 June 10, 2009 | Vol. 4, No. 23
Once, We Would Have Called It a Scandal by Newt Gingrich
There was a time when we would have called it a scandal.
In 1921, oil tycoon Harry Sinclair gave several prize head of cattle
and around $269,000 to President Harding's Secretary of the Interior,
Albert Fall.
In return, Sinclair got the exclusive rights to
drill in an oil field in Wyoming. Sinclair's no-bid contract became the
Teapot Dome scandal, the most notorious example of political corruption
in America prior to Watergate.
Between 2000 and 2008, the United Auto Workers (UAW) union gave $23,675,562 to the Democratic Party and its candidates.
In 2008 alone, the UAW gave $4,161,567 to the Democratic Party, including Barack Obama.
In return, the UAW received 55 percent of Chrysler and 17.5 percent of GM, plus billions of dollars.
But nobody's calling this a scandal. It's time we start. 2000-2008 UAW Giving: $23.7 million to Democrats. $193,540 to Republicans The almost $24,000,000 the UAW has given to Democrats since 2000 compares with the $193,540 the union has given to Republicans.
In the 2008 presidential election, President Obama was by far the
biggest recipient of UAW contributions, raking in $27,340 compared to
the $10,600 given to Hillary Clinton, the No. 2 recipient of UAW money.
And so it was no surprise to the cynical Washington political class when the payback began with the Chrysler bankruptcy.
In a rigged proceeding in which the federal government disregarded
bankruptcy law in favor of the political outcome it desired, the
Chrysler bankruptcy laid the predicate for the much larger General
Motors bankruptcy to come. Against law and precedent, the unions were
moved to the front of the line when it came to who would benefit from
the bankruptcy.
The Obama Treasury Department strong-armed
Chrysler's creditors into a deal in which the UAW was given 55 percent
ownership of the company while Chrysler's secured creditors - investors
who would have received priority in a non-political bankruptcy
proceeding - were left with just 29 cents on the dollar. On Monday, the Supreme Court Delayed the
Completion of the Chrysler Bankruptcy
Some of these secured creditors, led by a group of Indiana retirement
funds, are fighting back. They've charged in court that the Chrysler
bankruptcy violated the bankruptcy laws and violated their rights as
senior lenders.
On Monday, the Supreme Court put a hold on the Chrysler bankruptcy to hear their case.
We don't yet know which way the high court will rule, or if it will
rule at all. But we do know what's at stake. Indiana State Treasurer
Richard Mourdock put it well:
"The issue of secured creditors'
rights is bigger than Chrysler. It's an essential foundation of our
capital markets. And fundamentally, this is about the law." "Never Has an American Union Done So Well At
the Expense of Shareholders and Creditors"
But the Chrysler bankruptcy was just prelude to the
Obama-Administration-brokered General Motors bankruptcy deal announced
last week.
The GM deal is yet another example of rank, taxpayer-financed political favoritism.
Once again, the big losers
are GM's bondholders, who include substitute teachers in Florida and
retired tool and dye supervisors in Michigan. They hold $27 billion in
GM debt but are receiving a 10 percent stake in the new company.
In contrast, the UAW, which is owed about $20 billion from GM, is
walking away with 17.5 percent of the company and a cool $9 billion in
cash.
According to one analysis, while the bondholders will
be lucky if they recover 15 cents on the dollar, the UAW can expect to
recover up to 60 to 70 cents on the dollar - four to five times what
the bondholders will receive.
As Barron's Magazine wrote, "Never has an American union done so well at the expense of shareholders and creditors". "At
a Time When Some American Workers are Facing Stiff Pay Cuts, UAW
Workers Gave Up Their Customary Paid Holiday on Easter Monday"
Of course, the Obama Administration has assured us that the United Auto
Workers has made "substantial concessions" as part of the bankruptcies
that have literally saved the union from extinction.
But as no less than the Washington Post
put it, the "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."
Union members also preserved their right to have six unexcused absences from work before they can even be considered to be fired.
Can you feel the pain? The Unions Have Been Rewarded With
Ongoing Subsidization by the Taxpayers
It is a sign of the degree to which raw politics has dominated its
handling of Chrysler and General Motors that the Obama Administration
has a 31-year-old who has not yet graduated from law school determining the fate of two multi-billion dollar companies.
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For their political support of the Democratic Party, the auto unions
have been rewarded, not just with ownership stakes in two giant
companies, but with ongoing protection and subsidization by the U.S.
taxpayers.
The President has said repeatedly that he wants to
get out of the auto business as soon as possible. But does anyone
seriously believe that he would accept an arrangement in which GM
becomes profitable at the expense of the union and its gold-plated
benefits?
Having spent $50 billion to "save" GM and the UAW,
does anyone really believe that the Obama Administration will now allow
economics and not politics to dictate its future decisions?
In the GM and Chrysler bankruptcies, the Obama Administration has trampled on the rule of law.
It is using the taxpayers' money to pay back a political group for its political contributions.
There was a time when we would have called that a scandal.
| | Your friend,
Newt Gingrich |
Newt's Quick Links: -
Callista and I spent an amazing week in Poland and in Rome filming our
upcoming documentary on Pope John Paul II, "Nine Days that Changed the
World. EWTN's Joan Lewis stopped by our filming in St. Peter's Square
and wrote about it. You can read her article and check out her pictures
here.
- To learn more about "Nine Days that Changed the World" and other documentaries Callista and I have made, go to GingrichProductions.com.
-
Monday night I spoke to the annual Senate-House Dinner about the
principles upon which to build a center-right governing coalition. You
can read and watch my remarks here.
- The Center for Health Transformation's Jim Frogue and I published a piece this week on how fighting health care fraud is key to reforming our health care system.
- Father's Day is June 21. Why not give your dad the gift of the five principles for a successful life? Signed copies of 5 Principles for a Successful Life: From Our Family to Yours are still available here.
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