But Obama doesn’t share the public’s affinity for capitalism. When announcing GM’s bankruptcy, he laughably said, “What we are not doing—what I have no interest in doing—is running GM.” Yet, just the night before, he had called Detroit mayor Dave Bing to reassure him that New GM would be headquartered in Detroit.38 Furthermore, Obama’s auto task force had earlier pressured General Motors Corp. to get rid of the GMC brand,39 which was an odd move for an administration insisting it had no interest in managing the business. In another odd move for a group appointed by someone disinterested in running car companies, Obama’s task force cut in half Chrysler’s planned expenditures for its “We’re Building a New Car Company” campaign.40
The story of Chrysler’s government-nudged degeneration into bankruptcy is not a pretty tale. And in the end, Obama prevailed, as the Supreme Court lifted a stay on the sale of Chrysler to the group including Fiat SpA, clearing the way for the sale to proceed. As part of the restructuring ordeal, Obama’s auto task force closed down nearly 2,500 GM and Chrysler dealerships at the cost of some 100,000 jobs.
There was much suspicion about Obama’s partisan favoritism in his decisions as to which dealerships would be closed and which would remain open.41 The Washington Examiner’s Mark Tapscott wrote that “evidence appears to be mounting” that the administration “systematically targeted for closing Chrysler dealers who contributed to Republicans.” One example he cited was the closing of a dealership of a GOP congressman as well as competitors of a dealership whose owners included former Clinton chief of staff Mack McLarty.
Tapscott argued the basic issue was how to account for millions of dollars that were contributed to GOP candidates by Chrysler dealers who were being closed, while only one Democrat-contributing dealer had been shuttered. Leonard Bellavia, a lawyer representing a group of Chrysler dealers set to be closed, told Reuters he believed the closings had been forced on the company directly by the White House.
In fairness, Tapscott, in an update to his piece, conceded that certain credible bloggers disputed the notion that partisan considerations determined the closings. It could have just been a result of more dealerships being owned by Republicans. But he also cautioned that suspicion remained because the White House had not made public the criteria it used to make decisions on terminating dealerships. Tapscott also raised this provocative question: even if more dealerships were owned by Republicans, which had not been proven, “If 88 percent of all car dealers were Democratic contributors, rather than GOPers, how likely is it that the Obama folks would be delivering such an egregious economic blow to the group, a blow that put thousands of people out of work and deprives hundreds of Democratic donors of their means of making contributions?”42
Later, Congress reversed Obama on many of these dealership closings—over the stringent opposition of his administration. At the time, the White House warned this could set a “dangerous precedent.” What—Congress failing to rubber stamp one of the president’s edicts? The closings, according to the White House, were “a critical part of their overall restructuring to achieve long-term viability.” But nearly a year later, when jobs were created after this new legislation, Obama brazenly took credit for them. Obama told Democratic Party donors in Boston, “A year later, GM is hiring again, on the verge of reopening hundreds of dealerships,” which proved his $50 billion bailout of GM “was the right thing to do.” Bailey Wood, a spokesman for the National Automobile Dealers Association, remarked, “Now he is touting the fact that jobs were created after dealer arbitration legislation, which his administration opposed, forced GM/Chrysler to reevaluate closing these dealerships.” The White House declined to comment.43
It was expected that taxpayers would incur enormous losses on the auto bailout. The administration told Congress in December 2009 it expected to lose some $30 billion of the $82 billion used in the bailout. And yet, the administration was bragging about it. Gene Sperling, Treasury secretary Timothy Geithner’s senior counsel, said, “The real news is the projected loss came down to $30 billion from $44 billion.”44 The government also recklessly lost an estimated $6.3 billion of the $17.2 billion bailout of GMAC, a principal financing arm for the auto dealers that needed money to keep the floor plans in place. According to Harvard law professor Elizabeth Warren, chair of the Congressional Oversight Panel, the money was extended to GMAC with far fewer conditions than those imposed on the automakers themselves. “Treasury missed many opportunities to improve accountability and protect taxpayer money,” said Warren. She said Treasury did not require GMAC to show how it would return taxpayer money or even how the investment would increase credit to consumers. Warren added, “These decisions mean that Treasury is now struggling to deal with a GMAC that is not financially rehabilitated, Treasury has no exit strategy and taxpayers are not fully protected.”45
No exit strategy and a lack of taxpayer protection—quite a fitting summary of many of Obama’s intrusions into the private sector.
Chapter Eleven
THE CASE OF GERALD WALPIN AND AMERICORPS
CRIMES AGAINST THE PUBLIC INTEREST
Obama campaigned on a promise to protect and empower whistleblowers against government corruption. On his website he said that the best source of information about government waste, fraud, and abuse is often “existing government employee(s) committed to public integrity and willing to speak out.” Arguing that these “acts of courage” should be “encouraged rather than stifled,” he vowed to ensure that federal agencies “expedite the process for reviewing claims of whistleblowers and that they would have full access to courts and due process.”
His actions, however, haven’t quite lived up to his promises. The White House counsel’s office proposed legislation that would actually weaken whistleblower protection for FBI employees and reduce access to jury trials for national security workers who sue for protection from retaliation.1 But much more significant was the Obama administration’s treatment of AmeriCorps inspector general Gerald Walpin—a chilling tale of lawlessness, cronyism, and a patent disregard for government transparency and accountability.
ANATOMY OF A SCANDAL
On July 11, 2009, Obama abruptly announced his decision to fire Gerald Walpin. He sent letters to leaders of the Senate and House notifying them of the termination, to take effect in thirty days. His stated reason? He had lost “the fullest confidence” in Walpin, which is “vital” in “the appointees serving as Inspectors General.”
This was not your ordinary executive firing of an at-will staffer. The Inspector General is a highly sensitive position that acts as a watchdog against government corruption and must not be occupied by a lapdog who provides cover for wrongdoing. To be fired by the leader of the very branch of government one is assigned to investigate is enough to create a presumption of suspicion.
Obama would have preferred to fire Walpin quietly, but the recently passed Inspectors General Reform Act, designed to enhance the independence of IGs and provide them protection to do their jobs free of undue influence, required him to provide thirty days prior written notice to both Houses of Congress and to explain his decision. (Notably, Obama was among the co-sponsors of the bill.) He provided notice, but it was meaningless because he immediately placed Walpin on paid administrative leave and stripped him of his authority, which is precisely what the notice provision is intended to prevent. Nor did Obama outline his reasons beyond vague generalities.
Obama, in fact, had tried to circumvent the act altogether by nudging Walpin into resigning on his own. Senator Charles Grassley reported that the White House had called Walpin and given him one hour either to resign or be fired. Walpin refused to play.2 Grassley sent a letter to the president reminding him of the purpose of Inspectors General—to combat “waste, fraud, and abuse and to be independent watchdogs” to ensure that federal agencies are “accountable”—and that they are to be “free from undue political pressure” so they can operate “independently.”
Suspicion immediately arose that Ob
ama was firing Walpin because of Walpin’s investigation of Kevin Johnson, a former NBA star and the Mayor of Sacramento, California, who is a strong Obama supporter and personal friend. Before becoming mayor, Johnson had established a non-profit called St. HOPE to help “revitalize inner-city communities through public education, civil leadership, economic development and the arts.” After opening an investigation into whether St. HOPE had misused an $850,000 AmeriCorps grant,3 Walpin discovered that Johnson had used AmeriCorps funds to pay volunteers to participate in political activities involving the school board and to run personal errands for Johnson like washing his car.4
In a letter to Senator Grassley, White House counsel Gregory Craig offered a few details about Walpin’s firing, saying that a U.S. attorney, while communicating with an integrity committee for inspectors general, had criticized Walpin’s handling of the St. HOPE investigation. Craig wrote, “We are aware of the circumstances leading to that referral and of Mr. Walpin’s conduct throughout his tenure and can assure you that the president’s decision was carefully considered.” Walpin had referred the case to the U.S. Attorney’s office upon discovering anomalies in grant expenditures. The U.S. Attorney said Walpin’s assessment of misconduct seemed overstated and did not accurately reflect all the information. St. HOPE’s board chairman, Kevin Heistand, issued a statement saying it was “about time” Walpin was removed and that his “allegations were meritless and clearly motivated by matters beyond an honest assessment of our program.”
Nevertheless, something improper had occurred, even in the eyes of acting U.S. Attorney Lawrence Brown, or his office wouldn’t have worked out a settlement with St. HOPE whereby it would repay almost half the $850,000 grant money.5 In addition, the Integrity Committee of the Council of Inspectors General on Integrity and Efficiency had issued no negative findings against Walpin, and Walpin had “identified millions of dollars in AmeriCorps funds either wasted outright or spent in violation of established guidelines.” Meanwhile, Kevin Johnson and St. HOPE were temporarily cut off from receiving any new grant monies. As the Washington Examiner’s Byron York said, “The bottom line is that the AmeriCorps IG accused a prominent Obama supporter of misusing AmeriCorps grant money,” and “after an investigation, the prominent Obama supporter had to pay back more than $400,000 of that grant money.” Yet, “Obama fired the AmeriCorps IG.”6
The controversy was just beginning for President Obama. Democratic senator Claire McCaskill, a strong Obama ally, expressed concern that Obama hadn’t complied with the law requiring 30-day notice prior of termination (though she later reversed herself).
Norm Eisen, Special Counsel to the President, provided more details on Walpin’s termination in a letter to senators Joe Lieberman and Susan Collins, with a copy to Senator McCaskill. Eisen stated that Walpin was terminated following a review that had been unanimously requested by the “bipartisan Board of the Corporation.” He wrote that in a board meeting in May 2009, Walpin was “confused, disoriented, unable to answer questions and exhibited other behavior that led the Board to question his capacity to serve.” Furthermore, Eisen said acting U.S. Attorney Brown had filed a complaint about Walpin’s alleged failure to disclose exculpatory evidence about St. HOPE. Finally, Eisen claimed Walpin had insisted—over the objections of the Board—on working from his home in New York; that he “exhibited a lack of candor in providing material information to decision makers; and that he had engaged in other troubling and inappropriate conduct. Mr. Walpin had become unduly disruptive to agency operations, impairing his effectiveness, and, for the reasons stated above, losing the confidence of the board.”7
Gerald Walpin refused to go quietly, accusing the White House of “grasping at nonexistent straws” to justify his firing. He said the more diligently he investigated St. HOPE, along with the alleged waste of AmeriCorps money at the City University of New York (CUNY), the more resistance he encountered from the board of the Corporation for National and Community Service, which oversees AmeriCorps. “But that’s exactly why the IG position was created,” said Walpin.
Walpin argued that far from being confused, he simply gave the board information it didn’t want to hear and chastised it for “what appeared to be the board’s refusal to perform its duty, independent of management, in overseeing what management was doing, particularly as it regards determining the merits of the two reports I had issued.” He told the board it was its duty to evaluate all the evidence objectively and not “just to accept what management says.” He claimed the board was “angry” at his “temerity in telling them they should not be acting in the manner of many for-profit boards, which have been recently criticized.”8
As for his alleged confusion at the May meeting, Walpin said he had not been feeling well that day, and that board members repeatedly interrupted him as he was delivering his prepared presentation. At one point they asked him to leave the room so they could handle unrelated business. When he returned, he found the board had rifled through his papers and left them in disorder, but board members wouldn’t allow him time to reassemble his notes. He said the only confusion in the room was that of board members “as to their responsibilities.” Besides, as Byron York noted, Walpin’s confusion or lack of it would not have excused the president’s failure to comply with the statutory 30-day notice period.
Many Republican investigators denied Walpin was mentally impaired at all, finding him instead “collected and coherent.” One investigator said, “What the White House described is not the experience that we have had in dealing with him.” After talking to Walpin for two hours, Byron York corroborated the GOP investigators’ findings, further observing that Walpin had “performed well in recent high-profile media appearances.”9 Walpin also denied he was working from home at the displeasure of the board. He said the CEO and general counsel of the corporation had “expressly approved” the arrangement, and that he had also cleared it with the chairman and vice chairman of the board. Walpin called the charge that he lacked candor in providing material information to decision makers “a total lie.” As for the allegation that he had engaged in “other troubling and inappropriate conduct,” Walpin retorted, “From their viewpoint, my criticisms of the Corporation’s operations and the board of directors’ failure to perform its duties is troubling.”10
A CORROBORATING WITNESS
The Washington Times reported that it had located a witness who directly contradicted multiple aspects of the official White House explanation for the firing. “The witness,” reported the Times, “whose bona fides are unimpeachable, is on the agency’s payroll, and thus spoke on grounds of anonymity.” The Times contacted the witness on its own, without Walpin’s input or knowledge. The witness, who claimed to have first-hand knowledge, corroborated Walpin’s statement that the agency’s general counsel, Frank Trinity, and acting CEO Nicola Goren, had no objection to him working from home. As to the allegation that he was “confused” and “disoriented,” the witness said Walpin opened up the meeting by castigating the board for “particularly weak oversight of the grants” for both St. HOPE and CUNY, eliciting “considerable hostility and repeated interruptions” from board members. The witness also confirmed Walpin’s account of being denied time to reorder his papers after they had been rifled in his absence. The witness said he had never before or since seen Walpin the slightest bit confused, but he agreed Walpin and the board “weren’t connecting” at the meeting after the board badgered him and wouldn’t let him reorganize his notes.
The Times uncovered another damning tidbit against the White House’s claim that Walpin was confused. On June 9, 2009, one day before the White House asked him to step down and several weeks after the fateful May 20 board meeting, the agency asked him to deliver an important speech in San Francisco on June 23 to an expected audience of 2,000 staff members and grantees. Walpin said, “They begged me to come. Why would they do that if they thought I am incapacitated?”11
Once again, the MO of the Obama White House was on full display:
exploit and abuse executive power to benefit or protect your cronies and political allies, and punish or slander anyone who gets in your way. Walpin was sniffing too close to the stench of corruption.
WHITE HOUSE STONEWALLING
Congressional investigators began to look into the reasons for Walpin’s firing. White House special counsel Norman Eisen stonewalled Senator Grassley’s investigators, revealing very little and refusing to answer many questions. Grassley followed up with a letter to White House counsel Gregory Craig complaining of Eisen’s lack of cooperation. He then restated the unanswered questions in the letter.12
Key congressional Republicans accused the White House of providing “incomplete and misleading” information to investigators. But the White House hinted that its documents on the case were privileged, which just added to Republican suspicion; for if the White House had conducted a thorough investigation of the facts before firing Walpin, as it claimed, then why the need for secrecy? It looked more like the White House had fired Walpin for political reasons and built its case after the fact.
Next, a bipartisan group of congressional investigators questioned the general counsel for the Corporation for National and Community Service, Frank Trinity, who also refused to provide any details about Walpin’s firing. A congressional aide said Trinity claimed he didn’t feel at liberty to discuss the firing because it was the White House’s prerogative. When investigators pressed Trinity to justify his refusal to cooperate, reminding him that executive privilege had to be asserted by the president, he declined to respond. The issues Trinity refused to address included details on the contacts between the White House and CNCS prior to or after the firing; which members from CNCS had communicated with which White House officials; and whether CNCS officials had discussed with the White House the specific reasons for the firing.13 At one point, the White House added new allegations to justify the firing: Walpin supposedly demonstrated racial and gender insensitivity based on a parody newsletter that originated from his office commemorating the retirement of an employee. But there was no indication Walpin had any involvement in the newsletter, which had been published a year earlier, in May 2008.14
Crimes Against Liberty Page 27