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Morning Bell: Government Motors is Not the Answer

Posted By Conn Carroll On June 1, 2009 @ 9:28 am In Ongoing Priorities | Comments Disabled

At midday today, President Barack Obama will announce details of his administration’s $30.1 billion plan to restructure General Motors. Despite claiming [1] that the administration “will not interfere with or exert control over day-to-day company operations” it is instructive that this announcement is being made by the President, from the White House, and not by the company’s CEO from either the company’s Detroit headquarters  or  the New York bankruptcy court. Since March of this year when the White House rejected GM’s restructuring plan, their interventionist actions have spoken much louder than their hands-off rhetoric.

Just days after the White House informed GM that they were unhappy with the company’s first restructuring plan, President Obama fired GM CEO Richard Wagoner. [2] The payoff from Obama’s hand picked replacement, current CEO Fritz Henderson, quickly became apparent when Henderson stood next to Obama in the Rose Garden and announced [3] his support for the Obama administration’s new fuel efficiency standards: “GM is fully committed to this new approach.” The surreal event underscored the myriad of inherent new conflicts as the Obama administration now becomes GM’s regulator, tax collector, customer, lender, and owner. [4] The Obama administration’s heavy handed management of GM did not end there:

What Cars to Make – Currently, General Motors most profitable products are the Chevy Silverado pickup and the Cadillac Escalade SUV. [4] These gas guzzlers aren’t exactly popular with the anti-carbon Obama administration. GM’s electric-powered Chevy Volt, however, is expected to cost $40,000 per vehicle, much more than the $25,000 gas-electric Toyota Prius. [5]

Where to Make Them – The Obama administration plans to close 11 factories and idle another three. It’s hard to see how politics could not dictate the results of that process. Already, the United Auto Workers union successfully pressured the Obama administration to restrict the number of cars GM makes overseas. UAW President Ron Gettelfinger told [6] PBS last week “we, quite frankly, put pressure on the White House, the [auto] task force, the corporation to bar small-car imports from overseas.”

Salesman in Chief – While General Motors has been rapidly shedding market share, Ford (the last private auto company in Detroit) has actually gained market share. [7] Obama’s new car company will never turnaround if that trend continues. So already President Obama personally promoted a $7,500 tax credit for consumers who buy a GM Chevy Volt. [8]

We need an exit strategy out of Obama Motors today. Congress could help mitigate the damage down by the Obama administration [9] by:

  • Establish a firm, legally binding deadline–perhaps one year–for the sale of the firm back to the private sector.
  • Prohibit any further taxpayers loans or grants to GM.
  • Strictly bar GM during the period of government ownership from making any campaign contributions or engaging in policy advocacy of any kind.

Last month, President Obama declared “I don’t want to run auto companies. … I’ve got more than enough to do.” Whether or not the administration is making “day-to-day” decisions, running auto companies is exactly what the federal government is doing. That is the wrong road for Detroit, for consumers, and for U.S. taxpayers. America needs to take the nearest exit.

Quick Hits:


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/06/01/morning-bell-government-motors-is-not-the-answer/

URLs in this post:

[1] claiming: http://www.boston.com/news/politics/politicalintelligence/2009/05/details_of_the.html

[2] President Obama fired GM CEO Richard Wagoner.: http://www.foundry.org/2009/03/30/youre-fired-obama-fires-gms-ceo/

[3] announced: http://www.foundry.org/2009/05/19/news-flash-obama-appointed-gm-ceo-supports-obama/

[4] the Obama administration now becomes GM’s regulator, tax collector, customer, lender, and owner.: http://online.wsj.com/article/SB124381322189670529.html

[5] GM’s electric-powered Chevy Volt, however, is expected to cost $40,000 per vehicle, much more than the $25,000 gas-electric Toyota Prius.: http://online.wsj.com/article/SB124380079212769963.html

[6] told: http://online.wsj.com/article/SB124381255295170405.html

[7] Ford (the last private auto company in Detroit) has actually gained market share.: http://online.wsj.com/article/SB124381331678870543.html

[8] President Obama personally promoted a $7,500 tax credit for consumers who buy a GM Chevy Volt.: http://www.foundry.org/2009/03/31/morning-bell-car-salesman-in-chief/

[9] mitigate the damage down by the Obama administration: http://www.heritage.org/Research/Regulation/wm2462.cfm

[10] Rasmussen Reports: http://blog.heritage.org http://www.rasmussenreports.com/public_content/business/auto_industry/just_21_favor_gm_bailout_plan_67_oppose

[11] offered contradictory defenses of her 2001 Berkeley La Raza Law Journal speech: http://www.politico.com/news/stories/0509/23145.html

[12] the first president in U.S. history to have voted to filibuster a Supreme Court nominee: http://blogs.abcnews.com/politicalpunch/2009/05/first-president-in-us-history-to-have-voted-to-filibuster-a-supreme-court-nominee-now-hopes-for-clea.html

[13] long-range ballistic missile: http://www.latimes.com/news/nationworld/world/la-fgw-north-korea-missile2-2009jun2,0,5286742.story

[14] raise personal income taxes by 67%.: http://www.chicagotribune.com/news/local/chi-legislature-budget-bd-31may31,0,3410412.story

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