Given its desire to maintain and sell access to the Obama White House, it’s no wonder the Post has been so sympathetic to Obama in its coverage, absolutely refusing even to cover many controversies and scandals in the Obama Administration, such as Obama’s letting racist left-wing thugs escape justice for menacing white voters in Philadelphia, or his firing an inspector general who uncovered misuse of federal funds by an Obama supporter and tried to stop him from accessing federal stimulus money, or his repeal of welfare reform and replacement of investments with welfare in the job-killing $800 billion stimulus package.

It’s scary that the Post would seek to sell access to a health-care lobbyist, given that the Post’s reporting has already shown a dim grasp of basic health-care facts and math, and a bias in favor of the health-care proposals backed by Obama. In “’Public Option’ May Be Highest Hurdle in Senate” (June 24, 2009, pg. A11), the Post misstated the cost of an Obama-backed health care plan by a factor of a thousand, claiming that its “price tag” had been “drastically reduced” down to “$1.2 billion.” In fact, the cost is at least a thousand times higher — $1.2 trillion — and it won’t even cover most uninsured Americans, covering just 16 million of the 40 million uninsured. (The Post’s incorrect figure was corrected days after the fact, after I protested the figure. But virtually no readers saw the correction, which did not appear in the print version of the story).

As I noted in the Washington Examiner on Monday, “much of the media are ‘in the tank for Obama.’ That’s why they failed to report on how his stimulus package repealed welfare-reform, and how it will shrink the economy ‘in the long run,’ according to the Congressional Budget Office. When the Obama Justice Department let thugs get away with menacing white voters in Philadelphia, despite protests from the Civil Rights Commission, the press largely failed to report it. And it failed to cover how his proposed financial rules would increase pressure on banks to make risky, low-income loans. When an Obama adviser concluded that his proposed ‘barrage of tax increases‘ could ‘kill any chance of an early and sustained recovery,’ journalists ignored it. And when Obama broke his pledge of a ‘net spending cut‘ through budget increases and $9.3 trillion in projected deficits, they ignored that, too.” (See “Media Ignore Negative Aspects of Obama Agenda,” Washington Examiner, June 29, 2009, at pg. 18).

Meanwhile, the White House press corps are behaving like puppets. They pretend to the public that White House press conferences are spontaneous, when in fact they are carefully stage-managed events in which Obama decides long in advance of the press conference who will ask him questions, and about what, to avoid difficult and probing questions. (Recently, Obama pre-arranged a question about Iran from the liberal Huffington Post). Even veteran liberal reporter Helen Thomas is appalled by this, noting that even Richard Nixon didn’t try to control the press this way.

(Fannie Mae engaged in massive fraud and political bullying to thwart reform. It and Freddie Mac lost so much money gambling on the housing market that they were taken over by the Federal Housing Finance Agency, which took them over in the name of ending their risky practices, but instead actually increased their purchases of risky mortgage loans in an effort to artificially prop up the housing market. Obama made Freddie Mac lose $30 billion more after the takeover in order to write off mortgage loans to delinquent mortgage borrowers.)

Worse, Obama’s proposed regulatory blueprint actually increases the pressure on banks to make risky mortgage loans to low-income borrowers, by ratcheting up enforcement of regulations mandating such lending under the Community Reinvestment Act, which was a key contributor to the financial crisis. His financial regulation overhaul would create a new bureaucratic agency, the Consumer Financial Protection Agency, to enforce the Act without regard for banks’ financial safety and soundness.

Obama’s proposed financial rules also let the government take over financial institutions even if they are not broke. That gives the government the ability to seize institutions in ways that favor special interest groups, either by bailing them out at taxpayer expense, or effectively giving their valuable assets away to politically-connected buyers. The administration’s white paper advocates a “regime” that would allow takeovers not only of banks, but also of “nonbank financial firms.” Under it, the government would receive “broad powers to take action with respect to the financial firm,” including “the authority to take control of the operations of the firm or to sell or transfer all or any part of the assets of the firm.”

That could really harm taxpayers. Take a look at what happened at AIG, which was bailed out at a cost of $170 billion. Billions of tax dollars were spent on payments to AIG customers like Goldman Sachs, the wealthy investment bank, which received more money than it ever expected to receive or had any right to receive from AIG. Goldman Sachs is now reporting record profits. Goldman Sachs is one of the biggest donors to the Democratic Party and liberal politicians.

Chrysler is another example of a wasteful federal takeover: after effectively taking over the company and giving it billions of taxpayer dollars that will likely never be repaid, the federal government gave most of the company to the United Auto Workers Union. Meanwhile, it ripped off the pension funds that were legally entitled to be paid back before the UAW received any money.

The government can take even a poorly-run institution and make it run worse. The government took over IndyMac bank, and then used its control to give mortgage bailouts at taxpayer expense. “FDIC Chairwoman Sheila Bair, whom Obama held over because of the liberal policies she pursued in the latter half of the Bush administration (such as strong backing of the Community Reinvestment Act), . . . disregarded taxpayer interests upon seizing the large thrift Indymac and other banks and created a ‘model’ mortgage modification program for thousands of borrowers that wrote off principal on the loans and reduced interest payments to well below market rates. Initial results show a redefault rate in programs like these of more than 50 percent, but Bair and Obama show no signs of stopping this flawed experiment with taxpayer dollars.”

Obama’s proposals would force banks to make even MORE risky loans to low-income people. Even liberal newspapers like the Village Voice have admitted that “affordable housing” mandates are a key reason for the housing crisis and the massive number of defaulting borrowers.

But Obama plans to create a new “Consumer Financial Protection Agency” to stringently enforce Community Reinvestment Act regulations that require banks to make loans to low-income borrowers. Banks make pay-offs to left-wing “fair housing” groups to avoid charges that they have violated the CRA. Obama once represented ACORN, which pressures banks to make risky loans. Obama’s white paper complains that existing agencies do not enforce low-income lending requirements zealously enough because they have a “primary mission . . . to ensure that financial institutions act prudently.” (Pg. 54).

Obama’s demand for more low-income loans ignores the lessons of history. The current mortgage crisis came about in large part because of Clinton-era government pressure on lenders to make risky loans in order to make homeownership more affordable for lower-income Americans and those with a poor credit history, the DC Examiner notes. “Those steps encouraged riskier mortgage lending by minimizing the role of credit histories in lending decisions, loosening required debt-to-equity ratios to allow borrowers to make small or even no down payments at all, and encouraging lenders to use floating or adjustable interest-rate mortgages, including those with low ‘teasers.’”

The liberal Village Voice previously chronicled how Clinton Administration housing secretary Andrew Cuomo helped spawn the mortgage crisis through his pressure on lenders to promote affordable housing and diversity. “Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down . . . Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.” (See Wayne Barrett, “Andrew Cuomo and Fannie and Freddie: How the Youngest Housing and Urban Development Secretary in History Gave Birth to the Mortgage Crisis,” Village Voice, August 5, 2008).

In drafting his financial regulation proposals, Obama has turned to Barney Frank and Chris Dodd, lawmakers who are among those most culpable in spawning the financial crisis. The New York Times reports that “the plan is largely the product of extensive conversations between senior administration officials and top Democratic lawmakers — primarily Representative Barney Frank of Massachusetts and Senator Christopher J. Dodd of Connecticut.” Frank and Dodd were the lawmakers who defeated reform proposals to rein in the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, which later had to be bailed out for hundreds of billions of dollars. Fannie Mae killed reform proposals by paying off liberal lawmakers and bullying critics. Dodd recently attracted criticism for financial and ethical lapses.

Liberal lawmakers have long pressured financial institutions to promote risky low-income loans, to a degree that even Fannie Mae and Freddie Mac eventually found unreasonable. For example, the New York Times reported that “a high-ranking Democrat telephoned executives and screamed at them to purchase more loans from low-income borrowers, according to a Congressional source.” The executives of Fannie Mae and Freddie Mac “eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.”

As a Washington Post story shows, the high-risk loans that led to the mortgage crisis were often the product of regulatory pressure. Even after banking officials “warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending. Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more ‘affordable’ loans made to these borrowers.”

By dismissing the case, political appointees in the Obama Justice Department blocked action against a racist, anti-semitic hate group whose members included an Obama poll-watcher and city democratic official, who used racial epithets and physical intimidation to drive white voters away from a polling place in Philadelphia last year.

Even as it engages in costly, unauthorized, illegal auto bailouts, and a monumentally-costly stimulus package that will shrink the economy “in the long run,” the Obama Administration is abdicating core federal responsibilities like enforcing the voting-rights laws.

The Obama Justice Department has also rubberstamped unconstitutional legislation, failed to protect the voting rights of American servicemen, and been deafeningly silent about a liberal black political boss in Mississippi who prevented voters from casting ballots and engaged in vote fraud.

Today, the Supreme Court permitted more local governments to “bail out” of the “preclearance” provisions of the Voting Rights Act, which the Obama Justice Department is using to block states from requiring proof of citizenship to vote, and to force race-based redistricting. (The Obama Justice Department recently blocked Georgia’s attempts to prevent illegal alien voting by requiring voter ID).

In explaining why there is supposedly a need for this new agency, when other agencies already enforce the Community Reinvestment Act and fair-lending laws, his regulatory blueprint complains that “State and federal bank supervisory agencies’ primary mission is to ensure that financial institutions act prudently, a mission that, in appearance if not always in practice, often conflicts with their consumer protection responsibilities.” (Pg. 54).

In other words, the power to force banks to make low-income loans should be given to an agency that has no duty to ensure prudent lending or to take into account the effects of such requirements on banks’ stability or viability.

The President also wants to give financial regulators the power to seize key companies to prevent real or imagined “systemic risks” to the financial system. These are the same federal regulators who used the AIG bailout to give billions in unnecessary payments to Goldman Sachs, which neither needed nor expected that much money, and forced Freddie Mac to run up $30 billion in losses to bail out deadbeat mortgage borrowers. This is the same federal government that took over Chrysler and General Motors, and then used them to rip off pension funds and taxpayers and enrich the UAW union.

(There is one good thing in the President’s proposals, though: they get rid of the inept Office of Thrift Supervision, which poorly supervised savings and loans and AIG, and gives most of its responsibilities to the Office of Comptroller of the Currency, which competently supervises national banks.)

Obama’s regulatory blueprint disingenuously claims that the Community Reinvestment Act, which pressures banks to make low-income loans, can’t have contributed to the mortgage crisis, because it existed for years before the crisis began. But it is not the Act’s passage, alone, that economists credit with causing the mortgage crisis, but rather the unrealistic regulations adopted to implement the Act many years after the Act’s passage. Those regulations went into effect not that long before the mortgage bubble began, as historian Clayton Cramer notes. Economists, investment bankers, and historians have long noted the role of the Community Reinvestment Act and its regulations in promoting the risky lending that spawned the financial crisis. Investors Business Daily has chronicled how “the Community Reinvestment Act” pressured lenders to make the risky loans that led to the mortgage meltdown.

The current mortgage crisis came about in large part because of Clinton-era government pressure on lenders to make risky loans in order to “make homeownership more affordable for lower-income Americans and those with a poor credit history,” the DC Examiner notes. “Those steps encouraged riskier mortgage lending by minimizing the role of credit histories in lending decisions, loosening required debt-to-equity ratios to allow borrowers to make small or even no down payments at all, and encouraging lenders the use of floating or adjustable interest-rate mortgages, including those with low ‘teasers.’”

The liberal Village Voice previously chronicled how Clinton Administration housing secretary Andrew Cuomo helped spawn the mortgage crisis through his pressure on lenders to promote affordable housing and diversity. “Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down . . . Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.” (See Wayne Barrett, “Andrew Cuomo and Fannie and Freddie: How the Youngest Housing and Urban Development Secretary in History Gave Birth to the Mortgage Crisis,” Village Voice, August 5, 2008).

In drafting his financial regulation proposals, Obama has turned to Barney Frank and Chris Dodd, lawmakers who are among those most culpable in spawning the financial crisis. The New York Times reports that “the plan is largely the product of extensive conversations between senior administration officials and top Democratic lawmakers — primarily Representative Barney Frank of Massachusetts and Senator Christopher J. Dodd of Connecticut.” Frank and Dodd were the lawmakers who defeated reform proposals to rein in the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, which later had to be bailed out for hundreds of billions of dollars. Fannie Mae killed reform proposals by paying off liberal lawmakers and bullying critics. Dodd recently attracted criticism for financial and ethical lapses.

Banks and mortgage companies have long been under pressure from lawmakers and regulators to give loans to people with bad credit, in order to provide “affordable housing” and promote “diversity.” That played a key role in triggering the mortgage crisis, judging from a story last year in the New York Times.

For example, “a high-ranking Democrat telephoned executives and screamed at them to purchase more loans from low-income borrowers, according to a Congressional source.” The executives of government-backed mortgage giants Fannie Mae and Freddie Mac “eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.” But they realized the risk: “In 2004, Freddie Mac warned regulators that affordable housing goals could force the company to buy riskier loans.” Ultimately, though, Freddie Mac’s CEO, Richard F. Syron, told colleagues that “we couldn’t afford to say no to anyone.”

As a Washington Post story shows, the high-risk loans that led to the mortgage crisis were the product of regulatory pressure, not a lack of regulation. In 2004, even after banking officials “warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending. Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more ‘affordable’ loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.”

Lenders also face the risk of being sued for discrimination if they fail to make loans to people with bad credit, which often has a racially-disparate impact (proving that such impact is unintentional is costly and difficult, and not always sufficient to avoid liability under antidiscrimination laws). They also risk possible sanctions under the Community Reinvestment Act.

Banks get sued for discrimination no matter what they do. If they don’t make enough loans in low-income, predominantly minority neighborhoods, they get accused of “redlining,” and are subject to sanctions under politically-correct laws like the Community Reinvestment Act, which contributed to the financial crisis by pressuring lenders to make risky mortgage loans.

But if they do make such loans, they get accused of “reverse redlining,” and get sued by the liberal special-interest groups and municipalities that encouraged them to make such loans during the mortgage bubble. Baltimore and various borrowers have also brought “reverse redlining” lawsuits against banks.

The Washington Post reported that bond-rating agencies like Moody’s and Fitch are now getting sued, too, for “reverse redlining,” under the theory that they encouraged risky loans to low-income minorities (who subsequently regretted taking out those loans) by giving respectable ratings to the mortgage-backed securities produced by packaging those mortgage loans. The plaintiffs include the National Community Reinvestment Coalition, which has been pressuring lenders to make risky loans to low-income minorities for years. They blame the ratings-agencies for allowing lenders to make loans to minorities with “insufficient borrower income levels.”

As Haines noted, many public company shares are in the hands of large institutions — he mentioned mutual funds specifically — not “mom and pop” owners saving for their retirement. Those funds invest their assets on behalf of somebody else, namely individual investors, who are removed from corporate shareholder decision making by virtue of going through sucn an intermediary. What was surprising to Haines making this point was Rep. Frank’s reaction. He did not address this specific point, got agitated, and ended the interview.

This begs the question: What role does Barney Frank  envision for institutional investors in corporate decision making? One large category of institutional investor comprises union pension funds, which, as Diana Furchtgott-Roth of the Hudson Institute notes, are seriously underfunded, in part due to union bosses using those funds to advance political causes that do nothing to increase shareholder value. The fact that the unions that control these funds are major donors to Democratic politicians make that question awkward, but especially worth asking.

Video below. The interesting part begins at 4:50. (Thanks to Margaret Griffis for the CNBC video.)

Unemployment is even higher than the Obama Administration said it would be now if the stimulus package had never been passed. At least 1.5 million jobs have been lost since then.

The stimulus package is harming the economy, both by triggering trade wars that have cost at least 40,000 jobs, and by driving up interest rates for businesses that need to borrow money to expand or create jobs. (The government is keeping down interest rates on its own debt by printing vast sums of money to buy its own bonds, in order to finance the exploding national debt, which will result in massively higher taxes).

The Congressional Budget Office admitted the stimulus package would shrink the economy “in the long run” (contrary to Obama’s claim that it would prevent “irreversible decline“), but argued that it would at least create jobs in the short run.

But the stimulus package turned out to be harmful even in the short run, because it was so badly designed. It poured money into sectors of the economy where no help is needed because unemployment is low, while siphoning money out of sectors where unemployment is high. Moreover, “states hit hardest by the recession are getting the least amount of stimulus spending.”

The stimulus package is just one example of the Obama Administration’s fiscal irresponsibility, which is driving up the national debt at a record rate. The illegal auto bailouts are another. They waste billions to keep unskilled auto workers enjoying wages and benefits that are much better than those enjoyed by the average American (while ripping off pension funds and bondholders).

The stimulus package has directly destroyed tens of thousands of jobs. A provision in the stimulus package that violated NAFTA by blocking a mere 97 Mexican truckers from U.S. roads “caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade,” destroying 40,000 American jobs. A costly trade war with Canada is also brewing.

Obama’s policies echo those of Herbert Hoover, who helped spawn the Great Depression through his protectionism and tax increases. One of Obama’s own advisers admits that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.”

Justice Ginsburg yesterday granted a stay temporarily blocking the government’s plan for Chrysler, which would give effectively give most of the company to the UAW union, while paving the way for a dubious merger with Fiat. The stay was sought by pension funds that were (along with taxpayers) ripped off by the government’s plan.

The government’s handling of Chrysler trampled on federal bankruptcy laws, the federal TARP bailout statute, and the Constitution.

The federal government has said that even if it is acting illegally, the courts are powerless to do anything about it, since the pension funds challenging its actions have no legal standing to complain. A federal bankruptcy judge bought this argument. But that is false, as I explained yesterday.

Now, the government may argue that once the giveaway of Chrysler to the UAW and merger with Fiat goes through, that the legal challenges have become moot, preventing the courts from reviewing any legal violations that led to that merger. (I doubt the validity of that argument, since the giveaway will have lasting adverse consequences for the pension funds, above and beyond the dangerous precedent it sets for them and other secured creditors and capital markets, and the courts could still fashion relief to address some of the pension funds’ injuries; but the government’s argument may well be accepted, just as its standing argument earlier was accepted by the bankruptcy court. There is enormous political pressure on the courts to make the whole challenge go away).

The bailouts have been economically destructive. The Washington Post today notes that as a result of being bailed out, General Motors is now even more subject to “political pressures,” and as a result plans to build a money-losing politically-correct car “even if it loses money, taxpayer money.” Obama recently pressured General Motors to keep its headquarters in high-tax, crime-ridden, racist, economically-collapsing Detroit.

General Motors and Chrysler would have been better off if they had filed for bankruptcy last year, rather than taking federal money, since the bailouts have come with costly political strings attached, such as dropping opposition to costly CAFE regulations and other federal mandates, and bowing to political meddling in fundamental corporate decisionmaking, and have left the automakers with higher labor costs than if they had just ripped up their collective bargaining agreements in a standard bankruptcy. That endangers their long-run competitiveness. Indeed, the politicized auto bailouts resemble the failed British auto bailouts of the 1970s. If the automakers had ripped up their collective bargaining agreements in a regular bankruptcy, they would now be in a position to recover without taxpayer funds, since it was rising gas prices last year that pummeled their ability to sell the big cars that are their profit center, and gas prices have fallen enormously since their peak last year.

The Obama and Bush Administrations used money from the $700 billion financial system bailout for an auto industry bailout. Legal scholars at the Heritage Foundation, Clinton Administration Labor Secretary Robert Reich and many other commentators have argued that using the bank-bailout money for auto bailouts violates the bank-bailout statute.

The federal government is effectively giving Chrysler to the UAW union, while giving the shaft to other Chrysler stakeholders, like the Indiana state pension funds that invested in loans to Chrysler. As law professors like Todd Zywicki have noted, that violates federal bankruptcy laws.

Indiana Treasurer Richard Mourdock was right to challenge it in court. Mourdock correctly notes that the unfair plan for Chrysler pushed by the Administration violates the bankruptcy laws and rips off Indiana residents by leaving state employee pension funds and construction funds with a small fraction of what they are owed by Chrysler, far less than the UAW is getting, even though the pension funds are secured lenders and the UAW is not. By cheating Chrysler’s lenders, the government’s plan discourages lending, and sets a dangerous precedent that makes it harder for companies like Chrysler to raise money to create jobs in the future, as newspapers like USA Today have noted.

The pension funds deserve to win, since the government has trampled on federal bankruptcy laws, the federal TARP bailout statute, and the Constitution in forcing its plan down the pension funds’ throat.

But there’s no telling how long the stay will last, or if the Supreme Court will reach the merits of the pension funds’ claims. The federal government says that even if it is acting illegally, the courts are powerless to do anything about it, since the pension funds challenging its actions have no legal standing to complain. A federal bankruptcy judge bought this argument. But it is false, as I explained yesterday, since the funds do indeed have standing, even if the government were right in its exaggerated claims about what will happen if its plan is blocked.

The bailouts have been economically destructive, politicizing auto industry decisions. The Washington Post today notes that as a result of being bailed out, General Motors is now even more subject to “political pressures,” and as a result plans to build a money-losing politically-correct car “even if it loses money, taxpayer money.” Obama recently pressured General Motors to keep its headquarters in high-tax, crime-ridden, racist, economically-collapsing Detroit.

General Motors and Chrysler would have been better off if they had filed for bankruptcy last year, rather than taking federal money, since the bailouts have come with costly political strings attached, such as dropping opposition to costly CAFE regulations and other federal mandates, and bowing to political meddling in fundamental corporate decisionmaking, and have left the automakers with higher labor costs than if they had just ripped up their collective bargaining agreements in a standard bankruptcy. That endangers their long-run competitiveness. Indeed, the politicized auto bailouts resemble the failed British auto bailouts of the 1970s. If the automakers had ripped up their collective bargaining agreements in a regular bankruptcy, they would now be in a position to recover without taxpayer funds, since it was rising gas prices last year that pummeled their ability to sell the big cars that are their profit center, and gas prices have fallen enormously since their peak last year.

The Obama and Bush Administrations used money from the $700 billion financial system bailout for an auto industry bailout. Legal scholars at the Heritage Foundation, Clinton Administration Labor Secretary Robert Reich and many other commentators have argued that using the bank-bailout money for auto bailouts violates the bank-bailout statute.

The federal government is effectively giving Chrysler to the UAW union, while giving the shaft to other Chrysler stakeholders, like the Indiana state pension funds that invested in loans to Chrysler. As law professors like Todd Zywicki have noted, that violates federal bankruptcy laws.

Indiana Treasurer Richard Mourdock was right to challenge it in court. Mourdock correctly notes that the unfair plan for Chrysler pushed by the Administration violates the bankruptcy laws and rips off Indiana residents by leaving state employee pension funds and construction funds with a small fraction of what they are owed by Chrysler, far less than the UAW is getting, even though the pension funds are secured lenders and the UAW is not. By cheating Chrysler’s lenders, the government’s plan discourages lending, and sets a dangerous precedent that makes it harder for companies like Chrysler to raise money to create jobs in the future, as newspapers like USA Today have noted.

The stimulus package is harming the economy, both by triggering trade wars that have cost at least 40,000 jobs, and by driving up interest rates for businesses that need to borrow money to expand or create jobs. (The government is keeping down interest rates on its own debt by printing vast sums of money to buy its own bonds, in order to finance the exploding national debt, which will result in massively higher taxes).

The Congressional Budget Office, accountable to liberal Congressional leaders, admitted the stimulus package would shrink the economy “in the long run” (contrary to Obama’s claim that it would prevent “irreversible decline“), but argued that it would at least create jobs in the short run.

But the stimulus package turned out to be harmful even in the short run, because it was so badly designed. It poured money into sectors of the economy where no help is needed because unemployment is low, while siphoning money out of sectors where unemployment is high. Moreover, “states hit hardest by the recession are getting the least amount of stimulus spending.”

The stimulus package is just one example of the Obama Administration’s fiscal irresponsibility, which is driving up the national debt at a record rate. The illegal auto bailouts are another. They waste billions to keep unskilled auto workers enjoying wages and benefits that are much better than those enjoyed by the average American (while ripping off pension funds and bondholders).

The stimulus package has directly destroyed tens of thousands of jobs. A provision in the stimulus package that violated NAFTA by blocking a mere 97 Mexican truckers from U.S. roads “caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade,” destroying 40,000 American jobs. A costly trade war with Canada is also brewing.

Obama’s policies echo those of Herbert Hoover, who helped spawn the Great Depression through his protectionism and tax increases. One of Obama’s own advisers admits that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.”

The government is now arguing that the pension funds don’t have legal standing to challenge the plan, since they can’t prove they will be worse off than if the Administration had just sat back and let Chrysler go bankrupt naturally. The government says that the pension funds might have received even less in such a bankruptcy than the pennies on the dollar they are slated to receive under the government’s plan, under which it intervened and injected billions in taxpayer money into Chrysler, and then engineered a sale of Chrysler’s valuable asserts to a new company mostly owned by the UAW that is part of planned merger with Italian carmaker Fiat. (The Administration has completely failed to do its homework before pushing for a merger with Fiat, which is alleged to have Enron-like accounting problems, and massive shady dealings that could haunt taxpayers and autoworkers alike in the future).

The government is wrong. The pension funds have standing even if their victory would leave them no better off, but would eliminate the unfair preference received by the UAW. For example, in Heckler v. Mathews (1984), the Supreme Court held that male reverse-discrimination plaintiffs had standing to challenge a federal government gender-preference that benefited women, even if the challenge would only result in benefits being taken away from the women, and would not result in men getting any additional benefits.

Moreover, the funds, as secured creditors, will be enormously adversely affected in future bankruptcies by the disturbing precedent set by the Chrysler bankruptcy, in which an unsecured creditor — the UAW — received far more than secured creditors — the Indiana state pension funds that loaned money to Chrysler under the solemn understanding that they would stand first in line in any bankruptcy. Losing this lawsuit will strip them of an enormous bargaining chip in future bankruptcies. The loss of a bargaining chip is sufficient grounds for standing, as the Supreme Court made clear in Clinton v. City of New York (1998), where it allowed farmers to challenge the line-item veto as a violation of the Constitution when it resulted in the President vetoing legislation that would have given a bargaining chip to use in potentially purchasing a potato processing plant. Bankruptcy law experts have noted the precedent set by the Chrysler bankruptcy will have a great impact on General Motors and other bankruptcies in the future. An inability to compete on fair terms in the future is grounds for standing. See Gratz v. Bollinger (2003) (student who alleged he would apply as a transfer student to a college if it would stop considering race in admissions had standing to challenge college’s race-conscious admissions policy). That is precisely what the pension funds allege.

Moreover, even if the Obama Administration’s unfair plan to give Chrysler to the UAW were blocked, it would just find alternative ways, fairer to the pension funds and less biased towards the UAW, to keep Chrysler going, through taxpayer funds if necessary. Letting Chrysler go out of existence would put UAW members out of work, and the Administration would be loath to let that happen, given that the UAW spent millions electing Obama, and made millions more in donations to the liberal lawmakers who now dominate Capitol Hill.

A federal appeals court has refused to block the Administration’s illegal auto bailout, which rips off taxpayers and pension funds to enrich the UAW union. The pension funds that challenged the bailout then appealed to the U.S. Supreme Court. The bailout violates the federal TARP statute by diverting financial-system bailout funds to a takeover of the auto industry. And the government’s reorganization plan for Chrysler violates federal bankruptcy laws by ripping off lenders to give the company to the UAW union.

(The bailouts have been counterproductive. General Motors and Chrysler would actually have been better off if they had filed for bankruptcy last year, rather than taking federal money, since the bailouts have come with costly political strings attached, such as dropping opposition to costly CAFE regulations and other federal mandates, and bowing to political meddling in fundamental corporate decisionmaking, and have left the automakers with higher labor costs than if they had just ripped up their collective bargaining agreements in a standard bankruptcy. That endangers their long-run competitiveness. Indeed, the politicized auto bailouts resemble the failed British auto bailouts of the 1970s. If the automakers had ripped up their collective bargaining agreements in a regular bankruptcy, they would now be in a position to recover without taxpayer funds, since it was rising gas prices last year that pummeled their ability to sell the big cars that are their profit center, and gas prices have fallen enormously since their peak last year.)

The Obama and Bush Administrations used money from the $700 billion financial system bailout for an auto industry bailout. To do that, they have seized on the fact that the bailout statute contains a broad definition of “financial institution,” which the Administration claims includes virtually any institution, financial or not. The bailout statute defines “financial institutions” eligible for the bailout as “including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company.” Never mind that Congress listed as examples of “financial institutions” only entities that were banks, insurance companies, or financial institutions, not automakers. (Congress rejected auto bailout legislation last year precisely because it lacked safeguards against the use of bailout money to prop up uncompetitively high UAW wages — exactly what the Obama Administration is using the money for now. During the debate over the auto bailout legislation, the Treasury Department admitted that automakers are not financial institutions covered by the bank bailout statute).

Legal scholars at the Heritage Foundation, former Labor Secretary Robert Reich and many other commentators have argued that using the money for auto bailouts violates the financial bailout statute under the principle of statutory construction known as ejusdem generis, which says that when a term’s definition includes examples that are all of a similar kind, it limits the meaning of the term to things similar in kind to such examples.

But if that’s not so, and the bailout was just a big slush fund for the Administration to dispense with as it chooses, then the bailout law itself was unconstitutional, since it conferred unbridled discretion in the hands of the President to do whatever he wanted with it. The Supreme Court ruled in the Schechter Poultry case that giving the executive uncabined discretion violates the constitutional separation of powers between different branches of government, by giving the president essentially legislative powers. (An earlier version of the bailout law was even more clearly a violation of separation of powers, since it failed to provide for judicial review of the vast discretion it gave the president, unlike past delegations of power upheld in cases like the Amalgamated Meat Cutters case). The government’s incredibly broad reading of the bank bailout statute should be rejected, since it violates the canon of constitutional doubt.

Indiana Treasurer Richard Mourdock was right to raise these important legal questions in court. Mourdock correctly notes that the unfair plan for Chrysler pushed by the Administration violates the bankruptcy laws and rips off Indiana residents by leaving state employee pension funds and construction funds with a tiny fraction of what they are owed by Chrysler, far less than the UAW is getting, even though the pension funds are secured lenders and the UAW is not. By cheating Chrysler’s lenders, the government’s plan discourages lending, and sets a dangerous precedent that makes it harder for companies like Chrysler to raise money to create jobs in the future, as newspapers like USA Today have noted.

The federal government’s poorly-conceived bailouts will also endanger Indiana jobs in the long run by leaving Chrysler and General Motors with uncompetitive work rules and compensation.

As a lawyer who has handled both constitutional cases, and bankruptcy-related cases, I think that Indiana’s position has merit, and that the Supreme Circuit should rule in favor of its appeal. The Supreme Court should grant review, since the issues are of overriding national importance, and since the Second Circuit Court of Appeal’s ruling refusing to block the government’s plan has created a circuit split by countenancing circumvention of the bankruptcy laws as long applied in circuits across the country.

Their so-called “shareholder bill of rights,” recently introduced in the Senate, would impose a one-size fits all regime on public companies that would limit choices for shareholders, reduce corporate performance, and allow political agendas of pressure groups to trump the interests of ordinary investors. Most egregiously, the bill would make illegal a key feature of the corporate governance structures that have served shareholders very well at companies from Google and Microsoft to Berkshire Hathaway.

The bill would make it illegal for the CEO of a public company to also serve as the chairman of its board. The argument that critics such as the senators and others such as union pension funds make is that the chairman needs to be independent of the CEO for to provide better oversight for shareholders.

A prominent example critics point to is Bank of America CEO Ken Lewis, who made a series of bad calls while also serving as the company’s chairman. At the company’s recent annual meeting, Lewis was removed from his position as chairman, but not CEO, by a shareholder vote.

But this example, like many anecodotes without data, is very selective. There are many examples, by contrast, of some of the best performing companies in America.

For many decades, for instance, Warren Buffett has served as Chairman and CEO of his conglomerate Berkshire Hathaway. Yet Berkshire shareholders have not had much to complain about in terms of the company’s performance.

Simlarly, shareholders have not generally been displeased with Eric Schmidt’s tenure as chairman and CEO of Google since it went public in 2004. Past examples of sucessful stints as chairman and CEO include Bill Gates at Microsoft, where he served in both positions until he retired as CEO at the height of Microsoft’s success in 2000, and Jack Welch at General Electric in the ’80s and ’90s.

Nor is there any real evidence that having a separated chairman and CEO will keep a company from blowing up. Citigroup has had separate individuals in these position since 2004, but as it shareholders (and U.S. taxpayers) are painfully aware of, this hardly improved its corporate governance.

Different governance structuces are appropriate for different companies. A new company in its entrepreneurial stages often wants the same person as chairman and CEO for more of a focus on growth. A more established company may function better by separating these positions. Regardless, a company won’t have effective governance without diligent oversight by boards and shareholders.

The overall lesson from the experience of these companies is that shareholders are perfectly capable of deciding on things like whether the chairman and CEO should be separate, and these matters shouldn’t be dictated to them by the government. The same can be said for the bills other mandates such as “say on pay,” the requirement of an annual non-binding shareholder vote on executive salaries.

“Say on pay” has been on the proxy ballots of many companies, and sharholders have rejected the provision in the vast majority of cases, seeing the process as redundant and a waste of the company’s resources. So why should Schumer-Cantwell now impose ”say on pay” on shareholders who already have said that they didn’t want it.

Schumer-Cantwell also is on a parallel track with the Securities and Exchange Commission to impose “proxy access,” the ultimate corporate governance Trojan horse. Under this mandate, the company — and all of its shareholders — would be forced to subsidize the election campaign of any candidate for the board of directors that as few as one percent of shareholders wish to nominate.

As I have written prevously, “proxy access” lead to all sorts pressure groups, such as union pension funds and “green” foundations, cutting deals with CEOs. A union could, for instance, threaten to run candidates for the board unless the company imposed “card check” or forced unionization among its workers.

These special interest gains would come at the expense of ordinary shareholders, as the company’s performance would likely decline. And a recent survey released by the U.S. Chamber of Commerce showed that a large majority of even union households believe that pension funds should be managed to maximize retirement returns rather than, in the survey’s words, “advance the union’s social and political goals.”

So in the spirit of truth-in-advertising, Schumer and Cantwell should change the name of their legislation to the “Bossing Shareholders Around and Reducing Shareholder Value” bill. Or better yet, withdraw this destructive bill altogether.

As I noted earlier, the Indiana State Teachers’ Retirement Fund is challenging the diversion of tens of billions of dollars of federal TARP bank bailout money to pay for auto bailouts in the Chrysler bankruptcy case. That diversion violates the law. It is part of the government’s unfair reorganization plan for Chrysler, which rips off pension funds to provide short-sighted, unsustainable preferential treatment for the UAW.

(The bailouts have been counterproductive. General Motors and Chrysler would actually have been better off if they had filed for bankruptcy last year, rather than taking federal money, since the bailouts have come with costly political strings attached, such as dropping opposition to costly CAFE regulations and other federal mandates, and bowing to political meddling in fundamental corporate decisionmaking, and have left the automakers with higher labor costs than if they had just ripped up their collective bargaining agreements in a standard bankruptcy. That endangers their long-run competitiveness. Indeed, the politicized auto bailouts resemble the failed British auto bailouts of the 1970s).

The Obama and Bush Administrations used money from the $700 billion financial system bailout for an auto industry bailout. To do that, they have seized on the fact that the bailout statute contains a broad definition of “financial institution,” which the Administration claims includes virtually any institution, financial or not. The bailout statute defines “financial institutions” eligible for the bailout as “including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company.” Never mind that Congress listed as examples of “financial institutions” only entities that were banks, insurance companies, or financial institutions, not automakers. (Congress rejected auto bailout legislation last year precisely because it lacked safeguards against the use of bailout money to prop up uncompetitively high UAW wages — exactly what the Obama Administration is using the money for now. During the debate over the auto bailout legislation, the Treasury Department admitted that automakers are not financial institutions covered by the bank bailout statute).

Legal scholars at the Heritage Foundation, former Labor Secretary Robert Reich and many other commentators have argued that using the money for auto bailouts violates the financial bailout statute under the principle of statutory construction known as ejusdem generis, which says that when a term’s definition includes examples that are all of a similar kind, it limits the meaning of the term to things similar in kind to such examples.

But if that’s not so, and the bailout was just a big slush fund for the Administration to dispense with as it chooses, then the bailout law itself was unconstitutional, since it conferred unbridled discretion in the hands of the President to do whatever he wanted with it. The Supreme Court ruled in the Schechter Poultry case that giving the executive uncabined discretion violates the constitutional separation of powers between different branches of government, by giving the president essentially legislative powers. (An earlier version of the bailout law was even more clearly a violation of separation of powers, since it failed to provide for judicial review of the vast discretion it gave the president, unlike past delegations of power upheld in cases like the Amalgamated Meat Cutters case). The government’s incredibly broad reading of the bank bailout statute should be rejected, since it violates the canon of constitutional doubt.

Indiana Treasurer Richard Mourdock was right to raise these important legal questions in court. Mourdock correctly notes that the unfair plan for Chrysler pushed by the Administration violates the bankruptcy laws and rips off Indiana residents by leaving state employee pension funds and construction funds with a tiny fraction of what they are owed by Chrysler, far less than the UAW is getting, even though the pension funds are secured lenders and the UAW is not. By cheating Chrysler’s lenders, the government’s plan discourages lending, and sets a dangerous precedent that makes it harder for companies like Chrysler to raise money to create jobs in the future, as newspapers like USA Today have noted.

The federal government’s poorly-conceived bailouts will also endanger Indiana jobs in the long run by leaving Chrysler and General Motors with uncompetitive work rules and compensation.

On June 2, the Second Circuit Court of Appeals entered a temporary stay of the bankruptcy judge’s ruling rubberstamping the government’s plans for Chrysler, in an appeal brought by the Indiana State Teachers’ Retirement Fund. On June 5, however, it refused to block the government’s plan for Chrysler. The case is In re Chrysler, LLC, Docket # 09-2311-mb.

As a lawyer who has handled both constitutional cases, and bankruptcy-related cases, I think that Indiana’s position has merit, and that the Supreme Circuit should rule in favor of its appeal. The Supreme Court should grant review, since the issues are of overriding national importance, and the Second Circuit has created a circuit split by countenancing circumvention of the bankruptcy laws as long applied in circuits across the country.

“Existing public policies—including insurance regulation, government-subsidized flood insurance, improper mitigation, and faulty building code enforcement—contribute to unnecessarily risky and inefficient development along coastal areas by shifting the cost of hurricane damage ultimately onto third parties—mainly taxpayers. Poor policies lead to excessive vulnerability to hurricanes and would exacerbate the cost of any increase in storm activity, whether due to climate change or any other factor.”

Sutter’s paper is especially noteworthy right now as Congress debates whether to bailout beach house owners at U.S. taxpayer expense.

(The bailouts are doing no good. General Motors and Chrysler would actually have been better off if they had filed for bankruptcy last year, rather than taking federal money, since the bailouts have come with costly political strings attached, such as dropping opposition to costly CAFE regulations and other federal mandates, and bowing to political meddling in fundamental corporate decisionmaking, and have left the automakers with higher labor costs than if they had just ripped up their collective bargaining agreements in a standard bankruptcy, endangering their long-run competitiveness. Indeed, the politicized auto bailouts resemble the failed British auto bailouts of the 1970s).

The Obama and Bush Administrations used money from the $700 billion financial system bailout for an auto industry bailout. To do that, they have seized on the fact that the bailout statute contains a broad definition of “financial institution,” which the Administration claims includes virtually any institution, financial or not. The bailout statute defines “financial institutions” eligible for the bailout as “including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company.” Never mind that Congress listed as examples of “financial institutions” only entities that were banks, insurance companies, or financial institutions, not automakers. During the debate over the auto bailout legislation, the Treasury Department admitted that automakers are not financial institutions covered by the bank bailout statute.

Legal scholars at the Heritage Foundation, former Labor Secretary Robert Reich and many other commentators have argued that this violates the financial bailout statute under the principle of statutory construction known as ejusdem generis, which says that when a term’s definition includes examples that are all of a similar kind, it limits the meaning of the term to things similar in kind to such examples.

But if that’s not so, and the bailout was just a big slush fund for the Administration to dispense with as it chooses, then the bailout law itself was unconstitutional, since it conferred unbridled discretion in the hands of the President to do whatever he wanted with it. The Supreme Court ruled in the Schechter Poultry case that giving the executive uncabined discretion violates the constitutional separation of powers between different branches of government, by giving the president essentially legislative powers. (An earlier version of the bailout law was even more clearly a violation of separation of powers, since it failed to provide for judicial review of the vast discretion it gave the president, unlike past delegations of power upheld in cases like the Amalgamated Meat Cutters case). The government’s incredibly broad reading of the bank bailout statute should be rejected, since it violates the canon of constitutional doubt.

Indiana Treasurer Richard Mourdock is to be commended for raising these important legal questions in court. Mourdock rightly notes that the unfair plan for Chrysler pushed by the Administration violates the bankruptcy laws and rips off Indiana residents by leaving state employee pension funds and construction funds with a tiny fraction of what they are owed by Chrysler. By cheating Chrysler’s lenders, the government’s plan discourages lending, and sets a dangerous precedent that makes it harder for companies like Chrysler to raise money to create jobs in the future, as newspapers like USA Today have noted.

The federal government’s poorly-conceived bailouts will also endanger Indiana jobs in the long run by leaving Chrysler and General Motors with uncompetitive work rules and compensation.

Earlier, a panel of the U.S. Court of Appeals for the Second Circuit, including Chief Judge Dennis Jacobs, and Judges Amalya Kearse and Robert Sack, entered a temporary stay of the bankruptcy judge’s ruling rubberstamping the government’s plans for Chrysler, in an appeal brought by the Indiana State Teachers’ Retirement Fund. The case is In re Chrysler, LLC, Second Circuit Docket # 09-2311-mb.

As a lawyer who has handled both constitutional cases, and bankruptcy-related cases, I think that Indiana’s position has merit, and that the Second Circuit should rule in favor of its appeal.

When President Obama announced the Supreme Court nomination of Sonia Sotomayor, who coincidentally is an appeals court judge on the Second Circuit, he praised judicial qualities that are directly relevant to the courts overseeing the bankruptcies of Chrysler and General Motors. The president said that the qualities he most respected in judges were, “a commitment to impartial justice, a respect for precedent, and a determination to faithfully apply the law to the facts at hand,” as well as “an understanding of how the world works and how ordinary people live.”

As such, President Obama and his auto task force should respect the role of the bankruptcy courts and recognize that their role is not to rubber stamp the administration’s plan to take over Chrysler and GM, but to apply bankruptcy precedents and faithfully apply the law to the facts at hand, with an understanding of how contracts work in the real world and of the “ordinary people” who own the car companies’ debt securities as individual investors or through their IRAs and 401(k)s.

The bankruptcy judges also need to look beyond the individual circumstances of Chrysler and GM to weigh how the treatment of creditor contracts in these cases will affect American credit markets in the future. If courts cave to politicians’ whims and give secured creditors and bondholders less than they would receive under traditional bankruptcy precedents, our credit markets will suffer further damage as lenders and investors will be less willing to put their capital at risk in companies whose contracts could be abrogated at politicians’ demand.

Bankruptcy is a not an executive but a judicial function, and judges in the car companies’ cases should take as much time as they need to weigh the competing interests and ensure an equitable outcome. The measure of success should not be how fast Chrysler and GM emerge from this bankruptcy, but the degree to which contracts are honored in an impartial process.

As the Washington Post notes today, the “concessions” that Obama obtained from the UAW were merely cosmetic: “Union concessions were ‘painful’ only by the peculiar standards of Big Three labor relations: At a time when some American workers are facing stiff pay cuts, UAW workers gave up their customary paid holiday on Easter Monday and their right to overtime pay after less than 40 hours per week. They still get health benefits that are far better than those received by many American families upon whose tax money GM jobs now depend. Ditto for UAW hourly wages . . . . Cumbersome UAW work rules have only been tweaked.” Earlier, the Post lamented the “preferential treatment of the autoworkers’ union at the expense” of other company stakeholders and creditors, noting that “the union can boast that it has been promised no loss in ‘base hourly pay, no reduction in . . . health care, and no reduction in pensions,’” even though excessive union wages and benefits helped sink the company. Small wonder that even the liberal Post, which backed Obama’s bailout of GM in March, now has soured on it.

If GM had rejected a federal bailout, and filed for bankruptcy in December, it would be recovering right now, since it could have used bankruptcy proceedings to tear up the collective bargaining agreements with the United Auto Workers that saddle it with excessive wages and benefits and rigid work rules, and it would also be benefiting from the fall in gas prices from $4 last year to $2.50 now. By avoiding a federal takeover, it would also have greater freedom to oppose costly regulations proposed by the Obama Administration, such as CAFE and global warming regulations, which will destroy tens of thousands of autoworker jobs).

The bailout is neither necessary nor likely to be successful in the long run. In its auto bailout in the 1970s, England did the same things that Obama is doing now, like propping up high union wages and promoting the production of little “green” cars consumers may not want. Its bailout failed miserably, destroying the British auto industry’s chance of survival.

Even more wasteful than the GM bailout is Obama’s wasteful $800 billion stimulus package, which has destroyed tens of thousands of jobs.

Even as it engages in costly, unauthorized auto bailouts that have no legal basis, the Administration is abdicating core federal responsibilities like enforcing the voting-rights laws. Political appointees in the Obama Justice Department recently blocked action against a racist, anti-semitic hate group (whose members included an Obama poll-watcher and city democratic official) that used nightsticks and racial epithets to drive white voters away from a polling place in Philadelphia last year. The Obama Justice Department has also rubberstamped unconstitutional legislation, failed to protect the voting rights of American servicemen, and been deafeningly silent about a liberal black political boss in Mississippi who prevented voters from casting ballots and engaged in vote fraud.

The Obama Administration has said it will now interfere not just with the “selection of the company’s board of directors,” but also in “fundamental corporate decisions,” and “major corporate events and transactions.” For example, Obama recently pressured GM to keep its headquarters in crime-ridden, economically-collapsing Detroit.

The $30 billion is excessive even if the Administration’s wildest hopes come true. Even if federal money were the only way to keep GM afloat (which it isn’t — GM could be made competitive simply by cutting its excessively high employee wages to lower levels that still exceed average American wages), and even if the bailout saved not only GM jobs but also the jobs of “related suppliers and dealers,” “the price of the U.S. government bailout comes to about $125,000 per employee, including those working for related suppliers and dealers,” according to the Washington Post.

If GM had rejected a federal bailout and takeover, and simply filed for bankruptcy in December, it would be recovering on its own right now, since it could have used bankruptcy proceedings to tear up the collective bargaining agreements with the United Auto Workers that saddle it with excessive wage and benefits and rigid work rules, and it would also be benefiting from the recent collapse of oil prices. It was record-high gas prices that forced consumers to buy smaller cars last year, battering GM’s finances, which were based around selling big cars. But gas prices have fallen from over $4 a gallon last year to $2.50 now. So the bailout is saving no jobs, it’s just allowing GM to keep union wages high at taxpayer expense, while keeping it from becoming competitive in the long run. (The recent drop in gas prices will also mask the effects of incompetent management of GM by the Obama Administration. On the other hand, the Administration’s CAFE and global warming regulations, which GM opposed before it was taken over by the Administration, will destroy tens of thousands of autoworker jobs).

The bailout is neither necessary nor likely to be successful in the long run. In its failed auto bailout in the 1970s, Britain did the same things that Obama is doing, like propping up high union wages and promoting the production of little “green” cars consumers may not want. Its bailout failed miserably, destroying the British auto industry’s chance of survival.

“‘Countries . . . protect ailing auto companies on the theory that they need to protect jobs,’ said Maryann N. Keller, an independent auto analyst. ‘But it’s not clear that protecting companies leads to the revival of those companies.’ As for the jobs, Keller said ‘a lot of that is bunk’ because Americans would buy the same number of cars no matter who the maker is. ‘Somebody would still make the parts,’ she said. ‘They would just be made for a different customer.’”

Why is the Obama Administration doing something so wasteful? Politics. The UAW is one of the biggest sources of money and manpower for the Democratic Party and Obama, and the UAW is now calling the shots. (The UAW spent millions electing Obama).

While taxpayers have spent tens of billions of dollars bailing out the Detroit automakers, the UAW has made little in the way of sacrifices, refusing to accept cuts in pay that could keep the automakers able to compete with lower-cost competitors. As even the liberal Washington Post lamented, “the union can boast that it has been promised no loss in ‘base hourly pay, no reduction in . . . health care, and no reduction in pensions,’” even though excessive union wages and benefits helped sink the company. Meanwhile, the government has ripped off pension funds and bondholders who loaned the car companies money.

The bailouts aren’t the only outrageous waste of taxpayer money taking place right now. Even bigger is the wasteful $800 billion stimulus package, which is harming the economy, both by triggering foolish trade wars that have backfired and cost at least 40,000 jobs, and by driving up interest rates for businesses that need to borrow money to expand or create jobs. (The government is keeping down interest rates on its own debt by printing vast sums of money to buy its own bonds, in order to finance the exploding national debt, which will result in massively higher taxes).

As such, President Obama and his auto task force should respect the role of the bankruptcy court and recognize that its role is not to rubber stamp the administration’s plan to take over GM, but to apply bankruptcy precedents and faithfully apply the law to the facts at hand, with an understanding of how contracts work in the real world and of the “ordinary people” who own General Motors bonds as individual investors or through their IRAs and 401(k)s.

The Administration’s reorganization plan, in which the government owns more than 70 percent of the stock will not serve taxpayers, middle-class investors or ultimately the American auto industry and its workers well. There is no reason why the taxpayer money outlayed to GM – a mistake of both the Bush and Obama administrations – justifies the Obama administration’s demand for such a large ownership stake for the government and the United Auto Workers. The Chrysler bailout of the 1980s, while a troubling precedent for government rescues of industries, was resolved with taxpayers reimbursed without any government ownership stake.

The government ownership is already leading to politicization of questions ranging from dealership closings to the making of “environmentally correct” cars. Such decisions being made by politicians and bureaucrats means that restoring the company’s profitability — and paying the taxpayers back — will take a back seat to the goals of constituencies the government favors.

But bankruptcy courts also have to look beyond GM to weigh how the treatment of bondholder contracts in this case will affect American credit markets in the future. Much is made of how 54 percent of bondholders apparently approve of the revised settlement. But this is well short of the 90 percent that was originally the goal of the Obama auto task force.

And bankruptcy courts, according to the Associated Press,  traditionally only approve a Chapter 11 reorganization that has the approval of two-thirds of the claims for each class of bondholder. If courts cave to politicians’ whims and give bondholders less than they would receive under traditional bankruptcy precedents, the credit markets will suffer further damage as lenders and investors will be less willing to put their capital at risk in companies whose contracts could be abrogated at politicians’ demand.

Bankruptcy is a not an executive but a judicial function, and judges in the GM case should take as much time as they need to weigh the competing interests and ensure an equitable outcome. The measure of success should not be how fast GM emerges from this bankruptcy, but the degree to which contracts are honored in an impartial process.

Where have you gone, Judge Narragansett? (Brush up on your Atlas Shrugged!)

Obama adviser Martin Feldstein notes that “the Congressional Budget Office recently estimated that the resulting increases in consumer prices” from capping the amount of carbon dioxide energy users can emit “would raise the cost of living of a typical household by $1,600 a year,” a figure that “would rise significantly” from year to year.

Meanwhile, politically-connected corporations would make a bundle, since the “bill would give away some 85 percent of the permits” to emit carbon dioxide to favored “businesses instead of selling them at auction.”

Feldstein, a Harvard economist who has advised Obama, earlier warned that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” He compared Obama’s tax increases to the ones that contributed to the Great Depression and the “Lost Decade” of economic stagnation and decay in Japan.

Feldstein, who serves on Obama’s economic advisory board, has also “warned of serious inflation and higher taxes down the road” as a result of Obama’s policies.

Feldstein earlier noted that President “Obama’s biggest proposed tax increase is the cap-and-trade system of requiring businesses to buy carbon dioxide emission permits. . .CBO Director Douglas Elmendorf testified before the Senate Finance Committee on May 7 that the cap-and-trade price increases . . . would cost the average household roughly $1,600 a year, ranging from $700 in the lowest-income quintile to $2,200 in the highest-income quintile.”

That’s a highly regressive tax increase, since lowest-income earners don’t make a third of what highest-income earners make, but they would incur a third as much cost. It’s regressive in the same way as the 1932 excise tax increase by Herbert Hoover that deepened the misery of the Great Depression.

During the Great Depression, Herbert Hoover damaged the economy, and impoverished the American people, with costly, artificial attempts to stimulate the economy through increased government spending, financed by heavy taxes like the Revenue Act of 1932.

Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s regressive excise taxes were in 1932. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air.

In reality, Obama’s proposed “cap-and-trade” tax is likely to raise $2 trillion over the next decade, far more than even Feldstein anticipates. That’s far more than the $646 billion the Administration earlier estimated — amounting to at least $3,100 per family per year. And that figure may be dwarfed by the amount of money siphoned from consumers to well-connected corporations that have learned how to game “cap-and-trade” schemes.

In the Great Depression, President Herbert Hoover raised marginal tax rates to 63%, and went on a deficit spending binge. Similarly, Obama has proposed higher marginal tax rates, which will produce another $1.9 trillion in tax increases.

In spite of its massive size, Obama’s carbon tax won’t begin to pay for all his spending increases, such as a budget that will generate $4.8 trillion in increased deficits, Obama’s trillion-dollar toxic-asset program, and his $800 billion, economy-shrinking “stimulus” package, all of which contradict Obama’s campaign pledge of a “net spending cut.”

These tax increases are breaches of Obama’s campaign promise not to raise taxes on people making less than $250,000 a year, which he earlier broke by signing into law the regressive SCHIP excise tax increase.

It’s part of a long line of broken promises, such as Obama’s pledge to enact a “net spending cut,” which he discarded by offering mind-bogglingly large budgets that will explode the national debt through $9.3 trillion in massively increased deficit spending.

Obama has spent on an unprecedented scale, such as for a stimulus package that has actually shrunk the economy and destroyed thousands of jobs, and an auto bailout that forces cash-strapped taxpayers to bail out high-paid union auto workers, whose pay remains much higher than that of the typical taxpayer, while saddling the car companies with politically-correct mandates that may kill their chance of survival.

As economist Arnold Kling explains, “most of the stimulus spending does not take place until next year and beyond, so the short-run gains are puny. On the other hand, the big increase in the projected deficit creates the expectation of higher interest rates, which raises interest rates now. These higher interest rates serve to weaken the economy. According to this standard analysis, the stimulus is going to hurt GDP now, when we could use the most help. Much of the spending will kick in a year or more from now,” when the economy will already be in recovery, and “when the economy will need little, if any, stimulus. This is the flaw with using spending rather than tax cuts as a stimulus. The lags are longer when you use spending. Of course, if the real goal is to promote government at the expense of civil society” through “political favoritism, then the stimulus is working exactly as intended.”

1.2 million Americans have lost their jobs since Obama signed the stimulus package into law. The Congressional Budget Office predicted it would shrink the economy “in the long run” (contrary to Obama’s claim that it would prevent “irreversible decline“), but create jobs in the short run.

But the stimulus package turned out to be harmful even in the short run, because it was so badly designed. It poured money into sectors of the economy where no help is needed because unemployment is low, while siphoning money out of sectors where unemployment is high. Moreover, “states hit hardest by the recession are getting the least amount of stimulus spending.”

The stimulus package is just one example of the Obama Administration running up the national debt to bail out the more fortunate while sticking less fortunate people with the bill. The auto bailouts are another. They run up the national debt to keep unskilled auto workers enjoying wages and benefits that are much better than those enjoyed by the average American (while ripping off pension funds and bondholders). As Mickey Kaus notes, “Why should the government tax unskilled workers making $18 an hour, who haven’t bankrupted their employers, in order to protect unskilled workers making $28 an hour, and who have bankrupted their employers, from having to take a pay cut?” (Actually, the Chrysler autoworkers are making far more than $28 an hour, when you factor in benefits).

The stimulus package has directly destroyed tens of thousands of jobs. A provision in the stimulus package that blocked a mere 97 Mexican truckers from U.S. roads “caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade,” destroying 40,000 American jobs. And its vague “buy American” provisions, despite doing little to promote purchases of U.S. products, managed to ignite a trade war with Canada.

Obama’s policies echo those of Herbert Hoover, who helped spawn the Great Depression through his protectionism and tax increases. One of Obama’s own advisers admits that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” Even the Washington Post, which endorsed Obama and once supported his auto bailouts, now has soured on them and their waste of taxpayer money.