Scott Boykin's blog

Here's a bargain for you.  General Motors' current market value is about $500 million.  In a breathtaking abuse of executive power, the Bush administration "loaned" GM $13.4 billion from the Troubled Asset Relief Program ("TARP") in December, 2008, plus an additional $4 billion in February, 2009.  (Congress had not authorized the money to be "loaned" to GM.)  On June 1, 2009, the Obama administration announced that it would invest an additional $30 billion in GM.  About $41.2 billion of the "loans" will be converted into equity in GM, making the United States the principal shareholder with 60% of GM's stock.  You, the United States, have paid $41.2 billion for $300 million worth of GM stock.  Congratulations!  You overpaid for GM stock by 137 times its value.  

The bankruptcy petition GM filed this week has been its only reasonable course for a long time.  Bankruptcy protection will allow GM to shed assets and debt and renegotiate labor contracts.  GM's plea for your money to avoid bankruptcy on the ground that consumers would not buy their cars if GM were bankrupt never made sense, as the whole world has known for months that GM is insolvent.  Had there been enough leaders in Washington with the courage to reject GM's demands for cash, GM would have petitioned for bankruptcy months ago and might even have emerged from bankruptcy by now.   

The GM bailout is incredibly unjust.  Over 5 million people have lost their jobs since the recession began.  Those millions of Americans lost their jobs because their employers had to lay off workers to stay afloat, and those workers are no less important than GM employees.  But GM has political power, and those other employers don't.  GM's power has now forced all of us, including those people who have lost their jobs, to dramatically overpay to enable the failed automaker to postpone its inevitable bankruptcy until now.  It's just that simple, and just that ugly.

As economist F.A. Hayek argued for over sixty years, a free society does not exist to serve any particular goal.  Rather, it exists to enable the individuals in that society to pursue their own goals, which may be known to no more than a handful of other people.  In such a society, the law must be a predictable part of the background information that individuals use to plan as they pursue their own goals.  For that reason, it is essential that a free society be governed by general rules that apply to everyone equally.  In contrast, a society that is organized to pursue specific goals must be governed by commands to specific groups or individuals rather than general rules applicable to all, because achieving the chosen goals requires direction, not freedom.

In this instance, our federal government has decided that the automakers must not be allowed to fail at any cost, so it has commanded you to buy GM stock.  You have indeed paid an outrageous price for that stock, because the GM bailout cost more than money:  it was also a grave injustice.  And this injustice, like the bank bailouts that have made you the proud owners of failed financial institutions, is another step toward transforming our society into an organization that commands its powerless members to serve the interests of those with political power.  If you have never read Hayek's classic The Road to Serfdom, read it now. 

Scott Boykin is Chairman of the Alabama Republican Liberty Caucus

One of the more entertaining news stories from the last week is the squabble between RINOs Colin Powell and Dick Cheney.  Cheney observed on a talk show that he didn’t realize Powell was still a Republican.  Powell retorted that he was a Republican because he had voted for Republicans Reagan and Bush II as well as Democrats Kennedy, Johnson, Carter, and Obama.  Powell’s response makes as much sense as Cheney’s reputation for being a conservative, which nonsensically appears to be based on his advocacy for business interests and war in Iraq.

In itself, watching two big-government RINOs argue over which can claim the mantle of “Republican” is as meaningful as professional wrestling, but what is at stake today is what, if anything, it means to be a Republican.  In 1994, the Republican Party was on the brink of a ushering in a political realignment that would have made it the majority party for the first time since 1932.  Republican leaders won power by talking a big game of small government, but they didn’t mean a word of it.  As they gained power in Washington, the beltway Republicans proved that what they believed in was big, intrusive, lawless government.  The result is the last election in which big-government Republicans got the whipping they earned by years of misrule. 

Powell and Cheney should be irrelevant, so it matters that people listen to their “debate” over which is a Republican, precisely because neither of them should be a Republican.  Powell and Cheney illustrate two visions of a Republican Party without principle. 

Powell’s vision is one in which the Republican Party should seek electoral victories by appealing to the same people who vote for Democrats, so that the difference between the two parties is one of brand name only.  His view appears to be that competing parties foster debate and that debate is good as long as it is not based on any ideological difference.  This is the voice of one who came up through the federal bureaucracy and distrusts political principle absolutely. 

Cheney’s vision is one in which the sole governing principle is reason of state:  that the interest and well-being of the state itself is the value government exists to serve.  What matters to someone like Cheney is that the “right” people hold the reigns of power, and provided the right people are in charge, there should be no legal or moral restraints on government’s power.  This is the voice of the second Bush administration. 

Fortunately, we don’t have to accept either Powell’s or Cheney’s vision.  In fact, we can tell both of them that, however they may regard themselves, we do not consider them Republicans.  “I may be out of their version of the Republican Party,” Powell said of his critics, “but there's another version of the Republican Party waiting to emerge once again.”  Indeed, and therein lies our hope.  We have the benefit of two hundred years of political history in which successive leaders articulated and defended the principles of individual liberty, limited government, and constitutional government.  The likes of Cheney and Powell will be forgotten in a generation, and it is up to us to recapture our Party and provide the principled leadership our country needs now as much as ever. 

Scott Boykin is Chairman of the Alabama Republican Liberty Caucus.

Here's a story for you.  It's a story with a happy ending, and one that all Republican officials holding office anywhere should recall before they cast any vote.

On October 3, 2008, Arlen Specter, Republican Senator from Pennsylvania, was one of thirty-four Republican Senators who voted for the Troubled Asset Relief Program (TARP) that gave $700 billion to the Wall Street investors who helped wreck our economy.  On February 10, 2009, Specter was one of three Republican Senators who voted for the American Recovery and Investment Act of 2009 (Obama's "stimulus package"), which will dump $787 billion of borrowed and printed dollars into a hodgepodge of Democratic Party dream programs, including vast increases in federal dollars for health programs, environmental programs, social welfare programs, and public education.  On April 15, 2009, Pat Toomey, a former congressman who nearly defeated Specter in the 2004 Republican Primary for Specter's Senate seat, announced that he would challenge Specter in the 2010 Republican Primary.  On April 28, 2009, Specter announced that he was switching to the Democratic Party and would seek that party's nomination for Senate in 2010.

Specter candidly admits that he is switching parties because he expected Toomey to defeat him in Pennsylvania' s Republican Primary.  The Republican Liberty Caucus (RLC)  rated Toomey as a "Libertarian" over his six years in congress from 1999-2005, meaning that he had a strong performance as a legislator who generally favored individual liberty in both personal and economic matters.  Specter is a "centrist," which means he generally favors the ever-growing and more intrusive government we have today.  "I now find my political philosophy more in line with Democrats than Republicans, " Specter lamented, and indeed polls showed him trailing Toomey by 10 points in Pennsylvania. 

Specter voted for TARP because "the failure of Congress to take some decisive, substantial, action would run the risk of dire consequences to U.S. and world markets."  (Specter Press Release, Oct. 1, 2008).  Explaining his vote for Obama's "stimulus package," he stated "I am supporting the economic stimulus package for one simple reason: The country cannot afford not to take action." (Specter Press Release, April 3, 2009).  (Specter also procured an additional $10 billion in the "stimulus package" for the National Institutes of Health, a pet program of his, which has absolutely nothing to do with economic "stimulus.")

What if the 'decisive action' taken by our federal government is a really bad idea?  The United States Government caused this recession through credit expansion via the Federal Reserve System and government intervention in investment markets.  The Federal Reserve set the stage for the current economic crisis by several years of artificially low interest rates.  This cheap credit, combined with efforts by the federal government to expand mortgage lending, steadily blew up a financial bubble that was due to burst.  Government through its regulatory powers encouraged lending to subprime borrowers through the Community Reinvestment Act as amended during the Clinton administration.  Government-chartered corporations Freddie Mac and Fannie Mae encouraged mortgage lending through expanding the secondary mortgage market.  The secondary mortgage market developed truly exotic investment schemes to take advantage of the cheap credit available until reality set in and borrowers large and small were unable to repay their debts.  Banks lurched toward insolvency, businesses operating on credit were unable to continue, and millions of people have lost their jobs and homes.  This chain of events was brought to us courtesy of the Democrats and Republicans whose "political philosophy" Specter supports.

Government caused the current economic crisis by artificially expanding credit and thereby encouraging investment that real savings and demand could not support.  This is where recessions always come from, and our Beltway leaders just don't get it.  Now, the federal government proposes to fix the problem it caused by borrowing and printing $1.5 trillion, which it has "loaned" to banks and will spend on a variety of social programs that are guaranteed to have no immediate economic benefit whatever.  Billions of dollars are being taken from capital markets by our government to be spent in non-productive social programs.  Money that is not borrowed by the federal government will simply be printed.  By increasing the quantity of money in circulation, the government will reduce the value of the dollar, setting the stage for inflation.  Is this really the 'decisive action' we need?  No.

The only 'decisive action' taken by Specter today was to stick his finger in the wind and realize that he would be defeated by a pro-freedom Republican unless he escaped to the Democratic Party, where he undoubtedly belongs.  Republicans, take note:  we the people want Republican leaders who believe in us rather than in government.  We want Republican leaders who believe in individual freedom and the principles of limited government on which our nation was founded.  We do not want Republican leaders like Specter who find their "political philosophy more in line with Democrats," and we will be happy to show them the way to the door.