Unfortunately, there is so much disgrace that we could not contain it in just one post. Turns out we will need five separate posts to get everything in. While the first two days have been a potpourri of different types of slimy behavior, today we will focus on the area of cronyism and how politicians use our wealth and government functions to pay off political friends, connections, and donors to their election campaigns.
These payoffs usually result in unfavorable use and abuse of taxpayer wealth and freedom that optimizes the politician/crony relationship, usually not the best interests of the country. As always, our sources are well known, if not well respected, main stream media outlets, in order to not get my liberal friends and family members in a snit for using Fox News and the like.
Before we get started, let's lay out a definition of crony capitalism so we are all working off of the same definition:
Crony capitalism is a term that describes an economic system where people with good connections to the center of power manage to place themselves in positions of undue influence over economic policy, thus deriving great personal gains.
Nowhere in this definition we will be using does it say or require that these people are the best options for the country or the taxpayers' wealth or they are the most competent to execute the needed actions.
Thus, as if we did not have enough slime from the previous two days, lets load on some more, courtesy of cronyism:
1) The most recent case of cronyism was laid out in an Associated Press news report from August 9, 2012 which covered the news that the Federal Justice Department will not investigate or prosecute criminal charges against either Goldman Sachs the company nor Goldman Sachs employees related to trades they made during the financial crisis that were highlighted in a detailed 2011 U.S. Senate investigative report. The unusual announcement not to prosecute criminally came in an unsigned statement attributed to the department, i.e. no one in Justice had the courage or integrity to admit to this blatant non use of Justice resources.
The Senate investigation uncovered company emails showing Goldman employees deriding complex mortgage securities sold to banks and other investors as "junk" and "crap," i.e. the company knew what it was selling to its customers had virtually no chance of creating or even maintaining value. The chairman of the Senate committee that did the investigation, Democratic Senator Carl Levin "said during his subcommittee's investigation that he believed that Goldman executives "misled the Congress" and that Goldman "gained at the expense of their clients and they used abusive practices to do it."
Two interesting aspects of this decision to not proceed with an investigation. The Senate research and investigation and subsequent report were not done by Republicans. This recommendation came from a Democratic Party controlled Senate, the same political party of Barack Obama, so we can assume this was not politics at work, it may have actually been a rare case of Congress actually doing its job. Thus, one has to assume there really was some real smoke going on in this matter, it should have been the sworn duty of Justice to investigate on its own to see if there was real fire also.
Second, we should not be surprised nothing is happening. Goldman Sachs has been a heavy contributor to Obama's political campaigns, both in 2008 and again in this election cycle. Would not surprise me, or many other Americans, if those contributions and the decision by this administration to protect those contributors are linked together.
Combine this with information from the same article that reported the Securities and Exchange Commission had decided not to file charges against Goldman Sachs over a $1.3 billion subprime mortgage portfolio issue and it is pretty clear that the Goldman/Obama cronyism fix is in.
2) The postal child for Obama's cronyism is Solyndra, a bankrupt California solar panel company, which went belly up after it blew through more than $530 million of taxpayer wealth after receiving an ill-advised government loan guarantee. Prior to going out of business, Solyndra donated $7,500 to the California Democratic Party and company employees had also contributed more than $20,000 to Democratic candidates.
Furthermore, an Obama appointed advisor to the Energy Department, Steven Spinner, was a major driver of approving the Solyndra Federal loan even though his wife worked for Solyndra's law firm. A New York Times article from early October, 2011 discussed Solyndra-related emails: "The emails show Spinner discussed the pending final decision often with Solyndra officials, Energy Department colleagues, and the White House budget office.
3) According to an ABC News report, Fisker Motors is a Finland based automotive company that is working to develop expensive electric cars. Unfortunately, two years ago, the Obama administration approved a taxpayer backed loan for $529 million for this Finnish company to help with their technology development.
Why did U.S. taxpayer dollars back a government loan to a Finnish auto company to develop and build cars in Finland with Finnish workers? Could crony capitalism be at work again:
•One of Fisker's biggest financial supporters is the California venture capital firm Kleiner Perkins Caufield & Byers. Kleiner Perkins partner John Doerr, a California billionaire, hosted President Obama at a February dinner for high-tech executives at his secluded estate south of San Francisco.
•Doerr and Kleiner Perkins executives have contributed more than $1 million to Federal political causes and campaigns over the last two decades, primarily supporting Democrats.
•Doerr serves on Obama's Council on Jobs and Competitiveness.
•Former Democratic Vice President Al Gore is another Kleiner Perkins senior partner.
Now you start to understand that giving money to a Finnish car company to make a high end niche car model that the average American will never be able to afford has more to do with cronyism and campaign donations than sound government decision making.
4) But the auto cronyism is not confined to Fisker:
•The Department of Energy has also invested almost another half a billion taxpayer dollars with a loan to another electric car manufacturer, Tesla Motors.
•SEC filings show that Tesla has never had a profitable quarter and has no experience in mass auto production. It eventually wants to “mass produce” an electric car that costs about $57,000. Mass produce, car, and $57,000 in one sentence is one of the biggest incongruities of all time.
•A former Tesla board member, Steve Westly, is an Obama campaign donation bundler who raised hundreds of thousands of dollars for the President in 2008 and for his 2012 re-election campaign.
•The Westly Group was also a financial supporter of Tesla Motors until Tesla went public in 2010, and Westly continues to back the company.
•Tesla's founder and CEO, Elon Musk, is a major political contributor who has primarily backed Democrats, including Obama.
5) Solar energy cronyism is not confined to Solyndra. In late September, 2011, the Department of Energy approved a $737 million loan guarantee to a company called Solarserve that is working on a solar plant in Nevada. Given Obama's history of cronyism with Solyndra, Fisker, and Telsa, it should come as no surprise that this project was also infected with cronyism. Turns out that the brother-in-law of Democrat Congresswoman Nancy Pelosi, Ronald Pelosi, is second in command at the primary energy investment fund that backs the Solarserve effort. Surprise, surprise.
6) The Department of Energy also granted a $135 million loan guarantee to a wind power company in early 2011, Brookfield Asset Management. For the past two years, the company has been represented by the lobbying firm called Heather Podesta and Partners, LLC. If the name Podesta sounds familiar, it should be. Heather Podesta, a top election campaign fundraiser for Obama, is married to Tony Podesta who is the brother of John Podesta who has served long and loyally in Obama's past political efforts. Disgusting conflict of interest.
7) The Department of Energy handed out another Federal loan guarantee to another solar company in September, 2011, this one worth $1.37 billion, to BrightSource energy. This company wants to build the largest solar power plant in the world. A former board member of the company, John Bryson, was Obama's Commerce Department secretary until his recent resignation due to some bad driving incidents in California.
8) Consider the highlights of an April 3, 2012 Washington Beacon News report, keeping in mind that Harry Reid, the majority leader in the U.S. Senate, represents the state of Nevada:
•Three large renewable energy projects, Nevada Geothermal, Ormat Nevada, and SolarReserve, all of whom have received large grants of taxpayer wealth from Obama's Energy Department, are located in Reid’s home state. Executives from all three companies have donated to Reid and his fellow Democrats' election campaigns to the tune of over $58,000 since 2008.
•Brightsource Energy, which received a $1.6 billion loan guarantee from the Energy Department and will also operate a solar facility in Nevada, has donated at least $21,600 to Democrats' election campaigns since 2008. It has donated zero dollars to Republicans.
•Reid received almost $4,000 from Brightsource executives in the 2010 cycle, including $2,400 from CEO John Woolard, who hosted a fundraiser for the majority leader.
•Woolard is also a Barack Obama donor and has visited the White House almost a dozen times since Obama took office.
•Reid’s staffers have been a key part of Washington D.C.’s revolving door, setting up shop with lobbying outfits that have ties to green energy companies and the Department of Interior, which oversees such projects.
•For example, Kai Anderson, a top lobbyist for Ormat, is a former deputy chief of staff for Reid. Paul Thomsen, who handles government affairs for Ormat Nevada, Inc., is also a former Reid Staffer. Neil Kornze, the acting deputy director of policy for the Bureau of Land Management under the Department of Interior, is also a former energy staffer for Reid. Sanjay Wagle served as a renewable energy advisor at the Energy Department and he formerly worked for Vantage Point Venture Partners, a major backer of Brightsource Energy.
•Kathleen Weiss, the lead lobbyist and Vice President of First Solar, had 16 meetings at the White House with Valerie Jarrett and other senior administration staffers. In 2008, she donated $2,300 to then-Senator Ken Salazar (who is now Secretary of the Interior) and Harry Reid.
•The Department of Interior’s fast-track program was spearheaded by Steve Black, a counselor to Ken Salazar, and Janea Scott, special assistant to Black and former attorney for the Environmental Defense Fund.
9) Getting back to banks, consider an article by Bloomberg on June 18, 2012 that outlined how the American taxpayer, and taxpayers around the world, subsidize their countries' major banks, encouraging risky banker behavior that always seem to lead to bank bailouts. The details of the article can be read at:
http://www.bloomberg.com/news/2012-06-18/dear-mr-dimon-is-your-bank-getting-corporate-welfare-.html
I am not an expert on banking by any stretch but the following excerpt summarizes the insanity quite nicely:
JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.
The article goes on to state that:
•The U.S. taxpayer ends up paying the major U.S. banks about $76 billion a year in similar subsidies.
•This $76 billion is more than what the Federal government spends on education of our kids every year.
•This subsidy estimate is about equal to the annual total profits of these 18 banks, i.e. without the subsidies over the past twelve months, these banks would be a breakeven proposition from a profitability perspective.
•The article states it is difficult to get rid of this taxpayer burden since the banking industry has already made over $285 million in campaign donations in the 2012 election cycle, a cycle that is no where close to ending.
The article proposes a series of logical, easy to understand steps that would fix the situation, noting that: "Like all subsidies, the taxpayer largess distorts supply. If the government supports corn farmers, you get too much corn. If the government subsidizes banks, you get too much credit." And in hindsight, it is now obvious that too much credit created too many easy mortgages which led to the housing bubble which led to the Great Recession.
$76 billion a year in taxpayer wealth down the drain to support bankers who take needless risks while greasing the reelection wheels of incumbent politicians. Insanity and crony capitalism at its finest.
10) I will not go into details of a new CATO report today but will in a future post. The analysis and report can be found at the following link:
http://www.cato.org/publications/policy-analysis/corporate-welfare-federal-budget
The bottom line of their analysis of the 2012 Federal budget is that the American taxpayer funds corporate welfare to the tune of about $100 billion a year. This comes out to annual subsidy of almost $900 for every American household. Ask yourself: would America be better off if every American household had an additional $900 to spend every year or it is better for large corporations to get Federally funded corporate welfare?
11) And finally let's talk about General Electric. This is the company that makes billions of dollars in profit every year and rarely pays any U.S. income tax. This is a company that recently shipped out the upper management of a whole division to China but whose Chairman serves on the President's job commission. This is a company which avoided paying a new tax ("active financing tax") by simply donating money to some schools in an influential Congressman's district in NYC.
We could go on and on about GE's crony pals in Washington but it would be easier just to read the past post that went into such detail:
http://loathemygovernment.blogspot.com/2011/06/relationship-between-president-obama.html
Time for a shower top wash off today's sleaze lesson in crony capitalism and the selling out of Americans' freedom and wealth by the American political class to the highest bidder. Tomorrow our series on the slime, sleaze, immorality, and corruption of the political class will focus on how our politicians do not just enrich their political donors and allies but also do a fine job enriching themselves and their personal friends and family members, all at the expense or the American taxpayer.
Please visit our Presidential website, "The United States Of Purple," at:
http://www.unitedstatesofpurple.com/
The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.
The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.
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http://www.repealamendment/
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