Gangster Government: Barack Obama and the New Washington Thugocracy

By David Freddoso

And in this new and stunning book, New York Times best-selling author David Freddoso (The Case Against Barack Obama) provides the much-needed exposé of an administration that has brought Chicago-style corruption and strong-arm politics to Washington, looking to reward its friends (the unions, federal workers, and other liberal interest groups) and punish its enemies (the private sector workers and taxpayers who foot the bill for Obama¹s massive expansion of the federal government).

• Language: English
• Publisher: Regnery
• Release date: Apr 4, 2011
• ISBN: 9781596982048

Book preview

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Table of Contents

Title Page

Foreword

CHAPTER ONE - GANGSTER GOVERNMENT

ABOVE THE LAW

EXPANDING POWER

CHAPTER TWO - STOP US IF YOU CAN: SAVING THE UAW

DETROIT’S FORTUNATE SONS

RUNNING AMERICA LIKE HE OWNS IT

BLANK CHECK

I DON’T NEED LENDERS

ROADKILL

CAPTIVE INDUSTRY

COLLUSION COLLISION

FAILURE IN SUCCESS

CHAPTER THREE - ON THE PRECIPICE: OBAMACARE

AN OFFER YOU CAN’T REFUSE

UNCLE SAM: THE ENFORCER

PUTTING THE SQUEEZE ON SENIORS

THE RIGHT SIDE OF THE GUN

DIRTY DEALS, DONE VERY EXPENSIVE

IT GETS BETTER

RULE BY BUREAUCRAT

CHAPTER FOUR - THE MOST EXPENSIVE STORY EVER TOLD

WE JUST WASTED A TRILLION DOLLARS?

BORROW AND SPEND

IT’S LIKE A BUDGET NUMBER

CAN OPENER

NET ZERO

LEARNING FROM SPAIN

THE ANSWER IS BLOWING IN THE WIND

NO JOBS HERE

HIGH-SPEED RAIL

FROM CRISIS TO WASTE

FREE MONEY ISN’T FREE

CHAPTER FIVE - WE’RE GONNA HELP OUR FRIENDS: BIG LABOR

THE SEIU AGENDA IS MY AGENDA

PAYING HIS DEBTS WITH YOUR MONEY

THE HEART OF THE MATTER

FAVORS AMONG FRIENDS

UNION TOADY TASK FORCE

THE PRESIDENT’S BUDGET INCREASE PANEL

CHAPTER SIX - WE’RE GONNA HELP OUR FRIENDS: THE TRIAL LAWYERS

THE SPECIAL-EST INTEREST

TAX CUTS FOR A FEW RICH

PREEMPTION

FAVORS AMONG FRIENDS

MR. LEAD PAINT GETS A NOMINATION

THE OBAMA ANTI-STIMULUS

CHAPTER SEVEN - WE’RE GONNA PUNISH OUR ENEMIES

BOGEYMAN OF THE WEEK

CONTEMPT

NOT A FRIEND? OUT OF LUCK.

SUING ARIZONA

QUIS CUSTODIET IPSOS CUSTODES?

CHAPTER EIGHT - RECOVERING FROM GANGSTER GOVERNMENT

POWER OF THE PRESIDENT

ASSESSING THE DAMAGE

THINKING ABOUT TOMORROW

IF YOU CAN KEEP IT

Acknowledgements

NOTES

INDEX

Copyright Page

002

Nire hartzatxuentzat:

Ez nekeak, ez da bide txarra.

003

FOREWORD

BY 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, Barack Obama 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.

Michael Barone is senior political analyst for the Washington Examiner,

resident fellow at the American Enterprise Institute, and co-author of

The Almanac of American Politics.

CHAPTER ONE

GANGSTER GOVERNMENT

Were these acts committed on a petty scale and detected, they would be severely punished—the perpetrator suffering great disgrace. Those who commit such petty crimes are called temple robbers, kidnappers, burglars, con-men and thieves. But if only a man will go to the additional trouble of relieving his victims of their freedom, along with the contents of their pocketbooks—if only he turns them from citizens into slaves—why, then, instead of suffering insults and accusations, he is deemed happy and blessed, not only by his victims, but by all who hear that he has ascended to the very pinnacle of perfect injustice.

—Thrasymachus in Plato’s Republic.¹

To his admirers, President Barack Obama is a philosopher king—or a philosopher president—as this snippet from the New York Times suggests:

In New York City last week to give a standing-room-only lecture about his forthcoming intellectual biography, Reading Obama: Dreams, Hopes, and the American Political Tradition, [Harvard historian James T. Kloppenberg] explained that he sees Mr. Obama as a kind of philosopher president, a rare breed that can be found only a handful of times in American history.

There’s John Adams, Thomas Jefferson, James Madison and John Quincy Adams, then Abraham Lincoln and in the 20th century just Woodrow Wilson, he said.²

His vice president, Joseph Biden, informs us that Obama only comes off as aloof because "he’s so brilliant. He is an intellectual."³

His longtime friend and White House advisor, Valerie Jarrett, reminds us, through author David Remnick, that Obama is like no ordinary man:

I think Barack knew that he had God-given talents that were extraordinary. He knows exactly how smart he is.…He knows how perceptive he is. He knows what a good reader of people he is. And he knows that he has the ability—the extraordinary, uncanny ability—to take a thousand different perspectives, digest them and make sense out of them, and I think that he has never really been challenged intellectually.…So, what I sensed in him was not just a restless spirit but somebody with such extraordinary talents that had to be really taxed in order for him to be happy.… He’s been bored to death his whole life. He’s just too talented to do what ordinary people do.⁴

Newsweek’s Evan Thomas says Obama’s greater than any small idea like America. He compares him to another recent president—and to the Almighty:

Reagan was all about America....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....⁵

Sort of God. The One. The Light-Worker. The Philosopher President.

Descriptions like these abound in our mainstream media, where our president’s fan club never loses its zeal. But they do not apply so well to the real Barack Obama—the one who comes from the murky politics of Chicago and Springfield, Illinois. The one who won his first election for state Senate by throwing all of his opponents off the ballot.⁶ The reputedly arrogant and prickly state senator who nearly got into a fist fight with one of his state Senate colleagues in 1997, declaring to him on the Senate floor, I’m going to kick your ass!⁷

The Obama of media myth also bears no resemblance to the president of the United States whom we’ve seen over the last two years—the one who refers to his political adversaries as teabaggers (which as liberals snickeringly know refers to an obscene sexual practice), and talks about punishing his enemies.

Obama didn’t come to Washington from Mount Olympus. He came from the corrupt and dirty politics of Chicago. Philosopher seems like the wrong word for anyone who got ahead by forging so many unsavory but expedient political alliances with Chicago politicians. Rod Blagojevich and Tony Rezko do not strike one as types who pal around with philosophers.

Neither does Mayor Richard M. Daley, an Obama political ally whose brother William now serves as Obama’s chief of staff. Daley’s ways are captured well within Obama’s 2008 campaign boast: If they bring a knife to the fight, we bring a gun.⁸

It’s the Chicago way.

That’s what Mayor Daley was doing at 1:30 on the morning of March 31, 2003. Instead of guns, he brought bulldozers. They suddenly appeared along the lakefront at Merrill C. Meigs Field, a small airstrip built in 1948 on a manmade island in Lake Michigan. Its runways, used mainly by small private planes, were just a few hundred yards from the city’s vibrant downtown. The airport was valued for its convenience to downtown, and had reportedly been a favorite landing point for Republican Governor Jim Edgar. Meigs was also the site where a non-profit organization that honors the Tuskegee Airmen gave free monthly flights to introduce inner-city children to air travel in its Young Eagles program.⁹

The Chicago Park District owned the land on which the airfield operated. Daley had been trying to close Meigs for years and turn it into a park. He tried to shut it down in 1996 by refusing to renew its lease. The state legislature had responded by threatening to take it over.

Daley backed down—for a time. And in December 2001, it appeared the matter had been settled for good. Daley struck an agreement with the legislature and Republican Governor George Ryan to keep Meigs open until 2026 in exchange for a bill in Congress to guarantee federal approval of the expansion of O’Hare International Airport on the outskirts of town.

But when Daley did not immediately get his end of the deal—Illinois Republican Senator Pete Fitzgerald, a longtime opponent of O’Hare’s expansion, filibustered the bill—the mayor exacted his revenge with bulldozers. He was sending a clear message to anyone who might think of crossing him in the future. Their engines roaring, the city’s bulldozers gouged gigantic X-marks in the 3,900-foot runway, rendering it useless.

The destruction came as a complete surprise to the airport staff in the tower, federal authorities, pilots, Democrat Governor Rod Blagojevich, all fifty of the city’s Aldermen, members of Congress who had been working on the O’Hare deal, and even the Department of Homeland Security.¹⁰

Mayor Daley had also not bothered to inform the Federal Aviation Administration—whose regulations require at least a month’s notice before an airport can be shut down—until the moment the demolition began, with a letter to the FAA dated March 31. The mayor’s office also claimed that someone informed the FAA orally. Perhaps this was a phone call, shouted over the roar of the bulldozers. In the aftermath, Daley’s lawyers argued the city had no choice but to redirect federal funds intended for Chicago’s other two airports to demolish this busy little airfield, because it had been abandoned. No one had told that to the owners of the sixteen small planes that were left stranded on the field.

The feds didn’t buy any of this, and the city ultimately paid the maximum fine the FAA could charge them under the law for destroying the airfield. Unfortunately, that came to a pathetic $33,100.¹¹ But Chicago at least evaded justice on the count that it had illegally diverted federal money from its other airports to destroy Meigs. The city was fortunate enough to settle the case with the FAA for just $1 million. It could have been fined as much as $9 million. Daley spent at least $200,000 on outside lawyers to defend his overreach. ¹²

But if you’re the mayor of Chicago, it’s better to ask forgiveness than it is to lose the initiative and become just one more little person who lives under and not above the law.

Years later, a similar line of thinking helped President Obama squeeze his health care reform bill through Congress by one vote, despite overwhelming public opposition. To tamp down discontent over this unconstitutional manifestation of Hope and Change, congressional leaders offered as reassurance, We have to pass the bill so you can find out what is in it.¹³

At first, Daley claimed that the destruction of Meigs had been a homeland security matter: Those airplanes appear to be going to Meigs, but with a sudden turn they could cause a terrible tragedy downtown or in our crowded parks. That scares me.¹⁴

It was a naked lie that he never really tried to back up. When asked, Homeland Security Secretary Tom Ridge said that no one had consulted him or his department about the matter at all. Ridge said the fate of the airport was none of his business, but he also pointed out that the plans to close Meigs predated 9/11 by many years.¹⁵

Not that it mattered. Nobody believed Daley’s cover story, and he probably didn’t care if they did. As for the security implications, the airport’s closure, and the eventual elimination of its airspace classification meant that there would be less, not more, control over planes flying through downtown Chicago’s lower altitudes.

After Ridge’s comments, Daley offered instead an explanation of how wonderful it would be to have a park in the airfield’s place, on Northerly Island: That’s what makes Chicago unique from the rest of the world, he said. That we have protected this wonderful lakefront.

Actually, what makes Chicago unique, or at least noteworthy, is that it is a municipal dictatorship. Its politics are both crooked and brutal. Its elected officials believe, almost to a man, that they are above the law. The story of Meigs is a typical story of gangster government, of ends justifying the means, of government power being abused to reward friends and punish enemies.

That’s how things work in Chicago. Daley got his park, and for decades hence, Chicagoans and visitors will be able to visit it and view a monument to what a civic leader can accomplish by ignoring the law and acting unilaterally. Daley eventually got his O’Hare expansion, too. With Barack Obama in the White House, it would become the most heavily federally subsidized airport renovation project in the history of the United States.¹⁶

ABOVE THE LAW

The professorial columnist Michael Barone, whose Almanac of American Politics is the essential reference on every Washington journalist’s shelf, was the first to use the words gangster government to describe the Obama administration. He coined the phrase in May 2009 while describing how the Obama administration intervened in Chrysler’s bankruptcy to make sure that the autoworker’s union was protected at the expense of the firm’s senior creditors:

Think carefully about what’s happening here. The White House, presumably car czar Steven Rattner and deputy Ron Bloom, is seeking to transfer the property of one group of people to another group that is politically favored. In the process, it is setting aside basic property rights in favor of rewarding the United Auto Workers for the support the union has given the Democratic Party.… We have just seen an episode of Gangster Government. It is likely to be part of a continuing series.¹⁷

Barone had sounded an alarm, but this was not alarmism. No one was suggesting that Barack Obama was a government version of Tony Soprano, who sends Sicilian messages or sells drugs or moonshine or untaxed cigarettes out of the White House basement. Gangster government is about something else: about governing without recognizing the legitimate limits of one’s power. It’s about officials who use public office to make winners into losers and losers into winners; who bend, break and make the law to help their friends and punish their enemies.

If you want to understand gangster government, there’s no better place to start than Chicago, the place where Barack Obama learned the art of politics from some of its most notorious figures. Obama has brought Chicago to Washington, not just in the sense that some of his most trusted aides and advisors hail from there—Mayor Daley’s brother, Rahm Emanuel, David Axelrod, Valerie Jarrett—but also because the city has left a mark on him and his political methods.

In Chicago, politically connected contractors think it’s safe to defraud the public. Political appointees run bribery and extortion rackets from their positions of power. City lots are sold to politically important pastors for a dollar in exchange for their support.¹⁸ It’s a place were city Aldermen fix tickets and firefighters’ exams for friends and family, and extort business owners who need permits.¹⁹ It’s a place where the lowliest Alderman and the mightiest governor take kickbacks, put friends and relatives on the government payroll, and use their clout to get family members admitted to the state’s prestigious flagship university in Urbana-Champaign.²⁰

Not everyone in Chicago politics is on the make. Sitting at the top of Chicago’s corrupt politics is Mayor Daley, who has never been credibly accused of pocketing a dime that wasn’t his own. But as the Meigs case demonstrates, he has his own ways of showing that he believes he’s above the law. And his dictatorial power has brought manna from heaven for many of those closest to him. Chicago Tribune columnist John Kass summed up what was wrong with the mayor’s rule when he cited the obscene amounts of taxpayer dollars that go to his pals. In deal after deal after deal, the attitude is that his guys can take what they want, and the people in the neighborhoods better shut up about it, while higher taxes put more and more pressure on families to pay for the deals.²¹

Daley survived almost unscathed through several major corruption scandals in his administration. In the Hired Truck program, taxpayers handed over $42 million a year to what was essentially a crime ring run by city employees. They fixed trucking contracts in exchange for bribes and contributions to Mayor Daley’s campaign and his political organizations. It was all made possible by top Daley aides who manipulated the hiring process. One of them, Robert Sorich, just got out of prison in November 2010.²²

Daley’s longtime friends and supporters, the Duff family, milked the city for $100 million using bogus front-companies to win minority set-aside contracts.²³ James Duff, convicted in 2005, is scheduled for release in 2014.

In recent years, Daley’s family has gotten into the act as well, demonstrating that political smarts don’t necessarily run in the family. His son Patrick and his nephew, Robert Vanecko, bought into a sewer contractor at the right moment—just before it won $4 million in no-bid city work. They then cashed out, without ever revealing their involvement as the law required.²⁴ Their stake in the company had been deliberately concealed in the company’s documents filed at City Hall.²⁵ The company has since folded, and its former president has been indicted for mail fraud.²⁶

Vanecko went deeper into the swamp after this, teaming up with another Daley crony—President Obama’s former law firm boss, Allison Davis—in a real estate investment venture called DV Urban Realty. Davis and Vanecko won a contract to invest $68 million in real estate from five Chicago city pension funds. Their management fee was a guaranteed $3 million, with the possibility of making nearly three times that amount by 2014.²⁷ In spring 2009, it was discovered that the city had paid $500,000 to lease one of the warehouses DV Urban had purchased. The lease was on a month-to-month basis—a temporary arrangement, apparently designed specifically in order to avoid getting approval from the City Council.²⁸ Vanecko quit DV Urban around the same time, two weeks after a federal grand jury began investigating the pension funds’ decision to invest in the company.²⁹

Daley and his cronies are hardly alone. This is the way important politicians in Chicago and Illinois operate—like they own the place.

Emil Jones, Jr., the former state Senate president, was Obama’s political mentor from the moment Obama got to Springfield. For Jones, politics is a family affair. In 2008, he ensured his son, Emil Jones III, inherited his state Senate seat by waiting until after the primary election to announce his retirement. The younger Jones had begun public service by taking an unadvertised, $57,000-a-year job in state government—not bad for a 28-year-old without a college degree. The elder Jones had loyally sided with Democrat Governor Rod Blagojevich in every major intra-party fight in the legislature, and Blagojevich looked out for his friends.

In late 2005, the elder Jones married a Ph.D. psychologist who worked as a deputy director in the state Department of Human Services. At just the same time, she received a promotion and a $70,000 raise (to $186,000 a year), so that she was actually making more than the governor. As the AP noted: [T]he agency proposed a special job category that applied only to her. The administration asked the Civil Service Commission to approve the new classification, arguing that it was necessary to attract high-quality candidates for a demanding job. But [Lorrie] Jones was already in the job.³⁰

The Chicago Sun-Times reported in 2007 that Jones’s stepson, tech contractor John Sterling, was doing more than $100 million in work for twelve different government agencies.³¹ It’s nice work if you can get it—and you probably can if you’re related to Emil Jones. Wrote the Sun-Times’ Carol Marin: Illinois, after all, is not only the Land of Lincoln, it’s also the Land of Coincidence.³²

In terms of notoriety, former Governor Rod Blagojevich is now the top Chicago politician. His career serves as proof that everything in Illinois is for sale. Blagojevich’s comical lack of restraint appears to be the only thing that kept him from a long, healthy life of corruption. As of this writing, he still stands accused of trying to sell President Obama’s old Senate seat. But that high-profile scandal has perhaps overshadowed other important charges against him, which—like the scandals in Daley’s office—help illustrate how the world of Illinois politics really works.

In 2002, Obama and Rahm Emanuel had been top advisors to Blagojevich’s campaign.³³ But, the more interesting connection between Obama and Blagojevich is their mutual friend, the slumlord and political fixer Tony Rezko.

Prosecutors allege that Rezko, now a convicted felon (whom President Obama was forced to disown during his 2008 campaign), hired Blagojevich’s wife to a no-show, no-work job at his real estate development company. According to court documents, this allowed Rezko to write her at least $150,000 in checks between 2003 and 2004.³⁴ Coincidentally, Rezko was very influential in getting Blagojevich to appoint his friends (including Obama’s law firm boss Allison Davis) to important state boards.³⁵ Rezko even managed, with Blagojevich’s direct intervention, to get one of his relatives into the University of Illinois at Urbana-Champaign, despite low ACT scores.³⁶

According to prosecutors’ evidentiary documents in Blagojevich’s trial, Rezko was also paying regular cash bribes of $10,000 a pop to Blagojevich’s chief of staff, Lon Monk. Those documents detail Monk’s hilarious struggle to get Mrs. Blagojevich to do a better job pretending she actually worked in Rezko’s office:

Monk had conversations with Blagojevich and his wife about the need for her to actually go into the office to work on a