Over the last few months, it has become more and more apparent that bailouts from the Bush administration and the Obama administration haven’t gotten anywhere near their intended goals of saving jobs, keeping companies from bankruptcy and improving market conditions.
The latest news from General Motors is a perfect illustration of that.
The AP reports:
DETROIT (AP) – As thousands of General Motors workers await word on more U.S. plant closures, reports that the company plans to import Chinese-made vehicles to the U.S. have created a political problem for the automaker and the White House.
The reports, which GM will neither confirm nor deny, could mean trouble because GM is supported by $15.4 billion in U.S. government loans, largely due to the Obama administration’s desire to preserve the company’s 90,000 U.S. jobs.
The United Auto Workers charged last week that the Detroit automaker intends to almost double over the next five years the number of vehicles it imports to the U.S. from Mexico, South Korea, China and Japan.
“GM should not be taking taxpayers’ money simply to finance the outsourcing of jobs to other countries,” Alan Reuther, the union’s Washington lobbyist, wrote in a letter to U.S. lawmakers.
The bailouts did not stop the inevitable and necessary bankruptcy of General Motors as President Obama said they would. In fact, now we’re in a situation where American tax dollars are going to subsidize General Motors jobs overseas, exactly what the Obama administration doesn’t want.
The bottom line is that taxpayer dollars should not be used for these purposes as they were never intended for it. GM had such issues which could only be solved with bankruptcy, not more bailout dollars and many people saw that ahead of time. Throwing money down a rat hole in hopes it will turn into something else is a waste, and that’s exactly what happened here.
On Wednesday, Shanghai Securities News and other Chinese media reported that GM plans to begin exporting vehicles from China to the U.S. within two years, ramping up sales to more than 50,000 by 2014.
GM spokesman Tom Wilkinson in Detroit would not comment on the reports. The White House and Treasury Department did not immediately respond to requests for comment.
“GM is reviewing various options,” GM’s China office said in a written statement received Thursday. “We are not discussing details of our future portfolio, beyond what we have disclosed in auto shows and our viability plans.”
I don’t blame GM for moving production overseas since they are getting strangled to death by the United Auto Workers union. Unfortunately, the union acted counter-productively in squeezing GM with no concessions for so long that they have been a big factor in this outcome. GM management has also been fairly incompetent as well allowing this to go on for so long when it was evident problems existed in the 1990s.
I do, however, blame the federal government for wasting my tax dollars on a failing company which needed to file bankruptcy and become profitable again.
In this respect, the bottom line is that bailouts do not work as intended nor do they improve conditions when they do not address the root cause. The issue is not that GM was losing money, the issue is why GM was losing money. That wasn’t addressed, it was only exacerbated with taxpayer funds for a few months.