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Panel Discusses Obama's GM Restructuring Plan

Panel Discusses Obama's GM Restructuring Plan

By Special Report With Bret Baier - June 1, 2009

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: We are acting as reluctant shareholders because that is the only way to help G.M. succeed. What we are not doing, what I have no interest in doing, is running G.M.

In short, our goal is to get G.M. back on its feet, take a hands-off approach, and get out quickly.

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" HOST: You, the American taxpayer, now own 60 percent of General Motors as of today. And there could be more money going that way according to the president, all in an effort to get G.M. back on its feet.

What about this and all of the different elements to it? Let's bring in our panel, Steve Hayes, senior writer for "The Weekly Standard," A.B. Stoddard, associate editor of "The Hill," and Mort Kondracke, executive editor of "Roll Call" - Mort?

MORT KONDRACKE, EXECUTIVE EDITOR, "ROLL CALL": Well, Obama wants to stay out of running the car business. But he reminds me of one of the characters in those old jungle movies who gets caught in the quicksand. Can Obama swim out of the quicksand? And there's reason to doubt that he can.

I mean, first, G.M. in the midst of a recession, has got to be able to sell cars to people, and they're going to have to make cars that people want to buy.

And what the government is going to want to do is make the cars that the government wants them to make, you know, small cars that people may not want to buy.

If people won't buy those cars, then the government is going to have to do more bailouts.

Secondly, eventually, they're going to have to be private investors who are going to be willing to put their money into G.M. But are private investors going to go in when they're ridiculed by the administration as being speculators and given only 10 percent of the share in the company?

And there's a lot of politics that could be involved here. For example, the UAW wanted a ban on foreign imports of cars that G.M. would sell in the United States, and they got it. No cars are going to be imported from China, no Opels are going to be imported from Europe and so on, which are decisions that if you were running a company on a free-market basis, you probably would do. You would import the cheapest possible cars that you could and sell them here in order to get market shares.

BAIER: So, A.B., that raises the question about the micromanagement of G.M. While he says he doesn't want to run G.M., he does want to protect the UAW. At least the auto task force has been stepping in so far.

STODDARD: This is an interesting - this is a refrain we have heard before, that this is the best of some very bad choices.

And so, although the administration will argue to you that this began, this path - the Bush administration started down this path first with working capital loans, they, in taking this action today, they now own this bailout by bankruptcy phenomenon.

The muted response from the Republic Party has been surprising to me. But I think we saw something from the Republican National Committee today in the Chamber of Commerce. I think that will grow as we see the company try to protect the taxpayer investments. We don't know what that involves. Does that involve sending jobs overseas? Is scratching models and closing plants enough? And, as we watch the influence that the unions have, and how much influence the government allows them to have. They say they're going to not intrude on day-to-day operations, but they don't know what they're going to do six months to a year to three years from now to help the company stay viable.

BAIER: Steve?

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": We have a good idea of what the unions going to be doing, I think, with respect to G.M., and that's going to be quite a bit. I mean, that's 17.5 percent.

There are also going to be, I think, putting political pressure on the White House to do anything and everything.

And if you want to see some indication of just how much the UAW thinks it won, I'm going to actually read a quote. In December, Ron Gettelfinger, the president of the UAW, one of the loudest voices arguing against bankruptcy for G.M. and Chrysler, said, this is a quote: "There is no question in my mind that people would not buy their vehicles, unquote, if these companies went to bankruptcy.

Well, today everything is different because the UAW got what it did asked for. As Mort said, it got all of this protection. There are restrictions on the imports of cars. It got basically everything it was asking for.

And so today, this same Mr. Gettelfinger was out cheerleading the bankruptcy, and saying this is no problem. G.M. makes wonderful products. Bankruptcy is not a problem at all.

BAIER: What about, Mort, Congress' role in all of this, and keeping 535 lawmakers out of the G.M. pie?

KONDRACKE: Yes. They are going to close, what, 40 plants, was it?

BAIER: Nine plants, plus they're going to hold three others. But it's 20,000 jobs in different places.

KONDRACKE: Right. In every congressional district where this is the case, somebody is going to complain. And it's only natural that if you're a congressman, you are going to try to defend the economic base of your community. You're going to try to lean on somebody.

Now, the administration is going to have to resist all that. And there probably will be coalitions formed to try to protect jobs just the way there are to try to protect dealerships.

The administration is going to have to resist all that and say we're not playing this game.

BAIER: A.B., White House Press Secretary Robert Gibbs was asked numerous times today, what happens if the president doesn't like what G.M. is doing, and doesn't like the cars that they're putting out? Then what? And the answer was, then he could change the management team.

A.B. STODDARD, ASSOCIATE EDITOR, "THE HILL": Right, but he could also do more. At what point as a 60 percent stakeholder, at what point do you step in and say, we're going to have to change things here?

He doesn't want to get into a quagmire throwing good money after bad. He wants to get out in 18 months, and, all-told, five years. But he doesn't know how long this is going to last.

And he knows that if put in 50, and there is a threat that we have to put in more, he has either going to have to cut bait, or he has is going to have to take over operations and have a big impact on what management is doing.

And that is going to be - what Mort is talking about, this pressure, not only from the unions, but combined, all these new bosses in congress, there is going to be all these cooks in the kitchen.

And let's look at the larger economic picture here. It's hard to sell cars in bankruptcy. It is also hard to sell cars when we have had a shift in our consumer culture where we're not going to get easy credit anymore, we're not going to be able to collect cars and upgrade our cars every two to three years. The buying patterns are going to change.

BAIER: Steve, the buzz word today was "viability," making G.M. viability.

HAYES: Yes, well, the buzz word back in December was "viability," too, and now here we are, right?

(LAUGHTER)

HAYES: One of the most interesting things is when the president says "I don't want to get involved in the day-to-day decision-making of G.M."

It is a wonderful wish. I'm glad he expressed it that way. But he is either, in my view, hopelessly naive, because that's exactly what he will be, or he knows he will get involved in these things, and then he is just being dishonest.

 

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