Like you, I've been watching this AIG bonus story unfold over the weekend. And though I did not see it at first, I think it may prove to be a turning point, both for AIG and the government.
I don't believe the bonuses themselves are the heart of the matter, nor the fact that they're going to the very executives who caused AIG's implosion or even the galling reality that, since all money is fungible, they're being paid with taxpayer dollars. What's really driving this forward -- and what makes it such a dangerous moment for the White House -- is the jarring image of the administration's impotence.
Secretary Geithner found out about the bonuses. He told AIG CEO Edward Liddy it wouldn't fly. And Liddy, in a curiously imperial letter, tells Geithner that much as he is pained by the situation -- to blow it out his ass. Which he apparently proceeded to do.
So A.I.G. is legally obligated to pay billions in bonuses to the nitwits who bankrupted the company, the country and the world. And the politicians nod. Can't change a contract. What about GM's contracts with the autoworkers? What about GM's legally contracted pension obligations? The politicians didn't have any problem insisting that those legally obligated payments be abrogated. Peacenik wonders when the revolution will begin. How much are the people expected to take? A.I.G. obviously thinks there is no limit.
