GM Bankruptcy: A Roundup

Ross Eisenbrey, Vice President, Economic Policy Institute, Setting the record straight on GM:

The Obama administration’s intervention to save 1.5 million jobs and many small businesses by preventing the liquidation of General Motors and Chrysler is both momentous and controversial. Legitimate questions have been raised about the wisdom, fairness, and likelihood of success of these interventions. But some of the most widespread assertions are untrue or misleading. In the interest of setting the record straight, EPI Vice President Ross Eisenbrey addresses some common questions that deal with  important aspects of the GM bankruptcy.

Check out views from Dean Baker, John Nichols, Harold Meyerson, Michael Moore,  Greg Palast, Robert Reich, Jonathon Tasini, and Robert Weissman below the break.

Dean Baker, Center for Economic and Policy Research, “GM Bailout Makes the Most of a Bad Situation“:

The Obama administration’s plan for General Motors is a serious effort to try to make the best of a really awful situation.

In the current economic climate, sitting back and allowing GM to be liquidated was not a serious option. This would have wiped out a whole network of suppliers and ancillary businesses in Michigan, Ohio and Indiana, devastating the economies of these three states.

The federal government would have been forced to step in with large-scale aid, in this case, just to prevent mass destitution. The state and local governments would have lacked the resources just to maintain basic services like schools, hospitals and sanitation facilities. Of course, the plan is not perfect, and it can be argued that one or another of the parties got too much or too little.

John Nichols, “The ‘New GM’: Layoffs, Factory Closings, Offshoring“:

The major media in the United States begins to play up the reshaping of General Motors by the Obama administration’s auto-industry task force as a courageous or groundbreaking “new” initiative to “save” domestic automaking.

It’s not.

The GM bankruptcy and bailout is the continuation of post-industrial policies of the Clinton and Bush years. Those policies, which encouraged companies to shutter factories in the US and move operations to foreign countries with lower wages and weaker regulations, were defined by Wall Street rather than Main Street.

Harold Meyerson, “The GM Precedent“:

The real challenge before the administration is to promote policies that foster whole new industries, not that save individual firms. Obama is planning a speech on manufacturing next week; that could provide him the opportunity to commit the nation to the kind of industrial strategy we’ve lacked over the past three decades — to our detriment and China’s advantage.

Michael Moore,  “Goodbye GM”

Just as President Roosevelt did after the attack on Pearl Harbor, the President must tell the nation that we are at war and we must immediately convert our auto factories to factories that build mass transit vehicles and alternative energy devices…

Don’t put another $30 billion into the coffers of GM to build cars. Instead, use that money to keep the current workforce — and most of those who have been laid off — employed so that they can build the new modes of 21st century transportation. Let them start the conversion work now.

Greg Palast,”Grand Theft Auto: How Stevie the Rat bankrupted GM“:

[Steve Rattner Obama’s car czar]  has a … plan for GM: grab the pension funds to pay off Morgan and Citi.

Here’s the scheme:  Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance.  Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM’s stock – or 25%.  Whatever, 17% or 25% is worth, well … just try paying for your dialysis with 50 shares of bankrupt auto stock.

Yet Citibank and Morgan, says Rattner, should get their whole enchilada – $6 billion right now and in cash – from a company that can’t pay for auto parts or worker eye exams.

So what’s wrong with seizing workers’ pension fund money in a bankruptcy?  The answer, Mr. Obama, Mr. Law Professor, is that it’s illegal.

Robert Reich, “The Future of Manufacturing, GM, and American Workers (Part I)”  Part II Part III

The biggest challenge we face over the long term — beyond the current depression — isn’t how to bring manufacturing back. It’s how to improve the earnings of America’s expanding army of low-wage workers who are doing personal service jobs in hotels, hospitals, big-box retail stores, restaurant chains, and all the other businesses that need bodies but not high skills.

Jonathon Tasini, “GM, Health Care, Trade–It’s All Related”:

I am in favor of spending money on trying to save peoples’ jobs–we are talking about the survival of communities and the lives of thousands of people. But, having now spent the morning reading various media reports about the GM bankruptcy, it’s startling how little, if any, of the dialogue makes broader connections to other parts of the economic system. Put another way, it’s great to spend money to address a crisis but if you don’t see the crisis in a broader way, the money will be wasted. Here is what I mean.

Robert Weissman, “GM Nationalization: The Path Not Taken, Choices Still Ahead“:

…the government as majority shareholder will have ultimate control, and the long-term and socially appropriate investment practices can all be justified as in GM’s long-term interest.

The biggest problem is that the Obama administration explicitly disdains a desire to manage the company to advance the public interest. Even worse, the administration has stated its desire to begin selling off the government-held shares in GM in six to 18 months after the company emerges from bankruptcy; that posture puts a premium on measures to achieve short-term profitability … exactly the orientation that landed GM in its present predicament.

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