Commentary Magazine


Posts For: May 10, 2009

Re: Money Well Spent

A little while ago, I wrote a piece discussing how much money labor unions had spent on getting Barack Obama elected, and what kind of return they’re getting on that investment. There’s an old joke that defines an “honest politician” as “one who, once bought, stays bought.” By that standard, President Obama is a remarkably honest politician.

When Chrysler was teetering on the brink of bankruptcy, the Obama administration put together a plan for avoiding the court filing. Under the plan, Chrysler would be majority-owned by the United Auto Workers, with the next-biggest shareholder being the Italian automaker Fiat. This plan had one weakness: it required Chrysler’s creditors to go along, setting aside the lion’s portion of their claims and writing off most of their debt.

No problem, they thought. Most of those creditors had accepted TARP money, so the government already had a bit of leverage to twist their arms.

Unfortunately, enough non-TARP creditors refused to write off massive amounts of their investors’ money that they forced Chrysler into bankruptcy anyway.

Well, the Obama administration appears to have paid very close attention to that move, because they’re now pulling pretty much the same play on California.

The Golden State is, as most everyone knows, teetering on the brink of financial collapse. The state government  has instituted a whole series of budget cuts, shaving off about $74 million.

One of those cuts was in the pay for health-care workers who assist low-income disabled and elderly Californians. Their union didn’t like it one bit, so they called up the White House and asked if was something could be done.

The Obama administration informed California that its attempt to save $74 million could cost them $6.8 billion — in TARP money.

Essentially, the Obama administration was doing to California with its TARP money precisely what the non-TARP lenders did to Chrysler — using their financial leverage to shoot down a recovery plan that didn’t meet their favor, and threatening to drive the troubled organization into insolvency.

Now, it must be noted that TARP was not created by the Obama administration. It is, in the words of Obama, “inherited from the Bush administration.” If Bush ever foresaw how TARP would be used — as a club to cudgel its beneficiaries into complying with government plans and dictates — it would be the blackest mark on his legacy.

In the meantime, we need to learn from the narrowly averted Chrysler plan and the state of California — everything favor from the government comes with strings attached. They might not be very visible at first, but they are always present and almost impossible to sever.

A little while ago, I wrote a piece discussing how much money labor unions had spent on getting Barack Obama elected, and what kind of return they’re getting on that investment. There’s an old joke that defines an “honest politician” as “one who, once bought, stays bought.” By that standard, President Obama is a remarkably honest politician.

When Chrysler was teetering on the brink of bankruptcy, the Obama administration put together a plan for avoiding the court filing. Under the plan, Chrysler would be majority-owned by the United Auto Workers, with the next-biggest shareholder being the Italian automaker Fiat. This plan had one weakness: it required Chrysler’s creditors to go along, setting aside the lion’s portion of their claims and writing off most of their debt.

No problem, they thought. Most of those creditors had accepted TARP money, so the government already had a bit of leverage to twist their arms.

Unfortunately, enough non-TARP creditors refused to write off massive amounts of their investors’ money that they forced Chrysler into bankruptcy anyway.

Well, the Obama administration appears to have paid very close attention to that move, because they’re now pulling pretty much the same play on California.

The Golden State is, as most everyone knows, teetering on the brink of financial collapse. The state government  has instituted a whole series of budget cuts, shaving off about $74 million.

One of those cuts was in the pay for health-care workers who assist low-income disabled and elderly Californians. Their union didn’t like it one bit, so they called up the White House and asked if was something could be done.

The Obama administration informed California that its attempt to save $74 million could cost them $6.8 billion — in TARP money.

Essentially, the Obama administration was doing to California with its TARP money precisely what the non-TARP lenders did to Chrysler — using their financial leverage to shoot down a recovery plan that didn’t meet their favor, and threatening to drive the troubled organization into insolvency.

Now, it must be noted that TARP was not created by the Obama administration. It is, in the words of Obama, “inherited from the Bush administration.” If Bush ever foresaw how TARP would be used — as a club to cudgel its beneficiaries into complying with government plans and dictates — it would be the blackest mark on his legacy.

In the meantime, we need to learn from the narrowly averted Chrysler plan and the state of California — everything favor from the government comes with strings attached. They might not be very visible at first, but they are always present and almost impossible to sever.

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Negotiating Negotiations

I don’t know whether this report is accurate but I doubt it is. It reads that “The United States has set October as its target for completing the first round of talks with Iran on its nuclear program, according to confidential reports sent to Jerusalem” — but is based on “classified notice reporting on a meeting between a senior European official and the special U.S. envoy on Iran, Dennis Ross.” That’s second or third hand reporting. Contradicting it, just a week ago, an American official spoke on the record with reporters:

White House National Security Council spokesman Mike Hammer told foreign journalists Wednesday that “it’s not appropriate at this time to be trying to establish timetables, but rather seeing how the engagement can move forward.” 

Contrary to what critics on the left tend to argue, Israel isn’t the only one thinking that a deadline is necessary. Nicholas Burns, former Undersecretary of State for Political Affairs, and today a Harvard Professor, had more Iran-related negotiating hours in recent years than anyone, and he seems to think that prolonging the talks will not produce for better results:

“We’ve got to negotiate from a position of strength. We can’t go hat in hand to these negotiations and think by just talking we are going to make progress,” Burns said. Any negotiations with Tehran must have a strict timetable and include a previous agreement with both Russia and China for harsh sanctions if the talks fail, Burns said. And they should be backed up by the possibility of military action, he added.

Assuming that the U.S.-Iran dialogue will start in earnest only after Iran’s June election, October seems like a sensible date to Israel:

“It is important that the dialogue with Iran be limited, and if after three months it will become clear that the Iranians stalling and are not shelving their nuclear program, the international community will be required to take practical measures against them,” Lieberman said in a meeting with Italy’s Prime Minister Silvio Berlusconi on Tuesday.

Whether or not there’s some truth to the fresher report from Jerusalem, “deadline” talk will be at the center of Prime Minister Binyamin Netanyahu’s talk with President Obama next week. According to many reports, Obama realizes that the Iranians might be playing for time, and the Senate report, confirming Israel’s claims that “Iran could have enough material for a nuclear bomb in six months,” gives Netanyahu some additional ammunition for this meeting. The danger one might detect in the different, sometimes conflicting reports on “deadline yes or no” — is that time can’t only lapse in negotiations with Iran — it can also pass in negotiation over the right deadline for negotiation.

I don’t know whether this report is accurate but I doubt it is. It reads that “The United States has set October as its target for completing the first round of talks with Iran on its nuclear program, according to confidential reports sent to Jerusalem” — but is based on “classified notice reporting on a meeting between a senior European official and the special U.S. envoy on Iran, Dennis Ross.” That’s second or third hand reporting. Contradicting it, just a week ago, an American official spoke on the record with reporters:

White House National Security Council spokesman Mike Hammer told foreign journalists Wednesday that “it’s not appropriate at this time to be trying to establish timetables, but rather seeing how the engagement can move forward.” 

Contrary to what critics on the left tend to argue, Israel isn’t the only one thinking that a deadline is necessary. Nicholas Burns, former Undersecretary of State for Political Affairs, and today a Harvard Professor, had more Iran-related negotiating hours in recent years than anyone, and he seems to think that prolonging the talks will not produce for better results:

“We’ve got to negotiate from a position of strength. We can’t go hat in hand to these negotiations and think by just talking we are going to make progress,” Burns said. Any negotiations with Tehran must have a strict timetable and include a previous agreement with both Russia and China for harsh sanctions if the talks fail, Burns said. And they should be backed up by the possibility of military action, he added.

Assuming that the U.S.-Iran dialogue will start in earnest only after Iran’s June election, October seems like a sensible date to Israel:

“It is important that the dialogue with Iran be limited, and if after three months it will become clear that the Iranians stalling and are not shelving their nuclear program, the international community will be required to take practical measures against them,” Lieberman said in a meeting with Italy’s Prime Minister Silvio Berlusconi on Tuesday.

Whether or not there’s some truth to the fresher report from Jerusalem, “deadline” talk will be at the center of Prime Minister Binyamin Netanyahu’s talk with President Obama next week. According to many reports, Obama realizes that the Iranians might be playing for time, and the Senate report, confirming Israel’s claims that “Iran could have enough material for a nuclear bomb in six months,” gives Netanyahu some additional ammunition for this meeting. The danger one might detect in the different, sometimes conflicting reports on “deadline yes or no” — is that time can’t only lapse in negotiations with Iran — it can also pass in negotiation over the right deadline for negotiation.

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Can We Get The Money Back?

The Obama team is spinning another jump in unemployment as somehow good news — because we aren’t losing as many jobs each month as we were. Well, yes, but if we keep losing hundreds of thousands of jobs every month we’ll be in a very deep hole. And it’s no walk in the park for those unemployed Americans whose only solace is that the rate of other people losing jobs has slowed. As Bob Herbert writes: “It’s a measure of just how terrible the economy has become that a loss of more than a half-million jobs in just one month can be widely seen as a good sign. The house is still burning down, but not quite as fast.”

The AP observes this wasn’t what we were promised if the stimulus bill passed:

The economy lost another 539,000 jobs in April, bumping the unemployment rate up to 8.9 percent, the highest in 26 years, according to the Labor Department report released Friday.That figure already exceeds assumptions made by Obama’s economic advisers when they pushed for a $787 billion stimulus package — a measure that they said would be critical in reviving the slumping economy.

So how are we going to know how far off from the president’s 3.5M “saved or created” figure we are? We won’t:

[I]t’s hard to tell exactly where Obama’s record stands — or where he thinks it stands — because the White House has not yet announced how it intends to count jobs created by the stimulus bill. Obama’s number is based on a job-counting formula that his economists have developed but have not made public.

Whatever the formula, economists who study job creation say it will require some creative math. That’s because Obama has lumped “jobs saved” in with “jobs created.” Even economists for organizations that stand to benefit from the stimulus concede it probably is impossible to estimate saved jobs because that would require calculating a hypothetical: how many people would have lost their jobs without the stimulus.

So to be clear: we’re headed for double digit unemployment, the very thing the stimulus bill was supposed to stave off. We didn’t keep unemployment anywhere near 8% as the administration predicted — but we did rack up a whole lot of debt. The administration tells us this is all a ray of sunshine. And they said George Bush was cut off from reality.

The Obama team is spinning another jump in unemployment as somehow good news — because we aren’t losing as many jobs each month as we were. Well, yes, but if we keep losing hundreds of thousands of jobs every month we’ll be in a very deep hole. And it’s no walk in the park for those unemployed Americans whose only solace is that the rate of other people losing jobs has slowed. As Bob Herbert writes: “It’s a measure of just how terrible the economy has become that a loss of more than a half-million jobs in just one month can be widely seen as a good sign. The house is still burning down, but not quite as fast.”

The AP observes this wasn’t what we were promised if the stimulus bill passed:

The economy lost another 539,000 jobs in April, bumping the unemployment rate up to 8.9 percent, the highest in 26 years, according to the Labor Department report released Friday.That figure already exceeds assumptions made by Obama’s economic advisers when they pushed for a $787 billion stimulus package — a measure that they said would be critical in reviving the slumping economy.

So how are we going to know how far off from the president’s 3.5M “saved or created” figure we are? We won’t:

[I]t’s hard to tell exactly where Obama’s record stands — or where he thinks it stands — because the White House has not yet announced how it intends to count jobs created by the stimulus bill. Obama’s number is based on a job-counting formula that his economists have developed but have not made public.

Whatever the formula, economists who study job creation say it will require some creative math. That’s because Obama has lumped “jobs saved” in with “jobs created.” Even economists for organizations that stand to benefit from the stimulus concede it probably is impossible to estimate saved jobs because that would require calculating a hypothetical: how many people would have lost their jobs without the stimulus.

So to be clear: we’re headed for double digit unemployment, the very thing the stimulus bill was supposed to stave off. We didn’t keep unemployment anywhere near 8% as the administration predicted — but we did rack up a whole lot of debt. The administration tells us this is all a ray of sunshine. And they said George Bush was cut off from reality.

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Flotsam and Jetsam

The Washington Post editors are on to the Obama budget scam: “The White House has tried to produce as much hoopla as possible around a proposed $17 billion in savings. But while the savings are nice as far they go, they are part of a budget that will add trillions to the national debt. The budget relies on so much borrowing that it will cost taxpayers more than $4 trillion just to cover interest payments for the next 10 years — more than twice what the federal government will spend on education, energy, homeland security and veterans combined.”

Gov. Tim Pawlenty exercises his veto pen to stop a tax hike.

On the list of distasteful jokes, comparing a radio talk show host to a 9-11 terrorist and rooting for the host’s death is up there. And on the list of unpresidential displays, Obama laughing at the same is up there too. (Yes, if Bush did the same about Keith Olbermann it would be cause for a week of media angst, but let’s be honest Bush never would have done the same. For his many shortcomings he had a large amount of personal class and kindness. It is not everything in a president, but it is something.)

A must-read by James Capretta and Yuval Levin on stopping Obamacare: “Conservatives can make it clear they support reform. But they must make it even clearer that the Democrats’ plan would displace tens of millions of happily insured Americans and exacerbate the worst elements of the current system: gross inefficiency, high costs, and bureaucracy. President Obama and his congressional allies are pursuing a mammoth, complex, hugely expensive, ill-designed reform that is not likely to be popular when understood. Conservatives have a very real chance at stopping it if they highlight its key weaknesses and supply a superior alternative.”

Andy McCarthy explains that the Obama military commissions are pretty much the same as the Bush military commissions which candidate Barack Obama slammed. And “no,” the Obama team doesn’t “ever get called on their hypocrisy” by either the mainstream media or even the Left which pretends to care about these issues.

A blog title from Marty Peretz: “I’m Sick of Pelosi, Her Sanctimony and Her as Speaker; Maybe She Should Hand the Gavel Over to Jane Harman.” Well, if the Left really was looking for a leader who “stood up to George Bush” on interrogation, Harman would be it. The only one actually. But that would create cognitive dissonance and therefore must be ignored.

In marveling at Jim Moran’s hospitality for Guantanamo detainees I must admit I missed his raving about Robert E. Lee’s “patriotism.”(h/t  Glenn Reynolds) Imagine if a Republican said that.

And Marc Ambinder has figured out that Democrats have a political problem with Guantanamo. Ya think?

Gail Collins sums up Arlen Specter’s week: “If he keeps it up at this rate, by the 2010 campaign season, Specter will be so helpful that he’ll have tied up Senate Majority Leader Harry Reid and left him buried in the desert surrounded by fire ants. After all this, the Democrats were so angry that they stripped their newest member of his all-important Senate seniority, leaving him without a good committee post or a place to stash all of his old staffers. By midweek, Specter looked a little like Dickens’s Little Nell, wandering he knew not whither.”

Yup it’s a shocker alright: Hamas isn’t accepting a two-state solution.

Lisa Schiffren on Obama’s compromise on the D.C. school voucher plan: “Pundits showed pictures of the black children who were going to be booted from the same schools the president’s daughters attend.  . . [But] this is a sop to sensibilities, like pardoning the ceremonial turkey. The vast majority of D.C. students remain stuck in a failing system. But Obama won’t compromise either his big-government ideology or fealty to his backers, instead focusing on programs that don’t threaten the teachers unions or the government monopoly on education.” Well, it sounds like school voucher proponents need to keep up the rallies – they work!

The Washington Post editors are on to the Obama budget scam: “The White House has tried to produce as much hoopla as possible around a proposed $17 billion in savings. But while the savings are nice as far they go, they are part of a budget that will add trillions to the national debt. The budget relies on so much borrowing that it will cost taxpayers more than $4 trillion just to cover interest payments for the next 10 years — more than twice what the federal government will spend on education, energy, homeland security and veterans combined.”

Gov. Tim Pawlenty exercises his veto pen to stop a tax hike.

On the list of distasteful jokes, comparing a radio talk show host to a 9-11 terrorist and rooting for the host’s death is up there. And on the list of unpresidential displays, Obama laughing at the same is up there too. (Yes, if Bush did the same about Keith Olbermann it would be cause for a week of media angst, but let’s be honest Bush never would have done the same. For his many shortcomings he had a large amount of personal class and kindness. It is not everything in a president, but it is something.)

A must-read by James Capretta and Yuval Levin on stopping Obamacare: “Conservatives can make it clear they support reform. But they must make it even clearer that the Democrats’ plan would displace tens of millions of happily insured Americans and exacerbate the worst elements of the current system: gross inefficiency, high costs, and bureaucracy. President Obama and his congressional allies are pursuing a mammoth, complex, hugely expensive, ill-designed reform that is not likely to be popular when understood. Conservatives have a very real chance at stopping it if they highlight its key weaknesses and supply a superior alternative.”

Andy McCarthy explains that the Obama military commissions are pretty much the same as the Bush military commissions which candidate Barack Obama slammed. And “no,” the Obama team doesn’t “ever get called on their hypocrisy” by either the mainstream media or even the Left which pretends to care about these issues.

A blog title from Marty Peretz: “I’m Sick of Pelosi, Her Sanctimony and Her as Speaker; Maybe She Should Hand the Gavel Over to Jane Harman.” Well, if the Left really was looking for a leader who “stood up to George Bush” on interrogation, Harman would be it. The only one actually. But that would create cognitive dissonance and therefore must be ignored.

In marveling at Jim Moran’s hospitality for Guantanamo detainees I must admit I missed his raving about Robert E. Lee’s “patriotism.”(h/t  Glenn Reynolds) Imagine if a Republican said that.

And Marc Ambinder has figured out that Democrats have a political problem with Guantanamo. Ya think?

Gail Collins sums up Arlen Specter’s week: “If he keeps it up at this rate, by the 2010 campaign season, Specter will be so helpful that he’ll have tied up Senate Majority Leader Harry Reid and left him buried in the desert surrounded by fire ants. After all this, the Democrats were so angry that they stripped their newest member of his all-important Senate seniority, leaving him without a good committee post or a place to stash all of his old staffers. By midweek, Specter looked a little like Dickens’s Little Nell, wandering he knew not whither.”

Yup it’s a shocker alright: Hamas isn’t accepting a two-state solution.

Lisa Schiffren on Obama’s compromise on the D.C. school voucher plan: “Pundits showed pictures of the black children who were going to be booted from the same schools the president’s daughters attend.  . . [But] this is a sop to sensibilities, like pardoning the ceremonial turkey. The vast majority of D.C. students remain stuck in a failing system. But Obama won’t compromise either his big-government ideology or fealty to his backers, instead focusing on programs that don’t threaten the teachers unions or the government monopoly on education.” Well, it sounds like school voucher proponents need to keep up the rallies – they work!

Read Less