What to Expect from Obama's Second Term (Part Five)

More corporatism

Barack Obama’s first term was a three ring circus of corporatism. It is impossible to believe that the next four years will not bring more of the same. The legislative centerpiece of Obama’s first term was, of course, the patently unconstitutional Patient Protection and Affordable Care Act (PPACA). PPACA was written by insurance company lobbyists. Senator Max Baucus admitted this when he thanked former Wellpoint VP Liz Fowler for writing the bill. Wellpoint, Inc. is the largest managed health care provider in the Blue Cross and Blue Shield Association. Both former DNC Chairman Howard Dean and former Democratic Congressman Dennis Kucinich have publicly stated that the PPACA was in fact written by the insurance lobby. The PPACA mandates that all Americans purchase health insurance whether they want it or not. While perhaps forcing insurance companies to cover pre-existing conditions will affect the bottom lines of these companies, the vast numbers of new policies which the federal government will force Americans to purchase should more than make up for any such losses. “Obamacare” was neither a free market solution that libertarians would support nor the single payer government health system that progressives would support. It is nothing but a corporatist solution that benefits insurance companies first and foremost.

 

Besides “Obamacare,” another corporatist focal point of Obama’s first term was the Solyndra scandal. Shortly after receiving a $535 million government loan, Solyndra, a Fremont, California solar power firm, declared bankruptcy in September of 2011. Despite having learned that Solyndra was in grave danger, the Obama administration decided to keep providing it with loans rather than declaring it a sunk cost. There is little doubt that Obama will continue his corporatist support of “green energy” and “green jobs” despite how many monumental failures mount. 

The conventional wisdom holds that Obama’s bailout of General Motors was instrumental in helping him carry the important swing state of Ohio. The President campaigned on the rhetoric that bin Laden was dead but GM was still alive. The truth of the matter is that GM did go bankrupt. The only difference is that American taxpayers paid for the bankruptcy proceedings instead of GM. The GM bailout was ultimately a crude mixture of corporatism and labor unionist socialism. According to the National Legal and Policy Center:   

The cost to taxpayers to get GM through the bankruptcy process was $50 billion. The government, in return, received a majority ownership of what would become "New" General Motors. Canadian taxpayers put in over $10 billion making the total cash cost over $60 billion. The entire market cap for GM is currently under $40 billion and the American taxpayers' loss stands at around $15 billion.

Existing GM shareholders, who were the owners of the "Old" General Motors, lost everything and those who lent money to the company, primarily old GM bondholders, lost almost everything. $27 billion of bondholder debt was erased and bondholders were given a very small piece of the new GM pie. The politically-favored UAW fared much better under the Obama plan as its jobs and benefits were preserved and they received the second largest ownership stake in new GM, behind American taxpayers.

National Review columnist Michael Barone explains that despite the often repeated talking point that GM repaid its government loans, the GM bailout will still likely prove to be a loser for the American people:

The government still owns 500 million shares of GM, 26 percent of the total. It needs to sell them for $53 a share to recover its $49.5 billion bailout. But the stock price is around $20 a share, and the Treasury now estimates that the government will lose more than $25 billion if and when it sells.

Despite the corporatist favors that Obama gave to GM, Louis Woodhill, a member of the Leadership Council for the Club for Growth warned in an OP/ED on Forbes.com that GM is likely headed for another bankruptcy before the end of a second Obama term.  Obama is unlikely to view the money dumped into GM as a “sunk cost,” so expect another GM bailout if this occurs.

Individuals associated with Goldman Sachs contributed nearly $1 million to Obama’s 2008 presidential campaign. Likely uncoincidentally, several key members of Obama’s administration were formerly affiliated with Goldman Sachs – including former Chief-of-Staff Rahm Emanuel, Director of the White House Economic Council Larry Summers, Chairman of the  Commodity Futures Trading Commission Gary Gensler, Secretary of the Treasury Tim Geithner’s Counselor Gene Sperling, Budget Director Peter Orszag, Director of the Congressional Budget Office Douglas Elmendorf, Ambassador to the OECD Karen Kornbluh, Deputy Director for the National Economic Council Diana Farrell, overseer of TARP bailout funds Mark Patterson, etc. Unsurprisingly, nobody affiliated with the major banks or major Wall Street firms were held accountable for the economic collapse. 

Campaign contributors associated with the financial sector – Goldman Sachs, Bank of America, Morgan Stanley, JPMorgan Chase & Co., Credit Suisse Group, Wells Fargo, Citigroup, Inc., Barclays, HIG Capital, etc. – largely deserted Obama in favor of Romney in the 2012 election. While perhaps if Obama and the “banksters” do not “kiss and make up,” this will lead to fewer corporatist favors paid to Wall Street and the banking industry, there are plenty of potential new beneficiaries of corporatist largesse to take their place.  The University of California, Microsoft Corp, Google Inc., Harvard University, Kaiser Permanente, Stanford University, Columbia University, Time Warner, Comcast, and IBM were among Obama’s largest contributors for his reelection campaign. Keep your eyes open and don’t be surprised if the computer industry, the College-Industrial Complex, and the health care industry receive corporatist handouts in the next four years.  

Perhaps the height of corporatist hypocrisy during Obama’s first term was the cozy relationship between the Obama administration and Monsanto. Former Monsanto Vice President and lobbyist Michael R. Taylor became Obama’s “food commissar.” A study by French professor of molecular biology Gilles-Eric Séralini found a possible link between genetically modified corn and cancer. While this study has come under fire, any potential link between a food product and cancer should not be ignored by the federal government as long as the FDA still purports to be on the job. Both Russia and the European Union banned imports of genetically modified corn as a safeguard. Despite following in the footsteps of progressives who championed food safety in the early 1900s, Obama has done nothing to protect Americans from this potential hazard.  

In conclusion, the American people should expect even more corporatism from Obama's second term. In his farewell address to Congress, Congressman Ron Paul warned that "we can expect a continuous and dangerous march toward corporatism and even fascism with even more loss of our liberties." Alas, the good doctor may turn out to be prescient once again.