One of the right wing’s talking points is that the government nationalized the auto industry.
For example, in defending her description of the administration as “gangster government,” Michele Bachmann said:
First, is my assumption correct in that she’s referring to the massive dealership closings that took place several months ago (and may still be ongoing, I don’t know)? If so, what was the administration’s involvement in the decision? Did they mandate a certain amount of closures? Mandate which ones would close? What was its involvement in deciding who the winners and losers were?
Given the inherent absurdity and proclivity for falsehood that comprise Bachmann’s schtick, I wouldn’t be surprised that the claim is made up of whole cloth. But other than that, what is the government’s involvement in the auto manufacturers it bailed out? I’m not asking about all government regulation (e.g., CAFE standards), I’m referring to new powers and decision-making authority directly tied to the bailout.
Part of the GM bailout/bankruptcy/government takeover required them to cancel franchise agreements with non profitable local dealerships. So, GM canceled the agreements with dealerships who didn’t meet certain sales and profitability standards.
Required them or allowed them? My understanding was that they and everyone else knew that they had way too many dealers, but they were bound to keep them until they went into bankruptcy. The bailout let them declare bankruptcy but maintain credibility.
I’ve never seen any evidence that government was involved in deciding which dealerships to close.
So, Bachmann is lying again, as if that were big news.
It helps if you can think like an anti-big government conspiratorist. But here it is in a nutshell.
Federal government loans GM $57 billion, in effect becoming the majority stockholder.
GM fires its CEO, Rick Wagoner, at the request of the Obama administration, replacing him with Fred Henderson. One may presume that Henderson, if not hand-picked by the feds, was at least approved by them.
Henderson leads GM through Chapter 11. When the company comes out of reorganization, Henderson resigns and is replaced as CEO by Ed Whitacre. Whitacre had been appointed Chairman of the Board of GM during the Chapter 11 reorganization.
So, if one were prone to thinking in dark terms, one might conclude that Henderson and Whitacre are lackeys of the Obama administration.
If the companies in question took the bailout money then they did so under a set of government requirements, including whether or not to shut down what was considered unprofitable divisions and dealerships. You takes the governments money, you plays by the governments rules.
Yes, among other requirements and restrictions. That’s why not every automaker took the bailout money, and why even those that did thought about it a couple of times before finally doing so.
Well, that’s a good question. On the surface, profitability. But what other agendas were involved is, afaik, anyone’s guess at this point.
Well, the government basically set forth a bunch of requirements, including the development of new technology and the streamlining of their ‘brands’ (i.e. cutting out brands that the government thought were sub-optimal to whatever it was the government didn’t want), etc.
I have also seen conspiratorial suggestions that the Government would not be coming down as hard as it has on Toyota if it were not a major shareholder in Toyota’s largest American competitor.
Hasn’t GM backed down on a bunch of the dealership closures?
Is there a division between conditions (i.e., we’ll bail you out if you increase this or that or adapt this or that technology) and continued control? Is the choice of CEOs assailable or were Wagoner et al qualified?
What did the “cutting out brands that the government thought were sub-optimal” entail? Were there administration directives to kill the Radiostar brand in particular, or was it a set of business-criteria upon which the corporations made decisions?
I guess I’ve generally assumed that it was another right wing marketing point (i.e., empty rhetoric loosely based on a shadow of facts) aimed at stirring up the base. But I want to check that assumption and figure out where the nationalization and direct control is taking place.
GM apparently has discovered they need some of the dealerships that were slated to close. Whats the big deal with that.
The government went in, cut wages and removed the leadership as they saw fit. That is what they should have done with the Banking Industry. They should not have been allowed to eat tax payer money with huge salaries and bonuses. But that is a different group of people, the wealthy and powerful .
When a large business collapses, generally whoever was owed the most money is able to take control over the business. That group will then take whatever measures they feel is necessary to either turn the company around or sell it off in bits for the greatest return they can get out of it. If they have chosen to correct the business rather than to sell it off, they might take it under their wing as a child corporation, or they might simply replace the management, force some hard decisions to be made, and then disappear back into the mist collecting loan repayments like they had been before.
The government has been doing nothing more than what a bank or the stockholders would have been doing. “Nationalizing” GM would mean that GM was simply a child corporation of the US government like the Post Office. But so far as I am aware or that I can tell, the government has not done that. They made GM clean itself up, and then they went away and are letting it operate as a fully independent company again.
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Xtisme, are you saying that the gummint ORDERED poor little GM to drop Saturn, Hummer and Pontiac?
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I believe that getting rid of some of their brands was part of the contingency of receiving the funds, yes. I don’t know which specific brands were involved, and I’m not up on the details anymore as it’s been a while, but in essence, yes…if a given automaker wanted to receive the funds offered there were conditions attached, and some of those conditions involved automakers getting rid of some brands and shutting down some dealerships.
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Is there a division between conditions (i.e., we’ll bail you out if you increase this or that or adapt this or that technology) and continued control? Is the choice of CEOs assailable or were Wagoner et al qualified?
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I don’t know how much ‘continued control’ is being asserted, to be honest. I doubt that there is NO control, just like with the banks, but I also doubt that the government has sent in it’s own people to tell the automakers everything they have to do either. From what I remember, most of the conditions were initial conditions that had to be met, most likely with some metrics attached showing that the automakers were complying with the agreed upon requirements (such as developing whatever technologies the government wanted them to emphasize).
Well, it IS a right wing marketing point aimed at stirring up their base, but that doesn’t mean there aren’t any grains of truth in it. Like I said, I don’t think that the government is acting as puppet masters for GM and Chrysler, but by the same token the government certainly DID attach strings to the funding they provided as part of the bailout.
Lookey here, the interests of an insolvent corporation in returning to profitability happen to sync-up almost perfectly with the interests of a creditor providing credit to an insolvent corporation.
Here is something I would say to the Michelle Bachmann’s of the world:
GM is going to turn a profit, they’re repaying back billions of dollars that the government lent them, and the government is selling their stake in the company. If that is government takeover, then government takeover is a good thing.
It wouldn’t surprise me, since the excess of dealers was known to be a problem. However Bachmann was implying that the government specified which dealers to close, and that is what I doubt.
Indeed. Outside of the government insisting on GM focus on green technologies, they’ve done nothing but what everyone and their brother have been telling GM to do for decades:
Shrink the number of brands. Before falling, GM was forced to treat each of the companies that it had bought as though they were independent companies. This meant that each of them might have an SUV, a truck, a coupe, a sedan, etc. Because of this, GM was releasing a bunch of cars that were competing against each other for the clients money, diminishing the total returns for any one car, while also adding development costs.
Shut down dealerships that aren’t turning a profit.
Lower wages and benefits to employees to be competitive with other car manufacturers.
That’s not nationalizing, it’s being given the gumption to say “screw you” to the unions that have been running the show and forcing GM to never shrink anything.