Amid the controversy over Chrysler’s “It’s Halftime In America” Super Bowl commercial, a glaring question remains: if Chrysler is back on top and so strong, then why hasn’t it repaid taxpayers the $1.3 billion it still owes them?

“I was, frankly, offended by it,” said Republican strategist Karl Rove. “I’m a huge fan of Clint Eastwood, I thought it was an extremely well-done ad, but it is a sign of what happens when you have Chicago-style politics, and the president of the United States and his political minions are, in essence, using our tax dollars to buy corporate advertising.”

Already, Democrats have begun co-opting the “It’s Halftime In America” meme, and President Barack Obama’s campaign team has already signaled that “saving” Detroit and the American auto industry will be a central campaign theme in Mr. Obama’s 2012 reelection bid. Indeed, in June 2011, Mr. Obama proudly declared:

Chrysler has repaid every dime and more of what it owes American taxpayers for their support during my presidency–and it repaid that money six years ahead of schedule.  And this week, we reached a deal to sell our remaining stake.  That means Chrysler will be 100 percent in private hands.

The Washington Post fact checker, however, disagreed–strongly. (more…)

How much bailing out does one company need? After receiving some $50 billion in tax dollars from us courtesy of Obama’s “cash stash,” GM is claiming success with a “big profit” with last year’s third quarter report, and in his recent State of the Union Speech, President Obama claimed that GM was “back on top as the world’s number one automaker.” But true or not, if all is coming up roses for GM, why is the company now lobbying the individual states for mini bailouts?

That is exactly what is happening. The new “big success” automaker is spending millions hiring lobbyists to squeeze more millions out of state legislatures. As Justin Owen notes, GM has “turned to another, smaller government teat” by putting its hand out to the states. GM, Owen says, “has received another $1.7 billion in taxpayer-funded grants and tax abatements.”

This is no accident of timing, either. GM admitted to the Tennessee Watchdog that begging to the states for tax dollars is a concerted effort.

“We are increasing our activity with the states obviously, in the communities in which we operate. In doing this, we’ve invested more than $6 billion (throughout the states) during the last five years and brought 15,000 people back to work. So, the activity at the state level is important to us. Our lobbying is comparable to what our competitors are doing throughout the states,” said GM spokesman Greg Martin.

For the Watchdog, Christopher Butler found that GM has received more than $1.5 billion from Michigan, $7.5 million in tax incentives from Kentucky, over $10 million from Texas, and over $2 million from Indiana. Ohio and Maryland have given to the GM bailout fund, too, with tax incentives and other giveaways. (more…)

This is all that remains of the very popular Ford commercial that went viral on the internet and was featured on cable news channels over the past three weeks:

According to the Detroit News, Ford has pulled the ad due to pressure from the Obama White House:

Ford pulled the ad after individuals inside the White House questioned whether the copy was publicly denigrating the controversial bailout policy CEO Alan Mulally repeatedly supported in the dark days of late 2008, in early ‘09 and again when the ad flap arose. And more.

With President Barack Obama tuning his re-election campaign amid dismal economic conditions and simmering antipathy toward his stimulus spending and associated bailouts, the Ford ad carried the makings of a political liability when Team Obama can least afford yet another one. Can’t have that.

In an exclusive interview with Breitbart.com, the “star” of the popular ad, Chris McDaniel told me he was “a little bit flustered’ by Ford’s decision. He found out about it during a live radio interview this morning.  “I had no idea.  As soon as I got off the interview, I sent an e-mail to Ford’s VP of Marketing.”  He told me,  “I put myself out there on the line.  You either stand behind it or you don’t.”

Ford has not yet returned Mr. McDaniel’s e-mail.

A note posted by Ford Motor Co. on Facebook responding to the controversy says:

“(W)e were not coerced into pulling the ad down. The campaign continues to run. We took the ad out of rotation after 4 weeks which is consistent with the typical lifecycle for the campaign.”

But this explanation is inconsistent with the past practice of Ford and their handling of these commercials.  Other “press conference” style ads that they have produced are still available on YouTube, but the one featuring Chris McDaniel has been removed.

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Desperate times call for desperate measures, and the United Auto Workers’ Bob King thinks he’s just the union boss to make a go of it. With negotiations about to start with the Big Three American auto companies (two of which are UAW-owned), King is ramping up his rhetoric against the CEO of the only automaker that taxpayers did not bailout (Ford’s Mulally), while plotting his strategy for negotiations.

Meanwhile, claiming that he’s fighting for “social justice” and the entire American middle class (as opposed to just trying to save his otherwise failing union), sounding a lot like he is using the model being used to overthrow governments in the middle east, the UAW’s top boss is recruiting global activists to attack UAW-free foreign automakers.

If action is necessary, “we have a new strategy to organize them,” Williams said, which involves mobilizing members, retirees and allies “to expose violations of human rights.”

The efforts fall under the umbrella of the newly created Global Organizing Institute that is training the activists.

“It has the potential to be the largest, sustained consumer action by organized labor,” Williams said. “We have the resources and the people to be successful in this mission.”

In the United States, the Institute has put coordinators in each state to oversee recruits from university campuses and social organizations. An initial group of activists also has been recruited abroad in countries including China, India, Brazil, Japan and South Korea.

This coordinated effort will allow simultaneous protests at a company’s dealerships around the world to press for auto plant union organization in the U.S.

A second wave of eight interns from other countries is wrapping up a visit to the United States, where they interviewed workers at nonunion auto plants in Mississippi and Alabama.

When the UAW picks a company, these young international leaders say they will take action against the target, knowing they have UAW support.

In addition, alliances have been formed with unions in Germany, Japan and South Korea.

Of course, to King and his clan of foreign crusaders, a violator of “human rights” would be any foreign auto company that does not succumb to King’s extortionate version of a “fair election.”

(more…)

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss Friday’s unemployment numbers, Super Bowl ads, and AOL’s purchase of the Huffington Post.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

U.S. jobless rate drops, but experts question how many actually found jobs
Money Matters: Deciphering Bureau of Labor unemployment statistics
AOL to Acquire Huffington Post
Who Will Profit From AOL’s Deal for Huffington Post?
LEAKED: AOL’s Master Plan
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Sad to say, what I wrote last year at this time is hardly less apt today:  “The State of the Union Address is ordinarily a bore. It generally consists of a laundry list of proposals, and the list nearly always seems interminable. If Barack Obama has moxie, however, tonight could be different. His State of the Union Address could be a real game changer.”

“Here,” I then wrote, “is how he could do it – if he was really intent on saving his Presidency and on turning a disgraceful performance in that office into something worthy of eulogy. This evening, after the usual formalities, he could say:

My fellow Americans, let me begin by stating the obvious. The state of our union is not good. We seem to be – we may be – coming out of a recession. But, if so, the recovery is not only jobless; it is accompanied by an increase in employment.

This is contrary to my expectation. When I became President, my economic advisers told me that the rate of unemployment would be considerably lower now than it is. They were mistaken, and I erred in taking their advice. The fault is mine. I may not have gotten us into a severe recession, but I advanced proposals and I pursued policies which have prolonged and deepened it. I am at fault.

(more…)

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In today’s edition of Coffee and Markets, Ben Domenech and Francis Cianfrocca to discuss the the latest Fed actions, Wall Street numbers, earnings report expectations, whether the Democrats are wise to keep Nancy Pelosi, and President Obama’s declaration of the “New Normal.”

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. You can find our iTunes feed at CoffeeandMarkets.com. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

WSJ: Obama Warns of New Normal
Zerohedge: Zoellick Talks Gold Standard
WSJ: Ford and GM Rise, Chrysler Sinks
Cianfrocca: Bernanke Treats the Fever, Not the Infection

A bit less than a year ago, I posted piece entitled Is Barack Obama a One-Trick Pony? I raised this question with an eye to three thumbsuckers that had recently appeared – one on Politico by veteran commentator Elizabeth Drew; another, entitled Amateur Hour at the White House, written by Leslie Gelb for The Daily Beast; and a third, drawing on the remarks of these two well-known Democratic scribes, published in The Wall Street Journal by Peggy Noonan.

Noonan had two things to say – first, that no one among her liberal acquaintances really loved Barack Obama the way so many Democrats had loved Bill Clinton; and, second, that the Democrats were wrong to think that passing his healthcare reform would help him. In her view, the passage of “such a poor piece of legislation” would, in fact, do him almost irreparable harm. Moreover, she added, “There is the growing perception of incompetence, of the inability to run the machine of government. This, with Americans, is worse than Obama’s rebranding as a leader who governs from the left. Americans demand baseline competence. If he comes to be seen as Jimmy Carter was, that the job was bigger than the man, that will be the end.”

To this, I added, “The Democrats are getting what they asked for.”

In 2004, they tried a trick. If we nominate a man who won the Purple Heart in Vietnam, they thought, we will win. Never mind that John Kerry disgraced himself in the aftermath of his service in Vietnam, making unjust charges against his brothers-in-arms and resolutely thereafter refusing to apologize to those whom he had slandered. Never mind that he had no executive experience. Never mind that, as a US Senator, he was – to say the least – undistinguished. They wanted to win; and they gave not a thought to what sort of President he might be.

In 2008, the Democrats did the same thing. They had on their hands an inexperienced, recently minted US Senator from Illinois who was – as Joe Biden put it in a candid remark that typifies his propensity for speaking his mind without first thinking about the consequences – “the first mainstream African-American who is articulate and bright and clean and a nice-looking guy.” Never mind, they thought, Obama’s long-standing connections with William Ayers, the unrepentant mastermind of a domestic terrorist bombing campaign in the 1970s. Never mind Obama’s close association with the racist demagogue Jeremiah Wright. Never mind his lack of executive experience, his unfamiliarity with the private sector, and his ignorance of the ways of Washington. With the help of the pliable press, he could be sold – and the Americans would congratulate themselves on their lack of racial prejudice if they voted for him.

“Now,” I then wrote, “comes the reckoning. That is one problem. The other is that Obama’s one trick cannot often be played. As we have seen over the last few months, as he has tried to play this trick over and over and over again, the more we see of him, the less we are impressed. Franklin Delano Roosevelt never held his fireside chats more than three times a year. How many times has Obama demanded airtime from the networks in the last ten months? I shudder to think.” And to this, I added,

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Private saving and investment are the heart and soul of the dynamic market process. Together they provide and allocate the resources used to augment the economy’s productive capacity, generate sustained long-run economic growth, and thereby make possible a rising level of living. Economic crises interrupt this process by discouraging investors and causing them to consume their resources or to employ them in relatively safe, low-yielding ways. Absent entrepreneurs willing to take the great risks that characterize investments in great technological and organizational innovations, the growth process fades into economic stagnation or even decline.

The present recession starkly displays this characteristic crisis-related abatement of the economy’s investment process. Indeed, the decline of private investment during recent years has been much greater than most observers realize. Consider the following data, taken or derived from the most recently revised National Economic Accounts prepared by the Commerce Department’s Bureau of Economic Analysis (Tables 1.1.5, 1.1.6, and 5.2.6).

In 2006, gross private domestic investment reached its most recent peak, at $2.33 trillion (in constant 2005 dollars), or 17.4 percent of GDP. After remaining almost at this level in 2007, this measure of investment fell substantially during each of the next two years, reaching $1.59 trillion, or 11.3 percent of GDP, in 2009. This decline is severe enough, but it does not give us all the information we need to gauge the extent of the investment bust.

The greater part of gross investment consists of what the statisticians call the capital consumption allowance, an estimate of the amount of money that must be spent simply to offset wear and tear and obsolescence of the existing capital stock. In a country such as the United States, with an enormous fixed capital stock built up over the centuries, a great amount of funds must be allocated simply to maintain that stock. In recent years, the private capital consumption allowance has ranged from $1.29 trillion in 2005 to $1.46 trillion (in constant 2005 dollars) in 2009. Thus, even in the boom year 2006, about 60 percent of gross private domestic investment was required merely to maintain the economy’s productive capacity, leaving just 40 percent, or $889 billion in net private domestic investment, to augment that capacity.

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A year ago, in a blogpost entitled The Great Awakening, I argued that conservatives “should be grateful to Barack Obama, Nancy Pelosi, Harry Reid, and Rahm Emanuel.” After all, I wrote, they had unmasked “the Democratic Party as a conspiracy on the part of a would-be aristocracy of do-gooders hostile to the very idea of self-government in the United States,” and they had done so by making “the tyrannical propensities inherent within the progressive impulse visible to anyone who cares to take notice.” This is a theme to which I have returned repeatedly in a series of posts – some of them linked here, others archived here and here, and the most recent found here – arguing that, with the proper leadership, the Republican Party could seize this occasion and effect a political realignment.

The heart of the matter is simple. What Franklin Delano Roosevelt falsely claimed in 1936 is now demonstrably true: “A small group” of individuals – lead by our current President, his Chief of Staff, the Speaker of the House of Representatives, and the Majority Leader in the United States Senate – really is intent on concentrating “into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor – other people’s lives.” If they wish to effect a realignment, all that the Republicans have to do is to complete the task of unmasking begun by Obama, Pelosi, Reid, and Emanuel and make it clear that they really do intend to repeal Obamacare, to balance the federal budget without enacting permanent tax increases, to roll back the scope and size of the administrative state, and to restore within these United States limited, constitutional government.

They face two great obstacles. First, as I argued last year in my book Soft Despotism, Democracy’s Drift, the administrative state has been growing for almost a century now, and it has become entrenched. Moreover, its growth has been fueled not only by the ambitions of a self-styled progressive elite proclaiming its expertise and its desire to manage our lives for us. It has also been supported by the political psychology to which – the baron de Montesquieu, Jean-Jacques Rousseau, and Alexis de Tocqueville contended – commercial, liberal, democratic societies, such as our own, generally give rise. Put simply, men in liberal democracies tend to fall prey to what these thinkers call inquiétude, and under the influence of this uneasiness – this vague, unfocused fear lacking a defined object – they are apt, especially in times of economic distress, to be willing to trade independence for a promise of security. The Americans whom Tocqueville met in the early 1830s had the resources, institutional and moral, with which to resist this propensity. But we can no longer boast that, in the United States, local self-government is vigorous, private associations do much of what was allocated to government in Europe, the Christian religion provides us with a moral anchor, and marital fidelity and family solidarity afford us a haven from the upheavals that typify life in a dynamic, commercial society.

Second, no one really trusts the Republicans in Congress.

(more…)

Authored with Ivan Osorio

Yesterday, the United Auto Workers union (UAW) named Bob King as its new president. Does this mean a change in direction for one of America’s most powerful unions? Not likely.

King, a UAW vice president before yesterday and a member of the union’s executive board, was described by Time magazine late last year as being “Picked – Not Elected – to Lead [the] UAW.” As Time writer Joseph Szczesny noted, “For more than 60 years, the UAW’s top leadership has blocked attempts to permit union members to vote directly for the union presidency.” Instead, the union’s executive board has picked the UAW president since the late 1940s through closed caucuses.

It’s not like the union doesn’t need change. For several decades, lavish compensation packages and restrictive work rules have helped make the Big Three Detroit automakers uncompetitive, especially in the face of increased foreign competition. Yet you wouldn’t know it from the parade of old faces at the UAW’s recent convention. Listening to their comments, it’ s no wonder why Michigan has the worst unemployment in the nation—14 percent compared to 9.7 percent average for the entire country.)

AFL-CIO President Trumka pushed the class-war rhetoric so common among labor bosses. He thundered, “We cannot ease off the fight against trade agreements that favor Wall Street over workers throughout the world.” He applauded the UAW for “fighting back” against corporate America and hostile politicians, and called on the automakers to give back concessions made by the UAW.

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Since the early twentieth century, periods of real or perceived national emergency have been “critical episodes” in the growth of government’s size, scope, and power in the United States and in many other countries. Hence, the concise conceptualization: Crisis and Leviathan (the main title of my 1987 book on the growth of government in the United States from the late nineteenth century to the late twentieth century).

In the past century, the first five such critical episodes in the United States were: World War I; the Great Depression; World War II; a multi-faceted set of crises associated with the civil-rights revolution and the Vietnam War, roughly coincident with the presidencies of Lyndon B. Johnson and Richard M. Nixon; and the post 9/11 events associated with the so-called War on Terror and the U.S. attacks on and occupations of Afghanistan and Iraq. We are now amid another such critical episode, which springs from the housing bust that began in 2006, the economic recession that began late in 2007, and the financial debacle that reached its climax in September 2008.

The current troubles are complex and raise a multitude of questions. Many books and articles no doubt will be written to analyze these various issues in scholarly depth and detail, and certainly anything we might say today must be regarded as preliminary, at best. I focus here on a few aspects of the present episode that relate closely to my own research on the growth of government, a field of study to which I have returned again and again over the past thirty years.

I

The current recession has elicited many comparisons with earlier business downturns, especially with the Great Depression. Federal Reserve chairman Ben Bernanke is often described as an expert on the Great Depression who takes its lessons, as he understands them, deeply into account as he formulates and implements Fed policies. Likewise, many other economists have revisited the Great Depression recently in search of lessons applicable to current policy-making. In all of these reflections, the mainstream economics profession in general has distinguished itself by an astonishing superficiality of historical knowledge and lack of theoretical prowess.

The swiftness with which a great many mainstream economists have reverted to the simplistic “vulgar Keynesianism” that had its heyday from the late 1940s to the late 1960s has been nothing short of shocking, given that by the end of the 1970s such old-fashioned Keynesianism seemed to have been completely discredited and superseded in the leading echelons of the mainstream economics profession. Now it has come roaring back.

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President Obama recently reiterated his plan to fix the regulation of Wall Street and said it was time to “put an end to the idea that some firms are too big to fail.”

Amen.

But the president doesn’t need a new law or a new oversight committee, like the one he proposes, to end the concept of too big to fail.  He could, and should, simply make a speech declaring that from this day forward, any company, no matter how big or small, will be allowed to fail. If Bank of America or AIG or Chrysler goes bankrupt, so be it. Obama should unequivocally proclaim, “There will be no more bailouts. Period.”

If given, that kind of speech would surely be the most popular thing Obama’s done since becoming president. Arianna Huffington and other liberals angry that ‘crony’ capitalists are getting corporate welfare would love it. Glenn Beck, Michelle Malkin, and fiscal conservatives who truly opposed President Bush’s $700 billion Troubled Asset Relief Program bailout would love it. Libertarians and independents would be ecstatic to see the end of a system that protects—and even rewards—businesses that make bad decisions. (Only Wall Street firms enjoying the taxpayer safety net would be upset.)

Unfortunately, while Obama hints at ending “too big to fail” policies, his financial reforms actually continue to encourage the reckless financial behavior that helped get us into this mess.

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[Ed Note: This is the first post to run at BigGovernment. It was published two-years ago today. It still seems relevant.]

In 1995, President Bill Clinton stood before the nation and proclaimed, “The era of big government is over.” The following year, the federal budget deficit stood at 1.4% of GDP. Thirteen years later, in 2008, the deficit had doubled, to just over 3% of GDP. This year, the Congressional Budget Office estimates that the federal budget deficit will equal 11.4% of GDP.

As George Will would say, “Well.”

This is the real source of our “summer of discontent.” Yes, millions of Americans spent the month of August holding Tea Parties, attending town halls, organizing, marching and protesting against ObamaCare, i.e. Congressional and Administration proposals to reconstruct the entire health care sector. But to suggest that health care alone is at the root of this backlash is to miss the forest for the trees. To paraphrase Democrat strategist James Carville, “It’s the big government, stupid.”

Since last September when the financial markets stumbled, we’ve seen a Wall Street bailout, government takeovers of AIG, Citigroup, Fannie Mae, Freddie Mac, GM, Chrysler, and numerous banks. The Federal Reserve has opened its discount window to almost all-comers and has taken the unprecedented step of aggressively buying up the federal government’s own debt. Congress rushed through a “stimulus to nowhere,” moved closer to a “cap-and-trade” remake of the energy sector and openly talked about higher taxes and more regulation. (more…)