Cronyism Spinn[er]ing Out of Control

Jerry Rogers

for TownHall

President Obama announced on June 26, 2015 that he was appointing Steven Spinner to the Commission on White House Fellowships. In his statement, Mr. Obama described Mr. Spinner as an experienced and committed individual, and the President went on to say that he is looking forward to working with him. At first glance, no big deal—another hanger-on appointed to one of Washington’s myriad patronage boards and panels.

Then again, on closer scrutiny, Spinner isn’t your typical-everyday D.C. flunky. Steven Spinner was an adviser for the Department of Energy (DOE) loans program responsible for the Solyndra debacle. He played a lead role in the most infamous case of crony capitalism of the Obama Presidency, which means—arguably—the most infamous episode of cronyism in our nation’s history. Solyndra—the failed solar panel company that filed for bankruptcy—was the first to receive a taxpayer-backed loan guarantee from the DOE in September 2009. Spinner helped steer millions of dollars of the controversial stimulus funding to Obama’s crony corporate friends at Solyndra.

Spinner raised political cash—over $500,000—for Obama during the 2008 campaign, and then Spinner was named to the White House transition team and later served as “chief strategic operations officer” at DOE. Spinner—while at DOE—helped deliver over $530 million to Solyndra. In 2011, Solyndra files for bankruptcy leaving taxpayers with the massive bill. Spinner raised more political cash for the President in the 2012 cycle, and he’s rewarded again with a post on a White House commission. You can’t make this stuff up. The whole sordid affair reads like a bad script from a B-level political melodrama.

And there’s more to the script. Spinner’s wife worked for a law firm that represented Solyndra and a dozen or so other green-energy interests that applied for federal funding. The public record shows that her firm received $2.4 million from the government in legal fees associated with Solyndra’s loan application. Washington has always been a place where deals are done and favors exchanged. However, President Obama has created a new normal of hyper-cronyism of rewarding his political friends with taxpayer dollars (Solyndra) and government posts (Spinner).

The Washington D.C. metro-area has become the wealthiest region in the country because the political class rewards those like Steven Spinner who deal, almost exclusively, in favors at the expense of the American people. While Washington’s political class gets richer, everyday Americans struggle to pay their mortgages, put their children through school, and keep groceries in their cupboards. The economy remains stalled and our nation is in the worst “economic recovery” in our history. The Bureau of Labor Statistics shows that there are nearly 94 million Americans out of the workforce, the lowest labor force participation since 1977. Also for the first time in our history, working-age people now make up the majority of American households that depend on food stamps, a dramatic change from a just a few years ago, when children and the elderly were the main recipients.

As National Review reported back in 2011, Steven Spinner was “intimately involved in the negotiation and was advocating on behalf of” Solyndra regarding the DOE loan. Spinner involved himself in these negotiations regarding Solyndra even though he had signed an ethics agreement not to do so. What a sad testament to Washington’s new normal of hyper-cronyism that Steven Spinner is once again being honored with a White House position, even one as innocuous as the Commission on White House Fellowships. It’s sadder still that no one in the media picked up on the story. No news here—just business as usual for President Obama and Washington’s political class. Cronyism is Spinn[er]ing out of control.

Puerto Rico Wants a Great Big Fat… Bailout

By Jerry Rogers

for TownHall

Puerto Rico’s massive welfare state and excessive spending has put it in an economic state worse than Greece. This small island has an enormous problem—$72 billion in bond debt and more than $50 billion in retiree obligations. What’s worse is that the Puerto Rican government doesn’t seem to be serious about reform. Pedro Pierluisi, the island’s nonvoting member of Congress, has sponsored legislation—H.R. 870—to extend Puerto Rico Chapter 9 bankruptcy protection.

The Associated Press reported that “the White House threw cold water Monday on the notion of bailing out Puerto Rico from its financial crisis, instead urging Congress to consider changing the law so the island can declare bankruptcy.” Of course, this is typical Washington doublespeak because bankruptcy protection—H.R. 870—would be a federal bailout by other means.

Puerto Rico, as a commonwealth, does not have the legal authority to file for bankruptcy. Some in Congress—mostly Democrats, but some Republicans, too—are seriously considering H.R. 870 as a backdoor bailout.

What happens when you run out of other people’s money? Well, if you’re the Democratic Governor of Puerto Rico, you demand a bailout, and for others to “share the sacrifice.” Governor Alejandro García Padilla told the New York Times earlier this week that Puerto Rico’s debt “is not payable. There is no other option.” Padilla would love to find “an easier option,” as he swears, “this is not politics, this is math.”

Not politics? Padilla is engaging in the worst kind of politics in which political elites insist that taxpayers pay for their failure. Puerto Rico’s debt crisis is the result of years of big government run amok. Over the past decade, liberal politicians in San Juan engaged in profligate spending and borrowing to cover the costs of everything from welfare to pensions to government services. Progressive policies that saw the public-sector debt grow as the economy shrank. Not politics, but math? Then why are public-sector salaries more than 90 percent higher than salaries in the private sector? Why not cut spending to pay your bills? Because Padilla has promised not to lay off government workers—two-thirds of Puerto Rico’s budget is payroll, and it’s off the table.

Puerto Rico’s political elites refuse to do what is necessary to create economic growth. Changing the nation’s bankruptcy laws to give them a special exemption is wrong. It’s a form of cronyism—politicians in Washington doing favors for politicians in San Juan. It’s letting them off the hook; absolving them of their responsibilities. The political elites in Puerto Rico have implemented anti-growth excise taxes on job creators while crippling the island’s economy with chronic spending on welfare subsidies and an ever-expanding public sector. The government employs more than a quarter of the island’s workforce, and its labor force participation rate—40.6 percent— is the lowest in the Western Hemisphere. More than half the population is not working. Why work if welfare pays more than a job?

So Padilla, Pierluisi, and the island’s political establishment are asking their friends in Washington for a favor. Their plea for Chapter 9 bankruptcy is gaining momentum as the political class looks to protect itself.

The bailout bill—H.R. 870—does not require any meaningful, market-based reforms. It’s a “get out of jail free” card for Puerto Rico’s political elites and their failed statist policies. Chapter 9 is not a solution, but rather, at best, a temporary fix. And, Chapter 9 might not be a fix at all. Bankruptcy procedures can take months or years to work through the system. H.R. 870 is a bad bill. What’s needed is a radical change of less spending, regulating, and taxing.

Americans are tired of bailouts and boondoggles—TARP, Solyndra, General Motors, the ObamaCare rollout. Let’s not add failed governments and political elites to the list. Americans don’t want a “Great Big Fat” bailout for Puerto Rico. We don’t want our very own Greek island.