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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > May > 04 > Entry
Editorial: Federal bailout not a fate to be envied
When Washington decided — under President George W. Bush — to bail out not only the banks but the auto companies, immediately people started joking about how they, too, would like to be bailed out from, say, their credit-card debts.
But if they look now at GM and Chrysler, they might not be so sure.
Chrysler is going into bankruptcy, from which its top executive seems to think it will emerge in a good position. But it had to merge with Fiat
, in a deal that analysts are saying leads to Fiat’s dominance. And more than half of the company may be owned by the United Auto Workers union, or, rather, a UAW fund that deals with health benefits. The stock is in lieu of billions owed to members in health benefits.
And the company is shutting down production for a while, having already jettisoned many thousands of employees. And the CEO is on his way out. Dealerships are expected to close. The company’s financing arm has been cut out of the action. Suppliers, such as Dayton’s Behr Thermal Products, are watching with bated breath.
As for General Motors, it’s still struggling to meet the demands of the country’s new president, hoping to avoid bankruptcy. Pontiac is gone. Saturn may be gone. Dealerships are slated to go by the droves. Plants are being shut. The CEO is long gone. The company was a behemoth no more when the government stepped in, and it is becoming much smaller.
Much of what is left could end up being owned by a UAW fund. And nobody can say there aren’t still more blows ahead, before the government is out of the picture. In the end, both companies might survive and thrive. If so, they’ll have to repay the government money in some form.
President Barack Obama said at his press conference last week that, despite his extraordinarily aggressive role so far, he has no interest in running any auto companies. The claim is credible. Government ownership of auto companies has never been in the platform of the Democratic Party or the dreams of the party’s liberals.
Nobody knows whether the union is any more interested in ownership. For the union fund to own stock would be of little comfort to the thousands of workers in Dayton — more than in any city outside of Michigan — who have lost their GM and Delphi jobs over decades.
Nor would the presence of the UAW in management necessarily secure the jobs of present or future workers. If a company’s products aren’t selling, any owner must come to terms with that, making painful decisions.
Meanwhile, nobody knows how much the stock will be worth.
Given all that — plus the fact that running companies and running unions are very different businesses, potentially at odds with each other — the union might want to rid itself of the stock as soon as buyers can be found.
As for the corporations, they’ve been forced to act, in huge decisions, in accord with the interests of taxpayers, as those interests are understood by the president.
It’s not a model that anybody — management, unions, taxpayers, Democrats, Republicans — would want to see become a norm in the American business world, even if it was the least bad approach available.
Permalink | Comments (6) | Post your comment | Categories: Auto industry, Economy, Editorials, Martin Gottlieb
Comments
By George
May 4, 2009 8:41 AM | Link to this
Unbelievable! You have got to be kidding. Calling Obama’s claim “credible” when he says he has no interest in running the auto companies (and the banks) is the height of naivete. Obama is lying. Again. Remember his promises of REDUCING the deficit, earmarks, transparency and integrity? Of course, he did not run his campaign on a message of Fascist governmental control of privately owned business-but that is exactly what he is doing. Why? So he can reward those who can secure his re-election and the re-election of fellow democrats..the unions to get out the vote, the wealthy Wall Street bankers to pay for the vote, and saddest of all, the dependent under class who pay no federal income tax, that have been promised more than the government could ever afford to deliver. To my liberal friends: while your intentions may be good, tying yourself to a power hungry anti-capitalist like Obama will help no one and hurt us all.By JK
May 4, 2009 9:08 AM | Link to this
Agreed George.He’s getting a pass from liberal media.In debt for years and years to come.Bush spent way to much and media gave him heck now Obama triples it in a matter of 100 days a oppose to 8 years wasBy Displaced Buckeye
May 4, 2009 10:34 AM | Link to this
And don’t forget Obama’s “promise” to “diminish the role of lobbyists in the White House.” That was right after he just hired 32 of them! The 95% of the Middle Class are still waiting on our tax cut too! But it’s not Obama’s fault, he just doesn’t know, otherwise he would not do this!By Davidss2
May 4, 2009 4:39 PM | Link to this
Don’t tell me someone thought Obama was telling the truth about his goals during his campaign? He was running by telling the democrat faithful what they wanted to hear. He still hasn’t shown his birth certificate. You can judge hiim by the company he keeps: Alinsky, Willima Ayers, etc. Look at the ones behind his teleprompted now he bougtht the WhitE House with the “donations” to his campaign. Emanuel, Axlerod, and other wild democrats form the Clinton era leftovers.By MnM
May 5, 2009 11:57 AM | Link to this
Aw, c’mon … give the DDN editors a break. They love being bent over asking for another. They wouldn’t know “objectivity” if it sat in their laps.By RAW
May 6, 2009 4:36 PM | Link to this
So why settle for a bad approach in the first place? I still do not understand why these firms needed a bail out. We have processes in place to deal with failing businesses, even very large ones. Thes corporations should have gone into bankruptcy, liquidated assets to cover liabilities and restructured as leaner organizations. There are many advantages to that process. For one, you can renegotiate current liability obligations which was the main reason for many of these bailouts. The bailouts were meant to circumvent the process of renegotiation which would likely have caused some assets to be sold off to other entities. For the companies involved, it would have meant losing pieces of their organization and a reduction of influence, not exactly popular among many CEO’s. The problem is now the feds want controlling interest in the companies, a side-effect not considered by bail out recipients. In the case of the auto industry, Obama has done just as promised, returned the control to the working class, the UAW. Anyone else see a conflict of interest here. The other problem is that the government can now dictate terms to these businesses, whereas if they had taken the bankruptcy option, terms would have been dictated by judges and market factors. The overall result would have prevented the nationalization of two key sectors to our economy. The final statement of this editorial regarding the least bad approach disturbs me greatly. It seems as if the author does not understand that there were good approches already in place but were disregarded out of fear. If you are lost in the wilderness, there is no reason to assume that your compass is broken. Tried and true approaches to these situations were available, but never used on this companies of this scale. The process would have worked if given a chance, but too many politicians saw the opportunity to grab the power of nationalizing key sectors of American life (banks and autos). This was a power grab spurred on by the left and the right, and is indicative of the problems America faces in government.