Dr. J.’s Commentary: Why the Republicans Want to Kill GM

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Revised story on Dec. 17, 2008

by Steven Jonas, MD
featured writer
Dandelion Salad
Buzzflash.com

November 20, 2008

Remember the original bailout package? Yes, that one was some years ago for some hedge fund or funds. The Republicans were all for that one. Several billions. Then there was the bailout/buyout package for Bear Stearns. Billions more. Lehman Bros. wasn’t so lucky (but then again it’s primarily Goldman Sachs folks who populate this Treasury Dept., not Lehman folks). Then came the broader financial sector $700 billion bailout, the first draft of which was essentially written on the back of a paper napkin. (OK, that’s an exaggeration. It was actually two-and-a-half typed pages long.) That package eventually got into a very long bill. It was eventually passed to help the investment banking sector recover from its excesses of greed in the process of securitizing mortgage loans.

The process was enabled, courtesy of McCain’s Treasury Secretary-designate Phil Gramm and the repeal of the New Deal Era Glass-Steagal Act. It had separated investment and commercial banking to forestall exactly the kind of financial meltdown that has occurred over the past six months, courtesy of investment banks not being required to have the reserves to back up mortgage loans at anywhere near the level commercial banks are still required to hold. And then there is AIG, running through government funds at a great rate, currently around $150 billion. Boy those resort/spa costs are high, aren’t they? No problem there for the Republicans.

And so comes along the U.S. auto industry, especially General Motors. As a result of really bad management, focusing on immediate profitability and not caring much about the long run until very recently, it’s in a very bad way, with both GM and Chrysler facing possible bankruptcy without Federal government assistance. AIG, an insurance company, mind you, that made some very bad decisions on what to insure, gets $150 billion. The U.S. auto industry, which directly and indirectly employs an estimated 3 million people wants an extra (and paltry) $25 billion beyond the loan it is already getting to help it retool for fuel-efficient cars, wants $25 billion more to help it get to the time when it can start producing modern cars in significant numbers. And all of a sudden the Republicans are saying no. So why, you might ask?

Part of the answer does lie in the standard reasons given. Many U.S. automaker workers live in Ohio, Indiana, and Michigan and those states seem to be gone from the red group to the blue for quite some time to come, the racist messages that the Republicans used to win over those “Reagan Democrats” for the last 30 years to the contrary notwithstanding. That may be true in part, but there are U.S. automaker plants in other parts of the country, and certainly the suppliers and especially the dealers are all over the country. So that one doesn’t hold much water.

The Republicans’ own answer is, well if you bail out one industry, how do you pick and choose among the others that might/will start lining up. So let’s just let the auto industry go. Anyway, the free market should just be allowed to work, and the companies, well actually just Chrysler and GM, apparently, should just be allowed to go bankrupt and they will come out of it just fine. Well, they picked and chose among the financial sector companies, so that one doesn’t hold much water either.

Thus I think that it goes rather deeper than those three. There are three other reasons that are likely more significant. Two are ideological and one is political, but at a much broader level than just red state/blue state thing. First, and this one has been mentioned a bit, bankruptcy would permit the companies to break their union contracts, both for current employees and for their “legacy” beneficiaries who depend on the U.S. automakers for their pensions and health care coverage. Forgetting about what that would do to those workers, such actions would break the United Auto Workers, one of the last U.S. industrial unions that has any real power. That would be a real achievement for the Republicans.

Second, over the last 30 years, the U.S. manufacturing sector has declined very significantly, primarily as the result of the export of U.S. capital to countries such as China where wages are much lower. So-called “free trade” has had little to do with increasing trade going both ways (U.S. trade deficits have been on the increase every year for many years now) but rather with the free export of capital. This has to do with historical development of capitalism since it was invented in the 17th century. The first form was mercantile capitalism, in which money was made by organized trading at a level much higher than anything previously seen. The second form was industrial capitalism, still going strong in many countries around the world, especially those with cheap labor. The third form is finance capital, in which money is made neither from trading nor from making things but from the business of selling and trading various financial instruments, for example, home mortgages, and most recently, their “securitized” form. Modern Republicans, having had their hands on the many or all of major levers of governmental power since the election of Reagan, are closely associated with finance capitalism, much less with industrial capitalism. Thus their strong interest in helping out the former while being perfectly willing to let the latter die on the vine, especially if that death can bring down one of the few remaining major unions.

Finally there is an overarching political reason, well beyond red state/blue state voting patterns. The Republicans in their gut realize that if Obama even half-succeeds in bringing the country through the recession/Depression, especially if it is identified in peoples’ minds as Limbaugh would everso falsely have it be, as the “Obama Recession,” they will be in the political wilderness for along time. They realize that the only pathway they have back to power is if things get so bad that the Obama Administration is rendered powerless to deal with the situation and, possibly, there are an increasing number of public protests around the country that eventually turn violent, and possibly increasingly violent. Then they would become the “law and order” types, and you know what the scenario would then be. And so, in my view the overriding reason the Republicans do not want to help GM over the hump is precisely that they want to make things as bad as possible before Obama has the chance to step in and begin dealing positively with the situation, so as to significantly decrease his chances of success. Indeed, it is the obverse of the old Trotskyite mantra in referring to the conditions that could lead to a communist revolution, in this case leading to a possible fascist takeover: the worse the better.

Steven Jonas, MD, MPH is a Professor of Preventive Medicine at Stony Brook University (NY) and a www.TPJmagazine.us Contributing Author; a regular Columnist for BuzzFlash; a Special Contributing Editor for Cyrano’s Journal Online; a Contributing Columnist for the Project for the Old American Century, POAC; and a Featured Writer for Dandelion Salad https://dandelionsalad.wordpress.com/.

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10 thoughts on “Dr. J.’s Commentary: Why the Republicans Want to Kill GM

  1. Pingback: I Just Saw “Milk” by Steven Jonas, MD « Dandelion Salad

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  3. Detroit is the canary in the coal mine..
    It would be a national security mistake to dismantle our last great manufacturing base.. I have to agree with Aristocutionor we are vulnerable in every respect..

    The class war is full on! Detroit is asking for a loan unlike the Bankers who are being bailed out..

    Our middle class is disappearing at an alarming rate. We have no choice but to become self-sufficient.. Fast!
    The fall out from all of this is going to further erode unions, workers, and the two other workers that depend on those auto workers, or any manufacturing worker and further repression of worker wages across the board.
    We have nine sections of the newspaper every Sunday full of foreclosures for months now.. Forty square miles of land in Detroit is vacant. Our World Class City has become on par with some Third World Counties in poverty, utility issues, access to good food, infant mortality rate, environmental injustices, political corruption, homelessness, drug use both legal and illegal.

    Pay attention to what happens in Detroit because when our workers wind up in soup lines your cities , small towns, and suburban workers are next.

    In spite of it all Detroit still has wonderful people. Some of us are working over time to find a different way to live, to be sustainable, and still work for social justice for workers.
    I’ve seen proto-types for better cars, the next Ford, or Dodge is working his/her second shift in his/her garage building the perfect green car but none of that will matter if we do not fix our infrastructure, restore civil liberties, destroy corporate personhood, get out of our wars, institute national health care and become sustainable.

    Where all in for a rough ride; buckle-up!

    They started mass producing the Hummer for Arnold after Terminator. But we should have know better paying into the whole big macho cars and trucks. Americans have short memories. Is it the water?
    Remember the gas lines 35 years ago?
    That’s when the Honda’s, Toyota’s and the rest got their strong hold on the American car market. Free-trade has cost us a lot.

    peace, love and green cars from Motown,
    dk

  4. A little confined in scope.. The Demopublicans are all the puppeticians of the banksters..

    The reason is not for political maneuvering.. If the out come is to let the auto industry fall it is a signal that ALL American industry is to fall – be dismantled..

    The truth of the matter is, either there is a plan to dismantle the US, or, the proof will be in the re-building of ALL manufacturing in the US to the point of self-sufficiency..

    Plan, conspiracy, all that matters is that the US be self-sufficient in manufacturing, because, We are VERY vulnerable in every respect..

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  9. H. Ford built vehicles that the public could afford and use. Washington needed these heavy duty SUV”s, Hummer’s, Armor-able Vehicles, so who really caused the Auto Indus.’s problems ? It wasn’t “[y]our” need, it was what was being produced and sold.
    Like Lockheed-Martin builds top of the line aircraft, but have the “Authority” to sell the {B} model, which means L/M has to build superior craft, which again they’ve been given “Authority” to sell the {B} models. In other words once the assembly line is set up, the profit is made by selling more craft. Same with the Auto Industry
    G.M., Ford, Chrysler, build vehicles that are durable, and reliable at an affordable price. Ford knew selling more affordable vehicles would lead to profits. Stop being pressured by Wall st. estimates of profitability, causing the Industry the idea of selling fewer vehicles at an artificially high price. Cost vs. Profit.

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