Morning Bell: Americans Are Fleeing Obama’s Crony Capitalist Economy
Conn Carroll /
Today the Bureau of Labor and Statistics released its monthly jobs report showing that the U.S. economy added only 103,000 jobs this December. With the unemployment rate now at 9.4%, this marks the 20th month in a row that the unemployment has been over 9 percent, a post–World War II record. You are going to hear a lot of noise from the White House about how this drop from a 9.8% unemployment rate to 9.4% means the economy is in a strong recovery. This is false. The reality is that the only reason the unemployment rate dropped is because the U.S. labor force decreased by 434,000. More importantly 260,000 Americans dropped out of the labor force entirely. This means that the Obama economy is now driving Americans out of the labor force faster than it is bringing them.
This Tuesday, White House Press Secretary Robert Gibbs tweeted out: “General Motors Co.’s sales were up 21 percent in 2010 for its four core brands.” Which is some interesting spin. As The Truth About Cars points out, GM’s retail market share for all of their brands actually fell a full 1.8 percent in 2010. So why is the President’s closest communication aide doing PR for what is, supposedly, a privately owned car company?
Yes, the Obama Administration did sell off a majority stake of their ownership of GM this November (at a $10 billion loss to taxpayers), but that still leaves them owning about a 37 percent share in the company. In other words, our government is still part owner of a supposedly private car company. And that is not the only continuing link between bailed-out GM and the Obama Administration. The Obama czar who oversaw the GM bailout, Ron Bloom, was just named the new czar for all of manufacturing policy at the White House’s National Economic Council (NEC). So we can expect to see continued favoritism for GM and its bailed-out brothers from the entire Obama Administration.
The manufacturing industry is not the only sector of the economy where the Administration has installed a bailout revolving door. Over just the last two months, the Obama White House has sent budget director Peter Orszag to Citibank ($306 billion bailout), taken in Gene Sperling as NEC director from Goldman Sachs (beneficiary of the $173 billion AIG bailout), and added former Fannie Mae ($135 billion bailout so far) lobbyist and JPMorgan ($12 billion bailout) executive Bill Daley as President Barack Obama’s Chief of Staff. There is a phrase for an economy that is so dependent on close relationships between business people and government officials: crony capitalism. And it is strangling our economic recovery.
There is a better way. Instead of relying on bailouts, subsidies, tax loopholes, and regulations to pick and choose which politically connected firms succeed or fail, government should unleash entrepreneurs to create jobs through true free enterprise policies. Specifically, Congress should:
- Rescind unspent stimulus funds;
- Reform regulations—specifically repealing Section 404 of the Sarbanes–Oxley Act—to reduce unnecessary business costs;
- Remove barriers to domestic energy production;
- Suspend the job-killing Davis–Bacon Act and prohibit Project Labor Agreement requirements on federally funded construction projects;
- Conclude the pending free trade agreements with Colombia and Panama, as well as the recently announced agreement with South Korea; and
- Reduce taxes on foreign earnings to encourage companies to repatriate the profits to America.
According to James Sherk, Karen Campbell, and John Ligon of the Center for Data Analysis, adopting these measures increase real gross domestic product by an average of $56 billion a year between 2011 and 2020, reduce the national debt by $305 billion by 2020, and increase job growth by 305,000 a year between 2011 and 2020.
This past June, marking the first anniversary of the Obama Administration’s destruction of our nation’s bankruptcy code, Indiana Governor Mitch Daniels (R) warned: “The nation is not safe from crony capitalism. In the past year we’ve experienced the nationalization of the student loan industry and the passage of national health-care and financial-services regulation, each of which is rife with new opportunities for government favoritism and preferential handouts to favored corporations like Chrysler.” Our economy will never reach its full potential as long as the best way to succeed in business is to succeed in Washington.
- House Judiciary Committee Chairman Lamar Smith (R–TX) issued a letter to the Justice Department yesterday informing them that the House will be investigating allegations that the Civil Rights Division has engaged in race-biased enforcement of the National Voter Registration Act.
- Forty-six Republican House Members and one Democrat joined sponsor Marsha Blackburn’s (R–TN) bill that would block the EPA’s new global warming regulations.
- Representative Steve Scalise (R–LA) and 28 other House Republicans introduced legislation to rein in the various “czars” in the Obama Administration.
- Republican governors are pressing the Administration to make it easier for states to cut Medicaid spending.
- The Democratic-controlled Illinois General Assembly has reached agreement with Governor Pat Quinn (D) to raise income and corporate taxes to help eliminate a budget deficit of at least $13 billion this year.