Con­sumers won’t drive ‘Gov­ern­ment Motors’

The Washington Times Weekly - - Commentary -

Get ready, folks. Amer­ica has bought a car com­pany. As of June 1, we, the tax­pay­ers, own a ma­jor­ity stake in Gen­eral Motors Corp. Whether the com­pany will be for­mally re­named Gov­ern­ment Motors re­mains to be seen. But that’s what it will be.

GM filed for bank­ruptcy on June 1. In­stead of putting the failed car en­ter­prise into bank­ruptcy six months ago — where Carl Ic­ahn or Wil­bur Ross could have bought it — the Bush ad­min­is­tra­tion chose Bailout Na­tion. Un­der Team Obama, that bailout has mor­phed into fullscale gov­ern­ment own­er­ship. Twenty bil­lion dol­lars of Trou­bled As­set Re­lief Pro­gram money is al­ready in­vested in GM, with an­other $50 bil­lion on the way. And that num­ber could eas­ily dou­ble un­less GM car sales mirac­u­lously climb back to 14 mil­lion this year. That’s highly un­likely, with sales presently hov­er­ing around 9 mil­lion a year.

In other words, tax­pay­ers won’t get their money back. Yes, we the peo­ple will be left hold­ing the bag for the mis­takes of GM’s man­age­ment and la­bor leaders over the past four decades.

And with CAFE mileage stan­dards ratcheting up — all while GM is go­ing down — Team Obama‘s green vi­sion for the econ­omy will soon be crys­tal clear. With Pres­i­dent Obama in the driver’s seat, we will get lit­tle green two-door cars that most folks won’t want to buy.

Even worse, United Auto Work­ers chief Ron Get­telfin­ger has made it plain that his pow­er­ful union won’t let th­ese cars be man­u­fac­tured in low-cost nonunion plants over­seas. The re­sult? Mr. Obama’s lit­tle green cars will be un­prof­itable, as well.

It’s the big­ger pic­ture that has me most con­cerned. What does about hun­dreds of bil­lions of tax­payer dol­lars that will never be re­paid. This is the stuff the Ital­ians used to do, and the Bri­tish be­fore Mar­garet Thatcher, and the Sovi­ets a long time ago. But it’s very new and dif­fer­ent for Amer­ica.

Is this on­slaught of gov­ern­ment own­er­ship an at­tack on free-mar­ket cap­i­tal­ism? Yes, it is. Call it Bailout Na­tion or Own­er­ship Na­tion, it’s an un­prece­dented de­gree of gov­ern­ment com­mand, con­trol and be­gan dur­ing the Bush-Cheney ad­min­is­tra­tion, and Mr. Cheney didn’t deny it. But when I asked whether he had an­tic­i­pated the cur­rent de­gree of gov­ern­ment con­trol, he gave me an­other hon­est an­swer, as is his custom: No.

Re­gard­ing the banks, Mr. Cheney said the bailout work was done at the Trea­sury Depart­ment (un­der Henry M. Paul­son Jr.) and that no crit­i­cal stud­ies were per­formed by the White House. Mr. Cheney him­self op­posed the GM bailout, pre­fer- a big mis­take.

As for Pres­i­dent Nixon’s wage-and-price-con­trol pol­icy, the for­mer vice pres­i­dent re­minded me, “We fi­nally got out of it, but it took a long time to do it, and it [did] a lot of dam­age.”

Mr. Cheney was very crit­i­cal of Mr. Obama’s big-gov­ern­ment spending and bor­row­ing poli­cies, too, telling me there are just two ways out: in­flat­ing the money sup­ply or im­pos­ing big tax in­creases. He doesn’t like ei­ther. Yes, Mr. Cheney thinks Mr. Obama has taken Bailout Na­tion and gov­ern­ment stim­u­lus way be­yond any­thing the Bushies ever con­tem­plated. Nev­er­the­less, the dam­age is done.

Mr. Cheney re­called Mr. Bush say­ing, “We have to sus­pend free-mar­ket cap­i­tal­ism in or­der to save free-mar­ket cap­i­tal­ism.” So the big ques­tion is: How long be­fore we res­ur­rect free-mar­ket cap­i­tal­ism, and how much dam­age will cur­rent poli­cies do in the mean­time?

I won’t lose my faith in this coun­try’s long-term fu­ture. But the is­sue of how much dam­age we sus­tain be­fore re­turn­ing to the poli­cies of free-mar­ket eco­nomic growth is very much on my mind.

Lawrence Kud­low is a na­tion­ally syndicated colum­nist.

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