Late in 2009, President Obama graded himself “solid B-plus,” and it turns out that Treasury Secretary Tim Geithner isn’t going anywhere until he’s helped get America a credit rating to match.

San Francisco Chronicle:

Treasury Secretary Timothy Geithner has told President Obama he plans to remain in his job through the fall of 2012, keeping in place Obama’s longest-serving economic adviser after the first-ever U.S. credit downgrade and renewed fears of a second recession.
[...]
Geithner told the president Friday that he would remain in his post. Hours later, he had to go to the White House to meet with Obama again and tell him the nation would likely lose its triple-A credit rating.

“Secretary Geithner has let the president know that he plans to stay on in his position at Treasury,” Treasury spokeswoman Jenni LeCompte said in a statement. “He looks forward to the important work ahead on the challenges facing our great country.”

White House press secretary Jay Carney said: “The president asked Secretary Geithner to stay on at Treasury and welcomes his decision.”

Geithner was asked why he doesn’t quit and get a job elsewhere, and he replied, “In this economy?” Just kidding. The real reason is that he’s the only guy who remembers the password to the Turbo QE3 software.

Andrew Malcolm:

The master of finance who has so successfully assisted President Obama in boosting the national debt by more than $3 trillion, driving unemployment back north of 9% by spending only $787 billion in stimulus funds, corroding consumer confidence and presiding over the first federal credit downgrading in history has agreed to stick around to continue his impressive work for this Democratic administration.

I thought maybe the president would let Geithner go in an attempt to buy himself a little time when it comes to “turning around” the economy, but in hindsight doing so would imply Treasury, and ergo the administration, was at least partly at fault for the S&P flap, which would extinguish the Dems’ “Tea Party downgrade” fire. Geithner might not have been allowed to leave even if he wanted to.

**Written by Doug Powers

Twitter @ThePowersThatBe

Turbo Tax Tim is reportedly thinking about abandoning ship:

Treasury Secretary Timothy F. Geithner has signaled to White House officials that he’s considering leaving the administration after President Barack Obama reaches an agreement with Congress to raise the national debt limit, according to three people familiar with the matter.

Geithner hasn’t made a final decision and won’t do so until the debt ceiling issue has been resolved, according to one of the people. All spoke on condition of anonymity to talk about private discussions.
[...]
An exit by Geithner would complete the turnover in Obama’s original economic team, with Council of Economic Advisers Chairman Austan Goolsbee scheduled to leave in early August to return to the University of Chicago.
[...]
In addition to Goolsbee, who announced his decision to return to the University of Chicago earlier this month, three other top Obama economic advisers already have departed.

Anybody who suggested raising taxes on small business so the bloated government doesn’t have to shrink in size can’t get out the door fast enough.

No word yet on where Geithner might end up, but some of Obama’s economic team have instinctively returned to the university scene, which is the only place where their theories actually work.

**Written by Doug Powers

Twitter @ThePowersThatBeremember being

If President Obama is serious about tax increases (sorry, I meant to say “spending reductions in the tax code”) and increasing overall tax revenue, he should start by first calling a cabinet meeting and ordering everybody in the room to pony up what they owe.

From the New York Post by way of JWF:

US Attorney General Eric Holder and his brother failed to pay the property taxes on their childhood home in Queens, which they inherited last August after their mother died, The Post has learned.

And because their ailing mom, Miriam, was already behind on two quarterly tax bills when she succumbed to illness on Aug. 13, the charges went unpaid for more than a year — growing to $4,146.

It wasn’t until The Post confronted Holder last week about the delinquency that he and younger brother William Holder finally paid up Friday, including $73.14 in interest.

There are plenty of ways to lead in Washington, but “by example” is usually the least desirable option. But It’s possible Holder was completely unaware, although you might expect a US Attorney General to at least be inquisitive about the tax obligations in something he inherited a while ago, even considering the unfortunate circumstances.

Is “the New York Post didn’t inform me” (or in some cases Turbo Tax or the USA Today) now an acceptable excuse for failing to pay taxes on time?

In language that might make Barbara Boxer care about things like this a little more, by not paying their fair share, Obama’s tax-lax cabinet members along with some of ma’am’s delinquent liberal colleagues in Congress could be doing untold long-term damage to Planned Parenthood.

**Written by Doug Powers

Twitter @ThePowersThatBe

As the fictional Cleveland Indians announcer Harry Doyle from the movie Major League might say, Team Obama’s budget estimates, according to the Congressional Budget Office, are “juuust a bit outside.”

From The Hill:

The Congressional Budget Office on Friday released its analysis of President Obama’s 2012 budget proposal and found it does less to rein in deficits and the debt than the administration had estimated.

CBO estimates Obama’s plan would produce 10 years of deficits totaling $9.5 trillion. By 2021, it would increase the debt held by the public to 87 percent of gross domestic product.

The administration, using different methods, estimated budget deficits would total $7.2 trillion over the next 10 years under the 2012 budget. It forecast that total debt in 2021 would be 77 percent of GDP.

Gee, I wonder which analysis is more accurate.

The spin from the Obama administration on the CBO saying their numbers are at least a couple trillion off so far isn’t to deny it, but rather say, “whatever… the point is that it’s a lot either way”:

White House budget director Jacob Lew said in a blog post that “CBO confirms what we already know: current deficits are unacceptably high and if we stay on our current course and do nothing, the fiscal situation will hurt our recovery and hamstring future growth.”

None of this should come as a surprise, since we’re talking about a president who once said he didn’t always do his math homework as a child and is on record as stating that accounting is an inexact science (try using that one on your IRS auditor).

Don’t worry about a thing though, because the Treasury Department and Obama’s budget advisors are hard at work straightening all out as we speak:

**Written by Doug Powers

Twitter @ThePowersThatBe

On many an occasion I’ve surmised that there simply must be a comedian behind some of the financial decisions the Obama administration has made, but I honestly didn’t believe that to be the case literally — until now:

In the midst of debates on financial regulation and China’s currency in April, Treasury Secretary Timothy F. Geithner sat down to discuss the U.S. economy — with comedian Jon Stewart.

Geithner and Stewart, host of Comedy Central’s “The Daily Show,” held an off-the-record meeting at Stewart’s office in New York on April 2, according to Geithner’s appointments calendar, updated through August on Treasury’s website.

The two were privately planning the “Rally to Restore Insolvency” no doubt. A glance at Geithner’s schedule, and sure enough, an hour and a half “off the record” meeting with Jon Stewart:

Stewart must have given Geithner a few killer jokes he had to later share with Pelosi, Reid, Frank, Schumer, et al.

This can’t be a coincidence, because especially since that meeting, the management of the Treasury has been nothing short of hilarious.

Word of warning to Jon Stewart: There’s no better way to invite an IRS audit than by spending 90 minutes “off the record” with Tim Geithner less than two weeks before tax returns are due.

Sister Toldjah brings it home:

Well, hey, what do you expect from an administration who is headed by a man who consulted with George Clooney about foreign policy as a candidate for President? Not only that, but this is the same administration that looked to director James Cameron for solutions to the oil spill crisis, and which takes to fluffy daytime and late night TV talk shows for a little “reputation rehab.” It’s all just one big happy “patriotic” family.

Because every celebrity administration has to have celebrity advisors. Right?

(h/t Instapundit)

**Written by Doug Powers

Twitter @ThePowersThatBe

There’s a reason this was the best selling software in Washington DC last year:

In case you’ve ever wondered why so many on Capitol Hill don’t care about easing the tax burden, it’s because they just don’t pay them:

Capitol Hill employees owed $9.3 million in overdue taxes at the end of last year, a sliver of the $1 billion owed by federal workers nationwide but one with potential political ramifications for members of Congress.

The debt among Hill employees has risen at a faster rate than the overall tax debt on the government’s books, according to Internal Revenue Service data. It comes at a time when some Republican members are pushing for the firings of government workers who owe the IRS and President Obama has urged a crackdown on delinquent government contractors.

The IRS information does not identify delinquent taxpayers by name, party affiliation or job title and does not indicate whether members of Congress are among the scofflaws. It shows that 638 employees, or about 4 percent, of the 18,000 Hill workers owe money.

The average unpaid tax bill is $12,787 among the Senate’s delinquent taxpayers and $15,498 among those working in the House.

Reminds me of that joke commercial: “I just saved a ton of money by switching to no car insurance!”

Capitol Hill employees are now using the same 1040 SLEE-Z form that Obama cabinet officials and others used:

(h/t Top of the Ticket)

**Written by Doug Powers

Twitter @ThePowersThatBe

As they say in the military: BOHICA.

On ABC’s This Week today, tax cheat Treasury Secretary Tim Geithner championed the expiration of the Bush tax cuts and pooh-poohed the economic impact of tax hikes on the highest earners in the country. It’s “responsible” to punish the wealthy, he argued.

Because after spending America into oblivion, Team Obama now wants to show the world that we are “willing as a country now to start to make some progress” on deficit reduction.

On NBC’s Meet The Press, Geithner crusaded for raising the capital gains tax rate.

Then, to show his commitment to fiscal responsibility, he said the administration is going to kick the can again on behemoth fiscal black holes Fannie Mae and Freddie Mac:

Speaking on NBC News’ “Meet the Press,” Geithner says he supports allowing the top capital gains tax rate to revert to 20 percent. It’s 15 percent now.

He also addressed the future of Fannie Mae and Freddie Mac, the mortgage buyers whose bailout has cost taxpayers $145 billion so far. The financial overhaul didn’t address their future.

The Obama administration has said it wants to wait until next year to determine their future.

“I think we’re not going to preserve Fannie and Freddie in anything like the current form,” Geithner said on “Meet the Press.” “We’re going to have to bring fundamental change to that market.”

Investor’s Business Daily makes clear that it is not just the “rich” who will pay for Obama redistributionism:

Through the end of this year, the federal estate tax rate is zero — thanks to the package of broad-based tax cuts that President Bush pushed through to get the economy going earlier in the decade.

But as of midnight Dec. 31, the death tax returns — at a rate of 55% on estates of $1 million or more. The effect this will have on hospital life-support systems is already a matter of conjecture.

Resurrection of the death tax, however, isn’t the only tax problem that will be ushered in Jan. 1. Many other cuts from the Bush administration are set to disappear and a new set of taxes will materialize. And it’s not just the rich who will pay.

The lowest bracket for the personal income tax, for instance, moves up 50% — to 15% from 10%. The next lowest bracket — 25% — will rise to 28%, and the old 28% bracket will be 31%. At the higher end, the 33% bracket is pushed to 36% and the 35% bracket becomes 39.6%.

But the damage doesn’t stop there.

The marriage penalty also makes a comeback, and the capital gains tax will jump 33% — to 20% from 15%. The tax on dividends will go all the way from 15% to 39.6% — a 164% increase.

Both the cap-gains and dividend taxes will go up further in 2013 as the health care reform adds a 3.8% Medicare levy for individuals making more than $200,000 a year and joint filers making more than $250,000. Other tax hikes include: halving the child tax credit to $500 from $1,000 and fixing the standard deduction for couples at the same level as it is for single filers.

Tip of the iceberg. Be sure to click through for the rest of the tax tsunami to come.

***

Via GOP leader John Boehner’s office:

Treasury Secretary Timothy Geithner and Speaker Nancy Pelosi (D-CA) delivered a 1-2 punch to America’s small businesses today by signaling that their taxes will soon go up. As The Wall Street Journal notes, these comments come “as a number of Democrats, including North Dakota Sen. Kent Conrad and Nebraska Sen. Ben Nelson, have begun echoing calls by Republicans and some economists to extend the tax cuts for all earners… Many economists believe the recovery is too fragile to risk raising taxes anytime soon and that doing so could stall economic growth.”

Both the National Federation of Independent Businesses (NFIB) and the National Association of Manufacturers (NAM) have warned against such a tax hike. NFIB tax counsel Bill Rys said, “The businesses that are most likely to be hit by this tax increase employ about a quarter of the U.S. work force.” And, according to NAM’s data, 196,000 manufacturers – a full 68% of all American manufacturers – file taxes as individuals; these taxpayers had an average taxable of income well above $250,000, suggesting a large negative impact on manufacturers as well.

At his weekly press briefing, House Republican Leader John Boehner (R-OH) said that Americans are still asking ‘where are the jobs?’:

“For 18 months, we’ve had a government that believes that change is only possible by passing 2,000-page, trillion-dollar monstrosities, and one after another. Americans are still asking the question ‘where are the jobs?’ and all President Obama has to offer them is more stimulus spending, more debt, higher taxes and more job-killing regulations.

“The financial regulatory bill that the president signed this week is just another big-government power grab that will make it even harder to create jobs. It provides for permanent bailouts to President Obama’s Wall Street allies at the expense of small businesses and community banks across our country. Frankly, it’s just more of the same.”

The Dems think class warfare will be a winner at the polls. No, really.

More “show the world” rhetoric:

In recent days, fiscal conservatives like Senators Kent Conrad of North Dakota and Evan Bayh of Indiana expressed support for extending the tax cuts at all income levels, at least temporarily.

Senior administration officials said there was no interest in such a plan at the White House, which intends to have Treasury Secretary Timothy F. Geithner lead an effort to make the case that continuing tax breaks for the rich will not help lift the economy, but eliminating them will help reduce the deficit.

“We do not buy into the theory that because the economy is still recovering, extending tax cuts for the highest earners is a necessary or effective policy response,” said Gene Sperling, counselor to Mr. Geithner.

“While we are supporting measures like small-business lending and tax cuts to spark growth,” Mr. Sperling added, “it is also important to show the world that we are following through on our commitment to long-term fiscal discipline.”

***

Video flashback – The Taxman Cometh:

My tax advice: Remember in November.

My column today dives into the TARP special inspector general’s audit of the “Factors Affecting the Decisions of General Motors and Chrysler to Reduce Their Dealership Networks.” You can find it at the TARP OIG’s website here. I encourage you all to read through the entire 45-page report. The superficial MSM coverage of the audit, released late Sunday, didn’t do justice to the independent watchdog’s damning indictment of the arrogant bureaucrats in charge of nationalizing the U.S. auto industry — or the devastating consequences of politically-driven “shared sacrifice” with Obama, his SEIU cronies, and campaign lackeys behind the wheel.

Obama had the chutzpah to drag an unemployed car dealership employee laid off by Honda up on stage Monday to attack Republicans over government unemployment benefits. I suggest Republicans match him with a stage full of unemployed Chrysler and GM workers who lost their dealership jobs as a direct result of the capricious mandates of Obama’s non-expert auto experts.

A few trips back down memory lane before we get to the column: I’ve been hounding the Hayekian fatal conceit of Treasury’s TARP peddlers (under both Democrat and Republican administrations) from day one. And I’ve been hounding auto bailout supporters (both Democrat and Republican) since day one. Only the willfully blind and the woefully dumb couldn’t see what was coming.

Chicken Littles on Capitol Hill, I’m talking to you.

Update: William Tate notes the IG’s mention of the race factor (as well as gender) in protecting some dealerships.

***

Dealergate: Destroying Jobs in the Name of “Shared Sacrifice”
by Michelle Malkin
Creators Syndicate
Copyright 2010

Everything you need to know about the nightmare of government-controlled businesses can be found in a damning new inspector general’s report on Dealergate. The independent review of how and why the Obama administration forced Chrysler and General Motors to oversee mass closures of car dealerships across the country reveals grisly incompetence, fatal bureaucratic hubris and Big Labor cronyism. No wonder you won’t hear much about the report’s in-depth details in the so-called mainstream media.

Under the guise of “saving” the American auto industry through a bipartisan, taxpayer-funded bailout now topping $80 billion, President Obama’s know-nothing bureaucrats pushed the car companies to eliminate thousands of jobs — with unjustified haste using dubious economic models.

Obama ordered the bailout recipients to “prove” their long-term viability by submitting restructuring plans. But White House and Treasury Department “experts” rejected the auto manufacturers’ proposals, citing the too-slow pace of their plans to reduce their dealership networks over a period of five years. Once the auto companies modified those plans to meet government-backed timelines, the money flowed.

But Neil Barofsky, the federal watchdog overseeing the bank-auto-insurance-all-purpose bailout fund, found that the White House auto industry task force and the Treasury Department “Auto Team” had no basis for ordering the expedited car dealership closure schedules. They relied on a single consulting firm’s internal report recommending that the U.S. companies adopt foreign auto industry models to increase profits — a recommendation hotly disputed by auto experts who questioned whether foreign practices could be applied to domestic American dealership networks.

Team Obama’s government auto mechanics also ignored the economic impact of rushing those closures. According to Barofsky, they discounted counter-testimony from industry officials that “closing dealerships in an environment already disrupted by the recession could result in an even greater crisis in sales.”

The inspector general also noted that “it is clear that tens of thousands of dealership jobs were immediately put in jeopardy as a result of the terminations by GM and Chrysler.” After extensive investigation, the watchdog concluded that “the acceleration of dealership closings was not done with any explicit cost savings to the manufacturers in mind.” Only after Capitol Hill critics — both Republican and Democrat — started questioning the Dealergate decisions did Obama’s auto “experts” come up with market studies and estimated job loss data to assess the impact of their reckless, arbitrary orders.

In sum, the inspector general found: “(A)t a time when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs, Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all based on a theory and without sufficient consideration of the decisions’ broader economic impact.”

This is no surprise, of course, considering the amount of actual auto business expertise among Obama’s auto czars and key staff. That is: zero. Obama’s first auto czar, Steve Rattner, ran a private equity firm in New York before resigning his position amid a financial ethics cloud.

Rattner’s chief auto expert adviser, Brian Deese, is a 30-something former Hillary Clinton/Barack Obama campaign aide and law school grad with no business experience, who openly boasted that he “never set foot in an automotive assembly plant.”

And Rattner’s auto czar successor, Ron Bloom, is a far-left union lawyer who cut his teeth under Big Labor boss John Sweeney, has ideological ties to the corporate-hating Labor Zionist movement; and opined that “the blather about free trade, free-markets and the joys of competition is nothing but pabulum for the suckers.”

In search of the rationale for Team Obama’s bizarre, job-killing exercise of power over thousands of small car dealerships, the TARP inspector general may have stumbled onto the truth from Bloom. On page 33 of its report, Barofsky writes that “no one from Treasury, the manufacturers or from anywhere else indicated that implementing a smaller or more gradual dealership termination plan would have resulted in the cataclysmic scenario spelled out in Treasury’s response; indeed, when asked explicitly whether the Auto Team could have left the dealerships out of the restructurings, Mr. Bloom, the current head of the Auto Team, confirmed that the Auto Team ‘could have left any one component (of the restructuring plan) alone,’ but that doing so would have been inconsistent with the President’s mandate for ‘shared sacrifice.’”

“Social justice” chickens coming home to roost.

***
Yesterday: Why does Ken Salazar hate our economy?

***

Photoshop credit: George at Elegant Memories

Previous Dealergate coverage:

May 2009 – Dealergate and the MSM

May 2009 – Crunching the numbers: Dealergate & cronyism continued

June 2009 – Dealergate continued: More on Chrysler and Clinton cronyism

July 2009 – Democrats reverse Obama on auto dealerships

I agree with Tom Brown’s bottom line at Seeking Alpha:

“…the reason the auto companies were in trouble in the first place was that they’d been run into the ground by managements that had agreed to lavish their unionized workforces with uneconomic wage and benefit packages. The companies deserved to fail. (And remember that Ford, to its everlasting credit, has managed to survive without a federal lifeline.) Instead, GM and Chrysler are doomed to limp along as wards of the state, and will steadily hemorrhage jobs along the way. They’ll almost certainly end up as American versions of British-Leyland.If President Obama had really been interested in sustaining a prosperous auto industry that could create and sustain thousands of jobs, he would have allowed the companies to go through the normal bankruptcy process so that they could emerge with rational competitive labor-cost structures.”

In the age of Obama, “reform” is all about the boodle. So it was with the stimulus. And the massive national service expansion. And the health care bill. And so it is with the financial “reform” bill set for a Senate vote at around 5:30pm Eastern today. In front of the cameras, the Democrats will lambaste the greedy, Wall Street money. Behind the scenes, they’re pocketing Wall Street campaign donations and working out deals.

First, the latest from Capitol Hill:

Senators will face a crucial test vote Monday that could clear the way for debate on far-reaching legislation to overhaul the nation’s financial regulatory system — or end in a partisan standoff — as Wall Street once again takes center stage on Capitol Hill. Elsewhere, lawmakers will be preparing to condemn the alleged sins of Wall Street’s past and also wrestling over how to prevent such excesses in the future. Top executives from Goldman Sachs, beset by charges that the bank misled its clients by selling them mortgage investments secretly designed to fail, will face questions Tuesday about how the firm profited from betting against the U.S. housing market. Senate Republicans said Sunday they plan to block efforts to move forward with an overhaul bill unless Democrats alter central elements of the legislation. Meanwhile, Democrats and Obama administration officials spent much of the day finalizing strict new rules to rein in the huge derivatives trade, including measures that could threaten profits at some of the biggest banks.

Look beyond the superficial characterizations of the bill. There’s a garden of carrots to soften the blow of the sticks.

National Review has a good rundown of all the favors to Wall Street embedded in the legislation, including front-door bailouts, backdoor bailouts, and Big Labor goodies.

You might have heard about the new $50 billion fund that would be used to wind down large financial firms that became insolvent. The fund would come from assessments on Wall Street banks, based on the principle that these “too big to fail” institutions should pre-fund their own bailouts. But you probably didn’t know that these assessments would count as tax-deductible business expenses, meaning that for every dollar the banks would pay into the fund, 35 cents would come out of the Treasury.

This provision is Senate Banking Committee chairman Chris Dodd’s financial-reform bill in a nutshell: a hodge-podge of new restrictions on Wall Street offset by a hearty dose of sweeteners to keep financial-industry cash flowing to Democrats. For every measure that would cut into Wall Street’s profits, another would subsidize its operations. New regulations governing derivatives would cut into the fees investment banks could charge for structuring these customized products. But the bailout authority awarded to the FDIC and the Federal Reserve would allow the banks to borrow at reduced rates, with their creditors secure in the knowledge that the government would step in if the market tanked.

Barack Obama’s Big Lie — that taxpayers are not funding this fund — is refuted by the CBO (via Morning Bell):

Before President Obama continues to go around accusing others of lacking legitimacy, he should read the official cost estimate of the financial regulation bill released by the Congressional Budget Office last Thursday. Assessing the budgetary impact of the $50 billion that “systemically important financial firms” would have to pay in assessments to pay for the bill’s “Orderly Resolution Fund,” the CBO writes:

The total amount collected from assessments is estimated to be about $58 billion through 2020. But such assessments would become an additional business expense for companies required to pay them. Those additional expenses would result in decreases in taxable income somewhere in the economy, which would produce a loss of government revenue from income and payroll taxes that would partially offset the revenue collected from the assessment itself.

In other words, these financial firms have to get that $58 billion dollars from somewhere, and that somewhere is you. Now the Obama administration may argue that they actually oppose the creation of the resolution fund. But American taxpayers should be even more frightened when they find out why the Obama administration opposes it. The New York Times reports: “The Obama administration does not support the $50 billion fund, partly out of concern that more money may be needed if one or more big financial firms ever collapse and that creating a fund could make it difficult to authorize more money.”

James Gattuso at Heritage has much more in an analysis of the 14 fatal flaws in the Dodd plan. A few choice morsels:

* Creates a protected class of “too big to fail” firms. Section 113 of the bill establishes a “Financial Stability Oversight Council,” charged with identifying firms that would “pose a threat to the financial security of the United States if they encounter “material financial distress.” These firms would be subject to enhanced regulation. However, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk. As American Enterprise Institute scholar Peter Wallison wrote, “Designating large non-bank financial companies as too big to fail will be like creating Fannies and Freddies in every area of the economy.”[1]

*Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is “in danger of default” and whose failure would have “serious adverse effects on financial stability.” This determination is subject to review in the courts only on a “substantial evidence” standard of review, meaning that the seizure must be upheld if the government produces any evidence in favor of its action. This makes reversal extremely difficult.

*Does nothing to address problems at Fannie Mae and Freddie Mac. These two government-sponsored housing giants helped fuel the housing bubble. When it popped, taxpayers—because of an implicit guarantee by the U.S. Treasury—found themselves on the hook for some $125 billion in bailout money. Not only has little of this amount been paid back, but the Treasury Department recently eliminated the cap on how much more Fannie and Freddie can receive. Yet the bill does nothing to resolve the problem or reform these government-run enterprises.

I’m reading a terrific history of Chicago corruption by James Merriner, Grafters and Goo Goos: Corruption and Reform in Chicago, 1833-2003, who writes of the ageless, interdependent relationship between Windy City politicos and “goo goos” (the derisive term for good government reformers). The derision is well-earned. In Chicago, and in Chicago-on-the-Potomac, “reform” has always entailed wealth redistribution under the guise of public service. And it has inevitably led to more corruption. A dominant constant in corruption and “reform,” Merriner concludes, is “the steady expansion of governmental intervention in the economy and everyday life. The problem, corruption in government, always has galvanized reformers to reduce the amount of corruption with stricter laws and regulations. By the now the true remedy might lie in addressing the other side of the equation: reduce the amount of government.”

Or as I put it in Culture of Corruption: As government grows, corruption flows.

Along with an ocean of boodle.

My syndicated column today shines light on all the Goldman Sachs company men in the Obama administration’s midst. The GOP wants SEC correspondence disclosed. Here’s that story. In related news, Goldman Sachs cheerleader and beneficiary Rahm Emanuel met with NYC business elite about the financial reform plan. Listen up:

Another attendee, who spoke anonymously to discuss remarks that were intended to be private, said the chief-of-staff emphasized that there was a “12-week legislative calendar” to get the administration’s main goals accomplished.

Related must-read from Conn Carroll at The Foundry: The Crony Capitalist Threat to Our Economic Freedom.

***

All the president’s Goldman Sachs men
by Michelle Malkin
Creators Syndicate
Copyright 2010

While President Obama assails the culture of greed and recklessness practiced by the men of Goldman Sachs, his administration is infested with them. The White House can no more disown Government Sachs than Da Boss-in-chief can disown Chicago politics.

Obama is headed to Wall Street on Thursday to demand “financial regulatory reform” — just as the U.S. Securities and Exchange Commission has filed civil suit against Goldman Sachs for mortgage-related fraud. Question the timing? Darn tootin’. There are no coincidences in the perpetually orchestrated Age of O. Everyone from disgraced former New York Attorney General Eliot Spitzer to analysts at the Brookings Institution and Barclays Capital to the GOP leadership and Rush Limbaugh has noted the reeking political opportunism in the air.

As the New York Post reported Tuesday, the Democratic National Committee immediately bought sponsored Internet ads on Google that direct web surfers who type in “Goldman Sachs SEC” to Obama’s fundraising site. “It’s time to hold the big banks accountable,” the money-grubbing DNC message bellows. But just like his crony capitalist predecessor George W. Bush, Obama has relied on Goldman Sachs and Wall Street power brokers to engineer massive government interventions to “rescue” failing businesses with the tax dollars of ordinary Americans.

While irony-challenged Democratic candidates like mob-linked banker Alexi Giannoulias in Illinois (who hopes to fill Obama’s old Senate seat) call on Republicans to return their fat-cat Goldman Sachs donations, the Democrats are silent on the $994,795 in Goldman Sachs campaign cash that Obama bagged. The class-warfare Dems are also mum on all the president’s Goldman Sachs men sitting in the catbird’s seat:

– Goldman Sachs partner Gary Gensler is Obama’s Commodity Futures Trading Commission head. He was confirmed despite heated congressional grilling over his role, as Reuters described it, “as a high-level Treasury official in a 2000 law that exempted the $58 trillion credit default swap market from oversight. The financial instruments have been blamed for amplifying global financial turmoil.” Gensler said he was sorry — hey, it worked for tax cheat Treasury Secretary Tim Geithner — and was quickly installed to guard the henhouse.

– Goldman Sachs kept White House Chief of Staff Rahm Emanuel on a $3,000 monthly retainer while he worked as Clinton’s chief fundraiser, as first reported by Washington Examiner columnist Tim Carney. The financial titans threw in another $50,000 to become the Clinton primary campaign’s top funder. Emanuel received nearly $80,000 in cash from Goldman Sachs during his four terms in Congress — investments that have reaped untold rewards, as Emanuel assumed a leading role championing the trillion-dollar TARP banking bailout law.

– Former Goldman Sachs lobbyist Mark Patterson serves under Geithner as his top deputy and overseer of TARP bailout — $10 billion of which went to Goldman Sachs. Left-leaning government watchdog Melanie Sloan of the Citizens for Responsibility and Ethics in Washington responded: “It makes it appear that they are saying one thing and doing another.” Paul Blumenthal of the Sunlight Foundation noted that, while at Goldman Sachs, Patterson lobbied against executive pay limits that Obama had crusaded for as senator (before, that is, his administration carved out exemptions for AIG). While Patterson agreed to recuse himself on any Goldman Sachs-related issues or related policy concerns, Blumenthal wrote, it “still creates a serious conflict for Geithner, as Treasury is being partly managed by a former Goldman lobbyist. Geithner is also placed in a tough position considering that his chief of staff is limited in the areas in which he can work (supposedly).”

– Obama’s close hometown crony, campaign finance chief and senior adviser Penny Pritzker was head of Superior Bank of Chicago, a subprime specialist that went bust in 2001, leaving more than 1,400 people stripped of their savings after bank officials falsified profit reports. Pritzker’s lawyer at O’Melveny and Myers, Tom Donilon, is now Obama’s deputy national security adviser. He earned just shy of $4 million representing her and other high-profile meltdown clients including Goldman Sachs.

– White House National Economic Council head Larry Summers reaped nearly $2.8 million in speaking fees from many of the major financial institutions and government bailout recipients he now polices, including JP Morgan Chase, Citigroup, Lehman Brothers and Goldman Sachs. A single speech to Goldman Sachs in April 2008 brought in $135,000. Summers has prior experience negotiating government-sponsored bailouts that benefit private concerns. In 1995, he spearheaded a $40 billion Mexican peso bailout that bypassed Congress. Summers personally leaned on the International Monetary Fund to provide nearly $18 billion for the package. Summers’ boss, then Secretary of the Treasury Robert Rubin, was former co-chairman of Wall Street giant Goldman Sachs — the Mexican government’s investment banking firm of choice.

Rubin continues to mentor another former employee of his with regular visits and chats — Treasury Secretary Geithner, who was head of the New York Federal Reserve, which pushed bailed-out insurance conglomerate AIG to cover up sweetheart deals for investment banks that benefited, you guessed it, Goldman Sachs.

As Obama harangues Wall Street to clean up its house, all the president’s Goldman Sachs men have their feet on the coffee table at his.

***

Update: Well, well, well. Take a look at the White House visitor logs, courtesy of McClatchy:

While Goldman Sachs’ lawyers negotiated with the Securities and Exchange Commission over potentially explosive civil fraud charges, Goldman’s chief executive visited the White House at least four times.

White House logs show that Chief Executive Lloyd Blankfein traveled to Washington for at least two events with President Barack Obama, whose 2008 presidential campaign received $994,795 in donations from Goldman’s political action committee, its employees and their relatives. He also met twice with Obama’s top economic adviser, Larry Summers.

…Goldman’s connections to the White House and the Obama administration are raising eyebrows at a time when Washington and Wall Street are dueling over how to overhaul regulation of the financial world.

…According to White House visitor logs, Blankfein was among the business leaders who attended an Obama speech on Feb. 13, 2009, and he also joined more than a dozen bank CEOs in a meeting with Obama on March 27, 2009.

Blankfein also was supposed be among the CEOs who met with Obama in December, but he and two others phoned in from New York, blaming inclement weather.

He and his wife, Laura, were listed on the logs among 438 presidential guests at the Kennedy Center Honors the previous week.

In January, I deconstructed the White House “Financial Crisis Responsibility Fee” fakery for you:

1. The bank tax will inevitably be passed on to consumers and the White House has no way of stopping them from doing the dumping.

2. The tax won’t apply to non-banks, black holes Fannie Mae and Freddie Mac, or the bailed-out auto companies.

3. This isn’t about getting “our money” back. It’s about redistributing it again under the guise of faux populism.

More to the point, this is what I call the Cover Tim Geithner’s A** Tax. Making banks the whipping boys takes the heat off Geithner for his incompetent, complicit, and transparency-subverting tenure as New York Federal Reserve chair.

Team Obama wants you to keep your eyes on its fatcat barbecue charade.

My friends at the Heritage Foundation compiled a handy graphic that underscores chicanery.

Heritage’s Mike Brownfield sums it up:

President Obama announced his bank tax during his State of the Union Address in January and claimed it would be a way to recoup money dished out to banks as part of the Troubled Asset Relief Program bailout. The truth, though, is that those banks already paid-back the bailouts, with interest; the real deadbeat offenders are Freddie Mac, Fannie Mae, Chrysler and General Motors, who have yet to repay their debt. (Take a look at the above chart to see who has repaid – and who hasn’t.)

The President’s proposal was a not-so-thinly-veiled populist proposal, intended to play to an America disgruntled with government bailouts and those institutions that won government handouts.

He better brace himself for an America that finds itself even more disgruntled when they realize they’re getting hit with the very tax that was meant to appease them.

Zero Hedge has the scoop on the secret documents and uploaded some of the data for open-source analysis:

…the critical question is: since there is not one security rated A, and in fact the median rating is a high C, and since we know that Soc Gen had parked its securities with the Fed in November 2008, just what standards does the Federal Reserve have when accepting securities in the discount window to lend against? And the implication is that Bernanke will allow any toxic crap to be eligible collateral, likely at par.

We will continue analyzing the other firms’ securities as well, and solicit reader input in ideas on how to steer this analysis.

Stay tuned.

***

Update: Bernanke sent a buck-passing letter in response to questions about the AIG backroom bank bailout payments. Dealbook posts the Bernanke document and reports:

In a letter to Representative Darrell Issa, the ranking Republican on the House Oversight and Government Reform Committee, Mr. Bernanke said he “was not directly involved in negotiations” over payments to A.I.G.’s trading partners to unwind tens of billions of dollars in credit default swaps. Instead, he said, these negotiations were handled primarily by the staff of the Federal Reserve Bank of New York. (Read Mr. Bernanke’s letter on the jump.)

Responding to questions from Mr. Issa, Mr. Bernanke said the financial conditions of A.I.G.’s counterparties “was not a factor in the decision regarding the amount paid to the counterparties or whether concessions should be sought from them.”

Mr. Bernanke also said he was not involved in discussions with the Securities and Exchange Commission last year about any disclosure issues involving A.I.G.

Hotline On Call has the whip count at 43-18:

Allies of Fed chair Ben Bernanke spent the weekend trolling for Senate support ahead of an expected reconfirmation vote this week, but Bernanke remains short of the votes he needs to win a second term, according to a Hotline OnCall tally.

Bernanke has public support from 43 senators, while 18 are publicly opposed to his reconfirmation. That leaves 39 senators uncommitted, and many have said they are concerned about Bernanke’s record during his first years in office.

The WH and Senate leaders have expressed confidence they will have the votes they need. Still, underscoring the trouble some members have with Bernanke’s renomination, even the top GOPer in the Senate, Mitch McConnell, has refused to disclose how he would vote.

What was supposed to be an easy confirmation became more difficult recently as populist anger has surged across the nation. It has even cost Bernanke a certain vote; Sen. Sherrod Brown (D-OH) voted for Bernanke when his nomination came before the Banking Committee, but Brown has said he is rethinking that vote.

Complicit? Clueless? Incompetent? Corrupt?

All of the above.

Treasury Secretary Tim Geithner went before Congress today to answer (or not answer) questions about his role in the AIG bailout while he was chairman of the New York Federal Reserve. (See my backgrounder on the backdoor bailout payments to AIG’s counterparties here.)

Working on getting video, but looks like there were several choice moments of comeuppance, via Yahoo News/AP:

Treasury Secretary Timothy Geithner on Wednesday denied he played a role in withholding information about deals that sent billions of taxpayer dollars from the bailout of American International Group Inc. to big banks. His claim drew skepticism from lawmakers.

When President Barack Obama nominated the then-New York Fed chief on November 4, 2008, “I withdrew from monetary policy decisions…and day to day management of the New York Fed,” Geithner told a congressional panel.

“Many people, including people of this committee, have a hard time believing Secretary Geithner entered into an absolute cone of silence,” said California Rep. Darrell Issa, the committee’s top Republican.

My fave moment so far from GOP Rep. John Mica of Florida, who spanks Turbo Tax Tim:

“I played no role in those decisions,” Geithner said.

He said that he remained as president of the New York Fed and oversaw a wide range of other complicated dealings during that time.

“I will take complete responsibility for decisions I played a role in shaping,” he said.

But as to the AIG matter, he said, “I was not involved in decisions about what to disclose about the individual transactions or the names of counterparties. But I have enormous trust and confidence in the integrity and judgment of those who were.”

In a sharp exchange, Rep. John Mica, R-Fla., told Geithner “Either you were in charge and did the wrong thing or you participated in the wrong thing.”

Recalling the early controversy over Geithner’s failure to pay some personal income taxes, Mica said: “You gave lame excuses then, you are giving lame excuses now. Why shouldn’t we ask for your resignation as secretary of the Treasury?”

“You have a right to your opinion,” Geithner said.

Want to know what the stock market’s opinion is? Forbes: “Stocks Drift During Geithner Grilling; from House panel over NY Fed’s AIG bailout on his watch.”

***

Here’s the vid of the Mica-Geithner exchange, thanks to C-SPAN:

Issa’s op-ed in the Examiner: “Complicity or incompetence? The trouble with Tim Geithner and the New York Fed.”

It’s the blind leading the deaf — and all playing dumb.

***

Commenter Pasadena Phil adds:

It also came out that claims by Goldman Sachs’ Blankfein that his bank had hedged their exposure to AIG and so were not “bailed out” was not true.

Neil Barofsky,TARP Special Inspector General for the Treausure reported that the French bank regulators were willing to take less than 100% pay back for their stakes.

In other words, the NY Fed secrecy over the “who, what, when and how much” regarding the AIG payout to Goldman Sachs payout smells much worse today. There were clear opportunities to save many billions of dollars of taxpayer money here but Geithner/Paulson chose not to take them.

It really does look like a cover-up which is the main issue being addressed by today’s proceedings.

As part of the pre-State of the Union publicity blitz, the Obama White House had its cabinet members sit down for quickie videos to tell you how they all “got to work” and “took bold steps to rescue the country from a potential second Great Depression; to rebuild the economy for the long-term — so businesses can thrive, the middle class can grow and all our families can be more secure; and to restore America’s leadership in the world, as we wrestle with the global challenges of the 21st Century.”

I’m including a few of my favorites from corruptocrat Eric Holder, Janet Clownitano, and Turbo Tax Tim Geithner — all especially striking not for what they tell you, but for what they omit about their security-undermining, transparency-sabotaging tenures. It’s comedy gold. Well, bitter comedy gold.

You can watch all the videos here by scrolling your mouse over any individual in the group photo and clicking for the pop-up video (big hat tip: Mark S.).

Sadly, there is “no video available” for Rahm Emanuel. But I can tell you what message his video would convey if he had been allowed to make one: “$%^&!! F**king $&^@^!!!”

Other White House video series ideas I’d like to see implemented:

*Obama Czars: Our Year in Review
*Messages From Under the Bus: Withdrawn Nominees Speak!
*Michelle and Friends: How the First Lady and Her East Wing Cronies Spent Your Money

It’s not quite the Mother of All Distractions, but it’s up there. Maybe the First Cousin of All Distractions.

The White House unveiled its ballyhooed $90 billion plan to punish banks with a “Financial Crisis Responsibility Fee” this afternoon. It’s faker than the fake garden vegetables the First Lady served up on Iron Chef.

How does this fakery grow?

1. The bank tax will inevitably be passed on to consumers and the White House has no way of stopping them from doing the dumping.

2. The tax won’t apply to non-banks, black holes Fannie Mae and Freddie Mac, or the bailed-out auto companies.

3. This isn’t about getting “our money” back. It’s about redistributing it again under the guise of faux populism.

More to the point, this is what I call the Cover Tim Geithner’s A** Tax. Making banks the whipping boys takes the heat off Geithner for his incompetent, complicit, and transparency-subverting tenure as New York Federal Reserve chair.

Team Obama wants you to keep your eyes on its fatcat barbecue charade.

But don’t be distracted. Geithner will be on the hot seat next week in Congress. And that’s where the real scrutiny of “financial crisis responsibility” lies.

The WSJ weighs in on the secret backdoor bank bailout deals approved by the NYFed under Geithner:

Given the sweet deal and the fact that Mr. Geithner sought to keep secret the identities of the beneficiaries, logic would suggest that the AIG intervention was intended as a bailout for these counterparties. Supporting this conclusion is the fact that Mr. Geithner has sold his plan to regulate derivatives as a way to prevent such problems in the future. Yet when asked directly by the inspector general for the Troubled Asset Relief Program why he opted to buy out the counterparties at par, Mr. Geithner said “the financial condition of the counterparties was not a relevant factor.”

Then last November, he suggested that the systemic risk was in AIG’s traditional insurance business. “AIG was providing a range of insurance products to households across the country. And if AIG had defaulted, you would have seen a downgrade leading to the liquidation and failure of a set of insurance contracts that touched Americans across this country and, of course, savers around the world,” he said. So which was it?

Taxpayers also still haven’t been told why there couldn’t have been any sunshine on Mr. Geithner’s beloved AIG counterparties. If some of them really would have failed, with systemic consequences, why not announce that they were all getting a deal to bolster liquidity and allow them to resume lending? That is exactly what regulators had just done in October 2008 by naming recipients of TARP capital injections.

On the other hand, if the counterparties weren’t the systemic risk, then what’s the argument for regulating derivatives?

The evidence builds that AIG’s “systemic risk” wasn’t a mathematical answer to a rigorous and thoughtful review of data, but rather a seat-of-the-pants judgment by regulators in a panic. If that is the case, someone should ask Mr. Geithner why the American people should give him even more authority to make more such judgments from his hip pocket—with little public scrutiny.

Under the House regulatory reform, Mr. Geithner would chair a new Financial Services Oversight Council. The council could declare virtually any company in America a systemic risk, making them eligible for intervention on the taxpayer’s dime. The law firm Davis Polk reports that since this council is not an agency, it will not be subject to the Administrative Procedure Act, the Freedom of Information Act or the Sunshine Act, among other laws intended to allow citizens to scrutinize government.

It’s difficult to learn and apply the lessons of AIG because the New York Fed has done so much to conceal them. Mr. Towns appears to be getting closer to the truth, deciding yesterday to issue subpoenas focused on the New York Fed’s decision-making, as opposed to whatever it told AIG to say in public. Let’s hope lawmakers explore what the “systemic risk” actually was—and why Mr. Geithner should get nearly open-ended power to define it again.

Remember: As commenter Flyoverman put it best, “The only ethics committee with any clout is an informed electorate.”

***

Tom Elia on the same wavelength:

Obama Administration officials estimate that losses from the TARP program are around $120 billion, and argue this new tax will pay for those losses.

However, much of the estimated loss from TARP comes from the auto industry bailout.

So what appears to happening here is that the Obama Administration and congressional Democrats are attempting to levy a tax on financial institutions — some of which never received TARP funds, some which have already paid them back — in large part to pay for the bailout of the auto industry, a bailout which greatly favored the autoworkers’ unions, a Democratic Party constituency.

And they’ll use as political cover for this the populist anger — much of it deserved — over the financial bailout. However, make no mistake: much of this will in reality be a transfer of wealth from the financial industry to a Democratic Party voting bloc.

…Update: Here’s an ABC News interview with one of President Obama’s top advisors, Valerie Jarrett:

Note well Jarrett’s comment (at about 0:43), “…what I would say to them from a PR perspective is: How does it look to pass on those fees to your customers….”

Of course that’s exactly what the Obama Administration and the Democratic Party are doing to the US taxpayer in this obvious attempt to hide this payoff to its union constituency!