Trickle Up Poverty (16 page)
Under the new financial regulation legislation, hedge funds, the engines of the financial manipulation that triggered the 2008 meltdown, are subject to somewhat greater regulation. Those funds managing over $100 million will be required to register with the SEC, and the SEC will be required to report to Congress how investors have been protected from risks posed by short sellers.38 There are questions about whether these provisions will effectively prevent short sellers from once again raiding the markets and causing another crash, though. In fact, only a ban on short selling will protect legitimate investors from returning to the market without risking having their investments devalued by hedge fund raiders. Rasmussen Reports sums up the likelihood that Congress is really addressing the root causes of the current economic situation with this headline: “72% Are Not Confident Congress Knows What It’s Doing When It Comes to The Economy.”39
Don’t count on the Federal Government to start listening any time soon.
Writing in Rolling Stone magazine, Matt Taibbi sums up the situation:
Some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street’s political power by institutionalizing the taxpayer’s role as a welfare provider for the financial-services industry. At one point in the debate, Obama’s top economic advisors demanded the power to award future bailouts without even going to Congress for approval—and without providing taxpayers a single dime in equity on the deals.40
In the most sensible solution yet proposed for the AIG bailout, the website DotPenn.com envisions a scenario in which a Samurai is brought in to train AIG executives to commit seppuku, Japanese ritual suicide, because, as the Samurai explains to his audience, “you have dishonored your families, your company, and your nation.”41
Put the Brakes on Auto Bailouts
TARP funds were also used to prop up failing automakers General Motors and Chrysler. The Bush administration released $17.4 billion to the two automakers in December, 2008.42 A year later, GM and Chrysler had gone through more than $40 billion in additional TARP funds.43 In taking over the two auto giants, the Obama administration ignored the law and awarded huge stakes in the companies to the auto unions, offering stockholders pennies on the dollar while reducing them to minority status. The United Auto Workers (UAW) labor union now owns about 40 percent of GM and 55 percent of Chrysler and effectively controls both companies, something Karl Marx himself would have applauded!
The General Motors bailout is a perfect example of what this corrupt Obama regime considers fair: Unions got a hundred cents on the dollar, primary shareholders, who should have been first in line, were forced by government fiat to settle for twenty cents on the dollar. Illegal, unconstitutional, done deal. But the corruption and inequity don’t stop there. You might be familiar with the commercials that aired in the spring of 2010 in which the then-new president of General Motors, Ed Whitacre, an Obama appointee who is paid nearly $10 million annually, brags about how his company is paying back the bailout funds it received.
In a turn of events typical of this administration’s perverted notion of fairness, General Motors robbed Peter to pay … Peter. The former automotive giant “paid back” the federal bailout money given to it by taking money from another chunk of government bailout money that it had sitting in an escrow account. GM lost billions of dollars in its first year as a ward of the state, and so it was little wonder that eyebrows were raised when it “paid back” some of the “loan” from taxpayers.
Of course, as it turned out, GM didn’t pay it back at all. We’re still on the hook for a company none of us would likely have bought stock in the first place, if we hadn’t been forced to by the Obama administration. By the way, the Ford Motor Company, which refused federal bailout money, announced a $2.1 billion profit for the first quarter of 2010. The company also announced that it was adding employees and expanding production. That means nothing to Obama, who thinks Washington is the answer to the questions Detroit faces.
The crisis that faced America’s big three auto manufacturers before the government bailed out GM and Chrysler arguably had a single source: legacy costs resulting from union contracts negotiated half a century ago. The financial burden thus incurred weighed down their balance sheets to such a degree that, even if the industry in which they compete had been thriving, it would have been extremely difficult for them to maintain long-term profitability.
As automobile manufacturing became a global industry, the foreign manufacturers that expanded their operations into the United States flourished. But while Toyota and Honda, along with relative latecomers Hyundai and Kia, have a significant manufacturing and sales presence in the United States, they don’t have the staggering labor-related financial obligations under which GM, Chrysler, and Ford are struggling.
GM, for instance, has some 450,000 retirees. That’s more than three times the number of its current full-time employees, to whom GM pays pensions and for whom it provides medical care. By some estimates, medical costs for retirees alone add more than $1,500 to the average cost of each GM automobile.44 Need I point out the obvious? The higher sticker price to cover these perks contribute to stalled sales. What’s more, the company faces an unfunded liability of more than $80 billion, about half its annual pre-downturn gross sales, for future healthcare costs for employees and retirees and their dependents.45
Without the balance-sheet-killing albatross resulting from union contracts, foreign manufacturers have been doing very well in the United States. When Obama bailed out the auto industry by nationalizing GM and Chrysler, he put the burden of saving the industry from the consequences of union contracts negotiated by his leftist political forbears squarely on the shoulders of American taxpayers. In doing so, he virtually assured that these companies would either sink into oblivion or become permanent corporate wards of the state, with American taxpayers footing the bill.46
Unions have been losing members and influence in the private sector for years. Unfortunately, in the public sector, their presence has continued to grow. Andy Stern, president of the 2.2 million-member Service Employees International Union (SEIU), has logged more visits to the Obama White House than any other outsider. Stern is what conservative commentator Kimberly Morin describes as a “progressive, anti-business, anti-American left wing extremist who deserves no place in the White House.”47 The SEIU contributed more than $60 million to Obama’s presidential campaign.
Like Hitler’s brownshirts, Obama’s purple-shirted SEIU-member supporters, who seem to appear everywhere he speaks, are his equivalent of union storm troopers. They’ve showed up in several cities to “drown out” the voices of town hall meeting attendees protesting Obama’s policies. They turned out in Massachusetts in support of Martha Coakley in her unsuccessful campaign against Scott Brown for the Senate seat vacated by Teddy Kennedy. They assaulted Kenneth Gladney, one Tea Party protestor, beating him badly in order to intimidate him and prevent him from selling “Don’t Tread On Me” flags.48
Union membership is declining dramatically in the private sector. In 2009, there were more unionized employees in government (7.9 million) than in the private sector (7.4 million). By this year, union membership had dropped to 12.3 percent of wage and salary workers from more than 20 percent in 1983, with 37.4 percent of public sector workers unionized while only 7.4 percent of private sector workers are. It means that private industry in our free market has discovered that unions are budget-busters and done something about it. It also means that, being a Marxist president who was ushered into office in no small part because of union support, Barack Obama is going to do anything he can to reward those supporters.
That, in turn, plays out as support for such policies as “card check,” the elimination of the secret ballot for workers faced with voting for or against unionizing their shops. And it means that every industry the president is able to nationalize will soon become a unionized industry, helping the president and his union thug allies consolidate their power and gain ever-increasing control over our lives and our jobs. The fact that Obama is clearly using his relationship with the SEIU to further union interests in the United States attests to his ongoing push to bring labor unions back to an unearned and undeserved position of prominence in America.49
When Obama “rescued” GM and Chrysler, he committed American taxpayers to underwriting the leftist agenda of the past half century, as manifested in labor agreements antithetical to capitalism. That it’s taken so long for this leftist tactic, in tandem with the current exacerbating financial crisis, to finally bring the American auto industry to its knees is a testament to the resilience of capitalism. That Obama’s “solution” to this crisis might spell the end of American automobile manufacturing should not be lost on those of us who will have to bear the financial burden of “saving” it.
For all the manipulation and downright fraud that went into the passage of TARP legislation, one of the most egregious aspects of the law is that it creates a permanent debit on our balance sheet. When banks do pay back their TARP loans, guess what? The money doesn’t go back to the taxpayers who are underwriting the government borrowing that made it possible. It is treated as part of the general revenue of the federal government, to be spent by our elected and appointed officials on whatever they decide they want to spend it on. All repayment of TARP money does is give the government license to increase its TARP spending.50
And so, Barack Obama “inherited” a situation any leftist would love.
Left leaning hedge fund managers and their cronies appear to have engineered a financial crisis that they could blame on the “capitalist pigs” and, in turn, elect one of their own on the grounds that the capitalists themselves had undermined the very foundations on which they built their empires. Obama used this phony leverage to enact, less than a month after his inauguration, a nearly 1,000-page “stimulus” bill that requires the government to borrow upwards of $800 billion. This added to the national debt and tying up capital that would otherwise be available to fund private sector expansion that might actually create jobs.
The bill, which Mike Huckabee named the Congressional Relief Action Program (CRAP), was designed to “create” or “save”—as if saving jobs can be measured—more than three million jobs, according to it supporters. After a year, the White House’s own website declares that 1.2 million jobs have been “funded.” It appears as though the administration has given up trying to claim that any jobs were actually created or saved.
The primary things funded by the bill include expanded unemployment benefits, food stamps, healthcare subsidies for those out of work, and aid to states. The “aid to states” category is where most of the jobs have been funded.51 It also proposed to fund “shovel ready” local, state, and federal construction projects, although there were almost no such projects ready to be funded, thanks in no small part to the difficult process of satisfying all the leftist environmental-interest-group-related paperwork required to initiate such projects. A year after its passage, the bill has had little effect, except to contribute to international credit ratings agency Moody’s threat to downgrade the U.S. credit rating.
Meanwhile, the unions are far from losing power in the Obama administration.
Approximately eleven seconds after the last member of Congress left Washington at the beginning of the 2010 Easter Break, President Obama made fifteen recess appointments of administration officials. When President George W. Bush exercised this constitutional right given to our presidents, the Old York Times reported approvingly on the fact that Congressional Democrats were livid at Bush’s malfeasance and had vowed to make sure Bush’s constitutional rights were denied if they could find a way.52
Their reasons centered on the fact that Bush, in appointing Charles W. Pickering and William H. Pryor, Jr., wasn’t choosing judges who were willing to ignore the constitution when they rendered their decisions in important cases. Speaking for Democrats, former Senator Tom Daschle, who was himself voted out of office in 2004 and subsequently forced to withdraw his name from consideration for an appointment as Health and Human Services Secretary in the Obama administration for tax evasion, insisted that the president promise to “no longer abuse the [recess appointment] process.”53
Barack Obama, on the other hand, merely appointed Craig Becker to the National Labor Relations Board (NLRB) after Becker’s appointment had failed to get the requisite sixty Senate votes to be approved by the Senate. Rather than savage Obama after his recess appointments, as Democrats did Bush, forty-one Republican Senators chose to send a letter to Obama prior to the appointment strongly recommending that he not appoint Becker to the NLRB. Becker is an Andy Stern—Service Employees International Union (SEIU) lapdog, and his appointment represents Obama’s paying back the labor unions that spent hundreds of millions of dollars to help get him elected. Becker had been the associate general counsel for the SEIU, and his appointment gives labor the advantage it’s long been seeking at the
NLRB.54
The NLRB is charged with supervising union elections and interpreting the National Labor Relations Act, and Becker’s appointment gives the organization another leftist voice that will likely tip the balance of the agency further in the president’s favor, meaning that Obama can again bypass the legislative process and rely on the NLRB to implement such affronts to democracy as “card check.” The so-called “Employee Free Choice Act,” is exactly the opposite of what its name implies. Among other things, card check eliminates the secret ballot in union elections, meaning that every employee’s vote will be known by union organizers. It’s a strong deterrent to free elections, one that Becker favors.
Becker has also argued, in an article published in the Minnesota Law Review, that “traditional notions of democracy should not apply in union elections.”55 Becker, associate general counsel for the SEIU, is also a strong defender of ignoring immigration law. In a 2001 speech, Becker admitted that the “SEIU and other large unions have a very, very progressive position on immigration and immigration reform.”56 With Becker’s appointment, another avenue of assault on our democratic institutions can’t be far behind.