The Obama campaign is trying to hang so-called “vulture” capitalism around Mitt Romney’s neck, but as two excellent opinion pieces explain, it’s the administration’s crony capitalism that’s the really disturbing story.
The first piece, written by the Wall Street Journal’s Kim Strassel, explains the difference:
Like Mr. Romney, Mr. Obama has presided over bankruptcies, layoffs, lost pensions, run-ups in debt. Yet unlike Mr. Romney, Mr. Obama’s C-suite required billions in taxpayer dollars and subsidies, as well as mandates, regulations, union payoffs and moral hazard.
Strassel singles out the Solyndra debacle and the administration’s bailout of the unions General Motors. She notes that the alternative to profit-driven free enterprise, which the president is critical of, “is an Obama capitalism that is driven by political favoritism, government subsidies, mandates, and billions in taxpayer underwriting.”
In the second piece, Washington Post columnist Marc Thiessen says that “if Romney’s record in private equity is fair game, then so is Obama’s record in public equity—and that record is not pretty.” Thiessen lists numerous examples of companies that the administration gambled on with taxpayer money and lost. But what’s really disturbing is the administration’s cronyism:
Amazingly, Obama has declared that all the projects received funding “based solely on their merits.” But as Hoover Institution scholar Peter Schweizer reported in his book, “Throw Them All Out,” fully 71 percent of the Obama Energy Department’s grants and loans went to “individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” Collectively, these Obama cronies raised $457,834 for his campaign, and they were in turn approved for grants or loans of nearly $11.35 billion. Obama said this week it’s not the president’s job “to make a lot of money for investors.” Well, he sure seems to have made a lot of (taxpayer) money for investors in his political machine.
Lest any readers think that I’m shilling for Mitt Romney, I have provided comments to journalists that were critical of Romney’s Bain Capital for seeking government subsidies (for an example, see here). And if Romney has a specific plan to eliminate the Department of Energy’s subsidy programs, I’m not aware of it. That points to a more fundamental problem: so long as the federal government can stick its nose into the marketplace, cronyism is inevitable. Indeed, cronyism has been a persistent problem under both Democratic and Republican presidencies. For example, a Cato essay on scandals at the Department of Housing & Urban Development details the rampant cronyism at HUD during the Reagan administration:
Using congressional testimony, HUD documents, and interviews, the New York Times compiled a lengthy list of those benefiting from their political connections to HUD in the 1980s. Some earned substantial consulting fees for persuading [HUD Secretary Samuel] Pierce and his top aides to approve federal subsidies, while others used their connections to secure HUD subsidies for their own projects…
In 1990, a report adopted unanimously by the House Government Operations Committee concluded, “At best, Secretary Pierce was less than honest and misled the subcommittee about his involvement in abuses and favoritism in HUD funding decisions. At worst, Secretary Pierce knowingly lied and committed perjury during his testimony.” An independent counsel investigation into HUD activities under Pierce’s watch was instituted in 1990 and wrapped up in 1996. Pierce himself was not indicted based on his agreement to admit that “he created an atmosphere at HUD that allowed influence-peddling to go on.” In all, the independent counsel investigation into HUD corruption on Pierce’s watch yielded 17 convictions, including convictions of three former HUD assistant secretaries.