Last Updated:November 25 @ 04:16 pm

Barone: GM headed to bankruptcy despite Obama bailout?

By Michael Barone

Readers with long memories may recall that Charles E. Wilson, president of General Motors and nominee for secretary of defense, got into trouble when he told a Senate committee, "What is good for the country is good for General Motors, and what's good for General Motors is good for the country."

That was in 1953, and Wilson was trying to make the point that General Motors was such a big company -- it sold about half the cars in the U.S. back then -- that its interests were inevitably aligned with those of the country as a whole.

Things are different now. General Motors' market share in the U.S. is below 20 percent. It has gone through bankruptcy and exists now thanks to a federal bailout. But Barack Obama seems to think that it's as closely aligned with the national interest as Wilson did.

"When the American auto industry was on the brink of collapse," Obama told a campaign event audience in Colorado earlier this month, "I said, let's bet on America's workers. And we got management and workers to come together, making cars better than ever, and now GM is No. 1 again and the American auto industry has come roaring back."

His conclusion: "So now I want to say that what we did with the auto industry, we can do in manufacturing across America. Let's make sure advanced, high-tech manufacturing jobs take root here, not in China. Let's have them here in Colorado. And that means supporting investment here."

Was he calling for a federal bailout of other American manufacturing companies? And what does he mean by "supporting investment"? White House reporters have not asked these obvious questions, for the good reason that the president, who has been attending fundraisers on an average of one every 60 hours, has not held a press conference in something like two months.

Obama talks about the auto bailout frequently, since it's one of the few things in his record that gets positive responses in the polls. But he's probably wise to avoid probing questions, since the GM bailout is not at all the success he claims.

GM has been selling cars in the U.S. at deep discount and, while it's making money in China -- and is outsourcing operations there and elsewhere -- it's bleeding losses in Europe. It's spending billions to ditch its Opel brand there in favor of Chevrolet, including $559 million to put the Chevy logo on Manchester United soccer team uniforms -- and just fired the marketing exec who cut that deal.

It botched the launch of its new Chevrolet Malibu by starting with the green-friendly Eco version, which pleased its government shareholders, but which got lousy reviews. And it's selling only about 10,000 electric-powered Chevy Volts a year, a puny contribution toward Obama's goal of 1 million electric vehicles on the road by 2015.

"GM is going from bad to worse," reads the headline on Automotive News Editor in Chief Keith Crain's analysis. That's certainly true of its stock price.

The government still owns 500 million shares of GM, 26 percent of the total. It needs to sell them for $53 a share to recover its $49.5 billion bailout. But the stock price is around $20 a share, and the Treasury now estimates that the government will lose more than $25 billion if and when it sells.

That's in addition to the revenue lost when the Obama administration permitted GM to continue to deduct previous losses from current profits, even though such deductions are ordinarily wiped out in bankruptcy proceedings.

It's hard to avoid the conclusion that GM is bleeding money because of decisions made by a management eager to please its political masters -- and by the terms of the bankruptcy arranged by Obama car czars Ron Bloom and Steven Rattner.

Rattner himself admitted late last year, in a speech to the Detroit Economic Club: "We should have asked the UAW (the United Auto Workers union) to do a bit more. We did not ask any UAW member to take a cut in their pay." Non-union employees of GM spinoff Delphi lost their pensions. UAW members didn't.

The UAW got their political payoff. And GM, according to Forbes writer Louis Woodhill, is headed to bankruptcy again.

Is this really what Obama wants to do for all manufacturing across America? Let's hope not.

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Michael Barone, senior political analyst for The Washington Examiner (www.washingtonexaminer.com), is a resident fellow at the American Enterprise Institute, a Fox News Channel contributor and a co-author of The Almanac of American Politics.

COPYRIGHT 2012 THE WASHINGTON EXAMINER

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8 Comments

  1. inluminatuoComment by inluminatuo
    August 23, 2012 @ 8:48 am

    If what’s good for General Motors is good for the country, obviously Obama was neither good for General Motors NOR good for the country. Their Stock is down to $23/share after an Obama cluster F’d idea of a bankruptcy reorganization where the taxpayer took over the debts, saved his unions (The prime reason they went bankrupt in the first place) and screwed the stockholders. It immediately dropped from the initial IPO price of $34/share and has continued to go south ever since.The cost bleeding union rules and retirements and benefits are still in place but now they are forced to make electric cars that blow up which nobody wants to buy at twice the cost of a gasoline car. Now there is a socialist ideological government inefficiency gone wild. GM is now just a reflection of Obama’s bankrupt government. The $23/share stock must rise to $52/share if the taxpayer ever expects to get his money back and break even.

    This will NEVER happen while Liberal Democrat predatory financial Wolfman Obama uses Liberal Progressive powerless Wolfsbane ideology to run and devour the monetary capital of General Motors and run and devour the capital and Capitol of our American country. It’s time for some real working Bain Capital ideas to rule the country, rule GM and rule the day. Since taking over the government in 2008 Americans has been hammered with $5,200,000,000,000 in deficits, 282,000 jobs lost, endured a 35% drop in household net worth,,,,,while all we got were 210 fund raisers, absolutely nothing on his agenda for work today. It is time for this political child in an adult’s body to go back to kindergarten.

    Am I the only one here with a problem of bailing out a company who is taking our tax money to build plants in China and destroy American jobs at home? Enter Ross Perot and that giant sucking sound he predicted. Obama’s policies are just more devastating socialist smoke and mirror wealth-redistributing economic tasteless chop suey.

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    • ggfilthyComment by ggfilthy
      August 23, 2012 @ 12:48 pm

      I completely agree…but I have to correct you on one thing… It’s not Liberal Progressive…it’s liberal “REgressive”…and for God sakes…use small case lettering when discribing the loony left. sides’ that.. you are right on target!

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  2. rustypatComment by rustypat
    August 23, 2012 @ 10:34 am

    UAW … no cut in pay … you do the math.

    IDIOTS, doomed to repeat the bankruptcy scenario … and we’ll get stuck with the bill again. They are so hyper-focused on winning their own self-serving personal battles … they’ll lose the war for the rest of us.

    Keep bleeding the American Taxpayer … and China will own us sooner than ever.

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    • inluminatuoComment by inluminatuo
      August 23, 2012 @ 1:06 pm

      Maybe is rustypat ran GM we would not get so many rusty cars produced.

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  3. JDZComment by JDZ
    August 23, 2012 @ 10:45 am

    Romney was right on when he said that GM should have been allowed to go through the legal bankruptcy process instead of a politically based perverted bankruptcy run by the Obama administration. Romney understands very clearly what can help a business survive and what causes them to fail because that was what Bain Capital successesfully did ith an 80% success rate.

    Government is totally out of its element trying to manipulate the private economy and attempting to decide winners and losers because politicians are business wise incompetent and too politically driven ti make the hard decisions necessary for success.

    GM is going down unless a serious restructuring is accomplished based on business choices with the union bias out of the mix. The unions have become one of the root causes of the failures in our private economy and the out of control costs of government across the country. Sooner or later, this has to be dealt with. Wisconsin was a start.

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    • inluminatuoComment by inluminatuo
      August 23, 2012 @ 1:09 pm

      Whenever the State is put in charge of pre-determining the outcomes of an economic problem, the Taxpayer always gets stuck with the failed socialist experiment gone amuck, while the politicians and parties get richer while governmng from the muck of self-interest.

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  4. newrepublicanComment by newrepublican
    August 23, 2012 @ 11:05 am

    I am totally with you. The legal process for bankruptcy would have protected all investor’s interests according to the risk they took when investing in the first place. The USG takeover screwed many bond holders, destroyed salaried pensioners, and artificially floated the stock price. If this were done by a private company many people would currently be in jail … which is where Obama needs to be.

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    • ggfilthyComment by ggfilthy
      August 23, 2012 @ 12:52 pm

      I don’t even want him in jail….we spent to much….I mean… He spent to much money already….I say we throw him out of the country….send him back to his home land.

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