“Douglas Holtz-Eakin wasn’t very good at constructing an economic blueprint for John McCain‘s campaign, but he’s a pretty good analyst,” Jennifer Rubin writes in a blog at www.commentarymagazine .com.
“[Mr. Holtz-Eakin] writes: ‘The AIG debacle teaches us two things: First, it does not make sense to try to save any single financial institution. Failed enterprises should fail - and go away. … The second lesson is that no matter how bad you think market capitalism is, the federal government has proved it is worse.’
“It is this latter point that may prove troublesome for the Obama administration,” Miss Rubin said. “The president’s New Deal II agenda depends on two premises - the sky is falling and only the government can protect us. The first argument is being downplayed as Obama figured out that talking down the markets might not be the best strategy. But the second is called seriously into question by the gang that can’t shoot straight.”
“The AIG Beltway bonfire continued [Wednesday] with the spectacle of Ed Liddy, AIG’s government-appointed CEO, enduring the wrath of Congress for embarrassing the Members with post-bailout bonuses,” the Wall Street Journal says in an editorial.
“What we now have is a full-blown political panic ignited by no less than President Obama himself that is threatening to engulf his attempts to revive the financial system, and is undermining confidence in his leadership. This is no way to promote an economic recovery,” the newspaper said.
“As recently as Sunday morning, White House economist Larry Summers was saying the bonuses were regrettable but there wasn’t much that could be done to stop them. ‘We are a country of law. There are contracts. The government cannot just abrogate contracts,’ he said, with great good sense. Assorted congressmen then did what comes naturally, which is declare their mock outrage. Rather than keep his legendary cool, Mr. Obama and the White House panicked as well and joined the braying pack.
“Speaking on Monday of the $165 million paid to members of AIG’s Financial Products division, the president asked, ‘How do they justify this outrage to the taxpayers who are keeping this company afloat?’ Treasury Secretary Tim Geithner, who had known about the bonuses, was also trotted out to express his ‘outrage’ and declare that Treasury would somehow try to claw back the bonuses. By shouting ‘greed’ in a crowded and panicky Washington, our supposed financial stewards thus gave license to everyone in the media and Capitol Hill to see who could claim to be most shocked and appalled at AIG.
“We’ve now got a full-fledged mob on our hands, with Congress looking to string up bankers in whatever bunker they can be found. Senators Chuck Grassley and Max Baucus want to double the current income tax on these bonuses, to 70 percent from 35 percent, and that’s one of the more reasonable proposals. Congresswoman Carolyn Maloney, the Democrat from silk-stocking Manhattan, wants to tax it all - at 100 percent.”
“So Chris Dodd admitted he misled CNN, telling them on Tuesday he had nothing to do with the loophole that mysteriously found its way into legislation and paved the way for AIG’s bonuses to be paid. The following day, Dodd confessed to CNN’s Dana Bash that he in fact wrote the loophole, though he said he did it at the behest of the administration and with the knowledge that he would lose the amendment altogether if he did not comply,” Tom Bevan writes in a blog at www.realclearpolitics.com.
“But even Dodd’s mea culpa doesn’t ring totally true. He refused to say who at the Treasury Department requested the modifications to the amendment, downplaying it as a negotiation that took place at the ‘staff level.’ And at the very end of the CNN interview, Dodd says he ‘didn’t know the exact details’ of the modifications that made their way into the bill, a notion that strikes me as very hard to believe,” Mr. Bevan said.
“Dodd released a statement [Wednesday] night further clarifying his statement that 1) he made modifications at the behest of the Obama administration and 2) he was unaware of the AIG bonuses at the time and had no idea the modification would effectively create a loophole for them.
“Stepping back for a second, Chris Dodd is already in a bit of trouble in his re-election bid, based on recent polling. Obviously, this further complicates matters. Dodd is now directly associated with two of the most distasteful aspects of the current financial meltdown: getting a sweetheart mortgage from the CEO of a company that was a major player in the subprime mess, and now authoring the loophole that allowed AIG to pay $165 million in bonuses after already taking scores of billions of bailout dollars, all at taxpayer expense.”
“While not exactly a film buff, Gordon Brown was touched when Barack Obama gave him a set of 25 classic American movies - including ‘Psycho,’ starring Anthony Perkins - on his recent visit to Washington,” London Telegraph reporter Tim Walker writes.
“Alas, when the PM settled down to begin watching them the other night, he found there was a problem,” the reporter said.
“The films only worked in DVD players made in North America and the words ‘wrong region’ came up on his screen. Although he mournfully had to put the popcorn away, he is unlikely to jeopardize the special relationship - or ‘special partnership,’ as we are now supposed to call it - by registering a complaint.
“A Downing Street spokesman said he was ‘confident’ that any gift Obama gave Brown would have been ‘well thought through,’ but referred me to the White House for assistance on the ‘technical aspects.’
“A White House spokesman sniggered when I put the story to him and he was still looking into the matter when my deadline came last night.
“By the way, when Obama’s unlikely gift was disclosed, a reader e-mailed me to ask if ‘Clueless’ was among the films. Funnily enough, it was not.”
• Greg Pierce can be reached at 202/636-3285 or Greg Pierce.