General Motors wants its freedom

Our little experiment in industrial socialism didn’t work quite as well as the Democrats are saying.  General Motors did not pay back the bailout, and the American auto industry is not exactly “roaring back,” as the President said.  The government still owns over a quarter of all GM stock.  The company wants the government to sell out, but if it does, such is the low stock price, taxpayers would lose billions.  From Market Watch:

The Treasury Department is resisting General Motors’ push for the government to sell off its stake in the auto maker, The Wall Street Journal reports. Following a $50 billion bailout in 2009, the U.S. taxpayers now own almost 27% of the company. But the newspaper said GM executives are now chafing at that, saying it hurts the company’s reputation and its ability to attract top talent due to pay restrictions. Earlier this year, GM GM -1.41% presented a plan to repurchase 200 million of the 500 million shares the U.S. holds with the balance being sold via a public offering. But officials at the Treasury Department were not interested as selling now would lead to a multibillion dollar loss for the government, the newspaper noted.

via General Motors pushing U.S. to sell stake: report – MarketWatch.

The truth about GM’s payback

Have you seen the ads in which General Motors says that they paid back the government bailout money?  Well, George Will says that this is not exactly correct:

A television commercial featuring CEO Ed Whitacre demonstrates the institutional murkiness and intellectual dishonesty that result when the line between public and private sectors disappears.

In the commercial, Whitacre says GM has “repaid our government loan in full.” Rep. Paul Ryan (R-Wis.) noted that GM used government funds to pay back the government: It “simply transferred $6.7 billion from one taxpayer-funded TARP account to another.” The government still owns 60.8 percent of GM’s common equity, and the Congressional Budget Office projects that the government will lose about $34 billion of the $82 billion of TARP funds disbursed to the automotive industry.

When Ryan and two colleagues asked the Treasury Department for clarification, they got this careful reply: “Treasury has never suggested that the loan repayment represented a full return of all government assistance.” A Treasury news release did say “GM Repays Treasury Loan in Full.” The loan is, however, a small part of taxpayer exposure. Under crony capitalism, when government and corporate America merge, both dissemble.

via George F. Will – Greece and GM: Too weak to fail.

Is the health care law unconstitutional?

An editorial in the Washington Post, no less, which supported the health care reform bill, admits that the lawsuits seeking to strike down the new law may have a case:

Just minutes after Tuesday’s signing ceremony, the constitutionality of the health insurance reform law came under fire. A coalition of attorneys general from 13 states filed suit in a northern Florida federal court; Virginia lodged a separate complaint, and other states may follow.

These challenges are not frivolous. The states argue that the individual mandate — forcing individuals to purchase health insurance — stretches and distorts Congress's constitutional power “to regulate Commerce . . . among the several states.” A person who declines to buy insurance is not engaged in interstate commerce and should therefore lie beyond the reach of Congress, they say.

This contrasts, in two ways, with a consumer who is forced to buy car insurance. First, states have power to regulate activities within their borders that the Constitution does not grant the federal government. Second, a consumer must choose to enter the car market; only then does a state place a condition on that choice by requiring insurance. If the courts acknowledge the legitimacy of the individual mandate, the states argue, the federal government’s power to order purchases of other products or services — or any number of other directives — would be unlimited.

via States argue the feds can’t force purchase of health insurance –

To use an example I’ve heard, if the federal government can compel people to purchase health insurance, it should also be able to decide that it would be beneficial to the national economy to require everyone to buy a GM automobile.