If Republicans have their way, AIG will remain a household name through the 2010 congressional elections - and possibly beyond.
Party officials and strategists see the furor over executive bonuses at the bailed-out insurance giant as giving them an early issue to rally popular disgust at Wall Street in their favor. But Democrats counter that Republicans are exhibiting “false rage” and that any attempt to blame them for wasting taxpayer money is hypocritical and will backfire.
Republicans have stoked the public outcry in recent days at American International Group Inc. (AIG) for doling out at least $165 million in executive bonus pay after being awarded $170 billion in taxpayer loans and incentives.
On Saturday, the Connecticut attorney general said AIG papers showed that the company paid out $218 million in bonuses - $53 million more than had been disclosed previously.
The blame, Republicans say, rests squarely with the Obama administration and Democratic leaders in Congress for including a provision in the $787 billion economic-stimulus package last month that allowed AIG executives to receive their bonus checks.
“If [the financial] crisis drags out, which it most certainly will, AIG will come back time and again in the news over the next couple of years … and it will most likely be a campaign issue” in 2010, said Republican strategist Ron Bonjean. “It is a defining moment of the Obama administration. … This can really hurt.”
Republicans have reserved particularly harsh criticism for Sen. Christopher J. Dodd, who, as chairman of the powerful Banking, Housing and Urban Affairs Committee, was chiefly responsible for drafting the stimulus package.
The Republican Party public relations machine has worked overtime in a bid to portray the Connecticut Democrat - who is expected to face a tough re-election battle next year - as pandering to Wall Street at the expense of average taxpayers.
“This is their action. This is not something they can point to George Bush,” Republican strategist Dave Winston said. “They own the issue of giving bonuses to the AIG executives.”
The AIG bonus controversy already has become a campaign issue in New York, where Republican Jim Tedisco is battling Democrat Scott Murphy in a special election March 31 to fill the U.S. House seat that became vacant when Kirsten Gillibrand, a Democrat, was appointed to the Senate in January to fill the seat of Hillary Rodham Clinton, now secretary of state.
Mr. Tedisco has accused Mr. Murphy, a venture capitalist, of having unsavory ties to the financial industry. In a TV advertisement, Mr. Tedisco, a longtime member of the New York Legislature, called Mr. Murphy “just another Wall Street millionaire that’s threatening our future.”
The National Republican Senatorial Committee (NRSC), the fundraising arm of the Senate Republicans, has circulated press releases in recent days in states with Democratic senators who voted for the stimulus bill and who are considered vulnerable in upcoming elections.
“Contrary to President Obama’s promises on the campaign trail, this legislation was not subject to public scrutiny or input before it was hastily rammed through Congress and signed into law with his own pen,” NRSC spokeswoman Amber Wilkerson said.
Democrats say Republicans are shamefully distorting the truth. To demand that executives pay back or decline bonuses promised them in signed contracts is a tricky legal maneuver that may have derailed the entire package, they say.
They also have accused Republicans of hypocrisy - pointing out that several Republican leaders repeatedly had denounced proposals to cap the pay of executives who receive bailout money.
“Republicans trying to cast themselves as the protector of taxpayer money is astonishing, considering that until a few weeks ago, they were staunch opponents of any form of capping executive compensation,” said House Majority Leader Steny H. Hoyer, Maryland Democrat. “Their false outrage over AIG bonuses seems to be a rather quick turnaround meant for political gain instead of a principled stand.”
Senate Minority Leader Mitch McConnell, Kentucky Republican, earlier this year repeatedly objected to caps on executive compensation, telling ABC News on Feb. 4: “I really don’t want the government to take over these businesses and start telling them everything about what they can do.”
Sen. Richard C. Shelby of Alabama, the ranking Republican on the Senate banking committee, said on CBS’ “Face the Nation” in September: “It should be up to the board of directors of a private corporation to set the compensation of an executive. It shouldn’t be Congress’ role.”
“The public outrage is understandable, but Republicans have done nothing to improve the economic well-being of this country except for demanding things for the wealthy,” said Jim Manley, a spokesman for Senate Majority Leader Harry Reid, Nevada Democrat.
But Republicans say the matter goes beyond just the millions of dollars in executive bonuses, and that the AIG furor is emblematic of a White House and Democrat-controlled Congress that is incompetent and unprepared to handle issues of significant national importance.
“This clearly slipped through the cracks, which means there was a basic error in the way they were handling reviewing the [stimulus] legislation,” Mr. Winston said. “This is not the sort of thing that will inspire confidence with the American people.”