Below The Beltway

The public and political rage over bonuses paid out by American International Group after it received Federal bailout money has become virtually the only story driving the political agenda:

President Obama’s apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.

Politicians in both parties flocked to express outrage over $165 million in bonuses paid out to executives at the company, demanding answers from the president and swamping yesterday’s rollout of his efforts to spark lending to small businesses.

The populist anger at the executives who ran their firms into the ground is increasingly blowing back on Obama, whom aides yesterday described as having little recourse in the face of legal contracts that guaranteed those bonuses.

White House press secretary Robert Gibbs, peppered with questions about why the president had not done more to block the bonuses at a company that has received $170 billion in taxpayer funds, struggled for an answer yesterday afternoon. He explained that government lawyers are “looking through contracts to see what can be done to wrest these bonuses from their recipients.”

But that hasn’t stopped politicians on both sides of the aisle from demagoging  the issue to death. Senator Democrats, for example, are proposing an ex post facto, and probably Unconstitutional, revision to the tax code that would take away virtually all of the bonuses from the recipients, and New York Attorney General Andrew Cuomo issued subpoenas for AIG’s records regarding the bonuses. The grand prize for demagoguery, though, goes to Republican Senator Chuck Grassley, who said the following:

Sen. Charles Grassley is so angry over AIG bonuses that he says the executives should resign or kill themselves.

In a comment aired this afternoon on WMT, an Iowa radio station, Grassley (R-Iowa) said: “The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things — resign, or go commit suicide.”

Grassley tried to backpedal on those comments today, but the sentiment remains the same:

In the case of the Japanese, you know, they do one of two things. They either go commit suicide or they take a deep bow and say apologies and then sometimes resign. But they take full responsibility. And we’re not hearing that.

And obviously, I don’t want anyone to kill themselves because I don’t believe in that sort of thing. But I do believe that when you have done bad for your company, for your stockholders, and eventually for the taxpayer…you ought to say I’m sorry.

What Senator Grassley doesn’t seem to feel, though, is any sense of shame for the role that he and his fellow politicians have played in this whole debacle, as HughS at Wizbang notes:

Payments to financial industry executives have been on the political radar screen for months. Why didn’t Congress do something about this before then? It would have been relatively simple in my mind: simply have AIG officers agree in writing that the bailout funds had a specific and exclusive use before the money was handed over (this is SOP in Federal Bankruptcy Court). But that would have required some forethought and careful consideration by congressional leaders such as Barney Frank and Christopher Dodd.

Ed Morrissey, meanwhile, notes that there was an easy way to stop all of this from happening that nobody wanted to take:

The nasty little secret at the center of all the outrage is that the Obama administration could have stopped the bonuses by simply stopping the bailout. They could have forced AIG into bankruptcy, which would have voided the company’s contractual compensation obligations. Instead, the Obama administration chose to inject liquidity into AIG, following the lead of the Bush administration, which had done the same thing. That kept AIG’s doors open, and therefore kept its contractual obligations to its employees intact.

And, finally, Ann Althouse has some advice of her own for Senator Grassley:

[A]ctually, I agree with you. We need more shame around here. Let’s do some shaming. Let’s shame everyone in the executive branch and Congress who let our money flow into AIG without building in the kinds of restrictions that would have prevented the use of the money in the way that Grassley and others are bitching about now that it’s too late. So bow down, Senator Grassley. Take a deep bow and say you’re sorry. And then resign or go commit suicide like the Japanese stereotype that you think is cool to bring up when you are making a display of venting your anger at the people you want us Americans to be angry at — instead of you.

Something tells me we won’t be seeing any of that anytime soon.