Congress Isn’t Going To Keep Its Hands Off GM

Well it didn’t take me long to get an answer to the question about whether members of Congress would abide by Obama’s principles for keeping hands off the auto companies and other enterprises controlled by the government. The previous post enunciated those principles and asked if Congress had gotten the memo and if they did whether they gave a damn about them. The answer is that they have their own ideas.

From the WSJ:

The Obama administration has said repeatedly that it won’t use its majority stake in General Motors Corp. to meddle in the company’s daily affairs. Lawmakers on Capitol Hill aren’t being so shy.

The areas of potential concern to lawmakers range from proposed plant and dealership closings to longer-term plans for more fuel-efficient cars. And key elected officials are already promising to weigh in even as President Barack Obama and his aides say they will shield GM from outside pressure.

“I think members will express themselves for sure. We should do that,” said Rep. Sandy Levin, a Michigan Democrat whose district lies just north of Detroit. “We should express the interests of our constituents.”

That’s pretty clear isn’t it. If it impacts a district expect the elected representative from that district to stand up and work for those that elected him. Frankly, that’s what they’re paid to do. Obama may float a lot of high minded ideas about how this is going to work but unless he’s ready to bash heads big time, those sent to Washington are going to do what they were sent there to do. That’s the system.

Lawmakers have already shown they have muscle with GM, and they aren’t likely to back off now. Members of the Michigan delegation rebelled last month when word got out that GM, post-bankruptcy, planned to boost its imports of cars made at GM factories in China. As a result, GM agreed as part of its talks with the United Auto Workers union to reopen two idled plants by 2011 to manufacture as many as 160,000 compact cars a year.

Rep. Gary Peters, a Michigan Democrat whose district north of Detroit includes three plants set to cease production, is one of many lawmakers in the region who want the refitted plants in their backyard.

He has backing from Democratic Michigan Gov. Jennifer Granholm, who said Monday that she is going to be “aggressive” about trying to snare a facility that will help keep some automotive jobs in the state, which has the highest unemployment rate in the country.

Ms. Granholm, besides countless television appearances pleading for aid, has made about a dozen trips to Washington to meet with Mr. Obama, the president’s automotive task force and dozens of other officials.

Tennessee and Wisconsin have a chance to beat out the Michigan bid. Democratic Rep. Lincoln Davis of Tennessee pledged to lobby GM to get the new plant to open in his district in Spring Hill.

Look for this to get nasty. Red states are home to the transplants and Blue states to the U.S. manufacturers. There is a lot of political hay to be made on both sides. The Democrats would probably love to put some manufacturing facilities in the South just to make inroads into the Republican strongholds. Doing so, however, would jeopardize support in the upper Mid-West, though they may have so many chits piled up simply because of the rescue that they can afford to be a little adventurous.

But let’s get back to the realities:

Skeptics say that despite the government’s pledge to stay out of the way, the process is going to get messy.

“I think where GM builds its next plant is going to be more of a political decision than a business decision,” said Rep. Pete Hoekstra, a Republican from western Michigan. “For the foreseeable future, these car companies will be run by the Obama administration, and it will not be arm’s length.”

Gerald Myers, a former chairman of American Motors Corp. and now a business professor at the University of Michigan, says he fears GM will face promptings from across the spectrum, as lawmakers and interest groups seek to use the leverage of GM’s government ownership.

“What bothers me about what’s happening at GM is the obvious democratization of the company’s management,” he said. “You can already see GM making decisions in response to outside pressure groups.”

Let’s see, about eight or nine hours have elapsed since the Obama statement on the hands off attitude that will be taken with government owned companies and now this. I hope that none of you are surprised that politics is breaking out. This is just a precursor, folks. Wait until the real horse trading starts.

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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