David Axelrod on the inaugural stage for Barack Obama's swearing in as the 44th president on the West Front of the Capitol Jan. 20. (Photo by Chip Somodevilla / Getty Images)
by Mark Silva
The White House - and that means the president - clearly is angered by news that Wall Street has paid out billions of dollars in bonuses while collecting billions of dollars of federal money in a bailout of failing financial institutions.
And, while "limiting some of this executive compensation" is necessary to rally public support for a new financial-rescue plan which the White House is working on, David Axelrod, one of President Barack Obama's most senior advisers, stops short of embracing a ban on bonuses for companies receiving bail-outs. He leaves "no doubt,'' however, that the administration will take tough steps to address the issue, Bloomberg Television finds in an interview with the man who helped get Obama elected.
"It's very hard for the American people to understand how a bank executive should get a multimillion dollar bonus at a time when he's asking the government to essentially bail out his institution," Axelrod said in an interview on Bloomberg TV's Political Capital with Al Hunt, scheduled to air this weekend.
Obama voiced his own outrage this week after New York's state comptroller reported that Wall Street firms paid $18.4 billion in bonuses last year as the U.S. slid into recession - "shameful,'' the president said of the bonuses in a White House appearance.
And today, with his weekly White House address aired on radio and delivered via video on YouTube, in explaining that his advisors are working on a new plan for revival of the financial markets , the president promised to "ensure that CEOs are not draining funds that should be advancing our recovery.''
Treasury Secretary Timothy Geithner will "have something to say about" bonuses as early as next week, when he releases guidelines for banks receiving funds from the second half of the $700 billion financial rescue package, Axelrod says in the Bloomberg TV interview.
The administration is committed to "a strong, private financial sector" in the bank bailout, he says. "Obviously, we're trying to help these institutions on a temporary basis, but that's our goal," Axelrod says. "We're going to provide assistance to these institutions and hope that they -- hope and expect that they'll -- get back on their feet and that credit will flow."
Financial experts and lawmakers have said the government may need to spend more than $1 trillion to help the financial markets, Bloomberg notes. Axelrod declines to discuss specific numbers, but says the administration is crafting a plan that will "set up new rules of the road" for spending the remaining $350 billion of the rescue package approved under the Bush administration.
"There are a variety of things that we need to do in order to win the trust and confidence of the American people," he says. "And we'll address these other issues down the road, but right now, we've got to work with what we've got."
Axelrod defends Treasury's Geithner, who raised some eyebrows during his confirmation hearings last week by saying the president believes China is "manipulating its currency."
"What Tim said was akin to what the president said during the campaign, these are issues that we have to work through," Axelrod says. "We weren't blazing new ground there."
Obama spoke with Chinese President Hu Jintao this week following Geithner's testimony. Axelrod wouldn't say whether Obama reassured the Chinese leader on this issue.
White House Press Secretary Robert Gibbs, in a readout of that phone call, says the two leaders agreed to cooperate on many global issues. "The two presidents discussed the international financial crisis and agreed that increased close ooperation between the U.S. and China is vital,'' he says in an issued statement. President Obama stressed the need to correct global trade imbalances as well as to stimulate global growth and get credit markets flowing.''
Axelrod says the president will "make an announcement shortly" on his choice to lead the Commerce Department, the only Cabinet post left unfilled. Speaking of Republican Senator Judd Gregg of New Hampshire, a leading candidate for the Cabinet post, Axelrod says Gregg and Obama "haven't agreed on all issues," but the president has "a great respect for his ability and for his seriousness about public service." White House Press Secretary Robert Gibbs this week said Obama likes working with Gregg.
Axelrod also voices confidence that the Senate will confirm former South Dakota Sen. Tom Daschle, Obama's nominee for Health and Human Services secretary, whose tax records have come under scrutiny by Republicans on the Finance Committee. "I think that he's going to be confirmed," Axelrod ssyas.
After a unanimous Republican vote against the $819 billion economic stimulus bill that cleared the House this week, Axelrod says he cannot predict if any Republicans will support the package in the Senate, where the cost is growing to nearly $900 billion.
"We'll see," Axelrod says. "You know, we're hopeful. But the important thing is that a dialogue was opened. There were good discussions back and forth."
He also says Obama will continue to try to set a tone of bipartisanship that he pledged to bring to Washington.
"Old habits die hard in this town," Axelrod says. "There will be many instances in which there'll be cooperation -- maybe not with every Republican, and maybe not with every Democrat -- but we're going to forge coalitions behind all of our initiatives."
Asked about Karl Rove, former President George W. Bush's chief political strategist, writing this week that Obama is trying to consolidate power in the White House at the expense of the Cabinet by doubling the staff, Axelrod says the larger staff reflects a "multidisciplinary kind of approach" to coordinate issues such as health care and global warming with their related Cabinet departments.
"I appreciate any advice that Karl Rove has," Axelrod says. "But you know, they had their eight years and now we have our chance."
Comments
Geithner the tax cheat, criticizing others!
I have a suggestion to balance the budget: appoint Democrats to the cabinet, and thus force them to pay the taxes they owe.
Posted by: "Dissent is Patriotic" | January 31, 2009 9:11 AM
SEIZE ASSETS, SELL THEM OFF. ROUND UP THE 350 BILLION. GIVE IT TO US. EACH WORKING ADULT OR HOUSEHOLD IF THEY'RE MARRIED GETS 3,000. NOW THAT'S A STIMULOUS.
AND THEN YOU CAN GO AFTER ALL THEWAR PROFITEERS AND THE OIL COMPANIES' ASSETS.
OUT OF AFGHANISTAN NOW!
Posted by: EVERY LAST DIME NEEDS TO BE RETURNED FROM THE BAILOUT AND IRAQ WAR PROFITEERS | January 31, 2009 9:37 AM
O, my.
We can't deny the Masters of the Universe their bonus.
Otherwise, they'll all quit, march out in lock step, and go to work.....
Where?
MickyD's???
Posted by: ornery | January 31, 2009 9:55 AM
Geithner made good--just as anyone can with the I.R.S.--get over the election 'Dissent'. check out the pollution of "the google" when you try catching up on Bill Moyers' Journal. there's a warning "this site may harm your computer."
Posted by: Given the topics---looks like an AIPAC attack | January 31, 2009 10:01 AM
Obama gets to criticize Wall Street when he stops bombing civilians in Pakistan and pulls our troops out of Afghanistan.
BOMBING SHOULD BE CRIMINAL BEHAVIOR. THE MILITARY INDUSTRIAL COMPLEX BANKRUPTED OUR COUNTRY--NOT BAD MORTGAGES. NOT GREEDY MONEY PEOPLE.
WATCH BILL MOYERS:
http://www.pbs.org/moyers/journal/01302009/watch.html
Posted by: DOES OBAMA = LBJ? HOW MANY AFGHANS AND PAKISTANIS DID BARRY KILL TODAY? | January 31, 2009 10:18 AM
On C-SAN this morning they read a blurb (as they do all papers) from I think the NYT or maybe it was the WSJ. In the article some of these people who got these bonuses said they deserved them for working hard 40-80 hours a week...one only got a $250,000 bonus when he was used to getting a least twice that if not more. When will a bonus go back to being what it should be...a bonus for GOOD work? How much money is enough?
Posted by: lochnessmonster | January 31, 2009 10:56 AM
Everything that Giethner does should be in the sunshine.
He has demostrated that he is morally corrupt. He expects taxpayers to pay their tax bills while he doesn't.
If this is the best that the Obama administration has to offer up; this nation will be in a steady decline.
How can a morally corrupt individual be placed in charge of the bailout?
The selection of a morally corrupt Geithner, the selection of two lobbyists (while signing a bill to prohibit lobbyists and excusing these two) should warn the public of what can be expected.
This administration is talking out of both sides of its mouth.
"Get in their face" politics are not acceptable and won't be tolerated by the voting public.
Perhaps, the public needs to look beyond the Presidential nominee and look to the puppet masters pulling their string.
It's Rahm, Axelrod who run the show, direct the selections and drive Obama.
Posted by: Morally corrupt | January 31, 2009 11:01 AM
Mr. Geithner Sets a good example trying to stop it.
Posted by: Inky | January 31, 2009 11:22 AM
Ok fellow swampers (and Trib), here is my sleuthing for the week.
After reading lochnessmonsters's post from above, and remembering in the news this week about the typical executive bonus is 4 to 10 times the executives annual sallery.....my spidey senses stated kicking in. One could even say that it was a bubba porter tingle down my leg.
Most good things start with the simple word....why? Why would businesses not just increase the executives sallery? Right. That would be the easy thing to do, as payroll accounting is already set up in house.
Come to find out, these big bonuses are tax deductible for the company! Yep, that's right folks.....it's the same deduction as if these crooks were giving the money to a non-profit company!! It looks like there is a huge tax loophole being used here, and the "bonuses" are being run through the executives life insurance policy. It also looks like these executives are getting their taxes paid by the company with, you guessed it, another company tax exempt bonus!!!
So, all that pug sh!t about our businesses being over taxed, is just a bunch of ignorant windbags, which is what I have said for years.
Here are my sources links folks. Please read them carefully. I did not even dig super deep into this pile of pig sh!t, and there might be more goodies to learn on this topic. Trib, you NEED to blow this whistle.
http://www.nationwide.com/executive-bonus-plans.jsp
http://searchwarp.com/swa12357.htm
http://www.keypersoninsurance.com/executive_bonus_plan.php
I'm a simple man, and I did have a job once where we got a true bonus.....and I was one of the highest recipients in the company, with a $2,500 bonus. I, like many of you, did not understand this executive bonus crap at all.....I guess I was ignorant too, but it did line up with my beliefs, that pugs are greasy fat cheeting liars.
Posted by: Xcellentform | January 31, 2009 12:39 PM
A private bank/company can pay its employees/executives whatever it wants, but when they go hat in hand to Congress begging for a taxpayer handout the game changes. The bailout money was meant to get credit flowing, not for ceo bonuses. Instead of whining and scratching their heads about it, Congress needs to act and more clearly define what the bailout money can be used for and what it cant.
As for China manipulating its currency, I dont think that is even a gray area. They peg their currency to the dollar, artificially keep it weak in comparison to the dollar, making their exports cheaper. I hope Obama/Geithner dont back down from this position.
The remaining 350B in TARP money is no where near enough to take toxic assets of the books of major banks. Obama has also vaguely hinted at helping homeowners with this money, but wont say how. IMO, there is not enough money there for either goal, much less both.
Posted by: Herbie H | January 31, 2009 3:16 PM
I'm with you "Xcellent"
The only time I recall and end of year "bonus" it was actually a profit sharing plan that topped out at about 8 percent of salary; and when there were no profits, we didn't get anything.
Posted by: rupert | January 31, 2009 3:28 PM
@xcellentform:
No need for outrage on this issue. All business expenses are tax deductible for any company. Including all payroll in any form - salary, bonus, hourly wages, overtime, etc.
It's accounting 101.
Posted by: beancounter | January 31, 2009 3:56 PM
first wall street, i may suggest lets' go after overpaid hollywood, liberal corps the likes of microsoft, google..etc.
then lets take it all from each stinking liberal arts exec. SPREAD WEATH says the messiah. unbelievable ignorance of the liberal mentality. a mental disease.
Posted by: fitzelwig | January 31, 2009 4:12 PM
Obama should target the crimminal tax cheats in his own administration before he targets others. There isn't much credibility in the Obama Crime Family.
Posted by: robtr | January 31, 2009 4:14 PM
And to think, Wall street donated twice as much to Obama's campaign than the other candidate.
More importantly, most of the bonuses didn't go to CEOs but to the WORKERS.
The Democrat Slave Plantation is hypocritical.
Posted by: syn | January 31, 2009 4:44 PM
Why are we the people trying to "sell" these Wall Street losers on "borrowing" from us? Bonuses, at least out here in the real world, are rewards for creating prosperous, vital businesses, not sinecures for greedy clowns who get caught peddling useless crap loans that crash the global economy.
So, say you're a banker and you flushed $30 million down the toilet, which is the actual scenario we're looking at. When can we expect you to pay a part of that back?
Limiting executive compensation seems the very least that should be required to secure funding from we the people. Don't like it? Don't take the loan. Seems pretty freaking simple.
Posted by: Swamp Rat | January 31, 2009 4:57 PM
There could be no better investment in America than to invest in America becoming energy independent. The high cost of fuel this past year did serious damage to our economy and society. After a brief reprieve gas prices are inching back up again. Our nation should not allow other nations to have such power over us and our economy . We have so much available to us in the way of technology and free sources of energy. WE seriously need to get on with becoming an energy independent nation. We are spending billions upon billions in bail out dollars. Why not spend some of those billions in getting alternative energy projects set up. We could create clean cheap energy, millions of badly needed new green jobs and lessen our dependence on foreign oil all in one fell swoop. I just read an eye opening book by Jeff Wilson called The Manhattan Project of 2009. It would cost the equivalent of 60 cents per gallon to drive and charge an electric car.If all gasoline cars, trucks, and SUV's instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. Why don't we use some of the billions in bail out money to bail us out of our dependence on foreign oil? This past year the high cost of fuel so seriously damaged our economy and society that the ripple effects will be felt for years to come. www.themanhattanprojectof2009.com
Posted by: Benjamin | January 31, 2009 5:04 PM
With Obama planning to drastically cut the budget of the United States Military, I hope anyone who has friends in the military send them the following article. Maybe these budget cuts can be stopped, tragedy prevented and justice done. http://zachjonesishome.wordpress.com/2009/01/29/obama-oaths-of-allegiance-the-ucmj-unlawful-orders-joe-the-private-and-a-call-to-protect-the-republic/
Obama, Oaths of Allegiance, the UCMJ, Unlawful Orders, Joe the Private, and a Call to Protect the Republic
Posted by: Zach | January 31, 2009 5:46 PM
It doesn't help that the Senate Banking committee is chaired by Senator Chris Dodd who has taken advantage of sweetheart deals with Country wide, the firm that helped trigger the mortgage crisis, and that Congressman Barney Frank helped out his partner at Fanny Mae-Freddie Mac a couple of years before the bottom fell out. It would help if Congress admitted it screwed up on a bipartisan basis.
And I notice that Congress has not shown it shares the people's pain by taking, say, a 10% paycut, not has His Grace suggested that.
Posted by: Herb | January 31, 2009 8:24 PM
I'll assume what Gatheiner and Obama are upset about is the executive bonuses and not that of the secretary. Let's remember - Obama will get his hands on 35% of that bonus thru the employees income taxes. Also, the state of New York and City of New York will get its fair share also.
.
Finally, BO should think twice about all the political contributions that came from these Manhattan big shots.
Posted by: Terry | January 31, 2009 8:39 PM
Does this mean they will go after all those big bonuses and payouts the Fannie Mae/Freddie Mac CEOs received while running those organizations and our economy into the ground? How about Robert Rubin? He took a ton of dough from Citi...all while helping them spiral down the tubes. Oh wait, those guys are best buddies with Barney Frank, Chris Dodd, Chuck Schumer and the rest of the Dem Congress. Silly me, that means they will get a pass.
Posted by: ScottiesRule | February 1, 2009 12:08 AM
Beancounter; Yes, you are correct, but the companies are still dodging 15% in taxes by calling this money a "benefit" and not an "income". I'm going to assume that you did not read the links, and that you are probably one of the bean counters that is pushing for these kinds of tax loophole exploitations.
Posted by: Xcellentform | February 1, 2009 9:03 AM
I'm all for executives getting good-sized bonuses based on their performance and the performance of the company. When the company does well, the people putting in the hours, making the deals, and taking the risks ought to be compensated for that. But when the company is in such bad shape that it has to be bailed out by public funds, the thought of top brass continuing to take these enormous sums is nothing short of treason. They look like French aristocrats in 1788-1789, and if they continue their present course, I say we TREAT them the same way those guys got treated!
Posted by: Op109 | February 1, 2009 9:19 AM
Simple solution to ridiculous pay (and not just Wall Street) is to have 1) new income tax bracket at 75% for incomes over $5.0 million. Corporations will think twice about paying out so much money when it is just going to taxes. -AND- MOST IMPORTANT: 2) ESTABLISH AN INTANGIBLES TAX on people worth over $10 million. Anyone (including trusts, PIVs, etc) worth over $10 million pays 3% of their net worth in tax each year (and include their art collections, property, stocks, bonds, etc).
That how we need to pay for this stimulus and put fairness back into the American system.
Posted by: Michael Tracy | February 1, 2009 10:03 AM