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Posted at 9:20 AM ET, 01/24/2011

Obama's State of the Union address -- and crony capitalism

By Jennifer Rubin

President Obama is warming up for his State of the Union address, sounding the theme of "competitiveness." It sounds positive -- don't we all want to be competitive? But upon closer analysis, this is the worst of crony capitalism.

Take, for example, his new BFF: GE's Jeffrey Immelt. Obama is showing him off to demonstrate his new business friendly outlook, but Immelt's appointment as an Obama advisor should serve as a warning to those concerned about the noxious collaboration of big business and big government. Scott Johnson of Powerline writes a must-read post on the subject:

Before the GM and Chrysler bailouts, GE chief executive officer Jeffrey Immelt saw the money to be minted in environmentalism. GE would hold itself out as an environmental leader under the rubric of Ecoimagination. Then it would join up with big government, promote the global warming hoax and cash in on it through the regulatory regime of cap-and-tax. Ecoimagination is the public relations campaign that in part represents GE's strategic partnership with big government. See, for example, the friendly 2005 Forbes article "GE turns green."

GE got a taste of the good life when it got in on the bank bailout. As the Washington Post reported in a major article in mid-2009, GE had quietly become the biggest beneficiary of one of the government's key bank bailout programs. At the same time GE also avoided many of the restrictions faced by the big banks.

The Post noted that GE did not initially qualify for the Temporary Liquidity Guarantee Program, under which the government guaranteed debt sold by banks: "But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE."

Likewise, Fred Barnes examines the difference between a pro-growth agenda and crony capitalism:

Immelt is a classic example of a rent-seeking CEO who may know what's good for his own company but not what produces economic growth and private sector job creation. He supported Obama on the economic stimulus, Obamacare, and cap and trade - policies either unlikely to stir growth and jobs or likely to impede faster growth and hiring....

Immelt's support for cap-and-trade was pure rent-seeking. The measure was certain to drive up energy costs and weaken the economy, but GE was expected to benefit enormously. The cap-and-trade bill passed the House, but died in the Senate in 2009. However, the Environmental Protection Agency may, on its own, act to curb greenhouse gases, as cap-and-trade would have.

But, of course, Immelt is a symbol of, not the underlying flaw in, Obama's economic approach.

In the State of the Union address, be prepared to hear lots of talk about "green jobs" (i.e. corporate subsidies), more spending, and an array of policies that don't spur growth as much as they bind business to the Obama agenda. The Bill Daley-Obama-Immelt vision isn't one that promotes competition, lowers employers' costs, reduces regulatory burdens and the like. In fact, Obama is opposed to things that really would aid competitiveness -- reducing the cost of capital and labor, repealing oppressive mandates (including ObamaCare), and doing away with costly goodies for organized labor (e.g. Davis-Bacon "prevailing wage" rules).

In his response to the State of the Union address, Rep. Paul Ryan (R-Wisc.) has an opportunity to explain the difference between the Republican vision (pro-growth and pro-free markets) and the Obama vision (pro-cronyism). It is a huge mistake for Obama, who has lost independent voters and failed to offer effective pro-jobs policies, to follow a decidedly anti-populist course. Independents, and, indeed, most Americans, share a healthy skepticism about "bigness" -- big insurance, big government, big labor and big business. Republicans would do well to align themselves with "smallness" -- small business, the ordinary worker, and the next generation of Americans who will face diminished opportunities if we don't undergo a serious course correction.

By Jennifer Rubin  | January 24, 2011; 9:20 AM ET
Categories:  economy  
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Next: Obama's State of the Union address -- what about foreign policy?

Comments

Big business, big labor. They are flip sides of the same coin. Both are anathema to small government conservatism.

Posted by: gord2 | January 24, 2011 9:50 AM | Report abuse

Republicans would do well to align themselves with "smallness" -- small business, the ordinary worker
* * * * * * * * *
This post is just dripping with irony and hypocrasy. Rubin's sage advice here has been the Republican mantra for years. Pretend to stand for the little guy, small business, working joe, etc. to get elected - then climb in bed with the big money interests and never look back. The GOP is big business. Anyone telling you differently is lying or dumb.

Posted by: rgray | January 24, 2011 9:55 AM | Report abuse

It's amazing how blind some people can be to as the Bible puts it:

"Thou hypocrite, first cast out the beam out of thine own eye; and then shalt thou see clearly to cast out the mote out of thy brother's eye."

Crony capitalism is the American way. It knows no party.

Do you think it was an accident that the CEO of Goldman Sachs became the Secretary of Treasury just before the you know what hit the fan?

While talking, correctly I might add, about Immelt working behind the scenes for his company, do you realize the deal Goldman got, even BEFORE GE?

Goldman should have gone out of the business. Legally, they could not borrow from the Fed. They were specifically redisignated as a bank under the law in order to receive bailout funds, without any obligation to otherwise act as a bank or to comply with general banking regulations. Then bailout money was given to AIG, again with no legal basis, to save their debt obligations to Goldman, which were repaid incredibly 100 cents on the dolar with Fed money.

Stick to foreign policy Jennifer, you know nothing about business!


Posted by: johnmarshall5446 | January 24, 2011 10:26 AM | Report abuse

And the Republicans need to push back against the crony socialism of AARP, SEIU, etc. who lobbied for Obamacare and then get waivers from its mandates.

Posted by: vausa22923 | January 24, 2011 11:39 AM | Report abuse

re jm5446:

Let me get this straight. It's just wrong-headed for Jennifer to note and object to rampant crony capitalism in the Obama administration because one can identify possible examples that happened in previous administrations. And this is somehow a "beam" in Jennifer's eye?

I guess it's ok, then, for me to rob my neighbor and rape his daughter. There are plenty of prior examples of robbery and rape. Only a hypocrite could possibly object.

Posted by: meta-materialist | January 24, 2011 12:23 PM | Report abuse

Scott Johnson and Fred Barnes are so reliably objective, kudos on including them.

Posted by: danw1 | January 24, 2011 1:40 PM | Report abuse

meta:

Not "possible", but documented history.

Do you know where the term "shoddy" comes from? It refers to a very low-grade of wool that was sold to the government by cronies of Simon Cameron when he was Secretary of War under Lincoln, which then fell apart on the back of the soldiers when made into uniforms. I could go back farther and give Dem examples too but why bother?

As I pointed out in my post, both sides engage in it. It's the American way. You would prefer to charge Obama as if he had done something virginal, because that's your side of the coin.

Your rape example is simply too stupid to comment on.

Posted by: johnmarshall5446 | January 24, 2011 3:31 PM | Report abuse

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