The problem in the White House

David Freddoso, who wrote The Case Against Barack Obama, is author of the new book Gangster Government: Barack Obama and the New Washington Thugocracy. He talks to National Review Online’s Kathryn Jean Lopez about the man who’s seeking a second term in office.

Kathryn Jean Lopez: Why go “gangster,” when the first thing you then have to do in the book is explain how you don’t really mean to call the president Tony Soprano?


David Freddoso: The question is perhaps better directed at Obama’s administration. Why send a group of pinstriped thugs from the Treasury Department to interfere in a private company’s bankruptcy, all so that the property of its lenders can be given to a politically favored union? Why should officials at Chrysler, who actually pushed at one point for fairer treatment of the secured creditors, receive threatening, angry e-mails from the Treasury, and the creditors receive threats from a White House smear campaign?

That episode was the one that first brought cries of “gangster government.” Unfortunately, Michael Barone’s observation on it fits a broader pattern of this administration’s workings that has unfolded over time. Why did we see the drugmakers buying protection from the Obama White House during the talks over Obamacare? Why did Obama’s administration flagrantly violate a law that Obama once co-sponsored, in order to protect a friend from a zealous inspector general’s investigation? Why does this administration dedicate 99 percent of its attention to helping an institution — organized labor — that represents 6.9 percent of private-sector workers? Why is Obama overturning century-old precedents to help his friends and hurt his enemies? Why do White House advisers refer to American business as a golden goose that they don’t want “crapping all over them”?

When I first spoke to Barone about his idea of “gangster government,” I never imagined that the Obama administration would do so many things to help establish the pattern.



Lopez: Tony Rezko, Rod Blagojevich — why bring up stories from the past?

Freddoso: Blagojevich is hardly a story from the past. We’ll be seeing a lot of him later this month — and as always, far more than anyone really wants. We might even see Rezko.

What I found most interesting about his first trial were the specific allegations about Rezko that we didn’t know about when Obama was running for president. It turns out that Rezko might have been much more than just an influential guy who shook down investors to raise lots of campaign money for Blagojevich, and then got his friends appointed to key positions (and even got one of his relatives into the University of Illinois on Blagojevich’s say-so). Prosecutors have now made public details about how Rezko was allegedly handing envelopes full of used greenbacks to the governor’s chief of staff. Rezko allegedly hired the governor’s wife to a no-work, no-show job and thus funneled at least $110,000 into Blago’s bank account.

In that light, the weird land deals that Obama and Rezko got into, which took place in the same general period, really deserve a second look. When Obama admitted to a boneheaded move, he did so for a reason, and it’s worth looking at why and how these new details show that it’s even more boneheaded than originally believed. Here’s a guy who supposedly had the governor of Illinois eating out of his hand, and then engaged in these strange real-estate deals that definitely worked out well for the state’s junior senator. That adds a new dimension to the story that wasn’t there previously.



Lopez: Isn’t this all guilt by association?

Freddoso: Not at all — in fact, to say so would be unfair to Obama’s associates. Neither Tony Rezko nor Blagojevich had anything to do with the shameful Chrysler episode. Neither of them was involved in overturning a century of bankruptcy law or 45- and 75-year precedents in labor law in order to help politically important constituencies. None of them has gone to such lengths to make businesses more vulnerable to lawsuits, nor to funnel taxpayers’ hard-earned money to green bandits in the wasteful economic enterprises of high-speed rail and wind and solar energy. That’s all Obama, and that’s what Gangster Government is about.

Although the first chapter looks back at Obama’s Chicago roots, that’s only the beginning of the story. The most important thing is that the reader looks at his subsequent acts and measures them by that same “above-the-law” yardstick that governs life in Chicago.


I warned in 2008 that the man who won his very first election by throwing all of his opponents off the ballot was probably not the great reformer he claimed he was — the man who was going to fix Washington when others could not do so. Gangster Government is a book about how, after coming to Washington with that lofty promise, Obama has instead ruthlessly exploited Washington’s brokenness.

It was only later that Rahm Emanuel, Obama’s former chief of staff and the new non-resident mayor of Chicago, explained the importance of not wasting crises, because they allow you to do things you couldn’t do otherwise. We’re now seeing a lot of crises not being wasted.

Lopez: What does Socrates have to do with it?

Freddoso: I nearly choked on my coffee when I saw Obama’s comments about helping friends and punishing enemies — it really summed everything up well. I recalled that the same idea had been set forth by one of the characters in Plato’s Republic, only to be refuted by Socrates right out of hand. That isn’t right.

Lopez: What does the president have against Adam Smith?

Freddoso: Obama believes that his own, visible hand is a better guide for our economy than market demand. It is a widely shared conceit. The stimulus package, especially, is an exercise in reshaping rather than restoring the economy — of exploiting an economic crisis in order to move companies and industries in a direction that Obama personally prefers. He talks about this whenever he refers to the so-called jobs of the 21st century that he wants to create.

This is a dangerous risk he’s taking at the expense of every taxpayer in America, and of our long-term economic competitiveness. In Spain — an example he used to cite for its commitment to green energy — we already saw what happens when government tries to create demand where there is none: It wastes a ton of money and creates massive asset bubbles, without creating any net jobs. We saw the same thing happen here in the last two decades with the well-meaning attempts to incentivize homeownership beyond its true value.


The market tends to exact revenge on those who lay such fine plans. Truly sustainable jobs will not result from attempts to create demand for green power where there is none. And it’s not just the wasted stimulus money — an aspect no one considers is the private money that the stimulus has drawn out of productive enterprises and into subsidy chasing. The Obama White House estimated at one point that it was luring more than two dollars in private investment into the “clean energy” field for each dollar the federal government spending. If that figure has held up, then that translates to hundreds of billions of good private investment dollars that are being wasted on things for which there is no demand.

In that context, is it any wonder that job creation and the recovery have been sluggish? And we haven’t even addressed the possible long-term effects of all this government borrowing.

Lopez: What do you have against Spain?

Freddoso: I love Spain, and I’ll give the Spanish this much: Their socialist government is actually learning painful lessons from its green debacle and its overspending ways. I would be very sad if our own government failed to learn from Spain’s mistakes, and instead chose to repeat them, as Obama seems determined to do.

Lopez: How is Obamacare indicative of the president’s gangster politics?

Freddoso: I don’t think you could find an uglier legislative process, nor any bill in recent memory that was sold to voters with so much dishonesty. It was sold with lies, greased by bribes, and made possible by members of Congress who (still!) don’t even know what they voted on. It was rammed through against the public’s will, and with exceptions carved out for everyone whom Obama wanted to or had to help — PhRMA, the unions, and the AARP, to name just a few.

The silver lining is that unlike with many of Obama’s initiatives, such as the Libyan War or the auto bailout, we at least got a vote in Congress. But that’s a pretty low bar for measuring an administration, I think.


Lopez: What is the greatest scandal of Obamacare?

Freddoso: There are a lot of potential choices — the AARP is one, the deal with PhRMA is another, the giveaways to unions are a third. But I’m going to have to pick the decision not to include any kind of malpractice reform. That’s the clearest sign that the trial lawyers co-own this presidency, along with the unions.

There is no easier or more proven way to achieve Obama’s stated goal of health-care cost reductions, and yet it’s just tossed aside because it threatens the gravy train of an important interest group. That says a lot about the sincerity of the president’s rhetoric on health care.

Lopez: Is AARP’s untouchable status unraveling?

Freddoso: It certainly seems that way. I get the sense that new Republican majorities all across the nation have decided they’re going to take a bulldozer to the Left’s power structure, so that Democrats can no longer leverage the unwitting taxpayer’s livelihood.

We already see this going on at the state level, in places like Wisconsin, Florida, Michigan, Idaho, Maine, and Ohio, where the GOP is threatening or abolishing public-sector-union prerogatives. But in Congress, where the problem of public-sector unions is not as central to the budget problem — federal employees have no collective-bargaining rights over wages or benefits, and their pensions were reformed decades ago — there’s been a push to go after other important left-wing institutions. In budget terms, that means Planned Parenthood and NPR. The AARP, which enjoys tax-exempt status, is a timely target because of its role in Obamacare.

AARP’s publicly available tax forms reveal that it looks a lot more like a business than a non-profit. In 2008, it derived about 70 percent of its revenue from ad sales in its magazine and licensing royalties (you know — those AARP-endorsed insurance products) and less than 25 percent from membership dues. This is a relatively new development, because they used to look more like a traditional non-profit.

Just in the abstract, could you possibly imagine the AARP of ten years ago endorsing $500 billion in Medicare cuts — even if most of them are really just an accounting fiction? Neither can I. But because of AARP’s rapidly developing status as a bona fide business, the Obamacare debate put the group in a crisis: On the one side are the interests of its members, and on the other is AARP’s ability to sell more Medigap policies. For an advocacy organization to choose the latter over the former is a pretty grave violation of the trust that the organization had built up over time.

Conservatives were always upset over AARP’s apparent ideological commitment to big government, but potential legislative profiteering is a different story altogether.

Lopez: How has the president been a “gangster” to pro-lifers?

Freddoso: You are, of course, referring to the Justice Department lawsuit against David Hamilton, who is basically just a pious kid who made the mistake of supporting the wrong cause. I thought that the Black Panther case was interesting because of the disparate treatment received by this other defendant who has been pursued by precisely the same division of the Obama Justice Department.

It turns out that if you flagrantly bully and intimidate voters while brandishing weapons, there are high-level Obama appointees who will pull strings to make sure you can intimidate voters in another town during the next election. The story is very different if you brush someone’s arm while participating in a routine protest outside of an abortion clinic. In that event, the Obama administration will sue you for more than your entire net worth, even if the incident in question was so minor that all charges were dropped and the abortion clinic’s manager doesn’t remember it. I think the comparison speaks volumes.

Lopez: Why does Ray LaHood fit well in “ObamaLand”?

Freddoso: As a Republican congressman, LaHood was everything wrong with the old GOP majorities. In Gangster Government, I relate LaHood’s own description of why he sought a chair on the appropriations committee — he wanted to be there when the money was divvied up. Once you’ve read his own words, it’s obvious that he’s right at home in the Obama administration, and right at home discussing hare-brained schemes like installing cell-phone jammers on automobiles so that people will stop talking and driving.

He’s also part of the same Chicago political stock — just the Republican side of it. Keep that in mind when you see him going along with Rahm Emanuel’s plan to threaten states with the loss of stimulus money if their lawmakers complained about the waste in the stimulus.


Lopez: What’s so wrong about high-speed rail?

Freddoso: Two things: Inevitable cost overruns and long-term operating losses that require long-term government subsidies. It’s no wonder that governors in three states have turned down multi-billion-dollar grants. They love free money, but they don’t want to be on the hook for all the extra money later.

Everything I’ve read so far about the project in California suggests that people will someday be building statues honoring all of the governors who refused the money. Most long trips will be both faster and cheaper by air. Most short trips will be as fast or faster, and much cheaper, by car. Just imagine a family of four shelling out over $800 for the round trip between Los Angeles and San Francisco.

You mentioned Spain earlier. I have visited Spain twice — once in 1998, and again in 2009. I noticed on the second trip that the Spanish now drive larger cars that look more like ours. They are also buying more American-like appliances for their homes. That’s just anecdotal, but Europe’s dramatic decline in rail ridership and its increase in auto and air travel over the last few decades are well documented. So the great irony is that Europe is trying to be more like us, but Obama hasn’t gotten the memo.

Lopez: Supporting the SEIU isn’t special-interest-group politics. It’s protecting the common man, the blue-collar guy, isn’t it?

Freddoso: If by “protecting the common man” you mean bending over backwards for 12 percent of all workers, at the expense of the other 88 percent, then yes. But I think that verges on abuse of the term “common.”

You’re right to bring up the SEIU, which happens to be Obama’s favorite. They were the ones who made him a senator in 2004 — something he has not hesitated to acknowledge. They and the AFL-CIO broke the bank in 2008 to elect Obama and install as Democratic a Congress as possible. The unions’ spending in that election was the equivalent of a third presidential campaign, and so when you consider what the political environment was like, it’s amazing that Obama didn’t do even better.

That’s the best explanation for the incredible access that this White House has given labor leaders. To paraphrase Obama’s own words, he owes those unions, and when their leaders call, he calls them back right away. Richard Trumka of the AFL-CIO brags that he talks to White House officials every day on the phone and visits the White House at least once a week. Do you suppose that Halliburton ever enjoyed that kind of access under George W. Bush?

The private labor market is choosing against the union model. The unions’ age pyramids are upside-down. Their biggest selling points — good pensions — have become a victim of years of corruption and fiscal mismanagement. The original reason for their existence has been obviated by humane labor laws. We just don’t need to be protected from Upton Sinclair’s Jungle anymore. Obama’s administration, in zealously fighting to revive the unions, is longing for a past that may be impossible to recreate, even with every tool of his government being used to give some special favor to organized labor.

Lopez: Can you put a dollar amount on how much this president’s “gangster government” has cost the American taxpayer?

Freddoso: The real damage, as Frederic Bastiat would tell us, is unknowable. How do you put a price tag on Obama’s vilification of business lenders in 2009? How many entrepreneurs lost out on financing because of his single speech — to say nothing of the more significant actions the Obama administration took in relation to the auto bailout and bankruptcies? How can you calculate the fortunes and jobs that could have been created if GM and Chrysler had been allowed to go bust? Or the profits we’d be making and the jobs created if Obama hadn’t been so intent on stalling oil exploration — especially given oil prices today?

Consider, again, the hundreds of billions in investment capital that Obama brags he has lured into chasing energy subsidies through the stimulus. What good uses could that cash have been put to, and what benefits might have resulted for society as a whole? There could be 100,000 new jobs in some legitimate industry with long-term prospects. We might all be buying 5G phones by now. We just can’t know, because those are hidden costs.


Lopez: What do you hope a presidential candidate takes and literally runs with from your book?

Freddoso: I’d really like to see someone popularize the argument about hidden costs. There are legitimate reasons to believe that this is a lost cause. It’s easy to tell union autoworkers that you’ve saved their jobs with a bailout. It’s impossible to explain to the unemployed that when Obama bailed someone else out, he possibly cost them the opportunity to be hired.

On the other hand, maybe there is a chance. Because his policies have failed, Obama has to resort to making the same argument about how much worse things could have been without him. The opposite argument — that things could have been much better without him — has much more evidence in support. There haven’t been that many success stories from the stimulus package, and the clear instances of waste provide a good starting point for an argument about hidden costs. I’d love to see a political ad that begins with Obama’s speech at Solyndra, and then goes on to show how stimulus money failed to cause hiring at that company. When government decides where the economy is going next, it often guesses wrong, and its attempts to force the matter with gobs of money often become costly failures.

Lopez: Is his presidency truly a failure?

Freddoso: In the broad sense, it’s too soon to tell. Anything could happen in the next two years, or even in the next six. Maybe Obama will make some huge breakthrough in education reform. Or maybe he’ll just get lucky, and some enterprising scientist will square the circle on cellulosic ethanol, making all of our nation’s energy costs disappear overnight.

But in one specific and very important sense, I say that the Obama presidency is already a failure. Obama laid out some very specific milestones by which he will be judged — job creation, the cutting of costs in medicine, and the revitalization of business lending. In all three cases, his commitments to special interests are undermining the goals he set. For example:

Stimulus money cannot create jobs if it is being committed to overpriced union contracts, as Obama’s executive order on Project Labor Agreements dictates. Health-care costs probably won’t go down at all, but Obama would have had a fighting chance of curbing costs if he had included medical-malpractice reform in Obamacare — the low-hanging fruit. But the Obama administration believes, as Vice President Biden once put it, that unions and trial lawyers are the only ones standing between them and the barbarians, so they left an easily pluggable $50 billion annual leak in the system. In April 2009, at a time when the federal government’s supposed top priority was jump-starting lending, President Obama gave a major address roundly denouncing and even insulting the Chrysler lenders who were trying to get back a fraction of what was owed to them. Behind the scenes, he threatened them with further smears and vilification. Is that a good way to promote business lending — to punish it and make it less attractive, solely in order to help a moribund labor union?

In each case, we see an administration that is so committed to its political allies that it is even willing to trample its own stated goals in order to help them. That is a recipe for failure. Ironically, Obama’s efforts to cover his own political rear could become his greatest vulnerability going into the 2012 election, as the public recognizes that his favorites are devouring any prosperity that his policies might have otherwise created.

— Kathryn Jean Lopez is editor-at-large of National Review Online.