By Michael Barone
Thursday, August 23, 2012
Readers with long memories may recall that Charles E.
Wilson, president of General Motors and nominee for secretary of defense, got
into trouble when he told a Senate committee, “What is good for the country is
good for General Motors, and what’s good for General Motors is good for the
country.”
That was in 1953, and Wilson was trying to make the point
that General Motors was such a big company — it sold about half the cars in the
U.S. back then — that its interests were inevitably aligned with those of the
country as a whole.
Things are different now. General Motors’ market share in
the U.S. is below 20 percent. It has gone through bankruptcy and exists now
thanks to a federal bailout. But Barack Obama seems to think that it’s as
closely aligned with the national interest as Wilson did.
“When the American auto industry was on the brink of
collapse, I said, let’s bet on America’s workers,” Obama told a campaign-event
audience in Colorado earlier this month. “And we got management and workers to
come together, making cars better than ever, and now GM is No. 1 again, and the
American auto industry has come roaring back.”
His conclusion: “So now I want to say that what we did
with the auto industry, we can do in manufacturing across America. Let’s make
sure advanced, high-tech manufacturing jobs take root here, not in China. Let’s
have them here in Colorado. And that means supporting investment here.”
Was he calling for a federal bailout of other American
manufacturing companies? And what does he mean by “supporting investment”?
White House reporters have not asked these obvious questions, for the good
reason that the president, who has been attending fundraisers on an average of
one every 60 hours, has had only one press conference in something like two
months.
Obama talks about the auto bailout frequently, because
it’s one of the few things in his record that gets positive responses in the
polls. But he’s probably wise to avoid probing questions, since the GM bailout
is not at all the success he claims.
GM has been selling cars in the U.S. at deep discount,
and while it’s making money in China — and is outsourcing operations there and
elsewhere — it’s bleeding losses in Europe. It’s spending billions to ditch its
Opel brand there in favor of Chevrolet, including $559 million to put the Chevy
logo on Manchester United soccer-team uniforms — and it just fired the marketing
exec who cut that deal.
It botched the launch of its new Chevrolet Malibu by
starting with the green-friendly Eco version, which pleased its government
shareholders even though the car got lousy reviews. And it’s selling only about
10,000 electric-powered Chevy Volts a year, a puny contribution toward Obama’s
goal of one million electric vehicles on the road by 2015.
“GM is going from bad to worse,” reads the headline on
the analysis of Automotive News’s editor in chief, Keith Crain. That’s
certainly true of its stock price.
The government still owns 500 million shares of GM, 26
percent of the total. It needs to sell them for $53 a share to recover its
$49.5 billion bailout. But the stock price is around $20 a share, and the
Treasury now estimates that the government will lose more than $25 billion if
and when it sells.
That’s in addition to the revenue lost when the Obama
administration permitted GM to continue to deduct previous losses from current
profits, even though such deductions are ordinarily wiped out in bankruptcy
proceedings.
It’s hard to avoid the conclusion that GM is bleeding
money because of decisions made by a management eager to please its political
masters — and by the terms of the bankruptcy arranged by Obama car czars Ron
Bloom and Steven Rattner.
Rattner himself admitted late last year, in a speech to
the Detroit Economic Club: “We should have asked the UAW [United Auto Workers
union] to do a bit more. We did not ask any UAW member to take a cut in their
pay.” Non-union employees of GM spin-off Delphi lost their pensions. UAW
members didn’t.
The UAW got their political payoff. And GM, according to
Forbes writer Louis Woodhill, is headed to bankruptcy again.
Is this really what Obama wants to do for all
manufacturing across America? Let’s hope not.
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