What the (Bleep) Just Happened? (15 page)

Meanwhile, GM’s bondholders got screwed. GM had $27.2 billion in unsecured bonds owned by the public. These were owned by mutual funds, pension funds, hedge funds, and retail investors who bought them directly through their brokers. Under the restructuring deal, they were forced to exchange their $27.2 billion in bonds for 10 percent of the stock of the new GM. This amounted to less than five cents on the dollar. If you were one of the bondholders, too bad for you. Your wealth just got redistributed to the unions.

GM was quickly reminded that Obama literally owned it. In an extraordinary and unprecedented exercise of power, the chief executive of the United States forced the resignation of the chief executive officer of a major American company. One day, Rick Wagoner was the CEO of GM. The next, he was escorted out of his position by the president, who also demanded that the companies close hundreds of dealerships. Obama repeatedly said, “I have no interest in running the car companies,” and yet he seemed to be relishing doing exactly that.

Since it was your money GM accepted, you might want to know how the company has spent some of it: tens of millions of taxpayer dollars went into weatherization projects in Maine and to “offset its carbon footprint.”

Most hilariously, GM was working on a reality television show about their electric flop, the Chevy Volt. It was to feature all ten people in America who actually own one, four of whom needed loaner cars after their Volts burst into flames.

Meanwhile, after the big transfusion of taxpayer money into Chrysler, over 58 percent of that American icon went to an Italian company, Fiat. Another rousing bailout success.

Did, however, the $80 billion “save” American jobs? According to Paul Gregory, research fellow at the Hoover Institution, on the day it filed for its taxpayer-funded bailout, GM had 92,000 employees. After bankruptcy, it had 77,000 workers, a 16 percent loss. Gregory projects that had GM gone through a regular bankruptcy, it would have experienced roughly the same job loss—and the taxpayers would not have been on the hook. The bailouts did not save “millions” of jobs, as Obama, Biden, and the leftist gang promised. In fact, they probably only saved about 4,000.

And the cost to taxpayers? Obama’s own Treasury Department estimates that you and I will take it on the chin by $23.6 billion, despite GM turning a big profit. But hey, at least Obama took care of one of his biggest political constituencies and forced Detroit to make drivable toaster ovens.

No worries, though. All of this spending was being done in the name of economic “justice.” What could go wrong?

In January 2011, after having presented two $3.5 trillion–plus budgets and while preparing a new $3.8 trillion one, Obama made a big show in his State of the Union address of proposing a five-year budget “freeze” of nondefense discretionary spending. How meaningless and destructive was it? Let us count the ways.

First, when it comes to actually shrinking government, Obama is just not that into it. When Senator John McCain proposed exactly this kind of budget freeze during the 2008 campaign, Obama dismissed the idea out of hand, calling it a budgetary “hatchet” when what was needed was a “scalpel.”

Second, Obama spent his first two years
increasing
budgetary outlays by almost 25 percent. That means that the current baseline—at which he wants to freeze—is nearly 25 percent
higher
than it was when McCain originally proposed the idea. No wonder Obama didn’t mind suggesting a freeze. (He would continue spiking the spending baseline.)

Third, the so-called freeze did
not
apply to the big budget busters: Social Security, Medicare, and Medicaid, nor did it include things like the interest payments on the national debt. In fact, his “freeze” only covered about one-seventh of the budget. The other six-sevenths of the budget would continue to explode out of control.

Fourth, suggesting a “freeze” at such steeply high levels was insulting to our intelligence and destructive to our dire fiscal situation. Annual deficits are over $1 trillion, the national debt is careening toward $17 trillion, and Obama suggested grabbing more cookies out of the cookie jar. The jar is empty, and he’s still grasping.

Finally, most Americans have indicated repeatedly and emphatically that they want the federal government not to freeze astronomical spending levels, but to
cut
spending—drastically. Obama simply wouldn’t—couldn’t—do it. If anyone were wondering if Obama would moderate after the 2010 election, his disingenuous spending freeze should have erased all uncertainty. He blew a few kisses in the direction of so-called centrism, but where it counted—on the size, scope, and spending of government—he showed us that he hadn’t changed one iota. His circumstances had changed; he had to deal with a Republican House. But he has not had a change of ideological heart, nor has he moved to the much-ballyhooed center. He had to pretend he liked Republicans and was willing to embrace some of their ideas. In reality, he loathes those ideas and the GOP majority pushing them. And he loathes having to compromise, which is why he always does so little of it.

His appeasement fake-out didn’t work. Nobody was buying the “freeze” even as he was proposing it, for in that same speech, he also proposed
boosting
spending by an additional $20 billion, which he proudly claimed was $50 billion less than the additional spending he proposed in his 2010 State of the Union.

From that point on, Obama went for broke—quite literally. His next budget was so huge—$3.8 trillion—that it was rejected unanimously by the Senate, 97–0. Not even one kook senator could muster the political courage to back it.

Did that stop the Obama Spendthrift Express? No. In August 2011, he proposed $109 billion more for a new infrastructure bank and hundreds of billions of dollars more in government loans and loan guarantees for union-exclusive construction and green jobs boondoggles. Obama’s desire to spend other people’s money hit a crescendo of madness when he surprise-attacked John Boehner in the congressional cafeteria so he could steal his cigarettes and lunch money.

Even a few Democrats were taken aback by Obama’s full-steam-ahead spending approach. After his party got creamed in November 2010, House Minority Whip Steny Hoyer said, “Now that we’re at $14 trillion in debt, I think the answer is—responsibly—we’re not going to get there [a balanced budget] in ten years, but we have to be on a very considered path to get there.... We’ve dug such a deep hole.”

Pardon me? Where was Hoyer during the bailouts, the “stimulus,” and the ObamaCare debate? He supported every spending proposal. If we ran our households the way the Democrats ran the national budget, we would be in jail for writing bad checks and fraud, sharing a cell with Bernie Madoff and making license plates.

Not that the early budgetary deals of this new age were any great shakes. The first real fiscal test came several months after the Republican congressional near sweep in November 2010. In April 2011, it dawned on members on both sides that their last temporary Band-Aid on the budget, a continuing resolution, was about to expire. Democrats and Republicans ran around with their hair on fire, trying to get a new spending deal in place to carry the nation through the beginning of the next fiscal year, starting October 1, 2011. Apocalyptic visions of national park closures and other unthinkable events associated with a government shutdown were unfurled. Members rushed to the microphones to assure the American people that a shutdown would be avoided at all costs. After all, who among them wanted to be blamed for denying little Sally and Jimmy a chance to visit the Lincoln Memorial?

Republicans, in particular, fell victim to the stalking shadow of the 1995 government shutdown. That year, Republicans shut down the government over disputes with Clinton and the Democrats over spending. The media and the Democrats attacked the GOP for its “heartless” ways and failure to carry on “good government.” The myth spun out of that shutdown was that as a result, Republicans got creamed in 1996 at the polls. The reality, however, was far different: House Republicans lost only nine seats that year. In fact, nationally, the House GOP ran even with the Democrats, scoring 47.8 percent of the vote to the Democrats’ 48.1 percent. And in the Senate, Republicans actually picked up two seats. Contrary to the myth, the 1995 government shutdown did not damage the Republicans and forced the Democrats to work toward balancing the budget and reforming welfare.

In 2011, however, the Republicans were spooked by the media’s and the kooks’ constant invocations of 1995. So once again, the Republicans caved and agreed to another stink bomb of a budget deal. For perspective, the federal government under Obama has been spending about $11 billion
per day
. Under the April 2011 agreement, the sides agreed to “cut” $38 billion, which times out to under
four days’ worth
of federal spending.

The agreement had two big outcomes that put Republicans on the losing side. First, the Democrats successfully termed $38 billion in reductions as “cuts.” By calling them “cuts,” they could scream about how the GOP wanted to throw Grandma in the snow (a rhetorical absurdity usually reserved for battles over Social Security), make Grandpa eat cat food (another lefty oldie but goodie), and “kill women” (a new kook hit uttered gleefully by Democratic congresswoman Louise Slaughter). They could then appear to reluctantly go along with these “cuts” and get credit from a public desperate to see fiscal restraint and government shrunk.

These “cuts” were no such thing. The $38 billion number was an amount being denied to an
imaginary budget never adopted
. This deal came after two previous years in which Obama so increased baseline spending that he had everyone working from incredibly elevated levels. If you spend $50, then you spend $100, and then you propose to spend $150, and someone asks you to cut your budget, so you slash $10, and now you are spending $140. Is anybody buying that that’s a true “cut”? The April 2011 budget deal actually ended up costing $3.2 billion
more
in the short term, according to the Congressional Budget Office, and federal spending actually increased that year by 5 percent. So much for “cuts.” In an act of rebellion against a country and Congress that didn’t buy his sincerity in budget cutting, Barry broke out the Uncle Sam MasterCard and went online to order a Hoodie-Footie Pajamagram to cheer himself up.

Adding new entitlement to injury, the deal didn’t even address stopping or at least slowing funding for ObamaCare, the Biggest of All Redistributionist Programs and the promise of defunding and repeal of which got many Republicans elected in the first place. In their first opportunity to really take it on, the GOP whiffed.

The Republican leadership, in getting totally maneuvered, gave away its major weapon in the fight, a weapon given to them by the Tea Party and the American people through their big 2010 election victories: the leverage they had in holding out the possibility of a government shutdown. House Speaker John Boehner actually said, “We’ll never shut down the government.” Never? What a Junior League mistake. This is Politics 101, and frankly War 101: you never tell the enemy what you will do, and you never tell them what you will not do. And the GOP disarmed itself, both for that battle and for the budget and debt battles to come. From that point on, the Democrats knew that not only would the GOP not fight for serious budget cuts, they would cave at the first threat of a possible shutdown. Nobody on the Republican side was running grand strategy. The Democrats are ruthless street fighters, and Republicans always succumb to the false attack that
they
are the thugs. If this were professional sports or the military, John Boehner would have found himself on a bus back to the minor leagues or doing push-ups in front of a drill sergeant. You never telegraph your moves to an angry mob of loopy Bolshevik nuts.

The Democrats got their budget, almost fully intact given the elevated baseline, and they saw the GOP run away like Bill Clinton from a jealous husband.

Moreover, Obama and the kooks got the benefit of hilarious spin saying the GOP “won.” They knew the GOP didn’t win, and that’s why they were happy to let them have their little Charlie Sheen “duh, winning” headlines.

For years prior to this deal, Republicans assured us that they “got it” about spending and the seriousness of the deficit problem. In April 2011, they got together with the spendaholics on the other side and decided that the crisis they have been telling us about isn’t really serious enough to deal with seriously. It’s the status quo all the way, baby! And of course, their weaselly cowardice on that first big budget deal after they took control of Congress set the stage for further wimpiness over the debt ceiling and later budget fights. Republicans always seem to be the last group of people on earth to discover that liberals will lie, cheat, steal, or feign ignorance to get whatever they want.

There was, however, a conservative game-changer. Representative Paul Ryan, the chairman of the House Budget Committee, has shown enormous courage in trying to move his party and the nation back to fiscal responsibility. In April 2011, the same month his party agreed to the hot mess of a budget deal, Ryan introduced the Path to Prosperity. The plan was both dynamically pro-growth and adamantly reformist. Put simply, it argued for $6.2 trillion in spending cuts over ten years by bringing spending to below 2008 levels and a reduction in marginal tax rates, eliminating income taxes on capital gains, dividends, and interest, as well as the corporate tax rate, the death tax, and the alternative minimum tax. It proposed reforming the entitlements by moving Medicare to a premium-support model, in which Medicare would pay a lump sum to the plan chosen by the beneficiary, subsidizing its cost, and changing Medicaid so the states would receive block grants to give them flexibility in handling their individual Medicaid needs, particularly once the labyrinthine new mandates of ObamaCare kick in. (Ryan stuck to his guns and proposed a similar reformist budget for FY2013.)