David Brooks on yesterday's Government Intervention in the Auto Market: Car Dealer in Chief

… by enmeshing the White House so deeply into G.M., Obama has increased the odds that March’s menacing threat will lead to June’s wobbly wiggle-out. The Obama administration and the Democratic Party are now completely implicated in the coming G.M. wreck. Over the next few months, the White House will be subject to a gigantic lobbying barrage. The Midwestern delegations, swing states all, will pull out all the stops to prevent plant foreclosures. Unions will be furious if the Obama-run company rips up the union contract. Is the White House ready for the headline “Obama to Middle America: Drop Dead”? It would take a party with a political death wish to see this through.

Furthermore, there’s no reason to think the umpteenth restructuring will produce compelling results. Cost control without a quality revolution will make little difference. There’s no reason to think Americans are going to flock to G.M. cars. (The president lauded their fantabulousness, but G.M. sales fell 51 percent during the first two months of this year while the overall market declined by 39 percent.) Politically expedient environmental demands will make the odds of profitability even more remote.

Corporate welfare rarely works when the government invests in rising firms. The odds are really grim when it tries to subsidize fading ones. (In the ’80s, Chrysler already had the successful K-car in the pipeline.)

The most likely outcome, sad to say, is some semiserious restructuring plan, with or without court involvement, to be followed by long-term government intervention and backdoor subsidies forever.

Read it all. This worries me–I sincerely hope he is wrong..

Posted in * Economics, Politics, Economy, Office of the President, Politics in General, President Barack Obama, The Possibility of a Bailout for the U.S. Auto Industry

32 comments on “David Brooks on yesterday's Government Intervention in the Auto Market: Car Dealer in Chief

  1. A Floridian says:

    Next thing will be for the increasingly totalitarian USGov to try to force citizens to buy GM autos.

  2. A Floridian says:

    I say this because the totalitarians are planning to force physicians and nurses to participate in killing unborn infants.

  3. A Floridian says:

    …against their consciences.

  4. robroy says:

    Hey, GA/FL, what’s up with the multi-part postings?

    I am quite glad that Obama is blundering so badly. If things were going smoothly, we would have more of his social revisions being pushed.

  5. tgs says:

    The truly breathtaking part of this is that apparently the Executive Branch now has the power to unilaterally decide and announce with no oversight or approval from Congress that the American taxpayer will pay for automobile manufacturers warranty costs whatever that may be. It’s unconstitutional and mind blowing and if we have reached that stage then our Constitutional Republic is dead. Where is the outrage from Congress or for that matter, the citizenry?

  6. RandomJoe says:

    Reading this, I can’t help but think – what’s bad for the Democratic party is good for America.

  7. robroy says:

    Here is a video of McCain leaving a campaign stop at a GM factory when Obama supporters start chanting “Obama 08”:


    Wonder what those guys are thinking now?

  8. tgs says:

    #6. “what’s bad for the Democratic Party is good for America.” That may be true, but America is being turned into a Fascist state at a dizzying pace. We may not have the time to simply correct this over the next couple of election cycles. People must rise up and demand change now. Time is not on our side.

  9. In Texas says:

    And to think, I thought it was Bush/Cheney that had trampled the constitution and trampled on our civil rights. If its OK for Obama to fire the GM CEO, why has he not fired the heads of the UAW? A big part of the cost structure that needs changing are those related to labor – until that is done, it does not matter what kind of cars Detroit puts out, they will never be able to compete price wise with Japan and Korea (and next China and India).

  10. A Floridian says:

    Sorry, Robroy…too early and not enough tea.

    #5 YOU said it all (more than I could have said in 15 posts, RR).

    We are seeing on a national scale what KJS is doing in (or to) TEC – and what the UN and the ‘globalistas’ are pushing on a global scale.

    And, lo and behold, our own dear RW has been re-imaged, crowned and presented to the world as the UN apologist.

  11. Jeffersonian says:

    [blockquote]Read it all. This worries me–I sincerely hope he is wrong..[/blockquote]

    I’m sorry to say this, but Brooks is spot-on here, Kendall. GM is a dead man walking, and only in the crucible of Chapter 11 do they have the slightest prayer of emerging alive in some fashion. By becoming a ward of the State, particularly a State run by this crowd of foolish totalitarians, there is very little chance GM will ever be anything but a perpetual hole into which we throw capital.

    Business decisions are now being made by politicians who depend on the votes of workers who run these plants. I’d expect employment to swell at these facilities in time for elections, just as they used to at the “estatais,” the state-run businesses in Brazil. We’re becoming a banana republic, just without the bananas.

  12. Sick & Tired of Nuance says:

    I wonder what the new GM Yugo will look like and how much it’s MPG will be? Can I get one in charcoal gray?

  13. Katherine says:

    For those who may be thinking that conservative reaction here is becoming hysterical, check [url=http://www.washingtonexaminer.com/politics/Beyond-AIG-A-Bill-to-let-Big-Government-Set-Your-Salary-42158597.html]this report[/url]:[blockquote]But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the “Pay for Performance Act of 2009,” would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.[/blockquote]What’s going on is genuinely radical.

  14. Daniel says:

    Anybody know if the Pension Benefit Guarantee Corporation will have to pick up all the existing pension and retiree health care costs if the bankruptcy route is chosen? If available, this would be a great back door route to pay off the unions at taxpayer expense.

    I find it ironic that GM is excoriated for producing trucks and SUVs that pollute the environment when these are the only vehicles that make a significant profit, which allowed GM to pay for its massive pension and retiree health care costs. I can’t wait to see what a car designed by Congress will look like. It should make Rube Goldberg proud and be totally unaffordable without big government subsidies. Kind of like the current hybrid vehicles that don’t provide any cost advantage to the buyer until at least 125,000-150,000 miles. I don’t know about you, but every Chevrolet I owned in the 1970s and 1980s was a complete piece of junk that didn’t last past 100,000 miles. I can’t speak for the current models because I wouldn’t buy one based on past experience.

  15. Jeffersonian says:

    I’d go along with that, Katherine, if the P4P provisions included Congress. Let’s reduce Representative and Senator annual pay by $1 for each $1 million of annual deficit, and make it refundable by the legislator. By my calculation, each Congressman would owe about $1.5 million to the US government this year.

    Goose. Gander. Sauce.

    Of course, this is just tongue in cheek. More serious is [url=http://proteinwisdom.com/pub/?p=2695]this post[/url] from the brilliant Dan Collins:

    [blockquote]And as Barack’s administration seeks to recreate the gradualistically evolved institutions of the country by fiat into its own image, and as the monstrous lineaments of that image emerge, it will clearly not be any fault of this administration, who were merely doing what was required of the times, which dealt them a bad hand, because reality didn’t somehow conform to their expectations for it. The consequences will indeed have been unintended, but they won’t have been unforeseen. And the results will be the fault of those who have foreseen, as they always have been, according to the faithless and the ungrateful.

    And let me add this, too: out of all the disturbing things that Obama said in his press conference on the strings attached to the auto bailouts in his role as CEO to all the nation’s major industries, because of the “vision gap”, the most disturbing was that the value of the American automobile industry is principally a symbolic value. This is liberal cogitation at its most nakedly essential.[/blockquote]

  16. Dilbertnomore says:

    Elections – General AND Primary – produce consequences. 53% of voters elected Obama and we have them to thank for the social/political experiment in which we are the lab rats. Buyer’s remorse anyone?

  17. Branford says:

    But, Dilbertnomore, don’t you remember? Gov. Palin, running for VICE president (not president), was too insular and didn’t have enough experience according to the “elites” (even though she recognized corruption when she saw it – that’s called “character”), whereas Sen. Obama, Ivy League education and all, even though he had never had an executive job or done much more than vote “present,” would be the savior of us all! (And yes, I still am bothered by Canon Harmon’s dismissive attitude towards Palin.) Guess we’re sowing what we reaped (and by “we,” I don’t mean me).

  18. Dilbertnomore says:

    Banford, I remain fascinated by the selective curiosity and incuriosity exercised by the accursed 53% in the run up to the 2008 election. Their curiosity flourished in the diligent investigation of any potential flaw in any and every candidate, Republican or Democrat, EXCEPT Obama. About Obama, however, they were entirely incurious – except about the most trivial and unimportant ‘People’ magazine type stuff. The 53% expressed no wonder about Obama’s birth circumstance, childhood influences, education details (except in the most general sense), health history, intellectual history (undergraduate writings, law review authorship, public commentaries), post-law school friends and acquaintances, professional/social/political organizations or what Hope and Change really meant. It was as if even to ask such questions as any reasonable American citizen would think quite necessary to perform ones ‘due diligence’ as a voter, one should, quite reasonably, be regarded as racist or worse for daring to venture in that direction with respect to Obama. And now we have this……

  19. Mike L says:

    So let’s see, a couple months ago when the first bail out was proposed, everyone thought the GM execs should be canned and they should do a serious restructuring or be allowed to go bankrupt. Now, when the current admin cans the CEO, and tells GM their latest restructuring plan stinks and they better fix it fast or they will be allowed to go bankrupt, everyone seems to think it’s a great Obama conspiracy.
    You guys really crack me up.

  20. Katherine says:

    Mike L, GM needed to go into Chapter 11, get better management, and restructure old obligations. What we don’t need is GM doing so under political leadership rather than business and legal leadership. We should have told them, before their first bailout, that bankruptcy law was created for their situation. Now, after having thrown huge sums of tax money into failing businesses, the government is involved in running them (although claiming not to be).

  21. Jeffersonian says:

    That’s such a twisted recounting of events, Mike L, that it can only be characterized as deliberate dishonesty.

  22. Branford says:

    Mike L – I know you’re just joshing – surely you know the difference between a company deciding what the best thing might be to do in economic circumstances and the government MANDATING organizational decisions in a private company (private in the sense of not “government public”). But I forget – since GM “took the money” they are no longer a “private” company, but a very public one – how does it feel to be personally responsible for your neighbor’s car warranty?

  23. Dilbertnomore says:

    Actually, Mike L it was guys like me who were saying NO! to the bailout and encouraging Chapter 11 for the automakers that couldn’t hack it. It was Obama and the Dems who wanted to slow-roll the implosion, delaying the inevitable with truckloads of newly printed fiat money. You might recall just a couple of weeks before the Immaculation Obama asked Bush to cut loose the second half of the bailout package to keep the party rolling. Of course, Bush agreed. Now Obama and the Forty Thieves are in the driver’s seat Chapter 11 looks like a better alternative. Who knew?

    And now Obama and the Dems are in a very good position to assure their loyal toadies in the unions that all will be well and the only ones to take the fall will be the evil capitalist share holders and selected of the bond holders. And, of course, the evil managers. Can’t forget them.

    Just so long as Obama doesn’t forget to tell the American sheeple that he ‘feels their pain’ they won’t mind being stuck with the bill.

    The great social experiment goes forward! And all of us are the lab rats.

    Elections – General AND Primary – produce consequences. And the accursed 54% gave us these. I assume I should thank you for your role, Mike L. Yes?

  24. Dilbertnomore says:

    53%. Fat fingers.

  25. Mike L says:

    Dilbert : Yes, I voted for the current President. Considering the choices available, he was the lesser of evils. My opinion anyway. And gee, that bad old Obama doing what he can to protect the average every day workers. What a bastard!!
    Jeffer : what twisting of facts? Was not there a great hue and cry for GM to be allowed to go bankrupt back before the bailout? Is there not now a great gnashing of teeth because apparently the current admin could quite conceivably force that to happen?
    Kath: Apparently for you it’s good if they do it on their own, but if the admin forces them to do it by withholding the funds you don’t want to give them anyway, it’s bad. Explain your logic. Now I’ll agree with you that the original bail out funds probably should not have been done, but that’s not the cry or the subject of the predictions of what Obama “really intends” seen here.

  26. Jeffersonian says:

    [blockquote]Jeffer : what twisting of facts? Was not there a great hue and cry for GM to be allowed to go bankrupt back before the bailout? Is there not now a great gnashing of teeth because apparently the current admin could quite conceivably force that to happen? [/blockquote]

    We’re saying it’s none of the administration’s business, the same thing we were saying back in November. Furthermore, while Obama makes the threat, the fact that his administration now owns the situation at GM makes bankruptcy that much [i]less[/i] probable as it’s now a huge political liability. This makes it far more probable that what will happen is, within 60 days, GM’s new puppet CEO will miraculously come up with a reorganization plan that will, natually, require the continued flow of taxpayer capital to the company.

    In short, what must happen at GM (bankruptcy) will almost certainly not happen now and what should never happen (subsidy) will continue for the foreseeable future.

  27. Katherine says:

    Yes, Mike L, it’s okay if GM decides on its own that it is insolvent and files for Chapter 11. Regrettable, but the consequence of years of bad management decisions and union decisions. And it’s bad if the government takes over and begins firing executives and overseeing contracts, wages, etc. I don’t mind Obama withholding government funds; I wish funds had been withheld in the first place. But instead, he’s taking over the management, promising payment if they make the management choices he thinks are the right ones.

    We shouldn’t be using tax money to prop up failing businesses, and we shouldn’t be running said businesses from the White House.

  28. libraryjim says:

    And MikeL, 46 – 48% of the voters did not think Obama was the best choice — not counting those who did not vote because no candidate was any good according to them.

    As the Dems kept reminding Bush, 53% is NOT a mandate, it’s a slim margin! I personally did not think McCain was a great choice — my candidate was Huckabee — but I voted for him over Obama, having listened to the few who called for greater investigation of the Chosen One (and who were demonized by the MSM for doing so), and fearing that what is currently happening would happen!

  29. JimP says:

    Wow, I thought I was signing up for web site for Christians where we would be discussing things like helping the poor, salvation, theology only to wind up in the middle of a group of radical right wing Obama haters. I thought I was on Fox News or Laura Ingram’s site for a minute. I think I will like this site.

  30. Betty See says:

    Obama’s mistake may be that he thinks these businesses are too big to fail when in fact they are too big to manage.

  31. Cennydd says:

    Sometimes I think we need to turn giant megacorporations into little ones. Bust the trusts!

  32. Dilbertnomore says:

    JimP, you did indeed join a web site for Christians where we would be discussing things like helping the poor, salvation, theology. Kendall also seems inclined to post current events topics periodically. Here you will also find Christians who love and fear for their country. Our views are diverse and we express our opinions vigorously. Many of us are of the opinion Obama and the Congressional majority are taking our country rapidly to destination absolutely alien to the vision our founding fathers had in establishing our Constitutional Republic. And we are not passive about our beliefs. If you can’t handle that, I’ll miss you and wish you well to the degree you also love and fear for our country. I speak only for myself, obviously.