On morning after GM entered bankruptcy, President Obama tries to reassure the public about the government's "hands off" role, pundits ponder what it means for working class Americans, and investors barely notice, while taxpayers, auto-workers and retirees count their losses.
On the same day that GM took its first step into bankruptcy, and Chrysler began its journey out of bankruptcy, President Obama tried to reassure the nation that the government's ownership role will be short-term. Associated Press:
In a defining moment for American capitalism, President Barack Obama ushered General Motors Corp. into bankruptcy protection Monday and put the government behind the wheel of the company that once symbolized the nation's economic muscle.
..."We are acting as reluctant shareholders because that is the only way to help GM succeed," Obama said of the temporary nationalization of the 100-year-old company.
But with billions at stake, taxpayers may not see any gains or benefits, except for avoiding even worse consequences. LA Times:
Here's a simple bottom-line answer to the question of whether you, the new taxpayer-owner of General Motors, will make an investment profit on your new $50-billion, 60.8% stake in the company:
No.
But in the wonderland where politics and economics meet and marry, things aren't that simple. There the question boils down to this: How much is it worth to save the U.S. economy? The answer may well make the GM deal look like a bargain, for the choice may be between the nation's making this investment now and facing a future with a hollowed-out industrial midsection bereft of factories, commercial strips and households.
If that sounds familiar, it's close to what we were told about Wall Street's bailout: No, we may not see any direct benefits, and it probably won't slow down job losses or foreclosures, but it will prevent much worse from happening.
Except in places where GM's fresh start comes at the cost of jobs, as GM designates 14 plants for closing: NY Times. The Nation's John Nichols echos Bruce Springsteen ("Foreman says these jobs are going, boys, and they ain't coming back..."), and paints "the New GM" and the auto bailout as business as usual:
The GM bankruptcy and bailout is the continuation of post-industrial policies of the Clinton and Bush years. Those policies, which encouraged companies to shutter factories in the US and move operations to foreign countries with lower wages and weaker regulations, were defined by Wall Street rather than Main Street. The model of a "healthy" American company was defined by stock and bond speculators, who rewarded short-term thinking and brutal cost-cutting, even if these strategies resulted in the loss of millions of jobs, the closing of hundreds of functional factories and the deindustrialization of communities, regions and whole states that had once been among the most productive in the world.
Nothing about the old way of doing business made sense, and it made a wreck of GM. After decades of closing factories, laying off workers and shifting production overseas, the company now finds itself with $172.8 billion in debt.
It would make sense to change course, radically.
But the Obama administration is not doing anything radical.
Robert Reich picks up the chorus, on what the adminisration isn't saying about GM and the auto bailout, and why:
So the Obama administration is, in effect, paying $60 billion to buy off both constituencies. It is telling the first group that jobs and communities dependent on GM will be better preserved because of the bail-out, and the second that taxpayers and creditors will be rewarded by it. But it is not telling anyone the complete truth: GM will disappear, eventually. The bail-out is designed to give the economy time to reduce the social costs of the blow.
...Middle-class taxpayers worry they cannot afford to bail out companies like GM. Yet they worry they cannot afford to lose their jobs. Wilson’s edict, too, has been turned upside down: in many ways, what has been bad for GM has been bad for much of America. The answer is not to bail out GM. It is to smooth the way to a new, post-manufacturing economy.
Can government keep politics out of the GM bailout? McClatchy lays out the political maneuvering underway and previews what's at stake in the 2010 Elections.
Maybe, maybe not, but conspiracy theorists can't resist. Matt Taibbi's got latest: Obama's targeting Republican car dealerships.
I thought this was a joke when I first heard of it, but apparently it’s circulating as a serious theory, and gaining momentum.
It seems that there has been a lot of grumbling surrounding the closure of certain car dealerships in the the Chrysler wind-down. The company didn’t want to shut down some 25% of its dealerships, but the President’s Automotive Task Force insisted. And once the shutdowns commenced, rumors began to circulate that there were more forced closures of dealerships who contributed heavily to Republican candidates last year than dealerships who gave to Obama or Hillary Clinton.
Health Care Reform to the Rescue...Of the Economy
According to a new White House report, health care reform will boost the economy and put more money into Americans' pockets. MarketPlace:
With President Barack Obama saying it's this year or never for health-care reform, the White House on Tuesday released a study showing that an overhaul of the nation's health-care system would boost economic growth and put about $2,600 in a family's pockets.
In a report titled "The Economic Case for Health Care Reform," the White House's Council of Economic Advisers said reform of the kind Obama favors would boost gross domestic product by more than 2% in 2020 and almost 8% in 2030. That's if the annual growth rate of health costs is slowed by 1.5 percentage points.
For a family of four, the report said, those numbers translate into an income of $2,600 more in 2020 than without reform. In 2030, it would be nearly $10,000 higher.
"If we do reform well," Council of Economic Advisers Chairwoman Christina Romer told reporters, "the key impact is that it's very good for the economy."
And, if the proposal presented by six major health organizations is right, it could mean $2 trillion in savings over 10 years. Politico:
Six major health care organizations submitted a 28-page proposal Monday to President Barack Obama detailing how they could save $2 trillion over 10 years.
p> Some of the savings proposed Monday mirror ideas already under consideration in Congress, including reducing the number of hospital readmissions, increasing the use health information technology and preventing chronic diseases. They also propose streamlining administrative processes, reducing medical errors and promoting comparative effectiveness research.
Progressives rallied behind the president's health care plan at the America's Future Now conference. AFP:
A coalition of US progressive groups unveiled Monday a 82-million-dollar campaign to boost President Barack Obama's plans to overhaul the ailing healthcare system.
"The election of Barack Obama was the beginning, it's not the end," former Democratic National Committee chairman Howard Dean told reporters at an annual conference sponsored by activist group Campaign for America's Future.
"It was important to win the presidency so that there could be a progressive legislative agenda. Now we have one and now we've got to get to work."
Campaign for America's Future has galvanized some 1,000 organizations with a total of 30 million members through Health Care for America Now.
HCAN's Jason Rosenbaum comments on and the press conference with Gov. Howard Dean at America's Future Now and progressive mobilization for health care reform:
The real story today is the fact that progressives are united behind President Obama's health care plan...
This is where our strength comes from, and this is why we will win. We can mobilize America, and we have voters on our side.
It is this level of organization and coordination with will move health care reform through Congress and on to the President's desk. It is our ability to talk to broad swaths of America, to mobilize volunteers to go door-to-door, and to get voters to contact their Members of Congress that will manifest the public pressure we'll need to pass historic legislation.
Rosenbaum also takes on OMB director Peter Orzsag's report financing health care reform.
Paying for health reform now ensures there is no downside, budget-wise, even if efficiencies don't materialize as expected. Still, there will be a huge fight about the price of health reform, and we still haven't answered the basic question of where exactly that revenue comes from.
Congress hasn't started laying out these options yet, but I'm hoping Orszag keeps speaking up about our options for that revenue in the future, to bring his knowledge to bear on the complicated subject.
Meanwhile Senate Democrats are set to meet with the White House to discuss the details of health car reform. NY Times.
GOP Senators are working on a few proposals of their own for reforming health care. Politico.
Breakfast Sides
The administration is nearly finished with its plan to overhaul regulations governing the financial sector. NY Times.
