This is a rush transcript of "Special Report With Bret Baier" from March 18, 2009. This copy may not be in its final form and may be updated.
BRET BAIER, HOST: Some breaking news from Connecticut Senator Chris Dodd. He is now saying that he was — in part &# 8212; responsible for some of the language that ended up in the stimulus bill that essentially protected the AIG bonuses that were eventually issued, the $165 million. He said that it was at the urging of the Treasury Department.
We have been trying to figure out this mystery of what happened in the conference committee of the stimulus bill as part of the reason of what Congress did or didn't do about these AIG bonuses.
We have the sound bite right now. Let's take a listen:
(BEGIN VIDEO CLIP)
SEN. CHRIS DODD, D-CONN.: As many know, the administration, among others, was not happy with the language and wanted modifications with it. They came to us, our staff, and asked for changes. And the changes at the time did not seem that obnoxious or onerous. None of us
— I certainly didn't have any idea about AIG.
(END VIDEO CLIP)
BAIER: That's not what he told us yesterday. Let's bring in our panel to try to straighten all this out. From New York is Kirsten Powers, columnist for The New York Post, here in Washington, Jeff Birnbaum, managing editor digital of The Washington Times; and syndicated columnist, Charles Krauthammer.
We're explaining this, it goes back to the stimulus bill, Jeff, it's complicated but all this hubbub about the AIG CEO testifying today could have been prevented by something in that stimulus bill.
JEFF BIRNBAUM, WASHINGTON TIMES: Well, that's right. There was language inserted, and we don't know by exactly who — that's the big mystery of today — protecting those bonuses basically, including in the language the February 11th date, which — an effective date — for legislation that would prevent bonuses going forward but anything before February 11th. That meant that those bonuses would be paid out.
And whoever put that language in, obviously knew that there were bonuses for AIG and that those needed to be protected or would be protected with that language.
I think it's clear that a Democrat did this. It was either a Democrat in the Obama administration or a Democrat in Congress, but that final bill was written entirely by the Democrats in charge here in Washington.
As a result, Republicans are up in arms about this, and the Democrats in Congress and in the administration are pointing fingers at each other trying to blame the other for what clearly was a very bad mistake.
BAIER: Kirsten, Senator Dodd is saying something different than what he said yesterday, it possible that the administration called him up and said you have to fall on this sword?
KIRSTEN POWERS, NEW YORK POST: I mean what I heard him saying more and I think what some of the Democrats were saying behind the scenes was a little bit pointing fingers at the Treasury Department and sort of putting the blame on them. That he wanted to sort of protect against this kind of thing happening, and that the Treasury Department was putting pressure on them.
There was also, as you know — and I'm sorry, my earpiece cut out, so I don't know what was just said before me, so maybe this was already said — but Senator Wyden and Olympia Snowe had also had a provision that would have capped bonuses at $100,000 and then tax anything above it. And that was stripped out and we still don't know who did that.
Fingers are being pointed at the administration, and specifically, Larry Summers and Tim Geithner. So I think that all roads seem to be leading back in that direction, that they felt that they didn't want to put any onerous restrictions on AIG or any of these financial institutions.
BAIER: So, Charles, go big picture for us here. How big of a problem is this for this administration?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, I must say I'm enjoying this as much as anyone, the Democrats shooting at each other after all of them had pretended that this provision was immaculately conceived. But the whole afternoon today, the morning and afternoon of the interrogation of the head of AIG was Congress at its absolute demagogic worst.
I mean, let me count the ways:
Here's a guy who comes out of retirement to work for a dollar a year, who is not even in AIG at the time of the takeover by the government, who's being attacked by members of Congress earning $175,000 a year, who have just received in January a raise of $4,700.
Secondly, the Democrats are the ones who passed the stimulus package, which had this provision in it. And they had told us that the stimulus was so important for saving the economy that it had to be rushed into law before Presidents' Day, of course, leaving no one with any time to read it. So now they wake up. They read the bill that they had passed and begin excoriating AIG and others.
And lastly, the money here involved in the scheme of things is absolutely trivial; it's $165 million. That's what C.C. Sebastian is getting from the Yankees for his left-handed changeup. If Bill Gates, out of the goodness of his heart were to pay the bonuses for 100 years, he would still have half his fortune left.
There is a trillion amount of money when our economy is on fire and when AIG is hemorrhaging billions. It's a distraction and the Democrats and Republicans in Congress are using it for political advantage, and nothing else.
BAIER: All right, panel. Stay with us. We're going to hit another topic momentarily but pleas go on-line with "Special Report" right after the end of tonight's broadcast.
As you know from last week, it is an interactive show. We take your questions, your comments. And we'll have more from the panel and others on some of the hottest political stories and we'll have reaction to your questions and comments.
You will definitely want to be a part of this. Link up to us at foxnews.com/sronline.
So with all of this going on in Washington, the president is getting out of town. He is going to California right now. A good idea? The panel weighs in next.
(BEGIN VIDEO CLIP)
WHITE HOUSE PRESS SECRETARY ROBERT GIBBS: We don't look at it as the process of demonstrating the president's sense of humor. We look at it as a way of discussing the economic situation that we find ourselves in.
(END VIDEO CLIP)
BAIER: The press secretary talking about the president's trip and eventual appearance on "The Tonight Show with Jay Leno." The president is out in California right now. In fact, we have a live shot of Costa Mesa, California, one of two town halls that the president will be taking part in over the next couple of days including that visit to "The Tonight Show" as well.
We're back with the panel.
Kirsten, is this the right tone, the right message to be sending in the middle of this economic crisis that we are facing?
POWERS: Yes, I actually think that it is. I think that what he is doing, he's trying to get out of town. He's trying to get out of this sort of hysteria that's happening right now in Washington over, as Charles has alluded to, this very tiny amount of money that has now turned into this massive, you know, just everybody is completely consumed that's all they want to talk about.
He wants to go out, get away from that, talk directly to the people. I know a lot of people think that going on "Jay Leno" is sort of beneath the president. I'm just not one of those people. I think it's a great way to communicate with the average Americans. And he's going to be doing I think more of a sort of attempt to speak directly to Americans.
He is having a primetime press conference on Tuesday; he is sitting down with "60 Minutes" this weekend. And I think that's what he needs to be doing.
BIRNBAUM: I think it's smart for the president to get out of town. It doesn't matter where he's going, because there's really a blood lust frenzy going on right now. Somebody or something is going to have to give to — something has to be sacrificed in order to get rid of what is really an enormous populist uprising against AIG and these bonuses.
I know that Charles and Kirsten believe that it's a small amount of money, but to a lot of Americans, this is a terrible insult to them.
BAIER: Jeff, let me just interrupt you there. The big question about all of that is when Secretary Geithner knew about it. They came out with a time line, the White House did, that said he knew about it midweek, but yet he was also the head of the New York Fed. And today we heard testimony from Liddy that the Fed knew about this from the very beginning.
BIRNBAUM: That's right, Bret. I think Geithner needs to say what he knew and when he knew it. And there's no doubt that his job security is really in question now, and there's no better proof of it than President Obama coming out first thing this morning and saying that he had complete confidence in him. That's in Washington a real signal that there's trouble ahead.
So Obama going out of town, talking to real folks is a good idea. It is a especially good idea that he didn't stay in town this weekend where he would normally have gone to the gridiron dinner, that's a white-tie dinner; that's one level above black-tie dinner where he would hang out with all the inside the Beltway swells, which is not a very good place for him to be this weekend. Being out of town is an excellent idea.
KRAUTHAMMER: Well, I know that human sacrifice is a common ritual in Washington, but I'm not sure that this what did he know it and when did he know it really is at Watergate level. I think it's a few notches below.
I think Geithner is working on — is preoccupied with trying to create a plan to take the toxic assets out of the banks and save the world financial system. And I think that's probably why he overlooked the politically potent issue of the bonuses.
In the scheme of things, it's very small. Of course, politically, it's large, and in fact, it may claim his head in the end, but it shouldn't.
He's got other stuff to do. He is the man in charge of Treasury. Our economy hinges on saving the credit system, and this is, in fact, a triviality, and somebody ought to say it, even if the president and the members of Congress can't.
We're not constrained. I'm not running for office. I think it ought to be said at least once.
BAIER: But as far as the tone, Charles, about going out west and...
KRAUTHAMMER: Well, Obama's modus operandi is when the going gets tough, he gets going. He gets out of town. The best thing he does is campaign, so that's what he wants to do. He's not apparently that good at governing. He is not a lot of experience. He never ran a candy store in the past and he's having a little stumbling trouble these days running his government.
But, you know, presidents who are good speakers have charisma and popular support, like Reagan, will go over the heads of Congress directly to the people when they are in trouble and need help. That's what he's doing. It's understandable. If I were his advisor, I would tell him to do it.
BAIER: Kirsten, last word here.
POWERS: I agree completely that that's what he needs to do. And he needs to just capitalize on his popularity and the fact that still, with all of this going on, he still has a lot of support among Americans.
And he just needs to speak to them.
BAIER: Real quick, around the horn. Jeff first, does Secretary Geithner stay on?
BIRNBAUM: I think he does. I think something else will be sacrificed.
In particular, there will be high taxation placed on these bonuses.
POWERS: I think he will stay on. That would be my prediction.
KRAUTHAMMER: He will make it. But we'll have a public hanging or two on Wall Street.
BAIER: That's it for the panel.
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