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Government in the Way Again at GM and Chrysler
Posted By Meinan Goto On December 7, 2009 @ 4:18 pm In Economics | Comments Disabled
There’s new evidence that General Motors and Chrysler, both owned partly by taxpayers, are still facing interference in the way they are run. The latest example comes not from the Obama Administration, but from Congress.
At issue are the closures of over 2,000 dealerships announced by the two firms last summer. Despite much grumbling, the decisions appeared to be a non-political one, potentially saving as much as $2.5 billion annually according to the Washington Post . But politics did come in, in the form of congressional pressure to keep the dealerships open. Now GM and Chrysler seem to be bowing – at least in part –to that pressure.
The NY Times reported on Friday that GM and Chrysler have announced plans to “re-examine decisions to close about 2,000 dealerships and that some would probably stay open. Or reopen.” The announcements seem to be aimed at preventing movement on a house bill  that would effectively force all dealerships to remain open. Although the bill is still only in committee it has attracted 284 co-sponsors , more than enough to get the attention of the government-sponsored firms.
This isn’t the first time Congress has put political pressure on the firms. As the Wall Street Journal reported in October, there has been frequent pressure from members of Congress, pushing them to reverse decisions from plants closings, to contracting, to shuttering dealerships. So far according to the Wall Street Journal, GM has acknowledged that they reversed the closure decision on 70 dealerships, although they insist with a straight face that each of the decisions were based on their merits. Apparently Congress is still not satisfied.
In a release  responding to the GM and Chrysler announcements, Rep. Chris Van Hollen of Maryland stated that the efforts have “fallen short” and promises to “re-double” his efforts to enact legislation that will give auto dealers a “fair and reasonable opportunity to get back in business”. Both bailed out automakers face the difficult task of returning to viability. Such political interference will not make this task any easier.
Meinan Goto currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm 
Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org
URL to article: http://blog.heritage.org/2009/12/07/government-in-the-way-again-at-gm-and-chrysler/
URLs in this post:
 non-political : http://www.heritage.org/Research/Economy/bg2296.cfm
 Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/14/AR2009071403187.html
 NY Times : http://www.nytimes.com/2009/12/04/business/04dealer.html?ref=business&pagewanted=print
 bill: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h2743ih.txt.pdf
 284 co-sponsors: http://thomas.loc.gov/cgi-bin/bdquery/z?d111:HR02743:@@@P
 Wall Street Journal : http://online.wsj.com/article/SB125677552001414699.html
 release: http://vanhollen.house.gov/News/DocumentSingle.aspx?DocumentID=158391
 http://www.heritage.org/about/departments/ylp.cfm: http://www.heritage.org/about/departments/ylp.cfm
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