By INVESTOR'S BUSINESS DAILY | Posted Tuesday, May 12, 2009 4:20 PM PT
Integrity: Release of the interrogation memos was intended to tarnish the Bush administration's legacy of keeping America safe. Now, that political strategy is collapsing — and with it, Nancy Pelosi's speakership.
The tables have turned on "Memogate." House Speaker Pelosi and other congressional Democratic leaders clearly knew early on, via classified briefings, about President Bush's approval of enhanced interrogation techniques for high-level terrorist detainees. Yet she kept silent.
In an adaptation of the famous Watergate catchphrase, people have been asking, "What did the speaker know and when did she know it?" But as Pelosi's tune changes and her credibility crumbles, a new version of Nixon White House counsel John Dean's observation might be more apt: that there is a cancer growing on the speakership, and if the cancer is not removed, the speaker herself may be killed by it.
Here is the latest line of baloney we are being asked to believe: After a Pelosi aide was briefed on Feb. 4, 2003, together with House Intelligence Committee ranking Democrat Jane Harman, D-Calif., about waterboarding Abu Zubaydah, a key al-Qaida operative, Pelosi supposedly expressed support for a private protest letter Harman wrote — but she didn't ask to sign her name to the letter, sent to the CIA's general counsel, nor did she pen her own protest.
The rationale offered anonymously, apparently by a Pelosi associate, to the Politico this week was that she "didn't protest directly out of respect for 'appropriate' legislative channels." That simply doesn't ring true. The clear motivation behind the speaker's inexcusable twists and turns is: That was then and this is now.
When Pelosi and the others were briefed in 2002 and 2003, the 9/11 terrorist attacks were still fresh in the minds of Americans.
The widespread mind-set was that another attack could be just around the corner. And there were as yet no turns for the worse in Iraq for voters to be dissatisfied with.
So there was no political well from which Democrats could draw in complaining about the Bush administration's aggressive approach in fighting the global war on terror. You want to get tough with a few al-Qaida prisoners who know of future attacks? In 2002 and 2003, public sentiment was: Do it. And a politician who raised a stink would be accused of inviting new attacks.
Now, thanks to our short national attention span, a supremely effective weapon against terrorists that saved thousands of lives has turned into a political weapon, used to defame those who deserve credit for our success in fighting terrorism. Except now that very same weapon is going off in the speaker's face.
A speaker of the House seen as torturing the truth will not remain speaker for long.
By INVESTOR'S BUSINESS DAILY | Posted Tuesday, May 12, 2009 4:20 PM PT
Entitlements: A report on Social Security and Medicare holds some grim news: Not only are the programs going bust, but they'll run out of money sooner than expected. The crisis we've been warned about for years is here.
Baby boomers — that 70-million-strong population lump — begin officially retiring this year. That means the government's bill for retirees' pensions and health care has no where to go but up, for decades to come.
Everyone knew this day would come. And virtually every economist and actuary who had run the numbers could tell you, within a few years' certainty, the system was going bankrupt.
But all this seemed to happen in the distant future. Last year, both political parties virtually ignored the topic during their presidential campaigns. It became a non-issue issue.
Well, thanks to a profligate federal government, which will double the national debt to $11.5 trillion in just four years, and a recession that has weakened federal tax revenues, we can no longer ignore the problem. The day of reckoning is at hand.
The Social Security Board of Trustees reported Tuesday that costs will exceed revenues in 2016 — a full year sooner than expected just last year. And total assets — including more than 70 years of "surpluses" built up in the "trust fund" — will be completely gone by 2037 — four years earlier than in last year's report.
The deficit over the next 50 years is expected to be about 2% of taxable payrolls — up from 1.7% last year. By the way, changes in the last year alone have added $5.3 trillion in costs to the program.
Long-term, unfunded liabilities for Social Security and Medicare top $53 trillion — about four times the size of current GDP. Taxes must either rise or benefits shrink by that amount to close that gap.
"We should be neither casual nor hysterical about the revised insolvency dates," said Michael Astrue, commissioner of Social Security. "As with the economy as a whole, the Social Security system will weather this recession."
With all due respect, a little hysteria might be the best strategy right now. Fact is, the long-term outlook is made much worse by the recession. And the problems of Social Security and Medicare are structural — requiring a massive, root-and-branch reform that Washington seems unwilling to do.
Social Security should have been reformed a long time ago. When President Bush put private accounts on the agenda in a very minor way in 2004, he was roundly criticized. Congress did nothing — on either side of the aisle.
Now we must confront the looming bankruptcy of our federal retirement system. It shouldn't be this way.
The financial meltdown and recession, we've heard repeatedly, "prove" that private accounts are a bad idea. This is flatly false.
Andrew G. Biggs, an economist at the American Enterprise Institute, recently ran the numbers. On average, someone retiring this year can draw a Social Security benefit of about $15,700. If that same worker had a personal retirement account, based on historical returns in the stock market, he'd get $2,300 more than that.
That, after two of the worst stock-market downturns in history.
Funny, but the solution to our crisis looks like it's right in front of us. Private accounts would work, making our retirees richer and our economy bigger while easing the need for massive tax hikes later.
The only question is whether our leaders in Congress are brave enough and smart enough to do what's right — or whether they'll continue to fiddle as the nation's finances burn.
By INVESTOR'S BUSINESS DAILY | Posted Tuesday, May 12, 2009 4:20 PM PT
Regulation: To say we're skeptical of the administration's claim that green jobs will bolster economic recovery is putting it mildly. It's much easier to believe that needless environmental rules will cause widespread job losses.
The White House has promised to create 5 million green-collar jobs over the next decade using the tax code to stimulate clean-energy programs. It's a proposal that has mass appeal, a hip idea from a cool president. Which should tell us a lot about its substance — or lack thereof.
Spain tried to green its economy and in the process lost jobs, according to Gabriel Calzada Alvarez, an economics professor at Juan Carlos University in Madrid, Spain. Alvarez, who authored a 41-page study on his country's experiment, said the U.S. should expect to lose nine jobs for every four that it creates through green stimulus programs.
That alone would be painful enough. But it's possible those job losses would be compounded by additional losses caused by regulation of carbon dioxide, a greenhouse gas that eco-activists and politically aligned scientists claim is causing the Earth to warm.
It's unfortunate but likely that carbon emissions will eventually be restricted in this country. It could happen through a cap-and-trade bill, which isn't even vaguely understood by 76% of the public, according to a Rasmussen poll, or carbon-tax legislation passed by Congress and signed by the president. Or it could simply be regulated through rules written by unelected functionaries at the Environmental Protection Agency.
In any event, there will be painful economic consequences, including the ruin of many a livelihood. Across the next two decades, annual job losses due to restrictions on CO2 emissions will exceed 800,000 in at least two years. Losses for most years will be more than 500,000.
Taking a big hit, says the Center for Data Analysis at the Heritage Foundation, are manufacturers. They are especially vulnerable to CO2 emissions limits for two reasons: The manufacturing process is energy-intensive, and the demand for the goods this sector makes will fall in an era of higher energy costs.
A CO2 regulation regime would begin eating away at the manufacturing employment base in about five years. By 2029, more than 3.5 million jobs will have been lost, according to Heritage's reckoning.
The machinery industry will lose more than 57% of its jobs, while jobs in plastic and rubber production will fall 54%. Other manufacturing areas in which employment will drop precipitously are paper and paper products (36%), durable goods (28%) and textiles (27.6%).
Bear in mind that these numbers, as staggering as they are, don't count the losses that would occur if companies moved operations offshore, rather than absorb the higher energy prices.
The manufacturing sector is also expected to lose jobs in coming years due to increased productivity. Workers will be displaced as fewer are needed to keep the factories turning out goods at an equivalent or faster pace.
That's part of the market process, the gales of creative destruction, in which innovation kills off archaic jobs and replaces them with better-paying jobs that are a boost for, not a drain on, the economy. A worker who makes tires is better off than the blacksmith, and the economy in which the tire maker lives is more prosperous than the less-advanced economy of the man who makes horseshoes.
Regulation on commerce, either through rules or taxation, is a destructive wind, too. But what it destroys it does not rebuild. Carbon regulation will only increase the number of job losses that would come naturally in an important sector of the U.S. economy.
Those positions won't be replaced by openings in the renewable energy industry. While Washington is eager to force the country into green programs, the market for this industry's products remains small because of costs and inefficiencies relative to conventional energy sources.
Sucking money out of the private sector, where it could be used for investment that creates real jobs and commerce that supports existing ones, to fund a politically correct program is counterproductive.
Despite rhetoric and propaganda to the contrary, the nation will not be better off under a carbon-cap regime. What the country needs is a force in Washington to derail the global warming and climate change nonsense. There are more important issues for policymakers to deal with.
Former Vice President Dick Cheney recently defended the Bush administration’s handling of the War on Terror and criticized the Obama administration for making the nation "less safe," i.e., releasing details of interrogation techniques used on terror suspects. Cheney’s comments have been slammed by the White House, with spokesman Robert Gibbs saying Cheney should stop regurgitating "ideas and a series of thoughts" that "the last election rejected."
But Liz Cheney, a former State Department official, said on MSNBC today that her father is speaking out of genuine concern for the country and to make sure people know what has kept the country safe for the past eight years, and that her dad is willing to make himself available to the Obama administration to talk about what worked and what didn’t.
"I think that is very much the heart of the matter and I think because of that, he feels he has an obligation to speak out," Ms. Cheney said. "My dad feels very strongly that the current administration is making us less safe … It would be the easiest thing in the world for him to just go fishing and spend time with his grandkids."
Ms. Cheney also noted that former Vice President Al Gore was critical of the Bush administration when he left office, and Obama officials and Democrats never miss an opportunity to bash Bush, so why is Cheney getting all this flack?
"Nobody is sort of saying, ‘Gosh, the Obama administration needs to keep quiet about the Bush administration,’" she added.
She also agreed that the Obama administration is cherry-picking intelligence information to release — a charge echoed by Republicans who say the White House is only releasing memos on waterboarding and other intelligence documents that suit their political purposes. Rep. Pete Hoekstra, R-MI, just this week called on the intelligence community to declassify documents showing what members of Congress — including House Speaker Nancy Pelosi, D-CA— were told about interrogation techniques and when.
The media needs to "hold the administration’s feet to the fire on this," Ms. Cheney said. "People need to ask — when is the selective release of documents going to stop? … It’s really a dishonest game they’re playing."
Watch Ms. Cheney defend the Bush administration on "Morning Joe" below:
Barack Obama, like a bull in a china shop, is going full steam ahead to keep all his campaign promises and do it all in one year. Yesterday he "bluntly warned lobbyists and "special interests" not to stand in the way of efforts to rein in costs and guarantee coverage for all Americans. He said he intended to achieve those goals by the end of this year."
For the second time in as many weeks, President Obama pulled together dozens of lawmakers, community leaders and business representatives to solve a pressing issue -- this time, health care reform.
But the president's focus-group brand of governing is starting to wear thin for some who say the sessions are more style than substance. (Fox)
Conservatives for Patient Rightsis a non-profit, 501 c(3) organization dedicated to educating and informing the public about the principles of patients rights and, in doing so, advancing the debate over health care reform.CPR takes a look at 16 plans that have been discussed, written about or offered up as legislation. Which plans provide that the individual patient can make their own choices regarding the health care they seek? Which plans promote competition within the health care industry? Which plans are just too costly? Read about and compare the different health care plans here.
Obama Plan for a Healthy America
Creation of a public health coverage option. Creation of a National Health Insurance Exchange.
Daschle Critical — What We Can Do About The Health Care Crisis
Universal coverage through an individual mandate to purchase either public or private health insurance. Oversight of both public and private coverage by a Federal Health Board.
The Baucus plan would ensure that every individual can access affordable coverage by creating a nationwide insurance pool called the Health Insurance Exchange.
Heritage Foundation Design Principles for a Patient-Centered, Consumer-Based Market
Six principles for patient-centered, consumer-driven health care reform: individual consumers as key decision makers; individual ownership; individual choice; wide range of available choices; price transparency; regular opportunities to make coverage choices.
Perhaps Obama might consult the Heritage Foundation or Newt Gingrich about their plans or perhaps consult the medical community and patients for their input. Doctors don't like a system that will keep them from giving the best care to their patients. They also do not like plans that will try to force them to perform procedures that are morally repugnant to them. These focus groups are mostly for show. Obama has his mind made up on what kind of government health care play he wants for Americans.
"For the most part, these kinds of things are dog-and-pony shows that are hard to associate with any concrete, substantive results," said Michael Franc, a health care expert with the conservative Heritage Foundation.
"With 99.6 percent certainty, they're going to walk out of this summit wanting to do the same thing." [snip]
So what's the next topic Obama might focus group?
"If I had to take a guess, I'd say climate change," Franc said. (Fox)
Obama said, ""Those who seek to block any reform at all, any reform at any cost, will not prevail this time around." Maybe, maybe not Mr. President.
By JEFFREY H. ANDERSON | Posted Monday, May 11, 2009 4:20 PM PT
The post office competes against UPS and FedEx. Public schools compete against private ones — and should have to compete more. So what's wrong with having a "public option" for health care to compete against private insurance?
The core problem with a "public option" is simple, but it hasn't been widely recognized. In other realms, government has to provide a service to compete with private businesses.
But health insurers don't provide a service, per se. They are middlemen or financiers. They contract with others — doctors, nurses, hospitals — who provide the actual service. In such a context, genuine private-public competition is impossible. For no one can match government's ability to dictate the prices and availability of services rendered by others.
What Option?
The "public option" is intended to be a form of Medicare for all. President Obama and the Democratic Congress are pitching it as a way to give individuals and families a new choice.
More often the choice will be made by employers, who will decide whether they want to keep offering private insurance to their employees. To save money, many will choose to offer only the government-run plan, which should be called the "employer option" or perhaps the "government option for employers." By any name, it's an option for employers to force employees into government-run care.
To understand why the government-run plan will be tempting for employers, one must understand the nature of the "competition" involved. Imagine the scenario in which government competes directly against private automakers.
If Government Autoworks is vying for sales against Acme Autoworks, it actually has to make a decent product and sell it at a competitive price. If Government Autoworks makes a $20,000 car, but it's less reliable (think FedEx vs. USPS overnight), responsive or stylish than Acme's $20,000 car, it won't sell.
Government Autoworks cannot merely declare that its $20,000 car, which costs at least as much as Acme's to make, will now be priced at $16,200. If it does, it will lose money. It could still be propped up by taxpayers, but it couldn't compete on its own.
Now take the alternative scenario of providing health insurance. There, government doesn't have to make anything. It doesn't have to deliver packages. It doesn't have to run a school. Above all, it can dictate prices at its whim.
According to the Lewin Group, Medicare pays health care providers 81 cents on the dollar. So for a $20,000 procedure, Medicare, on average, pays $16,200. Doctors, nurses and hospitals go without the difference or pass along the costs to private insurers or individuals. So government can fix prices, at little or no cost to itself.
That makes the "public option" a fundamentally different animal from government entities that compete (more or less) legitimately against private competition. There is no way private insurance can compete against an entity that can just wave a wand and change a price to its advantage and someone else's detriment.
But if government can lower health care costs in this way, why is that bad? Three central reasons:
First, Medicare pays less per procedure, but it doesn't pay less. What Medicare gains per procedure, it loses in poorly coordinated care, wasteful procedures, fraudulent claims and bureaucratic waste.
Despite paying only 81 cents on the dollar, Medicare's costs since 1970 have risen more than twice as fast as the costs of all other health care in America combined. Per patient, Medicare costs have risen 27% more than all other nationwide health care costs — 41% if you include the prescription drug benefit.
Medicare is far more expensive than privately run care, and it's leading us toward financial disaster.
Second, a government-run system would kill any chance at real reform. The core problem with American health care is that the patients aren't the payers.
So providers and insurers don't cater to patients, and patients don't shop for value. Each element caters to whoever pays it: Providers cater to insurers (and the government); insurers cater to employers. Nobody caters to consumers.
A vibrant free market would aggressively cater to consumers, who in turn would shop for value — thereby making health care more consumer friendly, affordable and better. We'll never get there if the government takes over the insurance business. That will cement in place the core problem with today's system. We need a change, not another coat of cement.
Shaky Combination
Third, once government has run private insurance out of business, providers will no longer be able to shift costs to them. This will result in higher costs to taxpayers and lower wages for medical professionals, which will attract fewer people to the profession. If anyone doubts this, do they also doubt that higher pay attracts teachers?
Lines will form, care will be rationed and a two-tiered system will emerge: The very rich will pay for the care they want — whether here or abroad — out of their own pockets. The rest of us will have plenty of time, while we stand in line, to reflect on how nice it would be to have private insurance and the personal freedom it affords.
Anderson is the former senior speechwriter for the Health and Human Services Department and a former professor of political science at the Air Force Academy.
Last Friday, the day after Chrysler filed for bankruptcy, I drove past the company’s headquarters on Interstate 75 in Auburn Hills, Mich.
As I glanced at the pentagram logo I felt myself tearing up a little bit. Anyone who grew up in the Detroit area, as I did, can’t help but be sad to see a once great company fail.
But my sadness turned to anger later when I heard what bankruptcy lawyer Tom Lauria said on a WJR talk show that morning. “One of my clients,” Lauria told host Frank Beckmann, “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”
Lauria represented one of the bondholder firms, Perella Weinberg, which initially rejected the Obama deal that would give the bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts.
This of course is a violation of one of the basic principles of bankruptcy law, which is that secured creditors — those who lended money only on the contractual promise that if the debt was unpaid they’d get specific property back — get paid off in full before unsecured creditors get anything. Perella Weinberg withdrew its objection to the settlement, but other bondholders did not, which triggered the bankruptcy filing.
After that came a denunciation of the objecting bondholders as “speculators” by Barack Obama in his news conference last Thursday. And then death threats to bondholders from parties unknown.
The White House denied that it strong-armed Perella Weinberg. The firm issued a statement saying it decided to accept the settlement, but it pointedly did not deny that it had been threatened by the White House. Which is to say, the threat worked.
The same goes for big banks that have received billions in government Troubled Asset Relief Program money. Many of them want to give back the money, but the government won’t let them. They also voted to accept the Chrysler settlement. Nice little bank ya got there, wouldn’t want anything to happen to it.
Left-wing bloggers have been saying that the White House’s denial of making threats should be taken at face value and that Lauria’s statement is not evidence to the contrary. But that’s ridiculous. Lauria is a reputable lawyer and a contributor to Democratic candidates. He has no motive to lie. The White House does.
Think carefully about what’s happening here. The White House, presumably car czar Steven Rattner and deputy Ron Bloom, is seeking to transfer the property of one group of people to another group that is politically favored. In the process, it is setting aside basic property rights in favor of rewarding the United Auto Workers for the support the union has given the Democratic Party. The only possible limit on the White House’s power is the bankruptcy judge, who might not go along.
Michigan politicians of both parties joined Obama in denouncing the holdout bondholders. They point to the sad plight of UAW retirees not getting full payment of the health care benefits the union negotiated with Chrysler. But the plight of the beneficiaries of the pension funds represented by the bondholders is sad too. Ordinarily you would expect these claims to be weighed and determined by the rule of law. But not apparently in this administration.
Obama’s attitude toward the rule of law is apparent in the words he used to describe what he is looking for in a nominee to replace Justice David Souter. He wants “someone who understands justice is not just about some abstract legal theory,” he said, but someone who has “empathy.” In other words, judges should decide cases so that the right people win, not according to the rule of law.
The Chrysler negotiations will not be the last occasion for this administration to engage in bailout favoritism and crony capitalism. There’s a May 31 deadline to come up with a settlement for General Motors. And there will be others. In the meantime, who is going to buy bonds from unionized companies if the government is going to take their money away and give it to the union? We have just seen an episode of Gangster Government. It is likely to be part of a continuing series.
Sen. Arlen Specter's switch to the Democratic Party is prompting his campaign donors large and small to demand their money back, including several Republican senators whose political action committees gave tens of thousands of dollars to the Pennsylvania lawmaker.
Sen. Johnny Isakson didn't waste any time putting himself at the front of the refund line. The Georgia Republican asked Mr. Specter for a return of his leadership political action committee's $5,000 contribution Tuesday on the Senate floor - just hours after Mr. Specter announced he was changing his political stripes.
"Senator Specter readily agreed to return the contribution," said Isakson spokeswoman Sheridan Watson, adding that the exchange was cordial.
While not legally bound to refund any legitimate campaign donation, Mr. Specter has pledged to honor requests for refunds - and the requests are pouring in.
"That's the right thing for him to do and we will request a refund," said Sen. Lamar Alexander of Tennessee, chairman of the Senate Republican Conference. His fundraising committee, the Tenn PAC, had given $5,000.
Corrected paragraph: Other Republicans who are clawing back contributions include Senate Minority Leader Mitch McConnell of Kentucky, who gave $10,000 through his Bluegrass Committee; Sen. John Cornyn of Texas, chairman of the National Republican Senatorial Committee (NRSC), who gave $5,000 through his Alamo PAC; and Sen. Bob Corker of Tennessee, who gave $5,000 through his Rock City PAC.
"They gave that money to elect a Republican. They did not give that money to strengthen [Democratic Senate Majority Leader] Harry Reid's majority," NRSC spokesman Brian Walsh said. "I expect a lot of people will be looking to have their money returned."
Pennsylvania Republican Party Chairman Robert A. Gleason Jr. isn't satisfied with Mr. Specter returning campaign contributions on request. He wants the senator to return all of his campaign loot voluntarily.
Mr. Gleason told CNN that the new Democrat should "do the right thing and proactively return any and all campaign contributions he has received in recent months to run as a Republican in the upcoming election."
He also wants Mr. Specter to apologize to the state's Republicans for misleading them.
Mr. Specter, long considered among the more liberal Republicans in Congress, said he switched parities in part to avoid a formidable challenge from staunch fiscal conservative Pat Toomey in the Republican primary for the 2010 election.
Mr. Specter's political rebranding gives the Senate Democratic caucus 59 seats, including two independents, which is one vote shy of the 60 needed to break filibusters and ram President Obama's agenda through the chamber.
Mr. Obama, who was joined by Mr. Specter at a White House appearance Wednesday, lauded the new Democrat for his independence and "courage" in changing sides.
"I don't expect Arlen to be a rubber stamp," Mr. Obama said. "...I'm eager to receive his counsel and advice, especially when he disagrees."
Mr. Specter has vowed to remain fiercely independent and continue to oppose several of Mr. Obama's priorities, including the "card check" bill that would make it easier to unionize workplaces. He was one of four Democrats who voted against the Obama 2010 budget Wednesday afternoon in the Senate, which passed on a 53-43 vote.
Mr. Specter's party switch is not only costing him existing campaign cash, it could impede future fundraising as Republican contributors turn away and Mr. Specter's established stable of fundraisers could abandon the candidate, said a Republican campaign adviser.
"A lot of [the campaign staff] are probably as Republican as they are career Specter men," said the adviser, who did not want to be identified discussing his colleague's predicament. "Are they going to go work for Toomey or are they going to stay with him?"
Before the party switch, Mr. Specter had raised nearly $1.3 million since January and has $6.7 million in the bank for the 2010 race, according to first quarter campaign finance reports filed this month.
Mr. Specter retains a large pool of donors who are lobbyists and lawyers, groups that have been the financial backbone of his campaigns for decades. He also enjoys broad support among Pennsylvania Democrats.
Richard Ehst, Sovereign Bank's regional president for southeastern Pennsylvania, said he will not ask for a return of his $250 contribution to Mr. Specter.
"The man has behaved more like a Democrat than a Republican for years," Mr. Ehst said. "I think moving across the aisle might better define where his allegiances are."
• Christina Bellantoni contributed to this report.
RUSH: In a few short minutes, the president of the United States, Barack Peron, will announce his Argentinean-like takeover of Chrysler. Yeah, we don't hear much about Juan Peron anymore, we hear about Evita. What's happening to Chrysler today the president's going to announce it according to the schedule in four minutes, right outta Juan Peron's playbook. Left-wing fascism coming out for Chrysler. Hey, folks, great to have you with us. It's EIB Network and El Rushbo at 800-282-2882.
I did not watch it last night. I did not watch the press conference last night. I've heard all about it. I've seen it, I didn't watch it. I had to veg last night. I got an hour-and-a-half of sleep the night before, and I went home, I watched a movie, I watched Lost, and then I crashed. I forgot the president was even on. I heard all about the enchanted question, and that's what happens with the feminization of our culture. There was a New York Times question, some enchanted question. Yeah, we've got the sound bites from it and so forth.
The Chrysler bankruptcy is going to be announced in mere moments, but that just sets the stage for what's coming. Now, it's being portrayed as a legal bankruptcy rather than a political one, but I'm not so sure.
BREAK TRANSCRIPT RUSH: There's the president now. He's announcing what's going to happen. We know what's going to happen. I'll tell you here in mere moments exactly what this is, as president Barack Peron announces what's going to happen to Chrysler. This bankruptcy today for Chrysler took place after how many billions of dollars in bailout money? What did we give Chrysler, 10 billion, 15 billion? I get them sometimes confused with General Motors. But the point is what does this prove? We gave them billions; we gave them multiple fortunes to bail Chrysler out, and what's happening today? It wound up in the same place. It didn't work! That was your money, folks, that's down the rat hole. That was your taxpayer dollars, whether it's today's dollars, printed dollars, taxed dollars tomorrow, or what have you, it's money from the private sector that's down the rat hole 'cause it didn't work. What this means is that the laws of economics cannot be changed. Liberalism is a failure.
The way to look at this today, the president announces what's happened to Chrysler, this is a huge Barack Obama failure. Well, actually, at the end of the day it's a dynamic success for Barack Obama. This is precisely what he wants to happen. The United Auto Workers ending up with majority control of this company. But in terms of the way he sold this, only the government can do this. Remember, only the government can save these companies. Only the government can save our economy, only the government. Well, this is on his head now. He set up the committee to prevent what's happening today, the bankruptcy of Chrysler. He set up the committee to prevent it. He supported billions of dollars to subsidize Chrysler so that this would not happen. Last night in the press conference he all but took credit for preventing this and yet today here it is happening, crashing down on his head. So, from the standpoint of what Barack Obama told the people of this country, this is a failure, from the standpoint of what he secretly always wanted to accomplish, it's a huge success. From the standpoint of telling us what he was going to do, this is gonna save the auto business, we had to do this, only the government could do it. It's not being saved, is it? Standard old bankruptcy is what's taking place right now, controlled by the government.
So this is a huge President Obama failure. We were told this was going to save Chrysler, and it hasn't. Now, you may be wondering, "Why are you calling him Barack Peron?" Well, I'll tell you, because this Chrysler deal is reminiscent of Peronism, Juan Peron of Argentina. It's classic, undiluted Juan Peronism. You intimidate lawful debt holders into surrendering their legitimate claims in a bankruptcy, i.e., the bondholders. The same thing is going to happen at General Motors. The bondholders, private sector investors have $27 billion in bonds, UAW has $10 billion in bonds, but the UAW is going to get 39% of General Motors. In the case of Chrysler I don't know what the breakdown is in terms of the bondholders, what percentage they own versus the union and its percentage of bonds, but the lawful debt holders, the private sector debt holders are being intimidated here into surrendering their legitimate claims in the bankruptcy because, it just can't work, it's good money after bad. We tried, we tried. We said, how many, 10, $15 billion. We tried. We failed. It didn't work. But we can't let this company go south; it's the auto industry, and so forth.
So, after you intimidate lawful bond debt holders, the bondholders into surrendering their legitimate claims in the bankruptcy -- by the way, to illustrate this again, during the beginning of this so-called crisis in the automobile sector, when bankruptcy was first suggested and proposed, do you remember what the initial rejection to it was? There were two. "Who's going to buy a car from a bankrupt company? Nobody's going to do that. Plus the bondholders would get killed. The company wouldn't survive the bankruptcy and the bondholders, the private sector would get killed," remember? That's what happens in a bankruptcy, you're basically telling your creditors (blowing a raspberry), "We're outta here, we're going to reorganize. You may get some back but certainly not all of it." So that is what precisely has happened here. The lawful debt holders have been intimidated into surrendering their legitimate claims in a bankruptcy. The next thing you do, right out of the pages of Juan Peron, you force state-owned banks -- and we have state-owned banks, don't we, now? Notice the bankruptcy is happening after the bank takeovers, after nationalization of a certain percentage of some banks. Isn't it interesting the timing here? So you force state-owned banks -- you don't have to force them because they're yours anyway -- and these state-owned banks, and they're the big lenders to Chrysler over the years, you force them to give up most of their claims in a bankruptcy, 'cause you gotta save the company. I mean, that's the bottom line, gotta save the company for America.
Then after you have forced the lawful debt holders to surrender their claims and the state-owned banks, the big lenders, to give up most of their claims in a bankruptcy, then what do you do? You hand the company to your union allies. Fifty-five percent of Chrysler today will be owned by the United Auto Workers. Now, many Americans do not recognize this pattern, because we don't see this pattern in this country. This method of bankruptcy and of saving a company by basically turning it over to people who have hardly any investment in it, the United Auto Workers, at the result of an iron fist from the state, i.e., Barack Obama, this is so far outside the American political spectrum, business spectrum, people can't get their arms around it because they've never seen it before, and they probably don't know what Juan Peronism is, they may not even know who Juan Peron is. They know who Evita Peron is, they think it's Madonna and they think she was great.
So if the supreme leader, Barack Peron, succeeds in a lot of this, then we are taking a page out of another dictatorship in our hemisphere, no less, and that would be Argentina. But the thing to remember, if all of the bankruptcy stuff confuses you, and if the Juan Peron stuff -- by the way, it's accurate and legitimate -- but if all that confuses you, the thing to remember here, I want you to go back to the end of last year, we were told during the transition and when Obama first assumed office that these bailouts were the only way we could save these companies, these car companies. We had to do this. The government was the only institution that could do this. And then after they gave them the money, Barack Obama's car czars told them how to run the company. You gotta do this, you gotta do that, you gotta pass tests, you gotta give us your reorganization plan, you've got to tell us how you're going to run the company. And what happened? It didn't work. That's what you have to realize, after pouring in 10, 15, whatever it was, billion of your dollars with directions from Washington on how to save the company, it didn't work.
Political solutions to business problems do not work. The UAW, yeah, take it over, the UAW has a plan. Here's Obama supporting Chrysler's effort -- they've got no choice! Chrysler has no choice, whatever Obama told him to do, whatever his car czar, Steve Rattner and the rest of the boys told Chrysler they had to do, they did, but they failed. In their original promise to us, in their original claim of how this was all going to work out, they failed. A Barack Obama failure. However, for Barack Obama the president, this end result is a huge success. But it is a failure in the context of what he told us would happen and how the federal government's assistance would save this company.
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RUSH: My friends, if you will indulge me, I want to go through this briefly again. President Obama just concluded his news conference, announcing the bankruptcy procedure for Chrysler. Some of our stations might have carried it live, and so I want to do my own national rebuttal again, for those of you who did not hear the opening of the program because perhaps (I don't know how many did) your local stations carried the Obama announcement with the car czar team standing behind him at a new location in the White House. He said that Chrysler just didn't move fast enough. They just weren't moving fast enough here, and somebody had to step in, and we're much better off than we were 30 days ago. Folks, here's the bottom line -- and again, please indulge me if you just heard this. I'll go through it very quickly. Last year when these car companies ended up in huge trouble, it was Barack Obama who told us only the government could fix them; only the government could save them. We had to give them bailouts. We had to bail them out, and that's what was going to save 'em, and when we bailed them out we then -- well, not "we," but the Obama administration -- gave them instructions. Remember, they couldn't fly their corporate jets into town to make their case. After they did that one time they were humiliated. They had to drive to down for the second round of hearings.
They had to tell Congress, they had to tell Obama what they were going to do to save their companies after they got all their money, and if they did that, these bailouts would work. What we have here is an abject failure of government saving a business. This is totally not an accident reported this way. This is a Barack Obama failure. As promised, government cannot overcome the laws of economics. This was not technically a failure from Obama's standpoint because he got what he wanted. He got the United Auto Workers as the majority owners of Chrysler, and pretty soon a similar situation's going to happen with General Motors. So he sends out all the money to them. He gives them instructions: "Come back with a plan for your reorganization that we approve of."
They never had a chance because he wasn't going to approve any of it because what he wanted was what happened today, and it's straight out of Juan Peron. It's straight out of Argentina. You intimidate lawful debt holders, the bondholders into giving up their legitimate claims in a bankruptcy. Do the same thing to the state-owned banks. Obama owns a lot of the banks now, or a portion of them. He leans on them. The banks are the big lenders to Chrysler. He tells them to give up their claims in bankruptcy. The government runs the bankruptcy for 60 days. They're going to funnel another $8 billion into this. So whatever it is, 10 or 15 billion that Chrysler's got now, another 8 on top of it, did not save the company. What it ended up doing was turning the company over to Barack Obama's union allies.
You hand the company to the supreme leaders, labor union allies. You don't recognize this because this is not the way things have been done in America before. It's not been done in American business. This is outside the American political spectrum, and so there you have it. This is the objective. I made this prediction back in December that the autoworkers were going to be the majority owners in these companies. In the case of Chrysler, it will now happen -- and it was announced today as some great success story by President Obama. He said, "We did this. This worked. This is great. These companies have been better than they've ever been before. We saved them. This is tremendous, and we're going to have the best cars in the world again. They just weren't moving fast enough for me; it's why I had to move in today."
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RUSH: Going to start in Detroit. Ken, you're up first. Great to have you today on the EIB Network. Hello.
CALLER: Yeah, Rush, I'm calling as a former UAW member. And my comment was, considering that the unions don't believe in profits, and considering that the unions do not believe in employee incentives for hardworking people to make more than lazy employees, allowing the government and the UAW to run the auto industry is like letting a fox run the chicken coop.
RUSH: This is interesting you bring this up because the union does believe in earning extra money with overtime, but, you know, merit pay, they're not really for that, because it will make others who are not seeking merit pay look bad. But one of the questions I've had, the United Auto Workers with 55% ownership of Chrysler stock is going to have a majority of people on the board. What is the next contract negotiation going to look like between the UAW-owned Chrysler and the United Auto Workers line assembly workers?
CALLER: Well, Rush, what you have to keep in mind is that the way the unions work, is that they encourage their employees to be as nonproductive as they can, therefore the company has to hire more people to do the job. That's like having four people to do the job of one.
RUSH: Now, it's a pretty big leap here for you to -- I know that that happens, I've had my run-ins with the bricklayers on that way, way, way back, I know that happens, the bricklayers had to back off when I made that claim, they wanted less bricks laid per hour, per day, in the next union contract, late eighties or seventies. Anyway, for you to say the autoworkers do not believe in profits.
CALLER: That's correct. The reason I know this is that not only had I been involved behind the scenes with the UAW, but I grew up in a household where my father for 40 years actually was a high-ranking union official, and this is where I learned that the union philosophy is to get more people in. And if that means that you work as slowly as you can, therefore the company has to get more people hired to do the job, this is the way they do business.
RUSH: All right, but we need to separate things here.
CALLER: Sure.
RUSH: Union leadership is one thing. The union rank-and-file, many of them, are like everybody else. They're sheep, they're followers, and many of them don't have any choice in terms of where their donations are spent politically and so forth. But are you telling me that there's no understanding anywhere that a company where a union is employed has to show some kind of profit just to stay in business?
CALLER: Well, Rush, if someone comes in and he is self-motivated, he's motivated, but what happens is you have a lot of people that come in that are unfortunately on the lazy side of it, and they'll come in, they'll punch in in the morning, they --
RUSH: No, I understand -- so you're saying indirectly, indirectly, they're not concerned with profit, they're going to get paid regardless. All right, I get it. I still think it's going to be comical or has the potential to be comical to watch United Auto Workers' board, majority owners of Chrysler negotiate with the United Auto Workers line assembly people.
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RUSH: We have some sound bites here, President Obama announcing the end of Chrysler as we know it. Here's the first of three sound bites.
OBAMA: Today I am pleased to announce that Chrysler and Fiat have formed a partnership that has a strong chance of success. It's a partnership that will save more than 30,000 jobs at Chrysler and tens of thousands of jobs at suppliers, dealers, and other businesses that rely on this company. It's a partnership that the federal government will support by making additional loans that are consistent with what I outlined last month. As part of their agreement, every dime of new taxpayer money will be repaid before Fiat can take a majority ownership stake in Chrysler. RUSH: Well, I don't know when that's going to happen, then. The United Auto Workers are going to be the majority ownership of Chrysler. The union is getting 55% of the stock here. The thing you have to remember about this is, very simple, last December, January, all this money to the automakers, Chrysler, General Motors, and they were given requirements, "You gotta get back to us reorganization plans if you want more money." And finally, they had to say it didn't work, Obama is saying you guys aren't doing it right; we're going to make you go into bankruptcy. So all those billions in bailouts didn't work, a genuine failure of the Obama administration to save Chrysler. So now we're getting basically Juan Peronism, you convince the legitimate debt holders to give up much of their value, the banks, the big lenders, same thing, and then you send in union allies to take over. Here's sound bite number two.
OBAMA: A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I don't stand with those who held out when everybody else is making sacrifices.
RUSH: Now, you just have to laugh. This is another assault on the wealthy. It's an assault on hedge funds. Hedge funds are the villain. And furthermore, he is now impugning their motives. They were hoping everybody else would make sacrifices and that they would have to make no sacrifices. Some demanded twice the return that other lenders were getting? Since when does any of this have any relevance once the federal government moved in with bailout money and with orders and instructions to the CEO on how this thing is to be restructured. This is classic statism, an authoritarian figure dumping on the private sector at every opportunity, to mischaracterize their motives, to mischaracterize the reasons for the investment in things. Here's the third sound bite from President Obama.
OBAMA: That's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success. This process will be quick. It will be efficient. It's designed to deal with those last few holdouts, and it will be controlled. It will not disrupt the lives of the people who work at Chrysler.
RUSH: Oh, of course, can't have that. It's going to disrupt a lot of other people's lives, but we can't disrupt the lives of the union workers and the people who work there.
