ABC News’ Z. Byron Wolf reports:
Republicans are taking every opportunity to put the blame in the AIG bonus controversy on Democrats and the White House, but many have had a different position on regulating executive pay, a point President Obama drove home today to reporters.
“I think it’s very important to remind ourselves that there are a whole bunch of folks now who are feigning outrage about these bonuses that a year ago or two years ago or three years ago, said, ‘Well, we should never meddle in these compensation plans. These are the best and the brightest. They know what they’re doing. That’s part of the market.’ And now, suddenly, they’re outraged,” said Obama.
“The point that I’ve been trying to make consistently has been that we believe in the free market,” Obama continued. “We believe in capitalism. We believe in people getting rich. But we believe in people getting rich based on performance and what they have added in terms of value and the products and services that they create.”
Limits on executive compensation that were attached to the Senate version of the stimulus bill (but mysteriously watered down and in one case removed from the bill that passed) have led Republicans to go on the attack, accusing Democrats of protecting AIG bonuses by not making the limits on executive compensation strong enough.
At today’s hearing with AIG CEO Edward Liddy, Rep. Ed Royce, R-Calif., said Democrats "went out of their way to protect those bonuses."
But Royce and all but one Republican in the House were very much against meddling in executive pay in 2007 when Democrats pushed a bill that was called the Shareholder Vote on Executive Compensation Act.
That bill would have given shareholders in public companies the right to a nonbinding vote on executive compensation suggested by a public company’s board of governors. At the time, the Bush White House threatened to veto the bill as unnecessary, pointing to recently enacted SEC disclosure rules for executive compensation.
The shareholder vote on executive compensation bill never received a vote in the Senate.
There is something odd about the amendments Royce mentioned. One would have capped executive compensation and another would have sought to draw back bonuses awarded to firms receiving TARP money. Both were added to a Senate version of the stimulus bill.
In the final version of the stimulus that passed, the executive compensation measures were watered down, in the case of the executive compensation, or stripped entirely.
Democrats involved in crafting the stimulus have been unwilling to point the finger at who exactly removed the provision to tax executive bonuses and removed the retroactivity for the executive compensation limits. Sen. Chris Dodd, D-Conn., shirked responsibility for changing his amendment in the final version, arguing, "I wasn’t in the room" when changes were being made.
Finance Committee Chairman Max Baucus, D-Mont., admitted to not even reading the final bill.
Baucus’ colleague on the Finance Committee, Sen. Charles Grassley, R-Iowa, who has been extremely critical of the AIG bonuses, said today that Democrats wrote the bill in secret.
"The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate," said Grassley in a written statement released by his office with the subject line, "Democrats protected bailout company bonuses in stimulus.” "There was no transparency, so the only way the public will ever know who added the language to protect bailout company bonuses is if someone from the small group of Democrats in the room says so.”
The Republican leader in the Senate, Sen. Mitch McConnell, R-Ky., had his sights set this morning on the Treasury Department, which he said has abrogated its responsibilities.
"The situation at AIG is an offense to the taxpayers, and we’re going it get to the bottom of it even if the Department of the Treasury hasn’t," McConnell pledged on the Senate floor.
"The Treasury Department was supposed to be minding the store,” he said. “They had the authority to disperse the funds and to provide oversight. It was Treasury’s responsibility to watch how these funds were being used. Obviously, they fell asleep on the job. The Treasury Department was completely asleep on the job. They need to wake up. Americans are fed up with their hard-earned tax dollars going to people who got use in this mess in the first place."
McConnell demanded that the Obama administration guarantee "this will never, ever happen again."
But while today he is complaining that Democrats in the Obama administration have not done enough to keep the bonuses at AIG from being paid, back in February, when Congress was considering amendments to the stimulus package to curb executive compensation, McConnell was singing another tune.
"What you have to do, it strikes me, is have some kind of parameters that don’t have the government basically running the private business," McConnell said, according to ABC News’ Jonathan Karl Feb. 4 as Congress was considering adding executive compensation limits to the stimulus bill.
Even then, McConnell agreed that the bonuses were unseemly, but he drew a different conclusion about how the government should involve itself in the issue.
"It is a tough challenge," McConnell said then. "I think we are all appalled by these — some of these executive salary arrangements and bonus arrangements and perks, and all the rest. On the other hand, I really don’t want the government to take over these businesses and start telling them everything about what they can do. Then you truly have nationalized the business. So it is a delicate dance to try to prevent blatant abuses and still not have the government as a result of taking an equity position in the government telling them, for example, you can’t pay dividends or you can’t — I mean, things that are just ordinary business practices. We have to resist the temptation to basically dictate to these businesses how to run every aspect of their operation.”
A spokesman for McConnell argued today that there is no inconsistency in McConnell’s position — that he was appalled by extreme bonuses in February and is appalled by them now. And he pointed to a letter he sent to then-Treasury Secretary Henry Paulson after news reports that AIG executives were attending lavish conferences even after their first government bailout, calling on Paulson to make sure taxpayer dollars were being spent wisely.
Ultimately, the difference for Republicans, it would seem, is that AIG is a private company with a CEO, which would normally mean it should be exempt from government meddling. But AIG’s largest stockholder is the American taxpayer. At the moment, it is neither public nor private.