I will no doubt be accused of damning with faint praise by Obama supporters and God knows what adjective that describes “traitor” by the president’s detractors but after looking at this AIG matter carefully, I think some of my friends on the right have gone too far in their criticism of the Administration.
The higher echelons of the Obama Administration have demonstrated a tone deafness regarding public sensibilities not seen since perhaps the Carter Administration. It’s not just the AIG matter but also their incomprehensible plan to force military personnel to have private insurers pay for their disabilities and war wounds and now, this idea to let loose upon the populace people who have been accused of supporting terrorism and who have spent the last several years in the Guantanamo prison camp. There have been plenty of other examples of what amounts to either arrogance or ignorance of how their public pronouncements and actions will play with the average American and one begins to worry if Obama and his advisors aren’t cocooning themselves — closeting themselves in the White House, unable to accurately gauge the perception of the public on matters large and small.
But beyond this curious disconnect, the Obama White House is experiencing what every single modern American president has had to endure; the mistakes inherent in trying to get initial control of the executive branch.
There are approximately 3 million employees in the executive branch (plus 1 million active duty military). All of them answer to the president. But the tentacles of power that snake from the White House, to the departments, and out into the field where offices dot the countryside are highly dependent on a cadre of about 2500 appointed positions. No president takes office on January 20 with very many of these vital positions filled. I believe an argument can be made that Obama’s personnel operation has been by far the worst of any modern president’s and at the rate he’s going, it will be well into the second year of his term before these slots are filled.
But even if he was ahead of the game, the nature of the presidency and the chief executive’s initial ability to effectively grasp the levers of power and control his own government are limited by the sheer greeness of his appointees as well as a lack of meshing by his top aides who are busy themselves trying to figure out where they fit in. It is easy to see how the left hand of any new administration wouldn’t know what the right hand was doing or would fail to grasp the significance of a particular issue.
Yes, there have been troubling indications that these folks aren’t the geniuses everyone thought they were and that the president himself has demonstrated a lack of sure handedness on numerous issues. But the AIG bonuses matter (as well as the far more serious lapse regarding AIG paying counterparties in full) appears to have been mishandled as a result of a combination of Timothy Geithner’s incompetence and miscommunication between the Treasury and the Oval Office.
Exhibit 1: This article in WaPo that details Geithner’s stupidity and the White House being in the dark about the bonsues:
Treasury Secretary Timothy F. Geithner, a central figure in the decision to bail out AIG last fall as president of the Federal Reserve Bank of New York, said in an interview yesterday that he had not been aware of the size of the bonuses and the timing of the payments.
“I was stunned when I learned how bad this was on Tuesday [March 10],” Geithner said. “I shouldn’t have been in that position, but it’s my responsibility and I accept that.”
Two days later, Geithner told the White House. The last-minute disclosure irked some of the president’s senior advisers, but they refuse to point fingers now, saying the timing had little impact on the outcome or the president’s public statements this week.
“Would I have liked an earlier warning system on this? Yeah,” said David Axelrod, a senior White House adviser. “Would it have markedly changed things? Probably not. The legal constraints are the legal constraints.”
One source familiar with the discussions said the company had provided details about the bonuses to senior Treasury officials at least a month ago. A Treasury spokesman said last night that was not true.
I think it entirely possible that AIG informed someone at Treasury last month about the bonuses and it is even possible that Geithner himself was made aware of them at that time but failed to realize or anticipate public anger. If Geithner has lied, he must go — plain and simple. In fact, given what we know already about the Treasury Department’s utter failure to negotiate with AIG regarding their 100% payouts to counterparties, Geithner should probably be canned. He has lost the confidence of investors, of troubled banks, of many if not most in Congress, and the American people. It’s hard to see how he lasts through the weekend except the president just recenty expressed “full confidence” in his leadership at Treasury. As the drip, drip, drip of revelations continue over the next few days about what Geithner knew and when he knew it, that attitude by Obama may very well change and Geithner could be thrown under the bus.
But that doesn’t solve the president’s problem with regards to a lack of communication especially with the Federal Reserve as CEO Liddy testified yesterday before Congress:
“What we’ve assumed is that, in our discussions with the Federal Reserve, that they were properly communicating with others,” Liddy said. “It appears that we need to improve upon that process.”
While declining to answer questions about the AIG bonuses, Fed spokeswoman Michelle Smith said in a statement: “The Fed and Treasury officials have coordinated closely on all aspects of the U.S. government’s support for AIG during this extraordinary period.”
The Fed officials did not anticipate the political firestorm that would erupt over the bonuses, a senior government official said. “They clearly underestimated the matter,” the source said.
AIG executives say the Fed had been intimately involved in reviewing the contracts before the first dime was paid. The payments, which were due by March 15, were ready to be distributed last Tuesday, a senior AIG executive said. But the firm didn’t get the go-ahead from government officials to make the payments until late last week.
“We weren’t authorized until Thursday night,” the AIG executive said. “We were negotiating with the Treasury and the Federal Reserve. Treasury indicated that they needed it cleared by the White House, as well. We hit the go button for the payments on Friday.”
I would love to say that the Obama Administration “should have known” about this or that but frankly, it is unrealistic to expect the Administration to have focused on the bonus problem given that both the Fed and the Treasury Department had already signed off on them. They can be faulted for not realizing and not being prepared for the political firestorm that erupted but to expect them to have stopped the bonuses presupposes a level of control that they apparently lack at the moment. Is this incompetence or the growing pains felt by all new administrations? More evidence is needed to make a definitive judgement.
Barack Obama is the 8th president I have seen take the oath of office where I was old enough and interested enough to follow politics. I have also read numerous biographies and non-fiction accounts by insiders that detail these early months of struggle with riding the rough off of the president’s management style, discovering lines of communication, chains of command, who reports to who through whom, and building trust among top level executive branch employees who are, after all, strangers for the most part and must get used to each other’s personal idiosyncracies and habits.
I believe that many of Obama’s early problems can be chalked up to this shakedown period. His problem is that he doesn’t have the luxury of making mistakes — especially in the economic sphere. The crisis confronting the nation — not of his making — requires much more than he has shown so far. I believe his concentration on the economy has been poor, his execution, abysmal, and the fact that he keeps pushing his “remaking America” schemes at the expense and in lieu of focusing like a laser on economic recovery calls into question his basic leadership skills.
But in the AIG matter, I think many of his problems (some of them self-inflicted) can be chalked up to bugs in the system. How he overcomes these initial bumps in the road will tell the tale of his presidency — and whether we have a strong and vibrant economic recovery.
10:07 am
ha ha ha ha… good one Rick. If the previous administration is any indicator of how things work in the US government, Geithner will get a presidential medal of freedom, a cool nickname, and a sweet book deal when it’s all over.
This keeps getting better! Change Treasury to Department of Defense and you’ve got Rumsfeld! Nothing changes.
So anyway, back to being too distracted by the AIG bonus thing to notice what’s going on with the TARP billions.
If you don’t shut the fuck up about Bush every single time I mention something, you are going to be banned. Bush is not in the White House. End of story. And I did point out the hypocrisy in the Bush administration time and time and time again. For you not to acknowledge that shows your ignorance.
Either add something constructive or go away.
ed.
11:12 am
I guess it comes down to the president’s rush to have the stimulus bill approved and whether he has been truthful about his ignorance of the bonus component. When you write “but the AIG bonuses matter (as well as the far more serious lapse regarding AIG paying counterparties in full) appears to have been mishandled as a result of a combination of Timothy Geithner’s incompetence and miscommunication between the Treasury and the Oval Office” I think you pretty well sum it up as far as the first part of the equation.
I imagine Sen. Dodd’s statement about the bonus language either has put the lie to the president’s earlier claims of ignorance or show the senator to be a liar. I don’t know which will prove out.
The best advice for Republicans is to let the Democrats continue to melt down. From what I’ve seen, the GOP reps and senators have acted properly and just should point out this crap should have not been rushed. I imagine the Dems will try to bring the show trial to a close now that the public has started to get an inkling that this wasn’t some great big corporate conspiracy but government incompetence–on the part of the majority party.
11:20 am
Like you I try to judge by long-term results. I think Obama is trying to play the long game, which I think is a good idea. But I’m surprised at how off-balance his message machine has been. Is Axelrod on vacation?
I don’t know with Geithner whether what we’re seeing is a clumsy sort of wait-and-see, or whether he’s just lost. It’s almost as if with Bernanke and Geithner and the president there’s a sneaking feeling that things will sort themselves out over the next months to a year.
They don’t seem as scared as their own rhetoric suggests they should be. I find this interesting.
I’m just not seeing a clear narrative that makes sense to me, not from any side.
12:26 pm
Let’s see. Isn’t this administration now on the fourth person to fill the number two spot in Treasury? I wonder if and how ANYONE will take the job if Geithner continues to sweat blood and mess up the way he seems to be doing.
Who would want to be his backstop?
12:38 pm
Before you go any further with some of your misconceptions, perhaps you need to listen to Shep Smith’s rant from yesterday on Fox News. Everyone KNEW that these bonuses were going to be paid and all the outrage is pure posturing on the part of the Congress and the Administration. A bunch of dishonest and completely cynical liars - the lot of them!
12:42 pm
I’m sorry Rick. I’ll be good.
3:08 pm
You are obviously a faux Republican and a hater of America. Or a neocon. Or a lefty. Or… something.
4:58 pm
“While Henry M. Paulson, Jr., the current Treasury secretary, has taken a drubbing for the changeable nature of the government’s efforts to bolster the financial industry — somoe of which clearly contradicted each other — Mr. Geithner has managed, for the most part, to remain unscathed. He’s been wodely praised as a bright, articulat out-of-the-bos thinker who is a BAILOUT EXPERT, to the extent anyone can truely be an expert at fast-changing emergencies.
Behind the scenes, Mr. Geithner was the point person for weeks of sleep-deprived Bailout Weekends. It was Geithner, not Mr. Paulson, for example, who put together the original rescue plan for the American International Group.”
NY Times 11/25/2008
Geithner designed the AIG bailout. It was his baby. He also help write TARP along with Patrick Kennedy. To say that he was not aware that AIG was going to continue to get their bonuses shows that Geithner is either lying, or he is stupid, or both. The first clue should have been Geithner saying he didn’t pay his taxes because he used Turbo Tax.
And who has Geithner hired to help him and be his waterboy? None other than Lewis Alexander, chief financial economist for Citigroup, which has also had to have taxpayer bailout dollars. And Alexander doesn’t have to be approved because he is working directly for Geithner.
Add Alexander to the long list of crooks and tax dodgers that are currenly on the new administrations staff. Just take a look at who is on Obama’s Ecomonic Recovery Advisory Board: Penny Pritzer (who still owes the American people millions for her family’s failed bank), Andrew Stern, president of the corrupt SEIU and Jeffrey Immelt, who has driven GE into the ground and violated sanctions our nation placed on doing business with Iran. But then, with GE’s new company, Greenhouse Gas Services,that will deal in cap and trade (carbon credit scam), GE, and Immelt, stand to profits handsomely.
Pay to play is alive and well in D.C. and looks like it has gotten a shot of steroids.
Geithner needs to go. He brings nothing to the table in a time when the market is looking to the White House to instill confidence. And what does Obama do while Rome is burning? He leaves D.C. to go play his fiddle on Jay Leno.
6:45 am
What really gets me is the fact that these finger pointing idiots are gonna suck up some more of my tax dollars when AIG takes them to court over their unconstitutional tax hike mess. Most of the demwits knew of this bonus deal going to them but they all get on camera and vomit out so much fake indignation — God, this makes me ill.
11:44 am
Hot Air has preselected the portion of the March 3rd House Ways and Means Committee hearing where Rep. Joseph Crowley (D-NY) specifically mentions the upcoming payouts of over $162 million in bonuses to AIG execs in comments/questions with Tim Geithner.
It begs the question .. who is minding the store ?
11:18 am
[...] "A Tepid but Realistic Defense of the Obama Administration in the AIG Matter" Originally published: 19 March 2009 Submitted by: U.S. Common Sense Summary: Examining how the lack of a fully staffed Administration and their "greeness" plays a role in their response to the AIG bonus issue. [...]
12:38 am
Of course you would take the sunny side approach. I mean why should we regard the White House kangaroo court treatment of Detroit executives, Rush Limbaugh, bank executives, and now AIG as anything other than an honest mistake.
Doesn’t every administration engage in two minutes of hate and try and protray an entire class of people as charactures that even Joe Stewart would disown? Doesn’t every administration shred the Constitution just to prove that you can get this kind of star chamber treatment if you anger us?
I heartily concur that no this treatment, which would be common place at Stalin’s show trials or the People’s Courts of Hitler, shouldn’t be condemned as something out of the norm and are just as American as mom and apple pie.
We are getting to see how the lobster gets cooked. Its going to be along four years.
What this blog needs is more David Frum, Brooks, and McCain just to keep the icy objectivity.