So reads the Washington Examiner's editorial today about how Obama effectively gave ownership of Chrysler to the United Auto Workers Union (which spent millions electing Obama), rather than taxpayers (who have spent billions to bail out Chrysler) or the institutions that lent money to Chrysler based on the legal right and expectation that they would receive its assets before the UAW union would. Veteran political commentator Michael Barone also calls it "gangster government." The UAW will also retain "lucrative" pension and health benefits, courtesy of the taxpayer.
The liberal USA Today put it more gently, but it, too, criticized the Obama Administration. Obama demonized the institutional creditors, like hedge funds, that helped Chrysler when it needed funds, and then were given the shaft in his sweetheart deal benefiting the UAW. He branded them as "speculators" when they objected to it, and then arranged a collusive sale of the company in all but name (giving up all its valuable assets) to circumvent their legal rights (a sale rubberstamped by a liberal bankruptcy judge). As a result of Obama's attacks, these creditors have received death threats. Administration officials also threatened to smear the creditors in the press (which might violate the First Amendment).
But as USA Today notes, "those creditors have every right to balk. By doing so they are not only defending their own interests, they are standing up for the principles vital to functioning credit markets. Secured lenders get first dibs at recovering their losses if a company cannot meet its obligations. They will be less willing to lend if they fear they'll be forced to surrender their position."
While Chrysler's lenders have lost almost all of their assets, the union has given up little. Indeed, USA Today notes, the UAW has "continued to press for retiree health benefits more generous than those available to taxpayers funding the bailout." (Moderate Democrat Mickey Kaus describes UAW pension and health benefits under the deal as continuing to be "lucrative").
As reporter and columnist Tim Carney notes, car czar (and Democratic fundraiser) Steven
"Rattner and Obama have decided that the United Auto Workers union should get 55 percent of Chrysler. At the same time, they’ve attacked many of Chrysler’s secured creditors — who, in a regular, nonpoliticized bankruptcy, would be repaid in full — for resisting this deal. In a federal complaint, these administration targets alleged: 'The government exerted extreme pressure to coerce all of [Chrysler’s] constituencies into accepting a deal which is being done largely for the benefit of unsecured creditors at the expense of senior creditors.'
For the foreseeable future, Chrysler will be on the federal dole, both directly and indirectly. The Obama-Rattner plan puts UAW in charge of Chrysler, which is good news for the Democratic Party.
UAW’s political action committee spent $13.1 million last election cycle, a slow year for the union’s political arm. Of the PAC’s $2.3 million in direct contributions to candidates and candidate PACs, more than 99 percent went to Democrats. Of 42 Senate candidates to get UAW money, only one was Republican, and that was Arlen Specter.
The union’s PAC also reported $4.5 million in independent expenditures supporting Obama, plus an additional $423,000 opposing John McCain.
So, here’s the arrangement: You pay your taxes, the Obama administration funnels some of the money to Chrysler, whose profits enrich the UAW, which in turn funds Obama’s re-election.
Predictability, precedent and the rule of law have been replaced with the fiat of politicians. Chrysler could become a pass-through entity from taxpayers to the Democratic Party. And in charge of it all is a Democratic fundraiser. Boss Tweed would be proud."