Tuesday, June 02, 2009

Government Motors

"Government Motors" has become a popular moniker for the restructured General Motors. Obama denies this charge, saying "What I am not doing, what I have no interest in doing, is running GM.... They, and not the government, will call the shots and make the decisions about how to turn this company around."

Ha! Firing the CEO, forcing bond holders to take 10 cents on the dollar, big give-aways to the union and passing legislation making some of their most competitive vehicles illegal, is not exactly a hands-off approach. Obama won't run the company, he'll hand it over to the UAW and hand picked executives, while the taxpayers foot the bill to the tune of $50 billion. What exactly is the difference? 

Surprise, surprise, Obama's selection for CEO supports the new legislation making many of the cars you and I would like to buy illegal. By 2016, the average car must get 39 miles per gallon, up from the current 27.5. This will make cars more expensive, make domestic auto companies less competitive, and limit your freedom to buy a car that is right for you and your family. Worst of all, carmakers will have to sacrifice safety, making cars smaller and lighter in order to improve fuel efficiency. Thousands more people will die in traffic accidents because of this legislation. Driving a more fuel efficient car sounds great, but the free market (AKA the independent decisions of free people) will strike a better balance between fuel costs, maintenance, retail price, safety, and utility of a car or SUV than having President Obama decide what car is right for you.

The best thing for GM would have been to go bankrupt without a huge government "investment" and renegotiate its union contracts. This would allow them to get their costs in line and become competitive again. Obama refused to allow this to happen to his union supporters. Instead, we will dump billion after billion in tax payer money supporting the unions and a company that may never make a profit again.

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