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Morning Bell: Car Salesman in Chief

Posted By Conn Carroll On March 31, 2009 @ 8:06 am In Ongoing Priorities | Comments Disabled

On April 8, 1952, President Harry Truman ordered Commerce Secretary Charles Sawyer to seize and take over operation of most of the country’s steel mills. Truman cited no legislative authority for his actions. Instead, he cited the Korean War. Truman claimed there was a national emergency and his presidential war powers were all the authority he needed to nationalize the steel industry. The steel companies fought back, and in the landmark case Youngstown Sheet & Tube Co. v. Sawyer [1] the Supreme Court found Truman’s actions to be unconstitutional.

Justifying President Barack Obama’s unprecedented control over the U.S auto industry, an administration official told Politico [2]: “We’re in an economic crisis, which takes shared responsibility and shared sacrifice. The only way that we will recover is if everybody puts a little skin in the game.” Unlike Truman, Obama actually has some legislative authority to hang his nationalization hat on: the Emergency Economic Stabilization Act of 2008, which created the Troubled Asset Relief Program (TARP) funds that Obama is using to control General Motors and Chrysler. But, as we argued at the time [3], the broad delegation of powers in the bill makes it constitutionally suspect. Did any member of Congress voting for EESA really even contemplate that the bill would lead to a President of the United States saying this [4]:

In this context, my administration will offer General Motors adequate working capital over the next 60 days. During this time, my team will be working closely with GM to produce a better business plan. … I am confident that if we are each willing to do our part, then this restructuring, as painful as it will be in the short-term, will mark not an end, but a new beginning for a great American industry; an auto industry that is once more out-competing the world; a 21st century auto industry that is creating new jobs, unleashing new prosperity, and manufacturing the fuel-efficient cars and trucks that will carry us toward an energy independent future.

As great of a lawyer, community activist, and law professor as President Obama may have been, when has he ever run any company or come up with a single business plan. Now he’s running General Motors? But Obama didn’t stop at auto company CEO:

No one can deny that our auto industry has made meaningful progress in recent years. Some of the cars made by American workers are now outperforming the best cars made abroad. In 2008, the North American Car of the Year was a GM. … just in case there are still nagging doubts, let me say it as plainly as I can –- if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than it’s ever been. Because starting today, the United States government will stand behind your warranty.

Did we elect a president or a car salesman? Problem is, when we let the government become a market participant, there is no difference. Hence the slew of other incentives [5] Obama threw at the auto industry.

Back in November [6] we argued that bankruptcy was the best option for General Motors. But others argued that General Motors needed more time to prepare for a filing. Its now four months later and the Obama Administration is now claiming GM should have another 60 days. This political charade must end. No President of the United States should be selling cars out of the Grand Foyer of the White House. It’s embarrassing. Bankruptcy is still the best policy for General Motors and Chrysler [7].

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URL to article: http://blog.heritage.org/2009/03/31/morning-bell-car-salesman-in-chief/

URLs in this post:

[1] Youngstown Sheet & Tube Co. v. Sawyer: http://en.wikipedia.org/wiki/Youngstown_Sheet_&_Tube_Co._v._Sawyer

[2] Politico: http://www.politico.com/news/stories/0309/20683.html

[3] as we argued at the time: http://www.heritage.org/Research/Economy/wm2079.cfm

[4] saying this: http://latimesblogs.latimes.com/washington/2009/03/obama-to-detroi.html

[5] the slew of other incentives: http://www.usatoday.com/money/autos/2009-03-30-obama-backs-incentives_N.htm

[6] November: http://www.heritage.org/Research/Economy/lm33.cfm

[7] Bankruptcy is still the best policy for General Motors and Chrysler: http://www.heritage.org/Press/Commentary/ed031009b.cfm

[8] Islamist terrorism now threatens: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033000098.html

[9] all but vanish next year.: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033003291.html

[10] contracts are now seen as being rewritable: http://www.nytimes.com/2009/03/31/business/economy/31contracts.html?ref=todayspaper

[11] only nine reported spending no money on lobbying last year: http://www.politico.com/news/stories/0309/20688.html

[12] and a rise in protectionism.: http://www.chicagotribune.com/news/nationworld/sns-ap-eu-g-20-saving-trade,0,5263883.story

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