By on February 4, 2009

Point three of Barack Obama’s ethics pledge to the American people is that “no political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.” Obviously that’s a high standard, and one that seems increasingly important as the lines between government and industry are blurred by rampant bailouts. And clearly not everyone makes the cut. But as Obama assembles a team to “restructure” the auto industry, the spirit (if not the letter) of his ban on revolving door hiring seems to be falling by the wayside.

According to the Detroit News, the leading candidate for Obama’s “Car Czar” position is a certain Mr Steven Girsky, who the DetN describes as a “longtime auto industry analyst.” Having advised Centerbridge Industrial Partners and JP Morgan on auto issues, Girsky is more than simply an analyst. Automotive News [sub] reported in October of 2008 that Girsky was hired by the United Auto Workers to advise on the proposed Chrysler-GM merger and as AN dryly put it “he may also advise the UAW on a possible federal bailout of the U.S. automakers.” Girsky was also a consultant to GM’s CEO and CFO for just under a year, leaving the firm in 2006. As of October 2008, he also served on the board of Dana Corp, a massive auto supplier firm.

Does Girsky’s experience make him incapable of living up to Obama’s high moral standards? Technically, no. Like Tom Daschle before him, Girsky is clearly a lobbyist, though he’s not registered as one (the de facto bright line rule for Obama). But having been paid by the UAW within months to advise them on bailout strategy, he’s also clearly not going to live up to the “no work on regulations or contracts directly and substantially related to their prior employer for two years” standard. And if he is appointed as Car Czar, it’s safe to say that he will be guiding regulations and money disbursements that are “substantially related” to the work he has been doing for the UAW.

But as with so many political decisions, the choice of a Car Czar will likely be decided on the lesser of two evils. After all, Girsky may be steeped in the cozy relationships between GM management, the UAW and the government, but at least he has industry experience. Steven Rattner of Quadrangle Group has also been named as a possible czar, but as Newsweek reports, his main qualifications appears to be as a Democratic fundraiser (he is married to the National Finance Chairwoman of the DNC) and media-elite insider. Sure he covered energy and economy beats at the NY Times back in the day, but there’s little to indicate that he would make an especially good Car Czar.

Meanwhile, for all of Girsky’s industry connections, some of his ideas are decidedly TTAC-ish. Like when he got AN Executive Editor Edward Lapham‘s collar up by suggesting [sub] that the Detroit Three might need to cut as many as 70 percent of its dealerships. He even seems to cause some consternation among his UAW employers, based on this post at Salon. And that might just indicate the kind of experience and perspective that Obama’s team clearly needs. After all, his Climate and Energy Czar Carol Browner told Automotive News [sub] at the DC Auto Show that there are “lots of clean cars out there and options for the consumer.” You know, because the OEMs say so.

Meanwhile, it seems that nothing will stop or slow the rolling tide of money that is about to slosh into the automotive industry. $2b worth of battery research money is said to be going into the forthcoming stimulus package, and the Senate just approved an amendment to the stimulus bill which would make auto loan interest and state sales taxes deductable from federal taxes. Whether Girsky or Rattner is appointed as Car Czar won’t likely make much of a difference in terms of the amount of money that will be funneled into the industry over the following years. The crucial distinction is whether experience is worth the possibility of a conflict of interest.

Obama’s strict ethical standards are admirable, but if his options for Car Czar are between an industry insider who defines the term “revolving door” and a candidate who is being considered solely due to his political connections, something has clearly gone wrong. I’m not sure this kind of compromise is what people had in mind when they voted for “change we can believe in.” But in this familiarly frustrating choice, at least Girsky has a record of taking stands on crucial issues facing the industry. If he can publicly explain his recent UAW dealings in a way that passes Obama’s muster, Girsky may actually be the least of the available evils.

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33 Comments on “Bailout Watch 372: The Man Who Would Be Czar...”


  • avatar
    dean

    Has Obama nominated this guy, or is this just speculation? Seems to me that, at best, it is informed speculation, so questioning Obama’s fortitude in defending his ethical standards is premature.

  • avatar
    geeber

    Obama’s strict ethical standards are admirable…

    I think someone hasn’t been paying attention to the news for the past two weeks…

  • avatar
    BDB

    Obama made a big mistake in setting standards that are neigh-on-impossible for him to meet.

  • avatar
    FunkyD

    Politicians have ethical standards that others are expected to follow. If you though Obama was going to bring about true change, you were kidding yourselves.

  • avatar
    tced2

    Has he paid his taxes?

  • avatar

    what’s that about the woodshed?

  • avatar
    Robert Schwartz

    Shouldn’t we call him the Car Commissar? I mean czar is such a reactionary term and commissar is so progressive.

  • avatar

    should have said henhouse?

  • avatar
    rdodger

    I thought Roger Penske was in the running for Car Czar..??

  • avatar
    carlos.negros

    My understanding of the policy is that the nominee cannot have been a registered lobbyist. If he was not, then there should be no problem. True, he may have engaged in some lobbying activity, but what portion of his job did that entail? Did he break any laws regarding the registration of lobbyists? If not, I don’t see the problem.

    I think we need to be careful not to fall into the Rush Limbaugh trap of wishing for Obama to fail so much that we are willing to take the country down for that to happen.

    Obama’s policies came about because of Bush appointees, such as Gale Norton from the Ag department, who went from a job as a lobbyist for the cattle industry.

  • avatar
    John Horner

    ” … an amendment to the stimulus bill which would make auto loan interest and state sales taxes deductable from federal taxes … ”

    Just as they used to be before the “tax simplification” of the Reagan years stripped them away. All consumer interest used to be tax deductible, but the legislative geniuses took all of that away except for interest on loans backed by your home. Which in turn led to the cash-out refinancing boom, home-equity lines of credit and a nation of consumers who became conditioned to looking at their homes as an ever growing magical piggy-bank.

    Why should consumer debt backed by a lien on your home be tax deductible while that backed by your car isn’t?

    On the sales tax thing, the old principle was that you shouldn’t pay income tax on the money you already used to pay other taxes. It used to be a simple matter to deduct all sales and other local taxes, but over time that was nearly all taken away. Present law is really weird, subject to certain minimums and so forth, you get the option to deduct for state income taxes OR sales taxes paid, but never both. So, we are all paying lots of income tax on the taxes we are already paying.

    Madness.

  • avatar
    geeber

    I think we need to be careful not to fall into the Obama supporters’ trap of dismissing all honest criticism as partisan sniping.

    Obama and company are doing their best to give Rush and company lots of good material, and they have no one to blame but themselves.

    John Horner: All consumer interest used to be tax deductible, but the legislative geniuses took all of that away except for interest on loans backed by your home. Which in turn led to the cash-out refinancing boom, home-equity lines of credit and a nation of consumers who became conditioned to looking at their homes as an ever growing magical piggy-bank.

    That’s an argument for ending the deduction for mortgage interest, not making the interest on auto loans tax deductible.

  • avatar
    carlos.negros

    If we were to make mortage interest non-deductible, I would sell my home as soon as the market came back up, along with millions of others. There would be absolutely no good reason to own a home versus renting.

    It would be, like the proposal to tax our health benefits, just another sly Repub way of raising our taxes. It would be akin to the way Reagan reduced Federal-State tax sharing.

    If you want to see a REAL housing bubble burst, take away the mortgage deduction.

  • avatar
    carlos.negros

    Obama’s biggest mistake is to try and act in a bi-partisan manner. It is like trying to pet a rabid dog.

  • avatar
    magoo

    Edward Niedermeyer:
    “Does Girsky’s experience make him incapable of living up to Obama’s high moral standards? Technically, no. Like Tom Daschle before him, Girsky is clearly a lobbyist, though he’s not registered as one (the de facto bright line rule for Obama).”

    How is Girsky in any sense a lobbyist?

    A lobbyist is one who acts on behalf of an interest to effect or influence legislation. Not simply any paid consultant, advisor, or executive. That would rule out nearly anyone with any expertise at all.

  • avatar
    Edward Niedermeyer

    carlos.negros: Right, “not a registered lobbyist” is the Obama brightline. Daschle’s nomination failed because of the tax issue, not the becauset he acted as an unregistered lobbyist on several occasions.

    magoo: Having been hired by the UAW to advise on the last round of bailout negotiations he had a stake in their outcome. That round happened in December, and now it’s February. As far as we know, he’s still on the UAW payroll. I’m looking into this.

    Ultimately, I think if Girsky is open about his financial dealings with the UAW he is probably the right choice. His presentation to UAW Local 14 shows a firm handle on reality that one wouldn’t expect from a Kool Aid sipper. Clearly he has the experience, and if the government is giving money to the industry anyway and he’s simply being hired to manage the effort, he might as well be an industry insider, no?

    As for Obama, he is both a human and a politician. Only those who have overlooked these facts will become disappointed as he inevitably proves them.

  • avatar
    carlos.negros

    I am well aware that Obama is both a human and a politician. I am sure he will make mistakes. I only hope he will be man enough to admit them, unlike our last role model.

    A line must be drawn somewhere. The law states that if a person spends more than 20 percent of his work time calling legislators, or working directly on lobbying activities, that person needs to register as a lobbyist. If Girsky has spent more than 20 percent of his time on those activities, he should be disqualified.

    Daschle’s income tax problems clearly did him in. No one presented evidence, that I am aware of, that he should have registered as a lobbyist but did not.

    Personally I am glad that Daschle withdrew. I would rather have someone in that position who has no ties to health care providers or insurance companies. I personally would like to see someone in that position who had a close member of their family suffer and die because of lack of insurance. Perhaps their own child. Not some fat cat limousine liberal phony like Daschle.

  • avatar
    GS650G

    I’m not sure this kind of compromise is what people had in mind when they voted for “change we can believe in.”

    Too bad, he won and elections have consequences. I surprised at how gullible people were and easily fooled. Just wait until we dump 40 billion into GM and Chrco and they go under anyway.

  • avatar
    Martin Schwoerer

    I like this article, it’s informative and to the point and well-written.

  • avatar
    stevelovescars

    The mortgage interest tax deduction is in-effect a subsidy for financial institutions who make the loans… lot of good that has done us. So you pay the money to the bank instead of Uncle Sam but your net cost is reduced by about a third.

    Deducting car loan interest is an interesting idea, but in a market in which most buyers can get near zero-interest subsidized loans (unlike the pre-Reagan era when this was unheard of) it doesn’t amount to much of a deduction. It would be a subsidy if banks and captive finance companies (are there any left?) could begin charging profitable interest rates but then the net incentive for consumers would be washed out.

  • avatar
    mikey610

    FYI – Girsky worked for GM’s Treasury Department before he headed to Wall Street…..

  • avatar
    Robert.Walter

    Why not Jerry York?

  • avatar
    magoo

    Edward Niedermeyer :
    “magoo: Having been hired by the UAW to advise on the last round of bailout negotiations he had a stake in their outcome. That round happened in December, and now it’s February. As far as we know, he’s still on the UAW payroll. I’m looking into this.”

    How does that make him a lobbyist?

  • avatar
    obbop

    ““Car Czar””

    For those of you old fogies such as I who underwent the barrage of anti-Commie indoctrination during the heart of the Cold War years am I the only one irked by the use of a term that originated with the Rooskies albeit during their pre-Bolshevik era?

    Csar is merely the Russianized form of Cesar from the Roman Empire epoch.

    A csar (czar, tsar, whatever) is not the term-type I believe should be used in our constitutional republic (democracy? what democracy?).

    I view the term’s use (as in drug czar, car czar, etc.) is more of a slap in the face by a nose-in-the-air elite class upon the masses of what is expected to be a mass of subservient bleating sheep.

    Imagine, if you will, a federal or any level governmental official, politician or bureaucrat naming one of their own as a “czar” in 1955.

    I can envision immense outrage from a multitude of people, organizations, the media, etc.

    Yet, look at how readily the brainwashed bleating sheep uhhhh…. citizenry et al of today are accepting of the term.

    Please ponder.

    In a roundabout manner I believe the acceptance of that “czar term” is related to the interference in the so-called “free market” by the federal government.

    It’s a “brave new world” my fellow Americans lacking, I believe, freedom and bravery.

    The stench of class warfare and elitism hangs heavy over us.

    But what do I, a mere lowly commoner know?

    I am merely at the socio-economic level whereupon the presence of mega-millions of illegal alien invaders have a very real negative impact upon me, especially within the economic sphere where those folks upset the “free market’s” supply/demand equilibrium.

    Please excuse my “uppityness” and failure to bleat my sheep-like delight with my elite class masters and meekly obey the dictates from my betters residing above at their lofty heights atop the socio-economic apex.

  • avatar
    jkross22

    Mr. President Hopenchange,

    I am quite sure that there are more than two qualified candidates available to fulfill the requirements of this job that haven’t cheated on their taxes nor were lobbyists (however you would like to define lobbyist today).

    If you need help, I’m a recruiter and can assist.

    But then, that would mean not only acknowledging you made a mistake, but demonstrating your apology was sincere and doing something about it.

  • avatar
    shaker

    Obama’s position is much like that of the biblical Abraham, who attempts to save Sodom and Gomorrah from destruction by God, pleading ‘If I can find 50 righteous people, will you save the cities?’

    As the story goes (sort of), he fails to find 50, 40, 30… even 10 righteous people to save the city- only Lot, his wife and two daughters (?!?)

    Trying to find untainted yet effective people in Washington is surely just as difficult.

  • avatar
    geeber

    carlos.negros: If we were to make mortage interest non-deductible, I would sell my home as soon as the market came back up, along with millions of others. There would be absolutely no good reason to own a home versus renting.

    You own a home because you want privacy, and the ability to change and remodel the place to your desires and wishes, without a landlord looking over your shoulder.

    If the only reason to own a home is because of the mortgage interest deduction, this, in roundabout way, proves my point.

  • avatar
    jschaef481

    carlos.negros: I think we need to be careful not to fall into the Rush Limbaugh trap of wishing for Obama to fail so much that we are willing to take the country down for that to happen.

    That is a complete misinterpretation of Rush’s statements. It also misinterprets the prevailing opinion of most true conservatives (unlike Bush)who, as a matter of principle, oppose growing government for its intrusion on the liberties of its citizens, interference in the free market and misguided attempts to alter human nature. They are opposed to the implementation of socialist, collectivist or liberal policies by the elite because they believe, based on history, such policies are doomed to fail this country and will create other unintended and undesired problems and consequences. This is far different from taking the country down for political reasons.

    Although I’m no fan of Mr. Obama’s policies, I would like to see him succeed in changing the culture in Washington. It would indeed be refreshing to see our “leaders” debate the nation’s issues based on reason, logic and principles rather than simply ascribing demonic motives to those who dare oppose them. I would also be encouraged if the President lived up to his promise to root out the same old tired elitists, lobbyists, tax cheats, and insiders. Unfortunately, he talks the talk, but does not walk the walk. Reality sucks.

    In this case, however, it would be better to allow a federal bankruptcy judge to assume the duties of the so-called “car czar,” as many have pointed out here at TTAC.

  • avatar
    Potemkin

    Let’s not forget that Obama is a lawyer and as such is a master of weasel wording. In many of his statements he has left loopholes so that he can skirt the provisions of his own rules. Obamas choices of Richardson, Kellifer, Geithner, Dashcle, etc. show that his team couldn’t organize a one car funeral. This guy and his crew are even more inept than W’s bunch. The American people were taken in by Obama’s promise them everything speeches. It would seem that America prizes form over substance and that’s what they will get for 4 years.

  • avatar
    Phil Ressler

    1. I’d like an Automotive Assistance Administrator to have hard core business operating experience in the automotive industry. Roger Penske certainly would qualify, among others. Not these guys.

    Part of what Obama has to show, if the Federal governemnt is going to seriously bridge a private sector, is that he can create an administrative environment where business people can succeed in a government context, directing a taxpayer-funded rescue program.

    2. The mortgage interest deduction had multiple objectives at origin. The most important, however, wasn’t economic and it’s the reason people who think that rental vs. ownership is strictly an economic decision are wrong. The chief existential argument for the personal home mortgage deduction as a component of Federal tax policy was and is that home ownership gives individuals a stake in our system, so government should encourage it. The economic rooting of individuals in private property breeds political interest in stability and the American system of institutionalizing dynamic change while working things out.

    Phil

  • avatar
    agenthex

    I would also be encouraged if the President lived up to his promise to root out the same old tired elitists, lobbyists, tax cheats, and insiders. Unfortunately, he talks the talk, but does not walk the walk. Reality sucks.

    The guy’s been in office for coupe weeks and people are already expecting miracles.

    What’s hilarious ironic is his detractors often criticize supporter’s supposed view of him as a messiah when they’re the ones with such false expectations.

    Anyhoo, I doubt a czar is going to make that much of a difference since the fundamental changes need are internal ones. Maybe an insider can help, but good luck finding one that’s not ingrained with detroit culture AND free of conflicts of interest.

  • avatar
    agenthex

    Doubt post on edit? That’s weird.

    I would also be encouraged if the President lived up to his promise to root out the same old tired elitists, lobbyists, tax cheats, and insiders. Unfortunately, he talks the talk, but does not walk the walk. Reality sucks.

    The guy’s been in office for coupe weeks and people are already expecting miracles.

    What’s hilarious ironic is his detractors often criticize supporter’s supposed view of him as a messiah when they’re the ones with such false expectations.

    Anyhoo, I doubt a czar is going to make that much of a difference since the fundamental changes needed are internal ones. Maybe an insider can help, but good luck finding one that’s not ingrained with detroit culture AND free of conflicts of interest.

    Also, “conflicts” really aren’t that much of an issue as long as someone is objective and can perform the work well, but I guess this is politics after all.

  • avatar
    joeaverage

    Exactly AgentHex…

    Why not place a an IRS guy in there or a former gov’t FBI agent or something. Let them sniff out corruption if it is there. If they want expertise then put a manufacturing expert in there – somebody not from the auto industry. Maybe someone who managed shipbuilding or building trucks or building tanks. Different product, similar methods, without all the corporate baggage that Detroit carries around with it – drowning it. Somebody more anti-establishment or less attached to Detroit already.

    Let that expert Czar person hire some expertise to assist him in examining the situation.

    Not sure what else a Czar would do for us. Let the car makers work out their problems. They either will or won’t succeed. It’s not like a Czar is going to help guide them in any way.

    Yes, I hate the name “Czar” too. Think of old Russia every time.


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