bailouts

Chrysler didn’t pay back its bailout

Remember when President Barack Obama told the nation that Chrysler had paid back bailout financed through taxpayer money? Suprise! It’s not true, says FactCheck.org:

President Barack Obama visited a Chrysler plant in Toledo, Ohio, on June 3 to discuss the recent announcement that the Chrysler Group LLC repaid $5.1 billion in outstanding loans. That brought the total repayment, as of May 24, to $10.6 billion — about $1.9 billion less than the $12.5 billion the company borrowed under the Troubled Asset Relief Program, or TARP.

In his speech, the president said:

Obama, June 3: And today, I’m proud to announce the government has been completely repaid for the investments we made under my watch by Chrysler because of the outstanding work that you guys did. Because of you. Chrysler has repaid every dime and more of what it owes the American taxpayer from the investment we made during my watch. And by the way, you guys repaid it six years ahead of schedule.

Notice the president — sounding very much like a used-car salesman — used the phrases “during my watch” and “under my watch” when describing the TARP loans as being “completely repaid.” That’s because Chrysler received $4 billion on Jan. 2, 2009, (18 days before Obama took office) and $8.5 billion on April 30 (when Obama was president), according to this Government Accountability Office report (page 9) on TARP.
[…]
In its May 24 announcement touting Chrysler’s final repayment, Treasury acknowledged that it is “unlikely to fully recover” about $1.9 billion.

Club for Growth on Herman Cain

Just like in 2008, the Club for Growth is putting together a series of white papers on candidates running for the Republican Party’s presidential nomination. They’ve already looked into the records of Newt Gingrich and Tim Pawlenty. Next up is Herman Cain, a businessman turned talk show host.

The Club notes that Cain supports the FairTax, a plan that comes with a built-in constituency that would eliminate the federal income tax through repealing the 16th Amendment and replace it with an inclusive national retail sales tax. After opting against his own bid for president in 2000, Cain, then a flat tax supporter, backed Steve Forbes candidacy.

On spending, the Club finds Cain’s record to be thin, and carries a notable negative, in backing TARP, making claims that government ownership of financial institutions “is not a bad thing” and slamming that “free market purists” that opposed the bailouts, which Cain called a “rescue plan”:

Cain supported TARP, the government bailout of the financial industry, and even chastised people who opposed it in a condescending op-ed: “Earth to taxpayers! Owning stocks in banks is not nationalization of the banking industry. It’s trying to solve a problem,” Cain wrote.  “Owning a part of the major banks in America is not a bad thing. We could make a profit while solving a problem.”

UT Senate: Chaffetz to run against Hatch in the GOP primary?

We may have our first high-profile primary against an incumbent for next year’s election. Rep. Jason Chaffetz, a Utah Republican currently serving in his second term, has indicated that he will run against Sen. Orrin Hatch (R-UT) next year:

Utah Rep. Jason Chaffetz has told several Utah political insiders that he plans to run against Sen. Orrin Hatch next year, setting up a major intraparty Republican 2012 battle.

All eyes have been on the second-term congressman for months. But five Utah politicos, speaking on condition of anonymity, said Chaffetz has told them directly in recent weeks that he will contend for the Republican nomination.

Chaffetz said Tuesday that he’s not making any official announcement yet, but he is moving toward a Hatch challenge.

“I have an increasing clarity,” Chaffetz said. “Until I walk up to the microphone to make an announcement, it’s not official. But it’s no secret I’ve been thinking about this and I’ve been gravitating in that direction.”

Hatch’s campaign manager, Dave Hansen, said he has heard that Chaffetz has made some calls to tell people he would get in, but hasn’t heard anything definitive.

While Sen. Mike Lee (R-UT), who was elected last year with tea party support, has not endorsed Hatch for re-election, the Club for Growth made it very clear yesterday that they would get behind Chaffetz; noting Hatch’s inconsistent record on economic issues:

Paul Ryan’s big government tendencies

While Rep. Paul Ryan has seen his star rise and has heard plenty of calls to enter the Republican presidential race, conservatives should look deeper into his record rather than just the last year or so:

The Wisconsin lawmaker is a fierce opponent of Obama administration spending and any suggestion of higher taxes, but he also voted for the Troubled Asset Relief Program, which conservatives like to say “bailed out the banks,” the “auto bailout,” No Child Left Behind, the 2006 highway bill (with its “Bridge to Nowhere”) and the prescription drug benefit.

“It’s easy to vote against all of the Obama big spending items, but he voted for all the Bush-era big spending items,” said one conservative who wonders what all the hoopla over Ryan is about.

Ryan also has voted repeatedly against repealing Davis-Bacon, with its “prevailing wage” provision that is strongly supported by organized labor and is heresy to most free-market Republicans.

The article I’ve excerpted also mentions that Ryan’s budget plan has become a rallying cry for Democrats. That’s true, but that’s not the point I want to get across here.

Ryan has done more than just talk about the problems facing the nation, he has stuck his neck out there and presented a budget plan; although it doesn’t go nearly far enough because it doesn’t touch Social Security and defense spending. Yes, he deserves credit for that for offering a solution, but he has voted for many of the big ticket items that have brough us to the point; all of which are not popular with the grassroots and tea party groups.

For all of the talk he has given in the recent year of shrinking government, his past doesn’t match the rhetoric. It’s something to think about before he is canonized as a limited government conservative.

Return of TARP funds doesn’t make the auto bailout better

Word on the street has it that Chrysler has returned the vast majority of the money the United States government gave it as part of a federal bailout.  For many, this is evidence that the bailout worked and now things can go along just fine.  While most understand that the government hasn’t gotten all of its money back, they expect that to come with the IPO of the 8.6% of the company’s stock that Uncle Sam owns.

What gets missed by these folks is that this was still wrong.

Federal bailouts aren’t new.  They weren’t even new for Chrysler since they received one thirty years previously.  They’ve been around for a while now and are all examples of Uncle Sam picking winners and losers.  Federal bailouts, ostensibly a method of preventing job loss, are hardly universal.  They go towards large corporations who are now struggling, but ignore newer companies that may be struggling due to all kinds of factors that aren’t mismanagement.

So Uncle Sam writes a check to Chrysler or GM, and then tells the new start-up that they’re just flat out of luck.  I don’t have a problem with telling the little guy he’s out of luck, the problem is in not telling giant corporations the same bloody thing.

Business is risky.  Anyone starting a business stands to lose.  However, with that risk comes the potentially great rewards.  Bill Gates risked everything on Microsoft, and it worked out just fine.  For others, not so much.  That’s natural.  Everyone can’t win, despite our hopes and wishes.  If so, there wouldn’t be the opportunity for a few hardy souls to venture beyond what you and I know and forge a new frontier.

Nothing will get better without personal responsibility

We all have a vision of how to get this nation out of this funk we’ve been in for a while now.  It’s clear that despite various ideological paths, many of us believe that the current path is wrong.  As a libertarian, I’m a firm believer that the correct path is pretty clear.  However, nothing will improve until we start making personal responsibility a key factor in the lives of Americans.

With the housing crisis, we all heard horror stories about people who were losing their homes.  We were told that these people were the victims of predatory lending practices, which may or may not be true.  What got missed was that these people still bought homes they couldn’t afford and took on loans with adjustable rate mortgages, not knowing what they were in store for.

The truth of the matter is that many of these people were simply refusing to accept responsibility for their own mistakes.  They weren’t alone either.

TARP was all about bailing out bankers who didn’t want to accept their part in giving loans to people who couldn’t actually pay them back.  They danced around the issue and begged for government money to cover their mistakes.

The truth of the matter is that fewer and fewer people are being made to accept resonsibility for their own actions.  A police officer once said to a friend who’s business partner was murdered in a hold up that he needed to keep in mind the man coming from an disadvantaged upbringing.  The officer didn’t seem to grasp that Oprah Winfrey did too.  One of them isn’t knocking over bars in their spare time.

The reality is that the lack of people being held accountable for all of their actions is a key reason this nation is in the state it’s in today.  Maybe if we can change that, we can actually make this nation what it once was, only better.

Another big government Republican plans presidential campaign announcement

Newt Gingrich, former Speaker of the House, will announce his bid for the Republican nomination for president at some point tomorrow:

Former House Speaker Newt Gingrich (R-Ga.) will announce his candidacy for president Wednesday, spokesman Rick Tyler said Monday.

After an Associated Press report that Gingrich would make a 2012 bid official via social media Wednesday, Tyler confirmed it on Twitter.

Tyler said Fox News host Sean Hannity will have the first interview with Gingrich as a declared presidential candidate ahead of the former House Speaker’s speech to the Georgia GOP convention on Friday.

If you’re looking for Republican that has enabled big government, then Gingrich is right up your alley. In Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government, Stephen Slivinski offers insight into the slide that eventually led to the spending spree of George W. Bush and a Republican-controlled Congress. Silvinski gives example after example of how Newt Gingrich sold out of political expedency and threatened members of his own caucus if they didn’t vote how he wanted.

The highest moral

Many people believe that the most moral thing a person can do is to help other people.  This line of reasoning is common in most theological systems as well as it being the general sentiment of people in this nation as a whole.  I don’t disagree with this, but I think where I part ways from most is what that represents.

To me, the highest moral is to give people the freedom to succeed or fail solely based on their own abilities.  To allow them to achieve as much as they can based on their own resources sounds callous to some, and I can see why.  After all, not everyone will succeed, so why not provide some kind of safety net?

First, the risk of failure is what motivates some people to push as hard as possible towards success.  The idea that there is no safety net to catch them pushes them forward with a “there is no tomorrow” attitude.  That attitude makes them more determined to succeed than ever, and a safety net would ruin that very thing that helps them.

Next, the idea of a safety net infuses failure into the hearts and minds of many people.  Failure happens, but it is not something we should be completely accepting of.  While doors shouldn’t automatically close to those who have failed at something, society does more good for people if they treat failure as it is rather than pretending that there’s no harm at all in it.  There is.  You failed.  We’ve all done it, but most of us felt shame in that failure, as we should have.  I did, and it’s helped push me to achieve as much as possible.  I’m not alone.  Many people I’ve spoken with through the years have shared a similar story with me.

Gingrich doesn’t regret expansion of Medicare

Given his all but certain entrance in the Republican presidential primary, you’d think that Newt Gingrich would be shifting to the right on economic issues. He’s not. In fact, he recently told a reporter during a press conference that he doesn’t regret expanding Medicare, an entitlement already projected to have trillions in unfunded liabilities over the several decades, by supporting and lobbying for passage of prescription drug benefit - Medicare Part D - in 2003:

At a press conference on Friday, CNSNews.com asked Gingrich, “You were a prominent supporter of the Medicare prescription drug plan that President Bush signed into law in 2003. The Medicare trustees now say that plan is $7.2 trillion in unfunded liabilities over the next 75 years. Do you regret your support for the plan looking back?”

“No,” said Gingrich. “I think that we—I mean, I am for dramatic reform of Medicare. I chaired the Medicare reform task force which saved it in 1996 when the trustees said it was going to go broke, and we passed changes which enabled them to say that we had postponed any problem for well over a decade.

Here is the video with Gingrich’s full comments:

Is “too big to fail” a permanent fixture in public policy?

Here’s your “no sh*t” moment of the day. The TARP “watchdog” says that the bailouts have made “too big to fail” part of public policy:

The watchdog for the Troubled Asset Relief Program (TARP) issued its final verdict on the bailouts Wednesday in a mixed report that credited the program with stabilizing the economy but warned that a “too big to fail” mentality might persist.
[…]
But the group noted that the extraordinary intervention might have ingrained a “too big to fail” mentality in the financial markets, and perhaps in corporate America.

“By protecting very large banks from insolvency and collapse, the TARP also created moral hazard: Very large financial institutions may now rationally decide to take inflated risks because they expect that, if their gamble fails, taxpayers will bear the loss,” the report stated, adding that government efforts to save domestic auto manufacturers might have spread that hazard to non-financial institutions as well.

“The implication being that any company in America can receive a government backstop, so long as its collapse would cost enough jobs or deal enough economic damage,” the report stated.

Of course, they also claim the bailout was crucil to ensuring stability. Well, when you’re giving out taxpayer money to institutions that made poor decisions and would have otherwise failed, I’m sure they were relieved. But when the next economic troubles happen - whether it’s financial institutions or an auto industry producing cars no one wants, bailouts will be the policy of whatever administration is in power and Congress.

 
 


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