The Washington Post editors have figured out the Obama administration’s modus operandi: give money, then strong-arm the recipients. They write:

In theory, a government bailout should provide a short-term infusion of cash to give a struggling company the chance to right itself. But in its aggressive dealings with U.S. automakers, most recently General Motors, the Obama administration is coming dangerously close to engaging in financial engineering that ignores basic principles of fairness and economic realities to further political goals.

[. . .]

While the Obama administration has been playing hardball with bondholders, it has been more than happy to play nice with the United Auto Workers. How else to explain why a retiree health-care fund controlled by the UAW is slated to get a 39 percent equity stake in GM for its remaining $10 billion in claims while bondholders are being pressured to take a 10 percent stake for their $27 billion? It’s highly unlikely that the auto industry professionals at GM would have cut such a deal had the government not been standing over them — or providing the steady stream of taxpayer dollars needed to keep the factory doors open.

But this, of course, is nothing new. Have we already forgotten the AIG bonus flap? Has Tim Geithner let the banks pay back their TARP money yet? This is what comes, inevitably, from an administration with a vast social and economic agenda, which has used an economic crisis as an “opportunity” to alter the relationship between the public and private sectors.

The Obama administration’s policy agenda on labor and climate control, to name just two items, is going to clash with the profit motives of car companies. Guess which side will prevail. Similarly, when the banks took the cash (or had it foisted upon them) they should not have expected the freedom to continue to operate as they did before they became wards of the state. Statism or crony capitalism, or whatever we call it, is about the sheer exercise of government power over what used to be private decisions regulated by the marketplace and the rule of law.

This is precisely why we shouldn’t go down this road and why those interested in preserving the rule of law and some semblance of a free market economy should speak up. But bondholders are being bullied into silence. And Congress has ceded its role as regulator and appropriator to the executive branch. What’s to stop “Government Motors”? Well, there’s the ballot box and car lots all over the country where Americans can register their views.

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This entry was posted on Tuesday, May 26th, 2009 at 5:53 PM and is filed under Contentions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.