See the report by AC360°’s Joe Johns and Steve Turnham on AIG tonight, the first in our new series “10 Most Wanted: Culprits of the Collapse.”

Former CEO of AIG Martin Sullivan, center, waits to testify before the House Oversight and Government Reform Committee on Tuesday.

Steve Turnham
AC360° Producer

Remember all those stories about welfare moms driving cadillacs? They were 99% myth. Here’s one that isn’t. The insurance giant AIG takes 85 billion in taxpayer money, throws a nice little 400,000 dollar pedicure party for it’s top earners, then comes back for another 37 billion welfare check.

AIG has an explanation. And you’ll hear it tonight on AC360° as we begin our countrywide hunt for the top ten most wanted culprits of the collapse.

Steve Turnham
AC360° Producer

The bailout legislation passed by Congress today added $100 billion in tax breaks to the Wall Street rescue bill, the so-called “sweeteners.” The presumption was all that extra cash would tempt House members who voted against the first version to switch and pass the new version, and it did. But there was more to it than that.

The tax breaks were actually part of a prior bill that had support in the Senate, but was hung up in the House because budget hawks were insisting it be paid for without extra deficit spending.

In attaching the measure, Senate Majority Leader Harry Reid basically dared the House to accept the tax breaks, or take the blame for bringing down the economic rescue package. It’s a classic power play, and one that angered some House members.

Why would Senator Reid risk the economic rescue package by muddying it up with giveaways? The devil is in the details: the measure would give money to states with a lot of federal land — which doesn’t bring states any tax dollars — to pay for schools and government. It also would allow people in states without income taxes to deduct what they pay in sales taxes from their federal taxes.

Reid’s home state of Nevada will benefit from both - big time. It has a lot of federal land. It has no state income tax. Reid runs the Senate. Reid is up for reelection in 2010.

Some House members will benefit from the added $100 billion benefit; some are angry about it. And some fit both categories.

“I hate this like poison,” conservative Democrat Shelley Berkeley told the Las Vegas Sun, “but I think relief is necessary.” Berkeley is from Nevada.

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Steve Turnham
AC360 producer

If you want to know whether a bailout deal is possible, watch this space: www.house.gov/hensarling/rsc/.

That’s the URL for the House Republican Study Group, a group of 100 conservative House members leading the resistance to the Bush bailout. If they’re not on board, House Speaker Nancy Pelosi is unlikely to push a bailout through, even if she can muster enough democratic and moderate republican votes. After all, why give 100 House republicans a potent anti-Wall Street message to go home and beat you up over?

House conservatives are willing to do a deal, but only if it does not involve the actual government purchase of bad debt. Their spiritual leader, former House Speaker Newt Gingrich, put out what at first glance seemed to be a ringing endorsement of John McCain’s bailout plan bailout effort Wednedsay.

Gingrich called McCain’s move “the greatest single act of responsibility ever taken by a presidential candidate and rivals President Eisenhower saying, ‘I will go to Korea.’” But read the fine print, because there were some big IFs. IF, wrote Gingrich, the bill includes an economic growth component (tax cuts?), and energy solution (drilling?), and a “work-out” not a bail out for the financial sector.

The first two are killers: democrats are not going to ram through a package that gives the GOP what it wants just to get a bill passed. And what does a “work out” mean? Well we know what it doesn’t mean; it doesn’t mean the US government lifting the burden of bad decisions off of Wall Street and putting it onto the taxpayer, even if the White House says the taxpayer could actually profit in the long run.

As Hensarling himself put it Wednesday:

“I can put a gun to my neighbors head, take his college fund for his children, lace a bet on a roulette table in Las Vegas, and maybe, maybe, I’ll triple his money. But … that is not a risk that my neighbor voluntarily undertook. This is not a risk that the taxpayer wishes to voluntarily undertake.”

Editor’s Note:
We are devoting many posts today to the anniversary of 9/11, with first-hand accounts, insight, and commentary dedicated to that day seven years ago that changed our world.
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An airplane flies overhead toward Washington's Ronald Reagan National Airport as members of a Military honor guard stand at attention for the unveiling of the benches at the Pentagon Memorial, Thursday, Sept. 11,2008

Steve Turnham
CNN Producer

On 9/11 I was the Senate producer for CNN. By the time I got to work the House and Senate had already been evacuated. I ended up on the roof of the CNN bureau, with a veteran cameraman, pointing the lens at the sky, waiting for a plane to come barreling down the Mall and into the US Capitol.

By then the Pentagon had already been hit, and there was smoke drifting across the city. But no one was quite sure yet what had happened. Rumors were flying that a plane was heading into DC, to the White House maybe, or the Capitol. As it turned out that plane was the one that crashed in Pennsylvania, but in those early hours, nothing was certain.

Another network reported as fact that a plane was flying down the Potomac River towards us (CNN did not report this). We tried to get ready for anything. What if it hit the Capitol and the explosion reached us a quarter mile away? What if it missed, and hit closer to us? We decided if we did see a plane, we’d shoot as long as possible, then leave the live shot rolling, and duck behind a wall.

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