the Bush years. All this talk of accountability and getting the bonus back is just that - talk. They will lay low for a few weeks until the next story comes along and then it will be business as usual, swindling our money in bucketloads. The super rich and their minions who control the strings in Wall street are just playing their frat poker games, but this time it is with our money, trillions of it! Meet the new "changed" administration, same as the old administration!

— BAY, Boston, MA

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Geithner’s Dropped More Balls Than a Drunk Juggler (video)

Just in from the Huffington Post:

Roy Sekoff, Editor of the Huffington Post, appeared on CNN to discuss the backlash generated by the bonuses distributed by AIG and what effect it will have on President Obama's agenda. His co-panelists included David Sirota, Rick Newman and Neil Boortz. Roy didn't pull any punches regarding Treasury Secretary Tim Geithner, saying he's "dropped more balls than a drunk juggler."

Watch the video.

House Moves Ahead of the Impotent Obama Administration in the AIG Scandal

The Guardian’s Ewen MacAskill reported earlier today that Congress isn’t waiting around for the impotent Obama Administration to take action on the AIG bonus scandal:

In the face of public outrage at bonuses paid last week to executives of the bailed-out insurance giant AIG, the House of Representatives passed an emergency measure to impose 90% tax on the cash handouts, which total around $165m (£114m). It passed by 328 votes to 93.

MacAskill continues:

Congress is pointing the finger of blame at the White House for failing to take measures to prevent huge bonuses being paid to executives of institutions being bailed out.

Obama, who was on the second day of a visit to California, has seen the AIG row wreck his carefully-laid plans to spend the week selling his $3.6tn budget plans to help lift the economy out of recession and promote alternative energy plans. He has also been forced to come to the defence of his treasury secretary Tim Geithner, whose credibility has been challenged because of suggestions that he did little to prevent the bonuses being paid.

Although several leading Republicans have urged the Administration to fire Geithner, MacAskill notes:

While Obama is unlikely to sack Geithner only a few months into his presidency, the scandal has weakened the treasury secretary and threatens to make it harder for the Obama administration to push through ambitious plans for helping lift the US - and world - out of recession.

The House of Representatives has had enough:

Today the House of Representatives passed a bill drawn up on Tuesday after congressional offices were flooded with calls from constituents expressing disgust with the bonuses. Democratic members stood up in the house one after another to express anger over the bonuses paid out to what one called the "barons of Wall Street" at a time when millions were struggling with unemployment.

MacAskill reports that the Senate will vote on a similar bill next week.

The Obama Administration’s Failure to Prevent the AIG Political Train Wreck

Obama on the public outrage at AIG’s bonuses from bailout money to its incompetent execs: “Oops, there go my people. I must hurry and catch up with them for I am their leader.”

Our leader has a lot of catching up to do. In today’s Huffington Post, Sam Stein, with additional reporting by Arthur Delaney, describes how the White House and congress refused to back legislation that would have prevented AIG’s arrogant misuse of taxpayer funds.

Senator Ron Wyden said on Tuesday that the furor surrounding AIG's bonus payments could have been avoided had the Obama White House and members of Congress simply backed legislation that he and Sen. Olympia Snowe introduced more than a month ago.

In an interview with the Huffington Post, the Oregon Democrat noted that during the crafting of the stimulus package, he and his Republican colleague from Maine introduced a provision that would have forced bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent. The language made it through the Senate, but during conference committee with the House, it was inexplicably removed.

"The reality is, had that legislation been passed it would have been a very strong disincentive to anybody paying out bonuses in the future," said Wyden. "Earlier, the President had denounced those bonuses that came at the end of the year. And when Senator Snowe and I said it is not enough for those in elected office to say it was wrong, that they have got to have a plan to have them pay it back, we were able to get legislation through the United States Senate. Not a single United States Senator was willing in broad daylight to stand up and oppose our bipartisan amendment... but it died in conference."

Looking back, Wyden laments the missed opportunity, saying that it remains unclear who got the language stripped -- "it didn't die by osmosis." (Feel free to send along tips on who killed the provision.)

Moreover, Wyden says frankly, the Obama administration should have been better prepared to handle what was an inevitable political train wreck.

"I will say that I talked to most of the key members of the Obama team and I was not able to convince them of the value of the amendment that I authored with Senator Snowe," he recalled. "I think it is unfortunate. I think it was an opportunity to send a careful, well-targeted message, which would have communicated how strongly the administration felt about blocking these excessive bonuses. I wasn't able to convince them."

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Obama “Chokes Back Anger” at AIG While Reading From his Teleprompter

The online media appears to be unanimous this morning in noting that President Obama managed to restrain his anger at AIG for using bailout money for bonuses to its incompetent execs until he was struck by a tsunami of public outrage.

Here’s Wapo’s Dana Millbank (emphasis mine):

As the crowd began to file into the East Room yesterday to hear President Obama's thoughts on the AIG bonuses, the pianist in the Grand Foyer of the White House struck up the tune "Killing Me Softly."

It was an apt selection.

AIG, the insurance giant at the core of the financial meltdown, struck again over the weekend, disclosing that it would use some of its $170 billion in federal bailout money to reward its employees with $165 million in bonuses. And Obama was left looking like a pitiful giant as his aides explained that there was absolutely nothing they could do to stop the obscene payouts -- even though the government owns 80 percent of AIG.

As the president read from his teleprompter yesterday about "this outrage to the taxpayers who are keeping the company afloat," he developed a tickle in his throat and tried to clear it. "Excuse me," he joked. "I'm choked up with anger here."

But not enough. As Obama appeals for patience, his plans to stabilize the economy are at risk of being overtaken by a populist fury over the greed at AIG and in the rest of the financial industry. The president and his aides, armed with little more than their jawbones, seem powerless to stop the outrage.

A Pew Research Center poll out yesterday found that 87 percent of Americans are bothered by the bank bailout -- and that was before word got out about the bonuses at AIG, which was rescued by an earlier federal bailout. The rising anger helps to explain why Obama's towering support has slipped to mere mortal levels. The Pew poll put the president's support at 59 percent, down from 64 percent last month, while a CNN poll found Obama down 12 points from early February.

Obama has complained about "shameful" bonuses -- billions of dollars' worth -- for Wall Street bankers. He has admonished companies receiving the federal bailout that "you can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime." And yesterday, Treasury Secretary Tim Geithner used a podium at the White House to plead with banks: "You need -- you need -- you banks need to make the extra effort to make sure that good loans are getting to creditworthy small businesses, in order to serve the larger public good."

But the administration's bully-pulpit strategy isn't keeping pace with the spreading anger. Lawmakers erupted over the AIG news yesterday with demands for repayment and even a breakup of the insurance group. They were significantly more agitated than Obama's economic lieutenant, Larry Summers, who told ABC News on Sunday that the administration has "done everything it can do" to limit the AIG bonuses. Further, he told CBS, "we're not a country where contracts just get abrogated willy-nilly."

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