While We Were All Focused On A Shiny Object Over There…

BizPacReview reported yesterday about some information in the Obama Administration’s Friday night document dump.

The article reports:

Before the start of the Columbus Day holiday weekend, the Treasury Department made it easier for offshore banking institutions to make transactions with Iran, as long as the money doesn’t actually enter the U.S. financial system. Although many sanctions were lifted as a part of the Iran deal, certain “specially designated nationals,” or SDNs, are still subject to the sanctions for reasons which include their human rights record or support for terror groups.

Now, even these SDNs are no longer completely banned from transacting with U.S. businesses.

The Associated Press reports that this change in the rules is the result of complaints from Iran that the remaining U.S. Sanctions have limited Iran in its commercial dealings with other countries.

The article concludes:

Just another bad postscript to a bad deal, and we can expect plenty more of the same if people keep paying attention to the puppet shows instead of the man, or woman, behind the curtain.

The Iran deal was a really bad deal. We are financing terrorism and the development of an atomic bomb by Iran. We can expect more of the same from a President Hillary Clinton.

Stating The Obvious

The Hill posted an article on Friday about some recent comments by President Obama regarding the nuclear deal with Iran.

The article reports:

In comments following the Nuclear Security Summit in Washington, Obama denied speculation that the United States would ease rules preventing dollars from being used in financial transactions with Iran, in order to boost the country’s engagement with the rest of the world.

 Instead, Obama claimed, that Iran’s troubles even after the lifting of sanctions under the nuclear deal were due to its continued support of Hezbollah, ballistic missile tests and other aggressive behavior.

Iran so far has followed the letter of the agreement, but the spirit of the agreement involves Iran also sending signals to the world community and businesses that it is not going to be engaging in a range of provocative actions that are going to scare businesses off,” Obama said at a press conference.

“When they launch ballistic missiles with slogans calling for the destruction of Israel, that makes businesses nervous.”

The ballistic missiles with slogans calling for the destruction of Israel are not an indication of a new attitude. The Quds Force is named the Quds Force because Quds is the Iranian name for Jerusalem. The Quds Force is the group that will be given the ‘honor’ of taking Jerusalem when ‘the time comes.’ This represents the attitude of Iran since the Iranian revolution in 1979. I don’t know what President Obama thought was going to change when he agreed to the nuclear treaty.

The article concludes:

Despite the lifting of sanctions, American companies are still banned from doing business in Iran and foreign banks are prohibited from using the U.S. dollar for their Iranian dealings. Earlier this week, multiple reports indicated that the White House was considering easing financial rules to let foreign companies use the dollar to do business with Iran.

But on Friday, Obama appeared to shoot the idea down.

“That’s not actually the approach that we’re taking,” he said.

“It is not necessary that we take the approach of them going through dollar transactions,” he added. “It is possible for them to work through European financial institutions as well.”

Instead, Obama said, Treasury Secretary Jack Lew and other U.S. officials would help “provide clarity” to global businesses about what kinds of work they can do in Iran under current rules.

That sounds an awful lot like ‘the rules will be what I say they are.’

The Mess In Washington And Some Suggested Solutions

Today’s Washington Examiner posted an article about the eight worst federal agencies in Washington and how they could be fixed.

Here are some of the highlights. The article begins with the Department of Education. It has a 2016 budget of $79 billion. About 6 percent (250) of its employees are considered essential. It has existed for 36 years.

The article states:

McCluskey (Neal McCluskey, who directs the Center for Educational Freedom at the libertarian Cato Institute) said only two Department of Education activities can be justified: the Office for Civil Rights, to enforce the 14th Amendment, and Impact Aid, which gives federal funds to school districts that are burdened by nearby federal installations such as military bases or large science labs. Even then, the department doesn’t perform those two activities particularly well, McCluskey said, but at least they’re justifiable.

In the ideal world, McCluskey would simply get rid of the department. “What the federal government does in education, largely through the Department of Education, is unconstitutional. As important, we don’t have evidence it’s really helping. So why should it continue to do any of this?”

The next department the article lists is the Environmental Protection Agency (EPA). The EPA has a 2016 budget of $8.14. About 7 percent (1072) of its employees are considered essential. It began operating in December 1970.

The article reports:

Ozone rules, the EPA’s new regulations for smog, also are a captivating force for lawyers looking to sue the agency. Greens are suing the agency because the regulations made law last year were not strict enough. Hailed as the most expensive regulations in history, industry is suing because they argue they are too strict. As a twist, industry groups have come to the EPA’s aid in the lawsuit by the greens.

Tom Pyle, director of the conservative American Energy Alliance, says in addition to the EPA’s far-reaching regulations that need to be reined in, “the whole agency needs to be reorganized.”

For example, his group has proposed a host of streamlining proposals in recent years targeting the National Environmental Policy Act review process, known as NEPA.

The NEPA review process has become a key target for critics who see it as an overly burdensome and duplicative process for permitting energy and infrastructure projects.

Another agency the article lists that are in need of reform is the Department of Health and Human Services. Payments to Medicare and Medicaid providers are not carefully scrutinized and fraud is a problem. Another issue in the Department is the Food and Drug Administration’s lack of speed in bringing new drugs to the market.

Other agencies listed are the Internal Revenue Service, Office of Personnel Management, the Secret Service, the State Department, and the Department of Veteran’s Affairs.

Please follow the link to the article to read the details in each department. We need someone in Washington who is not afraid to upset the status quo.

Tax Refund, Anyone?

Today’s Washington Free Beacon posted a story stating that the Internal Revenue Service issued $46 million in erroneous tax refunds in 2013 returns.

The article reports:

The Treasury Inspector General for Tax Administration (TIGTA) released an audit Monday faulting the IRS for approving thousands of potentially fraudulent tax refunds in 2013.

“TIGTA identified that because of a programming error, over $27 million of refunds were erroneously issued for 13,043 Tax Year 2013 tax returns,” the audit said. “The programming error is overriding the IRS’s two-week processing delay on some refund tax returns that are identified by the IRS as potentially fraudulent.”

The audit said the returns were flagged for claiming a “questionable tax credit” but were then automatically issued before the IRS could complete its verification process.

In addition, the audit identified 3,910 “potentially fraudulent” tax returns that were issued due to ineffective monitoring, totaling $19 million.

“The IRS did not ensure that tax examiners timely completed their verification work,” the audit said. “Name mismatches in IRS systems prevented refund holds from posting to tax accounts. Refund holds were either not set correctly or not functioning as intended.”

The article states that the audit recommended that the IRS improve its screening and verification process. No kidding.

The Problem Is Not The Revenue–It’s The Spending

CNS News posted a story today stating that the federal government raked in a record of approximately $2,883,250,000,000 in tax revenues through the first eleven months of fiscal 2015 (Oct. 1, 2014 through the end of August), according to the Monthly Treasury Statement released Friday. This equals approximately $19,346 for every person who was working either full or part-time in August.

The article further reports:

Despite the record tax revenues of $2,883,250,000,000 in the first eleven months of this fiscal year, the government spent $3,413,210,000,000 in those eleven months, and, thus, ran up a deficit of $529,960,000,000 during the period.

…The largest share of this year’s record-setting October-through-August tax haul came from the individual income tax. That yielded the Treasury $1,379,255,000,000. Payroll taxes for “social insurance and retirement receipts” took in another $977,501,000,000. The corporate income tax brought in $268,387,000,000.

The chart below is an illustration of America‘s spending problem.

The article also noted that under ObamaCare new taxes took effect in 2013.

Excessive spending is a problem that Washington has no incentive to fix. It is up to the voters to give them an incentive–fix this or we vote you out of office!

 

All Accounts Have Not Been Settled

Yesterday John Hinderaker posted an article at Power Line about one aspect of the Internal Revenue Service (IRS) scandal that has not gotten as much publicity as some other aspects of the scandal.

The article reports:

The Obama Administration’s IRS scandal is multi-faceted. In addition to the persecution of conservative non-profits by Lois Lerner et al., the question has been percolating for some years whether Obama’s IRS has transferred confidential taxpayer information to Obama’s White House in violation of federal criminal laws. The issue first arose when Austin Goolsbee of the president’s Council of Economic Advisers told reporters that he had information about Koch Industries that could only have come, illegally, from confidential IRS files. When questions were asked, the administration immediately clammed up.

Years later, the judicial system may be poised to expose another layer of Obama corruption. A group called Cause of Action began a Freedom of Information Act lawsuit against the Department of the Treasury, and for several years, your taxpayer dollars have funded the administration’s cover-up.

The cover-up is beginning to unravel. A federal court in Washington, D.C. has ordered the Treasury Department to respond to Cause of Action’s request for documents.

The article further reports:

The Treasury Department’s lawyers wrote Cause of Action’s counsel an email that reads in part:

My client wants to know if you would consent to a motion pushing back (in part) TIGTA’s response date by two weeks to December 15, 2014. The agency has located 2,500 potentially responsive documents and anticipates being able to finish processing 2,000 of these pages by the December 1 date. It needs the additional two weeks to deal with the last 500 pages to determine if they are responsive and make any necessary withholdings. We would therefore like to ask the court to permit the agency to issue a response (including production) on December 1 as to any documents it has completed processing by that date, and do the same as to the remaining documents by December 15.

I suspect a good part o the time the government has requested will be spent attempting to scrub the documents of anything incriminating, but even at that, it is a pretty safe bet that some very damaging information will be revealed.

The story concludes:

This particular story is farce, not tragedy. It will wend its absurd way through the court system for years to come, probably arriving at no conclusion until the scofflaw Obama administration is safely out of office. In the meantime, federal criminal laws governing the privacy of IRS data, like the criminal laws generally, are a source of hilarity among Democrats. Democrat cronies sip Scotch and light cigars–I hope not with $100 bills–laughing at the rest of us who work to pay the taxes that support them in the luxury to which they have happily become accustomed. I have always thought that the term “ruling class” was ridiculous as applied to the United States, but the Obama administration is causing me to re-think that view.

How many members of the Nixon administration ultimately went to jail? I think no more than five or ten. The Obama administration has violated criminal statutes with an abandon that Nixon and his minions never dreamed of. An accounting remains; I think there are a considerable number of Obama minions and cronies who should be behind bars.

If the Department of Justice ever returns to being a Department of Justice, I believe much what has happened to the IRS and the Justice Department under President Obama will be undone. If the damage is not undone, we will be in danger of losing our representative republic.

An Email From A Friend

Canada‘s Top Ten List of American Stupidity

Number 10) Only in America…could politicians talk about the greedy rich at a $35,000 per plate campaign fund-raising event.

Number 9) Only in America…could people claim that the government still discriminates against black Americans when they have a black President, a black Attorney General, and roughly 20% of the federal workforce is black, while only 14% of the  population is black.  And 40+% of all federal entitlements go to black Americans, which is 3X the rate that go to whites and 5X the rate that go to Hispanics! (This one should probably be closer to #1 than #9)

Number 8) Only in America…could they have had the two people most responsible for our tax code, Timothy Geithner (the head of the Treasury Department) and Charles Rangel (who once ran the House Ways and Means Committee), BOTH turn out to be tax evaders who are in favor of higher taxes!

Number 7) Only in America..can they have terrorists kill people in the name of Allah and have the media primarily react by fretting that Muslims might be harmed by the backlash.

Number 6) Only in America..would they make people who want to legally become American citizens wait for years in their home countries and pay tens of thousands of dollars for the privilege, while they discuss letting anyone who sneaks into the country illegally just ‘magically’  become American citizens.

Number 5) Only in America …could the people who believe in balancing the budget and sticking by their country’s Constitution be thought of as extremists .

Number 4) Only in America ..could you be asked to present a driver’s license to cash a check or buy alcohol, but not to vote.  This one is a real joke!

Number 3) Only in America ..could people demand the government investigate whether oil companies are gouging the public because the price of gas went up when the return on equity invested in a major U.S. Oil company (Marathon Oil) is less than half of that of a company making tennis shoes (Nike).

Number 2) Only in America could a country collect more tax dollars from the people than any nation in recorded history, still spend a Trillion dollars more than it has per year (for total spending of $7-Million PER MINUTE), and complain that it doesn’t have nearly enough money.

And Number 1) Only in America could the rich people (who pay 86% of all income taxes) be accused of not paying their “fair share” by people who do not pay any income tax at all.

The Internal Revenue Service And Tax Fraud

On Tuesday, Byron York posted an article at the Washington Examiner website about widespread fraud in the Earned Income Tax Credit program.

The article reports:

“The Internal Revenue Service continues to make little progress in reducing improper payments of Earned Income Tax Credits,” a press release from Treasury’s inspector general for Tax Administration says. “The IRS estimates that 22 to 26 percent of EITC payments were issued improperly in Fiscal Year 2013. The dollar value of these improper payments was estimated to be between $13.3 billion and $15.6 billion.”

That’s not pocket change. Remember that these are the people who will administer the revenue part of ObamaCare.

The article explains that the IRS is not making any serious effort to end this fraud:

The new report found that the IRS is simply ignoring the requirements of a law called the Improper Payments Elimination and Recovery Act, signed by President Obama in 2010, which requires the IRS to set fraud-control targets and keep improper payments below ten percent of all Earned Income Tax Credit payouts. “The IRS continues to not provide all required IPERA information to the Department of the Treasury,” the new report says. “… For the third consecutive year, the IRS did not publish annual reduction targets or report an improper payment rate of less than 10 percent for the EITC.”

Let’s eliminate all bonuses paid to IRS employees until this fraud is at least under control. That might cause the IRS to develop some interest in solving the problem.

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More Mischief By The Obama Administration

The Daily Caller posted a story today about the plan to put new rules in place that would silence conservative grass roots organizations before the 2014 election.

The article reports:

The Obama administration’s Treasury Department and former IRS official Lois Lerner conspired to draft new 501(c)(4) regulations to restrict the activity of conservative groups in a way that would not be disclosed publicly, according to the House Committee on Ways and Means.

The Treasury Department and Lerner started devising the new rules “off-plan,” meaning that their plans would not be published on the public schedule. They planned the new rules in 2012, while the IRS targeting of conservative groups was in full swing, and not after the scandal broke in order to clarify regulations as the administration has suggested.

The article explains:

Ways and Means chairman Rep. Dave Camp blasted the off-the-record plan during a hearing Wednesday with IRS commissioner John Koskinen, and called for the administration’s newly proposed 501(c)(4) rules to be halted until criminal investigations into the IRS targeting scandal are complete.

“If Treasury and the IRS fabricated the rationale for a rule change it would tend to raise questions about the integrity of the rule-making process,” Camp said.

...New IRS commissioner Koskinen said that the rules should “put to rest all of the issues surrounding applications for tax-exempt status.”

But Madrigal’s email to Lerner proves that the regulations were being developed long before the IRS needed to publicly put anything “to rest.”

At least 292 conservative groups were subjected to unfair targeting between 2010 and 2012, against six liberal groups that were allegedly given similar treatment.

Regardless of which side of the political spectrum you side on, this should be chilling. The changes in the law will allow whichever party is in control of the executive branch to use the IRS to silence the speech of their opposition. This is not what America is about. Unless this ends now, the American people will never again get to hear both sides of a political campaign. That is frightening.

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The Final Chapter Of The General Motors Bail Out

Yesterday Yahoo News reported that the Treasury Department has announced that all government-held shares of General Motors will be sold by December 31.

The article reports:

…On Thursday, it (Treasury Department) announced it sold 70.2 million shares of General Motors (GM) stock and intends to sell its remaining 31.1 million shares by Dec. 31.

Once the final sale is complete, however, US taxpayers will have lost nearly $10 billion of the $49.5 billion the federal government used to prevent the auto giant from collapsing in 2008, Treasury officials say. The loss offsets a greater calamity that would have occurred – the disappearance of 1 million jobs – if the federal government had not intervened, says Treasury Deputy Assistant Secretary Tim Bowler.

I guess the question I have at the end of this is how did Ford Motor Company continue without the government bailout, and could General Motors have done the same thing? The taxpayers lost nearly $10 billion in this transaction. What would have been the result of simply dividing that amount of money between those Americans who pay taxes? I think in the long run, it would have had a more positive long term effect on the economy.

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Politicizing The Justice Department

Yesterday the Washington Times posted a story about illegal activity on the part of government employees at the Internal Revenue Service (IRS).

The article reports:

The Treasury Department has admitted for the first time that confidential tax records of several political candidates and campaign donors were improperly scrutinized by government officials, but the Justice Department has declined to prosecute any of the cases.

Senator Chuck Grassley (R-Iowa) has asked Attorney General Eric H. Holder Jr. for an explanation of the lack of prosecutions. Senator Grassley has asked for a reply before July 26.

The article reports:

“Although this may not be indicative of wide spread targeting, any instance is cause for concern,” Mr. Grassley wrote. “Even more alarming, in at least one instance TIGTA referred evidence of ‘willful unauthorized access’ to the United States Attorney’s Office, but criminal prosecution was declined. Decisions such as these directly impact the political process and should be subject to the scrutiny of the American public.”

The IRS did not respond to a request for comment on Mr. George’s findings.

It really is time to clean house in Washington.

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Delaying A Major Provision Of ObamaCare For A Year

This article is based on three articles–one posted at Breitbart.com yesterday, one posted at the Daily Caller yesterday, and one posted in the Washington Post yesterday.

The Obama Administration has announced that it will delay the implementation of the Employer Mandate part of ObamaCare for a year–it was scheduled to go into effect in January 2014. It will now go into effect in January 2015.

The Daily Caller reports the Obama Administration’s explanation for the change:

A blog post by White House senior adviser Valerie Jarrett on the White House blog explained that the goal of the postponement is to help “[cut] the red tape” in the “reporting process” for employers, and to give employers “more time to comply.” The changes come as a response to concerns expressed in “ongoing discussions with businesses” that “you need the time to get this right,” Jarrett wrote.

“It will allow us to consider ways to simplify the new reporting requirements consistent with the law,” wrote Mark Mazur, assistant secretary for Tax Policy at the U.S. Department of the Treasury, in announcing the decision. “Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”

However, there seems to be another side of the story.

The article at Breitbart reports that the pushing back of this deadline is illegal.

Breitbart reports:

And the Employer Mandate is mandatory. The law Congress wrote explicitly commands that this provision takes effect in January 2014. The ACA (ObamaCare) does not permit the government to grant a reprieve or an extension.   

Yet in a blatantly illegal move, the Obama administration is presuming to rewrite the ACA by choosing not to enforce provisions that are causing visible problems. The IRS—which is tasked with enforcing the Employer Mandate—will simply not enforce it until 2015. Every large employer in the country is under the mandate. If they don’t comply, then they are breaking federal law.

But the IRS not enforcing Section 1513 is like a policeman who patrols a stretch of road who says for the next year, he won’t issue any speeding tickets. He has no authority to suspend the law, but if he chooses to violate his duty by failing to enforce the law, then to all the motorists on the road it’s as if the law does not exist.

There are two main political motives for this move. First of all, the implementation of ObamaCare is not going smoothly, and it is to the political advantage of the party that passed the law (Democrats) to push off at least one major problem in implementation until after the 2014 mid-term elections. Secondly, because employers will not be forced to provide health insurance, employees will be faced with a choice–join the government run healthcare exchanges (sky-high premiums) or pay a fine (much lower). The government is hoping that if employers are not required to provide health insurance for employees, employees will be driven into the government-run healthcare exchanges.

Breitbart reports:

It’s worth noting that the ACA (ObamaCare) only subsidizes insurance policies on an exchange run by a state. Yet 34 states have refused to join this government-run debacle, so in those states the U.S. Department of Health and Human Services (HHS) will set them up.

This is why the IRS issued a regulation last year saying that these tax credits for state-run exchanges also extend to HHS-run exchanges. Several lawsuits are now underway challenging the IRS Rule, and they should quickly lead to federal courts striking down the regulation.

The bottom line here is simple–ObamaCare is a mess–politically and practically. Politically, the fact that the law was passed by a parliamentary technicality with only Democrat votes may come back to bite the Democrats as the problems with the law become evident. Practically, the law does not seem to be well thought out or well written. It is quite possible it will collapse under its own weight.

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Can We Elect More Senators Like This?

The Courier-Journal in Louisville Kentucky reported on Thursday that Senator Rand Paul is returning $600,000 to the U.S. Treasury. He saved the money on Senate office operating expenses during the past year.

The article reports:

The $600,000, which amounts to about 17 percent of Paul’s $3.5 million office budget, was in addition to about $500,000 he saved two years ago, his first year in the Senate, Paul said.

He said the savings were realized by “watching every purchase,” including keeping close tabs on expenditures for “computers, paper, ink cartridges. Everything we buy.”

He said he also keeps close watch on travel expenditures and noted that, although he frequently flies between Washington and Kentucky, his staff seldom does. He said he also doesn’t pay his staff excessive salaries.

The article lists a number of Senators in both parties who have returned money to the government. That is a start.Enhanced by Zemanta

How Much Are The Taxpayers Actually Going To Lose In The General Motors Bailout ?

Today the Detroit News posted a story about the General Motors exit strategy announced today by the Treasure Department.

The article reports:

The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday. GM shares jumped sharply on the news and were up 6.7 percent to $27.10, or $1.59.

The U.S. Treasury — after more than a year of refusing to say when it might start selling its remaining stake in GM — said it will announce a written plan in January to shed its remaining 300 million shares over the next 12 to 15 months — likely in a series of small stock sales.

The Treasury’s move is intended to minimize the impact of the stock sale on the share price.

The article states that there will be serious government losses in the General Motors bailout:

The exit plan may prove to be a boost to GM’s lagging stock price and to some car buyers, who have avoided GM because of the “Government Motors” label.

Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion.

Bailing out General Motors was not a good idea. A controlled bankruptcy would have been a better idea. What the bailout did, other than cost the taxpayers serious money, was to protect the unions and ignore what was good for the company in the long run. Even after the amount of taxpayer money spent and the losses taken, there are no guarantees that General Motors will exist in five years.

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Here We Go Again

On Tuesday, CNS News reported that the federal government is expected to reach its legal debt limit before the end of this year. At this point I would like to point out that it has been 1,289 days since the United States Senate passed a budget. It occurs to me that the lack of a budget might be part of the problem.

The article reports:

“Treasury continues to expect the debt limit to be reached near the end of 2012,” says the tenth paragraph of the “Quarterly Refunding Statement” put out by Assistant Secretary of the Treasury for Financial Markets Matthew Rutherford.

“However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America,” said the statement. “We continue to expect that these extraordinary measures would provide sufficient ‘headroom’ under the debt limit to allow the government to continue to meet its obligations until early in 2013.”

It’s time for Congress to work together and pass a budget. There has to be a way to create a budget that combines the idea of controlling spending and streamlining the tax code enough to increase revenues without raising rates.

The current American tax code is a tribute to lobbyists and special interest groups. It needs to be reduced to ten pages or less and put in language that you and I can understand. That is an idea whose time has come.

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Searching For The Truth About Delphi

 

The Washington Free Beacon and the Daily Caller have both posted articles about how the bailout of the automobile industry was handled in regard to Delphi, a company which supplies electronics and technology to the auto industry.

The Daily Caller posted an article stating that the decision to end the pensions of the non-union  workers at Delphi was not made independently by the Pension Benefit Guaranty Corporation (PBGC), the federal government agency that handles private-sector pension benefits issues, but that the decision was the result of pressure from the Treasury Department. They have uncovered a chain of e-mails that backs up this conclusion.

The Daily Caller reports:

The email chain was titled “Delphi Hourly Plan.” Delphi’s unionized hourly retirees originally saw their pension plans terminated together with the nonunion Delphi salaried retirees’ plans in a process that commenced on July 31, 2009.

Later, in September 2009, the union retirees’ plans were topped up while nonunion retirees’ plans remained terminated.

 These emails contradict July 2012 congressional testimony Feldman (Treasury official Matt Feldman) gave during an investigation by the subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs.

The treatment of Delphi employees is becoming a campaign issue in Ohio, where many of its employees were located. Paul Ryan met with nine Delphi retirees who lost their pensions, while their union coworkers pensions were untouched.

The Washington Free Beacon explains some of the details of the bailout:

Delphi was an important element of the auto-bailout. The company, one of GM’s largest parts suppliers, had been in bankruptcy since 2005 and Treasury officials recognized that it would need to be lifted from bankruptcy along with GM.

To cut costs, the Pension Benefit Guaranty Corporation (PBGC), an independent federal insurer of retirement systems, terminated the nonunion plan while GM volunteered $1 billion to top-off pensions belonging to the United Autoworkers union.

The administration has contended that GM was acting on a 1999 agreement with the union to close any pension gap that emerged if Delphi declared bankruptcy.

That agreement, however, was liquidated when GM itself entered bankruptcy and emerged as a new company, according to bankruptcy expert Todd Zywicki.

General Motors’ decision to guarantee the obligations of a separate company—Delphi—was completely unjustified under established principles of bankruptcy law, and it increased the cost of the taxpayer bailout of the automotive industry by more than $1 billion with no reciprocal benefit to General Motors,” he told Congress in July.

The auto industry bailout is an example of the government interfering with the laws of bankruptcy and acting in total disregard to the law. It’s time to bring people into Washington who respect the laws of this country.

 

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Why The Government Shouldn’t Meddle In Business

President Obama is citing his bailout of the auto industry as one of his accomplishments. I wonder if he has seen the numbers.

The Detroit News posted a story today that a report by the Treasury Department has estimated that the government will lose more than $25 billion on the $85 billion auto bailout. That is almost a third of the cost of the bailout!

The article states:

The report may still underestimate the losses. The report covers predicted losses through May 31, when GM’s stock price was $22.20 a share.

On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.

The government still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout.

This is how much it cost the taxpayers to avoid General Motors’ going through a structured bankruptcy. The government bailout violated the basic bankruptcy laws. The bailout was nothing more than the taxpayers giving the company to the unions. This sort of activity needs to be avoided in the future!

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Those Pesky E-Mails

Investors.com posted an article today about the latest scandal in the Obama Administration. You may not see this in the major media–they are too busy trying to distract the public with shiny objects–but it is an indication of how things work in the Obama Administration.

The article deals with GM’s Delphi auto parts unit and how its non-union employees were dealt with during the GM bailout.

The article reports:

The news site The Daily Caller has obtained internal government emails that show the U.S. Treasury Department, led by Timothy Geithner, pushed in 2009 to end the pensions of 20,000 non-union employees of GM’s Delphi auto parts unit as part of the auto bailout.

What’s truly outrageous is that, while those workers were cheated of their full pensions, union employees of the same Delphi company got their pensions paid.

This financially ruinous favoritism of union workers over nonunion workers is blatantly unfair, illegal and a violation of Constitutional guarantees of equal treatment under the law. And the reason is political.

This is one of many examples where government agencies were used for political purposes (paying back union supporters or wealthy donors) in the Obama Administration.

The Pension Benefit Guaranty Corporation (PBGC) is responsible for overseeing private pensions. This organization is an independent, quasi-governmental insurer of private pension plans. Under law, that organization would have had the authority to determine how the pensions were handled.

The article further reports:

The email trail shows clearly that in April 2009 the Treasury Department held meetings on GM and Delphi, including “pension issues.” However, the PBGC was, in the words of one official, “disinvited.”

This was well before the decision, made in July, to stiff nonunion workers on their pensions. It suggests that the White House and Treasury were calling the shots — not the compromised, and politically bullied, PBGC.

This violates PBGC’s independence under the law as the sole agency that can terminate a private pension — not Treasury. Worse, the PBGC, based on the emails, seems to have thought it needed to clear whatever it did with the White House and Treasury. It didn’t.

There is also the question of whether or not several White House officials may have lied under oath when questioned about the decision on the pensions.

The Obama Administration has taken political cronyism to a new level. It is time to vote them out of office.

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