Another Bad Idea from Washington

COMMENTARY Budget and Spending

Another Bad Idea from Washington

Jun 8th, 2009 2 min read

Spokesperson, The LIBRE Initiative

Israel Ortega is a former contributor for The Foundry.

Heard the news? Washington, D.C., has become the country's ATM.

At least that's the impression one gets after seeing the sheer amount of money being handed out a dizzying speed. The latest example of our spend-happy government is news that the feds will cut a check to automaker General Motors for $30 billion. In return, Uncle Sam will take ownership of approximately 60 percent of GM. That means that if you're a U.S. taxpayer, you are now part owner of a car company.

Sound great? Not if you believe in accountability, fairness, fiscal responsibility and the need to reduce our debt.

After several difficult months, General Motors finally filed for bankruptcy in June, opening the door to begin re-writing contracts and negotiate new terms -- particularly with the industry's powerful labor unions. Unfortunately, the GM bailout has created a dangerous precedent for other troubled firms. In the future, more will look to the federal government for a lifeline when in distress.

To be sure, General Motors stands out not only for the company's size, but also for its storied history. In fact, GM is almost synonymous with Detroit and auto manufacturing in general. Perhaps that helps explain why the government has been pouring billions of dollars to prop up this (previously) privately owned company.

In December, GM accepted bailout money from the government to keep itself afloat. In return, GM was required to tell the federal government how it intended to move toward viability and self-sustainability. Unfortunately for GM, the White House soundly rejected those plans.

And while the federal government may have been doing the right thing by rejecting those plans, that's when the lines between the private sector and public sector started blurring.

President Obama fired General Motors CEO Rick Wagoner (although he may still earn millions in bonuses) and half of its board. Swiftly it started to seem that every member of Congress was an auto expert -- there were almost as many plans for how to fix the auto industry as there were lawmakers.

And it's precisely here that we get at the crux of the problem with Washington, D.C. exerting even greater control of GM. Our country's entrepreneurial spirit has thrived in great part because the government has largely stayed out of the private sphere. A free market encourages creativity and, yes, competition. In fact, we as consumers stand to gain with increased competition in the marketplace because there will be more options and price wars.

Unfortunately, in this volatile economic climate many other companies are likely to hand over decision-making power to Washington, too, in return for federal monies. And of course, politicians with a thirst for even more power will be all too happy to oblige -- the Wall Street bailout being another example.

With a soaring deficit and expensive plans to institute ambitious "cap-and-trade" programs and overhaul the health care system, someone needs to tell Congress that trying to run a car company is a bad idea. The private sector cedes more control to the Feds, which is gambling with more of our hard earned money.

It's a lose-lose proposition.

Israel Ortega is a Senior Media Services Associate at The Heritage Foundation.

First Appeared in Libertad Digital