12.01.2008 0

A Gentleman’s Agreement to Bankrupt the Taxpayer

  • On: 12/23/2008 10:38:16
  • In: Economy
  • By Robert Romano

    “Quit worrying—you’ll be back on your knees in no time.”—Jack Nicholson to Greg Kinnear in “As Good as it Gets.”

    George Bush has made a gentleman’s agreement with robber barons and union thugs.

    And there is no question that after the Big Three automakers are done pouring through the $17.4 billion in “bridge loans” they have soaked from the Treasury’s Troubled Asset Relief Program (TARP)—i.e., the taxpayers—that they will again return to the federal government on their knees, begging for more.

    There is no reason to believe that either these companies’ managements or the union bosses will ever honor the original terms of the loans. After all, that would involve concessions. And why concede anything when the American taxpayer is on the hook—and can’t get off?

    Although President Bush did attempt to couch the loans to seeming conditions—the companies apparently need to show that they will be viable come March 31st—with the Obama Administration coming into power in less than a month, these verbal caveats mean practically nothing.

    Specifically the President stated, “This restructuring will require meaningful concessions from all involved in the auto industry — management, labor unions, creditors, bondholders, dealers and suppliers… If a company fails to come up with a viable plan by March 31, it will be required to repay its federal loans. Taken together, these conditions send a clear message to everyone involved in American automakers: The time to make the hard decisions to become viable is now — or the only option will be bankruptcy.”

    The fact is, the only real option is already bankruptcy. And if the Big Four (including the UAW) had any intention of making the “hard decisions,” they would have done so a year ago… or two years ago—or maybe a decade ago when it became entirely obvious to everyone that foreign cars had become a domestic juggernaut.

    Already, the UAW is looking for more favorable terms. And the focus is shifting to how the next bailout will be structured under the Obama administration. As the AP reported last week, “The long-term fate of the auto industry rests with Barack Obama now that President George W. Bush has given car companies $17.4 billion in emergency rescue loans,” and “Obama will be free to reopen the arrangement from the government’s side if he chooses, and the head of the United Auto Workers said the union would be appealing to the new president and the strongly Democratic new Congress on that subject.”

    Given the open-ended nature of the authority granted to the Treasury under the TARP, the President can now bail out just about any company he wants, and certainly can restructure the “deal” reached to give the loans in the first place. The FDIC too has dramatically expanded its insurance coverage under the same legislation, thus expanding its financial obligations. In tandem, the Federal Reserve in March expanded its discount window at will to include investment banks, not to mention its seemingly limitless power to print money at will or slash interest rates into nothingness.

    Taken together, it is clear that Congress has now voted away the power of the purse. Now, the lobbyists will appeal directly to the White House, the Treasury, the Fed, the FDIC, and any other applicable bureaucracy for funds during these troubled times. And these unelected officials, already granted the authorities to give away the taxpayers’ money, will oblige. Rapidly, the executive branch will become a revolving door for every handout, giveaway, and kickback imaginable from and to the power elite.

    Why even bother going to Congress—which can be held accountable by the people—when a troubled company can appeal to a faceless bureaucrat to make a deal behind the scenes? The public hearings in front of Congress are bad public relations for the companies, anyway. And the press is asking too many questions. Soon, the process will degenerate into less and less public oversight.

    Already, it is hard to track what has become of TARP funds and Federal Reserve loans. If Congress cannot in the coming sessions rein in these unaccountable departments and entities, the American people as well as their liberty will be in danger as the people’s representatives lose their power to protect their own constituents from outright theft.

    The Big Three will be back, sooner than March 31st, asking for yet more taxpayer funds. Begging. And without any legal constraints left upon the executive branch, GM, Ford, Chrysler—and yes, the UAW—will get whatever they want so long as they sufficiently threaten to take the entire national economy—and the greater global economy—down with them.

    That is really the end result of the President’s gentleman’s agreement with robber barons and union thugs. And, in the final analysis, it will be the American taxpayers who are being brought to their knees.

    Robert Romano is the Editor of ALG News Bureau.

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