Sale of the U.S. government’s stake in General Motors Corp. ends a sorry saga. Not only were Americans lied to about the costs, but the bailout underscores why replacing market forces with federal bailouts doesn’t work.
The Obama administration says it will unload 200 million shares — or about 40% of its holdings — back to GM right away. The rest, 300 million shares, are to be sold by March 2014.
[…]Well, GM on Wednesday said it will buy back the 200 million share government stake for $5.5 billion, or $27.50 a share.
The break-even point on the government’s total holdings was $53 a share. But now, with $20.9 billion in taxpayer funds left to pay off from 300 million shares, the break-even point has risen to $69.72 a share.
In other words, at current prices, taxpayers are sitting with a loss of 61%, or nearly $15 billion, on their investment.
So where did the money go, then?
According to a study last summer by the Heritage Foundation, the $80 billion auto bailout gave the UAW and its members nearly $27 billion due to the fact that GM couldn’t shed its outrageously expensive labor contracts, something it could have done in a normal bankruptcy.
As such, Obama didn’t bail out the auto industry; he bailed out the unions. Without the unions’ added costs, taxpayers would have owed nothing.
It’s not hard to see how this happened. The UAW and its affiliates give tens of millions of dollars each election cycle, almost entirely to Democrats.
This union influence explains why Obama’s auto czars, Steve Rattner and Ron Bloom, arranged a government bankruptcy for GM that flew in the face of hundreds of years of bankruptcy law and violated investor rights.
Bondholders took huge losses, while unions got a big chunk of ownership in GM stock that they weren’t legally entitled to.
In a shocking display of favoritism and blatant unfairness, GM’s union workers kept their pensions, while nonunion workers at GM spin-off Delphi lost theirs.
Those unions paid Obama back by working hard to get him re-elected. That’s how socialism works.
Twelve lawmakers wrote to House oversight committee Chairman Rep. Darrell Issa and Senate Homeland Security and Governmental Affairs Committee Chairman Sen. Joe Lieberman asking that they expand current probes into a Department of Treasury scandal that left 20,000 non-union Delphi retirees without their pensions after the 2009 General Motors bailout.
The members — Sens. Rob Portman of Ohio, Thad Cochran of Mississippi and Roger Wicker of Mississippi, and Reps. Pat Tiberi of Ohio, Steve Stivers of Ohio, Mike Kelly of Pennsylvania, Dan Burton of Indiana, Bill Johnson of Ohio, Paul Gosar of Arizona, Marcy Kaptur of Ohio and Gregg Harper of Mississippi — are led by Ohio Republican Rep. Mike Turner.
“We are writing to request that the committees which you chair submit additional requests for documents from the Department of the Treasury and the Pension Benefit Guaranty Corporation (PBGC) on matters pertaining to the unjust termination of Delphi salaried retiree pensions in the federal government’s bailout of General Motors,” the lawmakers wrote. “As you may know, the pensions of Delphi salaried retirees were significantly reduced in the aftermath of the bailout, while their union counterparts were made whole. These retirees, regardless of labor affiliation or not, spent their careers working alongside one another and should not be treated differently in their retirement. This decision of the Auto Task Force, Treasury, and the PBGC continues to affect roughly 20,000 current and future retirees across the nation.”
The bipartisan support for this renewed investigation call — Kaptur is a Democrat — undercuts the Obama campaign’s accusations that his GOP rival, Mitt Romney, and Turner are trying to “politicize” this scandal.
Portman, who’s widely considered to be on Romney’s short list of potential vice presidential candidates, said in a statement that he has “met with these hard-working Ohioans who lost a significant portion of their pension benefits while other retirees from the same company received far better treatment.”
“The idea that the administration played politics with their pensions is beyond disappointing, and it deserves answers,” Portman said. “The administration’s decisions have caused pain and loss to thousands of workers and their families as a result of their reduced benefits. This matter deserves continued scrutiny from Congress, and the administration must be called upon to account for its decisions.”
According to a new Government Accountability Office report, the federal government has so far handed out $2.7 billion out of a $5 billion program squirreled away in ObamaCare.
The Early Retiree Reinsurance Program is advertized as a way to “stabilize the availability of employer-sponsored coverage for early retirees,” according to a Health and Human Services memo.
The argument goes that companies are increasingly dropping retiree health benefits, leaving those who retire before becoming eligible for Medicare in a jam — either they face exorbitant rates for insurance or expose themselves to potentially catastrophic health costs.
[…]According to figures obtained by IBD, 10 of the top 12 recipients are either unions or public employee groups. In fact, the biggest single recipient was the UAW Retiree Medical Benefits Trust, which alone grabbed more than 8% of all the funds handed out so far. Other union beneficiaries include the United Food and Commercial Workers, the United Mine Workers and the Teamsters.
Meanwhile, almost half of the money doled out has gone to state and local governments, the GAO found.
[…]The problem is that these groups are the least likely to drop their retiree health benefits, calling the lie to the Obama administration’s whole “stabilizing” excuse.
In fact, over the past 10 years, the share of state and local governments offering retiree benefits increased — climbing to 83% from 80% in 2001, according to an annual Kaiser Family Foundation health benefits survey.
That’s at a time when private companies have been dropping retiree health plans to cut costs, with the share of large firms offering such benefits falling to 26% this year from 37% in 2001, the Kaiser survey shows.
So this ObamaCare money is really being used mainly to pay off unions and governments that would have provided these benefits anyway.
While the law forbids employers from using the funds for anything other than retiree health costs, money is fungible, freeing up union and government resources for other uses like, say, helping Obama get re-elected.
United Steelworkers President Leo Gerard, speaking on radio host Ed Schultz’s show last Monday, declared, “What we need is more militancy.” Asked to clarify, Gerard said: “I think we’ve got to start a resistance movement. If Wall Street Occupation doesn’t get the message, I think we’ve got to start blocking bridges and doing that kind of stuff.”
The Canadian union leader then denounced Americans’ 2008 election of Tea Party representatives to the House as “nut jobs,” and called for more force and illegality: “We ought to be doing more than occupying parks. We ought to start occupying bridges. We ought to start occupying the banks’ places themselves.”
[…]Two months ago another White House ally, Teamsters chief Jimmy Hoffa, openly called for his members to “take these sons of bitches out” in Congress, as Obama stood silently at his side. “They got a war with us and there’s only going to be one winner,” he growled.
Hoffa’s Teamsters, it should be noted, have the most violent record of all labor unions, clocking in 454 incidents of violence since 1991, according to the National Institute for Labor Relations Research in Washington.
Then there’s the SEIU-linked Acorn, which has made OWS its latest cause. The Obama-tied group had supposedly disbanded, but now operates as New York Communities for Change (NYCC), using the strong-arm political tactics of community organizer Saul Alinsky.
Since it was discovered that NYCC was a prime funder and director of the Occupy movement, Fox News reports that the group has been shredding documents, firing staff, offering up alibis and surveilling Fox News personnel.
One starts to wonder: Is Occupy Wall Street a grass-roots movement, or a corrupt, violent organization whose real center is the Obama administration itself? One thing’s for sure: It isn’t interested in democracy.
To start with the obvious, even though Obama denies that he will manage the companies, we have all learned by now that he has no problem doing the very thing he is denying. (In ordinary life this political artfulness is called lying). He fired one CEO, forced Chrysler to accept Fiat (WSJ.com 6/5/09), told GM that it cannot move its headquarters out of Detroit (WSJ.com 6/3/09), and may have ordered that whoever buys GM’s European auto maker Opel must agree not to export cars to the U.S.. (WSJ.com 6/1/09) These decisions were made in secret with no Congressional oversight, by a man with no training or experience of any kind in business, never mind the auto business. The companies will be run by politicians, who will make decisions for the benefit of political agendas rather than on sound business principles. The result will be that the auto companies and the union will not make the deep changes required to make the companies profitable, so we can anticipate many more cash infusions.
Gary Jason writes about how Obama is intervening in the free market to screw creditors and take care of his union supporters with taxpayer bailouts.
I will argue that the unprecedented action by the current administration in manipulating the bankruptcies of Chrysler and GM, and in effect nationalizing the companies, is egregiously unethical by every one of these major ethical perspectives. For this reason, I believe that this action makes it morally imperative for Americans to boycott these socialized companies.
… the Obama administration spent tens of billions in taxpayers’ dollars to take control of the companies and force the outcome it wanted. Obama, who received millions in contributions from the United Auto Workers union, has forced a settlement that will give UAW far more equity in the companies when they come out of bankruptcy than it was due compared to the secured debt holders.[i] Obama’s agents used threats and intimidation (calling holdout bondholders speculators and hedge funds at one point) to get the creditors to accept being shafted. (WSJ.com 5/11/09)The result is that the vast majority of the two companies will be almost clearly owned by the federal government and the UAW, and the UAW arguably controls the federal government.
The result is drenched in irony. The UAW was a major reason why the companies hit the wall, and now the UAW will be rewarded with major control and ownership. It is as if a rape victim were forced to marry her rapist. The result makes the crony capitalism we saw in Russia look clean by comparison; it, at least, was a kind of capitalism.
And what are the long-term consequences?
…To start with the obvious, even though Obama denies that he will manage the companies, we have all learned by now that he has no problem doing the very thing he is denying. (In ordinary life this political artfulness is called lying). He fired one CEO, forced Chrysler to accept Fiat (WSJ.com 6/5/09), told GM that it cannot move its headquarters out of Detroit (WSJ.com 6/3/09), and may have ordered that whoever buys GM’s European auto maker Opel must agree not to export cars to the U.S.. (WSJ.com 6/1/09) These decisions were made in secret with no Congressional oversight, by a man with no training or experience of any kind in business, never mind the auto business.
The companies will be run by politicians, who will make decisions for the benefit of political agendas rather than on sound business principles. The result will be that the auto companies and the union will not make the deep changes required to make the companies profitable, so we can anticipate many more cash infusions.
Worse yet, we can foresee that now that the UAW and feds have control of Chrysler and GM, they won’t stop there. Their natural instinct will be to achieve monopolistic control. The UAW has helped drive Chrysler and GM to the wall and is now co-owner with the government of most of the equity. They will likely next target Ford, to get equity ownership of it. Then look for the UAW and the administration it controls to attempt to force the employees of foreign auto makers in this country to join the UAW, or use environmental and other regulatory laws to put those companies out of business.
Obama and the Democrats are willing to use threats and intimidation to ram through their socialist policies. Here is a long list of unconstitutional interventions. (H/T 4Simpsons) He does not care about laws and rights – he wants power over your liberty. He wants to control your life.
The Road to Serfdom
For those of you who did not know before, the greatest economics book of the 20th century was Nobel-prize winning economic F.A. Hayek’s “The Road to Serfdom“, which is analyzes the history of socialism and fascism in Nazi Germany and Russia. This book is #1 on Human Events’ Top 10 books every Republican should read.
Human Events writes:
Friedrich Hayek (1899-1992) was an Austrian economist awarded the Nobel Prize in 1974. He defended capitalism and individual liberty against collectivism. In “The Road to Serfdom,” he describes how government planning of the economy leads to tyranny. President Reagan cited Hayek as one of his favorite economists. “To decentralize power is to reduce the absolute amount of power, and the competitive system is the only system designed to minimize the power exercised by man over man,” wrote Hayek. “Who can seriously doubt that the power which a millionaire, who may be my employer, has over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work?”
When Michele Bachmann stands up on the floor of the House and advocates against government intervention in the free market, she is literally standing between the American people and mass-murdering, rights-trampling, faith-destroying communism.
And by the way, Obama means to do the exact same thing with the health care and energy sectors.
Has Obama been a good President for Christians? Should Christians have voted for him? How well has he done at fulfilling his campaign promises to pro-life and pro-marriage social conservatives?
Watch this 7-minute video and see for yourself how prudent it was for Christians to put their faith in Obama’s promises. (H/T Gateway Pundit)
The Cloak Room lists the decisions of interest to Christians and social conservatives from the first 100 days of Obama’s regime.
I think we should judge presidential candidates on their record, not on their speeches or their appearance. How did Obama vote before his campaign started? Did the Christians who voted for Obama take the time to find out?
This video follows the story of the Democrats’ Hate Crime bill, which allows the government to imprison bloggers and Christians, (much like Iran’s theocratic government). My original post on Obama’s attempts to intimidate Chrysler’s creditors, thereby undermining the Constitution and the rule of law, is here. And it has now been corroborated over at Hot Air, here.
Regarding the intimidation of Chrysler’s creditors, Hot Air has a follow-up story from the Business Insider:
Creditors to Chrysler describe negotiations with the company and the Obama administration as “a farce,” saying the administration was bent on forcing their hands using hardball tactics and threats.
Conversations with administration officials left them expecting that they would be politically targeted, two participants in the negotiations said. …
The sources, who represent creditors to Chrysler, say were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person said 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.
Hot Air comments:
Well, that’s certainly reassuring. The man at the helm during one of the biggest economic crises in decades is a madman who will act in an unpredictable and irrational manner if he doesn’t get his way. It sounds like they paint Obama as either a lunatic or a petulant child.
The “madman theory” of the Presidency? Is that what uninformed Christians who voted for Obama expected?
UPDATE: Ace has more here and here. (H/T Commenter ECM) And Hot Air (Ed Morrissey) has more here.