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Aides attempt to cover for Obama

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ST. CLOUD, Minn. | To hear his camp tell it Thursday, President Obama has been in the dark on his administration's controversial efforts to force veterans to use their private insurance for treatments and to clear the way for large bonuses to be paid to the executives of the failed insurance giant AIG.

Vice President Joseph R. Biden Jr. was the latest to offer the president-didn't-know defense, suggesting to a Minnesota audience that Mr. Obama was "unaware" of the veterans plan until the president floated it to veterans groups leaders this past Monday and stirred a major controversy.

Treasury Secretary Timothy F. Geithner joined the bandwagon, saying it was he and not the president who deserved the blame for letting the bonuses to American International Group Inc. proceed.

"It's my responsibility," Mr. Geithner said, taking the blame just days after the White House leaked reports that it didn't know about the bonuses until after they were issued.

The efforts to shield the president from the fallout of early administration missteps has opened a door for Republicans to cast doubts on the competence, credibility and discipline of the new White House.

"We have the president saying he takes full responsibility and then saying it's not his fault," said Sen. Jon Kyl, Arizona Republican.

Mr. Kyl and other top Senate Republicans tweaked the president for finding the time to fill out an NCAA basketball tournament bracket and appear on Jay Leno's "Tonight Show" while anger was boiling over in Washington over revelations of the bonuses and while the nation's credit markets remained in crisis.

"This administration seems to have disdain or very little time for the hard work of governing," said Sen. John Cornyn, Texas Republican.

The White House was mum on Mr. Biden's explanation, but an aide argued that it was a moot point because no bill had been presented.

In St. Cloud, Mr. Biden, responding to a veteran's question, blamed budget bean counters for trying to save money with the care proposal that died Wednesday after an outcry from lawmakers from both parties and veterans groups.

"OMB decided - the Office of Management and Budget - they're the guys who watch every dollar and figure out what we can spend and what taxes are coming in and what's going out, etc., they decided that we could - quote save - 4 to 5 billion dollars in veterans health care costs in fact when a veteran came in with a war-related, excuse me, military-related injury or problem, that they would then have their private insurer be billed for that service," Mr. Biden said.

"And that caused a real, a real ripple," Mr. Biden said at the second of his Middle Class Task Force meetings.

Veterans and military advocacy groups learned that the administration was considering the idea soon after the president's budget outline was announced last month. Leaders of 11 such groups sent a letter to Mr. Obama on Feb. 27 opposing the proposal and asked to meet with him, a request that was granted with a White House meeting Monday with the president and members of his staff.

American Legion Commander David K. Rehbein said after the meeting that while the president listened intently to their concerns, "it became apparent during our discussion today that the president intends to move forward with this unreasonable plan."

Mr. Obama "refused to hear arguments about the moral and government-avowed obligations that would be compromised by it," Mr. Rehbein added.

The veterans representatives said the president told him that he wanted to pursue the proposal because it would generate $540 million in budget savings - a number the White House has not confirmed.

But when the administration dropped the proposal two days later, veterans groups immediately praised the president for his change of heart.

"The important thing is this issue is behind us and we can move forward," Veterans of Foreign Wars spokesman Joe Davis said Thursday.

On Tuesday, White House spokesman Robert Gibbs did not dispute that the plan was floated, but said no decisions had been made.

Hours after the House passed a confiscatory tax on the executive bonuses of companies that take bailout money and Mr. Geithner took responsibility for allowing the bonuses, Mr. Obama told Mr. Leno that his Treasury secretary was "on the hot seat," but was doing an "outstanding job."

During a CNN interview, Mr. Geithner acknowledged that his staff encouraged lawmakers to take out a key provision in last month's stimulus that would have taxed executive compensation in an attempt to discourage companies such as AIG from handing out excessive bonuses while receiving billions of taxpayer dollars.

"What we did is just express concern about the vulnerability of a specific part of this provision," Mr. Geithner said.

He confirmed that his staff said retroactive penalties would spark lawsuits.

Mr. Geithner continued to say that he did not know about AIG's planned $165 million in bonuses for top employees until March 10 but left room for the possibility that he had some inkling about the bonuses prior to that.

"On Tuesday, I was informed about the full scale and scope of these specific bonus problems," he said.

The Treasury Department and the White House did not answer queries about whether Mr. Geithner's comment meant that he had known something more general about the bonuses before March 10.

The embattled 47-year-old secretary added that he took "full responsibility" for not catching the bonuses earlier and stopping them from proceeding, one day after Sen. Christopher J. Dodd, Connecticut Democrat, said his staff had removed language from the stimulus mandating retroactive penalties on big bonuses.

But he and his department faced questions from Republicans why they did not renegotiate the bonuses earlier this month when they gave AIG an additional $30 billion in taxpayer bailout funds, bringing the total given to AIG since last fall to more than $170 billion.

Mr. Cornyn said Mr. Geithner and his staff knew about the bonuses before they rolled out the additional $30 billion in aid on March 2.

"The Federal Reserve Bank of New York says they notified Treasury in February," Mr. Cornyn said, referring to the institution that Mr. Geithner headed until Mr. Obama named him to the Treasury Department in December.

The New York Federal Reserve refused to comment on the allegation that it told the Treasury about the bonuses on Feb. 28, as has been reported by Time magazine.

— Jon Ward reported from Washington.

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