Wednesday, April 1, 2009

Obama – Just Fooling People About Bankruptcy Option for GM

At this point, given Obama’s long, successful history of talking like a moderate and acting like a radical, thus proving you can fool lots of the people all of the time, only a fool would believe Obama’s threat the other day of bankruptcy for General Motors if more concessions are not forthcoming from unions, among others. Just as with his comment the other day that he was not a big government guy, Obama can lie and he can lie boldly. Obama is the ultimate big government ultra-liberal. When he lies he knows that his core supporters will not care (many of whom indeed rationalize the “noble” lie that furthers their causes), and he won’t care that his opponents will not believe it, but he knows that the middle of the electorate that is uninformed, inattentive, and gullible will swallow it.

The Associated Press reported (link) the other day that:

President Barack Obama refused further long-term federal bailouts for General Motors and Chrysler, saying more concessions were needed from unions, creditors and others before they could be approved. He raised the possibility of controlled bankruptcy for one or both of the beleaguered auto giants.
Tough talk about the unions, but talk is all it is. The unions are of course a core constituency of the Democrat party, so nothing bad will happen to them. Bankruptcy would wipe out their uncompetitive wages, benefits, and work rules. So what’s really going on? Francis Cianfrocca writes (link) at Contentions:
As a condition of that hurriedly-arranged bridge loan [in the waning days of the Bush Administration], GM was required to come up with a viable business plan, or else be forced to return the TARP money…. And the plans were due on… March 31…. [However,] there was no way on earth for GM to present a viable, stand-alone operating plan. Why not? Because the GM menagerie includes one stakeholder that enjoys near-complete political protection: the United Auto Workers…. GM has many problems, and all of them need to be solved together for this company to have a chance. But if labor costs are protected, there’s simply no chance…. There’s no way that [now former] GM CEO Rick Wagoner could bring all the parties (bondholders, dealers, vendors, and labor) together to agree on major cost cutting, as long as the union held the trump card.

What should happen, given the circumstances? GM should be taken into government conservatorship (the rough equivalent of an 11 [bankruptcy] filing, but with taxpayers funding their losses). But that’s not going to happen. Given that [the Democrat-controlled] Congress is thoroughly unwilling to force the union to suffer, it’s more likely that we’ll see an outcome analogous to the nationalization of British Leyland. That means an open-ended commitment of taxpayer funds to cover the losses of an entity that is insulated from competition, and does its marketing in order to appeal to its government overseers rather than to its customers.

In today's Wall Street Journal, Holman Jenkins cuts right to the chase (link):

President Obama rightly says "sacrifices" must be made if GM is to emerge as a viable company. But there's one sacrifice he won't make: his re-election chances, by leaving the fate of the UAW truly up to a bankruptcy judge…. Keep that in mind amid reports the administration favors a "quick and surgical" bankruptcy. It's a bluff…. Even a "prepackaged" filing runs too much risk of a judge imposing more "sacrifice" on the UAW than the administration is prepared to tolerate.

Mr. Obama will be content with incoherent policies that poll well -- which means GM, Chrysler and perhaps Ford eventually will need taxpayer subsidies as far as the eye can see -- or until a real bankruptcy sometime after November 2012 [i.e., after Obama’s hoped-for re-election, when he would no longer need union votes].

Obama is a master at head fakes that dupe the star-struck and the gullible as he moves the ball down the field. We just all need to watch where he’s running, not what he’s saying.

John M Greco