A solid majority of people are opposed to this, but it's going forward anyway. Daniel Howes of the Detroit Free Press calls it a game changer.
'The week's not half gone and already the U.S. Treasury is in line to control 50 percent of General Motors Corp. with the United Auto Workers set to gain another 39 percent of the automaker. The feds would select GM's directors, effectively giving this White House (and the others to follow) control over GM's strategic direction, top management and even high-level product decisions.
That's just the beginning.
With or without bankruptcy, a Government Motors partnered with the UAW would be a whole new model for the global auto industry, a nationalized company whose labor union owners would be bargaining with themselves, their interests in positive cash flow to finance retiree health care obligations colliding with political interests to preserve wages and benefits.'
There are some who favor a government takeover of GM. Lefties, because they think workers aren't getting their fair share and government will give it to them. And some on the right who are betting that the inevitable failure with government at the helm will convincingly demonstrate the folly of future intrusions into private enterprise. I'm not at all optimistic about that outcome. By itself, the bailout represents an implicit acceptance of failure, and nature of the takeover signals an intention to perpetuate it.
'In this, Obama's Treasury and its auto task force are breaking revolutionary ground.
By subordinating the legitimate claims of investors to those of labor, they're confirming their bias against the Wall Street crowd and, second, what people in this town have known for years: That management's cradle-to-grave commitments to Big Three employees risked outstripping the ability of anyone but the government to pay -- and only then after the company has been nationalized, its bondholders neutered or threatened with bankruptcy and its equity investors wiped out.
For months as GM, Chrysler, the UAW, members of Congress and the Obama administration have careened toward this mind-numbing culmination, I've been asking myself what we're saving by asking the feds to keep big chunks of Detroit Auto on life support.
Already, tens of thousands of jobs have been wiped out. Plants closed. Retirements induced or destroyed. Dealers starved into submission. Suppliers pushed into liquidation. Local and state budgets decimated by the loss of tax revenue. And, now, investors short-changed with a strong arm that would make Tony Soprano proud.
We're saving -- or trying to save -- the political capital of those in power, the outsized obligations of GM and Chrysler to the UAW, and whatever jobs, union and salaried, may be left when this enabled nightmare finally comes to an end.'
The bailout objective is not the economic or financial success of GM, any more than the $3.5 trillion budget can be expected to revive the U.S. economy. By tripling the deficit in one year and setting up at least a decade of continuing budget deficits, the Obama administration is setting us on an inflationary course. Couple that with administration plans to boost marginal tax rates and you have a recipe that combines inflation with sluggish growth . The White House is not unaware. But in keeping with Rahm Emanuel's counsel, Obama is making the best of this economic crisis in order to make other fundamental changes.
GM exemplifies one of those changes. More federal intrusion into the marketplace. Rather than putting it back on its feet, the bailout will turn GM into another Amtrak, but on a much grander scale. Amtrak has been on federal life support since it began in 1971. According to the Boston Globe, Amtrak's total annual budget is $3.2 billion. Federal subsidies cover nearly half, at $1.49 billion.
GM is bigger. So far GM is into the government for $15.4 billion in aid, but according to Bloomberg the U.S. has no plan to continue subsidizing GM.
'The role of the U.S. in GM is to develop a plan whereby the automaker can be self-reliant and not need federal aid to survive, White House spokesman Robert Gibbs said yesterday.'
We would do well to remember that pronouncements from the Obama administration almost invariably come with an expiration date. The GM crisis represents yet another opportunity that the administration would be loath to waste. For the immediate future GM has become a vehicle for laundering taxpayer money through the United Auto Workers union into Democrat campaign coffers. The challenge for Obama is to make permanent that revenue stream.
But the fly in the administration ointment may be Ford Motor Company. Ford expects to survive without taking any federal bailout money. If it does the White House will be hard pressed to justify funneling taxpayer money to GM while Ford demonstrates its own viability without it.
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