Free Markets, Free People

I’d Like To Hear The Left’s Comments About The Expansion Of “Executive Power” Now …

I‘m still in rather stunned disbelief about the White House ousting GM’s CEO.  

It’s not about how good a CEO he was or whether I agreed with his plan, his leadership style or his results.  It’s about the White House going so far as to ask him to step aside.  And, according to Obama’s own statement today, his “team” will “working closely with GM to produce a better business plan”.

Why, that sounds like something we’ve seen pass this way before and firmly rejected:

Italian Fascism often involved corporatism, a political system in which economy is collectively managed by employers, workers and state officials by formal mechanisms at national level.

Now I’m sure there are those out there who will argue that this is hardly a “formal mechanism”. But of course that’s simply not true. It is formal enough that a CEO is gone. Someone believes it is a mechanism of some formality for that to happen. And, if you think about it, it is just one more mechanism among many that have been put forward lately. Timothy Geithner’s plan to have the government take over financial institutions and hedge funds if the government deems them a threat to the economy’s well-being, for instance.

After all the caterwauling by the left about “unprecedented executive branch power expansion” during the Bush years, they’re rather quiet about these. The market, however, has cast it’s vote. Down about 300 at 4pm.

And this is all based in a false premise – something I’ve noticed that Obama uses quite effectively:

“We cannot, we must not, and we will not let our auto industry simply vanish,” President Obama said at the White House.

Anyone – who would expect the domestic auto industry to ‘simply vanish’ if the companies were left to go the traditional route of bankruptcy?

Since when does bankruptcy equal “vanish”? Delta airlines seems to have survived it quite well, thank you very much. Their bankruptcy or the bankruptcy of other domestic airlines hasn’t seen the domestic airline industry “vanish”. Why would anyone believe it would happen if GM or Chrysler went bankrupt?

And that said, what did he suggest in his speech today?

The administration says a “surgical” structured bankruptcy may be the only way forward for GM and Chrysler, and President Obama held out that prospect Monday.

“I know that when people even hear the word ‘bankruptcy,’ it can be a bit unsettling, so let me explain what I mean,” he said. “What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so they can get back on their feet and onto a path to success; a tool that we can use, even as workers are staying on the job building cars that are being sold.”

Seems like that is precisely what all of us were telling them to do before they started throwing bucketfuls of imaginary dollars at the two companies, wasn’t it? And you can call it “surgical”, “structured” or whatever you want in an attempt to spin this as something other than fairly ordinary bankruptcy procedures, but that’s what they’re talking about.

One of the primary reasons they’ve attempted to keep these companies out of bankruptcy court can be described in three letters: UAW.

Their problem isn’t just “old debts” which need to be cleared away. Instead it is what is euphemistically called “legacy costs” which would go as well. And those “legacy costs” include the gold plated benefits the UAW now enjoys and doesn’t want to give up.

Administration officials on Sunday made it clear that an expedited and heavily supervised bankruptcy reorganization was still very much a possibility for both companies. One official, speaking of GM, compared such a proceeding with a “quick rinse” that could rid the company of much of its debt and contractual obligations.

The thing to watch out for is whether or not this “quick rinse” in a “heavily supervised bankruptcy reorganization” included “contractual obligations” to unions. If not, it will be a “quick rinse” of taxpayer’s wallets.

Among challenges the administration faced leading up to this weekend’s decision, foremost were the efforts to draw steep concessions from the United Auto Workers union and from the bondholders.

Attempts to solidify deals with the UAW and bondholders were slowed by disagreements by both parties over how exactly the other party needed to budge. The UAW, for instance, insists it already made health-care concessions in 2005 and 2007, and argues that the bondholders have never been asked to concede anything.

“I don’t see how the UAW will do anything until they see what the bondholders will give up,” one person involved in the negotiations on behalf of the UAW said Sunday.

Progress? Apparently both GM and Chrysler have been negotiating with both the bondholders and the UAW. But there’s not much to report there:

Both GM and Chrysler are negotiating with the UAW to accept a range of cost-cutting measures, including greatly reduced work forces, lower wages and a revamped health-care fund for retirees.

[...]

GM and representatives for its bondholders remained in talks over the weekend about a deal that would force these investors to turn in at least two-thirds of the value of the debt they hold in exchange for equity and new debt.

This arrangement would force GM to issue significantly more stock than what is currently being traded in the market. In addition, the government is being asked to guarantee the new debt with federal default insurance in order to entice bondholders who otherwise wouldn’t be interested in participating in the swap.

If GM can’t eventually forge a deal with the ad hoc committee representing the bondholders, the company may be forced to issue a debt-for-equity swap without the blessing of some of its biggest and most influential unsecured investors. This would heighten the possibility of the company eventually needing to file for Chapter 11 bankruptcy protection.

Or said another way, they’ll end up doing what we said they should have done in December, less umpteen billions of taxpayer money poured down a rathole. Of course, had they reorganized under Chapter 11 as we all said they should, the Obama administration wouldn’t have been able to make this unprecedented power grab, would it?

~McQ

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21 Responses to I’d Like To Hear The Left’s Comments About The Expansion Of “Executive Power” Now …

  • Speaking of the UAW – Our President speaks….
    “… It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognise that they cannot hold out for the prospect of endless government bailouts. Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry.”

    Let’s see how painful it is for them – after all, the plan is to straighten out the balance sheets, get rid of the old bad debt….I’d say those pensions are debt, I wonder if they’re ‘bad’, or if the American Taxpayer will be obligated to make good on them.  

    Honestly, it sucks that companies can offer pensions and (how like the government) pretend the pensions will be funded on future earnings instead of money they’ve set aside at the time (and we won’t even get into how Congress would have eventually looked at all that capital sitting in pensions and would have decided they were entitled to tax it NOW had the companies followed that method).
    But frankly that’s not a reason for the American general public to be placed on the hook for pensions. 
    And I’ve seen my pension, and my wives pension go out the window over the last 10 years with 2 major companies, so I don’t want to hear the whining about GM pensions as if theirs are special.  We’ll see if they’re special (care to take bets?) all right. 

    How they’ll deal with it will be based on just how loudly someone screams, just like everything else they’ve done in the last 2 months.

    • “wives”  he he he…..yeah….thank God she doesn’t read this site (yet)…..

  • Heh – look at the ‘new plan’ – and as you said, they’ll end up, after shoving money down the great rat hole, doing what they should have done in November/December.

    http://online.wsj.com/article/SB123841609048669495.html

  • Looker and Mcq – can’t you see that this is true LEADERSHIP?

    {SARCASM}

    Whither the Dr from ME?

  • Dont forget that foreign competition is hearing this and licking their chops. 
    http://www.newsy.com/videos/obama_to_gm_ceo_step_aside/

  • Jesus Christ.  Bush imprisoned American citizens without the rights to due process or the courts.  indefinitely.  And you have the nerve to compare that situation to this one?
    WTF is wrong with you? 

    • These guys are in an alternate reality, where killing people, waging war, denying basic human rights, and torture are legitimate executive powers, while trying to save the economy and holding corporations who receive taxpayer money accountable is fascism.  It’s bizarro-land, but luckily it’s limited to a small subsection of the blogosphere.

      • Yeah, Erb, in your “bizarro-land” Obama just created the  Automobile Repair Clause in the Constitution ensuring GM warrantees to all.  Why?  Because he said it and therefore it must be correct.  He is the constitutional scholar isn’t he?  By the way, would you mind pointing out that particular clause within the constitution to me?

        That is the point, schmuck.  And it is not called leadership.  It is called arrogance and hubris.

      • And you, the jokes just keep flowing from you. 

        Day after day, post after post.

        You’re getting more silly, and more shrill, by the hour.
        You were already a target rich environment, and you’ve moved over to Chinese wave assault rich.

      • What I’d like explained is what alternate Constitution is the good Dr. reading?  Maybe a small test would help:

        The President is the head of the Executive Branch and holds the title “Commander in _ _ _ _ _.”

        The Commander in Chief is the civilian head of the US _ _ _ _ _ _ _ _.

        The Department of Defense is an _ _ _ _ _ _ _ _ _ agency.

        Circle (True) or (False):  In all wars prior to the year 2001, the activity of “waging war” was performed by soldiers drawing kittens in diverse colors in order to encourage the enemy to release their feelings of rage and hostility. 

        Circle (True) or (False): After a declaration of war by Congress, the war is then waged by the Congressional Budget Office.

    • Hey dude!  provide some verification of that statement okay – it’s not enough to come in and claim it happened.

      Stop getting your information from the movies.

  • Jesus Christ. Bush imprisoned American citizens without the rights to due process or the courts. indefinitely. And you have the nerve to compare that situation to this one?

    True, Rick Wagoner isn’t a terrorist.

  • Hey, Erb doesn’t know what fascism is! Funny stuff.

  • It’s not just about the UAW, it’s about unionism. Detroit is the Democrats’ showcase from it’s salad days in the ’50s, back when unionism was at its zenith, with every other (white) worker in a union. For decades, UAW workers have been the highest paid workers in the world, with steel workers in second place. Without Detroit, private sector unionism as we know it is dead, and the Democrats simply cannot abide by that. Their economic worldview can’t take that hit, in spite of their recent political success. Of course in the end, all the king’s horses and all the king’s men won’t be able to save Motor City. The government could buy every car GM can produce every year and dump them into the ocean and it still wouldn’t keep them from going bankrupt. 

  • This post has been linked for the HOT5 Daily 3/31/2009, at The Unreligious Right

  • “Bush imprisoned American citizens without the rights to due process or the courts. indefinitely.”

    List them.

    Is it two people, total?

    FDR did this to thousands, but he is a HERO to the left.

  • Dude, Scott and Shiell, if you can’t understand why a taxpayer funded ‘rescue’ of an unprofitable, poorly run industry is a bad idea, you clearly fail to understand basic free-market economics. If you want to make a rational argument, root it in some sort of logic instead of copying and pasting what MoveOn.org tells you to believe. Try thinking for yourself. I realize that’s a lot to ask, but consider for a moment the possibility that Dubya is not responsible for all the world’s ills, that’s the first step to actually contributing to a solution.

    “True, Rick Wagoner isn’t a terrorist.” — classic :)

    • CL – Careful lumping me with those other useful idiots.  I do not credit MoveOn.org for anything other than being a front for Soros and company and I won’t be connected with the likes of those folks – EVER.  And the day Obama Mans Up and talks about his own failings in the current situation instead of constantly blaming Bush for his own stupidity, then I agree he might well be taking the first step toward contributing to a solution.

  • I know, I was surprised myself when the CEO of the GM got his pink slip but really what else can be done?  Also I heard that he resigned instead of getting fired.  I didn’t know the government is thinking of getting the car companies go bankrupt to get rid of their debt.  It sounds like this might work but how about the many retirees and all those satellite companies that rely on the car companies for their livelihood?               

    Evelyn Guzman