There seems to be confusion about whether Congress’ multibillion-dollar bailout of the auto industry worked.
Supporters of the bailout — made necessary by poor management, unsustainable union contracts and other factors — cite the fact that companies such as General Motors still are cranking out vehicles.
But they conveniently gloss over the ongoing costs of the bailout.
Taxpayers involuntarily hemorrhaged almost $50 billion into GM to save it, and they were saddled with 60 percent ownership of the company in mid-2009. Naturally, those costs became part of our staggering national debt, on which we pay copious amounts of interest every year.
Today, we are told that GM — unaffectionately nicknamed Government Motors — is having one profitable quarter after another.
But with one gigantic caveat: Three years after GM emerged from bankruptcy, courtesy of the taxpayers, more than a quarter of the company still is owned by the government. And there seem to be few prospects that it will cease to be at least partially government-owned anytime in the near future.
The Obama administration doesn’t dare sell its 500 million shares in GM at present, because their current value means taxpayers would lose an estimated $15 billion. And no one is predicting a massive short-term jump in the value of those shares.
By what logic can GM be said to have become once again a “profitable” company when it has not yet repaid billions of dollars that it received not from consumers freely purchasing its vehicles but from taxpayers who were overwhelmingly against bailouts in the first place?
And that does not even touch on the bigger principle: that government does not exist to prop up failing businesses, which only discourages the entry of new, nimbler competitors. It also discourages the bailed-out companies from taking real steps to reconfigure their business models. (Washington’s idea of holding GM to tough standards is restricting corporate jet use and limiting pay for executives.)
In addition, bailouts send a signal to other large companies that they will have a taxpayer cushion to rest on if they perform poorly. That is scarcely likely to generate the building of better mousetraps.
Protecting businesses from the consequences of their actions is not and never has been a proper, much less a constitutional, function of the federal government.
But since when did propriety and constitutionality inhibit congressional mischief?