Last night Sen. Chris Dodd admitted on CNN that he was responsible, under administration pressure, for language in the final version of the American Recovery and Reinvestment Act that explicitly permitted the types of retroactive bonuses that A.I.G. is under fire for doling out. The tale of this obscure amendment shows how important it is that Congress provide time for the public to Read the Bill—remember, the 1,000+ page stimulus bill was available to the public for only 13 hours before Congress began debating it, most of that time during the wee hours of the night. If the legislation had been available longer, perhaps this provision would have shriveled in the sunlight.
On February 4, 2009, the Senate approved, by voice vote, an amendment proposed by Sen. Dodd to restrict executive compensation for firms receiving TARP funds. Dodd's amendment wasn't the most far reaching executive compensation amendment offered during debate, but it did seek to restrict excessive compensation retroactively--the issue raised by the A.I.G. bonuses-- something fiercely opposed by the officials at the Treasury Department and in the Obama Administration. President Obama had earlier released his own set of executive compensation restrictions which did not include retroactivity or the "clawback" provisions in Dodd's amendment.
One week later and the bill was in conference committee with leaders of the House and Senate, in talks with Obama administration officials, hashing out details for the final bill draft. The administration, including top economic officials Tim Geithner and Larry Summers, remained opposed to the executive compensations restrictions and sought to alter, or eliminate, them. When the final conference report was released on February 13, Dodd's amendment was altered significantly, including the insertion of a provision provided retroactive protection to all bonuses agreed to prior to February 11, 2009. Contemporary news accounts state that the administration was lobbying against the provision and that they won numerous concessions. The controversial provision was in direct contradiction to Dodd's original amendment and ultimately provided the justification for approving the ballyhooed A.I.G. bonuses.
On March 17, Dodd refused to acknowledge any part in inserting the retroactive bonus immunity provision. One day later, while dodging questions about who asked him to change the amendment, he admitted that, under pressure, he agreed to changes to the amendment. The text is as follows:
BLITZER: What I hear you saying is that, you personally, you did this in order -- at the request of officials at the Treasury Department, Timothy Geithner, among others. DODD: Well, I didn't say who it was. But just say this, I wouldn't have modified my own amendment at my own insistence. I mean, I spent a long time to having people try to be -- change it. And obviously they came. And the alternative was losing the amendment. And I didn't think we should do that at all. BLITZER: Who asked you at the Treasury Department to do it? DODD: Well, they were people, obviously, coming and negotiating with the staffs back and forth. And I don't know their names specifically, it was at a staff level, people were talking about it. BLITZER: So it -- but it wasn't just your members of your own staff at the Senate Banking Committee who did this, you personally knew about it at the time, is that right? DODD: No, I didn't know the exact details. I knew they were coming with modifications to it, and whether or not we'd accept some.
Later on March 18, the Politico reported that a White House official acknowledged that, "Treasury told Congressional aides that trying to place limits on contracts already signed would create legal problems and could lead to lawsuits against the government."
There are so many things wrong with this situation it is hard to even start. First, Dodd apparently is saying that he didn't even know what the changes were to his amendment. Could there be any better case for requiring more time for lawmakers to read the bill? If he did know what the changes were, or even still if he didn't, it is the legislative branch's responsibility to write the laws. Responsibility falls on Congress for agreeing to the insertion of the retroactive bonus immunity even though the administration was leaning on them, and they should own up. Second, the closed conference committee system is a fraud and a threat to decent legislation. Technically, conference committee reports are supposed to be made publicly available for 48 hours before consideration, but that rule is rarely enforced. In 2006, the Democratic Party ran on making conference committees transparent and requiring 24 hours of public availability before consideration for all reports. That doesn't appear to be happening, and we're seeing the results.
To further show that conference committees cause undue, secret distortion to bills, we can take another example that is not the Dodd amendment, as it wasn't the only amendment changed in the conference committee. Another executive compensation amendment, sponsored by Sen. Ron Wyden and Sen. Olympia Snowe, was completely stripped from the bill in conference committee. The Wyden-Snowe amendment went further than Dodd's amendment in requiring "bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent." Upon seeing the conference report, Wyden saw that his amendment, which was previously agreed to by the whole Senate, was stripped from the bill. No one consulted him, as they consulted Dodd. The fate of the Wyden-Snowe amendment also shows that the administration was the one seeking to protect executive compensation. Wyden told the Huffington Post, "I pulled out all the stops ... If the White House economic team had made it clear that this was important, this provision would never have been removed. I don't believe the president has been well-served on the bonus issue by his economic team."
As Wyden says, "This lack of transparency -- and the lack of accountability that results -- is one of the most significant threats to our democracy." The first thing we can do is make sure that all lawmakers, staff, and citizens have at least 72 hours to read and review all versions of legislation. To stop these loopholes and last minute deletions, we need to mandate more sunlight. To help make that happen, join the Read the Bill campaign.