'This Week' Transcript: Bonuses, Bailouts and Budgets

And I -- you know, this week's -- this week's effort was really a -- you know, it was a -- it was a disappointing spectacle, and it was -- it was mostly driven by the fact that Democrats are trying desperately to draw attention away from the fact that they made these bonuses possible.

STEPHANOPOULOS: Let me bring the White House in here. There's two separate strands of argument here, number one, that the Treasury could have prevented it in the first place, and, number two, what is the White House posture on this bill?

When the -- when the excise tax passed the House, the president put out a statement saying it rightly reflects the outrage that many people feel, yet all weekend long, it appears the White House has been backing away from that. And the White House chief of staff, Rahm Emanuel, has been telling many people, including the financial community, that this bill is not going to reach the president's desk.

BERNSTEIN: Well, look, George, I think on -- on the first point, you really have to differentiate between what you can legally do about bonuses moving forward and about clawing back old bonuses. Clawing back old bonuses really does invoke constitutional issues, but as the president said, we are going to pursue -- and I know the Congress feels the same way -- any means, any legal means necessary to do so. So I think the important point about this bill is that you -- you understand the anger that the bill engenders because the idea that a firm would take taxpayer money and use it to pay out bonuses, retention bonuses to retain, to retain employees who, by their work, partially led to hundreds of thousands of other people losing their jobs.

STEPHANOPOULOS: Yes, but that's the sentiment behind the bill, but the consequences of the bill -- a lot of people in the financial community say that banks who are now getting TARP money are going to try to give it back as quickly as they can because this could cripple them...

BERNSTEIN: Well...

STEPHANOPOULOS: ... and then, secondly, that the private investors, the government needs to come in to help buy up the toxic assets or these banks are going to be scared off.

BERNSTEIN: And this is -- and this is a really important point. This -- this kind of clawback legislation has to balance between the need to address the absolutely reasonable and well-justified anger of the Congress and the American people about how this money is being spent in these undeserved bonuses and the need to pursue financial stability.

I think the way the president says it is exactly correct. What happened at AIG, vis-a-vis these bonuses, is a symptom of a much larger problem. And we cannot lose sight of the larger problem, which is stabilizing financial markets.

STEPHANOPOULOS: So -- but that's what I'm trying to get at. Does the president believe that the House bill and the Senate draft bill to tax and have an excise tax on these bonuses undermines the financial system? Is he opposed to them?

BERNSTEIN: I would say the way Senator Conrad said it is -- is absolutely correct. I think the president would be concerned that this bill may have some problems in going too far -- the House bill may go too far in terms of some -- some legal issues, constitutional validity, using the tax code to surgically punish a small group. That -- that may be a dangerous way to go.

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