Republicans see GM takeover as election weapon
Republicans plan to use the government takeover of General Motors Corp. as ammunition in their bid to defeat congressional Democrats next year, saying it’s a glaring example of big government intrusion into the marketplace that will rankle average voters.
They said the bankruptcy arrangement, which President Obama announced at the White House on June 1, is doomed to entangle politicians in business decisions that are outside their expertise.
“We’ll continue to make the case that President Obama and House Democrats want to do to America’s health care system what they have done to General Motors,” said Paul Lindsay, a spokesman for House Republicans’ campaign arm, the National Republican Congressional Committee. “Having to defend such drastic government intervention paid for with reckless spending and bailouts is not an enviable position for many of these Democrats to be in next year.”
Democrats, led by the president, intend to use the intervention in the election season as well, but they expect to promote it as necessary to get the company back on track and to save thousands of jobs. Democrats are also banking on the economy getting better.
Senate Majority Leader Harry Reid, Nevada Democrat, stressed that he expected the government’s involvement to be “a short-term stake” and said the government will not interfere with day-to-day operations of GM.
“President Obama’s decision to take a short-term stake in General Motors is driven by our nation’s shared interest in ensuring the American auto industry can survive,” Mr. Reid said.
Republicans said they would challenge that notion whenever they found a chance. Sen. Lindsey Graham, South Carolina Republican, vowed to force a vote to make lawmakers take a stand on the issue. And the topic is already popping up in the hottest Senate race — in which Sen. Arlen Specter switched parties to run as a Democrat in Pennsylvania.
A Republican challenger, Pat Toomey, said the arrangement — in which the government is pumping $30 billion into GM on top of the billions the Bush administration designated last year — is a bad deal. Mr. Toomey’s campaign said Mr. Specter “has been conspicuously silent on the latest round of auto bailouts” and asked whether Mr. Specter will “stand up for taxpayers or will he simply do the Democrats’ bidding?”
Mr. Specter’s Senate office did not make a statement on Mr. Obama’s decision.
In Michigan, which has been brutalized by the collapse of the U.S. auto industry, Gov. Jennifer M. Granholm said the government’s decision to put GM into bankruptcy and to take over much of the company means the worst is about to be over. “We can see that there’s light at the end of the tunnel,” she told CNN.
She acknowledged that the state’s unemployment rate — already the highest in the nation — will increase, but said having Mr. Obama’s backing of the auto industry and the bankruptcy proceedings is the key to restructuring.
Under terms of the arrangement Mr. Obama announced, the U.S. government will name most of the members of a new corporate board, and the company will begin to try to build a smaller, fuel-efficient car. The company will permanently close nine plants and cut 21,000 jobs and 2,600 dealerships in an effort to shed unmanageable obligations.
GM filed for Chapter 11 bankruptcy, and neither the company nor the administration had a guess as to how long the government will control the company.
Even as he was announcing plans that would lead the government to own 60 percent of GM, Mr. Obama sought to put as much distance between himself and GM’s future decisions.
“I refuse to let these companies become permanent wards of the state, kept afloat on a permanent supply of taxpayer money,” he said.
But Chris Chocola, a former congressman and president of the free-market conservative advocacy group Club for Growth, said his former colleagues at the Capitol can’t resist meddling with decisions about what plants to close or where to locate production facilities.
“I don’t think there’s really any way Congress can divorce the politics from this, and that’s a danger,” he said. He compared it to base closings, during which members of Congress finally had to take the decisions out of their own hands in order to end the politicking that accompanied the tough decisions.
“That’s the danger here is every politician here that has a GM or Chrysler plant in their district is going to scream you can’t close the one in my district,” he said.
Mr. Chocola also said no matter what the government does, lawmakers and officials from Mr. Obama down will be blamed for the company’s decisions, which means “ever-increasing opportunities to tick people off.”
The government also could find itself clashing with the car companies over environmental issues. The Obama administration has enlisted the bailed-out automakers to support its plan for emissions and federal fuelefficiency standards. The car companies and state lawmakers had been battling over emission standards for years.
The Workplace Fairness Institute, an outside group that is battling a union-sought bill that would make it easier to form unions and create binding arbitration between companies and unions, said the GM deal is an example of what happens when the government forces a deal between businesses and unions.
“The common thread throughout all these stories is that the workers suffer,” said Katie Packer, executive director of the institute.
Republicans from states with auto-manufacturing plants promised to try to secure government assistance for workers and said they hoped bankruptcy would work to GM’s advantage.
In announcing the moves, Mr. Obama sought to extend blame to previous administrations. He said his government “inherited a financial crisis unlike any that we’ve seen in our time” and therefore the government has had to take controlling stakes in private companies.
He said the “survival” of the U.S. economy depended on the move. It was the same argument the Bush administration made last year as it urged a congressional bailout of GM and pressured Congress to pass the $700 billion Wall Street bailout.
Jon Ward contributed to this report.
Workers take down a sign after a speech by General Motors Corp. Chief Executive Officer Frederick A. “Fritz” Henderson in New York on June 1.