Repub­li­cans see GM takeover as elec­tion weapon

The Washington Times Weekly - - Politics - BY S.A. MILLER AND STEPHEN DINAN

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.

BLOOMBERG NEWS

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.

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