Crony Capitalism Or Raw Corruption?

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Favoritism: It's good to have friends in high places. Last month, the White House issued tough new rules on CO2 emissions. This month, its biggest corporate supporter wins an exemption. Something smells here.

This has become a pattern for this administration: Impose costly new regulations on the economy, then let some corporations and unions avoid them.

That's just what happened in California, with the so-called Avenal Energy project. That badly needed energy plant uses two natural gas-fired General Electric 7FA gas turbines and one General Electric steam turbine to generate electricity. Under the EPA's tough new rules, the Avenal project wasn't going to be built.

Don't get us wrong: We support the project. The nation needs energy. We just don't like how the White House seems to play favorites with who gets exemptions and who doesn't.

"Maybe GE CEO Jeff Immelt's closeness to President Obama, and his broad support for Obama's agenda, had nothing to do with this exemption," the pointed out. "But we have no way of knowing that."

Or maybe we do. Immelt heads Obama's Council on Jobs and Competitiveness. According to Washington Examiner writer Tim Carney, GE has spent $65.7 million lobbying the White House - more than any other company. Given the White House record over the past two years, it's reasonable to assume it's playing favorites.

It isn't just the new regulations issued by the Environmental Protection Agency, either. The EPA rules are just the most recent case.

Under Obama's Affordable Care Act, some 773 companies and unions - big contributors to the Obama cause - now have exemptions from the overhaul's costliest provisions, affecting an estimated 2 million workers.

What does that matter, you ask? Well, those companies and their unions now get to operate at a competitive advantage to their would-be competitors, both foreign and domestic. How fair is that?

The answer, of course, is not very. Things have gotten so bad that liberal blogger Mickey Kaus has called for investigations of this unsavory corporatist trend by the White House. "Shouldn't Republicans hold hearings on the general threat of Putin-like corporatism - i.e., an insidious alliance between big government and favored corporate and labor interests?" he asked in a blog post last month.

We think the answer is yes. Maybe Wisconsin Rep. Paul Ryan, new chairman of the House Budget Committee, would be the man to do it. As he noted recently, crony capitalists "get ahead through subsidies, special tax breaks, regulatory favors and other forms of political favoritism." And he wants it stopped.

The insidiousness of this is obvious. First, make businesses and their owners totally dependent on the whims of bureaucrats. Then, make them beholden to you - partners, if you will, in the corruption of government favoritism.

This distorts markets and makes our economy less efficient. It also makes all of us a lot less free.

Think also of the Chevy Volt, which couldn't exist in a free market. It's a child of subsidies paid to government and union-controlled and owned General Motors Corp.

How about ethanol? We now use something like 40% of all our corn for fuel, even as food prices soar to record highs. Big agriculture companies, which give millions in political contributions each election cycle, are no doubt grateful.

Those in the private sector who get bailed out, subsidized or co-opted have a funny way of ending up working in the administration, overseeing the very industries in which they once worked. As Conn Carroll of the Heritage Foundation has noted, the Obama White House in just the last two months has:

• Sent budget director Peter Orszag to Citibank (recipient of a $306 billion bailout).

• Taken Gene Sperling as National Economic Council director from Goldman Sachs (beneficiary of the $173 billion AIG bailout).

• Added Bill Daley, former Fannie Mae ($135 billion bailout so far) lobbyist and JPMorgan ($12 billion bailout) executive" as President Obama's chief of staff.

Bailouts, exemptions, subsidies - all of this tilts the playing field in favor of political cronies and away from the rough-and-tumble competition that free-market capitalism requires. It's yet another reason why businesses have stopped investing and hiring.

Congress should put this on the ever-lengthening list of things that this administration has done that now need to be undone.


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