Obama's State of the Union address -- and crony capitalism
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.
| January 24, 2011; 9:20 AM ET
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