I‘m still amazed that many people who put their support behind Obama in the presidential election, are suddenly discovering things about him they don’t like.
Really? Now they discover Obama is a class warrior? It comes as no surprise for those of us who took the time to assess where he came from and what (little) he’d done.
Suddenly, the rich are concerned that the guy they backed may not be what they hoped he was (notice that’s the correct context in which “hope” should be used when “hope and change” is spoken):
Some of Barack Obama’s richest supporters fear they have elected a “class warrior” to the White House, who will turn America’s freewheeling capitalism into a more regulated European system
Ya think? What was your first clue – his remarks about “spreading the wealth” to Joe the Plumber or the thousands of other things he said which might imply such a tendency?
And as an aside, America’s capitalism is about as “freewheeling” as a modern waterslide is “death defying”.
Chris Edwards of the Cato Institute, a free enterprise think tank, said Democrats in Congress were unnerved by the president’s latest plan to raise $210 billion over 10 years from multinational corporations.
The money is needed to pay for a national debt that will double over the next five years; and triple over the next 10 years to $17.3 trillion. But the crackdown already faces fierce Democratic resistance.
“These big companies are based in New York Boston, Seattle and Silicon Valley, where Democrats dominate,” Mr Edwards said. “Obama’s tax plan is already cleaving him from his big corporate supporters,” he said.
The good news in this, of course, is that Congress has to pass the legislation that enables this, and per Edwards, they’re getting cold feet. The reason is also obvious – any “cleaving” of Obama from “big corporate sponsors” also means the rest of the Democrats suffer the same fate.
The level of taxation necessary to pay for the profligate spending now taking place will have to be massive as anyone with a 5th grade education understands. But the Dems also understand that any taxation that takes place must be other than income taxes because it is important to maintain the mirage that “95% of all Americans” are getting tax cuts. That leaves “the rich”, corporations and smoke and mirrors.
The rich have been identified ($250k or more), corporations are on the block with much higher taxation in the offing. So the investor class and the engine of the economy are under assault. The smoke and mirrors show? Wait until health care and cap and tax trade hit. 100% of Americans will be paying large sums for both.
But back to the point – the deeper we get into the Obama administration, the more we come to understand how gullible a good portion of the American public appears to be. There is a certain level of satisfaction with the buyer’s remorse being seen among many of his supporters as they see what their vote has actually bought. I sure hope they don’t shop for other important items as badly as they apparently shop for presidents.
Another “horrible Bush-era rule“, uh, er, kept:
The Obama administration on Friday let stand a Bush-era regulation that limits protection of the polar bear from global warming, saying that a law protecting endangered species shouldn’t be used to take on the much broader issue of climate change.
Interior Secretary Ken Salazar said that he will not rescind the Bush rule, although Congress gave him authority to do so. The bear was declared threatened under the Endangered Species Act a little over a year ago, because global warming is harming its habitat.
So why is this interesting (and important)?
The US Environmental Protection Agency designated polar bears an endangered species last year, because their habitats were disappearing as ice-caps melted.
Environmentalists seized on the ruling, arguing that endangered species were entitled to heightened protection under US law and that the government was therefore obliged to crack down on the carbon emissions causing global warming.
The Endangered Species Act bars federal agencies from “taking actions that are likely to jeopardise the species or adversely modify its critical habitat”, and lays down civil and criminal penalties for people that kill or injure designated animals.
But the Bush administration passed a rule exempting “activities outside the bear’s range, such as emission of greenhouse gases” from prohibition.
Which, apparently, the Obama administration has found to be the proper rule:
It is this rule that the Obama administration has decided to let stand.
Because, you see:
“The Endangered Species Act is not the proper mechanism for controlling our nation’s carbon emissions,” Mr Salazar said.
“Instead, we need a comprehensive energy and climate strategy that curbs climate change and its impacts.”
While I’m not so sure about Sec. Salazar’s last point, I agree whole-heartedly with his first.
The usual suspects, of course, are livid – but then they spend most of their life livid.
One of the things I try to consistently feature here at QandO is the depth of intrusion of the federal government into our daily lives. Talk about “mission creep”. There’s little that we do any more that doesn’t seem to involve the government looking over our shoulder and I, frankly, don’t welcome that sort of monitoring or intrusion.
So if you’re planning on selling your kids old books (or anything else that a kid under 12 might use) and they haven’t been “tested” first, you’re liable to a $100,000 fine. Now I know you’re reading this and saying, “no way. Our government would be that intrusive”.
I guess the best way to counter that is with the CPSC’s own words:
This handbook will help sellers of used products identify types of potentially hazardous products that could harm children or others. CPSC’s laws and regulations apply to anyone who sells or distributes consumer products. This includes thrift stores, consignment stores, charities, and individuals holding yard sales and flea markets.
The next line of defense for those who support this level of intrusion, once that level of intrusion has been exposed in the government’s own words, is “well, how would they enforce it”?
It’s not a bad argument (the answer is selectively), but it misses the real point.
Obviously, it’s unlikely the CPSA goons are going to bust up your yard sale. But putting out a detailed booklet that reserves the right to do so is hardly encouraging about where the implementation of this legislation is heading.
It is about precedent. And, it’s about acceptance. When both are established, it doesn’t require much in the way of the imagination to realize that like any entity which seeks to increase its power, government will soon attempt to stretch the envelope just a little further (further precedent/acceptance).
Wash, rinse, repeat.
Steven Rattner, the Obama administration’s “Car Czar,” was recently accused of acting, well, rather czar-ishly by White & Case attorney Tom Lauria. Those accusations were later corroborated by others privy to the meetings. Now comes a rather disturbing (and presently unsubstantiated) account of exactly what was said1:
Confronting the head of a non-TARP fund holding Chrysler debt and unwilling to release it for any sum less than that to which it was legally entitled without compelling cause, this country’s “Car Czar” berated the manager of said fund with an outburst of prose substantially resembling this:
Who the f*** do you think you’re dealing with? We’ll have the IRS audit your fund. Every one of your employees. Your investors. Then we will have the Securities and Exchange Commission rip through your books looking for anything and everything and nothing we find to destroy you with.
Faced with these sorts of threats, in this environment, with valued employees in the crosshairs and AIG a fresh, open wound upon the market, the fund folded.
Keep in mind that the non-TARP creditors in the bankruptcy have been forced to lump their fates in with the TARP recipients (emphasis added):
As of last night’s deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money.
As much as anyone, we want to see Chrysler emerge from its current situation as a viable American company, and we are committed to doing what we can to help. Indeed, we have made significant concessions toward this end — although we have been systematically precluded from engaging in direct discussions or negotiations with the government; instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.
Rattner’s alleged threats should give everyone some pause. Is it really the case that private companies will be forced to do the President’s bidding or face the full brunt of the state’s police power? Because that’s exactly what’s being alleged. I share the concern of the reporter of Rattner’s comments in that I certainly hope the accusations are inaccurate/misstated/outrageously untrue.
It is my deepest wish at this point that there is nothing about this latest bit of Car Czar thuggery even remotely based in fact- as this would mean that this country has truly and unarguably descended into fascism.
I use this term, “fascism,” quite deliberately. I also use it well aware that many will consider it needlessly inflammatory. Be this as it may, I submit there is simply no other term that properly describes the style and tenor of government emerging both in public and behind once closed doors.
The corporatist model — i.e. where unelected government officials and industry “leaders” fashion economic policy for the benefit of the state as whole, and in complete disregard of, and often quite hostile to, individual liberty — has never died, and is used more often than you might think (e.g. in the creation of energy policy, environmental policy, financial market rules, etc.), albeit in less radical form. That does not mean that Jews or any other disfavored groups will be marched off to concentration camps (opponents of gay marriage not named “Barack” can be forgiven for thinking otherwise). But it does mean that the preconditions necessary to ease the way for totalitarian control are already present. If enough people buy the “myth” presented by those in charge, then more and more power will eventually be ceded to a central authority, who will then have the ability to steamroll any opponents to the collective will. The accusations presented above suggest that Rattner (and one has to presume Pres. Obama), believes that enough Americans have bought the myth as to allow for such bullying. If so, that is a truly disturbing thought to contemplate.
UPDATE: In an article at the WSJ essentially chiding the MSM for failing to dig into this story, Tom Blumer notes the following (my emphasis):
The New York Times, in a report by Michael J. de la Merced and Jonathan D. Glater, does note the threats and Gonzales’s ruling, and has the following at its second-last paragraph.
When the debtholders, calling themselves the Committee of Non-TARP Lenders, made their first public statement last Thursday, they said their group consisted of about 20 investment firms holding about $1 billion. According to their motion to file under seal, the group now claims about $300 million in holdings.
de la Merced and Glater were apparently not curious about the possible reasons why the amount involved, and presumably the number of holders, is significantly lower than it was just a few days ago.
Maybe it’s because the threats are real, guys.
1 Edited to make SFW.
Dale makes an incredibly important point about investment below – investors aren’t going to commit their money to industries which are being manipulated by government for political goals and payoffs.
And, the Wall Street Journal makes a similar argument about corporate taxation and the Obama administration’s apparent plan to compound the problem he hopes to “deincentivize” by driving both investors and US companies off shore..
The energy picture is no rosier. Because there is no comprehensive and clear-cut, long-term energy plan from government, and because it is clear to many that the present administration’s plans for energy involve achieving political goals dictated by government vs. a straight market based plan which would see decentralized signals and decisions determine the energy future, investors are sitting on the sidelines. As Sen. Murkowski said, too many in national government today see the energy sector, and especially the oil and gas industry, as an “ATM to pay for other programs”.
When government is so deeply involved in picking winners and losers, investors are not going to invest. Especially given the example of the car and financial industries.
You can guess what that means in terms of economic recovery, not to mention economic growth. Investment is the engine of economic growth. Without it, nothing sustainable happens. Government can make all the make-work jobs in the world, but until investors commit to the economy, we only mark time economically speaking. If anything government should create a climate that provides incentives for private investors – low taxes, favorable investment rules, etc. to encourage investors to risk their money here in the US.
Instead, we have at least three critical areas where government intrusion and manipulation is having exactly the opposite effect.
Does it strike anyone else as funny that TARP is a poor anagram for “trap”? If Shakespeare had written this play the name would have been much more clever, of course, but I think he would delight in the barely concealed irony of the federal government drawing banks into its lair with the pretense of saving their hides, only to use the money intended to do so as the means of yoking the industry. I’ll bet the banks who took TARP funds don’t find it so humorous.
Since last October when Hank Paulsen forced nine of the largest banks to take an initial injection of $125 billion in TARP funds (among other bullying), the federal government has committed about $12.2 trillion dollars to bailouts and spent about $2.5 trillion on such efforts (er, among other, other bullying). Aside from an increasing assertion of control over the financial and automotive sectors of our economy (among other, other, other bullying), there is very little to show for all this money. Which leaves the rather stark impression that government control was the goal all along — i.e. the method within the madness.
I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn’t much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street’s black hole. So why no cheering as the cash comes back?
My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell ’em what to do. Control. Direct. Command.
Here’s a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons [ed.: That’s a highly charitable argument]. It wanted to recapitalize the banks to halt a financial panic.
Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He’s been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with “adverse” consequences if its chairman persists. That’s politics talking, not economics.
Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can’t a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can’t special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit — until now.
Despite the government’s bullying, it is difficult to feel much pity for the institutions who accepted TARP funds. Surely they must have at least suspected an iron hand inside that velvet glove attempting to feed them. However, if they truly don’t need the money, and have the means to pay it back, then onerous seems too slight a word to express how gripping the government’s control has become:
Financial firms eager to return infusions from the $700 billion Troubled Asset Relief Program will have to demonstrate that they can operate without debt guarantees provided by the Federal Deposit Insurance Corp., a senior government official said Tuesday. The FDIC program allows financial institutions to borrow money at lower costs.
The new requirement will make it harder for some institutions to get out from under government rules attached to the bailouts, another shift in a changing landscape for banks. It also illustrates the government’s desire not to have banks abandon the bailout program if they are not financially prepared to do so.
The government’s desire? I don’t recall exactly where that is accounted for in the Constitution. Is it buried somewhere in the penumbras and emanations of the commerce clause? Clearly the “government’s desire” must have some force of law that it can unilaterally decide to allow banks to sink or swim on their own. Otherwise, such desire is wholly irrelevant.
Nonetheless, banks did take the money, and so the government gets to call the tune. Institutions who would have collapsed absent the bailout have little to grouse about in such circumstances. But other firms, who didn’t need the money in the first place, rightfully bristled at the demands being placed upon them and the opprobrium casually tossed their way by the government.
Kim Price’s Gastonia bank accepted $20 million from the Troubled Asset Relief Program to help keep credit flowing as the economy faltered.
Now the Citizens South Banking Corp. chief executive and other community bankers feel that Congress is treating them like villains.
Proposed new TARP rules that could limit bankers’ pay have upset many bank executives here. And the congressional effort has prompted some banks in other states to give the money back.
TCF Financial Corp, a Minnesota lender, said it repaid a $361.2 million capital infusion that it took from the U.S. government’s bank bailout program, becoming the largest recipient to repay its funds.
Regulators, banks and investors once viewed participation in the program as a positive, figuring that it would help healthy banks lend more and perhaps buy struggling rivals.
But participation is now often viewed as an albatross, subjecting recipients to restrictions on such things as executive pay and dividends.
Investors now consider some banks that hold onto their aid as being too weak to return it. Large banks such as Goldman Sachs Group Inc ( GS – news – people ) and JPMorgan Chase ( JPM – news – people ) & Co have said they want to repay their aid soon.
TCF Chief Executive William Cooper this week said holding TARP money put the bank at a “competitive disadvantage.”
He said repaying the aid and eliminating the associated dividend payments will boost earnings by more than 14 cents per share annually.
By inducing banks to take TARP money, whether through tactics or intimidation, the government has neatly cornered the capital flow of the country. Much like Hamlet surreptitiously forced his uncle to publicly face scorn for his act of regicide (by having performed the “Murder of Gonzago,” aka the “Mouse-Trap”), the government has successfully lured failing banks into the public square for ridicule. Whereas Hamlet sought to elicit a sign of guilt in order to justify his vengeance, however, the government seems intent on effusing guilt throughout the banking industry so as to justify its controlling moves. By tainting the public view of the financial sector, the government seeks to undermine public confidence and build a chorus calling for its heavy-handed involvement. As mentioned above, protestations by the beggars for such action protest too much, methinks, but those who truly have no need of the interference have much cause to cry foul.
Hamlet ends with nearly every character dead, and the country being turned over to its greatest enemy. Unfortunately, the financial sector seems destined for a similar result as the government has made clear it will not allow certain institutions to fail, and is callously indifferent to fate of the unchosen. No matter how well those banks who managed to avoid TARP altogether do, the government is now the major mover in game, and the only one with the power to force its will on all the other players. It can, and will, pass laws that favor the winners its chosen, thus leaving the non-assisted banks out in the cold. In the end, firms who conform to market forces (i.e. respond to the desires of its customers), will be supplanted by those which conform to will of the government’s agenda. The trap was set, the mice did enter, and thus their fates were sealed.
Here at the Offshore Technology Conference in Houston, we were able to hear from a very distinguished panel concerning the energy “debate”. I put the word “debate” in scare quotes because it seemed that the consensus of the panel was there really isn’t a productive debate going on.
Roger Ballentine of the Progressive Policy Institute says that the two sides are talking past each other with little real effort to engage in anything which would actually address strategic energy policy.
Sen Lisa Murkowski, addressed the audience by video and spoke of a “comprehensive” plan which would include all types of energy, obviously including oil and gas. She spoke of a “scarcity of will” on the part of Congress to aggressively go after our own natural resources and cited the Gulf of Mexico as an example. There, she said, lays 45 billion barrels of oil and 320 trillion cubic feet of natural gas that we seemingly refuse to tap.
Yet as API’s President and CEO, Jack Gerard pointed out, when polled 67% of the American public want the exploitation of the oil and gas assets to be found on the Outer Continental Shelf (OCS), and that last week the Florida House passed a bill authorizing drilling off the coast of Florida by a 70-43 margin. That is a huge margin and speaks loudly about the public’s sea change in attitude concerning offshore drilling.
But it seems like no one in power in Washington is listening. And that brings us to the second point this panel made – it is necessary to engage the public/consumer and get them involved in this debate. It is they who will live with and pay for whatever Congress cobbles together regarding energy policy. So far, however, the only thing that has accomplished that level of public engagement is the price of gasoline at the pump. When it was at $4 a gallon, the public emphatically weighed in saying “this is unacceptable” and “do what it takes to fix it (to include drilling in the OCS). Since the price of gas has retreated, to be replaced by the economic recession, the public’s attention has been diverted elsewhere.
But we’re at a critical juncture right now. Legislation is being written and moved ahead within the Congress even while panelists in Houston on both sides of the political spectrum are saying the debate needs to begin in earnest, in a bi-partisan and productive way and the public needs to be engaged.
This was a wide ranging panel and I took 16 pages of notes. This particular post covers 2 of them at best. However this gives you a sense of the frustration to be found among those there representing government, industry and think tanks. Both sides of the broad political spectrum on the panel agreed that the bi-partisan “civil discourse” that would move this sort of policy forward in a positive way doesn’t at present exist even while the legislation outlining future policy is being written.
I’ll have much more to say about this as I wade through the pages of notes I took, but this suffices to give the general impression of where we are when it comes a well thought out and comprehensive strategic energy policy. In a word, nowhere. I’ll get into the “why” of that (“climate change” is the “cultural wedge” that is being used to muddy the energy debate), and the implications in another post.
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.