White House Staff Botched It
Folks, Geithner, Bernanke, and the Bush Treasury Department knew about the AIG bonuses for months. According to AIG, the payments were OK'd by the White House last Thursday. Why? Because it appears that David Axelrod and Rahm Emanuel grossly underestimated how infuriating this would be.
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."
For the new administration, the bonuses were a distraction from what senior aides called the main focus: getting the economy working and people back to work. "People are not sitting around their kitchen tables thinking about AIG," Axelrod said. "They are thinking about their own jobs."
Bad decision Dave.
Their message to the president when the group assembled for their first extended conversation about AIG in the Roosevelt Room on Sunday was not optimistic: They told him they had "done and will do what we legally can," Axelrod said.
But Obama made clear at that meeting that he was unwilling to throw up his hands. He instructed Geithner and the others to seek legal ways that the government might recover the bonuses. And he made plans to tell the public what he thought the next day.
That decision ran counter to the belief among some in his inner circle that the bonus issue while an outrage was a small problem compared with the economic issues confronting his young presidency. "The first and most important job we have is to get this economy moving again," Axelrod said. "As galling as this is, it doesn't go to the main issue."
What you see is a fine example of poor decision making clouded by being inside the White House bubble. After spending two years out on the campaign trail ensuring that your message and actions mesh with what people are thinking, Axelrod is now inside the bubble and cannot see that the optics of this fiasco do matter to people, because he assumes naively that people will look beyond it due to an overriding fear of their own situations. He also assumes his boss can talk his way out of anything, when in fact Obama has surrounded himself with two tone deaf lops in Geithner and Summers.