'Shock And Awe' Statism

By George Will
The Washington Post
http://www.washingtonpost.com
May 31, 2009

Epiphanies are a dime a dozen among congressional Democrats as they discover urgent new reasons to experience the almost erotic pleasure of commandeering other people's money. For example, freshman Rep. Alan Grayson, a Florida Democrat whose district includes Disney World, was recently there and was inspired.

The world, he realized, would be a sweeter place if Congress mandated that all companies with 100 or more employees provide a week of paid vacation to those who work at least 25 hours a week. After three years, they would be entitled to two weeks, and companies with more than 50 employees would have to start providing a paid vacation week. Grayson would not mandate that paid vacations be spent at Disney World.

With the welfare state approaching insolvency and businesses sagging, this is an odd time to augment Americans' entitlement mentality. But the travel and tourism industries think that Grayson's idea is neat.

Members of the Congressional Black Caucus want the Treasury Department to subsidize minority owners of broadcasting properties. The broadcasters are not "too big to fail" and so do not pose a "systemic risk," but, the representatives say, failures of minority broadcasters would diminish diversity.

Such government micromanagement of the economy is everywhere. The Post recently reported that Richard Wagoner, the former CEO of General Motors who was removed by the government, remains on GM's payroll "because senior Treasury officials have yet to decide whether he should get the $20 million severance package that the company had promised him." His 2009 compensation -- $1 -- is payable Dec. 31. The $20 million promised to him includes contractual awards, deferred compensation and pension benefits accrued over 32 years with the company. Promise-keeping, including honoring contracts, is the default position of a lawful society. But suddenly, many citizens' legal claims are merely starting points for negotiations with an overbearing government.

State governments, too, are expected to accept Washington's whims, but plucky Indiana is being obdurate. Gov. Mitch Daniels, alarmed by what he calls the Obama administration's "shock-and-awe statism," is supporting state Treasurer Richard Mourdock's objection to the administration's treatment of Chrysler's creditors, which include the pension funds for Indiana's retired teachers and state police officers and a state construction fund. Together they own $42.5 million of Chrysler's $6.9 billion (supposedly) secured debt.

Compliant, because dependent, banks bowed to the administration's demand that they accept less than settled bankruptcy law would have given them as secured creditors. Next, the president denounced as "speculators" remaining secured creditors, who then folded and accepted less on the dollar than an unsecured creditor -- the United Auto Workers union -- is getting. This raw taking of property from secured investors penalized those "speculators" -- retired Indiana teachers and state police officers who, Mourdock says, are being "ripped off by the federal government."

He is asking a court to declare that the Obama administration's actions have violated "more than 100 years of established law by redefining 'secured creditors' to mean something less" and that the actions violate the Fifth Amendment protection against the seizure of private property. Furthermore, he says, the government is guilty of "misuse" of the Troubled Assets Relief Program, which gives the Treasury authority only to aid financial institutions, not industrial companies.

One New Deal improvisation not yet emulated by the Obama administration is the September 1933 slaughter -- while the unemployment rate was 25 percent and millions were hungry -- of 6 million young pigs. The purpose was to raise the price of pork by reducing the supply of it. But the "cash for clunkers" idea is a cousin of that.

The Wall Street Journal's Joseph B. White reports that proposals percolating in Congress would further subsidize Detroit -- and chill the planet, of course -- by bribing people to turn in old cars and trucks (dealers have 400,000 unsold large pickups) and buy vehicles that get better gas mileage. In one plan, if the new truck gets one mile per gallon more than the old truck, the buyer would get $3,500; a two-mpg improvement would be worth $4,500.

Such a policy would counteract the president's environmentally harmful policy of forcing Detroit to quickly produce cars that are much more fuel-efficient -- meaning light, cramped and dangerous. Such products will be powerful incentives for Americans to continue driving their old, more polluting and less fuel-efficient cars. This will deprive Detroit of some customers, but surely the government has thought this through.

georgewill@washpost.com