Crimes Against Liberty (39 page)

But Obama doesn’t share the public’s affinity for capitalism. When announcing GM’s bankruptcy, he laughably said, “What we are not doing—what I have no interest in doing—is running GM.” Yet, just the night before, he had called Detroit mayor Dave Bing to reassure him that New GM would be headquartered in Detroit.
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Furthermore, Obama’s auto task force had earlier pressured General Motors Corp. to get rid of the GMC brand,
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which was an odd move for an administration insisting it had no interest in managing the business. In another odd move for a group appointed by someone disinterested in running car companies, Obama’s task force cut in half Chrysler’s planned expenditures for its “We’re Building a New Car Company” campaign.
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The story of Chrysler’s government-nudged degeneration into bankruptcy is not a pretty tale. And in the end, Obama prevailed, as the Supreme Court lifted a stay on the sale of Chrysler to the group including Fiat SpA, clearing the way for the sale to proceed. As part of the restructuring ordeal, Obama’s auto task force closed down nearly 2,500 GM and Chrysler dealerships at the cost of some 100,000 jobs.

There was much suspicion about Obama’s partisan favoritism in his decisions as to which dealerships would be closed and which would remain open.
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The
Washington Examiner’s
Mark Tapscott wrote that “evidence appears to be mounting” that the administration “systematically targeted for closing Chrysler dealers who contributed to Republicans.” One example he cited was the closing of a dealership of a GOP congressman as well as competitors of a dealership whose owners included former Clinton chief of staff Mack McLarty.

Tapscott argued the basic issue was how to account for millions of dollars that were contributed to GOP candidates by Chrysler dealers who were being closed, while only one Democrat-contributing dealer had been shuttered. Leonard Bellavia, a lawyer representing a group of Chrysler dealers set to be closed, told Reuters he believed the closings had been forced on the company directly by the White House.

In fairness, Tapscott, in an update to his piece, conceded that certain credible bloggers disputed the notion that partisan considerations determined the closings. It could have just been a result of more dealerships being owned by Republicans. But he also cautioned that suspicion remained because the White House had not made public the criteria it used to make decisions on terminating dealerships. Tapscott also raised this provocative question: even if more dealerships were owned by Republicans, which had not been proven, “If 88 percent of all car dealers were Democratic contributors, rather than GOPers, how likely is it that the Obama folks would be delivering such an egregious economic blow to the group, a blow that put thousands of people out of work and deprives hundreds of Democratic donors of their means of making contributions?”
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Later, Congress reversed Obama on many of these dealership closings—over the stringent opposition of his administration. At the time, the White House warned this could set a “dangerous precedent.” What—Congress failing to rubber stamp one of the president’s edicts? The closings, according to the White House, were “a critical part of their overall restructuring to achieve long-term viability.” But nearly a year later, when jobs were created after this new legislation, Obama brazenly took credit for them. Obama told Democratic Party donors in Boston, “A year later, GM is hiring again, on the verge of reopening hundreds of dealerships,” which proved his $50 billion bailout of GM “was the right thing to do.” Bailey Wood, a spokesman for the National Automobile Dealers Association, remarked, “Now he is touting the fact that jobs were created after dealer arbitration legislation, which his administration opposed, forced GM/Chrysler to reevaluate closing these dealerships.” The White House declined to comment.
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It was expected that taxpayers would incur enormous losses on the auto bailout. The administration told Congress in December 2009 it expected to lose some $30 billion of the $82 billion used in the bailout. And yet, the administration was bragging about it. Gene Sperling, Treasury secretary Timothy Geithner’s senior counsel, said, “The real news is the projected loss came down to $30 billion from $44 billion.”
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The government also recklessly lost an estimated $6.3 billion of the $17.2 billion bailout of GMAC, a principal financing arm for the auto dealers that needed money to keep the floor plans in place. According to Harvard law professor Elizabeth Warren, chair of the Congressional Oversight Panel, the money was extended to GMAC with far fewer conditions than those imposed on the automakers themselves. “Treasury missed many opportunities to improve accountability and protect taxpayer money,” said Warren. She said Treasury did not require GMAC to show how it would return taxpayer money or even how the investment would increase credit to consumers. Warren added, “These decisions mean that Treasury is now struggling to deal with a GMAC that is not financially rehabilitated, Treasury has no exit strategy and taxpayers are not fully protected.”
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No exit strategy and a lack of taxpayer protection—quite a fitting summary of many of Obama’s intrusions into the private sector.

Chapter Eleven

THE CASE OF GERALD WALPIN AND AMERICORPS

CRIMES AGAINST THE PUBLIC INTEREST

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bama campaigned on a promise to protect and empower whistleblowers against government corruption. On his website he said that the best source of information about government waste, fraud, and abuse is often “existing government employee(s) committed to public integrity and willing to speak out.” Arguing that these “acts of courage” should be “encouraged rather than stifled,” he vowed to ensure that federal agencies “expedite the process for reviewing claims of whistleblowers and that they would have full access to courts and due process.”

His actions, however, haven’t quite lived up to his promises. The White House counsel’s office proposed legislation that would actually weaken whistleblower protection for FBI employees and reduce access to jury trials for national security workers who sue for protection from retaliation.
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But much more significant was the Obama administration’s treatment of AmeriCorps inspector general Gerald Walpin—a chilling tale of lawlessness, cronyism, and a patent disregard for government transparency and accountability.

ANATOMY OF A SCANDAL

On July 11, 2009, Obama abruptly announced his decision to fire Gerald Walpin. He sent letters to leaders of the Senate and House notifying them of the termination, to take effect in thirty days. His stated reason? He had lost “the fullest confidence” in Walpin, which is “vital” in “the appointees serving as Inspectors General.”

This was not your ordinary executive firing of an at-will staffer. The Inspector General is a highly sensitive position that acts as a watchdog against government corruption and must not be occupied by a lapdog who provides cover for wrongdoing. To be fired by the leader of the very branch of government one is assigned to investigate is enough to create a presumption of suspicion.

Obama would have preferred to fire Walpin quietly, but the recently passed Inspectors General Reform Act, designed to enhance the independence of IGs and provide them protection to do their jobs free of undue influence, required him to provide thirty days prior written notice to both Houses of Congress and to explain his decision. (Notably, Obama was among the co-sponsors of the bill.) He provided notice, but it was meaningless because he immediately placed Walpin on paid administrative leave and stripped him of his authority, which is precisely what the notice provision is intended to prevent. Nor did Obama outline his reasons beyond vague generalities.

Obama, in fact, had tried to circumvent the act altogether by nudging Walpin into resigning on his own. Senator Charles Grassley reported that the White House had called Walpin and given him one hour either to resign or be fired. Walpin refused to play.
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Grassley sent a letter to the president reminding him of the purpose of Inspectors General—to combat “waste, fraud, and abuse and to be independent watchdogs” to ensure that federal agencies are “accountable”—and that they are to be “free from undue political pressure” so they can operate “independently.”

Suspicion immediately arose that Obama was firing Walpin because of Walpin’s investigation of Kevin Johnson, a former NBA star and the Mayor of Sacramento, California, who is a strong Obama supporter and personal friend. Before becoming mayor, Johnson had established a non-profit called St. HOPE to help “revitalize inner-city communities through public education, civil leadership, economic development and the arts.” After opening an investigation into whether St. HOPE had misused an $850,000 AmeriCorps grant,
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Walpin discovered that Johnson had used AmeriCorps funds to pay volunteers to participate in political activities involving the school board and to run personal errands for Johnson like washing his car.
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In a letter to Senator Grassley, White House counsel Gregory Craig offered a few details about Walpin’s firing, saying that a U.S. attorney, while communicating with an integrity committee for inspectors general, had criticized Walpin’s handling of the St. HOPE investigation. Craig wrote, “We are aware of the circumstances leading to that referral and of Mr. Walpin’s conduct throughout his tenure and can assure you that the president’s decision was carefully considered.” Walpin had referred the case to the U.S. Attorney’s office upon discovering anomalies in grant expenditures. The U.S. Attorney said Walpin’s assessment of misconduct seemed overstated and did not accurately reflect all the information. St. HOPE’s board chairman, Kevin Heistand, issued a statement saying it was “about time” Walpin was removed and that his “allegations were meritless and clearly motivated by matters beyond an honest assessment of our program.”

Nevertheless, something improper had occurred, even in the eyes of acting U.S. Attorney Lawrence Brown, or his office wouldn’t have worked out a settlement with St. HOPE whereby it would repay almost half the $850,000 grant money.
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In addition, the Integrity Committee of the Council of Inspectors General on Integrity and Efficiency had issued no negative findings against Walpin, and Walpin had “identified millions of dollars in AmeriCorps funds either wasted outright or spent in violation of established guidelines.” Meanwhile, Kevin Johnson and St. HOPE were temporarily cut off from receiving any new grant monies. As the
Washington Examiner
’s Byron York said, “The bottom line is that the AmeriCorps IG accused a prominent Obama supporter of misusing AmeriCorps grant money,” and “after an investigation, the prominent Obama supporter had to pay back more than $400,000 of that grant money.” Yet, “Obama fired the AmeriCorps IG.”
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The controversy was just beginning for President Obama. Democratic senator Claire McCaskill, a strong Obama ally, expressed concern that Obama hadn’t complied with the law requiring 30-day notice prior of termination (though she later reversed herself).

Norm Eisen, Special Counsel to the President, provided more details on Walpin’s termination in a letter to senators Joe Lieberman and Susan Collins, with a copy to Senator McCaskill. Eisen stated that Walpin was terminated following a review that had been unanimously requested by the “bipartisan Board of the Corporation.” He wrote that in a board meeting in May 2009, Walpin was “confused, disoriented, unable to answer questions and exhibited other behavior that led the Board to question his capacity to serve.” Furthermore, Eisen said acting U.S. Attorney Brown had filed a complaint about Walpin’s alleged failure to disclose exculpatory evidence about St. HOPE. Finally, Eisen claimed Walpin had insisted—over the objections of the Board—on working from his home in New York; that he “exhibited a lack of candor in providing material information to decision makers; and that he had engaged in other troubling and inappropriate conduct. Mr. Walpin had become unduly disruptive to agency operations, impairing his effectiveness, and, for the reasons stated above, losing the confidence of the board.”
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Gerald Walpin refused to go quietly, accusing the White House of “grasping at nonexistent straws” to justify his firing. He said the more diligently he investigated St. HOPE, along with the alleged waste of AmeriCorps money at the City University of New York (CUNY), the more resistance he encountered from the board of the Corporation for National and Community Service, which oversees AmeriCorps. “But that’s exactly why the IG position was created,” said Walpin.

Walpin argued that far from being confused, he simply gave the board information it didn’t want to hear and chastised it for “what appeared to be the board’s refusal to perform its duty, independent of management, in overseeing what management was doing, particularly as it regards determining the merits of the two reports I had issued.” He told the board it was its duty to evaluate all the evidence objectively and not “just to accept what management says.” He claimed the board was “angry” at his “temerity in telling them they should not be acting in the manner of many for-profit boards, which have been recently criticized.”
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