General Motors is the second-largest car company in the world, only recently losing the title after seventy-seven years on top. It just celebrated its 100th anniversary and currently operates in 140 different countries. Numbers from the last couple of years show average revenues of over 200 billion dollars, or about 1/10th of the federal government’s income. Barack Obama has a law degree and work experience in polling and community organizing. So of course it makes sense that with a company headed by the world’s foremost experts in automotive industry going down due to a faulty business model, President Obama would choose to keep the business model relatively unchanged and artificially keep this giant on life support at taxpayer expense, tasking himself with replacing all of the experts.

To be honest, with as many connections as a man like the President would have, that doesn’t necessarily have to be too bad of an idea. However, he chose as his new ‘car czar’ a man currently under investigation by the SEC for illegal kickbacks from a state pension fund. Mr. Rattner is now the President’s top advisor on the automotive industry, and the GM deliberations, in particular. We’re giving this man huge sums of stimulus dollars and putting him in charge of his own department at the Treasury, which seems to be a less than stellar plan at this point, considering the history.

Possible embezzlement and incompetence aside, he must be a relatively smart guy to be that powerful. Maybe he has automotive business experience – so that together they will come up with a great way to get a return on the taxpayers’ investment. So far, the plan includes buying almost 18,000 cars that no one else wants just to keep the business open indefinitely. The fleet will just sit in a warehouse and collect dust so that GM’s sales numbers are inflated long enough to put off the decision about bankruptcy until it is more politically palatable.  ’Business’ decisions do not matter now, though, as the Obama administration has forced out the shareholders’ pick for management and replaced a majority of the Board with his ‘experts.’

Mitt Romney recently gave a talk where he lauded Obama for having the fortitude to put GM into bankruptcy. The problem is that we had to go through all of this nonsense to get there. Left alone, the company would have had no choice but to go through a bankruptcy – they couldn’t have stayed afloat on their own. Now, they’re doing the same thing after blowing your money on a fleet of useless cars and a round of support funding that may or may not have had any effect. Romney, and others in positions like his, ought to be more demanding in their definitions of what constitutes a market-based solution to the ongoing economic crisis.

Coming out in support of the government-sponsored bankruptcy plan was a well-intentioned and prudent move, and there is something to be gained from picking one’s battles with the administration, but the fight that didn’t happen here was worth the trouble. Yes, GM is going to end up in the same place now as they would have then. But consider the difference between an immediate bankruptcy and the one that has taken place. We have the same company going under, but only after having all of its current contracts extended with your income taxes, selling 18,000 cars to the government with no purpose at your expense and whatever moral implications you might expect from the federal government hijacking a private enterprise.

We’ve already seen Obama refuse to take repayment of TARP funds because he wants Geithner to remain in control of the nation’s banks, and now this – taking over one of the nation’s largest companies and forcing them to do what they would have done anyway. These actions ought to be more troubling to GOP leadership, even more than runaway stimulus funding by itself. Let’s be honest – we always knew Dems would spend us into oblivion on ridiculous schemes and boondoggles, but the takeover of American banking and industry is a much more brazen move. ‘Backbone’ is not giving up on the current format of GM – back bone is the President and his cronies keeping their grubby hands off the company in the first place.

The decision to let the company go into bankruptcy did show a surprising amount of restraint, but only after a glaring lack of it was shown first. Conservative leaders can applaud the President when he does certain things right – authorizing Navy SEALs for one – but not when he throws free enterprise under the bus. This whole GM situation has been a disgusting sideshow in how not to run a company, and we have let the debate center around the one decision that was not a terrible mistake. To retain our credibility as a party of free enterprise, and of free markets in general, we must have a consistent voice in calling for experts to run companies (instead of cronies) and in reminding people that throwing money at a problem does not alone fix the situation (unless all those billions were worth a delayed bankruptcy). Yes, GM should be in a period of restructuring right now, but it should have started last year. A man who plans to run for CEO of GM President on his business credentials needs to continue finding his voice on that issue.

Last 5 posts by Gideon D'Assandro

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