The Wall Street Journal runs a piece by the chairman and CEO of General Motors, Ed Whitacre, under the misleading headline, "The GM Bailout: Paid Back in Full." That's nonsense. The article reports on GM paying back $5.8 billion. But the taxpayers put in at least $30 billion, more if you include GMAC and its suppliers, which is why Uncle Sam still owns 61% of GM, even after being "paid back in full." The whole idea of a company 61% owned by the government paying the government back is problematic, anyway -- it's really more like the government transferring money from one pocket to another. This is just GM spin.

Senator Schumer took a brief break this week from his tireless advocacy on the all-important carry-on bag issue to call for the Securities and Exchange Commission to "fund itself by retaining the fees it collects" rather than relying on Congressional appropriations.

The Schumer press release refers to "the SEC's chronic under-funding" and says, "Currently, the SEC raises millions more dollars every year in registration and transaction fees than it is allocated through the appropriations process, but its budget is limited to the amount approved by Congress. From 2005 through 2009, the SEC collected approximately $7.4 billion in transaction and registration fees but Congress only gave it only around $4.5 billion."

New York's senior senator, Charles Schumer (who, a Democratic operative told me recently, is already collecting votes for the majority leader job in anticipation of a loss by Senator Reid), has been on a rampage recently against the idea that airlines might charge a fee for carry-on-bags. Why this is a government issue beats me -- if some airline figures it can ease the fighting over overhead bin space by making passengers pay for it, and thinks that is worth the chance of annoying customers over the fee, why not let them try it? But anyway, that is not how Mr. Schumer thinks about issues. He has issued not one, not two, not three, but four -- count them, four -- press releases on the carry-on baggage issue over the past week.

Andrew McCarthy, who served as a federal anti-terrorism prosecutor with top Deutsche Bank lawyer-turned SEC enforcement director Robert Khuzami, writes in National Review Online:

Unless the SEC has more than what is laid out in its complaint, this isn't fraud. It's politics. If you want to talk material omissions, to charge Goldman but not charge Paulson is pretty darn material. If what Goldman was selling was fraudulent, it can only be because what Paulson manufactured for sale was fraudulent. The two were in cahoots. If what Paulson did was perfectly lawful, Goldman can't be legally culpable for helping him do it.

More:

More than two dozen businessmen, professors, and left-of center activists have signed on to a letter to Senators Reid and McConnell on financial reform, warning, "Neither the bill passed earlier this year by the House, nor the one currently under consideration in the Senate would have prevented the crisis. Without serious restructuring, they will not prevent a future crisis." Among the things they want in legislation are a mandated "timeline for the resolution of Fannie Mae and Freddie Mac," as well as "a separation of the roles of chairman and CEO for regulated financial institutions."

Who lost the $1 billion that John Paulson's Paulson & Co. made on the bet that is now at the center of the Securities and Exchange Commission's complaint against Goldman Sachs? The SEC complaint is pretty explicit about the obligation of the largest counterparty, ACA Capital. Its obligation was taken over by ABN Amro Bank N.V. which was taken over in 2007 by the Royal Bank of Scotland. In August of 2008, according to the complaint, RBS paid Goldman Sachs $840,909,090, most of which Goldman then paid Paulson.

What the complaint doesn't mention is that about two months later, in October of 2008, the British government stepped in to take over RBS with an injection of tens of billions of British taxpayer funds.

The other big counterparty in the Paulson-Goldman Abacus trade, the German bank IKB, also had a government backstop, the Financial Times reports today. IKB, the bank reports, is "backed by the state-owned KfW development bank." Says the FT: "By the summer of 2007, after losing almost its entire $150m investment in the CDO set up by Goldman, IKB had failed. When IKB's exposure came to light it was a hotly political issue in Germany: KfW was forced to bail it out."

In other words, the money that enriched John Paulson as part of the billion dollar "greatest trade ever" ultimately came out of the pockets of British and German taxpayers.

"Some grad students at Columbia's School of International and Public Affairs are up in arms that Citigroup CEO Vikram Pandit was tapped as the school's commencement speaker," the New York Daily News reports.

Goldman Sachs has engaged President Obama's former White House counsel, Greg Craig, to represent it in Washington, in a feat of revolving-door spinning right up there with Neel Kashkari's exit from Treasury to Pimco.

The Web site Big Government reports that John Paulson is the single biggest donor to the Washington-based "Center for Responsible Lending," which was pushing "cramdown" legislation that would have let bankruptcy judges modify mortgages. A BusinessWeek article in 2007 quoted a lobbyist on the other side of the issue explaining what was going on:

Scott Talbott, a lobbyist for the Financial Services Roundtable, a trade association that counts among its members Citigroup (C), JPMorgan Chase (JPM), and American Express (AXP), complains that Paulson is making money on the backs of painful home foreclosures: "The firm has bet that Americans will lose their homes. If the bankruptcy bill is enacted, [Paulson] stands to make large profits."

The latest column by the Hoover Institution's Thomas Sowell quotes Friedrich Hayek and then goes on to caution: "Even under serfdom and slavery, experience forced those with power to recognize the limits of their power. What this administration -- and especially the President -- does not have is experience. Barack Obama had no experience running even the most modest business, and personally paying the consequences of his mistakes, before becoming President of the United States."

Mr. Obama should probably get some credit for running his campaign, which, while not a business, was nonetheless a large and complex managerial undertaking that involved the expenditure of a lot of money and the motivation of a lot of individuals. Neither of his main opponents in the 2008 campaign, Senator McCain and Senator Clinton, had much experience running a business, either, though Ms. Clinton did serve as a member of the Wal-Mart board of directors. But on the basic point of the limits of power, Mr. Sowell is, as he so often is, on target.

Libertarian law professor Richard Epstein has a new column up at Forbes.com. Highlights: Professor Epstein notices that people are still quoting Justice Oliver Wendell Holmes: "Taxes are the price that we pay for a civilized society." Mr. Epstein:

when Holmes penned those words in 1902 the tax burden stood at 1.3% of GDP. By 2000 the tax burden exceeded over 20%, a number that looks almost blissfully low in light of the massive new Obama taxes. Some taxes are necessary for civilization, but surely every tax, no matter how dumb, is not.

Good stuff.

Pajamas Media has posted an article I wrote about the political contributions and lobbying expenditures of John Paulson and his firm Paulson & Co. Paulson and his firm, who were not charged in the SEC case against Goldman Sachs, had, as this FutureOfCapitalism.com reader pointed out, "a HUGE incentive to make sure the underlying mortgages actually defaulted. No grace periods, no working out the terms, no excuses for late checks, etc. Paulson needed default in the technical and legal sense; not delinquent or non-performing, but default as defined in the actual mortgage."

Not exactly what you'd expect Democrats, who have been calling for foreclosure prevention, to make as an ally. Yet, as the Pajamas Media article reports:

A reader writes in:

I have no love for Goldman Sachs and agree that the SEC case is motivated by politics--the need to give the current financial reform bill some momentum and for the SEC to collect a scalp since they failed so badly in this crisis. ....

New Pew Poll: "Just 22% say they can trust the government in Washington almost always or most of the time, among the lowest measures in half a century....In a follow-up survey in early April, just 25% expressed a favorable opinion of Congress, which was virtually unchanged from March (26%), prior to passage of the health care reform bill. This is the lowest favorable rating for Congress in a quarter century of Pew Research Center surveys. Over the last year, favorable opinions of Congress have declined by half – from 50% to 25%."

More: "In the current survey, 56% say they are frustrated with the federal government, 21% say they are angry and 19% say they are basically content."

More: "Favorable ratings for the Democratic Party have fallen by 21 points – from 59% to 38% – over the past year and now stand at their lowest point in Pew Research surveys."

The New York Post has an update on the State Department's plan to spend $5.4 million on new crystal stemware for American embassies, suggesting that set-asides for minority small-business contractors had something to do with it.

The Post article says one shut-out competitor complained that the plan "cost taxpayers an extra $1 million." But $4.4 million still seems like an awfully lot to spend on new wine glasses for diplomats.