Friday, April 3, 2009
To: Friends Of Free Enterprise
From: Gary L. Bauer
(This is the second of our weekly Defend Free Enterprise Reports. I hope you will share them with like-minded friends and business associates. Please encourage them to sign up at http://www.defendfreeenterprise.org or they can click the link at the end of this report.)
Congress Passes Obama’s Budget
The House and Senate essentially rubberstamped President Obama’s budget –a multi-year, multi-trillion dollar blueprint of deficits and debt as far as the eye can see. In fact, the Congressional Budget Office estimated that Barack Obama’s budget would add nearly ten trillion dollars to the national debt – doubling the debt in five years and tripling it ten! The Associated Press reported, “President Barack Obama’s budget would produce … more than four times the deficits of Republican George W. Bush’s presidency.” In addition, it contains hundreds of billions of dollars in tax hikes and lays the foundation for nationalized health care.
The vote in the House of Representatives was 233-to-196. Every “Yes” vote in favor of tripling the national debt came from a Democrat. Not one House Republican voted for this budget, and 20 Democrats joined the Republicans in voting “No.” The vote in the Senate was 55-to-43. Every “Yes” vote in favor of tripling the national debt came from a Democrat. Every Senate Republican and two Democrats (Evan Bayh of Indiana and Ben Nelson of Nebraska) voted “No.” That means that the only thing “bi-partisan” about this budget was the opposition to it!
Here a few noteworthy items.
* Sen. Mike Johanns (R-NE) successfully passed an amendment to block special “reconciliation” rules in the budget process from applying to the administration’s planned carbon “cap and trade” scheme, which I refer to as “cap and tax.” (It’s a massive new tax on energy that may cost every American business and family thousands of dollars a year! Administration officials have told Senate staff that they believe it could tax $2 trillion out of the economy.) What the Johanns amendment means is that the “cap and tax” scheme can be filibustered in the Senate at a later date. Every Senate Republican supported the Johanns amendment, as did 26 Democrats.
* Senators were even more emphatic in their rejection (94-to-3) of President Obama’s idea to limit tax deductions for charitable contributions from successful business owners and families.
* Here’s an additional point to consider. The budget is an important indicator of Washington’s principles and intent, but it is mainly a non-binding outline of what the White House and Congress hopes to do in the years ahead. (And it’s clear there are a lot of big spenders and tax hikers in Congress today!) The real heavy lifting will come later when the White House and congressional leaders propose specific bills and legislation to enact their agenda. We will keep you posted and alert you when these critical issues come up for a vote.
When Obama suggested in early February that he wanted to limit executive compensation at companies receiving bailout money, I was worried that it wouldn’t be long before liberals took his idea and ran wild with it. Within 24 hours, Rep. Barney Frank (D-MA) was talking about extending compensation restrictions to all financial institutions and possibly even to all U.S. companies.
This week the House of Representatives took the first step in that direction by passing H.R. 1664, the “Pay for Performance Act,” by a vote of 247-to-171. “Pay for Performance” sounds innocent enough, but it establishes a very insidious precedent.
H.R. 1664 allows the Secretary of the Treasury and key congressional chairmen (namely Barney Frank and Chris Dodd) to determine whether compensation is “unreasonable or excessive” for all executives and employees at any financial institution that has received TARP funds. Do we really want Tim Geithner, Barney Frank and Chris Dodd deciding how much to pay the secretary at the front desk or the clerk in the mail room? And what happens to these companies when large numbers of employees decide they don’t like Barney Frank’s evaluation of their performance? Thanks to Big Government, these companies will be unable to retain a competent workforce and may become dependent on the government’s largess, just like welfare.
But this is what happens when liberal politicians think they know better than the business owners who run their own companies. This is what happens when Big Government sticks its big nose in the free market. And if we establish the principle that taxpayer subsidizes allow the government to set salaries, what about asset depreciation or other business-friendly tax breaks? Aren’t those all forms of government subsidy?
“Capitalism Will Be Different”
A few weeks ago, Treasury Secretary Timothy Geithner said on the Charlie Rose Show, “I think capitalism will be different.” This week, President Obama fired the head of General Motors and the government is now seeking to restructure its board of directors. Yes, capitalism has changed alright. I’m still waiting to hear that President Obama is also sending a pink slip to the president of the United Auto Workers union, but I won’t hold my breath.
Meanwhile, Geithner renewed the government’s call this week for even more power over American industry. During testimony in the House of Representatives in defense of his institutional takeover plan, Rep. Donald Manzullo (R-IL) challenged Geithner, asking, “Do you realize how radical your proposal is?” Geithner responed, “It’s not radical. . .” But Manzullo shot back, “You’re talking about seizing private businesses and you don’t consider that radical?”
Today’s Washington Post reports that while Geithner served as head of the New York Federal Reserve Bank working “to solve narrow mechanical issues in the derivatives market, [Geithner] missed clear signs of a catastrophe in the making. …Although Geithner repeatedly raised concerns … he and the Federal Reserve system did not act with enough force to blunt the troubles that ensued.” Geithner admits, “We’re having a major financial crisis in part because of failures of supervision.”
Talk about rewarding failure! I’ve often said that the best way to get promoted in government is to mess up big. So, right under Geithner’s nose, major New York banks and institutions blew up, and this guy gets promoted and is now asking for even more power. This is the same guy who can’t even handle Turbo Tax! But don’t think for a second that if you make a mistake on your taxes that you will qualify for a “Geithner tax amnesty.”
And here’s an example of how Big Government is working to punish success. East Bridgewater Savings Bank has no delinquent loans and no foreclosures. It has $135 million in assets and $84 million in deposits. And even in this atmosphere it has turned a profit. Yet, the FDIC has issued the bank a critical rating under the Community Reinvestment Act. Why? Because, according to our government, East Bridgewater Savings Bank is not being risky enough! You can read the story here.
Thoughts On The G-20 Summit
I watched media coverage of the G-20 summit with great interest. While I was concerned about what policies might come out of the London gathering, I was equally concerned about the politics – especially the class warfare rhetoric. Did you see the mobs? The media tried to pass them off as just normal folks angry about the economy. It was in fact the far Left – anti-war groups, Muslim activists, anarchists, radical socialists. There was even a banner that read “Abolish Money!” Now that’s a strategy.
Unfortunately, we are seeing more and more of this here in America. Taxpayer-funded groups like ACORN are working hand-in-hand with labor unions to stage protests, like staging sit-ins in banks, “liberating” homes from foreclosure, and driving buses in front of the homes of AIG executives. But their efforts are fanning the flames of envy, fueling hatred and fear. Many AIG executives and employees have received death threats and other disgusting messages. Some have taken to hiring private security guards to protect their homes and families.
In fact, there is a shocking report today in Politico about a recent White House meeting between bank CEOs and the president about compensation. As the executives were explaining the need to pay their best and brightest well, President Obama shut down the discussion, telling them, “Be careful how you make those statements, gentlemen. The public isn’t buying that. My administration is the only thing between you and the pitchforks.”
Perhaps Obama’s comments were just a polite PR suggestion. But given Obama’s well-known connection to ACORN, some might see his comment as a warning about as subtle as a dead fish on your door step. By the way, this meeting occurred on the same day that GM’s Rick Wagoner was in Washington meeting with officials at the Treasury Department, where he told to “step aside.” At least the banking executives got out of town with their jobs.
The media and liberal politicians continue to promote the myth that “salvation” will come from Big Government. We know that America will only come through this because of you! The only way we get out of this mess is if investors and business owners and employees are rewarded for their hard work and willingness to take risks.
In the days and weeks ahead, we will be fighting hard to defend free enterprise and promote sound policies that will grow the economy, not the government.