Consumers won’t drive ‘Government Motors’
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.