Obama's Eurography: France = Texas

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Obama's Eurography: France = Texas

by Mark Silva

The British press are having no end of fun with the portrayal of their homeland"slightly smaller than Oregon''by the White House of the arriving American president who celebrated the British prime minister's visit to Washington with a boxed set of movie DVDs.

The U.K., the Telegraph's Toby Harnden notes of the press briefing book that the White House press office handed out to the traveling press departing from Andrews Air Force Base, is "generally mild and temperate'' and the "group of islands close to continental Europe'' has been "subject to many invasions and migrations.''

Wondering how all of this will help that "special relationship'' between the United States and Great Britain, Harnden takes special note of the description of Queen Elizabeth, who "enrolled as a girl Guide when she was eleven, and later became a Sea Ranger'' and during the war "put on pantomimes with the children of members of staff for the enjoyment of her family and employees of the Royal Household.''

(The White House hasn't divulged its gift for the queen yet -- the president will visit Buckingham Palace on Wednesday.)

The U.K. is not alone, however, in being likened to an American state. Germany is "about the size of Montana,'' the briefing book notes of other stops along the president's weeklong tour, the Czech Republic is "about the size of Virginia,'' and France, the largest nation in Europe, is "about four-fifths the size of Texas.''

For the record, the author notes:

Oregon: Pop. 3.7 million.

U.K.: More than 60 million.

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Obama's Euro-test: Power of popularity

by Christi Parsons

At the heart of President Obama's approach to foreign policy has been a promise to end the "unilateral" strategies of his predecessor and heal bruised relations with America's allies.

But as Obama makes his presidential debut on the diplomatic stage at the Group of 20 summit in London this week, he faces leaders from both Europe and Asia who have rejected some of his most important proposals for rescuing the global economy, including his call for more stimulus spending.

Despite the diplomatic niceties, that means Obama's vision of himself as a conciliator will face challenges from the start.

In many ways, Obama is the president that world leaders have been saying they wanted. He has reversed some of President George W. Bush's most controversial policies, ordering the shutdown of the Guantanamo Bay prison in Cuba and ending aggressive interrogation of terrorism suspects.

And Obama has made it clear that he supports a much more multilateral approach to world problems than Bush, breaking with his predecessor's notion of "a coalition of the willing," which in practice often meant a coalition of those who followed the U.S. lead with a minimum of criticism.

"The president and America are going to listen in London, as well as to lead," White House Press Secretary Robert Gibbs said. "Many of the things that we've done over the past couple of weeks . . . demonstrate that America is leading by example. We've taken key steps to restore economic growth in this country, to save and create jobs and to put money back in people's pockets."

Across Europe, Obama's poll numbers are as high or higher than his substantial approval ratings at home. But neither popularity nor a more conciliatory approach has prevented some foreign leaders from brushing off Obama's proposals for recovery.

(President Barack Obama leaves for Europe tomorrow, for a tour starting in London and carrying him through Strasbourg, Prague and Turkey. Christi Parsons of the Tribune Washington Bureau will travel with him. See her reports on Obama's European tour in Tribune newspapers and here in the Swamp:)

German and French leaders have shunted aside the president's call for increased government spending to stimulate their economies. The Czech Republic's prime minister even characterized the U.S. proposal as charting "the road to hell."

Instead of more stimulus spending, European and Asian leaders want more government regulation of the financial system. And they have been openly skeptical of Treasury Secretary Timothy F. Geithner's regulatory plans, suggesting they don't go far enough.

Nor have foreign leaders responded wholeheartedly to Obama's call for a greater commitment to the war in Afghanistan.

"European governments, for the sake of pleasing Obama, are not going to make concessions on these fundamental interests and political requirements," said Reginald Dale, director of the Transatlantic Media Network and senior fellow at the nonpartisan Center for Strategic and International Studies, or CSIS.

The G-20 summit, which will focus almost entirely on the global economic crisis, on Thursday will bring together leaders of the major developed economies of Europe and Asia, as well as the European Union and such emerging economic powers as China, India, Indonesia and Brazil. Obama is also expected to hold more wide-ranging meetings with some individual leaders, including China's Hu Jintao and Russia's Dmitry Medvedev.

Before returning to Washington, he will visit Turkey, one of the United States' most important allies in the Muslim world. There too Obama will encounter leaders who are not wholly in sync with American policies.

Especially in Europe, there is deep anger over what is seen as the role of reckless American financial institutions, and a complacent Bush administration, in creating the catastrophe.

The differences between the United States and its allies involve not just contending interests, but national attitudes and historical experiences.

On the question of more stimulus spending, for example, Americans have grown relatively accepting of government deficits. European Union policymakers set limits on the budget deficits member countries can run.

Conversely, European countries have a history of far more government involvement with business than the U.S.

European governments formed a consortium to launch the Airbus as a competitor to American jetliners, for instance, but Americans are having a hard time with the idea of government intervention to avert a collapse of the domestic auto industry.

Meantime, China has been questioning the dominance of the U.S. dollar and suggesting the creation of a new currency reserve to replace it as the world standard.

Despite these differences, many expect G-20 leaders to make cooperation the watchword at the summit.

Michael Froman, Obama's deputy national security advisor for international economic affairs, suggests the G-20 nations are much more in sync about what to do than the recent public statements from France, Germany and the Czech Republic might suggest.

"I think going into the summit, there's a broad consensus among the G-20 as to what needs to be done in these areas to restore growth and regulatory reform efforts," Froman said.

Steven Schrage, who holds the Scholl Chair in International Business at CSIS, predicted that any differences would be papered over. "If there are big disagreements, they'll have kind of innocuous language that kind of muddles the differences," he said.

At the North Atlantic Treaty Organization summit that follows the economic meetings by a couple of days, Obama will encounter another point of difference: He wants increased military commitments in Afghanistan. But NATO leaders have been signaling that they aren't interested in dramatically increasing their troop presence.

Launching into major diplomatic meetings just two months into the Obama administration, with the president's economic team still being assembled, has its risks.

But the summit dates were set before Obama took office, and some analysts think the timing actually helps him turn the page from the old American foreign policy to the new.

"What Obama has been saying is, 'We want to listen; we want to talk,' " said Steven Pifer, a former U.S. ambassador to Ukraine and former National Security Council senior director for Russia, who is now at the Brookings Institution. "There may be some advantage to not having our plan set in concrete."

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Ahead Of G20, Europe Rebuffs Stimulus Spending

Transcript: Obama On "Face The Nation"
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Obama: Automakers 'not there yet'

See the full Face the Nation interview with President Obama above.

by Mark Silva

It probably will take another federal jump-start for General Motors and Chrysler to get back on the road, the Obama White House is inclined to say this week, but the president is warning the ailing automakers that radical new designs still are required.

"They're not there yet," Obama said of the automakers, in an interview taped Friday and aired this morning on CBS News Face the Nation.

"We think we can have a successful U.S. auto industry,'' the president said. "But it's got to be one that's realistically designed to weather this storm and to emerge -- at the other end -- much more lean, mean, and competitive than it currently is.''

GM and Chrysler already are riding on $17.4 billion in government loans, and probably will need more help to survive the worst downturn in the auto industry in three decades. GM is seeking $16.6 billion more, Chrysler $5 billion more.

The president's task force on the industry is expected to recommend Monday that more short-term aid is warrantedin return for major concessions to make the companies viable and avert bankruptcy. The announcement that Obama makes Monday is expected to include more money in exchange for concessions from union workers, bondholders and others.

The president said he will demand a "set of sacrifices from all parties involved, management, labor, shareholders, creditors, suppliers, dealers. Everybody's gonna have to come to the table and say it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road."

GM and Chrysler face a Tuesday deadline to submit completed restructuring plans, but neither company was expected to finish their work. The administration hopes to accelerate that work with the aid that it announces on Monday.

Last month, GM said it intended to cut 47,000 jobs around the world, nearly 20 percent of its workforce, close hundreds of dealerships and focus on four core brands -- Chevrolet, Cadillac, GMC and Buicksending Saturn the way of Ford's Edsel.

Chrysler presented two scenarios in its February plan: One as its own company, the second in alliance with Italian automaker Fiat, whose executives have spoken with the administration's task force about a proposal to take a 35 percent stake in Chrysler in exchange for small car technology, transmissions and other items that Chrysler has.

Chrysler said last month that it would cut 3,000 workers and eliminate three vehicle models: the Dodge Aspen, Dodge Durango and Chrysler PT Cruiser.
Wire services contributed.

Ahead Of G20, Europe Rebuffs Stimulus Spending

The Obama administration has been calling for European countries to step up stimulus spending as a way of dealing with the global economic crisis. But as world leaders prepare for the G20 summit in London, many Europeans are rejecting that strategy. They say the social safety net they offer their citizens helps maintain spending, and what the world needs is tighter regulation of financial markets.

Obama's Euro-odyssey: 'Relationships'

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Obama's Euro-odyssey: 'Relationships'

by Mark Silva

In a weeklong journey across Europe, his first since election, President Barack Obama will not only seek a global commitment to economic stimulus -- rumored at $2 trillion in the European press -- but also work on his personal relationships with some of the world's most influential leaders, British, French, German, Russian, Chinese and more -- including that strained "special relationship'' with the British.

The president will leave Tuesday morning for London, arriving in the evening there on the eve of the summit of the Group of 20 major industrial nations and emerging economies. He will spend much of Wednesday and Thursday at the G-20 summit with the leaders of nations which, combined, account for about 85 percent of the global economy.

Obama has "two main objectives'' at the summit, according to White House Press Secretary Robert Gibbs.

One is "is ensuring that there is concerted action around the globe to jumpstart economic growth, and that we are advancing a regulatory reform agenda to ensure that this crisis never happens again and prevent anything like that in the future,'' Gibbs said in a briefing on the trip today. The president, Gibbs said, "is committed to ensuring that both of those messages are heard throughout the summit.''

The president also will be attending a summit of the European Union in Prague and the 60th anniversary summit of NATO in Strasbourg in travels across Europe ending in Turkey during a weeklong journey across the continent.

"It's an opportunity to... not just confront the inherited challenges that the administration took on, but also to reenergize our alliance to confront the looming threats of the 21st Century,'' said Denis McDonough, deputy national security advisor for strategic communication, joining in the briefing.

Christi Parsons of the Tribune Washington Bureau will travel with the president. Follow her reports in Tribune newspapers and here in the Swamp. And for now, see more highlights of the White House's briefing on the trip today here:

That includes nuclear "proliferation, which we'll hear an awful lot about in Prague; new threats like cyber and climate and energy security, which we'll also discuss in Prague; in addition to terrorism and Afghanistan and Pakistan, which will be robustly discussed in Strasbourg and Kehl at the NATO 60th anniversary summit''

Obama also will be working on bolstering "specific alliances,'' McDonough said. This includes the "special relationship'' with Great Britain, and British Prime Minister Gordon Brown, German Chancellor Angela Merkel and French President Nicolas Sarkozy. It also includes Turkey, which the White House calls "a vital member of NATO and a vital bilateral partner to the United States.''

At the G-20 summit, says Mike From, deputy national security advisor for international economic affairs, Obama and others will focus on a four-part program:

-- "First is putting in place significant stimulus to get growth going again.

-- "Secondly, fixing each of our financial systems to get lending flowing.

-- "Third, avoiding protectionism.

-- "Fourth, taking steps to minimize the spread of the crisis to emerging markets and developing countries.

On April 1, Obama will hold a series of meetings with Brown, Russian President Dmitry Medvedev and Chinese President Hu Jintao. He also will meet the next day with Prime Minister Manmohan Singh of India and King Abdullah of Saudi Arabia. In Strasbourg and Kehl, he will meet with Sarkozy and Merkel.

April 4 brings a full day of NATO North Atlantic Council meetings, with Obama planning to underscore the shared mission of the U.S. and NATO in Afghanistan, where the U.S. is deploying about 20,000 additional troops, support forces and training personnel.

The president will fly on to Ankara, Turkey, and meet with Prime Minister Recep Tayyip Erdogan, and then on to Istanbul for meetings with local cultural leaders and a roundtable with students.

"It's our intention to make the roundtable an opportunity through some of the new media capabilities that we'll have with us to reach out to young people in Europe, as well as in southwest Asia,'' McDonough said. "Turkey, particularly Istanbul, has served as the bridge between these two geographic areas over the course of many centuries now.''

The White House was asked if it is getting any "signals from the Russians in anticipation of the meeting with Medvedev that they are willing to be more helpful on Iran.''

"The atmospherics around our relationship with Russia have dramatically improved in the last several weeks,'' McDonough said. "But the get-together on the 1st will be an opportunity for us to make that much more concrete.

"And our hope remains that they will recognize that, as I think they have indicated at various times, that a nuclear Iran is a shared challenge, and we'll look forward to fleshing that out more,'' he said. "But the bottom line is, I think we've seen some very positive developments over the course of the last several weeks, but we look forward to seeing if we can't put those into action.''

On the economic front, the White House was asked if the automotive industry be part of the discussions in the G20 summit, either with Germany or with other auto-producing countries"and should we expect anything coming in the future, in terms of a more coordinated effort between the United States and other auto-producing countries on that issue?''

"In fact, there is dialogue going on right now between folks here who are working on the auto sector and Merkel's representatives and Merkel's advisors on this,'' Froman said. "So there's a good -- it's good dialogue going on around that issue.''

There are reports from Europe that Brown is circulating a draft document proposing a global economic stimulus of $2 trillion.

"The communiqué is still in the process of being drafted and negotiated,'' Froman said. "There isn't any single number that is sacrosanct. I think the important thing that there is broad agreement that was reflected in the finance ministers' statement of a couple of weeks ago to do whatever is necessary to restore growth, and to put sustained effort behind that until growth is restored.''

Asked about that special relationship with Great Britain, which would seem to be strained lately, according to the various press accounts of Obama's meeting with Brown, Froman said: "Despite the back-and-forth in the press on this issue, nobody has asked and nobody is asking any country to come to London to commit to do more right now.

"I think what we do have a consensus around, and I think that consensus is broadly shared -- because it was reflected, as well, in the finance minister and central bank statement of two weeks ago -- is that the G20 agrees as a whole that we'll do whatever is necessary to restore global growth; that we'll ask the IMF to monitor what's going on with the global economy and what's necessary; and that we'll maintain that effort over a sustain period of time.

"And I think to us that's the important thing coming out of this, is a consensus that the global community has come together to solve a global problem....

"As it relates to the special relationship, I think it's indicative of the close cooperation and coordination among allies that obviously we had a -- just completed a 60-day review as it relates to Afghanistan and Pakistan, and our British allies played just a key role on that,'' he said. "They stood up a parallel review. (National Security Advisor) General (Jim) Jones worked this very aggressively with his counterparts in London, both over telecommunications but also in person here and there.

"And so the bottom line is that I think the pPresident looks very much forward to going to London,'' he said. "He has great affinity for that city, for the people there, and great appreciation for the historic relationship that we maintain.''

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Sarah (Vogue?) Palin's NRA-atty genl

by Mark Silva

Alaska Gov. Sarah Palin has tapped an Anchorage lawyer and National Rifle Association director as the state's new attorney general. That is true.

Sarah Palin is not appearing on the cover of Vogue"the governor issue.'' That is false.

The governor today did name Wayne Anthony Ross, who twice sought the Republican Party's nomination for governor, as attorney general. He is a former NRA vice president and current director.

He succeeds Talis Colberg, who resigned amid what Palin called a "harsh political climate." Colberg was a central figure in "Troopergate," the Alaska Legislature's investigation into whether Palin or aides had pressured her public safety commissioner to fire a state trooper involved in a contentious divorce and custody battle with Palin's sister. Colberg filed a lawsuit on behalf of seven state workers challenging legislative subpoenas. A judge rejected the lawsuit and the employees later testified.

The Palin Vogue cover, which has been making the rounds of the Internet lately, appears to be the work of Kodiak Konfidential, a Website in Alaska which is none too friendly to the governor.

It stems from a time, back in 2007, when Vogue did spend some time at the Wasilla home of the governor, former mayor of tiny Wasilla and former television sports broadcastershe gave up any thought of a career with ESPN when she learned it was based in Bristol., Conn., but she did name a daughter Bristol, and Bristol did have a baby and then broke up with the father, but....

"At first they had me in a bunch of furs," Palin told the of the Vogue photo shoot back in 2007. "Yeah, I have furs on my wall, but I don't wear furs. I had to show them my bunny boots and my North Face clothing."

This stream of news consciousness was brought to you by Swamp Friday.

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YouTube: Top-15 political videos ranked

by Mark Silva

The surprise shoe-attack of former President George W. Bush, protected, one would think, within the confines of the Green Zone in Baghdad, during his final tour of Iraq as president stands out as one of the great moments in YouTube political fare.

So say the folks at eGuiders.comwhich bills itself as a "hugely buzzed about site (modesty never paid any bills) that serves as the ultimate guide to the best of original online content.''

It is "curated'' by some Hollywood types -- Damon Lindelof, Jerry Stiller, Shawn Ryan and Jon Cassar, among them.

And they have just launched their selection of the "top political moments in online video from the past few years, as played out through YouTube.''

These moments include Jon Stewart on Crossfire in 2006 (#15), Sarah Palin's interview with CBS News' Katie Couric last year (#9), Andy Samberg's tribute to Ahmadinejad (#7), Obama's "Vote Different" campaign (#3), and the number one political moment in online video: the Iraqi journalist's shoe-attack of George Bush.

In the opinion of these "curators,'' the prank call that two Canadians placed to Palin, the erstwhile Republican Party vice presidential nominee, ranks right up there (at No. 4) with "the Obama Girl's" "I've got a crush on Obama.'' (No. 6.)

They also liked the Chuck Norris ad for Republican Mike Huckabee (No. 8), Comedy Central's Stewart debating CNBC's Jim Cramer (No. 12) and FOX's Bill O'Reilly coming unglued (No. 10)

See the whole lineup of the Top 15 political YouTubes.

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Obama's stimulus 'way to Hell:' EU chief

by Mark Silva and updated

President Barack Obama's bid for a global strategy to gain rebalance in the world's economy faces at least a few obstacles.

Such as the leader of the European Union, who calls the president's economic stimulus "the way to Hell.''

As the dispatch from Brussels in The New York Times today notes, the words of Czech Prime Minister Mirek Topolanek, who has assumed the rotating presidency of the E.U., aren't going over all that well with everyone in the 27-nation alliance, particulary the British prime minister who will play host to Obama at a global summit next week.

Comes word today from the E.U. presidency, however, that the prime minister's remarks were misinterpreted. "He didn't say that," Czech Deputy Prime Minister Alexandr Vondra said at a news conferencetoday. The explanation is that Topolanek, speaking through an interpreter, had noted that the United States is taking strong fiscal action to combat the economic crisis and said the European Union would be on the "way to Hell" if it boosted its own fiscal spending.

Whatever he said, it may be a blessing for Obama that the E.U. presidency lasts only six months. As Obama heads for the summit of the Group of 20 major industrial and emerging economies in London next week, the words of the E.U. leader may hang in the air over a conference in which Obama is seeking a global commitment to attacking the economic problems underlying the global recession.

Just five days ago, the Times notes, "E.U. leaders had reached a carefully constructed political truce designed to bury their differences and agree on a common policy ahead of the London meeting. At last Friday's E.U. summit, they pledged an additional 75 billion euros to finance loans by the International Monetary Fund and to double a credit line for its struggling eastern economies.

"European countries, including Germany, have resisted calls to increase the scale of their fiscal stimulus arguing, that the G-20 should concentrate on tightening financial regulation. ''

It is suggested that perhaps the Czechs aren't feeling the same pain that others are feeling. The E.U. president "is sitting in the Czech Republic," one official told the newspaper, "where growth is holding up relatively well and a fiscal stimulus makes no sense... He has never been in favor of a big fiscal stimulus -- though he did not argue against it at the E.U. summit."

Analysts in Prague call Topolanek eager to "show Europe that he was still politically relevant despite the collapse of the government'' and say that "railing against interventionism'' is consistent with ideology of his center-right Civic Democratic party.

"While Mr. Obama in recent weeks has pleaded with European partners to stimulate the economy, countries including the Czech Republic that endured decades of Communism are deeply suspicious of state intervention,'' the Times notes, suggesting that the leader's comments are "likely to come as an embarrassment'' for Gordon Brown, the British prime minister, visiting the United States today in preparation for hosting the G-20 summit in London next week.

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Bobby Jindal at-bat against Obama (II)

by Mark Silva

Bobby Jindal: Take Two.

The young Republican governor of Louisiana, whose Republican Party response to President Barack Obama's speech to a joint session of Congress was widely pannedeven likened to the work of Mister Rogers will take another turn at the opposition podium.

Jindal will have a chance to voice his party's message tonight opposite the president's prime-time news conference.

Viewed as a possible presidential contender for his party, Jindal is headlining a congressional fundraiser for the GOP that happened to fall on the same night as Obama's presser.

The governor's televised address from the hallway of the governor's mansion in Louisiana in response to the president's congressional address was widely ridiculed.

"My God,'' MSNBC's Chris Matthews exclaimed on air as Jindal strolled into the hallway -- later explaining that he was commenting on the "stagecraft'' of the appearance.

Jindal's tale of human heroism in the aftermath of Hurricane Katrina even was questioned.

Tonight, Jindal will speak before a live audience of party faithful in Washington, with his address scheduled well before Obama's news conference at 8 pm EDT likely starting before the president's remarks. Obama will draw live broadcast and cable news coverage -- Jindal likely dependent on cable coverage of his talk..

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Fanfare (none) for the common toxics

by Mark Silva

On this Treasury-dominated day in which the Dow Jones Industrial Average surged by more than 400 points at this writing, the White House was asked why it hadn't wrapped Tim Geithner's announcement of his new toxic-assets strategy in more fanfare.

Geithner "used a more sort of quiet approach, pen and pad with reporters, not getting out there on television in a very public way,'' a reporter noted. "This is a major event. Everyone was waiting for the details, and it almost seemed like it came out in less than sort of a bombastic way.''

"I guess he's worried a little about less about what the packaging is... and more importantly what's inside of the box,'' said Robert Gibbs, White House press secretary, taking a poke at the administration's own campaign playbook for big announcements.

"I suppose we could have rigged out some flags and printed up
some placards and cued up some old campaign music,'' Gibbs said, "but I think what's important -- maybe not for Washington reporters, but what's more important for the American people -- is to hear the details of a plan that works to get their bank lending money again. I think that's, in all honesty, what the American people care most about.
"I think if you objectively look at what this administration has done or what the economic team has done in the course of about nine weeks of service,'' he said, "I think you'd be hard-pressed to find nine weeks where more solutions were outlined to problems and challenges that have been facing this country probably since the 1930s.''

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Obama's great challenge: 'Political will'

by Mark Silva

"We got socked in the jaw here'' this week, NBC's David Gregory said today, pointing to the Congressional Budget Office's projection that the federal deficit over the coming decade will be far larger than President Barack Obama has predicted.

It will take a massive amount of political will to spend the sort of money the president is asking Congress to spend with his $3.55-trillion new budget for 2010, the Meet the Press host suggested today.

"The political will issue is the president's greatest single challenge,'' New York Mayor Michael Bloomberg told his NBC News host. "There is a crisis of confidence in this country.

"It's up to the president,'' Bloomberg said. "He's been in office two months, he campaigned on change, everybody wants him to succeed, and he's got to now explain exactly that to the publicwhy it is so important to make the investment, and to commit ourselves down the road, and our kids down the road, to pay back all of the money they are spending today...

"We're in a situation today where he cannot not spend... We've got to get people back confident that they are not going to lose their jobs, that they're not going to lose their houses,'' the billionaire mayor, a political independent, said today.

Can the nation afford to make such investments, Pennsylvania Gov. Ed Rendell was asked on the show. The Democratic chairman of the National Governors Association said: "I don't think we can afford not to do it.... The American people aren't against spending. They're against spending they can't see.... They're against bailouts.... The American people want to be able to see it. They want to be able to touch it.''

They are both echoing what Obama himself said in his weekly address this weekend -- that the challenges of the economy are too great to ignore.

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Toxic Asset Plan May Be Announced Monday
Treasury Secretary Timothy Geithner could reveals his much-anticipated plan to get toxic assets off the books of America's struggling banks as soon as Monday, administration and industry officials said.
Obama should mimic Lincoln on bonuses

by Frank James

How does a president stop a nation from cutting off its nose to spite its face?

That is the challenge now facing President Barack Obama as he tries to keep the populist rage against Wall Street, in general, and American International Group Inc.'s bonuses, specifically, from derailing his efforts to stabilize the financial system.

The federal government has several programs either under way or planned which require taxpayer and congressional support for infusions of more taxpayer money into the nation's financial institutions.

But the backlash against the $165 million in executive bonuses at AIG threatens to put an end to support of the bailouts which could leave the nation's banks in the same sorry state they're in now, with too little cash on hand to offset the bad loans they continue to carry on their books. That would mean the credit system could remain substantially frozen which in turn could keep the economy in the doldrums for the foreseeable future.

Joe Nocera, the New York Times financial columnist, has a column that should be widely read in which he spells out the very bad consequences if Americans and their leaders continue to allow populist anger at banks -- never far from the surface in America -- to continue to dictate events.

An excerpt:

By week's end, I was more depressed about the financial crisis than I've been since last September. Back then, the issue was the disintegration of the financial system, as the Lehman bankruptcy set off a terrible chain reaction. Now I'm worried that the political response is making the crisis worse. The Obama administration appears to have lost its grip on Congress, while the Treasury Department always seems caught off guard by bad news.

And Congress, with its howls of rage, its chaotic, episodic reaction to the crisis, and its shameless playing to the crowds, is out of control. This week, the body politic ran off the rails.

There are times when anger is cathartic. There are other times when anger makes a bad situation worse. "We need to stop committing economic arson," Bert Ely, a banking consultant, said to me this week. That is what Congress committed: economic arson.

He goes on to write that Congress is well on its way to destroying whatever value is left in AIG, an odd action for an 80 percent owner in the company.

The retaliation against AIG employees is likely to accelerate the exodus of the very people in the company's financial products division who can unwind financial positions at the company while retaining the most value.

And all the anger at AIG is also pummeling the good parts of AIG, the insurance units that also have value. There are reports that some of the best AIG employees on the insurance side of the business that had nothing to do with the kinds of risks the financial-products people were taking are leaving too, again lowering the value of what's left at AIG.

So all the congressional and public outrage, while it feels good, may have the unintended consequence of ensuring that AIG is worth a whole lot less than it needs to be for we taxpayer/shareholders to recoup the upwards of $170 billion of our money that is keeping the company afloat.

David Wessel at The Wall Street Journal also has a piece well worth reading to understand why we're at a scary moment in the financial and economic crises. An excerpt:

Rescuing the economy from the worst financial crisis in 75 years just got harder. Thank those bonuses at American International Group.

The uproar over six- and seven-figure payouts by a company propped up with $173 billion of government cash complicates President Barack Obama's already formidable task: To bolster the political courage of voter-fearing lawmakers to spend unfathomable sums of taxpayer money in order to avoid a decade of stagnation or a repeat of the Great Depression.

Federal Reserve Chairman Ben Bernanke, the nation's most prominent student of the Depression, was asked by a television interviewer the other day: What keeps you up at night? His answer wasn't Citigroup or inflation. "The biggest risk is that we don't have the political will," he said. "That we don't have the commitment to solve this problem, and that we let it just continue. In which case, we can't count on recovery."

His point, though he can't put it so bluntly, is that it's going to take hundreds of billions of dollars more to rebuild the foundations of the banking system and restart the economy. It's going to mean letting some people profit from buying smelly mortgage assets on the cheap and paying others far more than the average office worker to manage huge portfolios that fall into government hands. And, to make the whole system safer, it's going to require changes to regulation of finance in ways that powerful interests will resist.

Yet the public mood toward spending more taxpayer money -- and toward bankers and their government overseers -- appears even more hostile than it did last fall when the House of Representatives initially rejected the Bush administration's $700 billion bailout plea. Back then, voters didn't know what the plan was. Today, they know -- or at least think they do -- and they don't like it.

In December, a CBS News poll found the public split on the wisdom of "providing money to banks and other financial institutions to try to help fix the country's economic problems," with 46% approving and 44% disapproving. Asked the same question between March 12 and March 15, 53% disapproved and 37% approved.

Obama may have made his task more difficult by sending two different messages. On one hand, he expressed his anger with the bonuses earlier this week and tasked his Treasury Department with finding the means to get the bonus money returned.

On the other hand, it was his administration that apparently asked for the language in the economic stimulus legislation that allowed the AIG bonuses to be paid to begin with. And The Wall Street Journal is reporting that the administration wants to weaken the bonus tax legislation in Congress because of continued fears that it will cause a Wall Street brain drain that could make the crisis more difficult to solve.

The only way for the president to meet this challenge may be for him to speak clearly as to the reason why some actions are necessary, even unpopular ones, to save the financial system. If he tries to have it both ways, appealing to populist anger while trying to retain support for the financial bailouts, he may well fail at both.

He may need to borrow once again from President Abraham Lincoln, whose story has clearly been a major influence on Obama. It was Lincoln who famously and beautifully said in his letter to Horace Greeley, the abolitionist newspaper publisher:

I would save the Union. I would save it the shortest way under the Constitution. The sooner the national authority can be restored; the nearer the Union will be "the Union as it was." If there be those who would not save the Union, unless they could at the same time save slavery, I do not agree with them. If there be those who would not save the Union unless they could at the same time destroy slavery, I do not agree with them. My paramount object in this struggle is to save the Union, and is not either to save or to destroy slavery. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that. What I do about slavery, and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I do not believe it would help to save the Union. I shall do less whenever I shall believe what I am doing hurts the cause, and I shall do more whenever I shall believe doing more will help the cause. I shall try to correct errors when shown to be errors; and I shall adopt new views so fast as they shall appear to be true views.

Obama must do all he can to save the financial system by the "shortest way" possible. If it means defending the payment of bonuses, he should do that. If it means banning all bonuses, he should do that. If it means allowing some bonuses and not others, he should do that.

But the ultimate goal at this stage must be stabilizing the financial system and resuscitating the economy, whatever it takes. It will take a political courage akin to Lincoln's for Obama to keep his eye on the goal and not get distracted by the popular uproar and the demagoguery of politicians. But that appears to be the only way out of the current crisis.

Obama Backers Return To Streets To Push Plans

His supporters plan a weekend door-to-door blitz designed to build public support for the president's economic proposals. Polls indicate the public is divided on the plans.

Bernanke: Exec Pay Must Be Monitored

Bernanke: Exec Pay Must Be Monitored
Federal Reserve Chairman Ben Bernanke on Friday called for banking supervisors to pay "close attention" to compensation practices as they examine the soundness of financial institutions.
Russian Planes Overfly US Carrier
ABC News' Luis Martinez reports: A Defense official confirms that twice this week several Russian aircraft overflew the aircraft carrier USS John C. Stennis and another US Navy vessel that were participating in military exercises in international waters off the...
Obama's 'famously funny' predecessors

by Mark Jacob

Perhaps President Barack Obama's sense of humor needs a bailout.

During the campaign, he made a quip about "lipstick on a pig," and John McCain's campaign accused him of insulting Sarah Palin.

After his election, he was asked whether he had spoken with any ex-presidents. He answered that he had consulted all the living ones but "didn't want to get into a Nancy Reagan thing about, you know, doing any seances."

He later apologized to the former first lady.

Now, Obama is saying he's sorry for comments on The Tonight Show With Jay Leno in which he said his bowling ability was "like Special Olympics, or something."

Maybe he's finally learned the same lesson as Bill Clinton, who said: "I used to have a sense of humor, but they told me it wasn't presidential, so I had to quit."

While we can expect a more serious and somber future with Obama, let's reflect on some sillier days.

FAMOUSLY FUNNY PRESIDENTS:

Abraham Lincoln was displeased with his beverage at a hotel. "If this is coffee, please bring me some tea," he told a waiter. "If this is tea, please bring me some coffee." Another time, a job applicant asked Lincoln to appoint him as a postal inspector, replacing a man who had just died. "Can I take his place?" the applicant asked. Lincoln answered: "Well, it's all right with me if it's all right with the undertaker."

Ronald Reagan kept his sense of humor even after being shot in 1981. He told his wife, "Honey, I forget to duck." Reagan also liked to make fun of his age. "When I was in fifth grade, I'm not sure that I knew what a national debt was. Of course, when I was in the 5th grade, we didn't have one."

Lyndon Johnson said: "I seldom think of politics more than 18 hours a day."

Franklin Roosevelt's best oratorical advice was: "Be sincere, be brief, be seated."

Theodore Roosevelt made a comment that resonates today because of financial malfeasance at high levels: "A man who has never gone to school may steal from a freight car, but if he has a university education, he may steal the whole railroad."

SURPRISINGLY FUNNY PRESIDENTS

Calvin Coolidge was shy and unassuming. In fact, one critic said he was "distinguishable from the furniture only when he moved." But in fact, Silent Cal was a cutup. When Coolidge was advised to boost military aviation, he asked, "Why can't we just buy one airplane and have the pilots take turns?"

Herbert Hoover, pilloried because of the Great Depression, didn't take himself too seriously. Upon the birth of his granddaughter, he said, "Thank God she doesn't have to be confirmed by the Senate."

UNFUNNY PRESIDENTS

James Buchanan was just plain dull. Sen. John Sherman once said of him: "The Constitution provides for every accidental contingency in the executive -- except a vacancy in the mind of the president."

Millard Fillmore declined an honorary degree from Oxford University because he felt undereducated and feared ridicule from students. "They would probably ask, 'Who's Fillmore? What's he done? Where did he come from?' And then my name would ... give them an excellent opportunity to make jokes at my expense."

SCRIPTED HUMOR

At a few designated events, politicians are allowed to be funny. Examples include the Radio and Television Correspondents Dinner in Washington and the Alfred E. Smith Memorial Foundation Dinner in New York. But those events are poor measurement of a presidential candidate's sense of humor because the jokes generally are written by professionals. A few remarks from last year's Al Smith dinner:

John McCain: "This campaign needed the common touch of the working man. After all, it began so long ago with the heralded arrival of the man known to Oprah Winfrey as 'The One.' Being a friend and colleague of Barack, I just called him 'That One.' He doesn't mind at all. In fact, he even has a pet name for me: George Bush."

Obama: "Contrary to the rumors you have heard, I was not born in a manger. I was actually born on Krypton and sent here by my father, Jor-el, to save the planet Earth."

REALLY BAD TASTE

George W. Bush tried too hard to please the crowd at the correspondents dinner in May 2004. He showed photos taken inside the White House, including one in which he looked under furniture in the Oval Office. "Those weapons of mass destruction have got to be somewhere," Bush joked. "Nope, no weapons over there ... maybe under here?" That might have been funny if not for the fact that 80 U.S. troops died that month in Iraq.

Ronald Reagan's greatest humor atrocity occurred in 1984, when he was doing a sound check before a radio broadcast. "My fellow Americans, I'm pleased to tell you today that I've signed legislation that will outlaw Russia forever. We begin bombing in five minutes."

WORST JOKES BY PEOPLE WHO DIDN'T QUITE REACH THE PRESIDENCY

Former Republican candidate Mike Huckabee offered the lamest ad-lib last year. Speaking to the National Rifle Association in May, his talk was interrupted by noise backstage and he said, "That was Barack Obama, he just tripped off a chair, he's getting ready to speak. ... Somebody aimed a gun at him and he dove for the floor."

Last June, Vice President Dick Cheney discussed his family roots and how he's distantly related to Obama. He also noted that there are Cheneys on both sides of his family. "And we don't even live in West Virginia," he added. He later apologized for insulting an entire state.

McCain has a long and weird history of joke-telling. When the Clintons' daughter was a teenager, McCain said at a fundraiser: "Why is Chelsea Clinton so ugly? Because her father is Janet Reno." Another quip from McCain: "The nice thing about Alzheimer's is you get to hide your own Easter eggs." Early in the 2008 race, he sang "Bomb bomb bomb, bomb bomb Iran" to the tune of the Beach Boys' "Barbara Ann."

SOLEMN SWEAR WORDS

Richard Nixon lost by a razor-thin margin to John Kennedy in 1960, and then had to watch Kennedy's eloquent inaugural address. When Nixon ran into Kennedy speechwriter Ted Sorenson later in Chicago, they talked about the address.

"I wish that I had said some of those things," Nixon told him.

"What part?" Sorenson asked. "That part about 'Ask not what your country can do for you ... '?"

"No," said Nixon. "The part that starts, 'I do solemnly swear ... ' "

Sources: Chicago Tribune news services; politico.com; "Great Presidential Wit: I Wish I Was in the Book" by Bob Dole; "A Funny Thing Happened on the Way to the White House" by Charles Osgood; and "The Concise Columbia Dictionary of Quotations" by Robert Andrews

Obama Apologizes For Special Olympics Gaffe

The president told the chairman of the Special Olympics that he was sorry about his late-night talk show quip equating his bowling skills to those of athletes with disabilities. Obama said on The Tonight Show that his score of 129 "was like the Special Olympics or something."

House Drops Tax Hammer On Bailout Bonuses

House Drops Tax Hammer On Bailout Bonuses
Acting with lightning speed, the Democratic-led House has approved a bill to slap punishing taxes on big employee bonuses from firms bailed out by taxpayers.
Gates Emotional Description of Dover Visit
ABC News' Luis Martinez reports: Defense Secretary Robert Gates grew emotional this afternoon as he recounted a visit Monday night to Dover Air Force Base in Delaware to attend the return of the remains of four servicemen killed this weekend...
Boxer: Emissions limits 'reality'

By Jim Tankersley

Sen. Barbara Boxer (D-Calif.) offered a stark message today to her colleagues who want to delay or kill major reductions in U.S. greenhouse gas emissions: You've already lost.

Boxer chairs the Senate Environment and Public Works committee, and she's drafting the Senate version of a so-called "cap and trade" bill that would limit the emissions scientists blame for climate change.

In what she dubbed a "reality check on global warming," Boxer said a growing series of regional emissions capsand the high likelihood that the Obama administration will soon take the first steps toward regulating greenhouse gas emissions under the Clean Air Actsuggest that Congress' only choices on emissions limits are to set them itself, or to watch others do it.

"I am here today to say that the days of inaction on climate change have ended," Boxer said. "The question is, will Congress continue to play a small part or a central role?"

The comments rebuked Boxer's Republican counterpart on the committee, Sen. James Inhofe of Oklahoma, a global warming skeptic who lambasted the cap-and-trade proposal on the Senate floor this weekcalling it all costs and no benefits for American taxpayers.

"If it is time for anything," he said, "it is time for us to get realistic about these policies, and focus on what is achievable, both globally and domestically, to help bring down energy costs to consumers and make us more energy secure so the American public doesn't get yet another raw deal."

This Angry Moment: Populist Outrage Building

165 million taxpayer dollars are going to the same employees at AIG who were responsible for its downfall. A new Gallup poll shows that three-quarters of Americans want the government to block or retrieve that money. Are you, your friends and your colleagues angry?

Eliot Spitzer: AIG's 'flavor of the month'

Veterans Concerned About New Proposal
The Obama administration may authorize the Department of Veterans Affairs to bill the private insurance companies of veterans, The Washington Post reported.
Obama: Decriminalize Homosexuality Worldwide
ABC News' Kirit Radia reports: The Obama administration said today it will sign on to a United Nations declaration calling for the decriminalization of homosexuality around the world. The move is a reversal of the position taken by the Bush...
Eliot Spitzer: AIG's 'flavor of the month'

by Mark Silva

Eliot Spitzer, former governor and attorney general of New York, made a name for himself fighting the white-collar excesses of Wall Streetuntil he made a name for himself as the customer of an excessively expensive call-girl ring.

Now Spitzer is writing columns for Slate and appearing on shows like WNYC's Newsroom, as he did todaycalling the controversial AIG bonuses "the flavor of the month...'' and "pocket change compared to the amount of unregulated money AIG is passing along to other banks.''

Spitzer, speaking with WNYC's Brian Lehrer, recalls action that he had taken as New York's A.G. that led to a $1.4 billion settlement with the insurance conglomerate.

"We were approached by some sources who said that AIG, which was at the time guided by Hank Greenberg as CEO, was, to speak in street vernacular, juicing its books by creating false reinsurance contracts that would appear to add capital to its balance sheet,'' Spitzer said. "Now that sounds all very complicated, but what it really means is they were playing games with their accounting in order to look stronger than they were...

"These contracts, it was alleged, were designed to make them look better in the eyes of Wall Street,'' he said. "We investigated, brought a civil case to settlement of $1.4 billion.

"At the time, $1.4 billion seemed like a lot of money. It was the biggest financial settlement ever,'' Spitzer said. "The board removed Hank Greenberg because he invoked the Fifth Amendment, when he was asked about this. Four people were charged criminally and convicted for basically playing games. But it led us to inquire and to probe into the inner workings of the company and what we saw was a mess.''

Lehrer asked about the government's bailout of AIG, wondering if it was necessary "precisely because they are so intertwined with the big banks and all this money on their toxic assets, that if AIG were allowed to fail like Lehman Brothers, the whole financial market would really collapse way beyond what we've seen so far?

"Let's go back to where we were last fall, right after Lehman had failed which is, almost universally viewed, as having been a policy error,'' Spitzer said.

"You had Bear Stearns, you then had Lehman on the cusp and I think what really happened is that Washington said, we have to show that somebody can fail, that we won't bail everybody out,'' he said. "The whole discussion of too big to fail is a separate discussion. I think policy was fundamentally flawed to let these banks get that big without putting real constraints upon them.

"Either you are too big to fail and we regulate you, or we break you up so you are not too big to fail. You can't have it both ways, too big to fail, without the regulation...
.
"Parts of AIG needed to be preserved, some of these contracts needed to be stabilized, you couldn't have another credit crisis such as that happened after Lehman failed, but that doesn't mean that you write a check for $173 billion, 100 cents on the dollar, to cover all these contracts,'' he said.

.He was asked if the attorney general's office had seen the credit default swaps at the company and the risk that they represented when it was examining AIG.

"We were not looking at that part of the company,'' Spitzer said. "We were looking at their reinsurance contracts with Gen Re, but what we saw was a company, when you peeled back the first layer of the onion, that was without anything close to adequate controls and adequate structure to know what was going.

"The way they put their financials together was something that was absolutely beyond what was acceptable, which was why they paid a fine of $1.4 billion.''

Spitzer's work on Wall Street helped him win election as governor of the Empire State, until his dalliances with Empire VIP escorts cost him his job. He quit.

Is Conventional Wisdom About Abusers True?

R&B singer Chris Brown was charged with two felonies following an argument with his girlfriend, pop singer Rihanna. He will be arraigned in April. The conventional wisdom is that "domestic abusers never change," and that abusers are generally men, but is that true?

Irish Obama: 'Apostrophe after the O'

"O'Bama"? President Touts Irish Ties To PM
Boasting about a bit of his own Irish ancestry, President Barack Obama hailed Ireland for having as much influence on U.S. culture and tradition "as any country on earth."
North Korea Rejects US Food Aid, Kicks Out US NGOs
ABC News' Kirit Radia Reports: North Korea has informed the United States it no longer wishes to receive American food assistance, the State Department said today. "North Korea has informed the United States that it does not wish to receive...
Irish Obama: 'Apostrophe after the O'

by Mark Silva

On this day of fountains running green at the White House, the nomination of the Steelers-owning Football Hall-of-Famer Dan Rooney as ambassador to Ireland and the gift of a bowl of shamrocks from the Taoiseach of Ireland, President Barack Obama stopped for some remarks at House Speaker Nancy Pelosi's St. Patrick's Day luncheon.

"This lunch was begun under Tip O'Neill and Ronald Reagan, two men of Irish stock who loved a good scrap, but who also knew how to work together to find common ground, and to put the differences of the day aside in favor of laughter and good cheer at the end of the day,'' Obama said, telling his hosts: "In fact, looking at all of you, I'm reminded of a greeting President Reagan once offered the guests at this gathering. "On St. Patrick's Day," he said, "you should spend time with saints and scholars. So I have two more stops to make...

"People help you discover a lot about yourself when you're running for president,'' the president said. "As has been mentioned, it was brought to my attention last year that my great-great-great grandfather on my mother's side hailed from a small village in County Offaly.

"Now, when I was a relatively unknown candidate for office, I didn't know about this part of heritage, which would have been very helpful in Chicago,'' he said to some laughter. "So I thought I was bluffing when I put the apostrophe after the O.... I tried to explain that "Barack" was an ancient Celtic name.

"Taoiseach,'' he said, "I hope our efforts today put me on the path of earning that apostrophe.

"If I may speak seriously for a moment -- earlier this morning, I mentioned briefly the recent attacks in Northern Ireland by those who would seek to challenge a hard-earned peace,'' Obama said. "And I told the Taoiseach, not all Americans are Irish, but all Americans support those who stand on the side of peace; and this peace will prevail.

"This peace will prevail because the response of the people of Northern Ireland and their leaders to these cowardly attacks has been nothing short of heroic -- true profiles in courage. They've condemned this violence, refrained from the old partisan impulses, made it absolutely clear that the future is too important to cede to those who are mired in the past. The sight of former adversaries mourning and praying and working together this week should inspire us all, and strengthen our resolve to see that this peace does not falter.

"And today, we also reflect on the fact that the past and the future of our nations are forever intertwined. The Irish came to America with the dream of a better life, but they didn't just wait for somebody to hand it to them -- they helped forge the very promise of America: that success is possible if you're willing to work hard for it.

"Irish hands have signed our founding documents and fought in our wars. They've helped build our greatest cities. Through tragedy and triumph, despite bigotry and hostility, and against all odds, the Irish created a place for themselves in the American story. We are a nation blessed with so many immigrant and ethnic groups that have contributed to that story -- and in doing so, they helped fashion a better life for all of us.


"Now our challenge tomorrow, and in the months and years ahead, is to try and remember some of that spirit of this day -- to work together with a renewed commitment to overcome the obstacles that stand in our way, and toil just as passionately as our forebears to bring about a better life for all Americans.

"And so to paraphrase some wise Irishman or woman -- may we govern,'' Obama said, "may we who govern have the hindsight to know where we've been, the insight to know where are, and the foresight to know where we are headed.''

Michigan Gov.: Job Loss 'Our Own Katrina'

At least one in 10 Michigan residents is unemployed. Facing the highest unemployment rate in the country, Michigan Gov. Jennifer Granholm says she's optimistic federal funds can help save the state. The Democrat shares her plan to use economic stimulus dollars to break Michigan's dependence on the auto industry.

Outrage Over AIG Politically Tricky For Obama

Obama Reaches Out To Small Businesses
President Barack Obama opened the federal treasury Monday to small businesses with plans for billions of dollars in government loans for the struggling sector that employs an estimated 70 percent of American workers.
Source Close to AIG: 'Everyone Gets That This Doesn't Look Good'
ABC News' Matt Jaffe reports: "AIG gets it," a source close to the company told ABC News today when asked about the widespread outrage about the $165 million in payments for executives as part of a retention program for members...
Obama approval slips below 60 percent

by Mark Silva

President Barack Obama's public approval rating has slipped.

"As a growing number of Americans see him listening more to his party's liberals than to its moderates, and many voice opposition to some of his key economic proposals,'' the president's high approval ratings have softened, the Pew Research Center's Andrew Kohut says today.

. It's down from 64 percent in February to 59 percent in the newest Pew survey, while the presidenti's disapproval rating has jumped from 17 to 26 percent in this span.

Disapproval of Obama has "increased markedly'' among Republicans (by 15 percentage points) and among independents (by 13 points).

The public perceives Obama as listening more to liberal Democrats than moderate Democrats -- by a margin of 44 percent to 30 percent in this survey. This marks a reversal from January, when 44 percent said he was listening more to moderates in his party and 34 percent said he was listening more to the party's liberals.

The latest survey by the Pew Research Center for the People & the Presswas run March 9-12, the survey of 1,308 adults carrying a 3 percent margin of error.

"There continues to be broad support for increased spending on infrastructure, and most have positive views of key aspects of his budget planreducing taxes on middle and lower-income households and raising taxes on the affluent,'' Kohut president of the Pew Center, reports.

"But the public remains divided over spending billions to help homeowners who are facing foreclosure on mortgages they cannot afford46 percent say this is the right thing for the government to be doing while an identical percentage says it is wrong.

See the full Pew report on Obama's slipping approval.

Outrage Over AIG Politically Tricky For Obama

The ferocity of the backlash against bonuses paid out to executives at AIG appeared to have the potential to erode President Obama's good standing with the American people. But it also presents him with opportunity to tighten banking regulations.

Cheney: Hey, Don"t Blame Us For Mess
Former Vice President Dick Cheney says it wasn't the Bush-Cheney administration's fault for the nation's economic mess the new administration is trying to clean up.
New AIG bonuses more fuel for outrage

by Frank James

It's being reported that AIG, the troubled insurance giant which the federal government has rescued by pumping into it hundreds of billions of dollars of taxpayer money, is paying hundreds of millions of dollars in additional bonuses to executives because of a Sunday deadline.

AIG says it's contractually bound to honor contracts and fears lawsuits if it doesn't make the payments.

This explanation, legally sound though it may be, is likely to unleash another fierce wave of anger at the company from lawmakers and taxpayers alike already fed up by earlier reports of other AIG bonuses and company retreats at luxurious resorts.

It could also raise calls that the company be allowed to file for bankruptcy protection since one thing a Chapter 11 bankruptcy proceeding would do is allow a federal judge to place AIG's bonus plans under strict review.

An excerpt from an Associated Press story:

WASHINGTON -- American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.

AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.

Treasury Secretary Timothy Geithner has asked that the company scale back future bonus payments where legally possible, an administration official said Saturday.

This official, who spoke on condition of anonymity because of the sensitivity of the issue, said that Geithner had called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG's current bonus structure.

Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.

In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.

Liddy said in his letter that "quite frankly, AIG's hands are tied" although he said that in light of the company's current situation he found it "distasteful and difficult" to recommend going forward with the payments.

'Victory At Risk' Offers A Plan For The Pentagon

One of the unintended consequences of the wars in both Iraq and Afghanistan is that the U.S. may not be prepared to fight another one. According to retired Army Major General Mike Davidson, history teaches that there will be another one — and he's got a plan to prepare for it.

Politics This Week: New FDA Head, Markets Bounce

Obama: Food Safety System A Health Hazard
President Barack Obama says the nation's decades-old food safety system is a "hazard to public health" and in need of an overhaul, starting with the selection of a new head of the federal Food and Drug Administration.
Treading Carefully, U.S. Hints It Wants to Engage Cuba, Venezuela
ABC News' Kirit Radia reports: It's a debate as old as the Monroe Doctrine: how should the United States engage its neighbors in the Western hemisphere? More often than not, the answer has been with a heavy hand. The Obama...
Obama failing to connect dots: Grassley

by Mark Silva

It's taxes, taxes, taxes in the Republican talking points today.

""The president of the United States has the pleasure of leading the country in the best of times, but the responsibility for digging us out of the worst,'' Sen. Chuck Grassley of Iowa says in the Republican National Committee's weekly address today. ""He has to govern in the present and build confidence for the future.

""Right now, Americans need jobs,'' the senator says. "They want Washington to fix only what it can, without destroying opportunities for the next generation. The president's programs don't connect all the dots.''

Obama proposes to raise taxes on wealthier Americans, Grassley notes, but that includes small businesses that provide most of the jobsthose increases that the president proposes take effect after 2011, not during the coming budget for 2010 that Obama proposes, however.

"All of these tax increases would be the biggest tax increase in history,'' says Grassley, noting that the deficit remains out of control in the president's plan.

"It's hard to convince taxpayers that more deficit spending is the answer,'' says Grassley, ranking Republican on the Senate Finance Committeeoverlooking the fact that Republican leaders allowed the federal budget deficit to reach then-record levels of near $500 billion a year during the Bush administration, when economic times were good.

The deficit stands at $1.75 trillion this year, according to the White House, and Obama says his budget will get it down to $1.17 trillion in 2010 and down to $533 billion by the end of his termstill higher than the peaks that Republican leaders and Bush reached between 2001, when the former president inherited a budget surplus, and 2008, when Bush set a new record. But then, these are tougher times.

Transcript:

"I'm Senator Chuck Grassley of Iowa. I serve as the senior Republican on the Senate Finance Committee, which handles all tax legislation.

"The President of the United States has the pleasure of leading the country in the best of times, but the responsibility for digging us out of the worst.

"He has to govern in the present and build confidence for the future.

"Right now, Americans need jobs. They want Washington to fix only what it can, without destroying opportunities for the next generation.

"The President's programs don't connect all the dots.

"His plans fail to recognize that Americans are not an endless source of tax dollars to pay for government spending.

"The President's proposed budget raises taxes. For the vast majority of people who earn less than $200,000, raising taxes on higher earners might not sound so bad.

"Yet a lot of small businesses are in that category. The landscaper or the general contractor with a dozen employees could land in the bull's eye.

"Tell these business owners their taxes will go up. Odds are, they'll cut spending. They'll cancel orders for new equipment, cut health insurance for their employees, stop hiring, and lay people off.

"These small businesses happen to create 74 percent of all new private sector jobs in the United States.

"Meanwhile, the President's budget includes a tax increase on more than half of small businesses with 20 or more employees. Businesses of that size account for two-thirds of the small business workforce. The tax increase is equal to 20 percent of the marginal tax rate paid by those small businesses.

"Ask people what number of jobs they're willing to sacrifice right now. To a person, they'll tell you zero.

"The Administration also wants to cut the tax deduction for giving to charity. Even the Tax Policy Center, a left-leaning think tank, says this would mean $9 billion less for philanthropy.

"The Administration's proposal to reduce the carbon production could amount to an average hidden tax increase of around $3,000 per household a year. In effect it's a national sales tax on energy.

"All of these tax increases would be the biggest tax increase in history.

"That's not all: Even if every one of these tax increases goes on the books, this budget still nearly triples the national debt by 2019.

"The President and his allies in Congress want to spend too much, tax too much, and borrow too much.

"Somebody has to pay -- if not the middle class now, then later. Eventually the middle class gets hit.

"Meanwhile, if taxes get too high, people drop out of the workforce and pay less taxes.

So higher taxes don't bring in more money.

"Government spending is a pretty inefficient way to create jobs anyway. Economists say the new stimulus bill will cost $787 billion to create or save 2.5 million jobs -- one million fewer than promoted by the Administration and congressional supporters. It amounts to $315,000 for each job created or saved.

"It's very simple. The government doesn't create wealth. It expends wealth.

"No wonder then the public is skeptical about Washington trying to fix the economy with one massive spending bill after another. It's hard to convince taxpayers that more deficit spending is the answer.

"There's evidence that the President and his people understand this, even if their budget doesn't show it. They say they don't want to raise taxes until 2011 because the economy is too weak.

"Well, if the President admits that tax increases hurt the economy, that will be true in two years as it is true today. Americans need leadership, and they need confidence now. They need their President and their elected representatives to connect all the dots. Jobs are hard-won. The government should first, do no harm. Thank you for listening."

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Obama's approval sagging? Pollsters say

by Mark Silva

Dough Schoen ran polls for Bill Clinton, So when he says President Barack Obama has a problem, the White House may want to listen.

Schoen says so today, in an Op-Ed piece in the Wall Street Journal penned with Scott Rasmussen, pollster-president of Rasmussen Reports and a surveyor whose numbers tend to not favor Democrats.

"Obama's poll numbers are falling to Earth,'' they report.

The argument they make is that, while the president's approval ratings are high -- above 60 percent in the Gallup Poll and 56 percent in Rasmussen's polling -- see what we meant? -- they are not as high as George W. Bush's ratings were at this stage of his young presidency, and they are sliding.

They point to a "net approval rating'' -- the difference between the numbers of people who strongly approve of the job that Obama is doing and the numbers who strongly disapprove. That gap has narrowed to 6 percentage points -- "his lowest rating to date,'' the two write in the Journal today.

The overall Rasmussen rating on Obama stands at 56 percent approval and 43 percent disapproval. The results of the daily Gallup Poll tracking of Obama's approval rating stand today at 62 percent approval and 27 percent disapproval.

Quite a difference, on the disapproval side. As we noted.

But there is "a substantial degree of polarization'' in the numbers, they say, which points to a certain concern for the Obama camp. And, while people approve of the new president personally, they are not necessarily as supportive of the steps he is taking to cure the economic problem that the nation is confronting, they note.

So, what does this mean?

Obama suggests he's not too concerned about daily tracking polls -- he even has compared the Dow Jones Industrial Average to a daily tracking number which, if one follows too closely, will lead to bad decisions. But Schoen and Rasmussen, for their part, suggest the divergent and sliding numbers could augur trouble for the White House.

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Madoff headed to hellish jail, SEC still in doghouse

Disgraced financier Bernard Madoff enters a federal court in New York City on March 12, 2009. (Photo by Mario Tama/Getty Images)

by Frank James

Physicians get to bury their mistakes, it's said. And federal regulators get to see theirs go to jail.

That's one way to look at Bernard Madoff's federal court appearance today where he pleaded guilty and a judge sent him directly to jail to await his sentencing in June.

If Securities and Exchange Commission officials had caught Madoff years earlier, which was possible since it was informed more than once of suspicions that Madoff was running a Ponzi scheme, he arguably would have been stopped years ago perhaps billions of dollars of investor money likely wouldn't have been lost.

But the SEC clearly failed in its duty to safeguard investors from a fraud it was literally led to by private investigator Harry Markopolos who repeatedly tugged the SEC's jacket to get them to fully probe Madoff's activities.

It will likely take years for the SEC to live down the mistakes it made in the Madoff case. As Mary Schapiro, the SEC's new head said at a House hearing yesterday: "As you can imagine, it is unfortunately that the SEC is currently being defined more by what it's missed than by what it's done, and certainly Madoff is an enormous component of that."

Schapiro said the SEC is working on fixing the commission problems Madoff exposed:

An excerpt of her testimony:

I will say that two weeks ago we filed three TROs in one day for Ponzi schemes. And there's no doubt but that the Enforcement Division's a bit on fire with respect to Ponzi schemes. And we can talk more about that.

As you also know, we have an inspector general investigation ongoing about what went wrong with Madoff. And we look forward very much to his report and his findings. And I do talk with him on a fairly regular basis. His report won't be done for months, and I feel -- I have to run the agency in the meantime, and we don't have the luxury of waiting months to start to make some of the structural changes that I think are really critical to addressing what went wrong with Madoff.

As you point out, we received tips, information that was quite credible and fairly complete, outlining why the returns that were promised by Madoff were highly unlikely to be legitimate. We get, as I said, 700,000 to a million and a half complaints a year and tips a year. We have to figure out a way to deal with that volume of information.

So I contracted in the last week with the Center for Enterprise Modernization, who's worked with other federal agencies to do just this sort of process review for the handling of data coming into the agency and then to make some short-term and longer-term recommendations to us on how we might better mine that data, understand what's important in it and then jump on those matters as a priority to try to head off Ponzi schemes and problems like that much earlier.

And we've -- also working on a package of proposed regulatory reforms that would deal with issues like the custody of customer assets, potentially an independent audit by an accounting firm of investment advisers. Such a requirement doesn't exist.

And so there's also a regulatory reform package that we're working on, and our examination program is refocused on a number of these kinds of issues.

Back to Madoff. He was told the court he was very sorry about his crimes:

An excerpt from the Associated Press:

"I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed," he told U.S. District Judge Denny Chin.

He said that he started the fraud but that he believed it would be short and he could extricate himself.

"As the years went by, I realized my risk, and this day would inevitably come," he said in a steady voice. "I cannot adequately express how sorry I am for my crimes."

The fraud turned a revered money man into an overnight global disgrace whose name became synonymous with the current economic meltdown.

Madoff also said he never invested the money. Instead he just stashed the money in a Chase Manhattan bank.

As for Madoff, he may have made many investors' lives hellish by separating them from their life savings. As punishment It sounds like his life is about to become hellish in return.

An excerpt from a Bloomberg News report on what he faces:

March 12 (Bloomberg)Bernard Madoff, who pleaded guilty today to masterminding the largest Ponzi scheme in history, may have to fight off prison inmates who want to squeeze him for money or blame him for the Wall Street crash.

"Madoff isn't going to be real popular," said Larry Levine, who served 10 years in federal prisons for securities fraud and narcotics trafficking and now advises convicts on surviving time behind bars. "All the guys there will have wives or parents who are losing their homes or their jobs or who can't send money to them anymore. Everybody's going to be blaming Bernie."

The 70-year-old investment adviser was ordered to jail by U.S. District Judge Denny Chin until sentencing scheduled for June 16. He faces as much as 150 years in prison...

... "He's looking at well over 20 years, probably at least 30," said Ellis, former president of the National Association of Criminal Defense Lawyers in Washington, D.C. "That's a life sentence for him."

Madoff didn't agree to a plea deal with prosecutors because they demanded he admit to a conspiracy, according to people familiar with the matter. That would have required him to say he worked with others in the alleged scheme, they said.

Ira Sorkin, Madoff's lawyer, had no comment on his client's possible sentence before the investment adviser arrived at court today.

The Queens, New York-born financier is a former Nasdaq Stock Market chairman and owns a penthouse on Manhattan's Upper East Side, vacation homes in Palm Beach and the French Riviera and a 55-foot Rybovich sport-fishing yacht called "Bull." He started his investment business in 1960, at the age of 22, with $5,000 saved from summer jobs.

Aging Convicts

Madoff will likely join a corps of aging white-collar convicts including former WorldCom Inc. Chief Executive Officer Bernard Ebbers, 67, now housed at the Federal Correctional Institution in Oakdale, Louisiana, and John Rigas, 84, the ex-CEO of Adelphia Communications Corp. who is imprisoned at the Federal Correctional Institution in Butner, North Carolina.

Ebbers, who was convicted in an $11 billion accounting fraud, is due for release on July 4, 2028, while Rigas's sentence for securities and bank fraud and conspiracy runs until Jan. 23, 2018, according to the Federal Bureau of Prisons Web site.

Federal prisons carry different designations, ranging from minimum to maximum, based on levels of security.

The two former CEOs are doing time in low-security prisons featuring double-fenced perimeters, mostly dormitory housing and work programs, according to the bureau Web site.

Madoff probably would be assigned to a low- or medium- security facility, said Levine, whose firm, Wall Street Prison Consultants, is in Los Angeles. Medium-level lockups usually house inmates in cells and are ringed with electronic escape- detection systems, the bureau site says.

'Least Violent'

Because crimes such as rape and murder are usually prosecuted under state laws, "in general, the federal system is less violent," said Peter Henning, a law professor at Wayne State University in Detroit. "Madoff will be put in with the least violent."

Madoff, who is Jewish, may be assigned to one of several U.S. facilities in the New York area, including the Federal Correctional Institution in Otisville, New York, 70 miles from Manhattan, where ultra-Orthodox Jews run religious services inside the prison, he said.

The financier may be sent instead to a low-security facility at Fort Dix, New Jersey. It's next to a minimum-security camp housing former fund manager Martin Armstrong, founder of now- defunct Princeton Economics International Ltd., who's serving a five-year sentence for securities fraud.

11 Counts

Madoff pleaded guilty to 11 counts, including securities, investment-adviser, mail and wire fraud as well as money laundering and theft from an employee-benefit plan.

The addition of money-laundering charges "may make this a life sentence" and push Madoff into a medium-security prison, at least at first, Ellis said. "Where you end up has as much to do with where the BOP has a bed open as your sentence."

Before Madoff's plea, two judges dismissed a government motion to revoke his $10 million bail and jail the financier after he sent a diamond bracelet and watches to friends and relatives in violation of an asset freeze. He awaited his hearing under house arrest at his $7 million duplex at 64th Street and Lexington Avenue.

Madoff may be sent first to the 12-story Metropolitan Correctional Center in lower Manhattan or the Metropolitan Detention Center in Brooklyn. Both house criminals from "swindlers to murderers," Wayne State's Henning said.

'Bleak' House

The "bleak" MCC is "horrendous," according to defense attorney Sam Schmidt, who visits the jail several times a week and represented Wadih el-Hage, convicted of federal terrorism charges related to the 1998 bombings of the U.S. embassies in Africa. He visited el-Hage at the facility between 1998 and 2001.

Conditions are worse at the Brooklyn jail, according to a court filing by Flora Edwards, a lawyer for fund manager Raffaello Follieri. He was convicted in 2008 in a real-estate investment fraud that led investors to believe he had a special relationship with the Vatican. Edwards' filing described the MDC as having an "intolerable" stench and free-roaming rats.

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