Once upon a time, politics was about serving the public good, assisting needy families and, yes, kissing babies. Now it’s about amassing power to end-run corporate boards, fire CEOs, whipsaw banks, advance personal agendas, and damn the taxpayers.
How else to explain House Speaker Nancy Pelosi backing fellow California Democrat Henry Waxman last fall to replace U.S. Rep. John Dingell as chairman of the Energy and Commerce Committee? It was a power grab, pure and simple. Years ago, politicians respectfully waited their turn to move up the ladder. But not a moment after Barack Obama had won the presidential election last fall, the California Democrats swooped in and shoved Dingell to the sideline. Being a true statesman, Dingell took the revolt in stride.
There’s the matter of our local automakers, as well. A long time ago — say, late 2007 — the Federal Reserve aggressively reduced interest rates, under heavy pressure from politicians eager to loosen lending standards so that more voters could realize the American dream of homeownership. After all, an election year was looming. But the resulting rate reductions were a catalyst for the home-mortgage meltdown and the banking crisis. When lending dried up, so, too, did auto sales and other retail activity.
To help make amends for their mistakes, the politicians, after lining up and blaming bank executives for the problem, came up with TARP funds (taxpayer money) to bolster financial institutions and restore consumer confidence. And when some banks balked at accepting the funds, the government insisted they take it anyway. No wonder the banks are lining up to pay back their government debt as soon as possible.
Next up on the firing line was the domestic auto industry, which has been bogged down for years by government interference, costly regulations such as CAFE, and union coercion. Could you imagine the Democrats allowing, say, airline executives to idle their planes while they collectively bargained with their unions? It would never happen because politicians simply aren’t interested in encouraging management and labor to find equitable solutions to problems. Wooing voters is the end game, and the unions have a lot more of them.
How else to explain the government and the UAW effectively owning General Motors and Chrysler? The housing meltdown and banking crisis crippled auto sales, prompting the automakers to ask Washington for loans to survive. And it didn’t take long before GM Chairman Rick Wagoner was told by the White House to resign.
Eyeing further influence (i.e., power), the White House and its auto task force, with the assistance of the UAW, moved in and took control of GM and Chrysler.
When debtholders — many of them large banks that accepted TARP funds — objected to the paltry sum they would receive from the government-led turnaround plan (as low as 10 cents on the dollar), a strange thing happened.
The White House reminded the banks that the TARP funds could be called in at anytime. So the banks acquiesced, the automakers will soon be majority-owned by the government and the UAW following the conclusion of bankruptcy proceedings, and taxpayers are left to foot the bill. And here we thought the TARP funds were meant to help the banks.