AIG CHOKES OBAMA - AT 6:47 A.M. ET:  It's often one symbolic incident that becomes a presidential administration's nightmare.  In Obama's case, it has the initials AIG.  From the Washington Post:

President Obama's apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.

Politicians in both parties flocked to express outrage over $165 million in bonuses paid out to executives at the company, demanding answers from the president and swamping yesterday's rollout of his efforts to spark lending to small businesses.

The populist anger at the executives who ran their firms into the ground is increasingly blowing back on Obama, whom aides yesterday described as having little recourse in the face of legal contracts that guaranteed those bonuses.

COMMENT:  The image of a group of failed executives receiving huge payouts, and an American president unable to stop them, is toxic to the administration.  After all, the United States government owns about 80 percent of AIG.  The behavior of AIG is another knife in the back of responsible free enterprise.  Legal contracts must be honored, but there are ways - tough, political ways - to persuade people to waive their bonuses.  Most of these people want to continue working in the industry, after all. 

March 17, 2009