You remember TARP. The “Troubled Asset Rescue Plan”? The plan which the Obama administration and the Treasury Department said they were monitoring closely? In fact, they even put a “watchdog” in charge of its oversight.
Transparency. Oversight. Hope and Change.
And any other buzzword promise that was thrown out there to describe how this administration would be so different from the last.
But apparently all the oversight promised depends heavily on cooperation, not stonewalling, by the Department administering TARP. That would be Treasury:
“We do not seem to be a priority for the Treasury Department,” the Congressional Oversight Panel’s Elizabeth Warren told a Senate Finance Committee hearing today.
“We have sent letters. We have requested that there be someone named so that we can get technical information. And so far, we have not been a first priority,” Warren said. “We use what you give us, and we will exercise the leverage given to us by Congress. In part, that’s why I’m here today. I’m here to talk to you about what’s happened so far, what we have discovered so far, the inquiries that we have in mid-stream and for which we continue to await responses.”
Warren, visibly frustrated with a lack of cooperation from the administration, emphasized, “This problem starts with Treasury.”
Now part of the problem, obviously, is that several key positions in Treasury have yet to be filled, over 60 days into the new administration and in the midst of a financial crisis. Apparently that’s not a priority either.
Oh, and you’ll love this:
Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program, voiced similar concerns.
He noted that his office just conducted a survey of all 364 TARP recipients on their use of government funds, something they had requested Treasury do, only for the Department to decline to do so except in the cases of Citigroup and Bank of America.
“One thing is clear: complaints that it was impractical, impossible, or a waste of time to require banks to detail how they used TARP funds were unfounded,” Barofsky said.
I continue to be unimpressed with Tim Geithner and his management and leadership style. What you’re reading here is totally unacceptable. For once, Sen. Chuck Grassley (R-IA) said the right thing:
“Unfortunately, despite saying all the right things about open government, the new administration has not made any major changes aimed at making TARP more transparent,” he said. “Moreover, I have heard about potential problems with access to information from all three of the oversight bodies testifying.”
Hope and Change.
A study just completed in Spain finds that the creation of so-called “green jobs” doesn’t at all seem to be the employment panacea promised by their advocates. As you recall, President Obama pointed to Spain as the reference point for the establishment of government aid to renewable energy. As the study points out, “No other country has given such broad support to the construction and production of electricity through renewable sources.” But the results are not at all what you might expect given the hype. In fact, they’ve been quite the opposite:
Optimistically treating European Commission partially funded data, we find that for every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.
Be sure you read that last part of the sentence carefully as well – those jobs would have been created by “non-subsidizsed investments” with the “same resources” – or said another way, they’d have been created in the private sector without government picking winners and losers and spending billions in taxpayer money.
Between 2000 and 2008, Spain was very aggressive in pursuing alternative energy and green jobs. But its results were less than stellar:
Despite its hyper-aggressive (expensive and extensive) “green jobs” policies it appears that Spain likely has created a surprisingly low number of jobs, two-thirds of which came in construction, fabrication and installation, one quarter in administrative positions, marketing and projects engineering, and just one out of ten jobs has been created at the more permanent level of actual operation and maintenance of the renewable sources of electricity.
So 9 out of 10 were temporary jobs, while only 1 in 10 became permanent. And the cost?
The cost to create a “green job”:
The study calculates that since 2000 Spain spent €571,138 to create each “green job”, including subsidies of more than €1 million per wind industry job.
The cost in jobs lost:
Each “green” megawatt installed destroys 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro.
And the eventual cost to consumers:
The price of a comprehensive energy rate (paid by the end consumer) in Spain would have to be increased 31% to being to repay the historic debt generated by this rate deficit mainly produced by the subsidies to renewables, according to Spain’s energy regulator.
Spanish citizens must therefore cope with either an increase of electricity rates or increased taxes (and public deficit), as will the U.S. if it follows Spain’s model
Previous studies have concluded that such increases would impact the poorest quintile the most:
• Reducing emissions, a major rationale for “green jobs” or renewables regimes, hits the poorest hardest. According to the recent report by the Congressional Budget Office, a cap-and-trade system aimed at reducing greenhouse gas emissions by just 15% will cost the poorest quintile 3% of their annual household income, while benefiting the richest quintile (“Trade-Offs in Allocating Allowances for CO2 Emissions”, U.S. Congressional Budget Office, Economic and Budget Issue Brief, April 25, 2007).
• Raising energy costs loses jobs. According to a Penn State University study, replacing two-thirds of U.S. coal-based energy with higher-priced energy such as renewables, if possible, would cost almost 3 million jobs, and perhaps more than 4 million (Rose, A.Z., and Wei, D., “The Economic Impact of Coal Utilization and Displacement in the Continental United States, 2015,” Pennsylvania State University, July 2006)
So to recap, we have a scheme which would see a net reduction in jobs by its implementation, create jobs of which only 10% were permanent, Cost anywhere from a half a million to a million dollars per job, increase energy costs tremendously and hit the poor the hardest.
Sounds like a winner, doesn’t it?
Will anyone pay attention to the actual experiment conducted by Spain and its results? Or are the blinders firmly in place?
While this scheme would be important to contest at any time, it is critically important to do so now, given the economic situation. One thing that must be avoided is government killing jobs as fast as the private sector creates them. This is truly a time when government should do all it can to enable the private sector to create jobs (tax cuts, etc.) and step back and allow that process to work. What it shouldn’t be doing is picking winners and losers and enacting a scheme which, in Spain at least, has proven to do all the things necessary to kill or at least cripple any economic recovery.
Thus was the reason, according to former ACORN worker, Anita Moncrief, why the New York Times killed a story about the connections between the activist group and the Obama campaign.
A lawyer involved with legal action against Association of Community Organizations for Reform Now (ACORN) told a House Judiciary subcommittee on March 19 The New York Times had killed a story in October that would have shown a close link between ACORN, Project Vote and the Obama campaign because it would have been a “a game changer.”
Heather Heidelbaugh, who represented the Pennsylvania Republican State Committee in the lawsuit against the group, recounted for the ommittee what she had been told by a former ACORN worker who had worked in the group’s Washington, D.C. office. The former worker, Anita Moncrief, told Ms. Heidelbaugh last October, during the state committee’s litigation against ACORN, she had been a “confidential informant for several months to The New York Times reporter, Stephanie Strom.”
During her testimony, Ms. Heidelbaugh said Ms. Moncrief had told her The New York Times articles stopped when she revealed that the Obama presidential campaign had sent its maxed-out donor list to ACORN’s Washington, D.C. office.
Ms. Moncrief told Ms. Heidelbaugh the [Obama] campaign had asked her and her boss to “reach out to the maxed-out donors and solicit donations from them for Get Out the Vote efforts to be run by ACORN.”
Ms. Heidelbaugh then told the congressional panel:
“Upon learning this information and receiving the list of donors from the Obama campaign, Ms. Strom reported to Ms. Moncrief that her editors at The New York Times wanted her to kill the story because, and I quote, “it was a game changer.”’
ACORN does not exactly deny Moncrief’s allegations, but instead waives her off as a “disgruntled” employee:
“None of this wild and varied list of charges has any credibility and we’re not going to spend our time on it,” said Kevin Whelan, ACORN deputy political director in a statement issued last week.
And the NYT isn’t saying much either:
Ms. Mathis [the New York Times’ Senior Vice President for Corporate Communications] wrote, “In response to your questions to our reporter, Stephanie Strom, we do not discuss our newsgathering and won’t comment except to say that political considerations played no role in our decisions about how to cover this story or any other story about President Obama.”
Strangely, neither the Obama administration nor anyone connected with his campaign comments on the story. Of course, if the allegations regarding handing over the donor list are true, then there may campaign finance law violations to worry about, so they probably wouldn’t say much anyway.
I have to admit, this is almost a dog-bites-man story. There can’t be too many people who will seriously contend that the NYT isn’t a liberal newspaper. And it wasn’t any big secret during the run-up to the election that the MSM was in the tank for Obama. But I do wonder if many people realize the lengths that the MSM would go to in order to see their boy to the finish line. Hillary supporters got the message pretty loud and clear during the primaries, and Palin’s backers can cite chapter and verse on how the MSM dragged her and her family through the gutter. Some people might even remember that story suggesting that McCain had an affair with lobbyist Vicki L. Iseman (for which she sued the NYT and settled out of court).
Yet, how many people realize that the de facto leader of the MSM would spike a story that’s not just critical of their chosen candidate, but that implicates him in illegal activity with a notorious election law violator? Seems like that would be news fit to print. Just not in the NYT apparently.
By the way, keep this story in mind as plans continue to unfold regarding the federal government subsidizing newspapers. If the NYT was willing to spike a story just to help its chosen one, what will they do when that chosen one is paying the bills?
I‘ve been following this story with numbed amazement at just how surreal it all is. No matter how many times I repeat this sentence in my head — The President of the United States has just fired the CEO of General Motors — I can’t quite convince myself that it’s true.
That’s not to say that I’m unsympathetic to the argument that the U.S. government, as lender, has every right to demand such a resignation if its going to be funding the company. Indeed, that’s a fairly common demand whenever a funding source enters the picture at dire times. And rightly so.
But let’s not forget that Obama is not the U.S. government. And, in reality, he’s not the lender. Congress holds that dubious distinction by being the keeper of the public purse. You’d think that Obama would have understood that and, y’know, at least told them about his plans for Rick Wagoner’s head. You’d be wrong, though [HT: Allahpundit]:
President Obama didn’t want any advice from Congress on the decision to ask GM CEO Rick Wagoner to resign, according to Carl Levin (D), Michigan’s senior senator.
“He didn’t ask us about it, he informed us,” Levin told reporters in a conference call Monday afternoon. “The president said he’d already decided.”
Levin said he and three other lawmakers were informed of the decision in a phone call Obama made from the Oval Office. Obama told the members of Congress that Wagoner needed to resign so that the administration could show the public it was making an effort at a fresh start with helping the auto industry, according to Levin.
I guess Congress isn’t about to argue with The One over this. Maybe they’re just upset that they didn’t think of it first. Nevertheless, is there any doubt that Obama has absolutely zero authority or power to make this decision?
Aside from the stupefying hubris driving Obama’s actions here, what real good is going to come of Wagoner’s ouster? He’ll walk away with about $20 Million in severance, and GM will still have around $6 Billion in legacy costs to deal with each year, on top of pay for its unionized workforce. And even if all those costs were brought into line, what exactly is the new (Obama picked?) CEO going to recover from the fact that GM is losing about $1 Billion per month? The sad answer is “probably nothing.” GM will proceed into bankruptcy, just like it should have from the start of all this mess, and it will take down several billion taxpayer dollars with it.
But all that pales in comparison to the precedent now set, without even a peep of objection from Congress, that the President of the United States considers it within his purview to fire the heads of companies when he sees fit. Lovely.
Did I miss some fine print in the election last year about voting for King of the United States?
I‘m still in rather stunned disbelief about the White House ousting GM’s CEO.
It’s not about how good a CEO he was or whether I agreed with his plan, his leadership style or his results. It’s about the White House going so far as to ask him to step aside. And, according to Obama’s own statement today, his “team” will “working closely with GM to produce a better business plan”.
Why, that sounds like something we’ve seen pass this way before and firmly rejected:
Italian Fascism often involved corporatism, a political system in which economy is collectively managed by employers, workers and state officials by formal mechanisms at national level.
Now I’m sure there are those out there who will argue that this is hardly a “formal mechanism”. But of course that’s simply not true. It is formal enough that a CEO is gone. Someone believes it is a mechanism of some formality for that to happen. And, if you think about it, it is just one more mechanism among many that have been put forward lately. Timothy Geithner’s plan to have the government take over financial institutions and hedge funds if the government deems them a threat to the economy’s well-being, for instance.
After all the caterwauling by the left about “unprecedented executive branch power expansion” during the Bush years, they’re rather quiet about these. The market, however, has cast it’s vote. Down about 300 at 4pm.
And this is all based in a false premise – something I’ve noticed that Obama uses quite effectively:
“We cannot, we must not, and we will not let our auto industry simply vanish,” President Obama said at the White House.
Anyone – who would expect the domestic auto industry to ‘simply vanish’ if the companies were left to go the traditional route of bankruptcy?
Since when does bankruptcy equal “vanish”? Delta airlines seems to have survived it quite well, thank you very much. Their bankruptcy or the bankruptcy of other domestic airlines hasn’t seen the domestic airline industry “vanish”. Why would anyone believe it would happen if GM or Chrysler went bankrupt?
And that said, what did he suggest in his speech today?
The administration says a “surgical” structured bankruptcy may be the only way forward for GM and Chrysler, and President Obama held out that prospect Monday.
“I know that when people even hear the word ‘bankruptcy,’ it can be a bit unsettling, so let me explain what I mean,” he said. “What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so they can get back on their feet and onto a path to success; a tool that we can use, even as workers are staying on the job building cars that are being sold.”
Seems like that is precisely what all of us were telling them to do before they started throwing bucketfuls of imaginary dollars at the two companies, wasn’t it? And you can call it “surgical”, “structured” or whatever you want in an attempt to spin this as something other than fairly ordinary bankruptcy procedures, but that’s what they’re talking about.
One of the primary reasons they’ve attempted to keep these companies out of bankruptcy court can be described in three letters: UAW.
Their problem isn’t just “old debts” which need to be cleared away. Instead it is what is euphemistically called “legacy costs” which would go as well. And those “legacy costs” include the gold plated benefits the UAW now enjoys and doesn’t want to give up.
Administration officials on Sunday made it clear that an expedited and heavily supervised bankruptcy reorganization was still very much a possibility for both companies. One official, speaking of GM, compared such a proceeding with a “quick rinse” that could rid the company of much of its debt and contractual obligations.
The thing to watch out for is whether or not this “quick rinse” in a “heavily supervised bankruptcy reorganization” included “contractual obligations” to unions. If not, it will be a “quick rinse” of taxpayer’s wallets.
Among challenges the administration faced leading up to this weekend’s decision, foremost were the efforts to draw steep concessions from the United Auto Workers union and from the bondholders.
Attempts to solidify deals with the UAW and bondholders were slowed by disagreements by both parties over how exactly the other party needed to budge. The UAW, for instance, insists it already made health-care concessions in 2005 and 2007, and argues that the bondholders have never been asked to concede anything.
“I don’t see how the UAW will do anything until they see what the bondholders will give up,” one person involved in the negotiations on behalf of the UAW said Sunday.
Progress? Apparently both GM and Chrysler have been negotiating with both the bondholders and the UAW. But there’s not much to report there:
Both GM and Chrysler are negotiating with the UAW to accept a range of cost-cutting measures, including greatly reduced work forces, lower wages and a revamped health-care fund for retirees.
GM and representatives for its bondholders remained in talks over the weekend about a deal that would force these investors to turn in at least two-thirds of the value of the debt they hold in exchange for equity and new debt.
This arrangement would force GM to issue significantly more stock than what is currently being traded in the market. In addition, the government is being asked to guarantee the new debt with federal default insurance in order to entice bondholders who otherwise wouldn’t be interested in participating in the swap.
If GM can’t eventually forge a deal with the ad hoc committee representing the bondholders, the company may be forced to issue a debt-for-equity swap without the blessing of some of its biggest and most influential unsecured investors. This would heighten the possibility of the company eventually needing to file for Chapter 11 bankruptcy protection.
Or said another way, they’ll end up doing what we said they should have done in December, less umpteen billions of taxpayer money poured down a rathole. Of course, had they reorganized under Chapter 11 as we all said they should, the Obama administration wouldn’t have been able to make this unprecedented power grab, would it?
I thought I’d quickly steal that title from one of our commenters (Brown). It pretty much encapsulates the latest and rather significant change as apparently the CEO of General Motors stepped down at the behest of the White House. Apparently Obama is now in the car business.
The two following paragraphs are significant:
“We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement,” the company said.
The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.
The folks who run the post office and Amtrack are now stepping in to run the auto industry. That’s not to say the auto industry has done so well itself, but there’s a market result for poor leadership, and it isn’t to prop up the industry and let government run it.
I’m sorry but this pain avoidance scheme which is costing us trillions of dollars we don’t have has now spun off into the absurd. If you think the auto industry is ailing now, just wait until the “Administration” engages in “restructuring the US auto industry”.
From Jim Harper of CATO speaking of the Obama on-line “Townhall meeting” yesterday:
President Obama promised to make his administration the most open and transparent in history, and taking questions from the public kind of looks like that. But it also kind of looks like gimmicky, a canned publicity stunt, rather than true openness in government.
Real transparency would include fulfilling his campaign promise to post bills online for five days before signing them. The President has now signed ten bills into law and not subjected any of them to that five-day public review.
Ten bills. That’s zero for ten in the transparancy department.
Yup, we’re just in too much of a hurry to really be transparent, apparently. And the press is doing such a great job of keeping Mr. Transparancy’s feet to the fire, isn’t it?
That is, why it isn’t the solution it is touted to be. Jeffrey Sachs of the Financial Times:
The Geithner-Summers plan, officially called the public/private investment programme, is a thinly veiled attempt to transfer up to hundreds of billions of dollars of US taxpayer funds to the commercial banks, by buying toxic assets from the banks at far above their market value. It is dressed up as a market transaction but that is a fig-leaf, since the government will put in 90 per cent or more of the funds and the “price discovery” process is not genuine. It is no surprise that stock market capitalisation of the banks has risen about 50 per cent from the lows of two weeks ago. Taxpayers are the losers, even as they stand on the sidelines cheering the rise of the stock market. It is their money fuelling the rally, yet the banks are the beneficiaries.
If you’ve been wondering why the stock market had a short rally upon its announcement, there’s your explanation. You need to read the whole thing as Sachs uses a simple example to explain his point. He concludes with:
Tim Geithner, Treasury secretary, and Lawrence Summers, director of the White House national economic council, suspect that they cannot go back to Congress to fund their plan and so are raiding the Federal Reserve, the Federal Deposit Insurance Corporation and the remaining Tarp funds, hoping that there will be little public understanding and little or no congressional scrutiny. This is an inappropriate institutional use of the Fed, the FDIC and the Tarp. Mr Geithner and Mr Summers should at the very least explain the true risks of large losses by the government under their plan. Then, a properly informed Congress and public could decide whether to adopt this plan or some better alternative.
But, of course, we’re just in too big of a hurry and the situation is too dire to actually discuss and debate the situation or do it properly through Congressional action. Instead we’ve been sold a bill of goods which, disguised as a way out, is simply a rip off of the taxpayer – again. As Jennifer Rubin notes:
So to avoid the overwhelming popular objection to perpetual bailouts and expenditures, the Obama administration will do this all “off budget” and with no hearings, Congressional debates, or votes. Not very transparent and quite imperious, when you get right down to it.
Yeah, not very “hopey changey” is it?
I’m warming more and more to my suggestion that government officials be compensated the same way they think CEOs should be compensated. If this ends up being a big loss to the taxpayer, Geithner and Summers should receive zero compensation for the outcome. And that would also go for anyone else in the administration or Congress who had a hand in implementing this plan.
This is such a basic lesson I’m surprised it has to be repeated so often.
Under pressure to narrow projected deficits, President Barack Obama’s 2010 budget proposal calls for raising more than $31 billion over the next decade by eliminating the oil and gas industry’s eligibility for various tax breaks.
When you’re thowing around 3.6 trillion dollar figures for budgets, someone is going to ask, “how are you going to pay for it?” A 3.6 trillion dollar budget certainly doesn’t answer, “by cutting spending” does it? So new sources of revenue have to be found. But in a consumer society who is the ultimate source of all revenue? If you answered, “the consumer” you get a gold star.
So revenue is the purported reason for the focus on oil companies. Additionally, they’re easy to demonize which makes for easy political pickings. That seems to be the modus operandi of this administration.
The plan would slap companies with a new excise tax on production in the Gulf of Mexico worth $5.3 billion between 2010 and 2019, and repeal the industry’s eligibility for a manufacturing tax credit worth $13.3 billion in that period.
In an era in which the word “trillions” is uttered with abandonment, billions suddenly don’t seem like much do they? Unless of course you’re a middle or lower income family. Then trillions and billions are meaningless. It’s how far can you stretch the thousands of dollars you earn each year?
Well that $13 a week tax cut you’re contemplating will quickly disappear at the gas pump if Congress and the adminstration get their way. Fuel prices will rise at the pump and may rise rather dramatically. That’s because that approximately 20 billion you see above will most likely morph into about 400 billion cost to the oil companies during that period:
The industry says the final cost of Mr. Obama’s proposals on petroleum production could top $400 billion, once his plan to put a price on greenhouse-gas emissions is factored in.
The Obama administration has generally justified its proposals by arguing that taxpayers deserve a better deal.
Yeah, I know, “lie” is a strong word. I’ve always considered it to be the knowing telling of a falsehood. And that’s precisely what this “justification” is. The “taxpayer” being talked about isn’t you in this scenario. It’s the government. You will be paying the passed through tax at the pump which the oil companies will then send to DC.
For the seeming millionth time, corporations don’t pay taxes, they collect them and pass them on. Individuals pay taxes.
Last but not least – Raising taxes in recessionary times (not matter how indirect) is a recipe for economic disaster. Additionally such taxes in recessionary times may have the effect of driving jobs offshore where taxes and restrictions are less onerous and seeing oil companies produce less oil and natural gas domestically in a time when there is a growing and increasingly worrisome energy gap.
Not a very bright policy.
It won’t be. There’s nothing “sacred” about wind and solar, certainly nothing which is going to see environmentalists back off of their opposition to anything with despoils the vision they hold of how mother earth should be:
As David Myers scans the rocky slopes of this desert canyon, looking vainly past clumps of brittlebush for bighorn sheep, he imagines an enemy advancing across the crags.
That specter is of an army of mirrors, generators and transmission towers transforming Mojave Desert vistas like this one. While Whitewater Canyon is privately owned and protected, others that Mr. Myers, as head of the Wildlands Conservancy, has fought to preserve are not.
To his chagrin, some of Mr. Myers’s fellow environmentalists are helping power companies pinpoint the best sites for solar-power technology. The goal of his former allies is to combat climate change by harnessing the desert’s solar-rich terrain, reducing the region’s reliance on carbon-emitting fuels.
Mr. Myers is indignant. “How can you say you’re going to blade off hundreds of thousands of acres of earth to preserve the Earth?” he said.
As I’ve said before, if you think that these groups are going to let anyone carpet the Mojave Desert with solar panels and endanger its eco system, you haven’t been paying attention to what has been going on here for the last 50 years.
Terry Frewin, a local Sierra Club representative, said he had tough questions for state regulators. “Deserts don’t need to be sacrificed so that people in L.A. can keep heating their swimming pools,” Mr. Frewin said.
But that’s precisely what it will take for solar to make any appreciable difference, given the technology available today. The ironic thing is the movement to plus up solar is being driven by a Democratic administration and putting it into direct conflict with one of its more loyal constituencies.
It is also causing dissent within environmental organizations as well:
“It’s not enough to say no to things anymore,” said Carl Zichella, a Sierra Club expert on renewable power. “We have to say yes to the right thing.”
We’ll see who wins in the end and what the eventual political cost will be – but you can rest assured, there’ll be nothing easy about implementing solar and wind if environmentalists have any say.