Tax the Banks to Cover Auto Bailout Losses?

funneling money graphicA recent article on by John Berlau exposes another scheme by the Obama Administration designed to redistribute more wealth in an effort to cover taxpayer losses in the General Motors and Chrysler bailout fiasco. The plan is to have financial institutions with assets of more than $50 billion to continue to pay a “financial crisis responsibility fee” until TARP losses by firms like GM and Chrysler are recouped. Of course, cronies at GM and Chrysler are not on the hook for the losses. It seems that the old playbook used by Obama to have others pay for the costs of failure at GM and Chrysler is still being used.

The confirms that the proposal is seeking to hold large financial institutions responsible for all TARP losses, even if the companies did not request TARP funds or repaid the funds in full. This exemplifies the dirty politics displayed throughout the GM bailout process that penalizes the less politically popular classes to benefit the connected few. The wealth redistribution scheme has seen old GM shareholders and bondholders, along with taxpayers, sacrifice to benefit friends of Obama at the UAW. As the Administration campaigns on a platform that demands corporations and the wealthy “pay their fair share,” the same philosophy does not apply to those who help with Obama’s political goals. Crony corporation, GE, has avoided paying taxes and is now benefiting from “green initiatives” enacted by the Obama Administration. In return, they are purchasing thousands of Chevy Volts. And most favored GM received billions of dollars in tax credits that essentially exempts them from taxes for years. No one in the Obama camp seems to take issue with GE and GM not “paying their fair share.”

The Detroit News piece estimates current taxpayer losses on GM at $15 billion. This does not include money GM received prior to the Obama bestowal of $50 billion in taxpayer funds. Nor does it include the lost tax revenue that results from the generous tax credits gifted to GM. There is also the money the government spends to support GM through purchases of, as well as subsidies for, vehicles like the Chevy Volt. Beyond the monetary costs, there is the more important moral hazard that goes along with socialists actions by our government that allows the Executive Branch to pick winners and losers in what should be a free market capitalist system.

More evidence that the White House is being dangerously intrusive in the private markets recently surfaced as Ford was pressured to remove ads criticizing GM and Chrysler for being bailed out. The strong arm tactics of the Obama Administration were previously displayed during creditor “negotiations” at Chrysler and GM where Treasury representatives allegedly insulted and cursed at those who tried to assert their rights under contract law. These actions were never properly investigated as oversight panel reporting was headed up by Obama “dear friend,” Elizabeth Warren.  Now, the latest silencing of Ford gives a scary vision of a society where critics of GM and the Obama Administration are under the watchful eye of a White House that wants to control the spin on politically sensitive issues.

Kudos to writers like John Berlau that work to expose the corrupt crony capitalism that is festering in our society. While mainstream media ignores stories like these that criticize powerful corporations, such as GM, that dedicate billions of dollars on ad spending, the internet has become a valuable source of dissenting views on the perceived success of the auto bailouts. The bailouts epitomize the term crony capitalism and have set a dangerous precedent for how our government can intrude in private industry with an agenda to benefit political allies and donors. Those that are aware of the injustices have gone as far as boycotting GM products. While the number of those that are involved in the boycott may not be enough to gain widespread attention, it is my hope that enough exposure of unfair actions, like the Obama wealth redistribution effort, will lead to a grass roots movement that will put enough pressure on politicians and TV networks to give a fair representation of dissenting views. The auto bailout process and the continued crony capitalism that is ensuing should be debated as the 2012 elections approach.

Mark Modica is an NLPC Associate Fellow.