Political Ramifications of AIG Bonuses for Obama Administration

President Obama has good reason to be indignant about the bonuses insurance giant AIG has paid at the same time it has received billions in rescue loans from the government.

The public never much liked these corporate bailouts and the AIG bonuses will make people like them even less. This is a problem for AIG, but it is a big problem for the president. He has already added substantially to the bailout money previously provided AIG and others and will almost certainly need to add more to address the continuing credit crisis.

This is one reason the administration appears so hesitant to put forth a plan to fix the financial sector. The amount of money needed to absorb the bad assets on the books of financial institutions is huge and it's not as if the administration has any money to spare.

It is already spending in excess of a trillion dollars on so-called stimulus and hundreds of millions more in its sweeping budget for next year, not to mention the earmark-laden nearly half a trillion to simply get the government through the rest of this year. Congressional Democrats have been for a lot of this spending, even though polls show it has alarmed the public.

But both the public and Congress will certainly choke on spending billions more to save the financial sector. Nearly everyone agrees, however, that until that job is done, the economy will not recover.