Congress and GM

December 1st, 2008 by Rick Drain

I applaud Speaker Pelosi, Congressmen from both parties, and (a week later) the Bush administration for telling the US three automakers to get serious if they want public money.

Apparently, the three CEOs hadn’t even prepared a business plan for their return to profitability;テつ they just packed their begging cups and hopped on the corporate jets.

Rick Wagoner of GM was particularly unrepentant.テつ He blamed the Unions.テつ He blamed the economy.テつ He blamed commodity inflation.テつ He blamed the financial markets.テつ Himself and his co-drivers?テつ No, no blame.テつ He asserted that they’d always had the right products, good quality, and generally competitive in every way.テつ Nope, this wasn’t their fault, and could they please have $25 billion so they can start thinking about a solution?

Naturally, they also used human shields:テつ “Support the Auto Industry!” they cried, “or all our workers and suppliers and dealers will be hurt!”

All this in an era when a dozen “foreign” car companies build cars in America, profitably, and steadily take market share away from the big three.テつ Those transplant automakers don’t seem to be begging for anything.

It is not clear that GM can be saved in its current form.テつ Since the auto CEOs have introduced the idea of using public money, we taxpayers should focus on how to get what we really want in return.

US taxpayers want to:

  • Keep auto workers employed.
  • Keep US parts suppliers from being dragged down by sudden loss of a customer.
  • Spend as little as possible.
  • Keep the company top hogs and even the shareholders from getting even a nibble of publicテつ money.

It’s not like Americans have stopped buying cars or anything.テつ It’s just that GM can’t make money selling them.

Consider that the least expensive solution may be:

  • (Fire Wagoner, and most of the people whose names he knows personally.)
  • Break up GM
  • Close the portions that can’t be made profitable.
  • Pay to retrain the workers and get them into comparably-paid jobs.
  • Offer incentives to competent car companies to move to Detroit.
  • Offer support to the suppliers during their transition to producing parts for the remaining competent companies.

Pay, incentive, support, yes that all sounds expensive.

I simply submit that a supported breakup may be less expensive and more effective than just giving the cash to the current management, with their assurances that they’ll think of something good to do, real soon now.

[updated 2009-01-13 to correct spelling of “Wagoner”]