Obamanomics Sparks Ire Across the Aisle

Liberals voicing anger, outrage over president's handling of bailouts.

March 17, 2009, 4:28 PM

WASHINGTON, March 17, 2009— -- President Obama is facing growing liberal anger over his handling of the economy, with prominent voices on the left voicing concerns that taxpayer-funded bailouts are enriching corporate America while doing little to right the nation's economic ship.

The revelation over the weekend of massive bonuses being awarded to employees of AIG -- despite repeated federal bailouts engineered by the Obama and Bush administration -- is igniting fresh outrage among liberal lawmakers and bloggers.

Several prominent Democrats are pointing out that Obama aides were more than willing to press auto workers to renegotiate contracts as a condition of bailouts for car companies -- but are now citing the sanctity of contracts in AIG bonuses, saying they can't be canceled.

"People have no confidence in what's happening right now," Jane Hamsher, the founder of the liberal blog FireDogLake, said Monday on ABC NewsNOW's "Politics Live."

"People on the right and the left are looking at all this money being shoveled to banks [by] friends of Timothy Geithner and Larry Summers ... and they're not seeing any accountability," she added. "They don't know where the money's going, they don't know how much is gone, and it's all nontransparent and extremely suspicious."

Hamsher is organizing an online petition drive to press lawmakers to block further bank bailout funds. The Obama administration has signaled that it anticipates needing more funds to stabilize the nation's banking system.

A group of nearly 80 House Democrats took the unusual step of publicly sending a letter to Treasury Secretary Tim Geithner on Monday, calling on him to block AIG's bonus payments.

"These kinds of abuses of the public trust will only threaten any future efforts by President Obama's Administration to intervene in the financial markets," they wrote.

Allowing the payments to go through would leave the president in a difficult political spot.

"He's walking down a very, very dangerous path right now," liberal activist and author David Sirota told ABCNews.com. "It betrays the exact problem that people are angry at -- that there's one set of rules for Wall Street and Washington and another set of rules for everybody else."

"It's becoming real, what the difference is between Obama's rhetoric about power coming from outside of Washington, and the reality of an administration filled with Washington and Wall Street insiders," Sirota said.

Obama Lashes Out at AIG

The president sought to acknowledge the anger over AIG by voicing outrage of his own. Obama promised today to "pursue every single legal avenue to block these bonuses.

"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. Now, how do they justify this outrage to the taxpayers who are keeping the company afloat?" Obama said.

Treasury Secretary Timothy Geithner has been working since last week to scale back or cancel the bonuses. But the fact that he failed to stop AIG from proceeding with the bonuses left some prominent Democrats frustrated.

Robert Reich, who was former President Clinton's labor secretary, called it a "scandal" that "Americans still have so little say over what is happening with our money."

"When our very own secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken," Reich wrote in a Huffington Post op-ed.

Democratic lawmakers joined Republicans in expressing outrage. They called on the president to do more to protect taxpayer dollars.

"The American people are being played for fools by AIG," Rep. Elijah Cummings, D-Md., said today on ABC's "Good Morning America."

Polls suggest that the public continues to have faith in Obama's capacity to manage the economy. A CNN poll released today found 59 percent of respondents approve of the president's handling of the economy.

But a Pew Research Center poll also released today showed Obama's job approval rating slipping a bit, down to 59 percent from 64 percent a month ago. The dominant issue on the public's mind remains the economy.

The new concerns reflect the fact that, with every passing day, ownership of the crisis is being shifted more and more to the president.

Public Confidence in President Obama: How to Fix the Economy

The president and his top advisers continue to point out that the economic mess began on President Bush's watch. But they won't be able to point the finger backward indefinitely, said Kevin Madden, a Republican political consultant.

"Outrage will soon be an overvalued commodity for President Obama," Madden said. "In order to fix the economy he is going to have to execute some tough decisions that aren't popular with a fatigued and anxious public. It's a big test."

Hamsher, of FireDogLake, said she can't imagine Congress granting more money for Obama administration strategies to shore up the financial system until the president proves that he and his team can be trusted.

"There is no public confidence in the process, and until you can restore that confidence, I think you're just lighting money on fire," she said. "I don't think there's any question right now that until they restore some confidence in the system, no one's going to give them that money, and I don't think that's a Democratic or a Republican consideration. I think that everybody feels that way this morning."

Sirota said that the administration's current course could permanently harm his credibility.

"This idea that he is committed to pushing more bailouts -- if he steps into that breach, he is opening himself and the administration up to suddenly becoming part of the problem, not part of the solution," he said.

ABC News Live

ABC News Live

24/7 coverage of breaking news and live events