No sense arguing with pitchfork carriers

3/22/09

Everyone loves a scapegoat. And Chris Dodd is a convenient target.

But his current controversy puts Countrywide mortgages and his 2007 Iowa move to shame. He, along with some rich, previously anonymous AIG executives who live in Fairfield County, is at the top of the nation’s enemies list for, so the charges go, letting the people who ruined the economy collect huge bonuses, paid for by the government, and then lying about it. Off with his head.

What he’s actually guilty of can be limited to a poor explanation of his actions. But that hasn’t stopped the mob.

It started more than a month ago when the Senate passed the Obama administration’s stimulus package. As The Wall Street Journal reported on Feb. 14, "The giant stimulus package that cleared Congress Friday includes a last-minute addition that restricts bonuses for top earners at firms receiving federal cash — including those that already received it — more severely than the Obama administration’s previous pay limits."

That last-minute addition — to retroactively limit executive bonuses at companies the government bailed out — was put into the Senate version of the bill by Chris Dodd, the guy we all hate so much.

But that addition didn’t make the final version of the bill. Once it went into the House-Senate conference, where they reconcile each body’s version to create a common bill to send to the president, its effect was nullified. "The administration is concerned the rules will prompt a wave of banks to return the government’s money and forgo future assistance, undermining the aid program’s effectiveness," the Journal reported at the time. "Both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, had called Sen. Dodd and asked him to reconsider."

The administration thought the provision would backfire. The president was not going to sign it with the retroactive limit on bonuses. So, at the administration’s insistence, the final version of the bill allowed for AIG, and anyone else covered in the bailouts, to pay their agreed-upon bonuses. Which they did.

(Incidentally, the argument that these bonuses represent sacrosanct "signed contracts" that must be honored lest we tumble into a socialist quagmire is ridiculous. When it’s workers, not executives, on the other end, companies break contracts all the time. Why is it every union from here to Alaska has been told to renegotiate its terms or else? Aren’t those contracts "sacred"?)

This has been part of a long-term trend. Since last year, when the economy went into free fall, at least half the political world has designated as villains Dodd and his House counterpart, Barney Frank. Those two, the argument goes, are to blame for the recession because they ran their banking committees for two whole years before the world collapsed.

The Obama administration, especially its Treasury Department, simply picked up this thread. When the outcry over the AIG bonuses exploded, the blame was put on someone already on the receiving end of misplaced outrage. Dodd had moved to limit the bonuses, but instead was blamed for enabling them. Maybe there’s some nefarious reason why he would have inserted a strict pay-limiting amendment only to weaken it, with no outside pressure, later in the process. But no one has come up with anything.

Coming so soon after his benefits on a pair of mortgage deals and the grumbling about his missed service while he ran for president, these incidents are taking a real toll. Republicans desperate to find Democrats to blame for the recession smell blood.

And in the past week, Dodd has been less than clear about the time frame and sequence of his actions. He’s been reluctant to point fingers at specific administration officials. But muddled explanations don’t justify outrage, and the legislative record is clear. You don’t need to think Dodd is a saint to think he’s being unfairly blamed here.

Hugh S. Bailey is assistant editorial page editor at the Connecticut Post. He can be reached at 330-6233 or at hbailey@ctpost.com.