Illinois Republicans aren't so pleased with President Obama''s bailout
plan for Detroit and they've been amping up the rhetoric in recent local media appearances. On WLS Radio yesterday, GOP Rep. Peter Roskam and morning
show co-host Don Wade imagined a dystopic future ...
Illinois Republicans aren't so pleased with President Obama''s bailout plan for Detroit and they've been amping up the rhetoric in recent local media appearances. On WLS Radio yesterday, GOP Rep. Peter Roskam and morning show co-host Don Wade imagined a dystopic future where the Obama administration's decision to oust General Motors CEO Rick Wagoner leads to complete state control over what cars Americans drive. Listen:
DON WADE: There’s a certain point though, and this takes it to the extreme, but we may see the day. You walk into a General Motors showroom and the cars that are displayed are going to be there not because anybody wants them, but only because the government has mandated that you must have them -- that kind of car with that kind of mileage, that kind of motor, that kind of fuel. And people come in and say “I really hate that, I don’t want one of those things.” But that’s going to be what’s there.
ROSKAM: Because it’s good for you! And because government knows what’s best for you. And you’re going to walk out and you’re going to finance it with a government loan and if you get into an accident, you’re going to a government health clinic and its going to be government subsidized energy.
Appearing on Monday's edition of WFLD's Good Morning Chicago, Rep. Mark Kirk joined Roskam in questioning the wisdom of the Obama administration's move. Watch (full video available here):
KIRK: Doing it this way gives an awful lot of power to the White House and key White House leaders who have never run a business. [...]
I don’t think the government is particularly good at doing anything. So we have one institution that’s run things horribly -- GM -- now being taken over by another institution -- the government -- that’s not particularly good at what it does.
Manzullo was just as adamant during his appearance on the same program Monday (and for the record, he voted in favor of the first auto bailout last December). Watch:
MANZULLO: The problem is when you asked for the government money in the first place -- that’s why I voted against the bailout -- these inevitable strings come by people who don’t understand free enterprise.
The overarching concern put forth by these Republicans -- that White House officials with no business knowledge are taking control of the auto industry -- is really a red herring.
The president and his team rejected the restructuring plans put forward by General Motors and Chrysler because they were not aggressive enough. As the New York Times David Sanger wrote, the paths proposed by the automakers were "once again far too modest, far too optimistic and far too late." These companies need structural and cultural reform as well as taxpayer money to survive. Without it, millions of jobs will be shed and the carmakers won't adjust to a changing climate. That can only happen with sound leadership coming from the top, something Wagoner was unable to provide. And if taxpayers are footing part of the bill, our representatives in government should have a direct say in how that money is being spent. As we learned the hard way with the TARP plan, handing over money without strings attached should not be an option.
The Obama administration will now work with GM and Chrysler to revise their plans -- with help and advice from the Treasury Department and the president's auto task force. Subjecting these insular companies to outside pressure will be healthy. And while the Republicans would like you to believe that this is a case of David Axelrod and Rahm Emanuel playing matchbox cars, the New Republic's Jonathan Cohn points out that Obama's team has done their homework:
For one thing, Obama and his advisors have done due dilgience. The task force immersed itself in every aspect of the auto industry, tapping outside consultants (including the well-respected Boston Consulting Group auto unit) and meeting one-on-one with major stakeholders. Obama and his advisers may not yet be experts in the auto industry, but they surely know more than almost anybody who was talking about this issue back in December in January.
While we should certainly question why such control wasn't imposed on the finance industry, which sucked up considerably more public money than Detroit, it's important to remember that a collapse of the auto industry would have devastating consequences. Just in Illinois, more than 80,000 jobs are directly tied to the auto industry and one estimate puts the total number of workers with direct links to car companies at more than three times that number. The status quo could cost the economy dearly.
Unfortunately, the Republican alternatives aren't satisfactory. Manzullo suggests dishing off $5,000 tax credits to any American buying a car or truck, a program which would cost $75 billion and wouldn't incentivize the purchase of more fuel-efficient cars, as Obama has proposed. Kirk wants to see the companies liquidated through bankruptcy without first splitting off the "bad" assets. The New York Times' Paul Krugman estimates such an approach could wipe out 1 million jobs and the Obama team has left that option off the table (while considering a "limited bankruptcy"). Roskam thinks busting union contracts will save the day, even though the UAW has already made cutbacks and is being pushed by the White House for even greater concessions. Also, his claim that the union "gave nothing away" in their last negotation with GM is plain false.
A reorganized, more efficient auto industry is good for America. But that transformation simply isn't going to take place at this juncture without government money and government direction.