Bailout backlash. It's the issue du jour in Washington.

To date, the administration's approach to handling it consists of carefully stage-managed public displays of righteous indignation. Monday, Austan Goolsbee asserted AIG should have gotten "the Nobel Prize for Evil." Ooomph. Very Cheney-esque. But the administration should beware what happens if as part of their new line of awards, those wry Swedes start giving out the Nobel Prize for Fecklessness or the Nobel Prize for When-You're-President-No-Matter-Who-Broke-It-You Own-It. Remember, AIG came to the U.S. government because they had already screwed up big time. That should have set off some alarm bells. The savants who were running AIG may have been clueless, but who was, or rather who was not, looking out for the United States? Who is doing it now on all the new deals that are being cut? 

I worry that despite all evidence to the contrary, somewhere out there is a smart, crafty Republican of the Newt Gingrich variety. He is watching the nation build up a head of angry steam over the AIG bonuses and he is realizing that is a potential bonanza from a political perspective. Oh sure, the Bush administration deserves much of the credit for creating the current crisis. But this Rahm-Emanuel-with-guns (scary thought) will know that with every passing day it becomes more Obama's crisis and what's more, the pre-inauguration involvement of some key Obama players creates a special opportunity. I am sorry to say this Secretary Geithner, but those red concentric circles on your chest are not the telltale warning signs of Lyme Disease. That's a target. 

What this unrepentantly partisan Republican and his cronies are going to do is to use every single apparent, possible or even real abuse of U.S. taxpayer dollars and hang it on as many Dems as possible beginning with Geithner. How involved, the attackers will ask, was he in the AIG deal? Did he know about bonus arrangements before they came to light? Did he fail to ask questions about such arrangements? What about the multi-billion dollar tranches passing through AIG to foreign financial institutions, some even now owned by European governments? Did he realize billions in U.S. taxpayer dollars were going to bailout foreign banks and shareholders? Did he consider whether a better deal could have been struck that did not make these greedy, reckless risk-takers whole? Why was he so cavalier with your money and mine? And why did he not spot the flaws in the system earlier? 

AIG is huge but it will only be the tip of iceberg. Every other bailout dollar will be watched. Every party that takes place on our tab, every luxury perk offered to senior executives, every penny wasted will produce attack blog posts, attack articles, attack ads, and, wherever possible, hearings. Any undertaking of the scope of the stimulus and the bailouts produced by this government (and let's remember the U.S. government has never in its history undertaken any spending programs of this size, especially in so short a period of time) will produce mistakes, waste, and corruption. It won't matter which it is, congressional campaigns will turn on whether candidates voted for or against funds that were wasted, whether they did their due diligence. Barring other catastrophes, my worry is that the 2010 mid-term elections could very well be defined by a systematic campaign to define key Democrats as unworthy stewards of the national treasury.

Democratic stalwarts who had oversight functions that they did not pursue with sufficient avidity will start losing -- first in primaries to other "reform" Democrats and if not then, to Republicans. Wouldn't you love to run against Chuck Schumer or Chris Dodd in the current environment? Run ads about their donations from Wall Street and how many of them tanked or took advantage of the United States or took advantage of the kindness of their apparently bought and paid for Congressional overseers? It would be...it will be...like shooting fish in a barrel. 

It will, of course, be a great irony but the rebirth of the Republican Party will be fueled by them blowing the whistle on a crisis of their own creation (irony doubled as they also attack the Democrats for overspending and fiscal irresponsibility, two subjects on which they wrote the book...entirely in red ink). And it will happen. Even though right now it is hard to imagine who will emerge from the current dung heap of Republican hacks, someone will, perhaps an entire generation of squeaky-clean, fiscally responsible, good government Republicans? Doubt it? Having trouble imagining it? It's a tradition in the Republican Party -- Theodore Roosevelt comes to mind -- but more importantly, it is what political market forces will demand. 

There will be casualties in the Obama administration. Count on it. Geithner is the most likely target but in the immortal expression of Rhys Ifans in the understandably under-rated The Replacements, he's "wiry." (Which is to say wily, tough, and a survivor.) So if they don't get him, they'll put him on the defensive and thereafter, the attackers will be opportunistic. And there will be attempts to adjust. But there is only one way to really offset this. Strike first. Appoint, as suggested earlier, an inspector general for the bailouts.  Not some guy in the Interior Department who will plod away. Appoint someone in the vein of Patrick Fitzgerald, the pre-transvestite Rudy Giuliani, or the pre-whore Eliot Spitzer. Find some former U.S. attorney for the Second District or some former Deputy Attorney General or judge who will strike fear into the hearts of your own party. Demand that the Democratic leadership on the Hill be the ones calling the hearings into how taxpayer funds were used and require that they are non-partisan in their approach to subpoenas or investigations. Get out in front of it...or be buried beneath it.

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