Tag: chuck grassley

National Standardizers, Time to Speak Out against Federal Coercion

Maybe because it’s now hitting schools, or because it’s gotten high on the radars of Michelle Malkin and Glenn Beck, or because national science standards have raised a ruckus, but for whatever reason the Common Core is finally starting to get the national—and critical—attention it has desperately needed. Indeed, just yesterday Sen. Chuck Grassley (R-IA) sent a letter to the Senate appropriations subcomittee that deals with education urging members to employ legislative language prohibiting federal funding or coercion regarding curricula. That follows the Republican National Committee last week passing a resolution opposing the Common Core.

It’s terrific to see serious attention paid to the Common Core, even if it is probably too late for many states to un-adopt the program in the near term. At the very least, this gives new hope that the public will be alert if there are efforts to connect annual federal funding to national standards and tests through a reauthorized No Child Left Behind Act. And there are certainly some states where nationalization could be halted in the next few months. Perhaps most important, the Grassley letter gives Common Core supporters who’ve said they oppose federal coercion a huge opening to act on their words—to loudly support an effort to keep Washington out. They can either do that, or substantiate the powerful suspicion that they are happy to use federal force to impose standards, they just don’t want to admit it.

Grinning and Bearing GM’s Bitter Ironies

Via General Motors, American taxpayers will soon own a 61 percent stake in a Texas-based company called AmeriCredit.  GM announced plans yesterday to acquire the auto finance firm for $3.5 billion, which management believes will help boost its auto sales and improve chances for an IPO later this year or next. 

Thus, a greater chance for re-privatization later is the rationalization for more nationalization now.

For those who opposed the nationalization of GM for its affront to free markets and the rule of law in the first place, the acquisition presents a dilemma.  On one hand, the deal means that the nationalization virus is spreading to infect another company in a different industry, ensuring that yet more business decisions are driven by political, rather than economic, considerations. (Although, to acknowledge the efforts of Messrs. Bush, Paulson, Obama, Dodd, Frank and others, politics already reigns supreme in the consumer finance industry.) One has to wonder what exemptions, loopholes, and carve-outs might be in store for AmeriCredit, as the administration crafts regulations to implement the just-passed “financial reform” legislation.

And Senator Chuck Grassley (R-IA), who questioned and brought attention to some of GM’s hyperbolic claims about its performance earlier this year, raised fresh doubts about the latest move:

If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first. After GM’s experience with GMAC, which left GM seeking a taxpayer bailout, you have to think the company and, in turn, the taxpayers would be better off if GM focused on making cars that people want to buy and stayed clear of repeating its effort to make high-risk car loans.

On the other hand, a course of action that gets the government out of the auto business as quickly as possible, and makes taxpayers as whole as possible, is probably the least objectionable. Though there are no guarantees that will happen, arguably that outcome is more likely if GM’s revenues and profits are higher.  And, according to auto industry analysts, the absence of a captive financing operation (GMAC, now called Ally Financial, is no longer part of GM) has hurt GM’s sales, especially in the “sub-prime” portion of the market.

The opening paragraph in the New York Times story on this topic yesterday went like this:

General Motors said Thursday that it had agreed to buy a financing company, AmeriCredit, for $3.5 billion so it can lease more vehicles and increase sales to consumers with lower credit ratings. 

According to that story, about 4 percent of GM’s sales go to sub-prime customers.  But GM’s sales could increase by as much as 20 percent if it “aggressively courts sub-prime buyers.”  Hmmm.  Haven’t we seen this movie before?  Is GM stealing a page from the Fannie/Freddie playbook? 

Well, apparently Ford and Toyota and the other big auto producers rely on their own captive financing units to make their vehicles accessible to those who wouldn’t qualify for credit from third-party financers.  But at least those automakers have shareholders to discipline lending behavior that might lead to increased default rates.  They may be more risk-averse or at least risk-conscious than a company spending other people’s money, whose success happens to be in the Obama administration’s best interests.

So where does this leave free market proponents?  Arguably, in the same boat as the Obama administration, pulling for higher GM revenues and profits.  Without successful operations, re-privatizing GM will be very difficult.

Of course, the final indignity—the ultimate heads-they-win-tails-we-lose irony in the GM saga—is that if GM is eventually re-privatized and if the taxpayers are made whole, proponents of similar interventions in the future will have a “success” story to tout.

Republicans Rediscover Their Big-Government Principles

Sen. Chuck Grassley, who can always be counted on to stick the federal government’s nose where it doesn’t belong, is criticizing Attorney General Eric Holder’s teeny-tiny steps toward a less oppressive enforcement of drug prohibition. Holder said on Wednesday “that federal agents will target marijuana distributors only when they violate both federal and state law. This is a departure from policy under the Bush administration, which targeted dispensaries under federal law even if they complied with the state’s law allowing sales of medical marijuana.”

Grassley says that marijuana is a “gateway” drug to the use of harder drugs and that Holder “is not doing health care reform any good.”

As Tim Lynch and I wrote in the Cato Handbook for Policymakers:

President Bush … has spoken of the importance of the constitutional principle of federalism. Shortly after his inauguration, Bush said, “I’m going to make respect for federalism a priority in this administration.” Unfortunately, the president’s actions have not matched his words. Federal police agents and prosecutors continue to raid medical marijuana clubs in California and Arizona.

And as Justice Clarence Thomas wrote in dissenting from the Supreme Court’s decision to uphold the power of the federal government to regulate medical marijuana:

If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything — and the Federal Government is no longer one of limited and enumerated powers.

That’s the principle that Chuck Grassley defends. Republicans claim to be the small-government party — and President Obama’s policies on taxes, spending, and regulation certainly justify a view that the GOP is, if not a small-government party, at least the smaller-government party — but they forget those principles when it comes to imposing their social values through federal force.