When President Barack Obama recently submitted his budget proposal to Congress, he also inserted a contingency for another $750 billion for more bailout funds. Had Obama stayed on that path, Congress would have been required to debate and to consider approving that additional sum. But those plans have now gone down the tubes.
The Washington anger over AIG bonuses has now spread throughout the country like a plague. This has made it functionally impossible for Obama to publicly secure a Congressional stamp of approval for the hundreds of billions of dollars of additional money that his administration needs to stimulate the purchase of currently unmarketable asset-backed securities. Should he attempt to obtain Congressional approval now, he will incite even greater outrage among Americans.
The administration’s solution is crafty: Make an end run around Congress by devising a plan which can be implemented through the executive branch. This removes the arrangement from public debate and the need for approval by the legislative branch.
Congress thus gets handed its own special bonus by being absolved of responsibility. No more personal embarrassment for the likes of Nancy Pelosi, Harry Reid, Chris Dodd, Barney Frank, Charles Rangel, etc.
President Obama’s revised plan will rely heavily on public-private partnerships which will require the full voluntary participation of Wall Street hedge funds, pension funds and insurance companies. Therefore, look for the Obama administration to tone down its rhetoric about corporate bonuses.
Why? Because the managers of Wall Street firms which will be requested to participate in the program will pick up their marbles and leave the playground, if their yearly bonus checks or alternate forms of compensation are at risk. To succeed with his new plan, President Obama needs Wall Street, but he can’t go public with that admission. Ironic, isn’t it?
NEXT: The Obama administration’s new stimulus plan.
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