The appointment by President Obama of Jeffrey Immelt, Chairman and CEO of General Electric, to head the new President’s Council on Jobs and Competitiveness is just another sign of the commitment of the Obama Administration to “Crony Capitalism”. For over 100 years GE was known for business innovation and manufacturing excellence. But long gone are the uplifting moments in our nation’s history when company spokesman Ronald Reagan proudly exalted GE’s motto: “Progress is our most important product.”
Mr. Immelt as the newly appointed pied-piper for the future for American industry suggests, (as Immelt wrote to shareholders):
“The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also, an industry policy champion, a financier, and a key partner.”
For the last three years, Mr. Immelt has been in the vanguard for this new relationship between business and government, as a member of the Administration’s “Economic Recovery Advisory Panel”.
During the wild Congressional spending spree of the last couple of years, GE miraculously became the largest beneficiary of the government’s Troubled Asset Recovery Program (TARP) bank bailout. Although GE did not initially qualify for TARP, the company’s $18 million annual investment in battalions of Washington DC lobbyists convinced Administration regulators to push that “reset” button and extend TARP guarantees and subsidies to GE. Public records demonstrate GE Capital, the company’s massive financing arm, pocketed $120 Billion in loans from the Federal Deposit Insurance Corporation at interest rates of less than 1% and snatched 25% of the entire $340 billion in subsidies from “Temporary Liquidity Guarantee Program” (TLGP) rescue fund.
Unlike other highly regulated financial institutions that secured Federal back-stops, including Bank of America, Citigroup and J.P. Morgan Chase; GE was not required to curtail use of risky derivatives or pass the Fed’s liquidity “stress test” to qualify for taxpayer funding. GE was also exempted from new regulations restricting executive compensation at firms like AIG and Goldman Sachs. Mr. Immelt took advantage of GE’s special treatment to pick up $30.9 million in total compensation over the last three years, while GE shareholders suffered a catastrophic 46% loss as the company’s shares crumbled from $35 to $19.
Mr. Immelt took advantage the new “reset economy” to globally expand GE’s Business Process Outsourcing (BPO) unit to over 40,000 people in India. Its NBC television network funded a series called “Outsourced” to humorously showcase what happens to off-shored American jobs.
Here at home, Mr. Immelt rearranged GE’s affairs to virtually eliminate the stiff corporate taxes most other U.S. corporations will pay for government to be the “regulator; “industry policy champion, a financier, and a key partner” for the benefit of GE.
Mr. Immelt financially expressed his appreciation for the Administration’s “interaction between government and business” by directing GE to invest heavily in its MSNBC 24 hour television news unit. Lead commentator, Keith Olbermann, who once donned a mask of Bill O’Reilly at the Television Critics’ Association in Hollywood and made a Nazi salute, received a hefty raise from $4 million to $7.5 million a year. His side-kick Chris Matthews, former Chief of Staff for legendary Democratic Speaker of the House Tip O’Neil, also stepped up to a $5 million annual contract.
This is the same Chris Matthews who stated on air that his job at MSNBC is to do everything he can to “help” President Obama succeed. Mr. Matthews added:
“Reagan was all about America, and you talked about it. Obama is, ‘We are above that now. We’re not just parochial, we’re not just chauvinistic, we’re not just provincial. We stand for something.’ I mean, in a way, Obama’s standing above the country, above – above the world. He’s sort of God. He’s going to bring all different sides together.”
The American people should be highly suspect of the intentions of Mr. Immelt as the national point person for jobs and competitiveness. The Obama Administration has bank-rolled GE’s continued transformation from a consistently profitable American manufacturer to a predominantly off-shored and spectacularly leveraged financial casino powered by taxpayer dollars. The Administration and Jeffrey Immelt have greatly benefitted from their Crony Capitalism relationship; the American people not so much.