[1]Two weeks ago today, the Obama Nation was gloating. Sweeping victories in the general election, Democrats now control the White House and both houses of Congress. Well, it’s been two weeks, so that means it’s time for me to get out of my fetal position, stop throwing up, an assess what’s transpired since then.
In the last two weeks, there has been a steady stream of companies lined up at the Treasury Department’s door to obtain “equity stakes” from the American taxpayer. I admit that I was one of the first (and few) to defend Treasury Secretary Paulson’s and Federal Reserve Chairman Bernanke’s bailout/rescue/money grab in an effort to shore up a global economy on the verge of total economic collapse. This was, and is, an unpopular position, because the consensus was, and is, that stupid management decisions should not be compensated for by the American taxpayer.
My argument was, and is, that one of government’s responsibilities is to protect its citizens from threats both foreign and domestic, and I saw the potential disaster as a serious domestic threat. I still do.
But now, two weeks after the Democrats’ stunning victories, everybody’s lining up for a piece of the government largesse. Insurance companies who made poor investment decisions with their insured’s premium dollars are buying savings banks and converting to a bank charter so they can qualify for TARP. US automakers, long saddled with an antiquated business model imposed upon them by their unions, seek equity stakes from the government. And the Democrats, ah the Democrats, can no longer blame Republicans, George Bush, Newt Gingrich, or anyone else for the consequences of their decisions.
Remember card check? It may not be much of an issue after all, and the first of the political promises to go. This morning on CNBC’s SquawkBox, former Honeywell CEO Larry Bossidy and noted economist Martin Feldstein commented on Detroit’s woes. What the automakers are asking is for the government to endorse and support a business model that would continue to encourage union participation. This cannot happen without blowing up this business model. In the real world of business, if you’re company is in trouble, you file Chapter 11 and sort it out. For a company like GM, that means allowing a bankruptcy judge to renegotiate the union contracts. Since so much of the Big Three’s capital is allocated to legacy costs associated with retirees, specifically perpetual health insurance and pension obligations, they cannot compete with Honda, Toyota and Nissan. (Never mind that GM, Ford and Chrysler products don’t last as long nor hold their resale value!) Honda, Toyota and Nissan build better products more cost effectively because they are non-union shops. Everybody in the country gets that except the unions and the Democrats.
So now Detroit is lining up in front of Congress, looking for some money. Obama and the Democrats are on shaky ground. They ran on a pro-Union platform, but the best thing for the Big Three would be to have them file Chapter 11 so that the existing contracts could be renegotiated and that, more than anything else, will help them return to profitability. What’s best for the Big Three is not what’s best for the Democrats, though, because a Chapter 11 filing would destroy the Unions. So much for whatever promises the Democrats made to get elected. Shame on the Unions for not looking realistically at the situation and instead, believing the campaign promises. What else will Obama and the Democrats renege on, because they cannot possibly deliver on the promises?
Two weeks. That was all it took for the Democrats to paint themselves in a corner. What will the next four years look like? As Conservatives, we need to have our message ready…