David Freddoso: Rattner's back story on 'saving' Government Motors 

General Motors is really back. I mean, in the Washington sense.

In July, the 60 percent government-owned company began doling out campaign cash from its political action committee once again, to put some weight behind the $11.3 million it has spent lobbying Congress since it received its first government help in late 2008.

All of this is being paid for by your tax dollars, thanks to the bailout recounted in the book "Overhaul" by former Car Czar Steve Rattner. "Overhaul" is a sober account of the auto bailout by someone who firmly believes he did the right thing. It is also an eye-opening and infuriating story about government saving horribly run companies that did not deserve it.

If you want to get angry, just read a few selected sentences from Rattner's book about General Motors, its business practices, its union and its CEO, Rick Wagoner:

  • "The GM team seemed placidly to take for granted that somehow, some way, the government would agree to its requests."
  • "There was absolutely no justification for the increase in market share that GM had assumed as part of its viability report ... GM seemed to be living in a fantasy that, despite the evidence of decades of decline, it was still the greatest carmaker on earth, in a class by itself.
  • "The overall concept seemed to be to trim only what was easily achieved and absolutely necessary, and use taxpayer dollars to ride out the recession."
  • "Laid-off workers received 95 percent of their normal pay."
  • "Under the UAW contract, auto-workers got paid nearly the same whether they built cars or not. [GM, Ford and Chrysler] actually maintained 'rubber rooms' where idled workers could job-hunt, watch TV, and work crossword puzzles while they collected pay."
  • [Nissan CEO Carlos Ghosn] had approached Rick Wagoner as early as June 2006 about taking a 20 percent stake in GM, but Wagoner persuaded his board to rebuff the deal, in part to save his own job as CEO."
  • "Our task force would later learn that, on Wagoner's instructions, GM was making no contingency plans, no preparations whatsoever for a possible bankruptcy filing. ... This attitude would add materially to the cost of the eventual rescue."

Inability to accept reality. Self-serving leadership. Confounding acquiescence to unreasonable union demands. Through the Chrysler and GM bailouts, taxpayers rewarded these practices.

It was probably illegal for the White House to fire Wagoner, but, if you believe Rattner, the decision itself isn't hard to understand.

What's incomprehensible, based on Rattner's account, is that GM's Board of Directors hadn't done so years earlier. Even less comprehensible was President Obama's decision to reward the GM board's lack of business judgment with a $50 billion bailout.

Rattner writes that after firing Wagoner, he even jumped on the phone to stave off mass resignations by the directors -- many of whom had been essential in destroying the company in the first place.

Rattner also writes: "I was stunned by commentaries suggesting that the government was overreaching by replacing a CEO who had lost $11 billion of taxpayer money in three months."

Of course, it was the government's fault that these people ever had access the $11 billion in the first place.

Obama saved GM. Rattner and his colleagues on the auto task force staked nearly $700,000 in taxpayers' money on each person the company still employs, and we're enjoying the consequences. Instead of presenting unrealistic viability plans, GM now just lies to consumers -- for example, about paying back its government loans.

But some things at GM never change. It's still spending a fortune lobbying and buttering up politicians with $90,000 in PAC donations just since July. And it's still losing market share to its competitors -- it has slipped from 19.6 percent to 19 percent so far this year.

David Freddoso is The Examiner's online opinion editor. He can be reached at dfreddoso@washingtonexaminer.com.

About The Author

David Freddoso

Bio:
David Freddoso came to the Washington Examiner in June 2009, after serving for nearly two years as a Capitol Hill-based staff reporter for National Review Online. Before writing his New York Times bestselling book, The Case Against Barack Obama, he spent three years assisting Robert Novak, the legendary Washington... more
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