What the (Bleep) Just Happened? (14 page)

It also turns out that the Solyndra loan was restructured so that in the event of a default, the American taxpayers would be moved to the back of the line, behind private investors such as Obama supporter Kaiser. Amazingly, just days before the bankruptcy was announced, the Obama administration was considering a taxpayer-funded bailout for the company. When that didn’t materialize, Team Obama began spinning faster than a circus clown with a bunch of plates. On the day the bankruptcy was announced, a spokesman for Obama’s Department of Energy said, “The project we supported succeeded.” In the corrupt, crony-driven world of the Obama redistributionism, the mega-waste of $535 million of taxpayers’ money, a bankruptcy, and the layoffs of over one thousand people are a “success” and in the words of Obama himself, “a good bet.”

But what about “green job” creation? Surely all of those hundreds of billions of dollars created countless “clean energy jobs,” right? The Energy Department loan guarantee program from which Solyndra and other bankrupt or shaky companies benefited created ONE new permanent job for every $5.5 million spent. If a private company had been loaned $535 million, it would have created hundreds, perhaps thousands, of jobs. But in Solyndra’s case, the government didn’t just choose winners and losers, it took a loser and tried to make it a winner. And the taxpayer was left holding the half-billion-dollar bag. Furthermore, in the fall of 2011, the Department of Energy’s Office of Inspector General announced over one hundred investigations into how “stimulus” money was spent. And Peter Schweitzer of the Hoover Institution reported that 80 percent of all green energy “stimulus” recipients were Obama campaign donors. Solyndra was just the tip of the bogus melting iceberg.

To add more corruption to injury, thousands of other companies that got countless billions of dollars in taxpayer “stimulus” funds owed the government millions of dollars in unpaid taxes. According to the Government Accountability Office, at least 3,700 government contractors and nonprofit organizations that got more than $24 billion from the “stimulus” owed $757 million in back taxes as of September 30, 2009. An engineering firm that received $100,000 in a “stimulus” contract owed $6 million in taxes. The Internal Revenue Service called it “an extreme case of noncompliance.” I’ll say. A social services nonprofit that got more than $1 million in “stimulus” funds owed taxes of $2 million. And a security firm that owed $9 million got more than $100,000 in funds. For Team Obama, no taxes, no problem!

Perhaps the most spectacular example of Obama “stimulus” cronyism and abuse of power was his abrupt firing of an inspector general who was investigating Kevin Johnson, a former NBA star and Obama supporter, for misusing taxpayer money. Gerald Walpin found that an $850,000 AmeriCorps grant to Johnson’s Sacramento nonprofit was being redirected toward bumping up staff salaries, meddling in a local school election, and having AmeriCorps members perform personal services, such as washing Johnson’s car. Walpin recommended that Johnson, an aide, and the nonprofit itself be “suspended” from receiving future federal funds.

In November 2008, however, Johnson was elected mayor of Sacramento, and his suspension might have barred the city from receiving “stimulus” money. In April 2009 Walpin received a phone call from the White House telling him he had one hour to submit his resignation and clear out his desk. It would seem that if you’re a former point guard for the Phoenix Suns, you get preferential treatment from the Hoop Dreams President. But if you’re an honest old man and a good public servant doing your job, then you get fired and humiliated by the Obama White House. There was one problem, however: in 2008 Congress had passed the Inspector General Reform Act, sponsored by none other than Senator Obama. It required the president to give thirty days’ notice and a reason before terminating an inspector general. So Team Obama had to stand down on the Walpin firing for one month, during which they tried to smear him for “inappropriate conduct” and for being “disoriented and confused.” This was economic stimulus, the Chicago way.

With such a massive trillion-dollar waste, it’s no wonder Team Obama could so easily indulge in Orwellian proclamations of jobs “created or saved” by the “stimulus,” a measurement they created out of thin air. No one could prove the negative: that without the “stimulus,” X number of jobs would have been lost. So they just made up the number X. When the “stimulus” was passed, Team Obama claimed that it would “create or save 3.5 million jobs.” The deceptive language of “jobs created or saved” is much like that of “spending cuts,” which are not actual cuts but reductions in fantasized budget projections. It’s all hand shadows dancing on the wall. This “jobs created or saved” garbage is like trumpeting your diet when you failed to gain another twenty pounds by forgoing a second Whopper for lunch. Either way, you’re still fat and sloppy.

When jobs hemorrhaged to the point that the unemployment figure sailed to 10.2 percent in October 2009, Team Obama was forced to back off from making up how many jobs were “created or saved.” By December 2009, they were shamed into abandoning their Alice in Wonderland formula, sending out a spokesman from the very FDR-sounding “Recovery Board” to put the final nail in the coffin: “Since the Office of Management and Budget is not going to use ‘jobs created or saved’ anymore, we’re not going to use it either.” And by the fall of 2011, Team Obama had bailed on the entire charade, referring only to “jobs supported.”

The leftists sold the “stimulus” as a way to generate confidence that the government was large and in charge, and that, in turn, was supposed to spark economic confidence and growth. In reality, the “stimulus” was meant to be a nearly trillion-dollar redistribution of income. In practice, it was a redistributive mess. Job creation, when any jobs were created at all, fell far short of what is required just to absorb new entrants into the job market alone, and unemployment mostly stayed in the 9 percent range for the next two years.

GDP growth has also remained anemic, with quarterly growth either paltry or nonexistent. By comparison, during the tax cut–driven Reagan recovery of 1983–1984, quarterly growth rates soared to 7 and 8 percent, while on average between 300,000 and 500,000 new jobs were created each month. During the three summer months of 1983, 1.7 million new jobs were created and the unemployment rate fell a full percentage point. That was a real Recovery Summer!, unlike the bogus Recovery Summers! Team Obama kept telling us to expect (note the emphatic exclamation point, also put to good use by the ’80s pop duo Wham!). Indeed, Recovery Summer! was akin to a slasher flick in which nobody survives. The proof is in the payout pudding: the “stimulus” was signed on February 17, 2009. Through August 5, 2011, $668 billion of the “stimulus” money was paid out. That equates to $743 million spent per day and $30 million spent per hour. On nothing, for nothing, except to fulfill the kooks’ redistributionist fantasy. On that score, it succeeded wildly.

As a huge political slush fund, the “stimulus” followed in the grand tradition of the bailouts. Bailouts are perhaps the most odious concept in capitalism. The free market guarantees opportunity. It does not guarantee outcomes. According to the kooks, that’s capitalism’s fatal flaw. Government should be in the business of guaranteeing outcomes in order to enforce “fairness” and “equality.” For the banks, the kooks—when they’re not regulating them to death—are good for business. Banks do well with big-government spending because they get major fees in debt issuance, so they’re inclined to work with the kooks. Bigger government spending, bigger fees for them.

When the financial crisis hit in the autumn of 2008, the panic was so widespread and the problems so grave that even the Bush administration agreed to TARP, a $700 billion fund approved by Congress, to stabilize the shaky banks and unfreeze lending, which had seized up. Half of the designated amount, $350 billion, went out under President Bush. That first half was pushed onto Congress by Bush’s Treasury secretary, Henry Paulson, a humanoid who resembles the tall, thin alien at the end of
Close Encounters of the Third Kind
. Individual members of Congress still have panic attacks and nightmares about Paulson’s powers of mind persuasion, which he used to get their TARP vote. Some have even claimed that Paulson took them up into his mother ship and gave them an anal probe. Having his own misgivings about the bailout, Bush reserved the balance for use at the new president’s discretion. Obama then released the remainder. On February 5, 2009, the new Treasury secretary, Timothy Geithner, reminded the bankers that they were now wards of the state. “Public assistance,” he pointedly told them, “is a privilege, not a right.”

They joined the insurance giant American International Group (AIG) and Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) largely responsible for the housing collapse, and other financial institutions of all sizes, in government welfare-dom. In 2008 alone there were over 740 separate bailouts totaling hundreds of billions of taxpayer dollars.

There were dozens of other bailouts that took place after September 2009, and many of the banks and other financial entities that took or were forced to take bailout money repaid it with interest. At the time, the argument prevailed that only the government was big enough and flush enough to pump enough capital into the banks, many of which were designated “too big to fail.” In other words, if those financial institutions were allowed to collapse, much of the financial system as well as those around the world would also collapse, creating a global economic catastrophe. But the banks were given money through TARP to lend and instead sat on it. The Federal Reserve paid them interest to hold the money, thus defeating the purpose of the capital infusion to unfreeze lending.

Despite that stated rationale of preventing an economic Armageddon, many Americans viewed as corrupt the bailouts of banks that had made risky bets. The countervailing argument was that if market forces were allowed to play out, the faltering banks would have gone under and the pain associated with their collapse would have been acute. But the market would have shaken out the failures, the toxic assets, and the bad loans, the system would have flushed through, and in the end the financial sector would have been healthier. This was the same argument against massive government intervention in the housing sector, which has also prevented that market from clearing itself out. Government intervention prevents sharp pain in the near term but ends up prolonging the pain over a longer period of time. It staves off the inevitable but never fully avoids it.

For the kooks, the bailouts served another purpose: to get the financial institutions under the wing of the government, from which it would be exceedingly difficult to extricate themselves. As Geithner told them, the banks (as well as every other industry that either needed or was forced to take federal money) were turned into welfare children. And the leftists’ objective was to keep them so for as long as possible. On September 14, 2009, one year after the initial financial panic, the
New York Times
ran a piece titled “U.S. Is Finding Its Role in Business Hard to Unwind,” in which they wrote, “Mr. Obama plans to argue, his aides say, that these government intrusions will be temporary. At the same time, however, he will push hard for an increased government role in overseeing the financial system to prevent a repeat of the excesses that caused the crises.” And so he did: when TARP ran its course, the Obama administration sought and got a major financial regulatory overhaul, the twenty-three-hundred-page Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank (named for those two paragons of congressional financial oversight, Senator Christopher Dodd and Representative Barney Frank), which enshrined in law the concept of “too big to fail” and, with it, the rationale for a perpetual government presence. One form of dependency ended and was replaced by another. Like a drug addict looking for a higher thrill, eventually marijuana just doesn’t do it, and you have to move on to the harder stuff like cocaine and heroin. By the look of the Hill staff who wrote the Dodd-Frank bill, they must have been sampling the product.

Joining the banks in Bailoutville were General Motors and Chrysler, which became poster children for why government should not inject itself in the private sector. In the autumn of 2009, the two automobile companies faced a collapse that would assuredly lead to their ultimate end as viable businesses and the loss of tens of thousands of jobs. Lost in the chaos was the fact that a third American car company, Ford, had seen the difficulties approaching, realigned its business operations, made cars that consumers actually wanted to buy, and did not require or ask for taxpayer money. That’s what companies are supposed to do in a market system. Sadly, most of the government’s and media’s attention was focused on the companies that had failed to adapt to the market—and got rewarded for it.

President Bush began the auto bailout ball rolling, and Obama picked it up with relish. Obama saw not only an opportunity to partially nationalize the auto industry but a chance to pay back some of his most devoted supporters. The auto bailouts were a systematic redistribution of great amounts of ownership from existing shareholders and creditors to the auto unions. Like the “stimulus,” the auto bailouts were a political act, not an economic one. If GM and Chrysler had been allowed to go into standard bankruptcy without the government bailout, restructuring would have taken place, an individual or company (U.S. or foreign) would have come in and paid the value, and the companies would have moved on. The unions, however, would not have fared as well. Thus, the Obama intervention.

An estimated $80 billion in taxpayer dollars were poured into GM and Chrysler. In the bailouts, GM gave the United Auto Workers (UAW) union 17.5 percent of its common stock, $6.5 billion of preferred shares, and a $2.5 billion note to fund a trust that will take over retiree health care costs. In the Chrysler bankruptcy, the UAW owned 55 percent of the stock in the restructured company. Here’s the deal. If GM and Chrysler want to be Government Motors, that’s fine. But from now on, I want all cars that come from those two companies to say so. I want them covered in images of the Obama administration, just like the advertisers covering NASCAR vehicles. I want side view mirrors shaped like Obama’s ears, I want the front bumper to resemble Janet Napolitano’s triple chin and I want a tailpipe shaped like Biden’s finger. Those sweetheart union deals pale in comparison to another one the UAW got in, of all places, ObamaCare. Bloomberg News uncovered an even bigger bailout to the UAW buried deep in the health care “reform” bill, which included $10 billion to pay for some of the most expensive medical costs for millions of autoworkers, steelworkers, teachers, and other early retirees with coverage. This move helped to offset health care concessions made by the UAW as part of the taxpayer rescue of GM and Chrysler. In other words, the union ended up giving up nothing. This was a classic case of Barry Three-Card Monte, where the chief confidence man in the White House makes a mark out of the taxpayers by taking sweet UAW deals out of one bill and dropping them into another. It’s simple: create a fake UAW stooge willing to make concessions who says he’s on the side of the American people, while he’s really on the same side as the card dealer the whole time.