December 19, 2008

It Could Have Been Worse, But It’s Still a Big, Big …..

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 11:42 am

….. Mistake — and yes, a betrayal:

The White House announced a $17.4 billion rescue package for the troubled Detroit auto makers that allows them to avoid bankruptcy and leaves many of the big decisions for the incoming Obama administration.

The deal would extend $13.4 billion in loans to General Motors Corp. and Chrysler LLC in December and January, with another $4 billion likely available in February. It also would provide the government with non-voting warrants, although the exact amount was unclear immediately. Ford Motor Co. has said it doesn’t need short-term assistance.

The deal is contingent on the companies’ showing that they are financially viable by March 31. If they aren’t, the loans will be called and all funds must be returned, officials said.

The deal generally tracks key provisions of the bailout legislation that nearly passed Congress earlier this month. But it is relatively lenient in allowing the companies to show their viability. It defines viability as having a positive net present value — a way of gauging the companies’ worth, taking into account all their future obligations.

So the money is being provided under less stringent conditions than Congress envisioned. While it appears to be tough with the immediate recall provision, the borrowers’ ability to decide how to prove their own viability negates most if not all of that.

The only hope now is that the incipient recovery signs I noted yesterday generate decent car sales in the coming three-plus months. Yesterday’s barrel-price drop might  help with that, bringing gas down to $1.40 a gallon (Update: Today’s drop below $34 might mean $1.35). If the price stays low and reignites SUV and similar-sized vehicle sales, and if GM and Chrysler management have brains (a dubious proposition), they will figure out a way to pay back the government, renounce future borrowing, and then tell the UAW it’s “put up or bankrupt” time.

If there’s a silver lining in this (I know, I’m looking really hard for one), it’s that the situation will probably prevent the Obama administration and the Democratic majority from doing anything really stupid that would cause gas prices to go way up. The linkage to the viability of the two car companies would, I hope, be too direct. (Update: To be clear in response to comment #1, I mean in the first couple of months of the administration, not long-term.)

Expect the “it’s not enough” chorus to begin shortly.

Follow-ups: Constitutional and Other Matters On Hillary and Obama

Filed under: Taxes & Government — Tom @ 5:59 am

On November 29, I noted two constitutional arguments. One has been “settled.” One hasn’t.

The first was this, from Eugene Volokh:

So, “Is Hillary Clinton Unconstitutional?” In a word, Yes — or, to be more precise, a Secretary of State Hillary Clinton would be unconstitutional.

The Emoluments Clause of Article I, section 6 provides “No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time.” As I understand it, President Bush’s executive order from earlier this year “encreased” the “Emoluments” (salary) of the office of Secretary of State. Last I checked, Hillary Clinton was an elected Senator from New York at the time. Were she to be appointed to the civil Office of Secretary of State, she would be being appointed to an office for which “the Emoluments whereof shall have been encreased” during the time for which she was elected to serve as Senator. The plain language of the Emoluments Clause would thus appear to bar her appointment … if the Constitution is taken seriously (which it more than occasionally isn’t on these matters, of course).

The “solution” was “the Saxbe fix,” which will also have to be applied to one other Senator and a congressperson who have been nominated to Obama’s cabinet:

Congress To Cut Cabinet Salaries — Again

Congress is going to have slice the Interior and Labor secretaries’ pay in order to comply with the obscure emoluments clause of the Constitution, which prohibits sitting lawmakers from being appointed to positions that saw a pay increase during their terms.

The provision was designed to prevent lawmakers from enriching themselves. But Congress has repeatedly circumvented the legal hurdle by reducing an appointee’s pay through legislation known as the “Saxbe Fix,” named after Congress made the change for Richard Nixon’s nominee for attorney general, Sen. William Saxbe.

Last week, Congress quietly approved a Saxbe Fix for Sen. Hillary Clinton, reducing her pay to the January 2007 level of $186,600 so she could serve as the next secretary of State. President Bush increased Cabinet secretaries’ salaries in a January 2008 executive order.

Congressional aides say lawmakers will have to do the same for (Colorado Sen) Salazar and (California Rep. Hilda) Solis in January since the measure approved for Clinton was narrowly tailored for her position.

But Volokh argued persuasively in his post that this fix doesn’t solve the problem:

Couldn’t Congress pass a repealing statute, or President Bush (or even President Obama) rescind the executive order, selectively, as to Hillary and make everybody happy? Nope: The clause forbids the appointment of someone to an office the emoluments whereof “shall have been encreased.” A “fix” can rescind the salary, but it cannot repeal historical events. The emoluments of the office had been increased. The rule specified in the text still controls.

Unless one views the Constitution’s rules as rules that may be dispensed with when inconvenient; or as not really stating rules at all (but “standards” or “principles” to be viewed at more-convenient levels of generality); or as not applicable where a lawsuit might not be brought; or as not applicable to Democratic administrations, then the plain linguistic meaning of this chunk of constitutional text forbids the appointment of Hillary Clinton as Secretary of State. I wouldn’t bet on this actually preventing the appointment, however. It didn’t stop Lloyd Bentsen from becoming Secretary of State. But it does make an interesting first test of how serious Barack Obama will be about taking the Constitution’s actual words seriously.

Not that he’s the first person to flunk the test — But Barack Obama, along with Congress, did flunk the test.

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Which leads to the other constitutional issue from November 29, brought up at American Thinker:

Obama has refused to disclose (i.e., show us — Ed.) the vault copy of his Hawaiian birth certificate. This raises the question whether he himself has established that he is eligible to be President. To date, no state or federal election official, nor any government authority, has verified that he ever established conclusively that he meets the eligibility standard under the Constitution

Hawaiian officials have since said they’ve seen the original certificate of live birth, and that people should go away.

But there’s one itty bitty loose end:

Hmmm. We really are going to find out Since the electoral college voting took place on December 15, we found out how important the Constitution is to people entrusted with solemn duties under it, didn’t we?

For the record, I believe that the original does exist, and that Obama hasn’t told Hawaiian officials to release it just to be obstinate. Your mileage may vary.

Update: Not that it affects the validity of the points raised, but www.democratic-disaster.com is 404ing. Google cache shows that it was working just before 6AM yesterday.

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In a related matter, what if Barack Obama happens to still be carrying a grudge towards a certain about-to-be former New York Senator?

If he did, do you think he might:

  • Nominate her to a Cabinet-level position like, say, Secretary of State?
  • Thereby forcing her to reveal contributors to her husband’s presidential library?
  • Gamble that the ongoing conflicts of interest identified therein might be so obvious, blatant, and potentially compromising to national security that even fellow Democrats have a hard time handling the idea that they will be raised time after time, month after month, with her every move?
  • Tell her after the controversy festers for a while, but after Caroline Kennedy is seated as a Senator, that, “You know, Hillary, I really wanted you to be Secretary of State, but we really can’t afford to be weighed down by this baggage for four years. I am so so sorry, and I really hate to do it, but I’m going to have to withdraw your nomination. I’m sure you understand”?
  • Thereby ending her political career? Or forcing her to run again — against a Kennedy — to get “her” New York Senate seat back?

Would he?