Obama To Visit Calif. Takes AIG Outrage With Him

President Obama on Wednesday travels to California, where he plans to promote his economic agenda. But he's not likely to escape the question dogging his Administration back in Washington: How it allowed the large insurance company AIG to pay big bonuses, while at the same time it was receiving taxpayer bailout money.

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It's MORNING EDITION from NPR News. Good morning, I'm Steve Inskeep.

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And I'm Renee Montagne. President Obama travels to California today for a series of campaign-style town hall meetings over the next couple of days, plus an appearance on the Jay Leno show. The president, in all those venues, will be promoting his economic agenda while also answering questions about jobs and home foreclosures. But he's not likely to escape the question dogging his administration back in Washington D.C. - how it allowed the AIG insurance company to pay big bonuses, millions and millions in bonuses, at the same time that AIG was being propped up by taxpayer money? NPR's Scott Horsley reports.

SCOTT HORSLEY: White House spokesman Robert Gibbs was on the defensive about the AIG bonuses from the get-go yesterday. And many of the questions during Gibbs' daily briefing, like this one from ABC's Jake Tapper, followed the classic Washington formula. What did the president know and when did he know it?

Mr. JAKE TAPPER (ABC News): Can you walk us through what members of your administration learned about the bonuses and when they learned about it?

Mr. ROBERT GIBBS (White House Press Secretary): I don't have a particular tick-tock in front of me.

HORSLEY: That tick-tock could end with alarm bells for the administration, which extended another $30 billion lifeline to AIG less than two weeks ago, without recognizing the PR firestorm the bonuses would create. AIG paid what it called retention bonuses worth $165 million, including six million to one individual. On Monday, the president denounced the bonuses and ordered his aides to explore every legal option for recovering the money. Those legal options may be limited, but the president's outrage serves a political purpose. He gets it, Gibbs says.

Mr. GIBBS: The president understands that the taxpayers have entrusted to him and to lawmakers in this town their hard-earned tax dollars that are being used to stabilize our financial system and they understand the outrage when you hear about and read stories like this.

HORSLEY: Pollster Andy Kohut of the Pew Research Center says even before the AIG bonuses became public, many Americans were unhappy with the government's efforts to bail out the financial system. Kohut says million dollar payouts to the very people who caused the problem make a bitter pill that much harder to swallow.

Mr. ANDY KOHUT (Pew Research Center): We see a bit of a populist backlash. Even many of the people who favor the bailout say they're angry about it.

HORSLEY: And Kohut says unless Mr. Obama is careful, that anger could rub off on him.

Mr. KOHUT: After a while, the president, even if things began before his taking office, begins to own the policies of the government. I mean I think that's one of the reasons why, you know, the White House was so hardened(ph). They can't be on the wrong side of this without being affected by it.

HORSLEY: So was the president blindsided by the bonuses, reporters wanted to know. Did Treasury Secretary Timothy Geithner drop the ball? Gibbs said the president was not blindsided and he defended Geithner for at least trying to block the payments.

Mr. GIBBS: The president has complete confidence. I think the secretary of treasury took extraordinary steps based on contracts that were in existence in April of last year in order to do all that he could to protect the taxpayer.

HORSLEY: Geithner is the one who will have to make the case to Congress if additional money is needed to shore up the financial system. He is also a key player in the administration's effort to draft new financial regulations. Gibbs says the case of AIG just illustrates why those updated rules are important.

Mr. GIBBS: So that we're not in this position again, so that this country doesn't find itself repeating this situation, that we put in place strong rules and regulations and give this administration and any administration moving forward the tools to resolve these highly complex situations in a way that most protects the taxpayer.

HORSLEY: President Obama will be making that case to the public this week during town hall meetings in California. He's also planning to appear on "The Tonight Show" with Jay Leno. Mr. Obama will likely have to sit through a few AIG jokes, courtesy of his host, and he'll need some good lines of his own, although for the president the bonuses are no laughing matter.

Scott Horsley, NPR News, Washington.

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