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Gangster government is always a danger, whoever is in power

April 12, 2011 | Modified: March 16, 2012 at 7:35 am

Michael Barone

We have just seen an episode,” I wrote in a May 5, 2009, column in the Washington Examiner, “of Gangster Government.” The subject of the column was the Chrysler bankruptcy package that was being hammered out by White House advisers Steven Rattner and Ron Bloom. Ordinarily in bankruptcy secured creditors—those who lent money only on the contractual promise that if the debt was unpaid they’d get specific property back—are paid off in full before any payment goes to unsecured creditors.

But in the case of Chrysler, the Obama administration insisted that Chrysler’s bondholders, who were secured creditors, would get only about 29 cents on the dollar, while United Auto Workers retirees, who were unsecured creditors, would get about 50 cents on the dollar. More than that, BarackObama made a point of referring to the bondholders as “speculators.” And one of the bondholders’ lawyers claimed that his client “was directly threatened by the White House in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.” An odd threat—except that Rattner is widely known to be one of the best friends of the publisher of the New York Times.

This was a case of the White House transferring the property of one group of people to another group to which it owed political debts. The UAW has long been one of the Democratic party’s strongest supporters, and labor unions contributed $400 million to Democratic campaigns in the 2008 cycle. Those contributions apparently paid off.

Some may consider this an isolated episode. Others may point out that it’s possible to identify episodes of gangster government in previous administrations of both political parties. But, as I predicted at the end of my May 2009 column, this was part of a continuing series, for two reasons.

First, under the Obama administration, the federal government became intertwined with the private sector in unprecedented ways. It owns large shares of two large auto companies and what was one of the nation’s largest insurance companies. It extended enormous loans to the nation’s largest banks. The administration’s defenders can point out, accurately, that some of these measures were initially taken in circumstances of financial emergency during the Bush administration. But that administration was not responsible for actions taken after January 20, 2009.

The second reason that this administration seems unusually inclined toward gangster government is the philosophy of its leader. When asked what he looked for when choosing a nominee for the Supreme Court, Barack Obama said he wanted “someone who understands justice is not just about some abstract legal theory,” but someone who has “empathy.” In other words, judges should decide cases so that the right people win, not according to the rule of law. The president himself taught law at the University of Chicago. But his principles seem to be conducive to the kind of gangster government the city of Chicago has from time to time experienced.

But let the facts speak for themselves, as assembled and presented by my Washington Examiner colleague David Freddoso. As in his 2008 book, The Case Against Barack Obama: The Unlikely Rise and Unexamined Agenda of the Media’s Favorite Candidate, Freddoso is self-confessedly not a partisan of the president. But he is also a fine reporter who respects the facts and refuses to draw unwarranted conclusions. He understands that people sometimes have good motives to do bad things.

Gangster government is always a danger, whoever is in power. It is a greater danger the more government is deeply enmeshed with the private sector and when its leaders believe that rules should be bent or ignored in order to benefit favored constituencies. So thanks to David Freddoso for providing a report that enables citizens to decide just how far gangster government has gone in this administration.