The Obama administration and Pennsylvania’s Republican governor worked hand in with Sunoco, a labor union, and private equity titan Carlyle Group to grease the skids for something of a bailout of a Philadelphia-area refinery.
This great Wall Street Journal news story on this deal doesn’t show any direct federal funds — only state subsidies, a special federal waiver from environmental rules, and White House hand-holding to make the deal happen.
But this raises a couple of points of interest.
First, it reminds us how whenever government starts helping some business or another, the financial sector seems to get a healthy slice of the pie.
When Obama’s Energy Department gave solar stimulus subsidies to NRG and Prologis, it wasn’t the green-energy companies that applied for the subsidy, it was Bank of America.
The Export-Import Bank subsidizes Boeing, but it does so by guaranteeing payment to the financiers of Boeing’s customers — the likes of JP Morgan. Obama’s Build America Bonds, proposed infrastructure bank, proposed green bank, government backing of Fannie Mae and Freddie Mac, mortgage bailouts — they are all subsidies to finance.
But here’s the second, broader point: Do we like politicians having so much ability to spare or kill businesses that are politically important and that deal with politically friendly unions? What sorts of added powers does this give our politicians? What opportunities for corruption does this create?
We know how this White House deals. We know that they gave the drug industry what it wanted in ObamaCare and in exchange got drug-industry money to run ads backing the bill and the reelection of Democratic Senators who voted for the bill. We also know it’s brutal strong-arm tactics with private-equity firms that didn’t go along easily with the sweetheart deal for the United Auto Workers in the Chrysler bailout.
If you worry about money’s influence on politics, you have to be worried about government’s role in steering business.