June 24, 2021

What Was That About a Contract?


He probably wasn’t voted “most likely to run a used car lot” in high school, but President Obama seems to be trying to run just about everything these days.  There’s not an area of our lives in which he’s not trying to have an influence and control over.

The problem is that with all of his expansion of government power and the tyranny he’s foisting on an electorate that’s either still in the honeymoon phase or that is just still blinded by his star power, he’s running roughshod over our founding principles and documents.

Now, to be sure, most Presidents have their run-ins and their problems with founding principles.

  • President Lincoln went against state’s rights—specifically the right to secede.
  • President Roosevelt took away our freedoms in large quantities in exchange for a system that (we just learned the other day) will bankrupt us and cause massive amounts of debt to be placed on my generation and my children’s generation.
  • President Bush took liberties to interrogate terrorists, stepped up security and used tax payer dollars to help banks out.

But nothing compares with our current President, who’s spending more money than every one before him combined, who for every dollar he’s spending, he’s borrowing fifty cents, and who seeks to control health care as well as every other aspect of our lives.

It’s really sick.

And if you don’t believe me that it can be bad, look at what he’s doing to Chrysler and GM!

The close relationship between the rule of law and the enforceability of contracts, especially credit contracts, was well understood by the Framers of the U.S. Constitution. A primary reason they wanted it was the desire to escape the economic chaos spawned by debtor-friendly state laws during the period of the Articles of Confederation. Hence the Contracts Clause of Article V of the Constitution, which prohibited states from interfering with the obligation to pay debts. Hence also the Bankruptcy Clause of Article I, Section 8, which delegated to the federal government the sole authority to enact “uniform laws on the subject of bankruptcies.”

The Obama administration’s behavior in the Chrysler bankruptcy is a profound challenge to the rule of law. Secured creditors — entitled to first priority payment under the “absolute priority rule” — have been browbeaten by an American president into accepting only 30 cents on the dollar of their claims. Meanwhile, the United Auto Workers union, holding junior creditor claims, will get about 50 cents on the dollar.

He’s paying people that voted for him, and he’s trampling all over the law.  So what makes you think that he will respect the law when it crosses others of his donors?   Who will stand up to him with his popularity rating where it is?

Nothing is as sacred as a contract—it’s what two people agree to and it’s the way that we trust others to give us something in return for what we give them.  If those contracts are suspect, if the rules can be rewritten by an outside person, why should we have faith in them?  Why should people risk their money with a group that a President has shown he’s willing to change the rules to benefit his friends rather than give the investors what they deserve?

(Visited 13 times, 1 visits today)

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge