Democrats on Defense after AIG Bonuses

Congressional Democrats careened between the circular firing squad and the three-ring circus Tuesday as they struggled with their new reality: playing defense on the economy.

Sen. Robert Menendez (D-N.J.) blamed Treasury Secretary Timothy Geithner for letting bailed-out insurance giant American International Group pay $165 million in bonuses to its employees, saying he wrote a letter to Geithner two weeks ago warning him of just such a possibility.

Sen. Chris Dodd (D-Conn.), tagged by Republican aides for sponsoring an amendment to the stimulus bill that allowed the bonuses, shifted the blame to the Treasury Department and “the bill conferees,” saying he had no idea that the AIG bonuses were coming.

Sen. Max Baucus (D-Mont.), joined by Sen. Chuck Grassley (R-Iowa), introduced a bill that would impose a 70 percent tax on “excessive” compensation paid to employees of all bailed-out companies. President Barack Obama has said the White House would use all legal means possible to get the bonuses back, but House Majority Leader Steny H. Hoyer (D-Md.) acknowledged that there were “some questions” as to whether Congress could do anything at all.

And while Hoyer begged AIG execs to give up the money voluntarily, Senate Majority Leader Harry Reid (D-Nev.) just tried to change the subject. Asked about Geithner’s role in failing to stop the bonuses, Reid said: “Let’s talk about what we have accomplished this Congress.”

Nice try.

For the second day in a row, the AIG bonuses were just about the only subject of conversation at the Capitol. At press conferences throughout the day — and as members filed in and out of a St. Patrick’s Day lunch — outrage over bonuses was on everyone’s lips.

And that suited long-suffering Republicans just fine.

“This latest flap involving AIG, I think, is very troubling,” crowed House Minority Whip Eric Cantor (R-Va.). “What’s going on in this administration? It seems like an administration in disarray.”

Having mostly opposed Obama’s stimulus plan, the second half of the Troubled Asset Relief Program funds and the omnibus spending bill, Republicans feel they have a free shot at the Democrats for anything that goes wrong now.

On Tuesday, they took it again and again. “This administration could have, and should have — through the process of providing for [AIG] another $30 billion two weeks, just two weeks, ago — prevented this from happening,” said Senate Minority Leader Mitch McConnell. “They had a lot of leverage prior to that infusion of $30 billion.”

House Minority Leader John A. Boehner (R-Ohio) said that “the American people are rightly outraged that their tax money is going to pay bonuses to the very people that got this company in trouble.” - Politico.com