Update From Congressman John Campbell

The American Republic will endure until the day Congress discovers that it can bribe the public with their own money.  ~ Alexis de Tocqueville (1805 - 1859)

Three Liners: OK, so ‘one-liner’ is the term we all know and are accustomed to hearing, well I can't tell you much in one line, but here's a group of three-liners on various subjects which may give you some information you didn't know:

House Cafeteria: Prices in the government-run cafeterias in the basement of the House Office Buildings have gone up recently, at the alarming rate of 31% between 2007 and the end of 2008.  According to House Chief Administrative Officer Dan Beard, who oversees the House cafeterias; since Democrats took control of the House they have instituted requirements for organically grown food and required all workers to be union members in order to serve or cook in the cafeterias, and these steps have in turn caused the price increase. But, House staffers do not like paying for all this, so your tax dollars are being considered to subsidize this too!

Cuts: The President announced, with great fanfare, his proposals to cut $17 billion of spending from 121 programs in the upcoming fiscal year. This is after he increased spending by over $1 trillion dollars in just two bills in his first couple months in office. So, he is proposing to cut an amount that is less than 2% of what he just increased, and his proposal is half of what President Bush had proposed to cut from the same programs last year, but Congress summarily rejected.

War Spending: This week, we will vote on President Obama's $92 billion proposal for new and additional spending not included in the stimulus bill, or the omnibus bill, or the budget, or any of the already passed additional spending bills. $81.6 billion of this amount is more funding for the wars in Iraq and Afghanistan and the balance is a grab-bag of unrelated spending items such as swine flu response, and $665 million for the West bank and Gaza.  This madness must stop and as such I intend to oppose this bill.

Guantanamo: Not long after he was sworn in as President of the United States, Mr. Obama fulfilled a campaign pledge to close the military base at Guantanamo Bay, Cuba. That was the easy part, now the administration has to figure out where to house the terrorists who are currently being detained there, of whom are required to be held at a military installation. Many of the same Members of Congress who supported closing this facility are now fervently arguing that the prisoners should not be moved to their state (including Camp Pendleton in Oceanside, California) and many European countries are rejecting them too.

This year: The government will borrow 46 cents of every dollar it spends.  I don't even need to say another word, or use up my alotted 3 lines on this one.

Cars and dealers: After unilaterally deciding to subvert contract law, equity, and any sense of fairness in requiring bondholders and stockholders of GM and Chrysler to take huge losses and give all benefit and upside to the United Auto Workers, the Obama Auto Task Force is at it again. They now have decided to unilaterally cancel the agreements of 3,600 GM and Chrysler dealers without the compensation called for in those agreements with the task force picking who stays and who goes. In an effort to supposedly save jobs, this will result in the loss of a job for about 190,000 employees of these dealerships.

Robots: Some of you may have received automated phone calls a few weeks back telling you to call my office and instruct me to vote for the President's budget. When people did call my office my staff would ask the callers why they would want me to vote to add more to the national debt in just over 5 years than all the previous 43 presidents combined had done prior, and to have deficits more than double the biggest deficit under President Bush. They frequently got the response, "Ahhh, well, I don't know about that but just tell him he should support the President because he is President."

Health Care: The President announced this week, with more fanfare and flourish, his "agreement" with "health care providers" to reduce the annual increase in health care costs by 1.5%. Never mind that this agreement has no specific method of how this will be achieved. The greater deception here is that the President's health care plan will cost an extra $600 billion or so, at the very least, so we are again "saving" a tiny amount of a greatly increased cost. Which means we are saving nothing.

Ok, you got me, that last one was 4 lines.

The survey that we did here a few weeks back was very popular with you all. So, next week, I will use that same survey mechanism to allow you all to be a Member of Congress for a week. Next week's Laptop Report will give you the opportunity to vote on every bill I vote on that week. I'm going to skip the arcane procedural votes because they often require understanding of all the rules which is not a skill set that any of you probably want to have. The week after that, I will tell you how you all voted on each bill; how the House of Representatives voted on each bill, and how I voted on each as well.

That should be fun!

Until next week, I remain respectfully,

Congressman John Campbell

Obamanomics: Naive, Or Intentionally Destructive?

According to such law, a company in bankruptcy must pay its debts to its “secured creditors” before it pays its unsecured creditors. Not only that, in most cases, secured creditors can demand to be paid in full.

In the case of Chrysler, several of the institutions to which it owes money are banks that accepted government bail-out funds last year and earlier this year. Those banks are now enslaved to whatever President Obama and the U.S. Treasury Department tell them to do. So when Obama tells, say, “bank X” to “accept twenty-eight cents on the dollar as payment of the debt Chrysler owes you,” well, those banks are obliged to obey Obama, whether or not it makes financial sense to do so, and whether or not bankruptcy law allows that bank to demand more.

But the private sector economy got in the way of Obama’s plans to save the world, because some of Chrysler’s secured creditors are hedge funds, that, unlike the “bailed-out banks,“ are NOT under Obama’s control. Several of the hedge fund managers involved in the situation did what they are permitted to do under bankruptcy law, and demanded more than the meager “pennies on the dollar” loan repayment that President Obama was ordering them to accept.

And this is when dear leader Obama moved in to “tirade mode.” Lashing out at the hedge fund “hold outs,” he succumbed to name-calling and insults, claiming that the “greedy” hedge fund managers were standing in the way of saving Chrysler.

Was it his naivety that prevented him from seeing the obvious - - that the hedge funds, and those Americans who had invested their personal money in those funds - - were the very thing that has kept Chrysler afloat in the first place? And is he so naïve to think that he will, to use his terms, “get credit flowing in America again,” while using his office to ruthlessly steamroll over the top of contracts, accounting rules, legal precedents, and law itself? Does he really think that he will “save” the U.S. economy and get banks lending again and get people with money to invest in new businesses and begin producing new employment opportunities, by denying legal rights to investors?

President Obama has now demonstrated to the world’s investors that rules and laws don’t matter - - his personal and political preferences are what matter, and he will get his way, even if investors are denied their rights and damaged in the process.

If Obama’s objective is to weaken the U.S., so as to make a “more fair world,” he’s well on his way to achieving that goal. Yet if Obama actually wants something other than a weaker U.S., then his naivety is something America cannot afford.

According to such law, a company in bankruptcy must pay its debts to its “secured creditors” before it pays its unsecured creditors. Not only that, in most cases, secured creditors can demand to be paid in full.

In the case of Chrysler, several of the institutions to which it owes money are banks that accepted government bail-out funds last year and earlier this year. Those banks are now enslaved to whatever President Obama and the U.S. Treasury Department tell them to do. So when Obama tells, say, “bank X” to “accept twenty-eight cents on the dollar as payment of the debt Chrysler owes you,” well, those banks are obliged to obey Obama, whether or not it makes financial sense to do so, and whether or not bankruptcy law allows that bank to demand more.

But the private sector economy got in the way of Obama’s plans to save the world, because some of Chrysler’s secured creditors are hedge funds, that, unlike the “bailed-out banks,“ are NOT under Obama’s control. Several of the hedge fund managers involved in the situation did what they are permitted to do under bankruptcy law, and demanded more than the meager “pennies on the dollar” loan repayment that President Obama was ordering them to accept.

And this is when dear leader Obama moved in to “tirade mode.” Lashing out at the hedge fund “hold outs,” he succumbed to name-calling and insults, claiming that the “greedy” hedge fund managers were standing in the way of saving Chrysler.

Was it his naivety that prevented him from seeing the obvious - - that the hedge funds, and those Americans who had invested their personal money in those funds - - were the very thing that has kept Chrysler afloat in the first place? And is he so naïve to think that he will, to use his terms, “get credit flowing in America again,” while using his office to ruthlessly steamroll over the top of contracts, accounting rules, legal precedents, and law itself? Does he really think that he will “save” the U.S. economy and get banks lending again and get people with money to invest in new businesses and begin producing new employment opportunities, by denying legal rights to investors?

President Obama has now demonstrated to the world’s investors that rules and laws don’t matter - - his personal and political preferences are what matter, and he will get his way, even if investors are denied their rights and damaged in the process.

If Obama’s objective is to weaken the U.S., so as to make a “more fair world,” he’s well on his way to achieving that goal. Yet if Obama actually wants something other than a weaker U.S., then his naivety is something America cannot afford.

by Austin Hill

Senior creditors: Chrysler deal violates 5th Amendment

If the Obama administration expected the senior creditors of Chrysler to fold their tents under political pressure, they may have gotten a rude shock today.  Thomas Lauria, who accused the White House of threatening the creditors withn humiliation at the hands of the White House press corps, has filed a motion to halt the administration’s machinations on behalf of the UAW in the Chrysler bankruptcy.  Lauria and his allies claim that the Obama administration has violated the Constitution in their bid to devalue the senior creditors’ holdings on behalf of junior creditors, and have some precedent to support the allegation.

The heart of the argument starts on page 8 (via HA commenter Outlander):

III. The Taking of Collateral through a Direct or Indirect Use of TARP Authority is Unconstitutional.

13. The Treasury Department relies on TARP as the purported authority to justify the disparate treatment under the 363 Sale, even though TARP was enacted after the Senior Lenders’ liens on the Debtors’ property were already in place. The Supreme Court long ago recognized, however, that a secured creditor’s interest in specific property is protected in bankruptcy under the Fifth Amendment. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 594 (1935). That case involved a Depression-era statute that was intended to help bankrupt farmers avoid losing their land in mortgage foreclosure. The statute in Radford provided that the bankrupt debtor could achieve a release of the security interests either (i) with the lender’s consent, purchasing the property at its then appraised value by making deferred payments for two to six years at statutorily-set interest rates; or (ii) by seeking from the bankruptcy court a stay of the proceedings for up to five years during which time the debtor could use the property by paying a rent set by the court, which payments would be for the benefit of all creditors, with a purchase option at the end of that period. Id. at 856-57.

14. Justice Brandeis noted that the “essence of a mortgage” is the right of the secured party “to insist upon full payment before giving up his security [i.e., the property pledged].” Radford, 295 U.S. at 580. In invalidating the statute, the Court stated that “[t]he bankruptcy power . . . is subject to the Fifth Amendment,” and that the pernicious aspect of this law was its “taking of substantive rights in specific property acquired by the bank prior to the act.” Id. at 589-90 (emphasis added). Thus, Congress could not pass a law that could be used to deny to secured creditors their rights to realize upon the specific property pledged to them or “the right to control meanwhile the property during the period of default.” Id. at 594. That is precisely what the Treasury Department would have Chrysler do here, with respect to the Chrysler Non-TARP Lenders’ property rights that were acquired prior to the enactment of TARP.

15. Relying on purported authority provided by TARP, the Treasury Department is demanding that Chrysler’s assets be stripped away from the coverage of the Senior Lenders’ liens – thereby impairing the rights of the Senior Lenders to realize upon those assets – so that those assets may be put in New Chrysler and used to the benefit of unsecured creditors in this proceeding, who will then be paid much more than the Senior Lenders. But, even assuming that TARP provides the Treasury Department with authority to provide funding to the Debtors and impose the transfer of collateral away from the Senior Lenders, TARP was enacted long after the Senior Lenders contracted with the Debtors and received senior liens on the Debtors’ property. Radford specifically disallowed the use of a law to retroactively alter existing liens on property.

16. Here, the proposed sale of the Debtors’ assets will leave the Senior Lenders with a diluted pool of assets and no further interests in the operating assets covered by their specific liens. The Constitution forbids this application of a law retroactively to undercut the Senior Lenders’ pre-existing property rights in favor or inferior creditors.

17. Finally, that the Treasury Department would take these unconstitutional actions to help the United States address difficult economic times is not an answer. Indeed, the same justification was expressly rejected in Radford, where Justice Brandeis noted that a statute which violated secured creditors’ rights, but which was passed for sound public purposes relating to the Great Depression, could not be saved because “the Fifth Amendment commands that, however great the nation’s need, private property shall not be thus taken even for a wholly public use without just compensation.” Id. at 602.

18. What is really striking here is that what is being proposed by the Sale Motion would strip the Collateral away and allow it to be put to use as new capital in New Chrysler for the benefit of existing and other creditors – even though the Chrysler Non-TARP Lenders have been given no opportunity to realize upon that Collateral to the point of full repayment ahead of at least $14 billion of selectively identified unsecured creditors.

One might think that a Constitutional scholar like Barack Obama would have already known that, but either this precedent escaped him or he doesn’t care about it at all.  Brandeis acted to uphold contract law, especially in the face of a government interest in paying off politically-connected unsecured creditors ahead of the senior creditors.  There is no other reason for Brandeis to make that decision, as only government could insert itself into the contractual relationship during a bankruptcy proceeding — just as Obama has done with Chrysler.

Lauria’s argument seems very compelling here, especially given Brandeis’ rather clear assertion that bankruptcy proceedings have to fall within the 5th Amendment — and that government can’t implement a taking to satisfy its own arbitrary aims by ignoring the relationship of the creditors to the default.  We’ll see whether the court rebukes Obama.

POSTED AT 1:36 PM ON MAY 4, 2009 BY ED MORRISSEY

Car Designer In Chief

WASHINGTON -- The Constitution enumerates three requirements of those who would be president (they must be natural-born citizens, at least 35 and a resident within the country for 14 years) and now the government's thrashing about in the economy imposes a fourth: Presidents must be able to speak pluperfect nonsense with a straight face, lest the country understand what the government is doing. Obfuscation serves political salvation when what the government is doing includes promising that if Chrysler will sell itself to Fiat, U.S. taxpayers will lend that Italian firm $6 billion. (Will someone please explain to me how we are saving the U.S. auto industry by having Chrysler sell itself Fiat and then lending Fiat $6billion???  Why 

aren't we retaining Chrysler as a U.S. company, help them find, not appoint, new innovative management and then lend them another $6 billion of U.S. taxpayer money, if we insist on going on this auto bailout route?)

Barack Obama displayed reality-denying virtuosity last week when, announcing the cashiering of General Motors' CEO, and naming his replacement, and as the government was prompting selection of a new majority of GM's board of directors, and as the government announced the next deadline for GM to submit a more satisfactory viability plan than it submitted at the last faux deadline, and as the government kept the billions flowing to tide GM over until, well, whenever, the president said: "The United States government has no interest in running GM."

Actually, his administration prefers to do that rather than allow bankruptcy to infuriate the United Auto Workers union, which was pre-emptively grateful to Obama's administration with lavish contributions to candidate Obama. The president supposedly showed "toughness" in sacking a conspicuous member of a particularly unpopular little cohort, CEOs of big corporations. He will need more grit if, as his administration hints, this time it is serious, that its patience is wearing thin, that someday GM could face "controlled" or "prepackaged" or "surgical" bankruptcy. One suspects that those adjectives intimate that it will be faux bankruptcy, gentle in dealing with the UAW.

Last November, five months and $17.4 billion in auto bailouts ago, this column noted: "Some opponents of bankruptcy say: GM must not be allowed to fail before it perfects batteries for its electric-powered Volt, which supposedly is a key to the company's resurrection. This vehicle was concocted to serve GM's prolonged attempt to ingratiate itself with the few hundred environmentally obsessed automotive engineers in Congress. They have already voted tax credits of up to $7,500 for purchasers of such cars -- bribes that reveal doubts about consumer enthusiasm for them at a price that would reflect cost."

In December, GM, by then a mendicant groveling before its congressional masters, ran a full-page newspaper ad apologizing for having "disappointed" everyone, vowing to stop selling so many "pickups and SUVs" (which were 11 of GM's 20 most profitable products in 2008), and promising "revolutionary new products like the Chevrolet Volt." Another ad, which appeared before December and is still running, features a car attached to an electric cord, and says the 

Volt amounts to "reinventing the automobile."

Last week, in an unenthralled summary of GM's "viability" plan, Obama's administration said: "GM earns a large share of its profits from high-margin trucks and SUVs, which are vulnerable to a continuing shift in consumer preference to smaller vehicles. Additionally, while the Chevy Volt holds promise, it will likely be too expensive to be commercially successful in the short term."

The stunning shift in consumer preferences that should make the White House's freshly minted auto experts feel vulnerable has been reported under headlines such as "Like a Rock: Hybrid Car Sales Plummet" (Wall Street Journal, Dec. 9) and "Hybrid Car Sales Go from 60 to 0 at Breakneck Speed" (Los Angeles Times, March 17). Absent $4 gasoline, customers, those nuisances with their insufferable preferences, do not want the vehicles the politicians want them to want, even with manufacturers now offering large rebates and other incentives.

The two best-selling vehicles in America this year are large pickup trucks (Ford F-Series and Chevy Silverado). In February, Toyota sold 13,600 Tundra and Tacoma pickups and 7,232 Priuses. It sells the Prius at a loss, which it can afford to do because it makes pots of money selling pickups. Has the Car Designer in Chief, aka the president, considered the possibility that what he calls "the cars of tomorrow" will forever be that?

His administration cannot be faulted for failing to do well what cannot be done well -- industrial policy, wherein the political class, with negligible experience in commerce, flounders. The administration can, however, be faulted for trying. The government's wallow in the automobile industry, under this and the previous administration, merits a hockey coach's evaluation of his team: "Everyday you guys look worse and worse. And today you played like tomorrow."

 By George Will, a 1976 Pulitzer Prize winner whose columns are syndicated in more than 400 magazines and newspapers worldwide. - Posted: TOWNHALL DAILY.com

Source:  Daily Thought Pad

A black Chevy Suburban SUV, manufactured by financially threatened General Motors Corporation, stands ready to transport high-ranking government officials at the Capitol in Washington, Wednesday, April 1, 2009. A GM bankruptcy would be one of the most complicated court-overseen restructurings ever undertaken. The imposing black Suburban has evolved as the archetype government security vehicle and is the standard for presidential motorcades and VIP's. (AP Photo/J. Scott Applewhite)