Filed under: Capitalism, Democrat Corruption, Domestic Policy, Economy, Health Care, Law, Politics | Tags: Crony Capitalism, Freelancers Insurance Company, Sara Horowitz
This is an odd story. A health insurance company headed by an old friend from the days when President Obama was an Illinois state senator got a $340 million federal loan to establish Obamacare co-ops in New York, New Jersey and Oregon is spite of having a chronic record of consumer and regulatory complaints.
The New York-based Freelancers Insurance Company has been rated as the “worst” insurer for two straight years by state regulators, according to Richard Pollock, of the Washington Examiner’s Watchdog Team. Data compiled by a national insurance association show an unusually high rate of consumer complaints.
The firm was founded by Sara Horowitz in 2009, who worked with Obama when he was in the Illinois state senate to launch Demos, a left-wing New York think tank funded in part by George Soros. The website of Demos described Horowitz and Obama as members of the founding group in 1999. Sometime between that date and November 6, 2011, reference to Obama was deleted.
Before incorporating FIC, Horowitz had established the Freelancers Union, a nonprofit organization that describes itself as offering “health insurance and other benefits, plus advocacy, solidarity, and resources for freelancers and independent workers.”
In 2012, Horowitz’s FIC won the largest single award under an obscure Obamacare provision that allocates $2 billion to establish 24 co-ops to compete against private insurers and state health insurance exchanges. Co-ops are collectively owned organizations that produce goods or services for the benefit of members instead of for profit.
The funds are awarded as tax-free loans by the U.S. Department of Health and Human Services’ Center for Consumer Insurance Information and Oversight.
The House Oversight and Government Reform Committee has opened an inquiry regarding FIC’s eligibility for the loans. The New York State Insurance Dept. ranked FIC last among commercial insurers with the most complaints , and 49th out of 50 among all of the stat’s insurance providers.
The department ruled that the insurer did not comply with statutory or contractual obligations in half the cases filed against the company. The National Association of Insurance Commissioners which represents 50 state insurance commissioners reported FIC’s complaint rate to be more than seven times the national average in the two most recent years for which information is available.
Horowitz was chosen in December to serve a three-year term as a director of the Federal Reserve Bank of New York. It apparently pays to be a friend of the president. Just gives you all sorts of confidence in ObamaCare, doesn’t it.
Filed under: Capitalism, Democrat Corruption, Economy, Politics, Progressivism, Statism | Tags: Andrew Klavan, Compulsive Spending, Crony Capitalism
President Obama has been trying for four years to promote the claim that the financial crisis was caused by the hated Bush tax cuts for “the rich.” Democrats always hate tax cuts, because they believe in BIG government, and you can’t have BIG government without lots of tax revenue.
Democrats also believe in “fairness” which means that income should be redistributed from those who earned income to those who didn’t earn any or enough. It just isn’t fair that some people should work harder or have more expertise or be luckier than others who don’t work hard or have any expertise and just aren’t lucky. Although “luck” isn’t always as lucky as people think. Statistically, the people who win lotteries usually turn out to be less lucky than they were in the first place.
Bill Clinton left a recession for George W. Bush. The “booming” Clinton economy was booming largely because of the “dot-com bubble” when everybody with a computer thought they were going to make their fortunes online. President Obama wants to go back to the Clinton tax rates because the rich paid more then, but he wants to pretend that Bill Clinton’s much lower spending didn’t exist, didn’t happen, spending is good, don’t even suggest that I should cut back on spending. Did you know we have 54 Christmas trees in the White House? Although we’ll be in Hawaii for most of the Christmas season. Out of touch.
Filed under: Election 2012, Law, News the Media Doesn't Want You to Hear, Politics, The United States | Tags: Crony Capitalism, Rule Breaking, Tax Cheating
“The Chairman’s Blog: Insights for leaders from Gallup’s work around the world”
The House of Representatives passed a bill last Tuesday that would fire federal employees who’ve been seriously delinquent in paying their taxes. They did this because almost 100,000 federal workers are behind on their taxes, including 700 congressional employees. These workers owed more than $1 billion in unpaid taxes 2010, up from just under $600 million in 2004, according to the Internal Revenue Service. We could charitably call these folks “rule breakers.”
Wow! We could save a billion dollars if the tax cheats just paid up? And they are rule breakers as well?
Of course, we’ve also learned recently that there’s been significant rule breaking in the General Services Administration (lavish conferences and now word of excessive bonuses) and the Secret Service (the prostitution scandal in Colombia). Combined, the problems of tax evasion and rule breaking generally point to deep ethical issues in the federal workplace.
The federal government really needs to know what Gallup knows: Rule breaking is very predictable. The more disengaged the workplace, the more employees will break rules. And according to Gallup’s 12-question employee engagement survey (Q12), U.S. government workers are mostly not engaged (52%) or are actively disengaged (18%).
Now, it may surprise many government leaders to learn that generous pay and benefits don’t predict a great workplace. Federal workers are generally well compensated and receive more vacation days and better healthcare and retirement packages than many private sector employees — yet they remain disengaged and work within a growing culture of rule breaking.
The Chairman doesn’t mention it, but an attitude at the top that rule breaking will not be tolerated would be a start. But that would be sheer hypocrisy wouldn’t it. The President of the United States has been quite explicit in saying that he will not prosecute the laws with which he disagrees. Reports of the Attorney General’s failure to prosecute the law have been constant. The Secretary of the Treasury was publicly labeled a tax cheat because he had not paid his taxes. Administration members accused of illegal actions EPA director Lisa Jackson, Interior’s Ken Salazar, HHS’s Kathleen Sebelius, some have been taken to court and told to knock it off.
The administration clearly has no respect for the separation of powers, and does not feel obliged to yield to the laws passed by Congress, nor the decisions that emanate from the courts. Thus we have a government functioning by “Executive Orders,” and a Congress left fuming. With that attitude, it is hardly surprising that you have some “trickle down fairy dust,” to borrow a phrase; a feeling that if they can get away with it, why can’t I?
Rudy Giuliani cleaned up New York with a belief that petty crime, broken windows and graffiti led to a general climate of disrespect for the law. You could call that “trickle up.” He was right, of course. And as long as the federal government has an attitude that crony capitalism, rule breaking, tax cheating are fine for members of the federal workforce and their executives, we will continue to have a lot of the aforementioned.
Filed under: Capitalism, Democrat Corruption, Economy, Election 2012, Statism, Taxes | Tags: "Most Transparent Administration", American Capitalism, Crony Capitalism
Bwa-ha-ha-haha! CNN headline:”Obama calls for greater transparency from Romney snort! giggle. President Transparency, who won’t disclose his Harvard grades, or his grades from Columbia University, or his grades from Occidental, or Punahou grades, or even grade school or kindergarten. His life is an open book — the autobiography with all those invented characters and dubious stories.
President Transparency— who has two cabinet members under threat of contempt of Congress because they won’t reveal the papers that Congress has subpoenaed, and President Transparency has asserted “executive privilege” so they won’t have to.
Obama can’t talk about the economy because his record with the economy is truly horrible. All his claims of hope and change, promises of jobs, promises of a reviving economy are all for naught. The economy sinks deeper, the job situation gets worse, largely because of the policies that Obama has pursued.
Mr. Obama doesn’t understand how jobs are created. He doesn’t seem to understand that public sector jobs are paid for with money taken from taxpayers. Every time you add another high-paying administration job, and they are very high-paying, everybody’s taxes go up a little more. He announced today that he wants to tax the rich more because they paid higher taxes during the Clinton administration and the economy did fine.
So the economy and unemployment are off the table, that leaves only attacks on Romney. At Axlerod’s direction, armies of lefties are digging through Romney’s financial dealings trying desperately to find something, anything, crooked. Romney is wealthy, that makes him a real target of the left. Former press secretary Robert Gibbs argued on Sunday that Romney’s financial picture is out of touch with that of most Americans.
“I pick a bank because there’s an ATM near my home,” he said on CNN’s State of the Union. “Romney had a bank account in Switzerland.”
OMG. Switzerland?
Romney had a stellar education, very bright, with a talent for numbers and data and business. Over the years that talent and his skill managed to turn many companies around, and some of them became spectacular successes. What people in private equity do is invest their own money, along with that of shareholders (including retirement funds and individuals) so they have a stake in how their efforts turn out, both on the upside and on the downside. The Obama campaign has already tried to portray Bain Capital as a “corporate raider” which is just silly, and demonstrates how very little these people understand about business.
When Obama was first inaugurated, Rham Emmanuel set up daily economic meetings, since the economy was in such dire shape. He was waiting for the multiplier effect to multiply, and he got bored and quit them.
Mr.Obama’s understanding remains at the same level as when he started. You jump-start an economy by creating demand; when there isn’t enough demand, you pump some money into the economy , which the people will spend, and the money will circulate through the economy creating a magical “multiplier effect,” creating more demand in every hand it touches. Trouble is, a number of our top economists have determined that the “multiplier effect” is approximately zero. And when people are frightened, they don’t spend the extra, they save it. He can’t even explain how his policies were supposed to work or why they haven’t, he can only make specious claims that it will all start to work pretty soon — one of these days.
People who regard the path to wealth as something obtained through crony capitalism, and government jobs as “public service” in which you buy votes and do favors are not going to understand American capitalism. From Elizabeth K. Spahn
Crony Capitalism.” Isn’t that what American capitalism is? We were into our third glass of very fine red wine at the banquet following the training session. He was absolutely sincere. I was horrified. . . .
Cronyism is not capitalism, I replied. Cronyism is the opposite of capitalism. American capitalism is about markets, competition. “Rational” markets in which sellers compete; purchasers decide based on price, quality, service, brand. Cronyism, nepotism, elites reserving the goods for themselves — This is the opposite, the antithesis of American capitalism. This is why we revolted in the first place.
He looked at me. I looked at him. Ah, he said.
Filed under: Capitalism, Democrat Corruption, Domestic Policy, Economy, Law, Politics | Tags: Auto Bailouts, Bankruptcy Laws, Crony Capitalism
In his round of campaign fundraisers (150 to date) President Obama celebrates the bailout of General Motors and Chrysler as one of his administration’s outstanding successes. The $23 billion the taxpayers lost was worth paying to avoid more massive job losses. But if the administration had treated the United Auto Workers in the manner required by bankruptcy law, he would have saved taxpayers $26.5 billion.
The Treasury Department estimates that taxpayers will lose $23 billion on the auto bailout. Researchers James Sherk and Todd Zywicki found that the preferential treatment given to United Auto Workers accounts for the American taxpayers’ entire losses from the bailout. Had the UAW received standard treatment in a normal bankruptcy proceeding, the Treasury would have recouped its entire investment. Benefits allowed UAW members to retire in their mid-50s with minimal out-of-pocket expenses for the remainder of their lives. None of the taxpayers’ losses came from “saving jobs” but instead from propping up the compensation of some of the most highly paid workers in America.
Overpaid workers with overgenerous benefits were a significant factor in the automakers’ decline. Detroit’s labor costs were 50% to 80% higher than other automakers like Toyota and Nissan. General Motors paid its unionized workers $70.51 an hour in wages and benefits, Chrysler paid $75.86 an hour. There were management mistakes, but these labor costs were a big reason why the automakers went bankrupt. Throughout the bailout, the Obama insulated the UAW from the sacrifices that unions usually make in a bankruptcy — at taxpayer expense. The UAW accepted huge pay cuts for new hires, but the administration kept the pay of existing UAW members at GM intact.
Section 1113 of the Bankruptcy Code enables reorganizing companies to improve their post-bankruptcy competitiveness by renegotiating union contracts to improve competitive rates. Thus GM still has higher labor costs than any of its competitors. UAW Employees at Delphi, a subsidiary of GM, got $1 billion of bailout funds to support their pensions. Delphi non-union retirees got nothing.
The $26 billion President Obama gave to the UAW is more money than the U.S. spent on foreign aid last year and 50% more than NASA’s budget. None of the money kept factories running. It went, in true crony-capitalist fashion to Obama’s union supporters.
There’s a reason why we have bankruptcy laws. They’re designed to see that everyone gets a fair shot, everybody is doing their fair share, and everybody is playing by the same rules — oh wait…
Filed under: Capitalism, Economy, Energy, Environment, Junk Science, National Security | Tags: Crony Capitalism, Green Loan Program, Subsidizing Friends and Supporters
One of the biggest scandals in American politics is about to erupt. It is a story of the inside game in Washington in which the political class enriches itself at the expense of ordinary taxpayers. Peter Schweizer’s new book details how 80 percent of the Department of Energy’s “Green Loan” program went to companies run or primarily owned by Obama’s financial backers. Out of $20 billion of government loans, $16 billion went to Obama bundlers, friends, and supporters. In other times, they used an old-fashioned word:
graft: The unscrupulous use of one’s position to derive profit or advantage.
Is this an inevitable result of government intervening in the private market, picking winners and losers? These are companies that rely on government support for their existence. In most cases, if the government support is withdrawn they cease to exist. Doug Ross quoted the relevant excerpt from Schweizer’s book:
When President-elect Obama came to Washington in late 2008, he was outspoken about the need for an economic stimulus to revive a struggling economy… After he was sworn in as president, he proclaimed that taxpayer money would assuredly not be doled out to political friends…
…But an examination of grants and guaranteed loans offered by just one stimulus program run by the Department of Energy, for alternative-energy projects, is stunning. The so-called 1705 Loan Guarantee Program and the 1603 Grant Program channeled billions of dollars to all sorts of energy companies…
…In the 1705 government-backed-loan program [alone], for example, $16.4 billion of the $20.5 billion in loans granted as of Sept. 15 went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party. The grant and guaranteed-loan recipients were early backers of Obama before he ran for president, people who continued to give to his campaigns and exclusively to the Democratic Party in the years leading up to 2008. Their political largesse is probably the best investment they ever made in alternative energy. It brought them returns many times over.
…The Government Accountability Office has been highly critical of the way guaranteed loans and grants were doled out by the Department of Energy, complaining that the process appears “arbitrary” and lacks transparency. In March 2011, for example, the GAO examined the first 18 loans that were approved and found that none were properly documented. It also noted that officials “did not always record the results of analysis” of these applications. A loan program for electric cars, for example, “lacks performance measures.” No notes were kept during the review process, so it is difficult to determine how loan decisions were made. The GAO further declared that the Department of Energy “had treated applicants inconsistently in the application review process, favoring some applicants and disadvantaging others.” The Department of Energy’s inspector general, Gregory Friedman, … has testified that contracts have been steered to “friends and family.”
Solyndra has become the poster child, particularly after the top executives took the Fifth Amendment to avoid testifying, and congressional investigations are ongoing, but there are many others. The latest is an electric transmission project that received stimulus-law financing under a program operated by the Western Area Power Administration.
NRG Energy is building a compound of nearly a million solar panels halfway between Los Angeles and San Francisco. Taxpayers and ratepayers are subsidising the project by almost as much as the entire $1.6 billion cost of the endeavor. This involves loan guarantees, cash grants, contracts that require power customers to pay higher rates, state laws that require utilities to buy increasingly large amounts of solar energy. Beneficiaries include firms like Goldman Sachs, Morgan Stanley, General Electric, Exelon, NRG and Google. The Dept. of Energy loan guaranteed a $1.2 billion construction loan, with a low loan rate of 3.5%. When construction is done, they get a $430 million check from Treasury. NRG doesn’t have to pay property taxes, saving it $14 million a year. And ordinary rate payers get to pay about 50 percent more than the expected cost of electricity.
The expected rate of return for equity investors is 25 percent.
States have passed legislation that requires utilities to buy a significant share of their power from renewable sources such as solar or wind. Kevin Smith, CEO of Solar Reserve, a Nevada solar project, said “It is like building a hotel, where you know in advance you are ging to have 100 percent room occupancy for 25 years.”
This is essentially what has happened in England, where a combination of EU regulations and governmental ignorance and fear of global warming has led them to a position where the high cost of energy is resulting in what they call “energy poverty” where people cannot afford the basic energy they need to stay warm — in a period when the globe has been cooling for over ten years.
Solar panels, they say, are ‘expected’ to last for 20 or 25 years, except they are quite fragile and subject to all sorts of damage. Then there are the backup power plants required for the times that the sun isn’t shining — like night, and cloudy weather. They don’t have any way of storing electricity yet, but they are thinking of large banks of used electric car batteries — used because the batteries are so costly.
The whole thing goes far beyond the Department of Energy’s foolish green loans. The federal government has paid out nearly $40 billion to subsidize corn-based ethanol. That is judged a success because it has displaced more than half a million barrels a day of petroleum. But ethanol has driven up food prices, contains less energy than gasoline, destroys small engines, is more polluting than gasoline, and if we were using our own energy resources properly would be unnecessary. And that’s just the ethanol.
Wind farms are proving to be neither cost/effective nor practical. There is the lightbulb ban, done so that GE, Sylvania and Phillips can make more money by having their bulbs made in China. There’s Beacon Power who made flywheels for electricity storage — bankrupt, Ener1, who made lithium-ion batteries, delisted by Nasdaq, and many more. There are the green job training programs, and I haven’t even touched upon the costly regulations emanating from the EPA. We may never know the total cost of all this nonsense, nor grasp the immediate costs to our country, our own pocketbooks and our own welfare and freedom.
Filed under: Capitalism, Democrat Corruption, Economy, Law | Tags: Crony Capitalism, Just a Coincidence?, Political Payoff
(REUTERS/Jonathan Ernst)
The Environmental Protection Agency says that new greenhouse gas regulations, as proposed, may be “absurd” in application, and “impossible to administer” by its self-imposed 2016 deadline, according to The Daily Caller. The agency is asking taxpayers for around $21 billion so they can hire up to 230,000 new bureaucrats to attempt to implement the rules.
Although the Clean Air Act does not give the EPA authority to regulate greenhouse gas emissions, they plan to do it anyway. The agency’s plan is being challenged in court by petitioners who argue that such a decision should be left for Congress to make. However, Obama feels free to waive rules made by Congress, so nothing is for certain anymore.
If the EPA wins its court battle, the number of businesses forced to file for an EPA permit and complete extra paperwork in order to continue operating would grow to as many as 6.1 million from the 14,000 now required to file.
The EPA would be forced, forced, to hire another 230,000 employees to deal with all the permits. The $21 billion does not cover the economic impact of the regulations, which would be much bigger.
Obama is simply ignoring the Solyndra scandal which keeps growing, as he hits the campaign trail trying to fire up his base. The Chicago Way— rewarding donors with taxpayer money, is becoming a pattern. Solyndra favored a major Democratic donor, George Kaiser.
LightSquared’s wireless broadband project jeopardizes the nation’s GPS system, on which the military and aviation depend, as well as others. That support involves not only supporting a big donor, Philip Falcone, by approving the project, but there is the possible subborning of perjury by asking four-star General William Shelton , head of the U.S. Space Command to alter his testimony to Congress.
A member of Missouri’s most prominent political family, Tom Carnahan is the host of the St. Louis fundraising effort, but his energy development firm, Wind Capital Group, is the recipient of a $107 million federal tax credit to develop a wind power facility in his state. The BlueGrass Ridge Wind Farm consists of 27 turbines, 252 feet tall. Each of the blades is 140 feet long. But after all the hype and investment, all the subsidies, wind accounts for only 1% of our electricity, backed up 24–7 by natural gas or coal-fired power plants. But tomorrow, sometime, it will surely produce all the electricity we need to power our economy.
There is a worrying disregard of basic economics, and the national interest in the blind pursuit of leftist environmentalist ideology. The appearance of corruption may just be an appearance, but the administration is busily picking winners and losers, and the winners just happen, coincidentally, to be big Democratic donors.
So Obama continues his strategy of forcing the cost of energy up so the public will be forced to support his clean green economy. None of it will work. The DOE’s Energy Information Administration reported that in 2007, the average subsidy per megawatt hour for all energy sources was $1.65. The subsidy for wind and solar was about $24 per megawatt hour. But then Solyndra seemed to think it was fine to sell solar panels for $3 that cost $6 to make.
Administrator Lisa Jackson seems to think that in a time of recession it’s fine to ask for $21 billion to hire another 230.000 people to process permits. Does she think that she is creating jobs? The government has no money of its own, where does the money come from? And is the $21 billion funding for permanent salaries and benefits, or just for the next year?
Filed under: Capitalism, Democrat Corruption, Domestic Policy, Economy | Tags: Cheap Vulgarity, Crony Capitalism, In the Pocket of the Unions
(click to enlarge)
Michael Ramirez, master of the visual metaphor, captures the moment. See all his work at Investors.com. “In the pocket” is unfortunately all too accurate. I have been dismayed and startled at the cheap vulgarity of union signs. They are making a major mistake. They can bully politicians who want their money, but they cannot bully the American public.
Filed under: Capitalism, Economy, Freedom, Statism | Tags: American Entrepreneurs, Chairman Austan Goolsbee, Crony Capitalism
Sigh. It would really help if someone in the White House had ever worked in the private sector. Austan Goolsbee is the Chairman of the president’s Council of Economic Advisors. (He replaces Christina Romer who has returned to the University of California at Berkeley). He’s been doing these White Board thingys from the White House for a while, and he always yells.
He gets this partly right. American entrepreneurs have created huge businesses. Successful startups are an engine of business, and hire a lot of people as they grow. But governments are notoriously bad at deciding which businesses should be supported and choosing which should become successful.
Obama has already been a shining example of this. His passionate belief in his green clean energy economy has no basis in science, engineering or energy expertise. Neither wind nor solar will ever make a significant contribution to our energy supplies.Yet he has “invested” billions in subsidies for those favored businesses. Wind farms and solar panel makers and electric battery factories could not exist without government subsidy, because they are not economically viable.
Obama champions a kind of crony capitalism. He subsidizes business, business supports his plans, he does favors for business, business supports his campaign, he gives business special perks, business does what he wants because they are obligated. Business becomes a creature of government. It is practiced in many countries. We usually refer to them as corrupt governments.
There is a long struggle between the guy with an idea in a garage and the huge business. And if that’s the way Obama is planning to solve his unemployment problem, we’re in bigger trouble than I thought. Venture capitalists are picky about the way they hand out their own money— in direct contrast to the Obama administration which shovels it out the door by the trillions. Because VCs don’ t like to waste their own money, they do a lot of due diligence.
I am deeply suspicious of the “comprehensive review of regulations.” What entrepreneurs need is freedom from regulation. Obama wants to control. Government assigned mentors?
What entrepreneurs need is for government to get out of the way.
Filed under: Energy, Environment, Law, Politics | Tags: Conflict of Interest, Crony Capitalism, Global Warming Profiteering
Assistant Secretary of Energy Cathy Zoi, as revealed by disclosure documents, has a huge financial stake in companies likely to profit from the Obama Administration’s “green policies.”
Zoi was previously CEO of the Alliance for Climate Protection — founded by Al Gore — and left that position to serve as assistant secretary in charge of energy efficiency and renewable energy. She manages billions in “green jobs ” funding. Disclosure documents show that she is in a position to affect the fortunes of her previous employer — former Vice President Al Gore — but she has large holdings in two firms that could profit directly from policies proposed by the Department of Energy.
Zoi and her husband hold 120,000 shares in Serious Materials,where he is in charge of public policy operations, as well as stock options. Zoi also holds between $250,000 and $500,000 in “founders shares” in Landis+Gyr, a Swiss “smart meter” firm. She also still owns between $15,000 and $50,000 in ordinary shares.
Smart meters are electric meters that return information about customer power usage to the power company immediately and allow the power company to control the amount of power that a customer can consume. Note that control is the key word.
Obviously, DoE funding to encourage the adoption of smart meters would lead to increased sales by Landis+Gyr and a windfall for Zoi. And insistence on insulated windows will lead to increased sales by Serious Materials. After all Serious Materials has received visits and endorsement by both the President and the Vice President — something their better-known competitors have not received.
This is what I have always understood to be called a conflict of interest. John Stossel did a show on what he calls crony capitalism — featuring — Serious Materials. This is problematical.
As a condition of employment with the Obama Administration, while Ms. Zoi maintained her holdings, she promised that “she would not participate personally and substantially in any particular matter that has a direct and predictable effect on their financial interest” without obtaining a waiver first. Uh huh.
People in government usually divest themselves of problematic investments. Given the often verbalized interests of the Obama administration’s Department of Energy it would seem impossible for her to avoid a serious conflict of interest.
