Monday, June 8, 2009
Monday, June 08, 2009
President Obama claims to "have no interest" in running General Motors. He does so with a straight face — and the same monotonous cadence that he employs whether condemning North Korea for nuclear explosions or joking with Jay Leno. But his actions, as well as his words, betray him.
The significance of the bankruptcy and restructuring of General Motors isn't that it happened but the way it happened.
His protestations notwithstanding, this is Barack Obama's General Motors. Just read from his statement earlier this month:
• "Two months ago … I laid out what needed to be done to save two of America's most storied automakers."
• "I made it clear that I would not put any more tax dollars on the line if it meant perpetuating the bad business decisions that had led these companies to seek help in the first place."
• "I decided, then, that if GM and Chrysler and their stakeholders were willing to sacrifice … then the United States government would stand behind them."
Which is more absurd — his implication that he is the embodiment of the U.S. government or that a former community organizer, part-time lawyer, part-time lecturer, part-time author, and fulltime politician knows beans about running the nation's largest automaker?
Then again, Nancy Pelosi and Harry Reid scolded the auto execs last fall for flying — instead of crawling — to D.C. to ask for a government bailout and then arrogantly demanded that they come back when they have a "viable plan."
Not that it's ridiculous to demand a viable plan. What's ridiculous is the assumption that the Speaker, the Majority Leader and most other Beltway politicians could recognize a viable plan for a 25-cent lemonade stand — much less a multi-billion-dollar auto company.
Remember, the reason government is funded by taxes is because it produces almost nothing that people will pay for willingly.
It wasn't necessary for President Obama to interject himself into these proceedings. As Commentary magazine columnist Jennifer Rubin points out, GM and Chrysler have had bankruptcy attorneys working on those plans for months.
"Why make this all about the president throwing his weight around and personally firing the head of a major corporation?" she asks.
The simplest explanation is that Obama wants these details signed, sealed and delivered to prevent their scrutiny in a court of law where, for example, the United Auto Workers Union would not get preference over holders of secured corporate bonds.
As Hans Bader points out at OpenMarkets.org, "the UAW will receive at least ten times as much value as the bondholders even though the bondholders are owed more ($27 billion vs. $20 billion). This is neither legal nor fair."
Which brings us to President Obama's oft-repeated claim that his decisions are guided by the way they "affect the daily realities of people's lives."
Well, the ordinary folks whose retirement or savings were ravaged by automakers' plummeting stock prices are suffering doubly from Obama's devastating policy to force them to take pennies on the dollar if their portfolio also included GM bonds, which were once considered relatively safe.
By contrast, the very labor unions whose bloated benefits and anachronistic job protection schemes put GM at a competitive disadvantage are now rewarded with nearly $10 billion and 17.5 percent ownership in the company.
While Obama says UAW will be required to make "painful sacrifices," the union boasts that its members will see no reduction in 'base hourly pay, no reduction in … health care, and no reduction in benefits."
Might the $13 million that UAW spent on last year's election have tipped the scales in its favor? Heavens, no!
So, GM hinges its recovery on the marketing genius of politicians who gave us Medicare, Social Security, Amtrak, a 3.4-million-word tax code, and $11.3 trillion in debt.
It's hard to imagine how a fire sale administered without Obama's oversight could have been more destructive or more expensive.
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Posted by Brett at 9:56 AM