Senate Democratic leadership sources say that there are already internal discussions between Senate Majority Leader Harry Reid and some members of his inner circle about how to handle Sen. Chris Dodd and the growing concern that his personal finance and conflict of interest scandals will continue to grow.
“Right now, Dodd is the poster boy for Democratic politics,” says a leadership aide. “There are serious doubts that he should be allowed to continue in the Senate.”
Dodd at this writing trails former Republican congressman Rob Simmons by double digits in early polling for his 2010 reelection bid. Dodd’s special treatment for home refinancing, his purchase of an estate in Ireland, which also received favorable treatment from the financial sector, and his wife’s conflicts of interest with ties to failed insurer AIG, as well as Dodd’s role in allowing AIG executives to collect contracted bonuses, have made him a political target for Republicans across the country.
Dodd has refused to bend or apologize for his actions, and there is a growing sense among Democratic leaders that he should not be seeking reelection but instead should announce his intent to retire. “There are several congressional and state-level Democrats who could more readily challenge Simmons and win,” says a staffer for the Democratic Senatorial Campaign Committee. Recently, the DSCC launched an attack on Simmons, but at the same time, the staffer said, it was an attempt to measure just how much trouble Dodd was in: “If the messaging doesn’t work, we have a good idea that it isn’t so much Simmons as it is about Dodd himself. From there, who knows where this goes?”
AIG in a Hole
Some House Republicans are attempting to determine who or what entity may have started the run on AIG, the collapsed insurer, which last fall was the epicenter of the U.S. financial collapse. “There was an initial run on AIG that put it in a hole that it couldn’t climb out of,” says a Republican staffer on the House Financial Services Committee. “We are trying to pull the string to see where it leads.”
The run began because an entity inside AIG known as AIG Financial Products sold insurance protection to banks and brokers on more than $400 billion of mortgage collateralized debt obligations and other fixed income assets. The initial run on AIG, many believe, was caused by rumors that the firm could not meet the initial margin calls.
“It would be interesting to see who lit the fuse on the AIG run, and whether there were other intentions in starting the collapse,” says the aide, who would not go into greater detail. The assumption, say some congressional staffers, is that there were political motivations for pushing AIG over the edge, given the timing of the margin call.
Meet the Team
As expected, senior Obama adviser Valerie Jarrett is directing much of the political and “third party” outreach from the White House to such groups as MoveOn.org and Americans United for Change (AUFC), as well as the Democratic Nation al Committee.
Jarrett routinely holds meeting with leaders of those groups in offices outside the White House, and has been spotted meeting with officials from labor’s SEIU, among other Obama-backing entities.
But Jarrett isn’t pulling all the strings. Her chief of staff, African- Lithuanian-American Michael Strautmanis, a longtime aide to disgraced former Illinois Gov. Rod Blagojevich as well as an early organizer for the Obama campaign, is, according to White House sources, the key driver for AUFC outreach and activities.
“Michael is the one who passes along the polling data we have, and gives us the external polling data we get from other groups,” says one source. “Valerie isn’t making the day-to-day decisions; Michael is.”
Both Strautmanis and White House deputy chief of staff Jim Messina work closely with chief of staff Rahm Emanuel in coordinating the messaging and advocacy programming that were used to create the impression of support for the Obama budget.
A White House official with knowledge of the coordination plan says that Strautmanis, Messina, and Jarrett communicate routinely with about five different groups, all of which were integral to the Obama political machine last fall.
Americans United for Change is the key entity, however, as it is now fully integrated into the DNC. A number of AUFC officials, such as former AUFC president Brad Woodhouse, are now DNC employees, and AUFC has been leading the coordinated campaign efforts against Republican congressional leaders.
While President Barack Obama has publicly called off attacks against Sen. Evan Bayh and other moderate Democrats who raised doubts about the White House’s budget and stimulus package, he has privately told aides to keep up the pressure on Bayh’s Moderate Democrats Working Group.
“We’re not going to let this thing go,” says a White House aide. “Bayh is raising funds and seeking PAC underwriting for his organization. If that’s the kind of game he wants to play, to throw sand in the gears of our legislative efforts, then we have ways to complicate matters for him, too.”
Bayh has told colleagues that he hopes to have about 10 members in his working group, which will meet regularly. At one time Bayh was thought to be a possible Obama running mate or cabinet member. Now, he may be setting himself up to be the president’s most visible Democratic critic.
House Republican whip Eric Cantor has become the man conservatives love and love to hate, depending on the day of the week. Cantor angered conservatives recently by voting “present” on legislation related to limiting executive bonuses.
He claimed that he did so not because he didn’t want to vote against the bill, but because his wife is an executive of a bank that received TARP bailout money. Now Democrats are attempting to determine if Cantor’s wife received a bonus for her work in the 2008 fiscal year.
Cantor has been walking a fine line on such issues ever since he persuaded a number of fellow House Republicans to vote for the Bush administration’s initial financial bailout plan, when many wanted to vote on principle against it.
Department of Energy secretary Steven Chu is not making a positive impression on his staff inside the department. Chu arrived with a reputation for being brusque and acting like he was the “smartest guy in the room,” according to current career Energy staffers, and he’s done nothing to soften that impression. “He may be the smartest guy, but he’s also the most obnoxious,” says one staffer.
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