Team Obama Faces Storm

Posted March 18, 2009 at 6:55pm

Hurricane AIG blew into town last week, and its winds were still howling Wednesday along the corridors of a White House forced to grapple with its first major public relations crisis.

The gale force of popular outrage knocked President Barack Obama’s budget message off its intended place on the front page, and Obama aides struggled to get it back to the top of the news.

The White House has faced a few headwinds before, most notably on the tax problems of its nominees and the sudden withdrawal of the nomination of Sen. Judd Gregg (R-N.H.) to be Commerce secretary.

But the administration’s failure to figure out that American International Group executives were getting astronomical bonuses even as the administration was moving taxpayer money into the company’s coffers last month — and Treasury Secretary Timothy Geithner’s failure to tell the president promptly when he did find out — raised serious questions for the first time about the competency of those already on the job.

The AIG deal to pay out the bonuses was struck last April. Geithner found out about it last Tuesday. He harangued the CEO of AIG on Wednesday. On Thursday, he let presidential aides — not the president — know about the problem. Thursday night they told Obama.

A more experienced White House operation might have then leaked the news on Friday evening after the network news shows had gone to bed. Instead, the Washington Post broke the story Saturday, and a feeding frenzy began that the White House has yet to quell.

Republicans have happily pounced on a tasty morsel served to them on a shiny silver platter. Rep. Connie Mack IV (R-Fla.) demanded a separate platter with Geithner’s head, saying the secretary must resign. House Minority Leader John Boehner (R-Ohio) said Geithner was “on thin ice.—

The administration’s response has seemed disjointed to some.

“I think the administration has sent mixed messages on this,— Sen. Ron Wyden (D-Ore.) said. “The president has been very strong, very firm. But his economic team has not.—

Last month, Wyden co-sponsored an amendment to the stimulus package with Sen. Olympia Snowe (R-Maine) that would have forced financial institutions that were paying bonuses out of Troubled Asset Relief Program funds to either return the funds or face an excise tax.

After talking with Obama’s economic team and getting the amendment included in the Senate-passed TARP bill, Wyden’s amendment was stripped out in conference committee.

“I talked to every one of them, and I couldn’t get anyone to push for the amendment,— Wyden said, adding that he and Snowe will reintroduce the measure this week.

White House National Economic Council Chairman Lawrence Summers led the initial public wave of outrage on the Sunday morning talk shows. But his message did not seem completely honed.

“Look, if you start changing the rules, ex-post, on financial — on these kinds of contracts — you may get a feeling of satisfaction in the short run,— Summers said on ABC’s “This Week.—

Summers added, “But the president said something very, very important … in his State of the Union speech. He railed and spoke very powerfully against what has happened. And then he said, but we can’t govern out of anger.’—

But the president then spent the next few days trying to express his anger — sometimes with the help of a teleprompter — and said blocking the bonuses is just what he wanted to do.

“I’ve asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole,— he said on Monday.

White House Press Secretary Robert Gibbs seemed a bit out of the loop. Asked Monday if Obama officials had first found out about the bonuses last week, Gibbs replied, “I think that’s true, based on what I read in the newspaper.—

By Tuesday, Gibbs had decided he needed to offer the proverbial expression of presidential confidence in a beleaguered aide — Geithner — even though the question was not asked. On Wednesday, Obama was himself forced to offer his blessing to Geithner.

“It’s difficult in a situation where you have all the burners on the stove going to keep your eye on all the pots,— said Towson University presidential communications scholar Martha Kumar, pointing to Obama’s focus on the budget, the stimulus, the financial rescue package and issues such as energy, education and health care.

“Those are all difficult issues to begin with, but to be handling all at the same time makes it difficult to put the type of attention you need on high priority issues,— Kumar said.

Kumar argued part of the problem for the White House might have to do with learning the ropes of governing as opposed to running a campaign. On the trail, authority and control are centralized. In the White House, officials must deal with various agencies — such as Treasury — as well as Members of Congress and other outside forces.

And Kumar observed that the White House appeared to be just discovering the strengths and weaknesses of senior aides.

“Geithner has been less useful as a communicator than they might have imagined when they came in, so they’re probing what their other resources are — like [Council of Economic Advisers Chairwoman] Christina Romer and Larry Summers, who have both turned out to be pretty good.—

Meanwhile, Wednesday, the media machine continued to churn away.

“When and what did the president know about AIG Bonus?— screamed the crawl at the bottom of the screen on the normally Obama-friendly MSNBC show “Hardball.—

Jessica Brady contributed to this report.