The Death of GM and the Obama Chilling Effect on Capitalism

by Howie Rich, Thursday, 02 April 2009

The tombstone for General Motors really should have read 1908-2008.

That’s because December 2008 is when the bell finally tolled for GM – when the marketplace determined that a combination of poor management decisions, union pressures and a slumping economy had made the automotive giant’s continued existence mathematically impossible.

Of course, that was also precisely when the administration of former President George W. Bush stepped in with a $17.4 billion bailout for GM and Chrysler, with further funds contingent on the two companies creating a “path to profitability.”

At the time, a skeptical American public heard talk of all the concessions that were being made by company executives, car dealers and the notoriously inflexible union bosses.

But it was former Treasury Secretary Henry Paulson who hinted that this massive infusion of taxpayer cash might be nothing more than the world’s most expensive delaying tactic.

"If the right outcome is reorganization or bankruptcy, then isn't it better to get there through an orderly process where every effort is made to avoid it, and if it can't be avoided, everyone's prepared for it?" Paulson said at the time, comments which were echoed by the Bush White House.

Fast-forward to February 2009, when the “reorganization plans” of Chrysler and GM were unveiled – and shown to be nothing more than requests for even larger taxpayer funded bailouts.

Still, the “tombstone moment” was delayed another month until this week, which has brought us perhaps the most bizarre – and disturbing – chapter in the evolution of the bailout culture that has infected our nation’s capital.

This week, the President of the United States insisted on the removal of a private sector CEO. And once he had been removed, that CEO’s severance package was governed by Treasury Department regulations.

No longer just bailing out companies, the White House is now determining who should run them and what their retirement packages should be.

Not only that, Obama has taken the unprecedented – and unnerving – step of guaranteeing all GM and Chrysler warranties.

Thank about that for a moment, in its ongoing attempts to revive a dying patient, the Obama administration has just put every American taxpayer on the hook for potentially billions in auto repairs!

Obama’s auto task force is also calling the shots on which models GM should produce and sell, and telling Chrysler who to merge with and for how much – all the while holding additional bailout billions over the heads of the two “private” corporations in case they refuse to abide by the government’s wishes.

One pro-free market commentator told me that “Obama might as well have reached into the corporate boardroom and started running that company.”

“That’s exactly what he did,” I said.

Obama’s actions "should send a chill through those who believe in free enterprise,” said Tennessee Senator Bob Corker.

How true.

And yet even as the government is guaranteeing GM’s warranties and providing an undisclosed amount of interim operating cash during this latest two-month reprieve, Obama and his socialist sycophants are pretending that they have administered some “tough love” to the company.

Nothing could be further from the truth.

America should have never taken those first, fateful steps down the road toward our present socialist experiment. And yet $13 trillion later, with the market still in shambles, jobs still on the decline and income levels flatter than pancakes, we’re stuck with an administration that seems hell bent on pushing the envelope of government control as far as it will go.

How bad has it gotten for what’s left of our free market?

Consider this – three months ago language like “socialist sycophants” would have been considered over the top.

Not anymore, though. What used to pass for rhetorical “red meat” among true free market supporters is now putting things mildly.

With each fresh interventionist encroachment, Obama is twisting the knife deeper into the belly of an economic system that founded, built and sustained these United States through generations.

Certainly, based on tens of billions of dollars lost and tens of thousands of jobs lost, Rick Wagoner deserved to be shown the door at GM.

But that should be a decision reserved for GM shareholders.

The fact that such a decision was made unilaterally by the President of the United States – holding the taxpayers’ checkbook in his hand as he made it – runs completely counter to everything this country stands for.

Yesterday’s invisible hand has become today’s iron fist.

We must unclench it, or risk joining our former Cold War adversaries on the ash-heap of history.

The author is the Chairman of Americans for Limited Government.

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