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Bonuses spark a populist outrage

April 2nd, 2009

All too often, the sight of men in expensive suits getting scolded by a congressional committee or being hauled off in handcuffs graces television screens.

The most recent in the long line of egregious actions of mismanagement was the distribution of bonuses to executives of AIG from funds they received from the federal bailout package.

The public expressed its outrage over the past few weeks, and politicians have been forced to deal with the situation.

Government leaders from both parties have attempted to fan the political flames while, at the same time, trying to curry favor among the American electorate.

Gary Ackerman, a New York congressman, said, “Even if all these people gave back double the amount they received and spent the week in the public pillory, it wouldn’t fix the problem. The real problem is greed.”

Similarly, Lynn Jenkins, a Kansas Republican, said, “My constituents in Kansas have bailout fatigue.”

These two statements are indicative of the type of spin that politicians are trying to put on the situation.

Ackerman is attempting to put the blame on the avarice of business leaders, while Jenkins is trying to shift the focus to the government by criticizing federal bailouts.

Both politicians are making political calculations, as has been seen in the past.

The first political fight came with President Barack Obama’s stimulus package. Every Republican in the House and all but three in the Senate voted against the bill.

Larry Schwab, a professor of political science at John Carroll University, believes that this was, in part, a political decision for Republicans. He said the vote was part of the calculation, considering that “the Democrats will get the credit anyway, and the Republican Party couldn’t come out in a winning manner.”

While Schwab sees politics being played in the current situation, he does not foresee this scandal as a true recruiting point for the GOP. “Support for the Republicans is quite low,” said Schwab. “I don’t see the Republicans gaining too much.”

Schwab also said that how this situation will play out politically depends on the perceived recovery of the economy.

This means that politicians must wait and see what becomes of the stimulus package and other efforts put forth in order to curb the effects of a slumping economy.

The foremost person in this scandal is Obama, who must deal with this situation. While his administration has been hurt, Schwab said, “[it] won’t do much harm.”

Whereas some former presidents have strongly rallied against similar actions Ð Theodore Roosevelt called corporate executives “malefactors of wealth,” and Franklin Roosevelt referred to the same people as “economic royalists” Ð Obama’s response has been tepid toward the scandal.

Referring to AIG at a press conference last week, Obama said, “This is a corporation that finds itself in financial distress due to recklessness and greed.”

Obama also said, “All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts and multi-million dollar bonuses. And all they ask is that everyone from Main Street to Wall Street play by the same rules.”

That was as far as Obama went in his condemnation. Schwab points out that Obama must tread lightly because of his proposals in other areas, which will require a public-private partnership.

This is especially apparent on the mortgage front, where Obama is looking to have the federal government buy up toxic mortgages from banks.

The financial crisis has engulfed the nation over the last few months and has, in turn, gotten the attention of political leaders attempting to place themselves in favorable conditions with the public.

Nowhere is this more apparent than with Obama, who is attempting to make the political moves that will allow him to pursue his proposed solutions.