Auto Bailout Failed
President Obama governs by autocratically ignoring legal constraints of precedents or principles.
He dismisses our Constitution as a “charter of negative liberties.” And his auto bailout ignored important legal precedents in a scheme based on a false claim that it would save 1.5 million jobs.
Advisers had told him that actual losses would only be 10 to 20 percent of 1.5 million, but Obama continues to use his false talking point in his current stump speeches.
Bailout money was stolen from the Troubled Asset Relief Program (TARP). Congress never authorized a TARP loan of $49.5 billion for GM. Taxpayers had to ante up an additional $30 billion just to give GM the financial reserves required by bankruptcy court.
That $30 billion bought shares in the new GM, which have lost 49 percent of their value relative to the Dow. Not a good deal for taxpayers!
But wealth redistribution from taxpayer to labor union is still going strong. Bankruptcy laws require bond holders (the secured creditors) to be paid first, but “Obamalaw” gave unsecured union creditors first position.
His failure to follow standard procedures redistributed an extra $26.5 billion of taxpayers’ money to the union.
By unfairly picking winners and losers, Obama actually hurt selected middle-class retirees, pension funds and endowments.
Even worse was the unprecedented transfer of a $45 billion tax credit to GM, which distorted its future financial reports!
Did these crony pay-offs fix GM’s problems? No. GM’s fundamental problem was that it could not afford its labor union contracts.
After the bailout, these costs remained unsustainable, at a level 20 percent higher than its competitors. A proper restructuring would have renegotiated those ruinous contracts.
By ignoring an option that worked in other industries, Obama just kicked the can down the road until after the 2012 elections.
Need I say more?
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