Freedom and Liberty
The Cato Institute takes a look at what election law and the Federal Election Commission (FEC) are doing to free speech in the United States by examining Citizens United v. FEC, which I previously wrote about here.
One of the things I try to do is take a look at stories and decide whether or not there’s enough there to blog about it. And part of that has to do with corroboration. When I first saw the story about the Obama White House allegedly threatening a Chrysler stakeholder during negotiations that eventually broke down, I wondered if perhaps that particular person might have been a little over sensitive or misinterpreted the situation. But it was interesting and something worth watching.
Today comes some corroboration making this a good blog story. Although the story uses anonymous sources, it uses multiple sources, and the reason for the anonymity should be obvious.
Although the focus has so been on allegations that the White House threatened Perella Weinberg, sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.
The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking “end justifies the means” group they have ever encountered. Another characterized Obama was “the most dangerous smooth talker on the planet- and I knew Kissinger.” Both were voters for Obama in the last election.
One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.
The White House has denied the allegation that it threatened Perella Weinberg.
Is this true? Well, at this point, it is more true than it was when Perella Weinberg was the only one reporting it.
Is this good? No. If true, this demonstrates an abuse of power that has no place in government at any level. While we all understand politics isn’t bean-bag, threats to use political power (not legal power, but the power of the bully pulpit and vilification) in this manner are simply unacceptable.
Again, the more I monitor this and the more I read, the more I believe this may have happened. I’d like to see the anonymous sources step up and identify themselves. Yeah, I know it takes a certain level of courage, but this is one of those “nip it in the bud” moments.
And I’d expect the left to be just as loud in its denunciation of this sort of abuse of power as they were the last 8 years when executive power abuse was a focus of their outrage with the Bush administration.
I assume the reason for their outrage was the alleged abuse, not the politics of the abuser.
It’s rare that I quit reading through a comment section because I happen upon what’s surely the best comment. However, this comment to Capt. Ed’s post about the Obama administration’s thuggish tactics in the Chrysler negotiations sums everything up perfectly:
“I did not have knowledgeable relations with it, that Constitution.”
There’s some interesting stuff out there to read about the Chrysler bankruptcy, like people asking “why wasn’t this done in the beginning”?
Simple answer – in the beginning there was no way to secure the UAW a majority stake in the company. Now, as Felix Salmon points out, that’s been accomplished:
The broad outlines of a deal are already clear: Fiat will take a 35% stake in the company and manage it; the UAW will have a 55% stake; and all the government’s TARP funds will be converted into a 10% stake. Present-day creditors do not get equity but rather get cash; the sticking point is exactly how much cash they will get. And of course present-day shareholders — Cerberus and Daimler — are wiped out, and top management will be replaced.
Of course the reason Chrysler is headed into bankruptcy is because all of its bondholders weren’t satisfied with the deal offered through taxpayers money. As you might imagine, Think Progress has the “progressive” spin on the situation:
As Bloomberg reported, “Obama’s team had first offered secured lenders $2 billion for their $6.9 billion in loans, and then raised the offer to $2.25 billion. In a game of chicken, the holdouts asked for $2.5 billion, and Obama’s patience ran out.” Steven Pearlstein put these numbers into perspective:
What you need to know about these vultures is that their idea of fairness is throwing 100,000 people out of work and denying retirees their pensions and their health benefits just so they can liquidate the company and maybe squeeze an extra 15 cents on the dollar from their Chrysler debt. Of course, to get that extra 15 cents, the hedge funds would probably have to fork over a penny or two to pay the army of $700-an-hour lawyers needed to spend two years working it through the bankruptcy process.
The greed factor here is really appalling, but bad intentions can sometimes produce a good result.
The greed factor here certainly is appalling, but not on the part of the group Think Progress would like us to believe is the problem. I mean, how dare secured lenders ask for more money than a paltry 30% of what they lent Chrysler? In the new world of what’s fair, apparently asking for 30% is unfair and greedy. And frankly with an administration which has tossed trillions around like they were beads at Mardi Gras, it seems that somehow $250 million more was just a “bridge too far” when it came to keeping the deal together.
More importantly, what in the hell is the President of the United States doing involved in this sort of process to begin with? Oh, wait, the UAW gets 55% ownership?
All of this is necessary but not sufficient for Chrysler to have any hope of a long-term future. One of the more interesting things going forward will be how Chrysler manages to turn itself into a smaller, nimbler, change-oriented company while being majority owned by the UAW — which is nobody’s idea of a change agent. In general, if you need a dose of creative destruction, big unions are not the place to look.
You think? Another wonderful deal put together by the folks who want to run your health care. And yes, I know this isn’t perfectly analogous to the British Leyland situation, but it certainly has some striking similarities. A labor union will most likely have to decide between it’s previous decades of focus and producing cars that people want and can afford. And government involved in the deal up to its armpits. In case you missed it, the government will appoint four of the nine member board and the Canadian government will appoint one. Fiat is essentially a management entity with only 3 on the board and a 35% stake. And while the UAW will only have one seat, it will be a seat representing 55% ownership.
Yeah, nothing can go wrong with that.
An moment of sanity prevailed in the Senate today:
For the second time in two years, a provision to allow bankruptcy judges to modify mortgages died in the Senate today, handing the Obama administration a significant defeat in its plans for arresting the foreclosure crisis.
Supporters argued the measure would keep 1.7 million borrowers in their homes, but it ultimately foundered in the face of fierce financial industry and Republican opposition. The bankruptcy modification provision, which was offered an amendment to a broader housing bill, failed by a vote of 45 to 51.
I love how this is reported by the WaPo. The measure failed because of ‘fierce financial industry and Republican opposition?”
Apparently it failed because 14 Democratic Senators said “no”.
Of course, passage of such a measure would make legal contracts in this country subject to review by the courts and arbitrarily changed based on political concerns. Certainly, in this case, such power is only being given for changing mortgage amounts – but as we all know, precedent is what courts operate under, and such a precedent would just as certainly be used to attempt to give the court similar power with other types of contracts.
It’s a phenomenally bad idea, but one you can expect to see attempted again and again, as promised by Dick Durbin:
“I’ll be back. I’m not going to quit on this,” said Senate Majority Whip Richard J. Durbin (D-Ill.), who sponsored the measure.
“At some point the Senators in this chamber will decide the bankers shouldn’t write the agenda for the United States Senate. At some point the people in this chamber will decide the people we represent are not the folks working in the big banks, but the folks struggling to make a living and struggling to keep a decent home.”
You’ve got to love the populist rhetoric and the absolute misrepresentation of what he and those that were trying to get this monstrosity passed were attempting. A fundamental change in how this country has operated since its inception. If courts can arbitrarily change the terms of a contract for social/political reasons, we’re doomed. And that’s precisely what Durbin and his ilk are proposing.
Unfortunately I have no confidence that he won’t manage, at some future time, to push this piece of legislation through. But at the moment, it’s where it needs to be – in the virtual garbage heap of bad legislation.
As you may or may not know, I just sent the last week touring the houses of Thomas Jefferson, James Madison and James Monroe – three of this nation’s founding fathers. So when I glanced through the following interview with Barack Obama I tried to picture any of these three men ever contemplating this question or a role for government in the context of the question and frankly, it’s unimaginable.
The only vision I could even begin to imagine is the three of them looking on sadly and shaking their heads “no” in unison as they tried to grasp the size of government and the depth of its intrusion into the lives of citizens the questions and answers indicated. I’m sure they’d also be trying to figure out where it all went wrong. The questions have to do with “end of life care”:
Q:…where it’s $20,000 for an extra week of life.
THE PRESIDENT: Exactly. And I just recently went through this. I mean, I’ve told this story, maybe not publicly, but when my grandmother got very ill during the campaign, she got cancer; it was determined to be terminal. And about two or three weeks after her diagnosis she fell, broke her hip. It was determined that she might have had a mild stroke, which is what had precipitated the fall.
So now she’s in the hospital, and the doctor says, Look, you’ve got about — maybe you have three months, maybe you have six months, maybe you have nine months to live. Because of the weakness of your heart, if you have an operation on your hip there are certain risks that — you know, your heart can’t take it. On the other hand, if you just sit there with your hip like this, you’re just going to waste away and your quality of life will be terrible.
And she elected to get the hip replacement and was fine for about two weeks after the hip replacement, and then suddenly just — you know, things fell apart.
I don’t know how much that hip replacement cost. I would have paid out of pocket for that hip replacement just because she’s my grandmother. Whether, sort of in the aggregate, society making those decisions to give my grandmother, or everybody else’s aging grandparents or parents, a hip replacement when they’re terminally ill is a sustainable model, is a very difficult question. If somebody told me that my grandmother couldn’t have a hip replacement and she had to lie there in misery in the waning days of her life — that would be pretty upsetting.
“…society making those decisions to give my grandmother … a hip replacment?” Above that he points to a doctor giving who that choice?
Below that who is Obama talking about making that decision or having that choice? Well it isn’t his grandmother. And although he uses the term ‘society’, he means government. Note he says that if someone had told him no he’d be upset, but he’s setting up the table to be ‘upset’. This is an old Obama trick – acknowledge the downside in a very personal way while still pushing for that downside.
Q: And it’s going to be hard for people who don’t have the option of paying for it.
THE PRESIDENT: So that’s where I think you just get into some very difficult moral issues. But that’s also a huge driver of cost, right?
I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.
Anyone who hasn’t quite figured out the rationing model Obama is talking about with his answers to these two questions needs to take a remedial reading course. Anyone – where does he see the opportunity to “cut costs” in the medical field?
And, how will he do it. Unless you’re still hungover from celebrating Guinesses’ 250th birthday, he is talking about denial of service especially to the elderly. Government will determine whether or not you’re worth that $20,000 operation. And the “moral issue” he’s talking about is all wrapped up in egalitarianism. What he’s implying may be “immoral” is allowing those who can pay access to the service while those who can’t pay (and for whom government won’t pay) are denied it.
Again, contemplate the model Obama talks about – reducing the cost of health care – and tell me which way that “moral issue” would be decided? Got the money? Too bad – it would be “immoral” to let you buy the service others are denied.
Q: So how do you — how do we deal with it?
THE PRESIDENT: Well, I think that there is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place. It is very difficult to imagine the country making those decisions just through the normal political channels. And that’s part of why you have to have some independent group that can give you guidance. It’s not determinative, but I think has to be able to give you some guidance. And that’s part of what I suspect you’ll see emerging out of the various health care conversations that are taking place on the Hill right now.
What a question. The assumption is swallowed whole. Where was the question “what if ‘we’ don’t want others making those decisions?”
And apparently you guys in fly-over country are too emotionally involved to make that sort of a decision through “normal political channels” so government have some unelected outside group develop the “guidance.” Only the elite can answer these questions properly.
Three questions, stunning in their implications. Three answers which should make the skin of all lovers of liberty crawl. I’m again left imagining Jefferson, Madison and Monroe listening in on this with unbelieving looks of horror on their faces. The irony is, their opposition to this incredible power grab by government would again leave them in the category of “radical”.
With the spike in interest about combating piracy suddenly, any number of people have been sought out and quoted concerning their ‘expert’ opinion about what to do.
Cyrus Mody of the International Maritime Bureau said that his organisation had qualms about the use of armed guards on ships: “We always have been against the carriage of arms on vessels. First, we don’t think there is legal backing. Two, there’s a risk of escalation. Three, you cannot carry arms on ships carrying hazardous or dangerous cargo.
“If you permit armed guards on certain vessels, the others, which cannot carry the armed guards will become vulnerable and be targeted a lot more.”
Maybe it is just me, but I simply don’t understand thinking like this. It reminds me of the rightfully ridiculed “if rape is inevitable, lay back and endure it” school of thought.
Note how Mr. Mody seems not to understand that we have an inherent right to self-defense and thus shouldn’t be particularly concerned with whether or not exercising that right has “legal backing”. When armed thieves attack you and your property, they certainly aren’t concerned with the niceties of legal backing. They are called “outlaws” for a reason. But like all human beings, they’re looking for easy targets. Lay back and offer no resistance and they’ll happily take your property and, perhaps, your life. Although that hasn’t been the case yet, it certainly could happen now that the military of various states are killing pirates. In fact, because they are using deadly force now, the need for being able to defend one’s self would seem to me to be even more urgent than before.
That brings us to point two – escalation. I hate to break it to Mr. Mody, but as noted, the military reaction to piracy has escalated the situation. What is obvious, however, is the military cannot provide protection to all of the shipping transiting the area – it can only react to attacks. In the last two attacks on American ships, there was no way for our navy to react immediately. In both cases the USS Bainbridge was hundreds of miles away when the attacks occurred. That leaves immediate self-defense in the hands of the crew of the ship being attacked.
As for three, of course you can have weaponry on such ships if done properly. And think of it this way, pirates don’t know whether or not the ship is carrying “hazardous or dangerous cargo” when they attack. So when they launch that RPG they’re much more of a danger to those cargoes (and the crew) than someone on the ship putting a line of .50 cal rounds across the bow of a pirate skiff and scaring them away.
And four, per Mr. Mody, it just isn’t fair if some ships have armed guards (Mr. Mody was reacting to a story about armed guards on an Italian cruise ship foiling a pirate attack) and others don’t. That’s just nonsense. It’s like “gun free zones” – what do they tell criminals? That no one will be able to defend themselves because the criminal will be the only one with a gun. It’s stupid. The whole point is to make the pirates unsure as to whether the ship has armed guards and whether it is worth it to them to attempt to attack such a ship. One way to take that sort of calculation out of their attacks is to ensure ships are “gun free zones”.
Certainly there are non-lethal ways to fight pirates, but as Gen. Petraeus said the other day, and I’m paraphrasing, I wouldn’t want to be on a water cannon when the guy at the other end has an RPG.
Fighting off pirates requires resistance, and resistance requires at least equality in firepower. The whole point is to make piracy less and less attractive. Right now the pirates pick a target, board it and name their ransom. The risk to reward ratio is so low they won’t consider returning to their former life. One way to help them make such a decision more readily is to raise that reward-to-risk ratio to a level that it is no longer attractive. Seems to me armed ships along with military intervention are certainly a good way to do that.
What we don’t need to be doing is listening to the likes of Mr. Mody and trying to dress up stupidity as some form of “civilized behavior”.
Nick Gillespie at Reason is none too impressed with the new Edward M. Kennedy Serve America Act just signed into law.
At a mere 5.7 billion dollars +200 mil in “stimulus” funds – and yes I’m being facetious (and don’t worry, they’re saving 100 mil among the administration cabinet) – we get legislation that:
reauthorizes and expands national service programs administered by the Corporation for National and Community Service, a federal agency created in 1993. The Corporation engages four million Americans in result-driven service each year, including 75,000 AmeriCorps members, 492,000 Senior Corps volunteers, 1.1 million Learn and Serve America students, and 2.2 million additional community volunteers mobilized and managed through the agency’s programs.
Or an expansion of the Community Organizer’s Full Employment Act if you really want to come clean about it.
Paid “volunteerism”. Is that government’s job?
And as Gillespie points out, the language under which this is organized – and I use the term loosely – is rife with opportunities for urban entrepreneurs to “benefit” mightily from things which will be extremely hard to measure (even though it claims, in the language, to have it covered):
The Serve America Act, which goes into effect on October 1, would increase and enhance opportunities for Americans of all ages to serve by increasing AmeriCorps from 75,000 to 250,000 positions over the next eight years, while increasing opportunities for students and older Americans to serve. It will strengthen America’s civic infrastructure through social innovation, volunteer mobilization, and building nonprofit capacity. The new law is also designed to strengthen the management, cost-effectiveness and accountability of national service programs by increasing flexibility, consolidating funding streams, and introducing more competition.
Ye gods – what could go wrong with that?
And this, as Gillespie points out, in the face of attempts to limit charitable tax breaks for the income class which makes most of those donations and are the engine for much of the charitable giving. Make sense?
Well, it does if your entire focus is to see how dependent on government you can make the population, certainly. This is another example of a liberal wet dream.
But what you should keep in mind is it was begun under Clinton and survived 8 years of a Republican administration.
Tell me – whose fault is that?
Sometimes math is actually pretty easy. For example, when someone, say some MIT professors, writes a report claiming that a tax on certain businesses will raise a specific amount of revenue for the government ($366 Billion to be exact), and that revenue is divided by an estimated number of American households (117 Million), there isn’t any doubt about how much money per household that tax represents ($366 b./117 m. = $3,128.21). Unless, that is, there are politics involved. Then the math becomes Bistromathic, which allows one of the progenitors of the original numbers to declare “you’re doing it wrong!” and almost everyone will believe him. Unfortunately for them, real math operates on real facts, and thus reality is destined to intrude upon their fantasy.
That, in a nutshell, is basically how the argument over costs of the Obama Administration’s cap and trade policy has unfolded. MIT’s John Reilly co-authored the original study, Republicans used the numbers to derive a cost per taxpayer, Reilly balked, and the media/leftosphere went into paroxysms of outrage about how the GOP were all a bunch of liars. But that was just the main course. For dessert, there will be crow (my emphasis):
During a lengthy email exchange last week with THE WEEKLY STANDARD, MIT professor John Reilly admitted that his original estimate of cap and trade’s cost was inaccurate. The annual cost would be “$800 per household”, he wrote. “I made a boneheaded mistake in an excel spread sheet. I have sent a new letter to Republicans correcting my error (and to others).”
While $800 is significantly more than Reilly’s original estimate of $215 (not to mention more than Obama’s middle-class tax cut), it turns out that Reilly is still low-balling the cost of cap and trade by using some fuzzy logic. In reality, cap and trade could cost the average household more than $3,900 per year.
The $800 paid annually per household is merely the “cost to the economy [that] involves all those actions people have to take to reduce their use of fossil fuels or find ways to use them without releasing [Green House Gases],” Reilly wrote. “So that might involve spending money on insulating your home, or buying a more expensive hybrid vehicle to drive, or electric utilities substituting gas (or wind, nuclear, or solar) instead of coal in power generation, or industry investing in more efficient motors or production processes, etc. with all of these things ending up reflected in the costs of good and services in the economy.”
In other words, Reilly estimates that “the amount of tax collected” through companies would equal $3,128 per household–and “Those costs do get passed to consumers and income earners in one way or another”–but those costs have “nothing to do with the real cost” to the economy. Reilly assumes that the $3,128 will be “returned” to each household. Without that assumption, Reilly wrote, “the cost would then be the Republican estimate [$3,128] plus the cost I estimate [$800].”
In Reilly’s view, the $3,128 taken through taxes will be “returned” to each household whether or not the government cuts a $3,128 rebate check to each household.
In short, Reilly’s claim of “you’re doing it wrong!” amounts to parsing of direct vs. indirect costs. Yes, the cap and trade taxes will be passed onto the consumers in some way, but those aren’t the “real costs” to the economy. Only those direct expenditures made necessary by the policy (the “but for” costs) are “real costs.” As long as the federal government provides a benefit to the taxpayers with the cap and trade taxes, then those higher utility bills are a wash:
In Reilly’s view, the $3,128 taken through taxes will be “returned” to each household whether or not the government cuts a $3,128 rebate check to each household.
He wrote in an email:
It is not really a matter of returning it or not, no matter what happens this revenue gets recycled into the economy some way. In that regard, whether the money is specifically returned to households with a check that says “your share of GHG auction revenue”, used to cut someone’s taxes, used to pay for some government services that provide benefit to the public, or simply used to offset the deficit (therefore meaning lower Government debt and lower taxes sometime in the future when that debt comes due) is largely irrelevant in the calculation of the “average” household. Each of those ways of using the revenue has different implications for specific households but the “average” affect is still the same. [...] The only way that money does not get recycled to the “average” household is if it is spent on something that provides no useful service for anyone–that it is true government waste.
He added later: “I am simply saying that once [the tax funds are] collected they are not worthless, they have value.”
Essentially, Reilly is making the pernicious claim that a dollar in the taxpayer’s hand is the same as one in the government treasury. But we all know that’s not true, including (I’ll bet) Mr. Reilly.
No matter how efficient the government is, it will never be able to take $X from me and return exactly $X of benefit. Indeed, at least some portion of that $X will be needed just to support the system of taking the money and providing the benefit. Already the taxpayer is at a loss.
Moreover, there is an implicit assumption in Reilly’s explanation that, in exchange for this de facto tax, the government benefits provided would be returned in proportion to their costs. But that would defy all historical precedence when it comes to the federal government which, once the money is received, tends to dole it back out to suit its own purposes. As Merv aptly states:
I really doubt the government will return any cost of cap and trade dollar for dollar. If they did it would be just an expensive money swap. To the extent the government does return any money you can bet that it will be based on conduct they want from people and not unconditionally. They will be imposing their choices on American families and their lifestyles.
To be fair, Reilly tacitly acknowledges this fact when he explains what use of his numbers would be acceptable to him:
“If the Republicans were to focus on that revenue, and their message was to rally the public to make sure all this money was returned in a check to each household rather than spent on other public services then I would have no problem with their use of our number.”
The fact is, cap and trade is going to cost taxpayers significantly more than the measly $13/week tax cut that the Democrats and the left are so excited about. While the $3,900 cost cited by John McCormack above is an accurate accounting of what Reilly’s study portends, even that is probably an unrealistically low estimate. Consider how the same policy has affected Europe:
Europe’s experiment with cap and trade has turned into a bureaucratic mess that has failed to live up to its initial expectations. A report by the GAO reveals that the supply of carbon permits has exceeded the demand causing allowance prices to fall substantially. This policy failure has caused the European economy to suffer and expectations to reduce CO2 emissions have been lowered.
Additionally, Europe’s cap and trade experiment has led to decreased employment opportunities and higher energy prices across the continent. In France manufacturers have packed up and left for Morocco. In the Netherlands factories are forced to close early to meet emissions standards. In Germany energy prices have risen 5% each year sparking widespread outrage. All across Europe evidence shows that cap and trade has hurt the economy. If the United States implements a European style cap and trade system, estimates show that it could wipe out between 1.2-1.8 million American jobs by 2020.
So the 95% of you who received a “tax cut” from Obama had better start saving that extra money up. You’re going to need every penny to service the debt required to pay for your costs of cap and trade.
What to make of this trend? I think Oklahoma got the 10th Amendment push-back ball rolling, Montana advanced the ball several yards, Texas got into the game recently (albeit, too glibly), several other states are getting their shots in, and now North Dakota takes it’s turn.
The resolution in the North Dakota legislature asking the federal government to begin recognizing the 10th amendment and to stop overreach into state matters, the one the Fargo Forum wrote off as being part of a “secessionist movement, has passed in the Senate. By a strictly party-line vote, unfortunately, meaning not one Democrat in the legislature had enough respect for the sovereignty of North Dakota to vote for it.
The resolution now goes to the House, where I expect it will also pass. Also, I’m guessing, by a strictly party-line vote. Which, if it happens, would be a small bright spot in an otherwise dim legislative session. It takes a certain level of conviction for politicians to vote for a resolution like this one. Would that the Republicans voting for it now had the courage of those convictions when faced with legislation that grows spending and government in the state.
At Say Anything, Rob Port has a copy of a state Senator Joe Miller‘s speech in support of the resolution from the Senate floor. I recommend you go there and read it.
Combined with some Governors rejecting portions of the stimulus funds, and the Tea Parties breaking out all over the country, I’d say it’s a good sign that people are finally telling Washington to take a hike. Personally, I would say that both Porkbusters and the Sunlight Foundation are owed some credit as well, but either way it’s about time that the federal government was reminded of its place. Granted, it’s a fairly small reminder, but maybe one that can be built upon.
So where does all of this lead anyway. Is there any hope that all of this momentum will lead to less federal government interference? How about some support for repealing the 17th Amendment? I’d like to think that it will end up reducing the size of government (i.e. electing fiscally conservative representatives who will cut taxes and greatly slash spending), but once that horse left the barn, the barn was burned to the ground and a giant spending dance was done on the smoldering ashes. Nevertheless, is there some small ray of hope that the states will rein in our profligate Congress?