A Dangerous Precedent

The US government in the auto business

 

Today President Obama announced the government-mandated resignation of General Motor’s CEO, Rick Wagoner, as a condition for more government aid. And he did all this without consulting the Congress. Even more strangely, Mr. Wagoner stepped down immediately. Stranger (or scarier) still, Mr. Obama rejected GM’s and Chrysler’s restructuring plans because he felt the plans did not do enough to make either company “viable”. Sen. Carl Levin, D-MI, was “sad” upon learning of this development and expressed concern regarding a “double standard in the treatment of the US auto makers and the financial industry” (TheHill.com). Now, according to President Obama, warranties on new GM vehicles will be backed by the US government rather than the manufacturer.

 

The government, regardless of who is at the helm, has been virtually out of control for a number of years as it grows larger and larger and thinks up new ways to be more things to more people – and on a much grander and more expensive scale. The promises Obama made while campaigning for president guaranteed that we would see government on an even larger scale than before. Now with control of GM, and to a lesser extent Chrysler, seemingly settled into the Oval Office, I fear we ain’t seen nothing yet. President Obama says the government is not in the car-making business, but evidence to the contrary would indicate otherwise since one word from the White House would cause the sudden “retirement” of GM’s CEO. And the US government is going to back auto warranties? What is this if not “control”? 

 

This is not a good move, and it does not restore my confidence in the industry since I have virtually no confidence in a US government that cannot seem to manage itself. Now Mr. Obama is an auto industry expert, so much so that he alone can determine whether a restructuring plan will be adequate.

 

I fear the worst is yet to come.