Axelrod v. Geithner round 1 - Axelrod turned out to be right (re: bonuses)

[TeamJordan23]

Take the Steering Wheel out of Geithner's Hands

On February 10th, the New York Times reported that there had been a "spirited" battle within the Obama administration over restrictions on executive pay and bonuses, and over attaching stringent conditions to any bailout money given to banks.

The clash pitted Tim Geithner, who opposed the restrictions and conditions, against David Axelrod, who favored them. According to the Times, Geithner had "largely prevailed."

In light of what has happened since then, that outcome must now be viewed as a tragic surrender to Geithner, Summers, and the political/Wall Street class -- a "victory" that could lead to the unraveling of the president's entire economic policy.

Maintaining the public trust is always important for a leader, but especially so during hard times. There is a fascinating chapter on Nelson Mandela in Stan Greenberg's new book, Dispatches from the War Room, in which Greenberg writes about how even the revered Mandela suffered a loss of public confidence when change did not come fast enough after he took office. "Don't assume the current euphoria, even with your high approval rating will carry you through," Greenberg counsels Obama, stressing the need to try to build up enough trust so that the public will stay with the president until they can actually experience change.

The Axelrod camp understood this and, according to the Times' February story, argued that "rising joblessness, populist outrage over Wall Street bonuses and expensive perks, and the poor management of last year's bailouts could feed a potent political reaction if the administration did not demand enough sacrifices from the companies that receive federal money."

Axelrod was right. And his loss has already cost the young Obama administration a lot.

No wonder the public is not convinced when Geithner, having laid the groundwork that made the AIG bonuses possible, and having gotten Chris Dodd to include a bonus loophole in the stimulus bill, now acts shocked over the bonuses.

Geithner's feigned surprise at AIG has been a body blow to public confidence in the president. According to Sunday's Rassmussen poll, just 12 percent of those Rassmussen defines as "Populists" have a favorable opinion of Geithner while those Rassmussen identifies as "America's Political Class" have a 76 percent favorable opinion of him.

It was painful to watch Obama, just hours after Geithner had admitted his role in the Dodd/bonus loophole affair, go on Jay Leno and say that Geithner is doing an "outstanding job." Even before Frank Rich's Sunday column was titled "Has a 'Katrina Moment' Arrived?," Obama's assessment had more than a whiff of Bush telling Brownie he was "doing a heck of a job."

Continue Reading: http://www.huffingtonpost.com/arianna-huffington/geithner-unable-to-escape_b_178006.html

[Norquist Nemesis]

1. About those "bonuses"...

Maybe someone else who is more familiar with the financial/banking industry can help out on this. From what I'm learning, "bonuses" are simply another term within the industry for salary compensation. To quote a lawyer I know who deals with these contracts, "The only question that matters to both the bank and the employee is "what is the bonus" "how is it calculated" and "to what extent is it guaranteed." "Salary is irrelevant", and when they talk about earnings it is the bonus that counts, not the salary.

I'm not saying this is the way it should be, but that this is the way it is. And, if so, this is indicative of how these people can be soooo very out of touch with the rest of us schmucks out here in the every day grind.

Geithner needs to understand that the great majority of people he is now working for don't think in the same terms as the world he came from. Nor do they have the opportunity to negotiate their salaries and "bonuses" in the same manner. He needs to get away from the underlying ideology that the world he came from is the driver of the economy, and be slammed into a reality that Obama talked about when it comes to valuing workers and the added value of work to actually make something!

[Hello_Kitty]

3. I think that's what they took into consideration with the bonus tax

When they limited it to 90% of whatever the "bonus" was, in excess of $250,000 in family income. Yes, bonuses are a big factor in compensation packages for people at all levels in the financial services industry. It may be necessary to place restrictions on that form of compensation, in order to disincentivize avaricious behavior. I'm not saying that must happen, just that it's worth looking into.

[Norquist Nemesis]

4. Nah, I think they took the public outrage into consideration

because most of them were stationed in London.

I'm not crazy about putting restrictions as you're suggesting. I would agree that it has to be regulated if they are accepting money from the government to "bail them out", though.

Wish I had the answers.

[Hello_Kitty]

5. Oh definitely that.

I'm just saying that after they decided to do something about the popular outrage they opted for a tax that impacted the millionaires without affecting the people who make $60k a year.

As for the restrictions I proposed, I'm not saying they're the best idea but people have got to stop being rewarded for being greedy lying theives with other people's money.

[biopowertoday]

7. that is all

well and sweet regarding what you say about Obama but the fact is he is listening to G. not Ax. Its like he is saying one thing and doing another--or straddling the fence.

[xchrom]

2. it's not the 'bonuses' that bother me so much -- but that we continue -- even now --

to empower our FAILED ruling class.

and the democratic party that we worked so hard to get into power AREN'T RULING!!!

[lostnotforgotten]

6. Obama's Katrina Moment - You Bet - Many More To Come

eom

[camera obscura]

8. Axelrod's job is to know what non-DC/NY people are thinking. Obama should trust him.

I don't think Geithner is a bad guy, but his job has always been to work with Wall Street and Washington DC, and it shows in his plans.

[TTUBatfan2008]

9. Trust the Axeman...

[JamesA1102]

10. Arianna's lying.

"No wonder the public is not convinced when Geithner, having laid the groundwork that made the AIG bonuses possible"

This statement is completely untrue. It is a GOP talking point that has been refuted by Media Matters: http://mediamatters.org/items/200903210007?f=h_latest

http://mediamatters.org/items/200903210007?f=h_latest

Interesting that Arianna has turned on Obama ever since he proposed raising taxes on her and her friends.

[northernlights]

11. say what?

"In fact, AIG reportedly disclosed that it had entered into agreements to pay these bonuses more than a year ago, and the Bush Treasury department approved of the AIG bailout with this agreement in place."

Furthermore, the mediamatters link refers to Chris Dodd, not Geithner.

Am I remembering wrong, or wasn't Geithner part of the Bush Treasury department that put the bonuses in place last year?

[JamesA1102]

12. You're remembering wrong

Geither worked in the Treasury department during the Clinton Administration. Last year he was president of the Federal Reserve Bank of New York.

[Beacool]

13. Listening to the masses is not always the wisest decision.

A president needs to keep a cool head, not rile up the masses who have been whipped into a frenzy by the media and a hypocritical Congress that is the beneficiary of our largesse and eats at the public trough.

Compensations vary in the financial sector. Some of the people near the top get large bonuses in exchange of an equally large salary. Some of these people's salary is a nominal amount. A large part of their yearly remuneration comes in the form of bonuses. Ditto for salary increases at mid level management. For example, an average employee will receive their annual increase upon their hiring or promotion anniversary. But, a head of department will receive their annual increase in the form of a bonus.