General Motors is no longer ‘Government Motors,’ if it ever was. So why won’t the Obama administration sell its GM stock?
Apr 2, 2012, Vol. 17, No. 28 • By FRED BARNES
The folks at General Motors are blessed with more foresight than you might have suspected. They were prepared when Vice President Joe Biden wanted to address a United Auto Workers rally at the GM plant in Toledo, Ohio, that manufactures transmissions. Sorry, they informed the vice president’s office, but we have a corporate policy that prohibits campaign events at any GM facility. So on March 15, Biden spoke to union members in Toledo at the main hall of UAW Local 12.
The policy is a product of post-bankruptcy General Motors, the company that wants to build cars and trucks and stay as far away from campaign politics as possible, especially presidential politics. The rule was instituted out of fear that President Obama, Biden, and administration officials would seek to use GM plants as campaign backdrops. And Republicans and conservatives—potential car buyers!—would see GM showrooms as Obama’s turf and stay away. Given the partisan bombast in Biden’s speech, one can understand their apprehension.
“Mitt Romney, Rick Santorum, and Newt Gingrich—these guys have a fundamentally different economic philosophy than we do,” Biden said. “Simply stated, we’re about promoting the private sector. They’re about protecting the privileged sector. We are for a fair shot and a fair shake. They’re about no rules, no risks, and no accountability.”
Worse, Republicans were ready in 2009 to let the American auto industry collapse, at the cost of 1 million jobs, he said. “But the guy I work with every day, the president, he didn’t flinch. This is a man with steel in his spine. . . . He made the tough call and the verdict is in.” Obama saved GM, Chrysler—and even Ford, though it received no money in the government bailout of the auto industry.
Here we see the Obama reelection drive in high gear, only to be outmaneuvered by GM. Obama routinely exploits the auto rescue as a central talking point in his quest for a second term. It dominates his campaign in the industrial Midwest. The Big Three, having averted destruction, are now thriving, and the president is seeking full credit. “It’s the only domestic policy success the man has had in his first term,” an auto analyst says.
But there’s another aspect of the Biden episode that’s enormously revealing. The Obama administration still owns 26 percent of General Motors’s stock. Yet GM officials weren’t afraid to tell the White House, No, you can’t use our facility. And this reflects a larger truth about GM: It is free from control by the Obama administration.
It’s not Government Motors anymore. Nor is the green-tech Volt—part electric, part gas powered—being produced at the insistence of the administration. The Volt is not an Obamacar or an Obamamobile. It’s been in the GM pipeline since 2006. Back then, Obama was a senator and GM needed an answer to a political environment that frowned on SUVs and trucks, the company’s gas-guzzling mainstays.
GM board members and management tell the same story about the Obama administration. It “has been absolutely true to its word to stay out of the business,” says David Bonderman, a Texas financier and board member. “They didn’t attempt to run the company,” says Ed Whitacre, CEO for nine months after the company emerged from bankruptcy in 2009. “They didn’t attempt to micromanage.” The current CEO, Dan Akerson, is more emphatic. “I will testify in front of the good Lord that this administration has never had a presence in the boardroom or any input in the operation of the business,” he told a House Oversight and Government Reform subcommittee in January.
Nor has the administration put any government officials on the board of directors. Akerson, by the way, is a Republican. GM keeps Washington abreast of its activity in the car business, since the government is still a large shareholder. And administration officials show up for annual GM shareholder conferences. That’s about it. There’s a tie, but it doesn’t bind.
The “new GM” has crossed the Obama administration repeatedly. Though the president has often expressed his fondness for the Volt, GM has suspended production of the vehicle for five weeks, with 6,000 unsold. This decision clashes with Obama’s goal of 1 million plug-in cars on the road in 2015. According to the Department of Energy’s blueprint issued last year, this would include 505,000 Volts. That goal was always unattainable. Now an Energy spokesman says it’s “no longer up-to-date.” Only 7,671 Volts were sold in 2011 and 1,626 in January and February this year. Sales appear to have picked up a bit in March.
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