Michigan Republican Rep Hot For GM – Chrysler Merger

by Robert Farago

October 21st, 2008 10:19 AM

michigan republican rep hot for gm 8211 chrysler merger

Yahoo! Finance reports that Michigan Representative Thaddeus McCotter has joined State Senator Carl Levin in suggesting that the GM – Chrysler merger is something that really ought to happen, even if the feds have to, uh, help. A Republican suggesting government intervention to broker a deal (i.e. kick-in your tax money) between two large corporations? Sure! “I would be supportive of anything as long as it guarantees people the opportunity to vote for me keep their jobs so they can vote for me so I can keep mine.” In fact, Tad’s “biggest concern” is “if there’s not a merger.” “If there is no merger you could see the entire Chrysler car company destroyed, disbanded and thousands of Americans put out of work.” Which is also true if there is a merger, but as they say, a week is a long time in politics. Anyway, check out the video interview on the page; Tad’s got a terrific little wiggle as he explains the difference between being a capitalist and a “free market supporter.” [thanks to Steven Lang for the link]

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Geeber on Oct 21, 2008
john Horner: Be afraid, very afraid, of politicians who view sending people off to war and/or out of their jobs as one of those unfortunate “hard decisions” they are just forced to make. The elected official that is the subject of this post is advocating a merger to SAVE jobs. He thinks that this will avoid job losses. Granted, he is wrong, but he isn't trying to put anyone out of work, or saying to Chrysler employees, "Tough luck, better have your resumes updated." The only problem is that Chrysler and its associated jobs are going away no matter what, but it won't be this Congressman who makes that ultimate decision. John Horner: We are seeing a government backed wave of big company mergers and further concentration of power which once would have been unthinkable … and with Republicans leading the charge. Congress is controlled by the Democrats, and they certainly haven't been saying "no." Rep. Pelosi and company sure aren't interested in stopping the charge...if anything, they are making sure that their constituencies get in on the fun, too. It was some Congressional REPUBLICANS and a few conservative Democrats who initially stopped the original bank bailout plan, and they were roundly criticized by just about everyone, even though they were reacting to negative feedback from voters. Whether the merger of GM and Chrysler succeed or not should be left up to the market. Except that the presidential candidates have been falling all over themselves to shovel as much taxpayer money to Detroit as possible to keep these companies afloat, and it has been Senator Obama leading that particular charge. I watched his nomination acceptance speech, and he said that he wants to help "Detroit retool to make fuel-efficient cars for the 21st century." Those of us who can translate campaign-speak realized that this meant, "I'll support as much taxpayer-funded largesse as possible to keep UAW members employed, as the union is a big contributor to my campaign." Never mind, of course, that if people wanted to save GM, Ford and Chrysler, they could visit their local dealer and purchase a brand-new vehicle at sticker price, instead of buying a Toyota, Honda, etc. Of course, buyers of Hondas, Toyotas and Nissans - not to mention the workers employed in the American-based operations that make those vehicles - can't funnel money to Senator Obama's campaign via the UAW, or turn out the volunteers on election day. So he isn't too concerned about them. As for the mergers concentrating power - yes, among the financial sector, it is troubling. But among the automotive sector, GM and Chrysler are "big" in name only. They key isn't size, it's market power, and at this point, neither one has much of that left. Chrysler is basically a supplier to rental car companies. It is worthless. GM is hanging on by a thread. I'm still trying to figure out exactly what power will be concentrated with a merged GM and Chrysler. If anything, they will compound each others' weaknesses. This merger will have about as much effect on the automobile market - and result in as much monopoly power by the merged company - as the merger of Studebaker and Packard did in 1954. Unless, of course, the next president decides to "help" the merged company in various ways involving more taxpayer-funded largesse.

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Argentla on Oct 21, 2008

If the merger happens, Chrysler will still cease to exist. The merger --> bailout --> C11 theory is the only one that doesn't smack of hallucinogens, and if that theory proves true, all of Chrysler's employees and dealers will be on the chopping block. It's not a matter of saving jobs. It's a matter of who pays for Wagoner and Nardelli's life of leisure and cushy retirement package.

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Steven Lang on Oct 21, 2008

It's a double edged sword folks... If these companies go down in flames you'll have millions without jobs and tens of billions in unfunded liabilities... which will be picked up by the Fed's (and eventually our grandkids) whether we like it or not. If Chrysler merges with GM, who knows. As an industry, I would think it could represent a mind numbingly stupid move unless the new Goliath has the opportunity to undue the strings of legal issues and fiefdom interests that effectively keep it gagged. A break-up of both automakers would be a far more intelligent scenario. But then again, it also depends on how the surgery goes. I believe that by doing this, getting rid of the legal issues, and emasculating the fiefdoms within the castle walls (especially upper management), would do wonders for the Big 3. But that would take the richest and most powerful folks in this country... and they collectively have too much interest in having things go the other way at this point.

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50merc on Oct 21, 2008

Steven Lang: "It’s a double edged sword folks…" Or as my Dad would say, "They are between a rock and a hard place." In this case, "they" are the politicians. Do they (a) offend voters by "heartlessly" refusing to aid major employers, or do they (b) waste billions of taxpayer money on non-viable private businesses. It's not surprising that politicians would decide to be "compassionate" by choosing option (b). When you stop to think about it, that's the fundamental problem with democracy--that people will unwisely use government to give themselves goodies. And it's why we have entitlement train wrecks not far ahead.

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