Special Report
Big Three Weekend at Bernie’s
Washington is not bailing out the Big Three automakers. It is nationalizing them. So who do you think will be running them?
Washington is not bailing out the Big Three automakers. It is nationalizing them.
Wake up and smell the coffee. Who do you think is going to be designing the next generation of auto products from these companies? The corporate leadership or the Congressional leadership?
In Partnership With Big Brother
After being rescued by billions and billions in government handouts, will the car companies be able to deny Congressional bigwigs anything they want in the design of their cars? Fuel economy standards, hybrid technology, electric cars, cars that run on ethanol, natural gas, switch grass, Bermuda grass, fine Colombian weed. Whatever Congressional poobahs want, they will surely now get, or easily pass legislative requirements forcing it on any corporate officials who remain insufficiently grateful and cooperative.
But you can rest assured that any potential ingrate will soon be gone, replaced by completely malleable gumbies with good Democrat party connections. Already we see Washington calling for the ouster of General Motors Chairman and Chief Executive Officer Rick Wagoner. The point is not that deposing Wagoner would be any real loss to GM. Under his leadership, GM’s stock price has collapsed from $70 in June 2006 to $2.78 last month. The point is that the corporate leadership of the new auto welfare queens will now be chosen by Congress and the Obama Administration, not by the corporate boards of directors, or the stockholders (read “quaint anachronisms” or “barbarous relics”).
Indeed, anyone on the boards of directors of the Big Three that says anything publicly, or privately within hearing, that offends any Democrat kingpin will soon be gone as well. Lord Obama himself said over the weekend regarding auto company managements, “If this management team that’s currently in place doesn’t understand the urgency of the situation and is not willing to make the tough choices and adapt to these new circumstances, then they should go.” That’s called laying down a marker. “Tough choices” means the choices Obama and Democrat Congressional leaders will now make for them. That is what Obama means by “adapt to these new circumstances.”
Jerome B. York, advisor to former GM Director Kirk Kerkorian, piled on, saying in Monday’s Wall Street Journal, “GM has five long-serving directors who have been on the board 10 years or more. They have approved of and overseen many of the moves that have contributed to the company’s troubles. They should also resign.”
For anyone who still doesn’t get the point, the bailout plan is said to include appointment of a new “car czar” to oversee the auto companies. Czar is a Russian word defined at Dictionary.com as “an autocratic ruler,” with synonyms of “despot, baron, emperor, monarch.” Interestingly, the first item that pops up at Dictionary.com under “czar” is “GM Car-Official Site.” For those who are paying attention, the handwriting is already on the wall.
Congressional Democrats want an oversight board including the Secretaries of Treasury and Transportation, tasked as the Wall Street Journal reports “with developing broader, general restructuring goals for the companies,” and with helping to develop plans to achieve these goals, “which the companies would be required to submit to the government by the end of March.” Also, “the companies would be required to notify the board of transactions of over $25 million.” In other words, the government would be running the finances of these companies as well, where they raise capital, from whom, when and how. Moreover, the General Accounting Office (GAO), and the special Inspector General for the financial market rescue, would also have oversight authority over the auto companies.
So the government will soon be firmly in charge of these companies. That, in turn, will mean a lot of costly, small time parochialism. The head of one Congressional Committee will want the companies to use steel produced in his district, another Congressional shaman will want the companies to use glass from his district, a senior Senator will want a big contract for an auto supplier in his state.
Any Color You Want, as Long as It’s Green
But the real senior partners of the automakers are now going to be the environmentalists. The Environmental Defense Fund, the National Resources Defense Council, Greenpeace, Friends of the Earth, the Sierra Club, this is where the Democrats are going to get their bright ideas on how to run the auto companies, this is who is going to be really designing the new cars from the “Big” 3.
After getting $75 billion in taxpayer funds, and probably more to come, how are the car companies going to continue to produce SUVs, Hummers, high performance cars, and any other politically incorrect vehicles? Forget about it. They are done.
What they will produce is the little Matchbox cars the Europeans drive. And that is what the environmentalists expect Americans now to drive as well. The American public has shown it won’t buy these cars, you say? Think again. You are behind the curve of our Brave New World. The environmentalists plan to force Americans to buy these cars. Ever hear of cap and trade? The carbon tax? Global warming? The environmentalists plan to slap fines of thousands of dollars a year on politically incorrect cars. By contrast, the auto bailout will enable them to sell the politically correct favored cars with thousands of dollars in taxpayer subsidies. Indeed, this will be defended as not just environmentally correct, but as protecting the taxpayer “investment” in the auto companies.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (18) | Leave a comment
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Mike| 12.10.08 @ 6:34AM
Call me crazy, but I would rather take a chance on a new vehicle built by a company reorganizing under chapter 11 than a new Lada.
Jason | 12.10.08 @ 8:14AM
Say hello to fascism...American style.
Fascism: Strict regulation and control of the economy through some form of corporatist planning in which the legal forms of private ownership of industry are nominally preserved but in which both workers and capitalists are obliged to submit their plans and objectives to the most detailed state regulation and extensive wage and price controls.
http://rightklik.blogspot.com/
dgdc| 12.10.08 @ 8:24AM
With highway bills, forign wars, etc the government has been subsidizing big oil and gas guzzlers for years. It's a bad idea but subsidizing fuel sippers will cost less than the trillions Bush spent in the middle east and all the other tax money spent to keep cheap oil flowing.
Pecos Pete| 12.10.08 @ 8:25AM
Been here before: Amtrak and the Post Office.
I wonder when the gubmint will start designing and building homes? Oh wait, we've done that before too.
Education and Health Care must be on the agenda too. Oops, done that, been there.
What's left? Oil and gas industry? Banks? Agriculture? Infrastructure build-outs? What's that you say? Oh, were already doing those too.
Small business (one or two employees) better watch out. Big brother is headed your way soon.
dnicholson| 12.10.08 @ 9:05AM
What the liberals and their pals in the enviro movement need to hear when they trot out the "America uses 25% of the worlds resources" line is "yes we do, and we also produce 33 % of the worlds goods because we are the most efficient producers of all time." And without that efficiency the world would be worse off. The one thing that the left can't stand are facts.
Jim Woodward| 12.10.08 @ 11:34AM
Any one remember British Leyland ?
Pat| 12.10.08 @ 12:25PM
Of course the Big 3 bailout is political, what else could it be? And it's not like we can make a business case for keeping domestic automakers on permanent life support. So lacking any business rationalization, it can only be done for political reasons.
And look at the rationalizations pouring out of the Big 3 and Detroit's media for confirmation of this political angle. No sincere admission of mistakes made in the past, no conscious recognition it's not 1965 anymore. The primary reasons given for a bailout, loss of jobs if the Big 3 fold, millions of them. And to hear the Detroit Free Press spin the story, once a 22 year old autoworker loses his job after GM folds, he will never work again - probably his children will never find work in their lifetimes.
Then there's "you gave Wall St. a bailout, why not us" - 7 & 8 year old brothers use this type of "it's not fair" argument. Another talking point is to wave the flag, "we were the arsenal of democracy in WWII."
But the unspoken clincher of an argument is that Detroit is economically "helpless" and the aftermath of a GM/Chrysler failure will be very ugly. The SE Michigan economy isn't diversified, the workforce is composed of either overpaid, unskilled workers or manager/technical types trained in a moribund corp. culture. Obama hasn't spoken the opening lines of his First Act yet and he can't afford to allow Detroit to self-destruct while the media looks on.
Joe B| 12.10.08 @ 1:19PM
Registered Republicans should adopt a highly disciplined boycott of all products made by quasi nationalized companies like GM being run or overseen by the Federal Govt. It's like volunteering to pay a scoundrel support tax, and it invites further socialism.
Dean M. Vander Linde| 12.10.08 @ 1:27PM
The Big Three will never learn from history. They made Faustian bargains with the UAW to prevent strikes; now they are about to make more with the federal government.
Anthony| 12.10.08 @ 1:32PM
Never again will I ever cast aspersions on hookers and prostitutes who make their money the hard way. At least it's the johns who do the begging, not the other way around. Watching and listening to the Big 3 Ex's perform a perverted form of oral sex on members of congress was as sickening a sight, as perhaps watching the new auto czar, Barney Frank, do the same to co-czar, Chris Dodd. I'm glad my diminished portfolio doesn't contain any auto stocks, because I'd hate to think that I would have participated in paying these whores for their services. Hey guys! the taint of Chapter 11 doesn't even come close to watching you repeat servicing members of congress orally, on a quarterly basis. And you can't even do a Clinton, and join the mile high club, now that your corporate jets are booted. As the old saying goes, what you are has already been established, the only question is for how much. Well, billions are a lot, and you can wrap yourselves in the cloak of doing it for a greater purpose, but you're still what you are, corporate sluts. Now, one of you get me a scotch and a cigarette.
Marc Jeric| 12.10.08 @ 7:00PM
Bravo, Anthony! I was going to comment on this auto bailout socialist farce, but after reading your comment I desisted. No way that I could improve on your wise words.
betterred| 12.10.08 @ 9:40PM
anyone who thinks the big 3 has a chance should visit a union plant and watch what really goes on..
There is no way( in any stretch of the imagination) that a union plant can be competitive with non-union.
AND here's a stat that explains this.
In 2007 GM and Toyota produced the same amount of cars roughly 9.5 million, GM posted a lose of 38 billion and Toyota posted a PROFIT of17 billion. case closed
baseballguy2001| 12.10.08 @ 10:00PM
Will anyone PLEASE believe me now? Our current President has done much more harm than good. Because of his liberal policies, he has exiled conservatives to the deep dark woods for a long time.
Robert Rosencrans| 1.3.09 @ 9:26AM
As the political elite in the U.S. Congress remain convinced they are the universal band aid for any problem that springs up, much destruction has been left in the wake of the fixers from Washington, D.C.
Everything the political elite throw their dangerous blanket of doom over with their smug and ill thought out plans withers and dies.
The alleged Great Society was the blueprint of destruction for many communities and the atom of the nucleus family, yet the rocket scientists in D.C. continue to launch one failed social program after another, followed by one failed economic program after another.
Now that the public has rejected the cars made by the former Big 3, now only a tattered shadow of their former selves, Washington remains convinced that they can save what the public has rejected.
There is no logic left in Washington, D.C. and little in the way of common sense.
All of us should invent companies based on social sound bites Washington loves to hear. Then we can produce useless products nobody wants, all the while waiting for a bail out from inside the beltway.
You see, if the public rejects something that is being produced no one can save the companies that make those products. It goes against all reason and all business sense and all common sense to do so.
But those little issues have never stopped the politically elite from squandering taxpayer funds.
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