For the first time since last fall's election, Democrats and the Obama administration are backpedaling furiously on an issue easily understood by financially strapped taxpayers: $165 million in bonuses paid out at bailed-out AIG.
Republicans, struggling to regain their political footing, are content to let Democrats try to dig their way out of this mess on their own.
Professing shock at the bonus payments, Democrats have embarked on a hurry-up effort to impose what amounts to confiscatory taxes on the bonuses, a maneuver that almost surely will be tested in the courts.
Treasury Secretary Timothy Geithner enjoys President Barack Obama's confidence, according to the White House.
But the mood is less charitable among congressional Democrats. Republicans have made Geithner their top target, not surprising given Obama's continued high approval ratings.
"It's shocking that they would — the administration would come to us now and act surprised about these contracts," said Sen. Mitch McConnell, R-Ky., the Senate GOP leader. "This administration could have and should have ... prevented this from happening. They had a lot of leverage two weeks ago."
That would be when the Treasury Department decided to make an additional $30 billion available to American International Group Inc., the huge insurance conglomerate deemed too big to fail by two administrations.
Which goes to the crux of the Democrats' current political problem.
Gone are the days when they could merely bludgeon the Bush administration and promise to seek bipartisan solutions to the nation's economic problems.
Now, in control of the White House and Congress, they are struggling to come up with an explanation for what no one in either party seems moved to defend.
Senate Majority Leader Harry Reid, D-Nev., said AIG stands as a symbol of "greed and perhaps corruption."
Sen. Max Baucus, D-Mont., scoffed at AIG's claim that the money represents retention pay. "There are enough bright people in this country that would do the job for an honest salary, and enough honest taxpayers demanding that we put an end to this stuff. You can bet I'll make sure justice is served," he said.
But the bonus payments occurred on the Democrats' watch, and for Republicans, AIG seems politically providential.
Their overwhelming opposition to last month's stimulus bill appeared to be gaining little traction as Democrats showcase every shovelful of dirt that is turned — all in the name of economic recovery.
Criticism that Obama and Democrats are embarking on a new era of tax-and-spend is undercut by the lack of a budget alternative from Republicans — the party that presided over a historic run-up in the federal debt earlier this decade when it controlled both the White House and Congress.
Less than 100 days into the Obama administration, polls have brought little good news to Republicans.
While a recent Pew survey found some slippage in Obama's support, it also registered only 28 percent approval for the job being done by GOP congressional leaders, the lowest in nearly 14 years. And a separate survey by CNN and Opinion research Corp. put support for the president's handling of the economy at nearly 60 percent.
Against this backdrop, White House press secretary Robert Gibbs sought to explain AIG.
He told reporters that Geithner "last week engaged with the CEO of AIG to communicate what we thought were outrageous and unacceptable bonuses," and "received a commitment to lessen some of the bonuses for senior executives...."
Asked directly Obama is satisfied that he found out about the bonuses in a timely fashion, Gibbs said: "Yes, the president is satisfied."
The president "has complete confidence" in his Treasury secretary, Gibbs added, although Geithner's early tenure has been anything but smooth. The Cabinet official's introduction of a new plan to bail out the financial industry was widely panned, and his confirmation was held up earlier when it was disclosed he had paid $34,000 in back taxes.
Obama himself has been vocal on the need to do everything possible to recoup the money paid out in bonuses, and so far, no Democrats in Congress have tried to hold him to account.
But the Treasury Department isn't immune, even from Democrats.
"I'm outraged by this," said Baucus in a statement. "At one point the Treasury was in a position to stop these bonuses. Those were the terms of TARP, terms that I helped draft."
But talk of legislation only leads to more uncomfortable questions for Democrats.
Sen. Olympia Snowe, R-Maine, and Ron Wyden, D-Ore., won passage of a provision earlier this year that they said would have prevented the type of payments now at the center of a storm.
It was dropped without explanation in the final compromise on the economic stimulus measure, replaced by a less restrictive set of conditions backed by Sen. Christopher Dodd, D-Conn., and accepted by the White House.
"The president goes out and says this is not acceptable and then some backroom deal gets cut to let these things get paid out anyway," said Wyden.
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