Fueled by the furor over AIG bonuses, the first calls have begun for beleaguered Treasury Secretary Timothy Geithner to resign — forcing President Obama to divert attention from the nation’s economic ills to defend the No. 1 official responsible for healing them.
Two key GOP congressmen called for Geithner’s resignation Wednesday after offering a blistering critique of a series of missteps leading up to his handling of the controversial insurance giant’s executive bonuses.
“Quite simply, the Timothy Geithner experience has been a disaster,” Rep. Connie Mack, R-Fla., said in a statement. “The Treasury Department is in disarray.”
Mack was joined later in the day by Rep. Darrell Issa, R-Calif. A terse message on Issa’s Twitter page announced that he is “calling on Sec. Geithner to resign!”
"Secretary Geithner either didn't know about the bonuses, and was grossly negligent, or he did know and failed to bring this to the president's attention," Issa, the top Republican on the House Government Reform Committee, continued in a statement released by his office. "Either way, the end result has been a significant waste of taxpayer dollars and he should take immediate responsibility and resign."
Obama, preparing for his appearance on “The Tonight Show With Jay Leno” during a trip to tout his economic plans in California, seemed blindsided by the collapse in support for the man once considered essential to reviving the economy.
“I have complete confidence in Tim Geithner and my entire economic team,” Obama said Wednesday during a White House appearance, adding that Geithner “is making all the right moves.”
Obama also took a thinly veiled shot at conservatives, saying some of those “feigning outrage” about the controversial AIG bonuses previously urged the government to avoid meddling in the free market.
House Minority Leader John Boehner, R-Ohio, stopped just short of joining their calls, telling a radio interviewer that Geithner is "on thin ice." He said the administration needs to provide more details of "what the administration knew and when they knew it."
Several Democrats, while continuing to stand behind Geithner publicly, are serving notice that their patience has limits.
Asked if he supports Geithner, Rep. Michael Capuano, D-Mass., told ABC News: "At the moment, yeah. I mean, I have questions like anybody else, but let's be serious. He's still new on the job, he hasn't been able to get anybody else appointed or actually confirmed by the Senate. So, I think it's a little too early to pass that judgment."
Rep. Paul Hodes, D-N.H., who serves with Capuano on the House Financial Service Committee, offered similarly tepid support: "I think Secretary Geithner is doing generally a good job, and I'm hoping that he's learning quickly how difficult the job he faces is."
They join a growing number of Democrats who are voicing concerns. Sen. Ron Wyden, D-Ore., is complaining that Obama's economic team is sending mixed messages.
"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," Wyden told the AP, referring to the AIG mess in which, somehow, $167 million in bonuses went to executives at a company being bailed out to the tune of $170 billion. "They need to put this to bed once and for all."
Whether Geithner can survive has become an open topic of discussion among Beltway insiders.
Longtime business writer John Berlau, director of the Center for Investors and Entrepreneurs at Competitive Enterprise Institute, tells Newsmax that “there’s a lot of buyer’s remorse in Congress right now” over the confirmation of Geithner to run Treasury.
Whether Geithner can hold on, Berlau predicts, will hinge on one thing: Whether the stock market continues its recent rally.
“I’ll give him a month,” Berlau says. “If the Dow is close to 8,000, he survives. If it’s closer to 7,000, or below 7,000, he’s gone.”
As long as Geithner has Obama’s support, he will get opportunities to reverse his slide. And best-selling author and Newsmax commentator Dick Morris thinks Obama’s image would take too big to jettison Geithner.
“I think Geithner, like the banks he bails out, is too big to fail. It would be a terribly costly admission by Obama to fire him,” Morris tells Newsmax.
Geithner’s tenure has been plagued from the outset by a series of mishaps. Obama remarked Geithner has “been played a bad hand.” But some pundits see the wounds as largely self-inflicted. Among them: Geithner had to pay up on $34,000 in back taxes shortly before taking charge of the department that oversees the IRS. Geithner ruffled international feathers prior to his confirmation hearings by saying Obama believes China has been “manipulating” its currency. Beijing reacted angrily, and the White House later clarified that no official determination of manipulation had been made. The rapid drop in equity markets following the release of Geithner’s bank rescue plan was largely attributed to disappointment over specifics in his plan. Columnist and TV host Larry Kudlow remarked: “Following the controversy over his late payment of taxes, this bank-plan blunder could be another nail in his coffin. Apparently, Tim Geithner is not yet ready for prime time.”During Senate hearings last week on the president’s proposed budget, senators took Geithner to task for vastly expanding the national debt. Two prospects in line to serve as Geithner’s top assistant have withdrawn their names from the appointment process. Geithner and the White House have been unable to fill several key executive vacancies at Treasury. A recent AFP report described Geithner as “practically alone on the job, working night and day to cope with the worst economic downturn in decades.” Former Fed chairman Paul Volcker commented: “He shouldn’t be sitting there alone … it really is an unfortunate situation.” Economists surveyed for a Wall Street Journal forecast recently gave the Obama economic team dreadful marks for effectiveness. About 50 economists gave Geithner, the former head of the New York Federal Reserve Bank, an average performance grade of 51 out of 100.
Whether Obama’s endorsement can stem the momentum that appears to be building against Geithner remains to be seen. One hopeful sign for the administration: Sen. John McCain and Sen. Joe Lieberman both took a more moderate tact Wednesday.
Lieberman, apparently referring to calls for Geithner’s resignation, told RollCall.com: “I don’t think that’s the answer here. I think there’s a way to deal with the situation.”
Geithner’s shaky status appears to have extended beyond the marble halls of Congress and into the realm of pop culture, however. A recent Saturday Night Live skit featured a Geithner impersonator offering $420 billion dollars to anyone calling a toll-free hotline with an answer to the nation’s banking crisis.
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