WASHINGTON (AP) - The White House said using tax law to pry bonuses from bailed-out company executives is “a dangerous way to go” and a GOP senator on Sunday advised against the mob mentality that has Congress “grabbing its pitchforks and charging up the hill” in pursuit of the cash.
While acknowledging public outrage over $165 million in bonuses paid by a financial firm that just months earlier had turned to taxpayers for aid, the administration’s economic advisers said President Barack Obama wouldn’t “govern out of anger.”
Obama’s economic team said the president would consider a House-backed plan that would tax American International Group Inc. executives 90 percent of bonuses paid this year but added that he didn’t embrace the populist legislation. Vice President Joe Biden’s economic adviser, Jared Bernstein, criticized the House plan as it headed to the Senate, where it was likely to be modified with bipartisan backing.
“I think the president would be concerned that this bill may have some problems in going too far _ the House bill may go too far in terms of some _ some legal issues, constitutional validity, using the tax code to surgically punish a small group,” Bernstein said. “That may be a dangerous way to go.”
Not going anywhere: Treasury Secretary Timothy Geithner.
Obama defended his embattled treasury secretary in an interview with CBS’ “60 Minutes.” The president said in the interview set to air Sunday that he still has faith in Geithner and that if Geithner offered to resign, the answer would be, “Sorry buddy, you’ve still got the job.”
Sen. Richard Shelby of Alabama, the Republicans’ top lawmaker on the banking committee, said his confidence in Geithner “is waning every day,” but he stopped short of calling for Geithner’s resignation.
“You know, nobody wanted to claim responsibility for the language in the stimulus bill that grandfathered the bonuses in at AIG,” Shelby said. “Now we know it came from Treasury. There’s a lot of questions to be asked. … I’m not feeling real good about Treasury’s role or the specific role of Tim Geithner at the moment.”
Populist anger came to a head last week when the Obama administration went on the defensive against AIG’s bonuses. It was a distraction for the administration as it sought support for Obama’s ambitious $3.6 trillion budget and a defense for Geithner, for whom Wall Street’s woes have become his chief task.
White House economic adviser Austen Goolsbee said Sunday that Obama understands the anger and that the easiest thing would be for AIG executives to return the bonuses.
“The president’s also been clear we don’t want to govern out of anger. He’s going to look at what comes out of the House, what comes out of the Senate, see what ideas we have,” Goolsbee said.
Republicans and Senate Democrats seemed to line up with the president’s policy team.
“People are disgusted and outraged, as they should be,” said Republican Sen. Judd Gregg of New Hampshire. “But let’s not overreact in a way that basically has the Congress grabbing its pitchforks, and charging up the hill, and abusing what is a core authority of a government, which is the authority to tax its people.”
While encouraging restraint over AIG’s bonuses, Gregg flatly declared that the president’s budget proposal was doomed to failure.
“The practical implications of this is bankruptcy for the United States. There’s no other way around it,” Gregg said. “If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt. People will not buy our debt; our dollar will become devalued.”
Shelby said Obama would have to scale back his budget, given the nonpartisan Congressional Budget Office reported on Friday the president’s budget would produce $9.3 trillion in deficits over the next decade _ more than four times the deficits of Republican George W. Bush’s presidency.
The Congressional Budget Office predicted a deficit of $2.3 trillion worse than the administration’s own projections foresaw. Obama economic adviser Christina Romer downplayed those numbers.
“There is a question whether CBO is right. So we know that forecasts _ both of what the economy is going to do and of what the budget deficit are going to do _ are highly uncertain,” Romer said.
Obama used his weekly radio and Internet address to defend his budget proposal, calling it “a firm foundation of investments in energy, education and health care that will lead to a real and lasting prosperity.” He planned a prime-time news conference Tuesday to continue bolstering his case to an audience outside of Washington.
Obama, in his CBS interview, said ordinary Americans are more concerned about having a paycheck and being able to pay college or medical bills than they are about “the news of the day in Washington.”
It was an us-versus-Washington appeal that the president made last week in a two-day trip to California and his supporters repeated during a nationwide door-to-door canvass on Saturday.
Bernstein spoke on ABC’s “This Week.” Goolsbee appeared on CBS’ “Face the Nation.” Shelby spoke on “Fox News Sunday.” Gregg and Romer appeared on CNN’s “State of the Union.”